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FOR IMMEDIATE RELEASE
LONDON - MARCH 01, 2019 09:26 AM (EST)
AM Best has affirmed the Financial Strength Rating of B (Fair) and Long-Term Issuer Credit Rating of “bb+” of Jordan French Insurance Company Limited (JOFICO) (Jordan). The outlook of these Credit Ratings (ratings) is positive.
The ratings reflect JOFICO’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The positive outlooks reflect AM Best’s expectation that robust operating performance and good internal capital generation will bolster the company’s risk-adjusted capitalisation. JOFICO reported pre-tax operating losses in the years leading up to 2013. However, following remedial actions taken by management to improve technical performance, strong operating profits have been achieved in each year since 2014. The company reported a combined ratio below 93% in 2015, 2016 and 2017, with a five-year average of 95.0% (2013-2017). JOFICO is expected to maintain a double-digit return on equity ratio over the medium term, supported by solid technical profitability.
The company’s balance sheet strength assessment is underpinned by very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects the company’s risk-adjusted capitalisation to improve to the strongest level over the coming year, driven by good retention of earnings. Offsetting factors in the balance sheet strength assessment include the company’s marginal liquidity position, moderate dependence on reinsurance and its small capital base.
The company has a limited business profile as a mid-tier insurer in Jordan, ranking sixth in the local insurance market based on 2017 gross written premiums. Although JOFICO’s competitive position benefits from a number of long-term client relationships, the insurance market in Jordan is small with limited growth opportunities. JOFICO’s ERM framework is developing, with control and oversight of key risks conducted on a silo basis as opposed to being managed holistically. Despite this, JOFICO’s risk management capabilities typically are aligned with the profile of its key risks.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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