NOVEMBER 11, 2020 09:08 AM (EST)
AM Best Upgrades Credit Ratings of National Insurance Company
FOR IMMEDIATE RELEASE
LONDON - NOVEMBER 11, 2020 09:08 AM (EST)
The ratings reflect NIC’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.
The rating upgrades reflect NIC’s improved balance sheet strength assessment, following the strengthening of its risk-adjusted capitalisation to the strongest level at year-end 2019, as assessed by Best’s Capital Adequacy Ratio (BCAR), benefiting from good internal capital generation and reduced underwriting leverage.
The balance sheet strength assessment also factors in the company’s heavy exposure to the high financial system risk associated with Jordan, where all its investments are held. NIC’s investment portfolio offers nonetheless a good level of liquidity, with bank deposits and fixed-income securities covering net technical provisions by 100% at year-end 2019. Offsetting factors in AM Best’s balance sheet strength assessment include the company’s small capital base and moderate dependence on reinsurance for large risks.
NIC has a track record of adequate operating performance over recent years, with a five-year (2015-2019) weighted average return-on-equity ratio of 7.2%. Technical results improved in 2019, following the poor results of NIC’s motor and medical segments in 2018, albeit remained negative with a combined ratio of 106.3% (2018: 113.5%). Improvement was the result of actions implemented by management to turnaround technical profitability, including portfolio pruning and enhanced underwriting discipline. AM Best expects continued improvement in NIC’s technical profitability to support adequate operating results prospectively.
NIC’s limited business profile assessment reflects the company’s relatively small size and concentration to Jordan’s intensely competitive insurance market, where it maintains a 3.1% market share (based on total market premiums in 2019).
NIC’s risk management framework is developing, and AM Best views its risk management capability to be marginal relative to its risk profile.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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 Guide to 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.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.