Best’s News & Research Service - November 22, 2023 09:09 AM (EST)
AM Best Affirms Credit Ratings of National Insurance Company
- November 22, 2023 09:09 AM (EST)
London //BestWire// - AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of National Insurance Company (NIC) (Jordan). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect NIC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
NIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by moderate internal capital generation and underwriting leverage. The balance sheet strength assessment factors in the company’s good level of liquidity, with bank deposits and fixed income securities covering net technical provisions by 107% at year-end 2022. Partially offsetting rating factors include NIC’s exposure to the high financial system risk associated with Jordan, where NIC’s investments are held, the company’s small capital base, which exposes its risk-adjusted capitalisation to potential volatility, and its moderate dependence on reinsurance for writing large limit risks. Although the company has a dependence on reinsurance, the associated credit risk is mitigated partially through the use of a reinsurance panel of strong credit quality.
NIC has a track record of adequate operating performance, with a five-year (2018-2022) weighted average return-on-equity ratio of 5%. The company took a number of corrective measures in recent years in response to weak technical performance in 2018 on its medical and motor portfolios. In 2022, NIC reported a non-life combined ratio of 97.4%, better than its five-year weighted average of 102.5% (2018-2022). Operating earnings have been supplemented historically by generally modest investment income, reflecting the company’s relatively conservative investment portfolio. AM Best expects NIC’s 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 very competitive medical and motor insurance markets on a net premium written basis, as other lines of business are reinsured heavily. NIC is a mid-tier player in Jordan, where it maintains a market share of approximately 3% (based on total market premium in 2022).
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.