Best’s News & Research Service - December 10, 2021 08:39 AM (EST)
AM Best Affirms Credit Ratings of National Insurance Company
- December 10, 2021 08:39 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 good internal capital generation and moderate 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 100% at year-end 2020. Offsetting factors in AM Best’s balance sheet strength assessment include NIC’s exposure to the high financial system risk associated with Jordan, where all its investments are held, the company’s small capital base, which exposes its solvency levels to potential volatility, and its moderate dependence on reinsurance for large risks.
NIC has a track record of adequate operating performance over recent years, with a five-year (2016-2020) weighted average return-on-equity ratio of 6.3%. Technical results improved in 2019 and 2020 following the poor results of NIC’s motor and medical segments in 2018. The 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 market share of approximately 3% (based on total market premiums in 2020).
NIC’s risk management framework is developing, and AM Best views its risk management capability to be marginal relative to its risk profile.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.