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 JOFICOs 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 Bests expectation that robust operating performance and good internal capital generation will bolster the companys 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 companys balance sheet strength assessment is underpinned by very strong risk-adjusted capitalisation, as measured by Bests Capital Adequacy Ratio (BCAR). AM Best expects the companys 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 companys 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 JOFICOs competitive position benefits from a number of long-term client relationships, the insurance market in Jordan is small with limited growth opportunities. JOFICOs ERM framework is developing, with control and oversight of key risks conducted on a silo basis as opposed to being managed holistically. Despite this, JOFICOs risk management capabilities typically are aligned with the profile of its key risks.
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