Jordan French Insurance Company Limited rated B with positive outlook
A.M. Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of “bb+” to Jordan French Insurance Company Limited (JOFICO) (Jordan).
The outlook assigned to these Credit Ratings (ratings) is positive.
The ratings reflect JOFICO’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The positive outlooks reflect A.M. Best’s expectation of robust operating performance and good internal capital generation, which will bolster the company’s risk-adjusted capitalisation. JOFICO reported pre-tax operating losses in several years leading up to 2013; however, following remedial actions taken by management to improve technical performance, strong operating profits have been achieved from 2014 onward. JOFICO reported a combined ratio of below 92 per cent in 2015 and 2016, which is a significant improvement on its five-year average of 97.2 per cent (2012-2016). JOFICO has reported strong return on equity ratios consistently above 15 per cent over the past three years, and A.M. Best expects double-digit returns to continue over the medium term.
The company’s balance sheet assessment is underpinned by very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which A.M. Best expects to improve to the strongest level over the next three years. This strengthening is forecast to be driven by the retention of strong earnings, selective de-risking of investments and controlled underwriting growth. Offsetting balance sheet factors include the company’s marginal regulatory solvency position, moderate dependence on reinsurance and its small absolute capital base. Liquidity is viewed to be adequate, but asset liability management is underdeveloped.
A.M. Best views the company to have a limited business profile as a mid-tier insurer in Jordan, ranked sixth in the local insurance market based on 2016 gross written premiums. Although JOIFCO’s competitive position benefits from a number of long-term client relationships, the insurance market in Jordan is viewed to be small with limited growth opportunities. JOFICO’s ERM framework is viewed as developing, with control and oversight of key risks conducted on a silo basis as opposed to being holistically managed. Despite this, JOFICO’s risk management capability is typically aligned with the profile of its key risks.