A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Middle East Insurance Company Plc (MEICO) (Jordan).
The outlook for both ratings remains negative.
The ratings of MEICO reflect its leading domestic franchise and strong track record of profitability.
Offsetting rating factors include the economic and financial risks associated with operating in Jordan.
The negative outlook continues to reflect MEICO’s highly concentrated investment profile, which has resulted in a marginal and potentially volatile level of risk-adjusted capitalisation.
MEICO remains a leading insurer in Jordan, with gross written premiums rising 6% in 2014 to JOD 39 million (USD 55 million). MEICO’s business profile is well diversified with strong market positions in property and life business lines, and a leading position in marine. MEICO has generated profits in each year of operation and in 2014 produced profits across all business segments with its non-life combined ratio remaining stable at 88%. Results for the first half of 2015 indicate that performance is in line with the previous year.
MEICO’s risk-adjusted capitalisation improved marginally in 2014. The company benefits from a strong reinsurance panel and low underwriting leverage. However, the company’s capital requirements continue to be driven by a concentrated investment profile. MEICO’s investments are heavily weighted towards equity and real estate, which account for approximately 90% of total invested assets. Strategic initiatives are in-place to reduce its real estate exposure further during 2015 and in subsequent years. Prospective risk-adjusted capitalisation is dependent on MEICO’s future level of earnings retention to support growth and the ability to de-risk its investment portfolio.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe – Rating Services Limited Supplementary Disclosure.