AM Best affirmed Middle East Insurance Company Plc’s (MEICO) Financial Strength Rating of B+ (good) and Issuer Long-Term Credit Rating of “bbb-” (good) (
The ratings reflect MEICO’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The negative outlook reflects continued pressure on the company’s risk-adjusted capitalization and operating performance, as capital generation has been limited in recent years by reduced underwriting profitability.
MEICO’s balance sheet strength is supported by risk-adjusted capitalization, which improved to the highest level in 2020, as measured by Best’s capital adequacy ratio (BCAR), benefiting from the disposal of a large single equity stake and the suspension of dividends. AM Best expects MEICO’s risk-adjusted capitalization to remain at least at a very high level over the medium term, as capital generation is limited by dividend distributions, which have resumed in 2021. The offsetting factors in the assessment of balance sheet strength include the company’s significant exposure to real estate and equity investments in
MEICO has a track record of operating profitability, supported by prudent underwriting and provisioning practices. However, fierce competition in
MEICO is a medium-sized player in
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Source: AM Best