AM Best confirms credit ratings of Middle East Insurance Company Plc

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LONDON–(BUSINESS WIRE)–
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) (Jordan). The outlook for these credit ratings (ratings) is negative.

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 Jordanand its moderately high reliance on reinsurance, albeit partially mitigated by a good credit quality reinsurance panel.

MEICO has a track record of operating profitability, supported by prudent underwriting and provisioning practices. However, fierce competition in Jordan increased pressure on MEICO’s technical margins in recent years, and led to a gradual deterioration of the company’s combined ratio, which averaged 97.9% over the past five years (2016- 2020), versus 10-year (2011-2020) weighted average of 95.0% (as calculated by AM Best).

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MEICO is a medium-sized player in Jordanwith a gross written premium of 40.3 million JOD ($56.9 million) in 2020. Growth was moderate over the 2016-2020 period, as evidenced by a compound annual growth rate of 1.0%, indicating the challenges the business faces in growing while maintaining profitability in a very competitive market.

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 relevant 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 more information on the use and limitations of credit rating opinions, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best’s Credit Scores, Best’s Preliminary Credit Scores, and AM Best’s press releases, please see Guide to the Proper Use of Best Scores and Ratings.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at United Statesthe company does business in more than 100 countries with regional offices in London, amsterdam, dubai, hong kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Romeo BertiACA, CMA

Financial Analyst

+44 20 7397 0267

[email protected]

Ghislain Le CamCFA, FRM

Director, Analytics

+44 20 7397 0268

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200 ext. 5159

[email protected]

Jim Peavy
Director, Communications

+1 908 439 2200 ext. 5644

[email protected]

Source: AM Best

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