AM Best Upgrades Credit Ratings of Gulf Insurance Group – Jordan

AM Best has upgraded the Financial Strength Rating (FSR) to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) of Gulf Insurance Group – Jordan (GIG Jordan) (Jordan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect GIG Jordan’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also factor in enhancement from GIG Jordan’s parent company, Gulf Insurance Group K.S.C.P. (GIG), reflecting the strategic importance of GIG Jordan to the group.

The rating upgrades reflect the long-term improvement in GIG Jordan’s operating performance to a level considered supportive of AM Best’s strong assessment level, driven by strong underwriting performance. In 2023, the company reported a combined ratio of 92% (2022: 95.6%), with the company’s five-year (2019-2023) combined ratio ranging between 86.7% and 96.3% (these metrics are calculated using a combination of IFRS 4 and IFRS 17 reported figures). Overall, operating performance is supported by relatively modest but stable investment income, with the company returning an investment yield (including capital gains) of 4.1% in 2023, in line with the five-year (2018-2022) weighted average of 4.2%.

GIG Jordan’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). GIG Jordan’s BCAR scores are expected to remain comfortably at the strongest level, supported by good organic capital generation and measured growth. During the second quarter of 2023, the company rebalanced its investment portfolio by moving away from domestic cash and deposits, in favour of fixed income securities diversified across the Middle East region. The rebalancing ensured that the company maintained sound liquidity.

GIG Jordan has a leading position in its domestic insurance market, with a market share of approximately 15%. However, the company’s underwriting portfolio is concentrated heavily toward medical and motor risks on a net premium basis, which is a common characteristic of insurers in the region. Furthermore, Jordan’s insurance market is relatively small and fragmented.

GIG Jordan’s ERM framework has evolved under its current management team, and robust controls appear to be in place. Significant steps have been taken over the past years to integrate the company with GIG’s ERM practices and strengthen its risk culture. GIG continues to integrate operationally with its subsidiaries, providing support in areas such as reinsurance purchasing, risk management, pricing and reserving, and investment management.

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 pertinent 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 additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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