A.M. Best has revised the outlook to negative from stablefor the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed theFinancial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of "bbb+"of Jordan InsuranceCo. (JIC) (Jordan). The outlook of the FSR remains stable.
The negative outlook on the Long-Term ICR reflects JIC’smarginal level of risk-adjusted capitalisation. A concentrated investmentportfolio that is skewed toward real estate and equities exposes the company'scapital base to volatility. Underwriting results remain good; however,operating performance has deteriorated over recent years. The Credit Ratings(ratings) also continue to reflect the company's strong business profile inJordan.
JIC's risk-adjusted capitalisation has gradually trendeddownwards over the past five years, reaching a marginal level for the currentratings. The company is taking steps aimed at strengthening capital adequacy,which includes divesting some capital intensive investment holdings andsuspending dividend payments in 2016. A.M. Best will closely monitor movementin JIC's capital adequacy over the medium term. Strengthening risk-adjustedcapitalisation will likely depend on the company's ability to successfullyreduce its concentration toward high risk equity and real estate assets, aswell as generate and retain sufficient earnings to support future growth.Improved capital management is expected to be supported by the company'sdevelopment and integration of an economic capital model.