A.M. Best has downgraded the Long-Term Issuer Credit Rating(Long-Term ICR) to "bbb" from "bbb+" and affirmed theFinancial Strength Rating (FSR) of B++ (Good) of (gig Jordan)(Jordan). Concurrently, A.M. Best has placed these Credit Ratings (ratings)under review with negative implications.
These rating actions reflect the deterioration in thecompany's operating performance in 2016 and the first quarter of 2017, whichhighlighted deficiencies in its enterprise risk management (ERM) capability,and the impact that the poor results reported as at end of March 2017 isexpected to have on gig Jordan's regulatory solvency position, which was deemedmarginal at the end of 2016.
Whilst gig Jordan has historically generated strongoperating profits, supported by good technical performance, results for 2016and first quarter 2017 have been negatively impacted by the correction of an ITsystem calculation error, which had led in the past to inflating net premiumwritten. As a result, gig Jordan reported a profit before tax of JOD 1.4million in 2016, compared to JOD 5.7 million in 2015, and a loss of JOD 4.2million in the first quarter of 2017. This IT system calculation error, whichremained uncovered for years, highlighted deficiencies in the company’s ERMcapability, particularly surrounding operational controls.