Jordan: First Insurance's gross contributions up 9% to $53.2 mln in 2016
Source: Middle East Insurance Review | Jan 2018
Amman-headquartered takaful operator, First Insurance Company (FIC), has reported gross contributions of JOD37.7 million (US$53.2 million) in 2016, representing growth of 9% over 2015.
Following its successful merger with Yarmouk Insurance in 2015, the insurer continues to grow successfully at a faster pace than its competitors, noted A.M. Best.
FIC has a track record of adequate operating performance, demonstrated by a five-year (2012-2016) average return on equity of 4%, supported by stable underwriting and investment results. The company achieved an improved loss ratio of 73.4% in 2016 (74.8% in 2015 as calculated by A.M. Best) driven by a decrease in attritional claims; however, this has been offset by a higher expense ratio resulting in a marginally higher combined ratio of 93.2% (93.0% in 2015). The company reported a net result of JOD2.1 million in 2016, up from JOD1.3 million in 2015.
FIC maintains a very strong balance sheet, benefiting from a low level of underwriting leverage, a reinsurance programme of good credit quality and a conservative investment profile. The company benefits from a good market position as the fourth largest insurer in Jordan.
FIC operates solely within Jordan and therefore, its business profile remains constrained to this relatively small market, noted A.M. Best which has removed the insurer from under review with positive implications and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb”. The outlook assigned to the FSR is stable, while the outlook assigned to the Long-Term ICR is positive.
The ratings also benefit from rating enhancement, reflecting FIC’s strategic importance to its ultimate parent company, Solidarity Group Holding (SGH), a leading provider of Islamic insurance solutions in Bahrain and Jordan. The potential positive rating movement for FIC remains subject to the execution risk associated with the integration of Bahrain-based Al Ahlia Insurance into SGH given the size of the operations concerned. Furthermore, SGH’s operations and assets remain exposed to the high levels of political, economic and financial system risks associated with Jordan and Bahrain, the ratings agency said. M
JOD1 = US$1.41