Jordan: AM Best revises issuer credit rating outlook to 'Stable' for Middle East Insurance Co
Source: Middle East Insurance Review | Apr 2024
The underwriting results of Middle East Insurance Company (MEICO) have been adequate in recent years, as evidenced by a five-year (2018-2022) weighted average combined ratio of 99.6% (as calculated by AM Best), according to the global credit rating agency.
MEICO’s technical performance in 2023, under the new IFRS 17 standard, is expected to have remained in line with recent underwriting results. Investment performance, albeit volatile, contributes positively to overall profitability, as evidenced by the five-year (2018-2022) weighted average net investment return (including gains) of 2.6%.
AM Best has revised the outlook to ‘Stable’ from ‘Negative’ for MEICO’s Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the insurer’s Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” (Fair). The outlook of the FSR is ‘Stable’.
The credit ratings reflect MEICO’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The revision of the Long-Term ICR outlook to ‘Stable’ from “Negative’ reflects the stabilisation in MEICO’s balance sheet strength credit fundamentals, which had been under pressure in recent years.
The company’s risk-adjusted capitalisation, which AM Best assesses as strong, as measured by Best’s Capital Adequacy Ratio (BCAR), is impacted by significant capital requirements emanating from concentration to a single equity and real estate holdings. The balance sheet strength assessment considers MEICO’s unleveraged balance sheet, adequate liquidity, strong reserving practices, and low underwriting leverage. M