AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “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 strong, as well as its adequate 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.

GIG Jordan’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), at the strongest level. The company’s risk-adjusted capitalisation moderately reduced in 2021 as a result of the acquisition of Arab Life & Accident Insurance Co. (P.S.C.) during the year. GIG Jordan’s BCAR scores are nevertheless expected to remain comfortably at the strongest level, supported by good organic capital generation. GIG Jordan benefits from a liquid investment portfolio, good financial flexibility and GIG’s comprehensive group-wide reinsurance programme of sound credit quality. The assessment also considers GIG Jordan’s exposure to high levels of economic, political and financial system risk from operating exclusively in Jordan.

GIG Jordan achieved another year of improved technical performance in 2021, as evidenced by the 86.4% combined ratio (2020: 86.7%), as calculated by AM Best. The company’s five-year (2017-2021) weighted average combined ratio of 99.1% is impacted negatively by poor underwriting results in 2017.

AM Best expects GIG Jordan’s underwriting profitability to be maintained at levels similar to those achieved since 2019, when changes in risk selection implemented by management took effect. Overall operating performance is supported by relatively modest but stable investment income, with the company returning an investment yield (including capital gains) of 3.8% in 2021, marginally below the five-year (2017-2021) weighted average of 4.2%.

GIG Jordan has a leading position in its domestic insurance market, with a market share of approximately 14%. 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. AM Best expects the acquisition and merger of Arab Life & Accident Insurance Co. (P.S.C.) to benefit GIG Jordan’s product diversification over the long term, although it has little immediate impact.

GIG Jordan’s ERM framework has evolved under its new management team, and robust controls appear to be in place. Significant steps have been taken 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.

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