AM Best has upgraded the outlook for Middle East Insurance Company Plc (MEICO) from negative to stable for its Long-Term Issuer Credit Rating (Long-Term ICR) while affirming its Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” (Fair). The FSR outlook remains stable.
These ratings reflect MEICO’s strong balance sheet strength, adequate operating performance, limited business profile, and appropriate enterprise risk management.
The revised Long-Term ICR outlook to stable reflects the stabilization in MEICO’s balance sheet strength credit fundamentals, which had been under pressure in recent years.
MEICO’s risk-adjusted capitalization, deemed strong by AM Best, is impacted by significant capital requirements stemming from concentration in single equity and real estate holdings. The assessment of balance sheet strength considers MEICO’s unleveraged balance sheet, adequate liquidity, strong reserving practices, and low underwriting leverage.
In recent years, MEICO has maintained adequate underwriting results with a five-year (2018-2022) weighted average combined ratio of 99.6% as per AM Best’s calculations. Investment performance, though volatile, has contributed positively to overall profitability with a five-year (2018-2022) weighted average net investment return (including gains) of 2.6%.
As a mid-tier player in Jordan, MEICO recorded gross written premium (GWP) of JOD 46.2 million (USD 65.2 million) in 2022. Despite moderate growth in recent years due to competitive pressures in Jordan’s insurance market, MEICO’s GWP grew by 11.8% in 2022 and is expected to further expand by 6-7% in 2023, mainly due to the reallocation of mandatory motor third-party liability insurance business to incumbents following the exit of some players in the market during 2022. Future premium growth is anticipated to remain moderate.
This press release pertains to published Credit Ratings on AM Best’s website. For comprehensive rating information and disclosures, please refer to AM Best’s Recent Rating Activity web page and Guide to Best’s Credit Ratings.
AM Best, a global credit rating agency and data analytics provider, operates worldwide with headquarters in the United States and regional offices in key international locations. Visit www.ambest.com for more information.
