AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb+” (Fair) for Middle East Insurance Company Plc (MEICO), based in Jordan. The outlook for these ratings remains stable.
The ratings reflect MEICO’s solid balance sheet strength, which AM Best classifies as strong, alongside its adequate operating performance, limited business profile, and sound enterprise risk management practices.
MEICO’s balance sheet strength is supported by its strong risk-adjusted capitalization, as indicated by the Best’s Capital Adequacy Ratio (BCAR). However, the company faces significant capital requirements due to its concentrated investments in equity and real estate portfolios. AM Best’s assessment of MEICO’s balance sheet considers factors such as its unleveraged structure, adequate liquidity, sound reserving practices, and moderate underwriting leverage. The holding company, Middle East Holding Company Plc (MEHC), has also been assessed as neutral. This rating reflects MEHC’s robust risk-adjusted capitalization and its solvency drivers, which are in line with MEICO’s.
In terms of operating performance, MEICO has maintained modest profitability, with a return on equity averaging approximately 3% over the last five years (2019-2023). Underwriting results have been impacted by the motor third-party liability (MTPL) segment, a tariffed and unprofitable line within the Jordanian market. As a result, MEICO has experienced technical losses since 2021. Despite this, the company has demonstrated disciplined underwriting in lines it can control, leading to steady improvement in results since 2022. Investment performance has been a positive contributor to MEICO’s operating outcomes, with a five-year average net investment return (including gains) of 2.8%, offsetting modest underwriting losses in recent years. However, the company’s operating performance is expected to remain modest, with ongoing challenges from technical losses in the MTPL line.
MEICO is a top-five player in Jordan’s competitive and fragmented insurance market. While the company’s business is diversified by line of insurance on a gross basis, it remains heavily concentrated in the motor sector on a net basis. In 2023, MEICO saw a 10.6% growth in insurance services revenue, driven by the reallocation of MTPL business to incumbent insurers after some insurers exited the market. Looking ahead, MEICO expects modest premium growth.
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