AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of National Insurance Company (NIC) (Jordan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect NIC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

NIC’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by modest internal capital generation. The balance sheet strength assessment considers the company’s solid liquidity position, with the investment portfolio predominantly invested in cash and fixed-income securities. However, partially offsetting rating factors include NIC’s exposure to the elevated financial system risk in Jordan, where it holds the majority of its investments, as well its relatively small capital base, which enhances the potential volatility of its risk-adjusted capitalisation. Additionally, the company has a moderate dependence on reinsurance driven by the underwriting of some large-limit risks. Nevertheless, the credit risk associated with this dependence is mitigated partially by the use of a reinsurance panel of solid financial strength.

NIC has a track record of adequate operating performance, with return-on-equity ratios averaging 9.4% in the past five years (2020-2024). Challenging underwriting conditions in Jordan’s motor insurance market weighed on the company’s results in 2024, translating to an underwriting loss for the year. However, the recent actions taken by NIC’s management to improve technical discipline are expected to result in the company reporting an underwriting profit for 2025. The company’s operating earnings have been supported by modest investment income, consistent with the relatively conservative asset classes the company invests in.

NIC’s limited business profile assessment reflects its relatively small scale and concentration in Jordan. While the company has a diversified profile on a gross basis, it is concentrated in the highly competitive medical and motor lines of business on a net basis.

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