A.M. Best Europe - Rating Services Limited has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of "bbb+" of Arab Orient Insurance Company (Arab Orient) (Jordan). The outlook for both ratings remains stable. Both ratings continue to reflect Arab Orient's leading position in the Jordanian market, its robust, stable profitability and good level of risk-adjusted capitalization. The company's concentrated business profile and aggressive strategy are considered offsetting rating factors. Arab Orient's ratings also incorporate the implicit support from the company's parent, Gulf Insurance Company K.S.C. (GIC). Arab Orient ranks as the largest insurer in Jordan writing premiums of almost JOD70m in 2011, equivalent to a market share of 15%. Arab Orient dominates the medical business, one of the few growing lines in Jordan, which has allowed the company to grow very rapidly. Despite the somewhat aggressive growth strategy, Arab Orient has continued to deliver profits supported by very good technical profits and a conservative investment strategy that is largely focused on cash and term deposits. However, given the medical business is running at loss ratios in excess of 100% on an underwriting year basis, A.M. Best remains concern over the longer-term support of reinsurers under the current commission structure. The company's growth, which has far outpaced the market in recent years, has strained Arab Orient's risk-adjusted capitalization. However, having improved in 2011, A.M. Best considers Arab Orient's risk-adjusted capitalization as good benefitting from the company's conservative investment strategy, solid panel of reinsurers and sound profit retention policy. Positive movement on Arab Orient's ratings is likely to materialize should the company continue to defend its leading position whilst improving diversification and supporting growth in capital. A.M. Best is monitoring closely the aggressive growth strategy of the company in line with its capital needs, which is considered to be the most likely source of future negative pressure on the ratings. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Understanding Universal BCAR"; "Understanding BCAR for Life/Health Insurers"; and "Assessing Country Risk". Press Release
