Manama – Islamic International Rating Agency (IIRA) has reaffirmed the Takaful Financial Strength (TFS) rating of The Islamic Insurance Company PLC (‘TIIC’ or ‘the company’), Jordan, at ‘A’ (Single A). Outlook on the assigned rating is ‘Stable’. The fiduciary score has been reassessed in the range of ‘71-75’, reflecting adequate fiduciary standards. The fiduciary score is an aggregation of scores assigned to its two sub-sections i.e. Asset Manager Quality and Shari’a Governance.
TIIC is the first and one of only two takaful operators in the Hashemite Kingdom of Jordan (‘Jordan’ or ‘the country’). With gradual growth in its business, TIIC has established a niche for itself in the takaful segment and is the 7th largest player commanding a share of 4.2% of gross premium written in the insurance industry.
Domestic growth in insurance business has tapered down over the years, due to a challenging macroeconomic environment and instability in the region. TIIC’s growth trends, although affected by economic pressures, have remained favorable vis-à-vis the industry in recent years. The company’s focus on increasing the proportion of low-risk and highly profitable life takaful segment has contributed to improvement in overall profitability. Motor business continues to pose a drag on overall underwriting performance owing to regulatory constraints in pricing of Motor Third Party Liability business, a large sub segment of the motor business, across the industry. Given the declining proportion of this business, some improvement has been noted in overall claims and combined ratios over time.
TIIC draws significant advantage from its association with Jordan Islamic Bank (JIB), which has a strong retail franchise in the country and is TIIC’s major shareholder. The company sources significant amount of profitable business from JIB and efforts towards establishing alternative delivery channels, such as bancassurance, principally in collaboration with JIB, will enable the company to achieve further growth.
Retakaful arrangements are considered adequate. Liquidity profile and capital base of the company is considered sound. Diversification in earnings, through increased contribution from investment avenues, if enabled, will facilitate the company to buffer the volatility inherent in key lines of takaful businesses, and boost overall returns.
The Corporate and Shari’a governance framework at the institution remains sound. However, further reinforcement may be brought about by adopting industry-wide best practices. For further information on this rating announcement, please email to iira@iirating.com
Sabeen Saleem, CFA
Chief Executive Officer
© Press Release 2016
