Regulatory Alerts2022-06-20
Added · Updated
Central Bank of Jordan Circular on Reinsurance Arrangements and Programs
The Central Bank of Jordan mandates that reinsurance brokers must exclusively transact with reinsurers classified in the First and Second Groups based on AM Best, Moody's, or Standard & Poor's ratings. Additionally, the circular prohibits brokers from engaging with unlicensed underwriting agents, requiring them to hold a license from the Central Bank to operate. These compliance requirements apply to reinsurance brokers operating in Jordan.
In the Name of Allah, the Most Gracious, the Most Merciful
[Logo of the Central Bank of Jordan]
Reference No.: 9786 / 2 / 17 Date: 19 / 11 / 1443 AH Corresponding to: 19 / 6 / 2022 AD
Dear Reinsurance Brokers,
Subject: Reinsurance Arrangements and Programs
Greetings,
With reference to the above subject and regarding the reinsurance arrangements and programs implemented on behalf of insurance companies operating in Jordan, please confirm your compliance with the following:
- The necessity to deal exclusively with classified reinsurance companies, in accordance with the provisions of Paragraph (a) of Article No. (5) of the Reinsurance Standards Instructions No. (4) of 2002 and its amendments, which stipulates that "The company is committed to reinsuring each of its insurance contracts with reinsurers classified in the First and Second Groups." This is according to the credit classification mentioned in Decision No. (5) of 2002, part of the guidelines for the Solvency Margin Instructions, as shown below:
| AM Best | Moody's | Standard and Poor's | |
|---|---|---|---|
| A++ & A+ Superior | Aaa Exceptional | AAA Extremely Strong | First Group |
| A & A- Excellent | Aa Excellent | AA Very Strong | |
| B++ & B+ Good | A Good | A Strong | Second Group |
| Baa Adequate | BBB Good |
In the Name of Allah, the Most Gracious, the Most Merciful
[Logo of the Central Bank of Jordan]
- The prohibition of dealing with unlicensed underwriting agents by the Central Bank, in accordance with the provisions of Paragraph (a) of Article (4) of the Instructions for Licensing Underwriting Agents and Regulating Their Work, Amendments, and Responsibilities No. (4) of 2010 and its amendments, which states: "No person shall practice the work of an underwriting agent in the Kingdom or through it unless they obtain a license from the Central Bank in accordance with the conditions specified under the provisions of these Instructions and the decisions issued pursuant to them, under penalty of legal responsibility."
Please accept our highest respect,
The Governor Dr. Adel Al-Sharkas
Copy: Dear Insurance Companies