A.M. Best has upgraded the financial strength rating (FSR) from B++ (Good) to A- (Excellent) and the long-term issuer credit rating (long-term ICR) from “bbb+” to “a-” of National Telcom Corporation (NTC).
The outlooks of the Vermont-based captive have been revised from positive to stable.
The ratings are reflective of NTC’s “very strong” balance sheet strength, in addition to its adequate operating performance, neutral business profile and appropriate enterprise risk management.
NTC, a captive that reinsures two fronting insurers–Great American Insurance Company and Rural Trust Insurance Company—financially assumes a portion of each loss from the National Telecommunications Cooperative Association’s insured members.
The captive has a niche expertise as a provider of insurance products to rural, independent telephone companies throughout the US.
Additionally, NTC assists telecommunication businesses manage financial risk by providing industry-specific insurance and risk management solutions.
The upgrade in rating reflects the continuation of NTC’s improved operating and underwriting results in recent years, driven by improved underwriting expense management.
In addition, NTC has reduced its dependence on third-party fronting agreements through the investment in an affiliated start-up company, Rural Trust Insurance Company (RTIC).
Conversely, RTIC’s growth has resulted in higher premium levels and underwriting leverage ratios, however, NTC’s risk-adjusted capitalisation continues to support the higher premium levels and underwriting results have not displayed any material deterioration.
