National Grid Insurance Company Limited (NGICL), the captive insurer of the British multinational utilities company NG, has had its financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” by A.M. Best.
The outlook of the Isle of Man-based captive’s ratings is stable.
The ratings are reflective of the captive’s “very strong” balance sheet, strong operating performance, neutral business profile and appropriate risk management.
The assessment of NGICL’s business profile as neutral reflects its core role in NG’s risk management strategy as its principal captive.
The captive is well-integrated into NG’s overall risk management framework and its primary objective is to mitigate the NG group’s European financial exposure to casualty, cyber, property damage and business interruption risks.
NGICL’s balance sheet strength is underpinned by the strongest level of risk-adjusted capitalisation.
A.M. Best noted that it expects the captive’s prospective risk-adjusted capitalisation to remain at the strongest level, underpinned by the captive’s low underwriting leverage and comprehensive reinsurance programme.
The captive has a track record of strong underwriting performance, as evidenced by a five-year, 2014 to 2018, weighted average combined ratio of 45 percent.
NGICL’s exposure to low frequency, high severity losses in its property damage and business interruption account means prospective operating performance remains subject to volatility.
The impact of large losses on the captive’s balance sheet is, however, mitigated partially by extensive reinsurance protection.
