AM Best affirms the Financial Strength Rating of 'A' (Excellent) and the Long-Term Issuer Credit Rating of 'a' (Excellent) of NiSource Insurance Corporation, Inc. (NICI), with a 'stable' outlook on both ratings. NICI is a single-parent captive domiciled in Salt Lake City, Utah, wholly owned by NiSource, Inc. The captive provides all-risk property, workers' compensation, excess general and automobile liability, medical stop-loss, long-term disability, group life insurance and punitive damage coverage to the parent and its affiliates. The ratings reflect NICI's balance sheet strength, which AM Best assesses as strong, alongside strong operating performance, a neutral business profile and appropriate enterprise risk management (ERM). The captive benefits from the implicit and explicit support it receives as a strategic component of NiSource's wider ERM framework. AM Best says NICI maintains the strongest level of risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR). The assessment also considers the captive's strong liquidity position, prudent reserving approach, disciplined investment strategy and the financial flexibility afforded by the parent. NICI has produced consistently favourable reserve development on a calendar-year basis over the previous decade. These strengths are offset by a high retention-to-surplus ratio, which reflects the limit the captive offers the parent. On operating performance, AM Best points to favourable combined and operating ratios that exceed those of its commercial casualty composite, supported by favourable loss ratios and the low underwriting expense structure inherent to single-parent captives. The agency says NICI's results consistently match or outperform those of its industry peers. NICI plays a critical role in NiSource's overall ERM framework, supporting the parent's objectives through insuring key risks and ultimately supporting its financing needs. The stable outlook reflects AM Best's expectation that NICI will maintain its overall balance sheet assessment at the strongest level of BCAR-measured risk-adjusted capitalisation, while continuing to deliver strong operating performance through sustainable profits and organic surplus growth. AM Best also expects the willingness and ability of NiSource to support the captive to remain unchanged.
