A.M. Best has given the financial strength rating of “A- (Excellent)” and the long-term issuer credit rating of “a-” to NiSource Insurance Corporation (NICI).
NICI is a captive insurer of NiSource, an American utilities company that provides gas and electric across seven states, primarily through its brands Columbia Gas and NIPSCO.
According to A.M. Best, the ratings are reflective of NICI’s “very strong” balance sheet strength, in addition to its strong operating performance, limited business profile, appropriate enterprise risk management, and very strong risk-adjusted capitalisation.
Since 2010, NICI has produced profitable net operating income consistently each year from underwriting and investment income, with surplus growing significantly over the past five years.
A.M. Best suggested that NICI is well positioned to maintain a high level of operating performance due to the risk management expertise it has demonstrated and conservative underwriting criteria.
The active involvement of NiSource’s senior management in the captive’s operation and NICI’s overall profile within the ultimate parent’s structure is recognised by A.M. Best as particularly beneficial.
The rating agency explained that positive ratings could occur if the company sustains “positive operating results and improved risk-adjusted capitalisation”.
However, negative ratings could result from a decline in the company’s liquidity levels, an increase in underwriting leverage or outsized catastrophe or investment losses in conjunction with a significant prolonged decline in risk-adjusted capitalisation.