National Grid Insurance (NGICL) has had its financial strength rating of A (Excellent) and the long term issuer credit rating of “a” affirmed by A.M. Best.
The outlook of the ratings of the Isle of Man-based captive is stable.
As the principal captive insurer of National Grid (NG), NGICL remains core to NG’s risk management strategy and is well-integrated into NG’s overall risk management framework.
Its main responsibility is to mitigate the NG group’s European financial exposure to casualty, cyber, property damage and business interruption risks.
According to A.M. Best, the ratings are reflective of NGICL’s balance sheet strength, categorised as very strong, in addition to its strong operating performance, neutral business profile and appropriate risk management.
The balance sheet strength is supported by the captive’s “strongest level” of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Radio (BCAR).
The ratings agency expects this to remain at the strongest level, supported by the captive’s low underwriting leverage and comprehensive reinsurance protection.
The captive’s exposure to low frequency, high severity losses in its property damage and business interruption account mean prospective operating performance remains subject to volatility.
The impact of these large losses is, however, mitigated partly by extensive reinsurance protection, and NGICL has demonstrated its ability to take corrective pricing actions following large losses.
The captive has a track record of strong underwriting performance, mirrored in a five-year average combined ratio of 64 percent between 2013 and 2017.