National Guaranty Insurance Company of Vermont (NGIC) has had its financial strength rating of A- (Excellent) and its long-term issuer credit rating of “a-” affirmed by A.M. Best.
The outlook of these ratings remains stable.
The ratings support NGIC’s integral role as the captive insurer of Waste Management (WM), a leading company in the waste management industry.
NGIC benefits from the parental support and robust risk management strategies afforded to it from WM as important factors of the company’s overall financial assurance programme.
The captive’s ratings reflect its balance sheet strength, which is categorised as very strong, as well its strong operating performance, limited business profile and appropriate enterprise risk management.
Offsetting these factors partially is the large percentage of policyholder surplus loaned back to WM in the form of a 24-hour demand note that has caused liquidity measure to underperform its peers.
Capital levels are monitored by the Vermont Department of Financial Regulation, which requires the company to maintain a certain aggregate exposure to capital ratio.
The nature of the relationship between NGIC and its parent company means changes in WM’s credit risk can impact the captive’s ratings, as it is dependent on WM’s ability to support its credit risk profile, competitiveness and risk management.
The ratings agency's view of third-party credit ratings and market-based credit risk measures of WM indicates stability, resulting in NGIC’s outlooks remaining stable.
Positive rating movement may occur if the captive’s operating performance materially improves while sustaining the appropriate level of risk-adjusted capitalisation.
The rating may be impacted negatively if the company’s balance sheet strength deteriorates materially to levels that do not support its risks.
Additionally, negative ratings could occur if WM experiences financial distress and deterioration to its credit profile.