A.M. Best has upgraded the financial strength rating from A- (Excellent) to A (Excellent) and the long-term issuer credit rating from “a-” to “a” of NiSource Insurance Corporation (NICI).
The outlook of the Utah-based captive’s ratings remains stable.
A single parent captive wholly owned by NiSource, NICI accepts insurance risks from NiSource and its affiliates, providing all risk property, workers’ compensation, general and automobile liability, cyber liability, medical stop-loss, long-term disability, and group life insurance.
The ratings are reflective of the captive’s “very strong” balance sheet strength, in addition to its strong operating performance, neutral business profile, and appropriate enterprise risk management.
Since 2010, NICI has produced consistently profitable net operating income each year from underwriting and investment income.
Its balance sheet strength has been bolstered through retained earnings, and over the past five years, surplus grown significantly.
According to the ratings agency, the captive is “well-positioned to sustain a strong level of operating performance due to its demonstrated risk management expertise and conservative underwriting criteria, hence, the stable outlooks”.
A.M. Best has taken a favourable view of NICI’s overall profile within NiSource’s structure and recognises the benefits inured from this, particular attention is paid to the active involvement of the ultimate parent’s senior management in the captive’s operation.
Positive rating actions could occur from sustained positive operating results and improved risk-adjusted capitalisation.
However, 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, or financial issues resulting in ratings pressure on the ultimate parent could cause negative rating actions.