A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a” of National Grid Insurance Company Limited (NGICL), based in the Isle of Man is a captive insurer of National Grid plc (NG).
A.M. Best said the outlook of these credit ratings is stable.
The ratings reflect NGICL’s balance sheet strength, which A.M. Best categorised as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
NGICL’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by best’s capital adequacy ratio (BCAR).
NGICL’s prospective risk-adjusted capitalisation is to remain at the strongest level, supported by the captive’s low underwriting leverage and comprehensive reinsurance programme, according to A.M. Best.
NGICL has a track record of strong underwriting performance, as evidenced by a five-year (2015 to 2019) weighted average combined ratio of 49 percent.
A.M. Best said: “Prospective operating performance remains subject to volatility, due to the captive’s exposure to low frequency, high severity losses in its property damage and business interruption account. However, the impact of large losses on NGICL’s balance sheet is mitigated partly by extensive reinsurance protection.”
NGICL’s neutral business profile assessment shows its core role in NG’s risk management strategy as its principal captive.
"It is well-integrated into NG’s overall risk management framework, and its primary objective is to mitigate the NG group’s European financial exposure to property damage, business interruption, casualty and cyber risks," A.M. Best added.