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FOR IMMEDIATE RELEASE
OLDWICK - JULY 06, 2016 03:44 PM (EDT)
A.M. Best has revised the issuer credit rating (ICR) outlook to stable from negative and affirmed the financial strength rating (FSR) of A (Excellent) and the ICR of “a+” of Nuclear Electric Insurance Limited (NEIL) (Wilmington, DE). The outlook for the FSR remains stable.
The ratings reflect NEIL’s very strong capital position, conservative operating strategy, strong enterprise risk management culture and its exclusive leadership position in the U.S. nuclear power generating industry. NEIL essentially provides 100% of the nuclear utility property insurance coverage in the United States.
Partially offsetting these positive rating factors are the company’s primary focus on catastrophic property risks and related business interruption claims, and the financial stress this could cause in the unlikely event of two full-limit losses. Furthermore, the company has reported volatility in underwriting results in recent years due to claims activity. Nonetheless, NEIL’s risk management program is strong and is designed to manage risks in line with the company’s defined tolerance levels and its comprehensive loss prevention programs.
The ratings recognize NEIL’s history of maintaining sufficient capital to support its ongoing obligations, as well as its financial flexibility to suspend policyholder distributions to facilitate that support. NEIL also has the contractual right to assess a retrospective premium for 10 times each member’s annualized premium, which enhances the company’s financial flexibility, although this facility is yet to be used.
An offsetting rating factor is the company’s reliance on one market and two principal product lines, as well as its earnings volatility. However, these factors are reflective of a captive insurer focused on a particular niche market supported by its members.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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