CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 08, 2017 10:04 AM (EST)
A.M. Best has affirmed Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of “a-” of NiSource Insurance Corporation, Inc. (NICI) (Salt Lake City, Utah). The outlook for these Credit Ratings (ratings) is stable.
The ratings reflect NICI’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. Additionally, the ratings reflect the company’s very strong risk-adjusted capitalization, history of consistently strong operating performance, sound risk management capabilities and conservative balance sheet strategy. The ratings also recognize its history of maintaining sufficient capital and financial resources to support ongoing obligations.
These positive ratings factors are offset partially by NICI’s limited market scope, which is somewhat mitigated by its improving loss history, favorable geographic spread of risk, the history of its growing surplus position and the support of its ultimate parent, NiSource Inc. (NiSource). Additionally, while NICI depends on third parties for processing, servicing and administration, NiSource’s senior management is intimately involved in these operations.
NICI is a single parent captive insurer wholly owned by NiSource that 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.
NICI has produced consistently profitable net operating income each year since 2010 from underwriting and investment income. Its balance sheet strength has been bolstered through retained earnings. Over the past five years, surplus has grown significantly. A.M. Best believes NICI 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 favorable view of NICI’s overall profile within the ultimate parent’s structure and recognizes the benefits inured from this. Particular attention is paid to NiSource’s senior management being actively involved in the captive’s operation.
Positive ratings triggers could include sustained positive operating results and improved risk-adjusted capitalization.
Nonetheless, downward ratings pressure could result from 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 capitalization. In addition, financial issues resulting in ratings pressure on the ultimate parent could impact NICI’s ratings.
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 Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.