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FOR IMMEDIATE RELEASE
LONDON - MAY 10, 2018 12:34 PM (EDT)
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 (Isle of Man) Limited (NGICL), a captive insurer of National Grid plc (NG). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect NGICL’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
NGICL’s balance sheet strength is supported by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), being at the strongest level. A.M. Best expects NGICL’s risk-adjusted capitalisation to remain at the strongest level, underpinned by the captive’s low underwriting leverage and comprehensive reinsurance protection.
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 the captive’s balance sheet is partly mitigated by extensive reinsurance protection. The captive has a track record of strong underwriting performance, reflected in a five-year average combined ratio of 64% (2013-2017). NGICL has demonstrated its ability to take corrective pricing actions following large losses.
NGICL remains core to NG’s risk management strategy as its principal captive. It is well-integrated into NG’s overall risk management framework, with its primary objective being to mitigate the NG group’s European financial exposure to casualty, cyber, property damage and business interruption risks.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated 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.
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