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FOR IMMEDIATE RELEASE
OLDWICK - JULY 21, 2017 10:20 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Nuclear Electric Insurance Limited (NEIL) (Wilmington, DE). The outlook of these Credit Ratings (ratings) 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 provides essentially the entire nuclear utility property insurance coverage in the United States.
Partially offsetting the 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. Despite the recent positive results, 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 within the company’s defined tolerance levels. NEIL also maintains a comprehensive loss prevention program.
The ratings also recognize NEIL’s history of maintaining sufficient capital to support its ongoing obligations, which include its financial flexibility to suspend policyholder distributions. NEIL also has the contractual right to assess a retrospective premium for 10 times each member’s annualized premium, which strengthens the company’s financial flexibility. This facility has never been used.
Offsetting rating factors are the company’s reliance on one market and two principal product lines, as well as the earnings volatility. However, these factors are reflective of a captive insurer focused on a particular niche market supported by its members.
A key rating driver that could lead to positive rating action is profitability in underwriting results over the long term.
Key rating triggers that could lead to the downgrade of the company’s ratings over the longer term include increased leverage, substantial increases in losses, and a significant erosion of capital or loss of 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 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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