24 April 2017Analysis

AM Best gives National Grid captive "Excellent" rating

AM Best has affirmed the Financial Strength Rating of A (Excellent) of Isle of Man-based National Grid Insurance Company (NGICL), the captive of British multinational electricity and gas utility company National Grid.

The ratings agency said this reflects NGICL’s very strong risk-adjusted capitalisation, as well as its importance as a risk management tool within the NG group.

The ratings also reflect NGICL’s track record of strong but volatile operating performance.

However, the captive's prospective underwriting performance remains subjects to volatility due to its exposure to low frequency, high severity losses in its property damage and business interruption accounts.

AM Best said the impact of large losses on the captive's balance sheet is partly mitigated yb extensive reinsurance protection.

"NGICL remains core to NG’s risk management strategy as its principal captive,” said AM Best. “It is well integrated into the parent’s overall risk management framework, with its primary objective to mitigate the NG group’s European financial exposure to casualty, cyber, property damage and business interruption risks.

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