NGIC gets positive outlook from AM Best

AM Best has revised the outlooks to positive from stable and affirmed the financial strength rating of A- and the long-term issuer credit rating of “a-” of National Guaranty Insurance Company of Vermont (NGIC).

The ratings reflect NGIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

“The revision of the outlooks to positive recognizes NGIC’s favourable operating results over the past decade demonstrated by consistently strong underwriting and return on revenue metrics,” said AM Best. “The company has produced exceptional annual, five- and 10-year average combined ratios that outperformed the industry and its peers by wide margins. AM Best’s expectation is that NGIC will continue to produce favourable operating results prospectively, driven by the organization’s extensive loss controls, which have resulted in a loss-free history for the captive. The positive outlook also considers the continuation of NGIC’s very strong balance sheet, with organic surplus growth, and the company maintaining its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio.”

The ratings also reflect NGIC’s strategic role as the captive insurance company of Waste Management, a provider of comprehensive waste management environmental services in North America. As a strategic and integral part of WM’s ERM program, the parent wholly funded the captive’s capitalisation in the form of a demand note that generates net investment income to augment surplus annually. Further supplements have been provided in form of letters of credit as changes in exposures warrant. NGIC benefits from WM’s robust risk management strategies, which enable it to support a portion of WM’s financial assurance program efficiently and appropriately.

NGIC has a limited business profile and is licensed in two states and operates in 27 states as a non-admitted insurer to meet financial assurance obligations of its parent. The captive’s ERM is considered appropriate as a focused insurance company that leverages its expertise to benefit policyholders.

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