29 May 2013Actuarial & underwriting

Nuclear Electric receives Excellent rating despite volatility

A.M. Best has revised the outlook of Delaware-domiciled captive Nuclear Electric Insurance Ltd.’s issuer credit rating outlook to negative from stable whilst simultaneously affirming its “a+” rating. The captive’s A (Excellent) financial strength rating was also affirmed.

The ratings reflect strong capitalization, conservative operating strategy, strong enterprise risk management culture and the exclusive leadership position of Nuclear Electric Insurance, which provides “essentially 100 percent of the nuclear utility property insurance coverage in the United States”.

The negative outlook considers the magnitude of recent claims and the implications of those claims for ERM. According to the ratings agency: “the company has implemented changes to its risk management, coverage for high risk perils and pricing models; however, in A.M. Best’s view it will take time for these measures to be fully tested.”

A.M. Best continued: “an offsetting rating factor is the company’s reliance on one market and two principal product lines as well as its earnings volatility. However, these factors are reflective of a captive insurer focused on a particular niche market supported by its members.”