The ratings agency noted that the outlook of these credit ratings remains stable.
According to A.M. Best, the ratings reflect NGICL’s risk-adjusted capitalisation and risk management capabilities within the National Grid group. The ratings also support the insurance company’s “strong but volatile” operating performance.
A.M. Best suggested that NGICL’s risk-adjusted capitalisation will remain strong, supported by the captive’s low underwriting leverage and reinsurance protection.
However, the ratings agency explained that the captive’s underwriting performance is subject to “irregularity as a result of exposure to low frequency, high severity losses in its property damage and business interruption accounts”.
Between 2012 and 2016 the captive had a five-year average combined ratio of 43.5 percent.
According to A.M Best, the captive is well integrated into the parent’s overall risk management framework, with its primary objective to mitigate the National Grid group’s European financial exposure to casualty, cyber, property damage and business interruption risks.