AM Best has affirmed the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit rating of ‘a’ (Excellent) for NiSource Insurance Corporation (NICI), a single-parent captive insurer of NiSource, with a ‘stable’ outlook.
The affirmation reflects NICI’s strong balance sheet, favourable operating performance, neutral business profile, and appropriate enterprise risk management.
AM Best says NICI maintains the strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR).
The captive’s balance sheet is further supported by ample liquidity, conservative reserving and investment practices, and the financial flexibility provided by its parent.
AM Best notes that NICI has shown consistently favourable reserve development over the past decade, although this is partially offset by a high retention to surplus ratio tied to the limits it provides to the parent.
The strong operating performance is underpinned by favourable combined and operating ratios that outperform AM Best’s commercial casualty composite.
NICI benefits from a low underwriting expense structure, typical of a single-parent captive, and loss ratios that continue to trend positively.
According to the rating agency, NICI has organically tripled its surplus over the past 10 years, supported by its niche captive focus, disciplined underwriting and risk management capabilities.
NICI, wholly owned by NiSource, offers a broad suite of coverages including all-risk property, workers’ compensation, excess liability, medical stop-loss, long-term disability, group life and punitive damages.
Despite its limited business scope as a single-parent captive, the company benefits from direct access to its parent’s risks, operational resources, and overall financial strength.
NICI plays an integral role in NiSource’s risk management strategy by insuring key exposures and supporting broader financial objectives.
The stable outlook reflects expectations of continued strong risk-adjusted capitalisation, consistent underwriting profitability and the ongoing support of NiSource.
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