AM Best has revised the outlook to positive from stable and affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent) of Vermont-domiciled National Guaranty Insurance Company of Vermont (NGIC).
NGIC is owned by US waste management environmental services company, Waste Management, Inc. (WM).
As a strategic and integral part of WM’s enterprise risk management program (ERM), the parent wholly funded the captive’s capitalisation in the form of a demand note that generates net investment income to augment surplus annually.
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.
Further supplements have been provided in the 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 programme efficiently and appropriately.
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 recognises NGIC’s favourable operating results over the past decade demonstrated by consistently strong underwriting and return on revenue metrics.
AM Best said the company has produced exceptional annual, five- and 10-year average combined ratios that outperformed the industry and its peers by wide margins.
The ratings agency’s expectation is that NGIC will continue to produce favourable operating results prospectively, driven by the organisation’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 capitalisation, as measured by Best’s capital adequacy ratio (BCAR).