AM Best Affirms Credit Ratings of National Guaranty Insurance Company of Vermont
May 20 2021 - 12:06PM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-”
(Excellent) of National Guaranty Insurance Company of Vermont
(NGIC) (Burlington, VT). The outlook of these Credit Ratings
(ratings) is stable.
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.
The ratings support NGIC’s role as a captive insurance company
of Waste Management, Inc. (WM) [NYSE: WM], one of the leading
provider of comprehensive waste management environmental services
in North America. The captive benefits from the parental support
and robust risk management strategies afforded to it from WM as
important factors of the NGIC’s overall financial assurance
program. Active risk management has benefited capitalization
through loss prevention to generate consistently positive
earnings.
Partially offsetting these factors is the large percentage of
policyholder surplus loaned back to WM in the form of a 24-hour
demand note, which has caused liquidity measures to underperform
its peers. This factor is mitigated by WM’s balance sheet size and
operating cash flow, which could readily fulfill the loan
obligation if required. Capital levels also are monitored by the
Vermont Department of Financial Regulation, which requires the
company to maintain a certain aggregate exposure to capital ratio.
Additionally, NGIC’s expense ratio compares unfavorably with the
surplus lines composite over a five- and 10-year period, due to the
nature of the financial assurance line of business and expenses
focused on risk mitigation. However, the company has reduced
underwriting expenses significantly over the past five years to
further benefit operating and net income.
Due to the nature of the relationship between NGIC and WM,
changes in WM’s credit risk can have an impact on NGIC’s ratings,
as it is dependent on WM’s ability to support its credit risk
profile, competitiveness and risk management. The captive continues
to be an integral component of WM’s risk management platform. AM
Best’s view of third-party credit ratings and market-based credit
risk measures of WM indicates stability, resulting in NGIC’s stable
outlooks.
Negative rating action could occur if the company’s balance
sheet strength deteriorates materially to levels that do not
support its risks. Negative rating action also could occur if WM
experiences financial distress and deterioration to its credit
profile.
AM Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the
United States and throughout the world. For current Best’s Credit
Ratings and independent data on the captive and alternative risk
transfer insurance market, please visit
www.ambest.com/captive.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best’s
Credit Ratings. For information on the proper media use of Best’s
Credit Ratings and AM Best press releases, please view Guide for
Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City.
For more information, visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Kourtnie Beckwith, CPCU, AU, AMIM Financial Analyst +1
908 439 2200, ext. 5124 kourtnie.beckwith@ambest.com
Dan Teclaw Associate Director +1 908 439 2200,
ext. 5394 dan.teclaw@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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