AM Best Affirms Credit Ratings of National Guaranty Insurance Company of Vermont
May 29 2020 - 12:39PM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-” of
National Guaranty Insurance Company of Vermont (NGIC) (Burlington,
VT). The outlook of these Credit Ratings (ratings) remains
stable.
The ratings reflect NGIC’s balance sheet strength, which AM Best
categorizes 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], a 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 company’s overall financial assurance program. The
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 that has caused liquidity measures to underperform its
peers. This factor is mitigated partially by WM’s balance sheet
size and operating cash flow, which could fulfill the loan
obligation readily, 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 due to the nature of the financial
assurance line of business and expenses focused on risk mitigation.
However, the company has been able to reduce 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
outlooks remaining stable. Additionally, AM Best notes NGIC’s
balance sheet remains very strong and its operations remains strong
and profitable as an essential business in the COVID-19
environment, while meeting waste management needs of its
customers.
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 New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20200529005556/en/
Kourtnie Beckwith, CPCU, AU, AMIM Financial
Analyst +1 908 439 2200, ext. 5124
kourtnie.beckwith@ambest.com
Dan Teclaw Senior Financial Analyst +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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