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LONDON--(BUSINESS WIRE)--

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of National Grid Insurance Company (Isle of Man) Limited (NGIC). The outlook for both ratings is stable.

The ratings of NGIC reflect its strong risk-adjusted capitalisation and comprehensive reinsurance programme. Also, the ratings outcome incorporates a strong integration within the parent’s, National Grid Plc (NG Plc), risk management structure. An offsetting rating factor for NGIC is its historic volatile underwriting performance.

A.M. Best expects NGIC’s business mix to remain largely unchanged. It is expected that the volume of premiums written will increase again in 2012/2013 in line with inflation.

A.M. Best anticipates that NGIC’s risk-adjusted capitalisation is likely to remain very strong over the next two years. NGIC is likely to continue to release a significant proportion of its reserves for outstanding claims in the next two years as claims are closed or conservative reserves are reduced and hence will reduce risk-adjusted requirements. A.M. Best considers NGIC’s reinsurance programme as comprehensive and adequate.

A.M. Best believes that there is a certain degree of volatility within the company’s portfolio due to the nature of the risks insured by NGIC. However, a recent increase in premium rates is expected to alleviate the impact of high frequency claims on the company’s performance. For the year ending March 2012 and going forward, NGIC is expected to produce good underwriting results.

Upward rating movements are unlikely in the next two years.

Negative rating actions could occur if there were a significant deterioration in NGIC’s risk-adjusted capitalisation linked to no evidence of support from NG Plc to boost capitalisation. In addition, a significant deterioration in NG Plc’s financial position would likely lead to a review of NGIC’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: “Alternative Risk Transfer (ART)”; “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; and “Risk Management and the Rating Process for Insurance Companies”. Best’s Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit http://www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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A.M. Best Affirms Ratings of National Grid Insurance Company (Isle of Man) Limited