AM Best Affirms Credit Ratings of NiSource Insurance Corporation, Inc.
29 March 2024 - 3:23AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of “a”
(Excellent) of NiSource Insurance Corporation, Inc. (NICI) (Salt
Lake City, UT). The outlook of these Credit Ratings (ratings) is
stable.
The ratings reflect NICI’s balance sheet strength, which AM Best
assesses as very strong, as well as its strong operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
NICI maintains the strongest level of risk-adjusted
capitalization, as measured by Best’s Capital Adequacy Ratio
(BCAR). A conservative reserving philosophy is evident through the
company’s reported favorable reserves development in each of the
past 10 years. The balance sheet assessment also considers the
company’s ample liquidity measures, and maintaining low
underwriting leverage, in addition to having no debt.
The strong operating performance assessment is supported by
favorable combined and operating ratios that outperforms AM Best’s
commercial casualty composite. NICI’s strong operational results
reflect loss ratios trending favorably, and a low underwriting
expense structure that stems from the inherent benefits of being a
single-parent captive for NiSource Inc. (NiSource). Through its
niche captive orientation, risk management expertise and
conservative underwriting criteria, NICI has generated favorable
results at levels generally equal to or better than its industry
peers, organically growing its surplus by three-fold in the past 10
years.
NICI is a single-parent captive insurer wholly owned by
NiSource, providing all-risk property, workers’ compensation,
excess general and automobile liability, medical stop-loss,
long-term disability, group life insurance and punitive damage
coverage for the parent and its affiliates. AM Best has taken a
balanced view of NICI’s overall business profile, which albeit
limited in scope, maintains inherent advantages as a single-parent
captive with immediate access to business and resources along with
the broader financial wherewithal of its ultimate parent. NICI
plays a critical role in NiSource’s overall ERM framework,
supporting its objectives through insuring key risks of the parent,
ultimately supporting NiSource’s financing needs.
The stable outlooks for NICI reflect the company’s sustained
profitability, adherence to maintaining capital at the appropriate
risk-adjusted levels and its measured and prudent approach in
insuring its parent’s exposure. Positive rating action may occur
due to a sustained trend of improvement in the company’s overall
balance sheet strength that supports a higher assessment level.
Conversely, negative rating actions could occur from a decline in
the company’s operating performance, an increase in underwriting
leverage or an outsized loss event that triggers a sudden decline
in risk-adjust capitalization. In addition, negative rating action
could occur due to financial issues resulting in rating pressure on
the ultimate parent that could impact NiSource’s ratings.
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 use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
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.
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Chul Lee Senior Financial Analyst +1 908 882
2005 chul.lee@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Fred Eslami Associate Director +1 908 882
1759 fred.eslami@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com