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

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

Business Wire

LONDON -- February 21, 2013

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) (Isle of Man). The outlook for
both ratings remains stable.

The ratings of NGIC reflect its strong level of risk-adjusted capitalisation,
which is supported by a comprehensive reinsurance programme. The ratings also
consider the captive’s importance within the risk management framework of its
parent, National Grid plc. (NG plc). An offsetting rating factor relates to
the volatility of NGIC’s operating performance.

A.M. Best expects risk-adjusted capitalisation to remain strong, in spite of
NGIC’s exposure to Superstorm Sandy during financial year 2013. Gross losses
derived from Superstorm Sandy are expected to amount to GBP 186 million.
However, this loss was largely mitigated by NGIC’s comprehensive reinsurance
progamme, which is placed with highly rated reinsurers. NGIC’s net loss
exposure to Superstorm Sandy is unlikely to exceed GBP 40 million.

NGIC’s underwriting results are subject to considerable volatility, owing to
the nature of risks it underwrites. Exposure to large loss events in financial
year 2013 is expected to result in a combined ratio (loss ratio plus operating
expense ratio) in excess of 200%. However, technical earnings continue to be
supported by the company’s prudent reserving approach. A.M. Best will continue
to monitor the underwriting performance of NGIC going forward.

NGIC remains core to NG plc’s risk management framework, with the objective of
mainly mitigating exposure to business interruption and property damage.

Upward rating movement is unlikely at present.

Negative rating actions could occur if a poor underwriting performance were to
become more frequent in the near future, and/or a material deterioration of
risk-adjusted capitalization were to occur. In addition, a significant
deterioration in NG plc's financial profile 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: “Risk Management and the Rating
Process for Insurance Companies”; “Understanding Universal BCAR”; “Catastrophe
Analysis in A.M. Best Ratings”; “Rating Members of Insurance Groups”; and
“Alternative Risk Transfer (ART)”. Best’s Credit Rating Methodology can be
found at 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

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 www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Company, Inc.
Konstantin Langowski, +(44) 20 7626 0318
Associate Financial Analyst
Anandi Nangy-Kotecha, +(44) 20 7626 0271
Associate Director, Analytics
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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