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 -- March 13, 2014

A.M. Best 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 remains stable.

The ratings reflect NGIC’s strong risk-adjusted capitalisation, comprehensive
reinsurance programme, as well as the captive’s strong integration within the
risk management structure of its parent, National Grid plc (NG). These
positive rating factors are partially offset by NGIC’s historical volatile
underwriting performance.

A.M. Best anticipates that NGIC’s capitalisation is likely to remain strong
over the next two years in spite of an increased risk retention, which is
mitigated by a robust capital base. In addition, NGIC’s conservative
investment strategy and the high credit quality of its reinsurance panel
support its strong capital adequacy, as measured by the Best’s Capital
Adequacy Ratio (BCAR).

NGIC’s reinsurance programme is regarded as comprehensive and sufficient to
mitigate the impact of large losses that could adversely affect the company’s
balance sheet strength.

NGIC remains core to NG’s risk management strategy, with the primary objective
of mitigating exposure to business interruption, property damage and third
party liability risk.

A.M. Best believes that there is a certain degree of volatility in
underwriting results 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 large claims on the company’s performance. NGIC is
anticipated to report strong underwriting earnings for the financial year
ending March 2014, driven by a benign claims environment and substantial
reserve releases relating to property damage and business interruption lines.

Upward rating movements are unlikely at present. Negative rating actions could
occur if poor underwriting performance were to become more frequent in the
near future and a material deterioration of risk-adjusted capitalisation were
to occur. In addition, a significant deterioration in NG's financial profile
would likely lead to a review of NGIC's ratings.

A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated throughout the world. For
current Best’s Credit Ratings and independent data on the captive and
alternative risk transfer insurance market, please visit

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. Best’s Credit Rating Methodology can be found at

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

This rating announcement has been issued by A.M. Best Europe – Rating Services
Limited, which is a subsidiary of A.M. Best Company. 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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


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