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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)   Limited  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 www.ambest.com/captive.  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 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.  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.  Contact:  A.M. Best Co. Konstantin Langowski Associate Financial Analyst +(44) 20 7626 0318 kony.langowski@ambest.com or Anandi Nangy-Kotecha Associate Director, Analytics +(44) 20 7626 0271 anandi.nangy-kotecha@ambest.com or Rachelle Morrow Senior Manager, Public Relations +(1) 908 439 2200, ext. 5378 rachelle.morrow@ambest.com or Jim Peavy Assistant Vice President, Public Relations +(1) 908 439 2200, ext. 5644 james.peavy@ambest.com