Best Assigns ‘A’ Rating to NGT Insurance Co.

December 15, 2004

A.M. Best Co. announced that it has assigned a financial strength rating of “A” (Excellent) to NGT Insurance Company (Isle of Man) Limited (NGT), a captive of National Grid Transco plc. with a stable outlook.

“The rating reflects the company’s excellent prospective risk-adjusted capitalisation and excellent and stable operating performance. An offsetting factor is the high volatility of the business written,” Best said.

The rating agency also indicated that it “believes NGT’s capitalisation is likely to remain stable after factoring substantial anticipated dividends to the parent over the next two years and a growth in net premiums written of approximately 25 percent for 2004-2005.

“A strict underwriting approach and a relatively low retention (approximately 60 percent anticipated) are likely to continue supporting a loss ratio of between 45 percent and 55 percent in 2004-2005.”

Best noted that the “risks written by NGT, electricity and gas transportation infrastructure risks, expose it to high severity and low frequency events. This is partially mitigated by NGT’s reinsurance programme, which is placed with highly rated reinsurers and provides high coverage limits.”

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