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A.M. Best Affirms Credit Ratings of Nuclear Electric Insurance Limited

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A.M. Best has affirmed the Financial Strength Rating of A
(Excellent) and the Long-Term Issuer Credit Rating of "a+" of Nuclear
Electric Insurance Limited
(NEIL) (Wilmington, DE). The outlook of
these Credit Ratings (ratings) remains stable.

The ratings reflect NEIL's balance sheet strength, which A.M. Best
categorizes as strongest, as well as its marginal operating performance,
favorable business profile and appropriate enterprise risk management.
The ratings also acknowledge NEIL's management culture and its exclusive
leadership position in the U.S. nuclear power-generating industry. NEIL
provides essentially the entire nuclear utility property insurance
coverage in the United States.

Partially offsetting these positive rating factors are the company's
primary focus on catastrophe property risks and related business
interruption claims, with the subsequent financial stress this could
cause in the unlikely event of two full-limit losses. Despite the recent
positive results, the company has reported volatility in underwriting
results in recent years due to claims activity, which relates to the
fact that the company relies on one market and two principal product
lines. However, these factors are reflective of a captive insurer
focused on a particular niche market supported by its members.
Nonetheless, NEIL's risk management program is designed to manage risks
within the company's defined tolerance levels. NEIL also maintains a
comprehensive loss prevention program.

The ratings also recognize NEIL's history of maintaining sufficient
capital to support its ongoing obligations, which include its financial
flexibility to suspend policyholder distributions. NEIL also has the
contractual right to assess a retrospective premium for 10 times each
member's annualized premium, which strengthens the company's financial
flexibility. This facility has never been used.

A key rating driver that could lead to positive rating action is
profitability in underwriting results over the long term.

Key rating factors that could lead to a downgrade of the company's
ratings over the longer term include increased leverage, substantial
increases in losses, and significant erosion of capital or loss of
members.

A.M. 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 A.M. 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 A.M. Best's
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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