AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of National Guaranty Insurance Company of Vermont (NGIC) (Burlington, VT). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect NGIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings also reflect NGIC’s strategic role as the captive insurance company of Waste Management, Inc. (WM) [NYSE: WM], one of the leading providers of comprehensive waste management environmental services in North America. As a strategic and integral part of WM’s ERM program, the parent wholly funded the captive’s capitalization in the form of a demand note that generates net investment income to augment surplus annually. Further supplements have been provided in form of letters of credit as changes in exposures warrant. NGIC benefits from WM’s robust risk management strategies, which enable it to support a portion of WM’s financial assurance program efficiently and appropriately.

NGIC’s surplus growth is organic and steady as the company has been able to enhance its profitability over the past five years by significantly reducing its underwriting expenses. It has not had any losses in the program; however, NGIC has an expense ratio that is higher than others in the surplus lines composite due to the nature of the financial assurance line of business and expenses focused on its comprehensive risk mitigation.

Positive rating action could occur if a sustained positive trend in balance sheet strength continues in the near term. Negative rating action could occur if AM Best's perception of the parent’s ability and willingness to support the captive changes significantly. Negative rating impact also could occur if the company’s balance sheet strength or risk-based capitalization weakens materially to a level that does not support its risks.

AM 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 AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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