AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a+” (Excellent) of Bermudian-based Cedar Hamilton Limited and its parent company, Nuclear Electric Insurance Limited of Delaware.

Cedar Hamilton is a wholly owned subsidiary of Neil and provides specialty lines capacity to Neil’s members.

The outlook of these credit ratings is stable.

The ratings reflect Neil’s balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, favourable business profile, and appropriate enterprise risk management.

The ratings also acknowledge Neil’s management culture and its exclusive leadership position in the US nuclear power-generating industry.

AM Best said Neil essentially underwrites the entire nuclear utility property insurance coverage in the United States.

Neil continues with its mission of maintaining the financial strength to cover two full-limit nuclear losses, while promoting industry risk management and safety practices.

The agency said that partially offsetting these positive rating factors were the company’s primary focus on property catastrophe risks and related business interruption claims, with the subsequent financial stress this could cause in the unlikely event of two full-limit losses.

Despite recent positive results, the company remains exposed to volatility in underwriting results given the nature of the risks it insures and because of claims activity, given that it relies on one market and two principal product lines.

However, these factors are inherent to captive mutual insurers focused on a particular niche market supported by its members.

Nonetheless, Neil designed its risk management programme to manage risks within the company’s defined tolerance levels.

Neil also maintains a comprehensive loss prevention programme, AM Best said, with a specialised, effective loss prevention department closely working with insured members to control losses. Neil’s loss prevention effort is supported by a panel of employed and contract nuclear engineers.

The ratings also recognise Neil’s history of maintaining sufficient capital to support its ongoing obligations, which includes its financial flexibility to suspend policyholder distributions.

Neil also has the contractual right to assess a retrospective premium for ten times each member’s annualised premium, which strengthens the company’s financial flexibility.

To ensure that members’ capitalisation is adequate to support such an action, Neil requires members to maintain an investment grade credit rating or provide collateral. This facility has never been used.