The ratings of NGIC reflect its excellent risk-adjusted capitalization, operating performance and liquidity positions, as well as its sophisticated risk management strategy and practices, conservative investment strategy, its management teamís extended experience in the industry and its parentís, Waste Management, Inc. (WM), operational controls.
Partially offsetting these positive rating factors is that a large percentage of NGICís surplus is loaned back to WM, which is supported by a 24-hour demand note. However, capital levels at NGIC are monitored by the state, and the company must maintain a certain aggregate exposure to capital ratio as prescribed by the
NGIC was incorporated on
As a pure captive established to meet the financial assurance obligations of WM, under Subtitle D of the Resource Conservation and Recovery Act, NGICís financial strength is closely tied to the financial position of WM. The coverages written apply to landfills owned and/or operated by subsidiaries of WM (WM-owned landfills), and assure that as of the date of closure, there will be sufficient funds to pay for proper closure and post-closure activities, such as ďcappingĒ and monitoring of the site. The reserves for these coverages are maintained on the parentís balance sheet. WMís ability to adhere to its strict operating guidelines, including reserve adequacy, ensures that NGIC has minimal exposure to losses.
NGICís ratings are not expected to be upgraded within the next 12-24 months as its operating performance and capital position already have been considered in the ratings process. The ratings could be downgraded if NGICís Bestís Capital Adequacy Ratio (BCAR) score declines, its operating performance and risk profile deteriorates, insured losses deplete capital, significant changes and turnover occur in its management team and/or risk management controls and tolerances or WMís financial condition deteriorates.
The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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