Nuclear mutual gets AM Best A rating for new Bermudian E&S carrier

Nuclear Electric Insurance Limited (NEIL) has secured an A financial strength and “a+” credit rating for Cedar Hamilton Limited, a new Bermuda-based insurer that will provide specialty lines capacity on an E&S basis in the US to the mutual’s members.

NEIL confirmed that the new vehicle had been granted a Class 3 license by the Bermuda Monetary Authority in December last year, as it aimed to begin writing business through the platform at 1 April.

At the time it said that Cedar Hamilton was in the process of applying to the National Association of Insurance Commissioners to be placed on its quarterly listing of alien insurers.

That would allow the carrier to write on an E&S basis in all 50 US states.

In a statement, AM Best said the ratings assigned to Cedar Hamilton reflect the explicit financial support in place from NEIL in the form of an 80 percent intercompany quota share reinsurance agreement, as well as a net worth maintenance agreement.

The agency also affirmed the ratings of NEIL at the same level and noted that they reflect the strongest level of risk-adjusted capitalization at the mutual.

“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 ratings also recognize NEIL’s management culture and exclusive leadership position in the US nuclear power-generating industry, as well as its comprehensive loss prevention program supported by a staff of loss prevention specialists,” said AM Best.

Partially offsetting those positive factors is the inherent volatility of a nuclear-exposed mutual insurer, and the financial stress associated with the unlikely event of two full-limit losses, said the firm.

“These risks are mitigated somewhat by NEIL’s history of maintaining sufficient capital to support its ongoing obligations, which includes demonstrated financial flexibility in suspending policyholder distributions,” AM Best continued.

It noted that the mutual has the contractual right – not yet exercised – to assess a retrospective premium for 10 times each member’s annualized premium, which strengthens its financial flexibility.

UW reorganization

At the same time as confirming the Bermuda license, NEIL said it was reorganizing its underwriting department to support business written by NEIL and the new E&S subsidiary.

The underwriters supporting NEIL’s member nuclear business would be known as the nuclear underwriting team, with underwriters supporting Cedar Hamilton known as the specialty underwriting team.

The nuclear underwriting team is led by Scott Lauchlan and includes Jon Levis, Matt Beck and Steve Nusspickel, supporting the mutual’s core nuclear accounts, overseas nuclear accounts, as well as assumed or ceded reinsurance directly related to nuclear risks.

The specialty underwriting team led by John Oehler includes Jeff Butler, Gary Gresham, Robert Posey, and Alex Buganski and will support all NEIL and NEIL overseas member conventional accounts for risks including property, cyber, and excess liability, as well as assumed or ceded reinsurance that is conventional in nature, said the mutual in a statement.

It added that the two teams would continue reporting to NEIL CUO Robert Curtis, who leads all underwriting and reinsurance for NEIL and Cedar Hamilton after joining from Scor last year.