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

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

The ratings support NGIC’s role as a captive insurance company of Waste
Management, Inc. (WM) [NYSE: WM], a leading company in the waste
management industry. The captive benefits from the parental support and
robust risk management strategies afforded to it from WM as important
factors of the company’s overall financial assurance program. The active
risk management has benefited capitalization through loss prevention to
generate consistently positive earnings.

Partially offsetting these factors is the large percentage of
policyholder surplus loaned back to WM in the form of a 24-hour demand
note that has caused liquidity measures to underperform its peers. This
factor is mitigated by WM’s balance sheet size and operating cash flow,
which could readily fulfill the loan obligation, if required. Capital
levels also are monitored by the Vermont Department of Financial
Regulation, which requires the company to maintain a certain aggregate
exposure to capital ratio. Additionally, NGIC’s expense ratio compares
unfavorably with the surplus lines composite due to the nature of the
financial assurance line of business and expenses focused on risk
mitigation. However, the company has been able to reduce underwriting
expenses significantly over the past five years to further benefit
operating and net income.

Due to the nature of the relationship between NGIC and WM, changes in
WM’s credit risk can have an impact on NGIC’s ratings, as it is
dependent on WM’s ability to support its credit risk profile,
competitiveness and risk management. The captive continues to be an
integral component of WM’s risk management platform. A.M. Best’s view of
third-party credit ratings and market-based credit risk measures of WM
indicates stability, resulting in NGIC’s outlooks remaining stable.

Positive rating action could occur if NGIC’s operating performance
materially improves while maintaining the appropriate level of
risk-adjusted capitalization. Negative rating impact could occur if the
company’s balance sheet strength deteriorates materially to levels that
do not support its risks. Negative rating also could occur if the parent
experiences financial distress and deterioration to its credit profile.

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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM 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 © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Kourtnie Beckwith, CPCU, AU, AMIM
Financial Analyst
+1
908 439 2200, ext. 5124
[email protected]

Dan
Teclaw
Senior Financial Analyst
+1 908 439 2200,
ext. 5394
[email protected]

Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
[email protected]

Jim
Peavy
Director, Public Relations
+1 908 439
2200, ext. 5644
[email protected]