Why AM Best upgraded National Guaranty Insurance Company of Vermont’s credit rating to A (Excellent) in 2025

AM Best has elevated the Financial Strength Rating of National Guaranty Insurance Company of Vermont (NGIC) to A (Excellent) from A- and upgraded its Long-Term Issuer Credit Rating to “a” (Excellent) from “a-.” The credit rating agency also revised the outlook for both ratings to stable from the previous positive designation. NGIC is the captive insurance arm of Waste Management, Inc. (NYSE: WM), a leading North American provider of waste management and environmental services. The insurer is headquartered in Burlington, Vermont, and licensed in two states while operating on a non-admitted basis in 27 states.

The upgrades were officially announced by AM Best from its Oldwick, New Jersey, office on July 2, 2025, and underscore the rating agency’s confidence in NGIC’s ability to maintain superior operating performance, very strong balance sheet strength, and an effective enterprise risk management (ERM) framework.

What factors contributed to the improved assessment of NGIC’s operating performance and balance sheet strength?

The rating agency’s improved view of NGIC’s operating performance—now assessed as “very strong” instead of “strong”—was largely driven by the captive insurer’s consistently favorable underwriting metrics. Over the past decade, NGIC has posted a combination of profitable returns and underwriting discipline that has significantly outpaced the broader insurance sector and peer captives. According to AM Best, NGIC has maintained combined ratios well below industry averages, suggesting an advanced capability to manage risk exposure and limit claims volatility.

This financial strength is bolstered by its loss-free history, a rare distinction in the insurance industry and one that AM Best considers a testament to NGIC’s advanced loss control protocols. These controls are part of a broader strategic framework integrated into the corporate risk culture of its parent company, Waste Management, Inc.

Furthermore, AM Best noted that NGIC’s capital structure is entirely funded by Waste Management through a demand note, allowing the captive to remain solvent and responsive to evolving liabilities. Additional funding, when necessary, is extended through letters of credit—again illustrating the strategic financial backing and confidence from its parent.

How does NGIC support Waste Management’s enterprise risk management and assurance needs?

National Guaranty Insurance Company of Vermont plays a core strategic role in Waste Management’s ERM framework. As a captive insurer, NGIC is designed to underwrite risk exposures that are difficult or cost-inefficient to insure via traditional markets. These exposures include financial assurance obligations, particularly in highly regulated industries such as environmental services.

By directly assuming risk from Waste Management, NGIC helps optimize the group’s total cost of risk, allows for customized policy structures, and reduces dependence on commercial insurers that may fluctuate on pricing or coverage terms. NGIC’s licensing footprint—though limited to two jurisdictions—is strategically augmented by operating as a non-admitted insurer across 27 states, ensuring that it can address Waste Management’s compliance obligations in key geographic areas.

Institutional stakeholders familiar with the captive insurance market have acknowledged that NGIC’s alignment with Waste Management’s robust risk mitigation strategy strengthens both entities’ resilience. This includes environmental liability exposures, which are notoriously complex and expensive to insure in open markets.

What are the implications of NGIC’s credit upgrade for institutional and regulatory stakeholders?

For institutional investors monitoring Waste Management’s risk profile and insurance reserves, the AM Best upgrade reaffirms that core operational risks are being managed efficiently within the group structure. The continued support of NGIC’s solvency by Waste Management signals confidence in its self-insurance strategy and the sustainability of its ERM system.

From a regulatory perspective, the rating enhancement provides further assurance that Waste Management’s financial assurance mechanisms—critical in areas such as landfill closure obligations, environmental remediation, and compliance bonding—are being backed by a financially sound and strategically managed insurer.

The stable outlook from AM Best indicates that the credit agency does not foresee material volatility in NGIC’s underwriting performance or balance sheet over the medium term. This stability enhances the trustworthiness of NGIC’s role in Waste Management’s long-term risk planning, especially as environmental regulations become more stringent and dynamic.

How does AM Best evaluate captive insurance entities like NGIC, and what does this rating signify?

AM Best, as the leading rating agency for alternative risk transfer vehicles, assesses over 200 captive and specialty risk entities globally. Its framework considers capital adequacy, underwriting results, business profile, and the alignment of insurance operations with parent company risk profiles. For a captive such as NGIC, which functions with a narrow underwriting focus and serves a single parent, the evaluation of strategic alignment and execution capability becomes paramount.

An A (Excellent) rating for a captive signals robust claims-paying ability and implies a low probability of default, even under stressed financial or loss scenarios. The upgraded “a” Long-Term Issuer Credit Rating similarly enhances NGIC’s ability to demonstrate financial solvency and compliance strength during regulatory audits, investor scrutiny, and reinsurance negotiations.

Given the risk-aware nature of the captive model, AM Best’s upgrade also indirectly underscores the sophistication of Waste Management’s integrated risk management practices, which enable NGIC to thrive within a specialized and capital-sensitive insurance segment.

What is the future outlook for NGIC and its strategic integration with Waste Management’s risk portfolio?

Looking forward, AM Best expects National Guaranty Insurance Company of Vermont to sustain its profitability and continue outperforming peer captives, while preserving its very strong balance sheet and claims-paying capacity. The rating agency also indicated confidence that NGIC will remain a crucial element of Waste Management’s long-term financial assurance strategy, especially as operational risks evolve due to environmental shifts and regulatory tightening.

NGIC’s ability to maintain a zero-loss underwriting record, backed by proactive loss prevention controls and reliable capital support, will likely keep it among the best-performing captives in the AM Best coverage universe. Analysts anticipate that NGIC may see further functional expansion, such as supporting new types of risk or covering more diverse geographies, in line with Waste Management’s corporate growth and environmental investment roadmap.

For the broader captive insurance market, NGIC’s rating serves as a benchmark for performance and alignment, particularly for parent companies seeking greater control over insurable risk without compromising on financial transparency or regulatory acceptability.