[December 14, 2012]

A.M. Best Affirms Ratings of Bison Insurance Company Limited

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Bison Insurance Company Limited (Bison) (Charleston, SC). The outlook for both ratings is stable.

The ratings reflect Bison's historically adequate capitalization, generally favorable operating performance, conservative reserve levels and effective enterprise risk management controls. The ratings also recognize Bison's history of maintaining sufficient capital and financial resources to support its ongoing obligations.

Partially offsetting these positive rating factors are Bison's volatile underwriting results due to its low frequency, high severity risk profile, coupled with its high net retained limits relative to its available capital. Additionally, the continually changing risk profile of Bison's primary insureds directly affects its risk profile. This is mitigated by the company's conservative reserving philosophy and the ongoing, demonstrated support from its parent, Duke Energy (News - Alert) Corporation (Duke Energy) [NYSE: DUK].

The risk management team of Duke Energy takes a holistic approach to managing its risks and utilizes the captive as an integral part in this process. Bison's long-term growth opportunities primarily depend on the business success of Duke Energy.

Bisons ratings take into account its potential for future earnings volatility. In A.M. Best's opinion, positive rating actions are dependent upon Bison stabilizing its operating performance as well as its risk-adjusted capitalization, materially exceeding A.M. Best's expectations. Positive rating actions also could occur if the credit profile of Duke Energy improves.

The potential for negative rating actions could result if the volatility in Bison's operating performance exceeds A.M. Best's expectations and results in a significant prolonged decline in its risk-adjusted capitalization. In addition, deterioration in the credit profile of the parent could impact Bison's ratings.

A.M. 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 insurance market, please visit www.ambest.com/captive.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Alternative Risk Transfer (ART)"; "Rating New Company Formations"; "Understanding BCAR for Property/Casualty Insurers"; "Understanding Universal BCAR"; and "Catastrophe Analysis in A.M. Best Ratings." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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