A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a" of Bison Insurance Company Limited (Bison) (Charleston, SC). The outlook of these Credit Ratings (ratings) is stable.

The rating affirmations reflect Bison's historically excellent risk-adjusted capitalization, consistent operating profitability driven by favorable underwriting results, 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 Corporation (Duke Energy) [NYSE:DUK].

Bison insures select risks for Duke Energy providing a variety of coverage in property/casualty lines of business. While favorable operating performance has been reported consistently in the most recent five years and the first nine months of 2016, underwriting results are volatile, hence susceptible to occasional outsized losses, as evidenced in 2014 when it recorded an underwriting loss of $87 million, which eroded $49 million or 25% of the company's capital and surplus. Nonetheless, this loss is somewhat mitigated by favorable geographic spread of risk and overall trend of favorable loss history. The outsized shock losses, which generally stem from high property losses, recur in five- to seven-year cycles. Duke Energy's risk management team takes a holistic approach to managing its risks and utilizes the captive as an integral part of this process. Bison's long-term growth opportunities primarily depend on Duke Energy's business success.

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 risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 .

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

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