A.M. Best has upgraded the long-term issuer credit from “a” to “a+” and affirmed the financial strength rating of A (Excellent) of Sooner Insurance Company.
The outlook of the ratings of the Burlington-based captive is stable.
The ratings are reflective of Sooner’s balance sheet strength, categorised as “very strong”, in addition to its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The upgrade in ratings reflects the captive’s consistent capital and surplus growth, fortified by operating results.
Sooner’s balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio, consistently favourable loss reserve development, and low underwriting leverage.
The majority of Sooner’s capital is loaned to its ultimate parent, ConocoPhillips, however, it is considered to have relatively low risk due to this affiliation, as well as the parent’s strong balance sheet and history of positive earnings.
The captive’s operating performance has been consistently strong over the past 10 years, driven by solid underwriting profits, with most return metrics outperforming the industry composite and modest investment returns.
For over a decade, the company’s loss experience has remained favourable, due in part to strong risk management programmes at ConocoPhillips, whose management views Sooner as a core element in its overall corporate risk management programme.
Sooner’s business profile assessment reflects its position as the captive insurer for its ultimate parent.
The captive’s underwriting risks consist largely of providing property damage, business interruption and general liability coverage to ConocoPhillips and its subsidiaries, including joint ventures worldwide.
With regard to the captive’s ERM, A.M. Best noted: “ConocoPhillips’ corporate insurance and health, safety and environmental groups have a culture of risk awareness and a framework to identify and manage various different types of risks, such as periodic reviews of their potential loss exposures through a specialist in industrial risks, a process A.M. Best views as appropriate for its risk profile.”
Additionally, the ratings reflect the implicit support of ConocoPhillips and the critical role the captive plays in its ERM programme.
