A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a” of Spirit Insurance Company (Spirit) (Vermont) and Radius Insurance Company (Radius) (Cayman Islands). The outlook of these credit ratings is stable.
A.M. Best categorised Spirit and Radius’ balance sheet strength as very strong, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management.
Phillips 66 is the parent company for the two captive insurers, Spirit and Radius. The captives’ loss experience has remained generally favourable due in part to a lack of material catastrophic events and the parent’s strong loss control programme.
The parent company conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist. The captives’ underwriting risks largely consist of onshore and limited offshore property and liability business.
Spirit provides property damage, business interruption and excess liability insurance to Phillips 66, and its affiliates and subsidiaries related to domestic US operations only, but generally does not provide coverage for Texas-based risks.
Radius provides similar coverage as well as cargo insurance to Phillips 66 and affiliates, and subsidiaries related to non-US risks in which Phillips 66 has ownership interests.
A.M. Best explained that Spirit and Radius have exposure to high severity, low-frequency losses due to the limits offered on their respective policies and their significant dependence on reinsurance protection.
Spirit also provides terrorism coverage to its parent.
A.M. Best said: “While terrorism risk exposure remains relatively high on a gross basis, concerns are mitigated by reinsurance protection afforded by the Terrorism Risk Insurance Programme Reauthorisation Act (TRIPRA).”
“However, due to the temporary nature of TRIPRA, A.M. Best will continue to monitor the company’s gross terrorism risk exposure over time as it relates to the company’s risk management practices and overall capacity.”
