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, based in Vermont, and Radius Insurance Company, based in the Cayman Islands.
The outlook of these credit ratings is stable.
The ratings reflect Spirit and Radius’ balance sheet strength, which A.M. Best categorised as very strong, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management.
Spirit and Radius are captive insurers for their ultimate parent, Phillips 66, whose management incorporates the captives as core elements in its overall risk management programme.
A.M. Best stated that the captives’ loss experience has remained generally favourable due in part to a lack of material catastrophe losses, as well as the parent’s strong loss control programme.
“Phillips 66 conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist,” according to A.M. Best.
The captives’ underwriting risks largely consist of onshore and limited offshore property and liability business.
Spirit provides property damage, business interruption, excess liability and employee medical reimbursement insurance to Phillips 66, its affiliates and subsidiaries’ domestic US operations only; however, Spirit generally does not provide coverage for Texas-based risks.
Radius provides similar coverage (property damage, business interruption, excess liability), as well as cargo insurance to Phillips 66, its affiliates, and subsidiaries’ non-US risks in which Phillips 66 has ownership interests.
A.M. Best outlined 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.
In addition, Spirit provides terrorism coverage to its parent.
A.M. Best explained: “While terrorism risk exposure remains relatively high on a gross basis, concerns are mitigated by reinsurance protection afforded by the Terrorism Risk Insurance Program Reauthorization Act (TRPRA), which expires in 2027.”
