A.M. Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit rating of “a+” of Sooner Insurance Company (Sooner), based in Vermont.
The outlook of these credit ratings is stable.
The ratings reflect Sooner’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), generally favourable loss reserve development and low underwriting leverage.
Although Sooner has a significant loan to its ultimate parent, ConocoPhillips, A.M. Best considers it to have relatively low risk due to this affiliation, as well as the parent’s strong balance sheet and history of positive earnings.
Sooner’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.
The company’s loss experience has remained favourable for over a decade. This is 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.
A.M. Best states: ”The company’s business profile assessment reflects its position as the captive insurer for its ultimate parent. Sooner’s underwriting risks consist largely of providing property damage and excess liability coverage to ConocoPhillips and its subsidiaries, including joint ventures, worldwide.”
On its enterprise risk management (ERM), A.M. Best outlines that ConocoPhillips’ corporate insurance and health, safety and environmental groups have a culture of risk awareness and a framework to identify and manage various types of risks, such as periodic reviews of their potential loss exposures through a specialist in industrial risks, a process that the rating firm views as appropriate for its risk profile.
A.M. Best says the ratings also reflect the implicit support of ConocoPhillips and the critical role the captive plays in its ERM programme.
