S&P Global Ratings has raised its long-term issuer credit and insurer financial strength ratings on Iron Horse Insurance Co. and Traders Insurance Ltd. to ‘AA-’ from ‘A+’ following a revision of the captives’ group status assessment. Iron Horse, a US-domiciled insurer, and Traders, which is based in Bermuda, are captive insurers to Chevron Corp. S&P Global Ratings confirmed today that it now considers both Iron Horse and Traders to be “core” subsidiaries of the overall Chevron group, upgraded from their previous status of “highly strategic”. The revision of the group status assessment reflects the captives’ increasingly integral role in the parent group’s financial and risk-management structure, playing significant parts in Chevron’s global risk-retention strategy. Due to the nature of the captives’ risk profile, they are exposed to low-frequency but high-severity losses. Despite this, the rating agency believes the parent will provide additional capital support as needed to ensure the captives meet regulatory minimum standards in the event of a large loss or aggregation of smaller losses. The outlook on the ratings on both entities is ‘stable’, mirroring the ‘stable’ outlook on the ultimate parent company, Chevron. S&P Global Ratings noted that it could lower the ratings on both captives in the next two years if it were to lower its ratings on Chevron. The ratings could also be lowered if the captives became significantly less important to the group’s strategy or if evidence of diminishing support from the parent were to emerge. Conversely, a potential upgrade would depend on a corresponding upgrade to Chevron’s ratings.
