A.M. Best Affirms Credit Ratings of Spirit Insurance Company and Radius Insurance Company
November 01 2018 - 10:15AM
Business Wire
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) (Burlington, VT) and Radius
Insurance Company (Radius) (Cayman Islands). The outlook of these
Credit Ratings (ratings) is stable.
The ratings reflect Spirit and Radius’ balance sheet strength,
which A.M. Best categorizes as very strong, as well as its adequate
operating performance, neutral business profile and appropriate
enterprise risk management.
The balance sheet strength is supported by risk-adjusted
capitalization being at the strongest level, as measured by Best’s
Capital Adequacy Ratio (BCAR), consistently favorable loss
development and high liquidity. Business is written separately by
Spirit and Radius, and each company has a history of strong
underwriting results and operating returns, with most return
metrics outpacing the composite.
The business profile assessment reflects the position they hold
as the captive insurers for their ultimate parent, Phillips 66
[NYSE: PSX], whose management incorporates Spirit and Radius as
core elements in its overall risk management program. The captives’
loss experience has remained favorable due in part to a lack of
material catastrophic events and the parent’s strong loss control
program. Phillips 66 conducts periodic reviews of Spirit and
Radius’ potential loss exposures through an industrial risks
specialist.
The captives’ underwriting risks largely consist of onshore and
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 U.S. operations only; however, Spirit 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 and affiliates, and subsidiaries
related to non-U.S. risks in which Phillips 66 has ownership
interests.
Partially offsetting rating factors are Spirit and Radius’
exposure to large losses due to the limits offered on their
respective policies and their significant dependence on reinsurance
protection. In addition, Spirit’s terrorism risk exposure remains
relatively high on a gross basis. Although the majority of Spirit’s
capital is loaned to its parent, there is limited counterparty risk
due to the affiliation of the two companies and the alignment of
interests. Additionally, Spirit provides terrorism coverage to its
parent. 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 (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.
A.M. Best remains the leading rating agency of alternative
risk transfer entities, with more than 200 such vehicles rated in
the United States and throughout the world. For current Best’s
Credit Ratings and independent data on the captive and alternative
risk transfer insurance market, please visit
www.ambest.com/captive.
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is a global rating agency and information provider
with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20181101005683/en/
A.M. BestAlexander SarfoSenior Financial
Analyst+1 908 439 2200, ext.
5779alexander.sarfo@ambest.comorSusan
MolineuxAssociate Director+1 908 439 2200, ext.
5829susan.molineux@ambest.comorChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comorJim
PeavyDirector, Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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