News Column

A.M. Best Affirms Ratings of Iron Horse Insurance Company

June 5, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Besthas affirmed the financial strength rating of A (Excellent) and the issuer credit rating of ďa+Ē of Iron Horse Insurance Company(Iron Horse) (Burlington, VT). The outlook for both ratings is stable.

The ratings reflect Iron Horseís adequate risk-adjusted capitalization, explicit parental support, experienced management team and the role it plays as a direct captive subsidiary of Chevron Corporation (Chevron) [NYSE:CVX].

These positive rating factors are partially offset by Iron Horseís high net loss exposures, as the coverages provided tend to result in claims that are characterized as low frequency but high severity. This is somewhat mitigated by the captiveís ability to secure capital from Chevron in the event of a covered shock loss. Iron Horse directly benefits from the attention of Chevronís experienced risk management team. Iron Horse also gains from Chevronís global operations, which provide favorable geographic spread of risk and line of business diversification.

In its role as a captive insurer, Iron Horse, along with Heddington Insurance Limited, currently provides broad and competitive global insurance products for Chevron and its subsidiaries. The insurance needs of Chevron are supplied through these captive operations (where appropriate) and the commercial market.

Iron Horse and the other Chevron captives provide comprehensive coverage above Chevronís internal retentions, while Iron Horseís reinsurance is placed through a corporate wide plan with the worldís leading providers of capacity, resulting in a diversified and balanced distribution of reinsurers.

Key rating drivers that could lead to a positive outlook or an upgrading of Iron Horseís ratings are material and sustained improvement of its underwriting performance and long-term maintenance of strong capital levels.

Key rating drivers that could lead to a negative outlook or a downgrading of the companyís ratings are significant deterioration in its capital from either claims or investments, a reduced level of capital that does not support the ratings as measured by Bestís Capital Adequacy Ratio (BCAR) or a prolonged decline in underwriting profitability.

Iron Horse's ratings are tied to the rating of Chevron, and a change to Chevronís rating could result in changes to the captive's ratings.

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 Bestís Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.





A.M. Best

Janet Hernandez, 908-439-2200, ext. 5767

Senior Financial Analyst

janet.hernandez@ambest.com

or

Robert DeRose, 908-439-2200, ext. 5433

Vice President

robert.derose@ambest.com

or

Jim Peavy, 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

james.peavy@ambest.com

Source: A.M. Best


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