OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Besthas affirmed the financial strength rating of A
(Excellent) and the issuer credit ratings of ďaĒ ofSpirit Insurance
Company (Spirit) (Burlington, VT) and Radius Insurance Company
(Radius) (Cayman Islands). The outlook for all ratings is stable.
The ratings of Spirit and Radius are based on each companyís excellent
capitalization, a history of profitable business written from a
predecessor captive, as well as the position they hold as the captive
insurers for their ultimate parent, Phillips 66 [NYSE:PSX]. The
ratings also consider the level of commitment on the part of Phillips
66, whose management incorporates Spirit and Radius as a core element in
its overall risk management program.
Partially offsetting these positive rating factors are Spirit and
Radiusí exposure to large losses due to the limits offered on their
respective policies, as well as their significant dependence on
Spirit provides property damage, business interruption and excess
liability insurance to Phillips 66 and affiliates and subsidiaries
related to domestic U.S. operations only, while Radius provides similar
coverage (property damage, business interruption, excess liability), as
well as marine hull and cargo insurance to Phillips 66 and affiliates
and subsidiaries related to non-U.S. risks in which Phillips 66 has
Business written separately by Spirit and Radius each has a history of
strong underwriting results and operating returns. The captivesí loss
experience has remained favorable due in part to the strong loss control
program at the parent. Phillips 66 conducts periodic reviews of Spirit
and Radiusí potential loss exposures through a specialist in industrial
risks. A single occurrence could result in a large loss that approaches
each captiveís limits. Although the majority of Spiritís capital is
loaned to its parent, there is limited counterparty risk due to the
affiliation of the two companies.
A.M. Best believes that Spirit and Radius are well positioned at their
current rating levels, and the ratings are not expected to be upgraded
or their outlook revised in the near term. Nonetheless, key rating
factors that could lead to negative rating actions include a significant
and sustained decline in Spirit and Radius' risk-adjusted
capitalization, net operating performance results that do not meet A.M.
Bestís expectations or a material deviation from their risk profiles
that could potentially undermine the stability of the ratings. In
addition, deterioration in the credit profile of Phillips 66 could
impact both companiesí ratings or if Cayman Islandsí country tier is
downgraded it could impact Radius' 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
A.M. Best Company, Inc.
Alexander Sarfo, 908-439-2200,
Senior Financial Analyst
M. Chirico, CPA, 908-439-2200, ext. 5087
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
Peavy, 908-439-2200, ext. 5644
Assistant Vice President,
Source: A.M. Best Company, Inc.