Phillips 66
17 December 2024news

AM Best affirms ratings of Phillips 66 captives

AM Best has affirmed the financial strength rating of 'A' of the two captive insurance companies owned by energy refiner Phillips 66. 

Vermont-based Spirit Insurance Company and Cayman Islands-registered Radius Insurance Company both have stable outlooks, the ratings agency said.

The two captives underwrite onshore and limited offshore property and liability risk for the parent company, AM Best said, and have experienced generally favourable losses. 

“Spirit and Radius each have the inherent benefits of financial flexibility and support as captive insurers for their ultimate parent, Phillips 66, with integrated operations, closely aligned and uniform interests, and are established core elements in its overall risk management programme,” AM Best said. 

“The captives’ loss experience has remained generally favourable due to the parent’s strong loss-control programme and relatively small number of material catastrophe losses. Phillips 66 conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist, which demonstrates its commitment to safety.”

Spirit provides property damage, business interruption, construction all-risks, excess liability and employee medical reimbursement insurance for Phillips 66, its affiliates and subsidiaries’ domestic US operations except in Texas.

 Radius provides similar coverage to the parent company’s non-US risks in which Phillips 66 has ownership interests. As of 2022, premium and exposures for Radius decreased after removing UK property exposures from the captive.

“Spirit and Radius have exposure to low frequency, high severity loss claims due to the sizeable limits offered on their respective policies, introducing potential significant dependence on reinsurance protection,” AM Best said. “Spirit also provides terrorism coverage to its parent. Though relatively high on a gross basis, terrorism exposure is heavily mitigated by reinsurance protection afforded by coverage under the federal Terrorism Risk Insurance Program Reauthorization Act, which expires in 2027.”

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