AM Best affirms Sooner ratings
AM Best has affirmed the financial strength rating of A and the long-term issuer credit rating of “a+” of Vermont-registered Sooner Insurance Company. The outlook of the ratings is stable.
The ratings reflect Sooner’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating agency said that Sooner’s balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), generally favourable loss reserve development and low underwriting leverage. Sooner’s most significant asset is a loan back to its ultimate parent, ConocoPhillips. The arrangement provides Sooner’s capital and has relatively low risk due to the parent/subsidiary affiliation, as well as the parent’s strong balance sheet and history of positive earnings.
“Sooner has a sustained history of strong operating performance, driven by solid underwriting profits, with most return metrics outperforming the industry composite,” said AM Best. “The company’s loss experience has been largely favourable for more than a decade due in large part to ConocoPhillips’s strong risk management programs. As a core component in ConocoPhillips’ ERM program, the captive arrangement affords the corporation flexibility to manage infrequent, large losses efficiently and productively.”
According to AM Best the neutral business profile assessment reflects Sooner’s position as the primary captive insurer for its ultimate parent. Sooner’s underwriting risks mainly provide property damage and excess liability coverage to ConocoPhillips and its global subsidiaries and joint ventures.
AM Best added that the enterprise’s ERM embodies an integrated culture of risk awareness and a framework to identify and manage various types of risks continually, including periodic reviews of its potential loss exposures through a specialist within industrial risks, a process AM Best views as very appropriate for the company’s risk profile. The ratings also reflect Sooner’s strategic role for ConocoPhillips as evidenced by the parent’s ongoing implicit and explicit support of this captive.
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