22 September 2017Analysis

AM Best gives ‘Excellent’ rating to Phillips 66 captives

Ratings agency AM Best has affirmed the financial strength rating of A (Excellent) of Spirit Insurance Company and, based in Vermont, and Radius Insurance Company, based in the Cayman Islands. The outlook of these ratings is stable.

Both of the ratings reflect the two captives' excellent risk-adjusted capitalisation, sound risk management practices and 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, an American multinational energy company.

The ratings also consider the level of commitment on the part of Phillips 66, which incorporates Spirit and Radius as core elements in its overall risk management programme.

The positive ratings factors are partially offset by the two captive insurers' 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.

Spirit provides property damage, business interruption and excess liability insurance to Phillips 66, and affiliates and subsidiaries related to domestic US operations only. However, Spirit does not provide coverage for Texas-headquartered risk.

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-US risks in which Phillips 66 has ownership interests.