S&P upgrades Chevron captives to ‘AA-’
S&P Global Ratings has raised its long-term issuer credit and insurer financial strength ratings on U.S.-domiciled Iron Horse and Bermuda-domiciled Traders to 'AA-' from 'A+'. The outlook is stable.
Iron Horse Insurance Co. (Iron Horse) and Traders Insurance Ltd. (Traders) are captive insurers to Chevron Corp.
S&P said that it considers Iron Horse and Traders to be core subsidiaries of the overall Chevron group. As captive insurance entities, the rating agency views the captives as an integral part of the group's financial and risk-management structure, playing significant roles in the group's global risk-retention strategy.
Due to the nature of the captives' risk profile, they are exposed to low-frequency but high-severity losses. But in the event of a large loss or aggregation of smaller losses, S&P believes the parent will provide additional capital support as needed to meet regulatory minimum standards.
The stable outlook on the ratings on Iron Horse and Traders mirrors S&P’s stable outlook on the ultimate parent company, Chevron.
S&P added the caveat that: “We could lower the ratings on both entities in the next two years if we lower our ratings on Chevron. We could also lower the ratings if we think the captives become significantly less important to the group's strategy or we see evidence of diminishing support from the parent. We could raise the ratings in the next two years if we raise the ratings on Chevron.”
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