18 January 2023Actuarial & underwriting

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 Sooner Insurance Company. The outlook of these credit ratings is stable.

The ratings agency said that 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).

Sooner’s balance sheet strength is underpinned by its risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio, generally favourable loss reserve development and low underwriting leverage. Sooner’s most significant asset is a loan back to its ultimate parent, ConocoPhillips. The loan provides Sooner’s capital and is considered to have 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 long track record of strong operating performance, driven by solid underwriting profits, with most return metrics outperforming the industry composite. 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 afforded the corporation flexibility to manage the largest loss efficiently and productively in its history from a claim late in 2021.

The company’s business profile assessment reflects its position as the 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.

Sooner’s ERM has a 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 the implicit support of ConocoPhillips and the critical role the captive plays in its ERM program.