OLDWICK: AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Spirit Insurance Company and Radius Insurance Company. The outlook of these Credit Ratings is stable.
The ratings reflect Spirit and Radius’ balance sheet strength, which AM Best categorizes as very strong, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management.
Spirit and Radius are captive insurers for their ultimate parent, Phillips 66, whose management incorporates the captives as core elements in its overall risk management program. The captives’ loss experience has remained generally favorable due in part to a lack of material catastrophic events and the parent’s strong loss control program. Phillips 66 conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist.
The captives’ underwriting risks largely consist of onshore and limited offshore property and liability business. Spirit provides property damage, business interruption and excess liability insurance to Phillips 66, and its affiliates and subsidiaries related to domestic U.S. operations only; however, Spirit generally does not provide coverage for Texas-based risks.
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-U.S. risks in which Phillips 66 has ownership interests.
Spirit and Radius have exposure to high severity, low frequency losses due to the limits offered on their respective policies and their significant dependence on reinsurance protection. Additionally, Spirit provides terrorism coverage to its parent.
While terrorism risk exposure remains relatively high on a gross basis, concerns are mitigated by reinsurance protection afforded by the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA). However, due to the temporary nature of TRIPRA, AM Best will continue to monitor the company’s gross terrorism risk exposure over time as it relates to the company’s risk management practices and overall capacity.
Edited by Kazim Rizvi