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22 September 2017
Oldwick
Reporter Becky Butcher

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Phillips 66 captives affirmed 'excellent'

A.M. 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 captive insurers for Phillips 66.

According to A.M. Best, the rating affirmations reflect Spirit’s and Radius’s excellent risk-adjusted capitalisation, sound risk management practices and history of profitable business written from a predecessor captive.

The rating agency explained that partially offsetting these positive rating factors are Spirit’s and Radius’ 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, with the exception of Texas-headquartered risk.

Radius provides similar coverage including, property damage, business interruption and 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.

Spirit and Radius write business separately, and each company has a history of strong underwriting results and operating returns.

A.M. Best explained that the captives’ loss experience has remained favourable due in part to no material catastrophe events and the strong loss control programmes at the parent.

In addition, Spirit provides terrorism coverage to its parent and 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, A.M. Best has suggested it 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.

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