Oldwick
21 September 2017
Reporter: Becky Butcher

ConocoPhillips captive ratings affirmed ‘excellent’


A.M. Best has affirmed the financial strength rating of “A (Excellent)” and long-term issued credit rating of “a” of Sooner Insurance Company (Sooner), the captive insurer of ConocoPhillips.

Sooner provides property damage, business interruption and general liability insurance to ConocoPhillips and its subsidiaries worldwide.

The rating affirmations reflect Sooner’s excellent risk-adjusted capitalisation, historically favourable operating results driven by favourable underwriting results, conservative reserve levels and the position it holds as the captive insurer for ConocoPhillips.

The ratings also consider the level of commitment on the part of ConocoPhillips, whose management incorporates Sooner as a core element in its overall risk management programme.

According to A.M. Best, partially offsetting these positive rating factors are Sooner’s significant reinsurance credit risk, stemming from the large limits offered on its policies, the possible change in the captive’s net retentions that could happen year over year, and the limited diversification of business written, which is expected with a single-parent captive.

The rating agency suggested that Sooner may have high net retentions based on its the capacity of the overall insurance market from year to year, however, Sooner has the capital to retain these risks, if net retentions were to increase.

Although the majority of Sooner’s capital is loaned to ConocoPhillips, it is considered to have relatively low risk due to this affiliation, as well as the parent’s strong balance sheet and history of positive earnings, A.M. Best explained.

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