AM Best has affirmed the financial strength rating of A (excellent) and the long-term issuer credit ratings of “a” (excellent) of Vermont-domiciled Spirit Insurance Company and Cayman-based Radius Insurance Company.
Spirit and Radius are both pure captives owned by Texas-headquartered energy company, Phillips 66.
The captives’ underwriting risks largely consist of onshore and limited offshore property and liability business.
Spirit provides property damage, business interruption, construction all risks, excess liability and employee medical reimbursement insurance for Phillips 66, its affiliates and subsidiaries’ domestic US operations only, though generally does not provide coverage for Texas-based risks.
Radius provides similar coverage for non-US risks in which Phillips 66 has ownership interests.
Spirit also provides terrorism coverage supported by reinsurance protection provided by the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA).
Both captives have exposure to low frequency, high severity loss claims due to the sizable limits on their respective policies, introducing potential significant dependence on reinsurance protection.
The ratings reflect Spirit and Radius’ balance sheet strength, which AM Best assesses as very strong, as well as each company’s “adequate” operating performance, neutral business profile and “appropriate” enterprise risk management.
Phillips 66 also owns SCH Insurance Company, a Texas-domiciled captive established in 2014, which is not rated.
The captives’ loss experience has remained favourable due to the parent’s strong loss control program and small number of material catastrophe losses.
Phillips 66 conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist.
Premium and exposures for Radius fell in 2022 after removing UK property exposures from the captive.