AM Best Affirms Credit Ratings of Spirit Insurance Company and Radius Insurance Company
AM Best has affirmed a Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a' for Spirit Insurance Company and Radius Insurance Company, with a stable outlook. The favorable ratings are attributed to their robust balance sheet strength and adequate operating performance. Both companies serve as captive insurers to Phillips 66 (PSX), benefiting from strong loss control measures and favorable loss experience. However, they face exposure to high severity, low frequency losses and significant reliance on reinsurance.
- Affirmed Financial Strength Rating of A (Excellent) for Spirit and Radius.
- Stable outlook reflecting strong balance sheet strength and adequate operating performance.
- Captive insurers for Phillips 66, benefiting from strong loss control programs.
- Exposure to high severity, low frequency losses due to limits on policies.
- Significant reliance on reinsurance protection.
OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Spirit Insurance Company (Spirit) (Colchester, VT) and Radius Insurance Company (Radius) (Cayman Islands). The outlook of these Credit Ratings (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 [NYSE: PSX], 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 catastrophe losses, as well as 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, excess liability and employee medical reimbursement insurance to Phillips 66, its affiliates and subsidiaries’ 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, its affiliates, and subsidiaries’ 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, which expires in 2027.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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