AM Best Affirms Credit Ratings of Spirit Insurance Company and Radius Insurance Company

Rhea-AI Summary

AM Best affirms Spirit Insurance Company (Spirit) and Radius Insurance Company (Radius) with A (Excellent) Financial Strength Rating and 'a' Long-Term Issuer Credit Ratings. The outlook for these ratings is stable. Spirit and Radius have very strong balance sheet strength, adequate operating performance, and neutral business profile. They are captive insurers for Phillips 66 [NYSE: PSX] and have favorable loss experience due to strong loss control program and limited catastrophe losses.

Positive

• AM Best affirms the A (Excellent) Financial Strength Rating and 'a' Long-Term Issuer Credit Ratings for Spirit and Radius, indicating very strong balance sheet strength and favorable loss experience due to a strong loss control program and limited catastrophe losses.

Negative

• Premium and exposures for Radius declined in 2022 after removing U.K. property exposures from the captive, introducing potential significant dependence on reinsurance protection due to sizable limits offered on policies.

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” (Excellent) 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 assesses as very strong, as well as each company’s adequate operating performance, neutral business profile and appropriate enterprise risk management.

Spirit and Radius each have the inherent benefits of financial flexibility and support as captive insurers for their ultimate parent, Phillips 66 [NYSE: PSX], with integrated operations, closely aligned and uniform interests, and are established core elements in its overall risk management program. The captives’ loss experience has remained generally favorable due to the parent’s strong loss control program and relatively small number of material catastrophe losses. Phillips 66 conducts periodic reviews of Spirit and Radius’ potential loss exposures through an industrial risks specialist, which demonstrates its commitment to safety.

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 U.S. operations only; however, Spirit generally does not provide coverage for Texas-based risks. Radius provides similar coverage (i.e., property damage, business interruption, excess liability) to Phillips 66, its affiliate and subsidiaries’ non-U.S. risks in which Phillips 66 has ownership interests. However, premium and exposures for Radius declined in 2022 after removing U.K. property exposures from the captive.

Spirit and Radius have exposure to low frequency, high severity loss claims due to the sizable limits offered on their respective policies, introducing potential significant dependence on reinsurance protection. Spirit also provides terrorism coverage to its parent. Though relatively high on a gross basis, terrorism exposure is heavily mitigated by reinsurance protection afforded by coverage under the federal 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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Kourtnie Beckwith

Senior Financial Analyst

+1 908 882 1649

kourtnie.beckwith@ambest.com

Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Daniel Teclaw

Director

+1 908 882 2390

dan.teclaw@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best

FAQ

What are the Financial Strength Rating and Long-Term Issuer Credit Ratings for Spirit Insurance Company and Radius Insurance Company?

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of 'a' (Excellent) for Spirit Insurance Company and Radius Insurance Company.

What is the outlook for the Credit Ratings of Spirit and Radius?

The outlook for the Credit Ratings of Spirit and Radius is stable.

Who are the ultimate parent companies of Spirit and Radius?

Spirit and Radius are captive insurers for their ultimate parent, Phillips 66 [NYSE: PSX].

What type of coverage does Spirit provide for Phillips 66?

Spirit provides property damage, business interruption, construction all risks, excess liability, and employee medical reimbursement insurance for Phillips 66, its affiliates, and subsidiaries’ domestic U.S. operations only.

What type of coverage does Radius provide for Phillips 66?

Radius provides similar coverage to Phillips 66, its affiliate, and subsidiaries’ non-U.S. risks in which Phillips 66 has ownership interests.

What are the potential negative aspects of the PR?

Premium and exposures for Radius declined in 2022 after removing U.K. property exposures from the captive, introducing potential significant dependence on reinsurance protection due to sizable limits offered on policies.