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Press release from Business Wire

A.M. Best Affirms Ratings of Heddington Insurance Limited

Friday, May 31, 2013

A.M. Best Affirms Ratings of Heddington Insurance Limited

10:00 EDT Friday, May 31, 2013

OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a+” of Heddington Insurance Limited (Heddington) (Bermuda). The outlook for both ratings is stable.

The ratings reflect Heddington's superior capitalization, consistently positive operating results and the role that it plays as a captive insurance company of Chevron Corporation (Chevron) [NYSE:CVX].

These positive rating factors are partially offset by Heddington's high net loss exposures, as the coverages provided tend to result in claims that are characterized as low frequency but high severity. This is somewhat mitigated by the captive's good loss history supported by strong investment income and parental support provided by high yield loans to affiliated companies. Heddington has sufficient capital resources to meet its underwriting related obligations, as measured by Best's Capital Adequacy Ratio (BCAR).

The ratings are based on the consolidated results of Heddington. The ratings further recognize the company's strong enterprise risk management controls and underwriting expertise, the loss controls included in the structuring of insurance coverages offered by Heddington, as well as the cost effective manner in which those services are delivered. Heddington also gains from Chevron's global scope, which provides it with a favorable geographic distribution of assumed risks.

In its role as a captive insurer, Heddington, along with Iron Horse Insurance Company (another active Chevron captive), currently provides broad and competitive global insurance products for Chevron and its subsidiaries. The insurance needs of Chevron are supplied through these captive operations (where appropriate) and the commercial market. Heddington and the other Chevron captives provide comprehensive coverage above Chevron's internal retentions, while Heddington's reinsurance is placed through a corporate wide plan with the world's leading providers of capacity, resulting in a diversified and balanced distribution of reinsurers.

There is a small likelihood that positive rating actions could take place within the next 12 to 24 months based on Heddington's stand-alone characteristics. However, negative rating actions may result from material loss of capital that does not support the ratings or the captive's profile is diminished within Chevron.

A.M. 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.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.
Janet Hernandez
Senior Financial Analyst
(908) 439-2200, ext. 5767
janet.hernandez@ambest.com
or
Robert DeRose
Vice President
(908) 439-2200, ext. 5433
robert.derose@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

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