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Press release from Business Wire

A.M. Best Affirms Ratings of Iron Horse Insurance Company

Friday, May 31, 2013

A.M. Best Affirms Ratings of Iron Horse Insurance Company

10:01 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 Iron Horse Insurance Company (Iron Horse) (Burlington, VT). The outlook for both ratings is stable.

The ratings reflect Iron Horse's adequate risk-adjusted capitalization, explicit parental support, experienced management team and the role it plays as a direct captive subsidiary of Chevron Corporation (Chevron) (NYSE:CVX).

These positive rating factors are partially offset by Iron Horse'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 ability to secure capital from Chevron in the event of a covered shock loss. Iron Horse directly benefits from the attention of Chevron's experienced risk management team. Iron Horse also gains from Chevron's global operations, which provide favorable geographic spread of risk and line of business diversification.

In its role as a captive insurer, Iron Horse, along with Heddington Insurance Limited, 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.

Iron Horse and the other Chevron captives provide comprehensive coverage above Chevron's internal retentions, while Iron Horse'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.

Key rating drivers that could lead to a positive outlook or an upgrading of Iron Horse's ratings are material and sustained improvement of its underwriting performance and long-term maintenance of strong capital levels.

Key rating drivers that could lead to a negative outlook or a downgrading of the company's ratings are significant deterioration in its capital from either claims or investments, a reduced level of capital that does not support the ratings or a prolonged decline in underwriting profitability.

Iron Horse's ratings are tied to the rating of Chevron, and a change to Chevron's rating could result in changes to the captive's ratings.

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, 908-439-2200, ext. 5767
Senior Financial Analyst
janet.hernandez@ambest.com
or
Robert DeRose, 908-439-2200, ext. 5453
Vice President
robert.derose@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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