Press release from Business Wire
A.M. Best Affirms Ratings of Spirit Insurance Company
Thursday, June 06, 2013
A.M. Best Affirms Ratings of Spirit Insurance Company10:41 EDT Thursday, June 06, 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 Spirit Insurance Company (Spirit) (Burlington, VT). The outlook for both ratings is stable.
The ratings of Spirit are based on its excellent capitalization, a history of profitable business written from a predecessor captive, as well as the position it holds as the captive insurer for its ultimate parent, Phillips 66 [NYSE: PSX]. The ratings also consider the level of commitment on the part of Phillips 66, whose management incorporates Spirit as a core element in its overall risk management program. Partially offsetting these positive rating factors are Spirit's exposure to large losses due to the limits offered on its policies as well as its significant dependence on reinsurance protection.
Business written by Spirit has a history of strong underwriting results and operating returns. The company's loss experience has remained favorable due in part to its strong loss control program at the parent. Phillips 66 will conduct periodic reviews of Spirit's potential loss exposures through a specialist in industrial risks. A single occurrence could result in a large loss that approaches Spirit's limits. Although the majority of Spirit's capital is loaned to its parent, there is limited counterparty risk due to the affiliation of the two companies.
Key rating triggers that could result in positive rating actions would be Spirit generating consistent net income, limited losses and meeting and/or exceeding its business plan over the long term.
Key rating triggers that could result in negative rating actions would be Spirit generating consistent net losses, numerous large claims and/or not executing its business plan over the long term.
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.
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A.M. Best Co.
Senior Financial Analyst
908-439-2200, ext. 5629
Steven Chirico, CPA
Assistant Vice President
908-439-2200, ext. 5087
Senior Manager, Public Relations
908-439-2200, ext. 5378
Assistant Vice President, Public Relations
908-439-2200, ext. 5644