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Press release from Business Wire

A.M. Best Affirms Ratings of Radius Insurance Company

Wednesday, June 19, 2013

A.M. Best Affirms Ratings of Radius Insurance Company

10:26 EDT Wednesday, June 19, 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 Radius Insurance Company (Radius) (Cayman Islands). The outlook for both ratings is stable.

The ratings of Radius are based on its excellent capitalization, 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 Radius as a core element in its overall risk management program.

Partially offsetting these positive rating factors are Radius' exposure to large losses due to the limits offered on its policies as well as its significant dependence on reinsurance protection.

The business that will be written by Radius has a history of strong underwriting results and operating returns. The company's loss experience has remained favorable due in part to the strong loss control programs at the parent. Phillips 66 will conduct periodic reviews of Radius' potential loss exposures through a specialist in industrial risks. A single occurrence could result in a large loss that approaches Radius' limits; however, the company has the capital to fund claims in the event of a reinsurance recovery problem.

Key rating triggers that could result in positive rating actions would be Radius 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 Radius 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.

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

A.M. Best Co.
Nick Dranchak
Senior Financial Analyst
(908) 439-2200, ext. 5629
nick.dranchak@ambest.com
or
Steven Chirico, CPA
Assistant Vice President
(908) 439-2200, ext. 5087
steven.chirico@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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