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.
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Spirit and Radius each have the inherent benefits of financial flexibility and support as captive insurers for their ultimate parent, Phillips 66, with integrated operations, closely aligned and uniform interests, as well as being established core elements in Phillips 66’s overall risk management program. The captives’ loss experience have remained generally favorable due to their 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 the parent’s commitment to safety.
The captives’ underwrite risks that largely consist of onshore and limited offshore property and liability businesses. 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. Premium and exposures for Radius have decreased since removing U.K. property exposures from the captive in 2022.
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 the parent, which is heavily mitigated by reinsurance protection under the federal Terrorism Risk Insurance Program Reauthorization Act, which currently expires in 2027.
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