A.M. Best Affirms Ratings of Sooner Insurance Company
June 03 2015 - 3:20PM
Business Wire
A.M. Best has affirmed the financial strength rating of A
(Excellent) and the issuer credit rating of “a” of Sooner
Insurance Company (Sooner) (Burlington, VT). The outlook for
both ratings is stable.
The ratings reflect Sooner’s excellent capitalization, history
of consistent operating profitability driven by favorable
underwriting results, conservative reserve levels and the position
it holds as the captive insurer for its ultimate parent,
ConocoPhillips [NYSE: COP]. The ratings also consider the
level of commitment on the part of ConocoPhillips, whose management
incorporates Sooner as a core element in its overall risk
management program.
Partially offsetting these positive rating factors are Sooner’s
significant reinsurance credit risk stemming from the large limits
offered on its policies and the possible change in the captive’s
net retentions that could happen year over year, as well as the
limited diversification of business written, which is expected with
a single parent captive.
Sooner provides property damage, business interruption and
general liability insurance to ConocoPhillips and its subsidiaries
worldwide.
Sooner has a history of generally positive underwriting results
and strong operating return measures. Over a 10-year period, the
company’s loss experience has remained favorable due, in part, to
ConocoPhillips’ strong risk management programs.
ConocoPhillips’ corporate insurance and health, safety and
environmental groups conduct periodic reviews of their potential
loss exposures through a specialist in industrial risks. Sooner may
have high net retentions based upon the capacity of the overall
insurance market from year to year. Nonetheless, Sooner does have
the capital to retain these risks, if net retentions were to
increase. Although the majority of Sooner’s capital is loaned to
ConocoPhillips, it is considered to have relatively low risk due to
this affiliation as well as the parent’s strong balance sheet and
history of positive earnings.
A.M. Best is unlikely to upgrade Sooner’s ratings over the long
term due to its limited market profile. Key rating drivers that
could lead to rating downgrades are a significant loss of surplus,
consistent adverse reserve development or a significant change in
the company’s risk profile. In addition, deterioration in the
credit profile of ConocoPhillips could impact Sooner’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.
Key insurance criteria reports utilized:
- Alternative Risk Transfer (ART)
- Catastrophe Analysis in A.M. Best
Ratings
- Evaluating Non-Insurance Ultimate
Parents
- Risk Management and the Rating Process
for Insurance Companies
- Understanding BCAR for
Property/Casualty Insurers
This press release relates to rating(s) that have been
published on A.M. Best's website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please visit A.M.
Best’s Ratings & Criteria Center.
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 © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20150603006518/en/
A.M. BestAlexander Sarfo, 908-439-2200, ext.
5779Senior Financial
Analystalexander.sarfo@ambest.comorSteven Chirico, CPA,
908-439-2200, ext. 5087Assistant Vice
Presidentsteven.chirico@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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