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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 12, 2018 02:18 PM (EDT)
A.M. Best has upgraded the Long-Term Issuer Credit Rating to “a+” from “a” and affirmed the Financial Strength Rating of A (Excellent) of Sooner Insurance Company (Sooner) (Burlington, VT). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sooner’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The rating upgrade reflects Sooner’s consistent capital and surplus growth, fortified by strong operating results.
The balance sheet strength is underpinned by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), consistently favorable loss reserve development and low underwriting leverage. Although the majority of Sooner’s capital is loaned to its ultimate parent, ConocoPhillips [NYSE: COP], 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.
Sooner’s operating performance has been consistently strong over the past 10 years, driven by solid underwriting profits, with most return metrics outperforming the industry composite and modest investment returns. The company’s loss experience has remained favorable for over a decade. This is due in part to strong risk management programs at ConocoPhillips, whose management views Sooner as a core element in its overall corporate risk management program.
The company’s business profile assessment reflects its position as the captive insurer for its ultimate parent. Sooner’s underwriting risks consist largely of providing property damage, business interruption and general liability coverage to ConocoPhillips and its subsidiaries, including joint ventures worldwide.
With regard to its ERM, ConocoPhillips’ corporate insurance and health, safety and environmental groups have a culture of risk awareness and a framework to identify and manage various different types of risks, such as periodic reviews of their potential loss exposures through a specialist in industrial risks, a process A.M. Best views as appropriate for its risk profile. The ratings also reflect the implicit support of ConocoPhillips and the critical role the captive plays in its ERM program.
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.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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