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A.M. Best Affirms Ratings of Sooner Insurance Company CONTACTS:
FOR IMMEDIATE RELEASE OLDWICK, N.J., May 29, 2009—A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Sooner Insurance Company (Sooner) (Burlington, VT). The outlook for both ratings is stable. The ratings are based on Sooner’s excellent capitalization, history of profitable operating results 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 its parent, whose management incorporates Sooner as a core element in its overall risk management program. Partially offsetting these positive rating factors are the captive’s exposure to large losses due to the high limits offered on its policies and the resulting significant dependence on reinsurance protection. Sooner has a history of strong underwriting results and operating returns. Its loss experience has remained favorable due in part to its parent’s strong loss control programs. ConocoPhillips’ risk management conducts periodic reviews of its potential loss exposures through a specialist in industrial risks. Based on this analysis, a single occurrence could result in a large loss that approaches Sooner’s treaty limits. Nonetheless, Sooner has the capital to fund claims in the event of a reinsurance recovery problem, and it participates in the U.S. federal program for terrorism coverage, the Terrorism Risk Insurance Program Reauthorization Act of 2007. Although the majority of Sooner’s capital is loaned to its parent, there is limited counterparty risk due to the affiliation with ConocoPhillips, and ConocoPhillips has a strong balance sheet and a history of favorable earnings. Further, the parent is required to fund annually the loan from its captive. A.M. Best remains the leading rating agency of captive insurers rating a wide variety of more than 200 captives in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative insurance market, please visit www.ambest.com/captive. The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. ### |
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