A.M. Best Affirms Ratings of Sooner Insurance Company

  A.M. Best Affirms Ratings of Sooner Insurance Company

Business Wire

OLDWICK, N.J. -- May 17, 2013

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
consistently producing net underwriting income and net income, as well as
being the captive insurer for its ultimate parent, ConocoPhillips (NYSE: COP).
The ratings also consider the parent’s overall risk management strategy and
Sooner’s core involvement in this strategy.

Partially offsetting these positive rating factors is the possible change in
Sooner’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 has a history of strong underwriting results and operating returns. Its
loss experience has remained favorable due, in part, to ConocoPhillips’ strong
risk management program. ConocoPhillips’ corporate insurance and health,
safety and environmental groups conduct periodic reviews of its potential loss
exposures through a specialist in industrial risks. From year to year, Sooner
may have high net retentions based upon the capacity of the overall insurance
market. However, if net retentions were to increase, Sooner does have the
capital to retain these risks. Although the majority of the company’s capital
is loaned to ConocoPhillips, there is limited counterparty 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 and/or a significant change
in Sooner’s risk profile.

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.

Contact:

A.M. Best Co.
Nick Dranchak, 908-439-2200 ext. 5629
Financial Analyst
nick.dranchak@ambest.com
Rachelle Morrow, 908-439-2200 ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
Steven Chirico, CPA, 908-439-2200 ext. 5087
Assistant Vice President
steven.chirico@ambest.com
Jim Peavy, 908-439-2200 ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
 
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