OLDWICK: AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Sooner Insurance Company with a stable outlook.
The ratings reflect Sooner’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
These factors are supported by Sooner’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), consistently favorable operating results, favorable loss reserve development and low underwriting leverage.
The ratings also consider the level of commitment on the part of its ultimate parent, ConocoPhillips, whose management incorporates Sooner as a core element in its overall risk management program. Although the majority of Sooner’s capital is loaned to its parent, 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-plus years, driven by solid underwriting profits, with most return metrics outperforming the industry composite, as evidenced by a five-year (2014-2018) average combined ratio of 11% 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.
From an ERM perspective, 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 AM 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.