AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of 'a' (Excellent) of Spirit Insurance Company (Spirit) (Colchester, VT) and Radius Insurance Company (Radius) (Cayman Islands).

The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Spirit and Radius' balance sheet strength, which AM Best assesses as very strong, as well as each company's adequate operating performance, neutral business profile and appropriate enterprise risk management.

Spirit and Radius each have the inherent benefits of financial flexibility and support as captive insurers for their ultimate parent, Phillips 66 [NYSE: PSX], with integrated operations, closely aligned and uniform interests, and are established core elements in its overall risk management program. The captives' loss experience has remained generally favorable due to the parent's strong loss-control program and relatively small number of material catastrophe losses. Phillips 66 conducts periodic reviews of Spirit and Radius' potential loss exposures through an industrial risks specialist, which demonstrates its commitment to safety.

The captives' underwriting risks largely consist of onshore and limited offshore property and liability business. Spirit provides property damage, business interruption, construction all-risks, excess liability and employee medical reimbursement insurance for Phillips 66, its affiliates and subsidiaries' domestic U.S. operations only; however, Spirit generally does not provide coverage for Texas-based risks. Radius provides similar coverage (i.e., property damage, business interruption, excess liability) to Phillips 66, its affiliate and subsidiaries' non-U.S. risks in which Phillips 66 has ownership interests. As of 2022, premium and exposures for Radius decreased after removing U.K. property exposures from the captive.

Spirit and Radius have exposure to low frequency, high severity loss claims due to the sizable limits offered on their respective policies, introducing potential significant dependence on reinsurance protection. Spirit also provides terrorism coverage to its parent. Though relatively high on a gross basis, terrorism exposure is heavily mitigated by reinsurance protection afforded by coverage under the federal Terrorism Risk Insurance Program Reauthorization Act, which expires in 2027.

AM 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 AM 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 AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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