A.M. Best Affirms Ratings of Heddington Insurance Limited

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The FINANCIAL — A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a+" of Heddington Insurance Limited (Heddington) (Bermuda).

The outlook for both ratings is stable.

The ratings reflect Heddington's superior capitalization, consistently positive operating results and the role that it plays as a captive insurance company of Chevron Corporation (Chevron).

These positive rating factors are partially offset by Heddington's high net loss exposures, as the coverages provided tend to result in claims that are characterized as low frequency but high severity. This is somewhat mitigated by the captive's good loss history supported by very strong investment income and parental support provided by high yield loans to affiliated companies. Heddington has sufficient capital resources to meet its underwriting related obligations, as measured by Best's Capital Adequacy Ratio (BCAR).

The ratings are based on the consolidated results of Heddington. The ratings further recognize the company's strong enterprise risk management controls and underwriting expertise and loss controls offered in the structuring of insurance coverages offered by Heddington, as well as the cost effective manner in which those services are delivered. Heddington also gains from Chevron's global scope, which provides it with a favorable geographic distribution of assumed risks.

In its role as a captive insurer, Heddington along with Iron Horse Insurance Company (another active Chevron captive) currently provide broad and competitive global insurance products for Chevron and its subsidiaries. The insurance needs of Chevron are supplied through these captive operations where appropriate and the commercial market. Heddington and the other Chevron captives provide comprehensive coverage above Chevron's internal retentions, while Heddington's reinsurance is placed through a corporate wide plan with the world's leading providers of capacity, resulting in a diversified and balanced distribution of reinsurers.

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.

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