A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of "a" of Spirit Insurance Company (Spirit) (Burlington, VT ) and Radius Insurance Company (Radius) (Cayman Islands). The outlook of these Credit Ratings (ratings) is stable. The rating affirmations reflect Spirit's and Radius' excellent risk-adjusted capitalization, sound risk management practices, history of profitable business written from a predecessor captive, as well as the position they hold as the captive insurers for their ultimate parent, Phillips 66 [NYSE: PSX]. The ratings also consider the level of commitment on the part of Phillips 66, whose management incorporates Spirit and Radius as core elements in its overall risk management program. Partially offsetting these positive rating factors are Spirit's and Radius' exposure to large losses due to the limits offered on their respective policies and their significant dependence on reinsurance protection. In addition, Spirit's terrorism risk exposure remains relatively high on a gross basis. Spirit provides property damage, business interruption and excess liability insurance to Phillips 66 and affiliates and subsidiaries related to domestic U.S. operations only, while Radius provides similar coverage (property damage, business interruption, excess liability), as well as marine hull and cargo insurance to Phillips 66 and affiliates, and subsidiaries related to non-U.S. risks in which Phillips 66 has ownership interests. Business is written separately by Spirit and Radius, and each company has a history of strong underwriting results and operating returns. The captives' loss experience has remained favorable due in part to no material catastrophe events and the strong loss control programs at the parent. Phillips 66 conducts periodic reviews of Spirit's and Radius' potential loss exposures through an industrial risks specialist. Although the majority of Spirit's capital is loaned to its parent, there is limited counterparty risk due to the affiliation of the two companies and the alignment of interests.