A.M. Best Affirms Ratings Heddington Insurance Limited

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 the company serves as a captive insurance company for Chevron Corporation [NYSE: CVX].

These positive rating factors are partially offset by the company'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 Heddington’s good loss history supported by very strong investment income and parental support on loans to affiliated companies. Heddington has sufficient resources to meet its underwriting-related obligations, as measured by Best's Capital Adequacy Ratio model.

The ratings are based on the consolidated results of Heddington and its subsidiary, Heddington Insurance (U.K.) Limited. The ratings further reflect risk management programs and underwriting coordination in the design and implementation of insurance policies offered by the company as well as the cost effective manner in which those services are delivered. Heddington also gains from its parent's global scope, which provides it with a favorable geographic distribution of risks assumed.

In its role as a captive insurer, Heddington provides broad and competitive global insurance products for Chevron and its subsidiaries. In addition to Heddington and Heddington Insurance (U.K.) Ltd., the corporation currently owns three other active captives: Iron Horse Insurance Company, Puritan Assurance Ltd. and Traders Insurance Ltd., which was merged with Bermaco Insurance Company Ltd. in December 2006. The insurance needs of the corporation are supplied through these captive operations where appropriate and the commercial market, with many of the insurance arrangements for the parent rationalized among captives to enhance operating efficiencies. Heddington, along with other Chevron captives, provides comprehensive coverage above Chevron's internal retentions, while its reinsurance is placed through a corporate-wide plan with the world's significant providers of capacity, resulting in a diversified and balanced distribution of reinsurers.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.