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HAMILTON, Bermuda--Twelve percent of Oil Insurance Ltd.'s shareholder members are withdrawing from the energy industry mutual effective Jan. 1, 2007, the company announced.
Hamilton, Bermuda-based OIL said in a statement that nine shareholder members have elected to leave and not renew their policies. OIL--one of three mutual insurance firms that, along with Oil Casualty Insurance Ltd. and sEnergy Insurance Ltd., are collectively known as the OIL Group of Cos.--had 83 members prior to the withdrawal.
New York-based Standard & Poor's last week affirmed its A- financial strength rating for OIL but revised its outlook for the company to negative from stable.
George F. Hutchings, OIL's senior vp and chief operating officer, declined to say which OIL shareholder members are leaving. He did note, however, that at least two of the outgoing member companies are shareholders of sEnergy, the catastrophe business interruption and excess property damage insurer for energy companies that in April announced a wind-up of its operations.
The 14 current shareholder members of sEnergy are: BHP Billiton Petroleum (Americas) Inc., CITGO Petroleum Corp., ConocoPhillips, Duke Energy, Koch Industries Inc., Lyondell Chemical Co., Tesoro Petroleum Corp., Suncor Energy Inc., Nova Chemicals Corp., Petro-Canada, Borealis A/S, OMV Aktiengesellschaft, Statoil ASA and Sasol Ltd.
Mr. Hutchings said that the outgoing OIL members are diverse in their risk profiles and in their reasons for leaving. "They all had their different reasons why they left...there was no commonality across the board," he said. "The people that did withdraw represent virtually all of the business sectors" where OIL does business--including offshore energy, onshore energy, mining, pipelines--around the world.
This year, shareholder members under a contractual obligation had to inform OIL of their intent to renew policies with the mutual no later than Oct. 31.
Compared with the nine shareholders who plan to leave at the end of this year, "in the past, in any given year, there have been two to four" members who have departed from the structure at the end of a policy year, said Mr. Hutchings.
In the statement, OIL said "it does not believe that the withdrawal of these shareholders from OIL has had or will have a material adverse effect on our company."