OREANDA-NEWS. S&P Global Ratings said today that it revised its outlook on U. S.-based Iron Horse Insurance Co. to negative from stable and affirmed its 'A+' financial strength and long-term counterparty credit ratings.

On Sept. 13, 2016, we affirmed our ratings on Chevron, including the 'AA-' long-term corporate credit, and revised the rating outlook to negative from stable. The revised outlook reflects our view that Chevron's credit measures will be weak for our expectations for a 'AA-' rating through 2017 (see Chevron Corp. Rating Outlook Revised To Negative From Stable On Revised Operating Assumptions; 'AA-' Rating Affirmed, published Sept. 13, 2016, on RatingsDirect).

"The ratings and outlook on Iron Horse reflect our view that the company is highly strategic to Chevron Corp. under our group methodology criteria," said S&P Global Ratings credit analyst Jeff Pusey. Our ratings on a highly strategic subsidiary are one notch below the group credit profile (the ratings assigned to the core subsidiaries of the group) and carry the same outlook. We view Iron Horse as an integral part of the group's financial and risk-management structure, as it plays a significant role in the group's risk-retention strategy. Partly offsetting these strengths are its relatively weak operating performance and capital adequacy.

Wholly owned and managed entirely by Chevron, Iron Horse, incorporated in 2005, provides property, construction, liability, marine cargo, and marine hull coverage to Chevron and its subsidiaries globally. Because of the nature of its risk profile, Iron Horse is exposed to low-frequency but high-severity losses. However, in the event of a large loss or aggregation of smaller losses, we believe the parent will provide liquidity and capital support as needed.

The negative outlook on Iron Horse reflects that on its ultimate parent. We believe that Iron Horse will continue to qualify as a highly strategic subsidiary under our rating criteria during the rating horizon of two years. Therefore, any changes in the outlook or ratings on Iron Horse will depend on rating actions on Chevron Corp.