AM Best Revises Issuer Credit Rating Outlook to Positive for Zurich Insurance Group Ltd and Its Main Rated Subsidiaries

LONDON--(BUSINESS WIRE)--
AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of the main rated insurance subsidiaries of Zurich Insurance Group Ltd (Zurich) (Switzerland). At the same time, AM Best has revised the Long-Term ICR outlook to positive from stable for Zurich, a non-operating holding company, and affirmed its Long-Term ICR of “a” (Excellent). The outlook of the FSRs is stable.

The Credit Ratings (ratings) reflect Zurich’s consolidated balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, very favourable business profile and appropriate enterprise risk management (ERM).

The revision of the Long-Term ICR outlook to positive reflects AM Best’s expectation that Zurich’s strong and stable operating performance, underpinned by improved profitability of its commercial property and casualty business and higher revenues derived from management services for Farmers Exchanges, will support the resilience of its balance sheet.

Zurich’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is at the strongest level. The group’s balance sheet strength further benefits from excellent liquidity and good financial flexibility, with demonstrated access to financial markets. A partially offsetting factor is Zurich’s reliance on soft capital components to support its capital position, which include the value of in-force life business and hybrid debt.

The group’s strong operating performance is supported by a highly diversified earnings profile by line of business and geography. Results are enhanced by the consistent fee-based income derived from its non-claims management services for Farmers Exchanges (a leading mutual insurance group operating in the United States), which is expected to increase following the completion of the joint acquisition of MetLife’s U.S. property and casualty operations by Farmers Exchanges and Farmers Group, Inc., a member of Zurich, in April 2021. The Zurich group’s income is supported by solid returns from its life operations, as well as stable investment income. Additionally, the underlying performance of the group’s non-life business has improved in recent years, driven by stronger underwriting discipline, favourable pricing conditions and a shift in business mix toward less volatile shorter-tail and specialty lines of business. As a result, Zurich has delivered a solid five-year (2016-2020) return on equity of 11.2%.

Zurich is one of the world’s largest insurance groups, with excellent diversification by geography and product. The group maintains strong competitive positions in Europe and the United States, a strong presence is Latin America and selective positions in Asia Pacific.

The Long-Term ICR outlook has been revised to positive from stable, whilst, the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) have been affirmed, with a stable outlook on the FSR, for the following subsidiaries of Zurich:

• Zurich Insurance Plc
• The Fidelity and Deposit Company of Maryland
• Empire Fire and Marine Insurance Company
• Empire Indemnity Insurance Company
• Universal Underwriters Insurance Company
• American Guarantee and Liability Insurance Company
• American Zurich Insurance Company
• Universal Underwriters of Texas Insurance Company
• Steadfast Insurance Company
• Zurich American Insurance Company
• Zurich American Insurance Company of Illinois
• Colonial American Casualty & Surety Company
• Rural Community Insurance Company
• Zurich Insurance Company Limited
• Zurich American Life Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Jessica Botelho-Young, CA

Associate Director, Analytics

+44 20 7397 0310

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

Ghislain Le Cam, CFA, FRM

Director, Analytics

+44 20 7397 0268

[email protected]

Jim Peavy
Director, Communications

+1 908 439 2200, ext. 5644

[email protected]

Source: AM Best