LONDON–(BUSINESS WIRE)–AM Best affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” (Superior) of Zurich’s major rated insurance subsidiaries Insurance Group SA (Zurich) (Switzerland). At the same time, AM Best confirmed the long-term ICR of “a” (Excellent) from Zurich (a non-operating holding company). The outlook for FSR is stable while the outlook for long-term ICRs is positive.
The credit ratings (ratings) reflect the strength of Zurich’s consolidated balance sheet, which AM Best assesses as very strong, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).
The positive outlook on long-term KPIs reflects AM Best’s expectation that strong and stable operating performance across Zurich’s various profit centers will continue to support the resilience of its balance sheet strength. The group’s asset-liability management and liquidity capabilities should help it weather the current external headwinds associated with financial market volatility and an uncertain macroeconomic outlook.
Zurich’s balance sheet strength is driven by risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at its highest level at the end of 2021. The group’s balance sheet strength benefits from excellent liquidity and good financial flexibility, with proven access to financial markets. AM Best expects the sensitivity of Zurich’s balance sheet to market risk to decrease significantly following the divestiture of parts of its German and Italian life insurance portfolios, which is expected to be completed in 2022 and 2023. Furthermore, the group has improved its provisioning practices in recent years. and takes the necessary measures to take account of current inflationary pressures. A partially offsetting factor is Zurich’s moderate reliance on soft capital components to support its capital position, which includes the value of in-force life insurance business. AM Best expects this to decrease after the sale of the German and Italian life portfolios is finalized.
The group’s solid operational performance is underpinned by a highly diversified earnings profile by business sector and geographic region. Over the past few years, Zurich has succeeded in improving the performance of its P&C insurance portfolio. Group revenues are supported by strong returns from its life operations, as well as stable investment income. In addition, operating results are enhanced by ongoing fee-based revenue from Zurich’s non-claims management services for Farmers Exchanges (a leading mutual insurance group operating in the United States). As a result, Zurich achieved a strong five-year (2017-2021) average return on equity of 11.8% (as calculated by AM Best). In the first half of 2022, the group recorded a net profit attributable to shareholders of $2.2 billion (half year 2021: $2.2 billion), supported by strong results in all its profit centers.
Zurich is one of the largest insurance groups in the world, with excellent geographic and product diversification. The group retains strong competitive positions in Europe and the United States, a strong presence in Latin America and selective positions in Asia-Pacific.
The FSR of A+ (Superior) and the long-term ICR of “aa-” (Superior) have been confirmed with a stable outlook on the FSR and a positive outlook on the long-term ICR, for the following Zurich subsidiaries :
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Zurich Insurance Ltd
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The Loyalty and Depository Society of Maryland
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Empire Fire and Marine Insurance Company
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Empire Indemnity Insurance Company
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Universal Underwriters Insurance Company
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American Warranty and Liability Insurance Company
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Zurich American Insurance Company
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Texas Insurance Company Universal Underwriters
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Steadfast insurance company
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Zurich American Insurance Company
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Zurich American Insurance Company of Illinois
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American Colonial Accident and Bond Company
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Rural Community Insurance Company
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Zurich Insurance Company Ltd
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Zurich American Life Insurance Company
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