A.M. Best has assigned the financial strength rating of A+ (Superior) and an issuer credit rating (ICR) of “aa-” to Zurich Insurance plc (ZIP) (Ireland), a key operating subsidiary of Zurich Insurance Group Ltd (Zurich) (Switzerland), the ultimate parent of the Zurich group of companies. The outlook assigned to both ratings is stable.
The ratings of ZIP reflect its strategic importance to Zurich as the carrier for the majority of the group’s European general insurance business. Based on recent figures, the company’s gross written premiums (GWP) represent more than 20% of Zurich’s consolidated GWP. ZIP also benefits from explicit support from Zurich Insurance Company Limited (ZIC) (Switzerland), the main operating entity of Zurich, through the provision of extensive reinsurance protections. Zurich is a well-capitalised insurance group with considerable access to alternative resources to sustain its operations. Therefore, A.M. Best believes that ZIP is highly likely to receive capital support if required.
The ratings of ZIP also factor in its standalone risk-adjusted capitalisation, which is expected to be maintained at a solid level, and its strong business profile in the European markets. A partly offsetting rating factor is the company’s weak technical performance as demonstrated by a three-year average combined ratio of 103.7%. However, ZIP has shown early signs of improvement in its underwriting profitability, which is expected to continue in the near term. Nonetheless, ZIP consistently reports good operating results, supported by solid investment returns.
The ratings of ZIC, which are based on the consolidated assessment of Zurich’s financial strength, have been extended to ZIP given its key role in the group. Therefore, any positive or negative actions on the ratings of ZIP will likely move in line with that of ZIC. Additionally, negative rating pressures may arise if ZIP’s standalone risk-adjusted capitalisation deteriorates to a level outside of A.M. Best’s expectation or if there is a sustained deterioration in the overall earnings of the company.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
- A.M. Best’s Perspective on Operating Leverage
- Analyzing Insurance Holding Company Liquidity
- Catastrophe Analysis in A.M. Best’s Ratings
- Equity Credit for Hybrid Securities
- Evaluating Country Risk
- Insurance Holding Company and Debt Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
