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BEST'S CREDIT RATING ACTION

Best’s News & Research Service - October 21, 2022 09:06 AM (EDT)

AM Best Affirms Credit Ratings of Zurich Insurance Group Ltd and Its Main Rated Subsidiaries

  • October 21, 2022 09:06 AM (EDT)

London //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (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 affirmed the Long-Term ICR of “a” (Excellent) of Zurich (a non-operating holding company). The outlook of the FSR is stable while the outlook of the Long-Term ICRs is positive.

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 positive outlook on the Long-Term ICRs reflects AM Best’s expectation that strong and stable operating returns from Zurich’s various profit centres will continue to support the resilience of its balance sheet strength. The group’s asset-liability and liquidity management capabilities are expected to help it to withstand current external headwinds associated with financial market volatility and uncertain macroeconomic prospects.

Zurich’s balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which was at the strongest level at year-end 2021. The group’s balance sheet strength benefits from excellent liquidity and good financial flexibility, with demonstrated access to financial markets. AM Best expects Zurich’s balance sheet sensitivity to market risk to diminish substantially following the disposal of parts of its German and Italian life insurance back books, which should be completed over 2022 and 2023. In addition, the group has enhanced its reserving practices in recent years and is taking actions as needed to account for current inflationary pressures. A partially offsetting factor is Zurich’s moderate reliance on soft capital components to support its capital position, which include the value of in-force life business. AM Best expects this to reduce following completion of the sale of the German and Italian life back-books.

The group’s strong operating performance is supported by a highly diversified earnings profile by line of business and geography. Over the past several years, Zurich has successfully improved the performance of its property and casualty portfolio. The group’s income is supported by solid returns from its life operations, as well as stable investment income. Furthermore, operating results are enhanced by the consistent fee-based income derived from Zurich’s non-claims management services for Farmers Exchanges (a leading mutual insurance group operating in the United States). As a result, Zurich has delivered a solid five-year (2017-2021) average return on equity of 11.8% (as calculated by AM Best). At half-year 2022, the group reported a net income attributable to shareholders of USD 2.2 billion (half-year 2021: USD 2.2 billion), supported by strong results across all its profit centres.

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 FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) have been affirmed with a stable outlook on the FSR and a positive outlook on the Long-Term ICR, 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 Performance Assessments, 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.



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