A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and issuer credit ratings (ICR) of “aa-” of Zurich American Insurance Company (Zurich US), headquartered in Schaumburg, Illinois, and its property/casualty pooling affiliates.
Zurich US and its affiliates are subsidiaries of Swiss-based Zurich Insurance Company Limited (ZIC). Best has also affirmed its ratings on the parent company and its subsidiaries.
Best’s outlook for all of the ratings is stable.
The ratings reflect the “favorable operating performance of Zurich US since 2006, the group’s strong level of risk-adjusted capitalization and its highly established enterprise risk management practices that comprise the organization,” said Best.
“Additional positive rating factors include Zurich US’ profile as one of the top five writers of property/casualty insurance in the United States, giving it market leadership in many of its key product lines and territories. The implicit support of ZIC and the strategic importance of the parent’s U.S. operations to the group’s worldwide operations also are key drivers of the ratings.”
Best also indicated that despite “relatively poor earnings prior to 2007 (driven by adverse loss reserve development and underpriced business written in prior years), reserve development for Zurich US has improved in recent years across most lines, with results since 2006 that are in-line with the commercial casualty industry composite.
“Additionally, Zurich US has been disciplined in pricing with its continued efforts in rate tiering and portfolio reshaping. Furthermore, Zurich US has sizable amounts of third-party reinsurance recoverables relative to its surplus.”
In addition Best pointed out that the” large amounts of reported collateral on its foreign reinsurance recoverables and the relative strength of its domestic based reinsurers” substantially offset these risks. “The rating outlook recognizes A.M. Best’s view that current earnings will be sustainable in the medium term.”
Best summarized the companies affected by the ratings as follows:
The FSR of ‘A+’ (Superior) and ICR of “aa-” have been affirmed for Zurich American Insurance Company and its following property/casualty pooling affiliates:
– Fidelity and Deposit Company of Maryland
– Empire Fire and Marine Insurance Company
– Empire Indemnity Insurance Company
– Universal Underwriters Insurance Company
– Assurance Company of America
– Maryland Casualty Company
– Northern Insurance Company of New York
– American Guarantee and Liability Insurance Company
– American Zurich Insurance Company
– Universal Underwriters of Texas Insurance Company
– Steadfast Insurance Company
– Zurich American Insurance Company of Illinois
– Colonial American Casualty & Surety Company
Source: A.M. Best