Best Assigns Ratings to Zurich’s Irish Subsidiary, ZIP

January 20, 2015

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), which is based in Ireland, and is a “key operating subsidiary of Zurich Insurance Group Ltd (Zurich) (Switzerland), the ultimate parent of the Zurich group of companies,” Best said.

The outlook assigned to both ratings is stable.

Best said its 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 percent 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-capitalized insurance group with considerable access to alternative resources to sustain its operations.” Best added that it “believes that ZIP is highly likely to receive capital support if required.”

In addition Best said the ratings of ZIP also “factor in its standalone risk-adjusted capitalization, 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 percent. 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 capitalization 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.”

Source: A.M. Best

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