A.M. Best Affirms Ratings of Zurich American Insurance Company and Its Affiliates

A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of Zurich American Insurance Company (Zurich US) (headquartered in Schaumburg, IL) and its property/casualty pooling affiliates. Zurich US and its affiliates are subsidiaries of Zurich Insurance Company Limited (ZIC) (Switzerland), the main operating company of Zurich Insurance Group Ltd (Zurich) (Switzerland) [NYSE: ZURN]. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)

The ratings reflect Zurich US’ relatively favorable trend of positive operating performance over the past five years, strong level of risk-adjusted capitalization and its comprehensive enterprise risk management practices. Additional positive rating factors include Zurich US’ profile as one of the top writers of commercial property/casualty insurance in the United States, the implicit and explicit support provided by Zurich and the strategic importance of the U.S. group to Zurich’s worldwide operations.

Somewhat offsetting these positive rating factors are the ongoing competitive environment within the U.S. property/casualty markets and Zurich US’ exposure to natural and man-made catastrophes. In addition, the group’s loss ratio over the last five years has been elevated compared with similarly rated peers; however, this is offset by the group’s favorable expense ratio that is substantially lower than industry composite norms and the attritional loss ratio that has continued to improve, resulting in the group reporting generally favorable combined ratios during this time.

While A.M. Best believes that Zurich US’ ratings are well positioned at their current rating levels, positive movement could occur should the group’s underwriting and operating performance continue to compare favorably with its peers while maintaining strong risk-adjusted capitalization. Factors that could lead to negative rating actions include deterioration in Zurich US’ underwriting and operating performance to a level below its peers, an erosion of surplus that causes a decline in risk-adjusted capital to a level no longer supportive of the group’s current ratings and any lessening of implicit or explicit support from Zurich.

The FSR of A+ (Superior) and the ICRs 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

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 utilized:

  • Understanding BCAR for Property/Casualty Insurers
  • Catastrophe Analysis in A.M. Best Ratings
  • Rating Members of Insurance Groups
  • Risk Management and the Rating Process for Insurance Companies
  • The Treatment of Terrorism Risk in the Rating Evaluation
  • Gauging the Basis Risk of Catastrophe Bonds

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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts:

A.M. Best Company
Michael Russo
Senior Financial Analyst
(908) 439-2200, ext. 5372
michael.russo@ambest.com
or
Michael Lagomarsino, CFA
Assistant Vice President
(908) 439-2200, ext. 5810
michael.lagomarsino@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

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