Best Upgrades Ratings of Zurich’s U.S. Subsidiaries to ‘A+’

A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘A+’ (Superior) from ‘A’ (Excellent) and issuer credit ratings (ICR) to “aa-” from “a+” of the U.S. subsidiaries of Zurich Insurance Company Limited (ZIC), including the lead company of the U.S. group, Zurich American Insurance Company (Zurich US) and its rated property/casualty pooling affiliates. The outlook for all ratings is stable.

Best has also taken the same action for Zurich Insurance Company, the main operating unit of Zurich Financial Services.

Best said the ratings reflect the “improved underwriting and operating performance of Zurich US in recent years, particularly on an accident year basis, as well as the strong level of risk-adjusted capitalization and enterprise risk management practices that have strengthened the organization as a whole.

“Additional positive factors include the enhanced profile of the group 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.”

In addition Best noted the “implicit support of ZIC and the strategic importance of the parent’s U.S. operations to the worldwide operations of the group,” which it said are “key drivers of the rating upgrades.”

Best added that “notwithstanding 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 accident year results now more comparable with the commercial casualty industry composite.”

The stable rating outlook recognizes Best’s view that “current earnings will be sustainable in the medium term.”

The subsidiary companies affected by the rating actions are as follows:
FSR has been upgraded to ‘A+’ (Superior) from ‘A’ (Excellent) and the ICRs to “aa-” from “a+” with a stable outlook for Zurich American Insurance Company and its following P/C 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