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

AM Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to "aa" (Superior) from "aa-" (Superior) and affirmed the Financial Strength Ratings (FSR) of A+ (Superior) of the main rated insurance subsidiaries of Zurich Insurance Group Ltd (Zurich) (Switzerland). At the same time, AM Best has upgraded the Long-Term ICR to "a+" (Excellent) from "a" (Excellent) of Zurich, a non-operating holding company. The outlook of the Long-Term ICR has been revised to stable from positive, whilst the outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Zurich's consolidated balance sheet strength, which AM Best assesses as very strong, as well as the group's strong operating performance, very favorable business profile and appropriate enterprise risk management.

The upgrades for the Long-Term ICRs reflect the continued resilience of the group's balance sheet strength, underpinned by excellent financial flexibility, and strong operating returns from its diverse profit centres. Over the past several years, the group's pricing actions, risk selection and natural catastrophe exposure management, have led to an improved and less volatile performance of its property/casualty portfolio. In addition, the group's life operations and fee business provide it with solid additional earning streams, supporting robust internal capital generation.

Zurich's balance sheet strength is underpinned by risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), which is at the strongest level. The assessment considers Zurich's consolidated financial leverage, which is expected to remain stable over the coming years, together with the group's strong capital management capability, excellent financial flexibility, and solid regulatory solvency position. Zurich reported a Swiss Solvency Test coverage ratio of 224% as at the end of September 2024 (year-end 2023: 233%). AM Best's assessment of Zurich's risk-adjusted capitalisation includes a contribution from economic capital embedded in long-term business and equity credit for hybrid debt, which are considered weaker elements of the group's capital structure.

Zurich's strong operating performance is supported by a highly diversified earnings profile by line of business and geography. This was illustrated by a robust net combined ratio of 94.5% for 2023, as calculated by the group. Earnings have been supported by good growth across protection and savings products, evidenced by growth in life present value of new business premiums of 24% in 2023. Results are enhanced by the consistent fee-based income derived from Zurich's non-claims management services for Farmers Exchanges (a leading insurance group operating in the United States), of USD 1.9 billion in 2023.

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 in Latin America and selective positions in Asia Pacific.

The Long-Term ICRs have been upgraded to "aa" (Superior) from "aa-" (Superior), whilst the FSRs of A+ (Superior) has been affirmed, with the outlook of the Long-Term ICRs revised to stable from positive and the outlook of the FSRs maintained at stable for the following subsidiaries of Zurich:

• 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
• Zurich American Insurance Company
• Rural Community 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
• 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. For more information, visit www.ambest.com.

Copyright 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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