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

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and 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). The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)

“Risk Management and the Rating Process for Insurance Companies”

The ratings reflect Zurich US’ trend of favorable 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 five 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. operation to Zurich’s worldwide operation.

Somewhat offsetting these positive rating factors are the ongoing competitive environment within the property/casualty markets and Zurich US’ exposure to natural and man-made catastrophes. Although Zurich has not given guidance on any losses as a result of Hurricane Sandy, the losses are expected to be reasonably significant, albeit manageable in the context of Zurich’s overall 2012 results.

Upwards rating actions are unlikely at this point.

However, 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, any lessening of implicit or explicit support from Zurich or if prospective losses from Hurricane Sandy were significantly outside Zurich’s risk tolerance.

The FSR of A+ (Superior) and 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. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Catastrophe Analysis in A.M. Best Ratings”; “The Treatment of Terrorism Risk in the Rating Evaluation”; and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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