A.M. Best Affirms Rating of Zurich Specialties London Limited.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Apr. 23, 2002 A.M. Best Co. has affirmed the A (Excellent) financial strength rating of Zurich Specialties London Limited (ZSL ZSL Zoological Society of London (UK) ZSL Zero Slot LAN ZSL Zylog Systems Limited (Edison, New Jersey) ). The rating reflects the company's strategic importance to Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance (ZFS (1) (Zettabyte File System) A distributed file system from Sun that was added to OpenSolaris in 2005 and Solaris 10 in 2006. With support for 128 bits, compared to 64 for NTFS and other contemporary file systems, storage capacity is unlimited for all practical ), which is rated A+ (Superior). It also factors ZSL's excellent capital position, good operating performance and excellent business profile in specialist insurance sectors. Offsetting these factors is ZSL's heavy reliance upon outwards reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. . Strategic importance to ZFS--A.M. Best regards ZSL as strategically important to its ultimate parent (ZFS) and believes it plays a key role within the group. Further, the company benefits from a multi-year stop-loss arrangement provided by Zurich Insurance Company. Excellent capitalisation--ZSL's capitalisation is excellent according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. A.M. Best's risk-adjusted capital model with a capital adequacy level of 149% at year-end 2001. Prospectively, capital adequacy is likely to remain supportive of the company's current rating level. The company's current liquidity ratio is very low (45% at year-end 2001). However, this is somewhat offset by the high proportion (approximately 70%) of premium ceded to ZFS group companies, which are unlikely to delay claim payments. Good operating performance--Despite the 93% deterioration in operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in 2001 to GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1.5 million--mainly attributed to its WTC WTC World Trade Center, see there net loss (GBP 9.4 million)--ZSL maintains a good operating performance. Traditionally, ZSL has relied on its investment returns (five-year average of 8.5%) to smooth its deteriorating underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance (five-year average combined ratio of 121.3%). However, A.M. Best expects an improvement in ZSL's underwriting results, likely to lead to a 15%-20% reduction in the combined ratio in 2002 (the combined ratio in 2001 was 130.6%). The company's five-year average return on equity was excellent at 10.7%. Excellent business profile--As part of the Zurich London trading platform, ZSL has developed its business position as an underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. of specialist insurance risks in London. A.M. Best believes that the company benefits from the Zurich brand and from the recent market withdrawals. A.M. Best projects compound net written premium annual growth of 6.5% to 2004 (GBP 128.3 million in 2001). Reliance on outwards reinsurance--ZSL operates with a low net retention with 65% of premium ceded in 2001, unlikely to be altered in the foreseeable future. Approximately 70% of this volume was ceded to companies within the group. Expectations: -- ZSL is likely to remain a strategically important affiliate in the ZFS group and maintain its leading position as underwriter of specialist risks in the London market. -- The company is likely to maintain its risk-adjusted capitalisation at the current level or above. -- A.M. Best's forecast for retained earnings during 2002-2004 indicates sufficient growth in capitalisation to support these business volumes. -- A significant improvement in operating performance will be achieved through stronger underwriting and continued solid investment returns. -- A high proportion of outwards reinsurance protection will continue to be provided by other companies within the group. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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