A.M. Best Affirms Zurich Insurance Co., Farmers Insurance in Light of Planned Merger With B.A.T. Industries.OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 20, 1997--Effective immediately, A.M. Best Co. has affirmed the ratings of Zurich Insurance Co. (Switzerland) and of Farmers Insurance Group's (Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. ) property/casualty and life/health subsidiaries. The affirmations follow the announcement that Zurich Insurance and B.A.T Industries p.l.c. have reached an agreement in principle to merge Zurich with B. A. T's financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. businesses in a stock-for-stock transaction. These businesses are complementary and would create a financial service organization with a strong presence in insurance, 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. and asset management. Under the agreement, a new Swiss company, headquartered in Zurich, would be called 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 Group. Zurich Financial Group would be one of the world's largest insurance groups, with a top-10 position in the growing asset-management industry. The transaction would allow both groups to build on strong positions in key markets, including the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , United Kingdom, Switzerland and Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. . In the United States, the merger with Farmers will allow Zurich Group to immediately achieve a significant presence in the personal lines market. Long-term benefits include the opportunity to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. Farmers' strong captive distribution system in the United States. Furthermore, in combination with Zurich Group's pending acquisition of Scudder, Stevens & Clark, Zurich Financial will be one of the leading financial services organizations. The agreement contains a number of conditions that must be met to ensure the completion of the merger. Most notably, B. A. T Industries would hold Zurich harmless from any potential tobacco liability stemming from its tobacco operation. As part of this complicated transaction, B. A. T would spin off its tobacco division in a separate legal entity, British American Tobacco plc British American Tobacco PLC formerly British-American Tobacco Company Ltd. (1902–76) and B.A.T Industries PLC (1976–98) British conglomerate that is one of the world's largest manufacturers of tobacco products. . The transaction, which management expects to close in the third quarter of 1998, is subject to shareholder and regulatory approval. To the extent that there are any material changes to the transaction, A. M. Best will determine the rating implications. The affirmations apply to the following companies: Zurich Insurance Co. (Switzerland) ("A+"), Farmers Insurance Group ("A-"), Mid-Century Insurance Co. ("B++"), and Farmers New World Life Insurance Co.("A+"). The ratings of all other Zurich Group and B. A. T insurance subsidiaries are unaffected. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. CONTACT: A.M. Best Jeffrey Dunsavage, 908/439-2200, ext. 5618 dunsavj@ambest.com |
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