Zurich Ireland Authorized for European Corporate; S&P Assigns ‘A+’ Rating
Zurich Financial Services Group (ZFS) announced today that Zurich Insurance Ireland Limited (ZIIL), formerly Eagle Star Insurance Company (Ireland) Ltd., will become an EU-wide risk carrier for Global Corporate business with the ability to operate through a branch network under the EU Non-Life Insurance Directives.
“This new structure is aligned to Zurich’s strategy of creating a more effective organization by achieving centrally coordinated and therefore more efficient capital management,” said the bulletin. “ZIIL will specialize in offering insurance cover for cross-border risks and related services to European corporate customers.
“As a first step, ZIIL has established a branch office, Zurich Insurance Ireland Limited UK Branch, which is located in London and will become operative as from May 24, 2005. It will underwrite insurance cover for non-UK domiciled business for Zurich Global Corporate UK’s customers.”
In a separate announcement Standard & Poor’s Ratings Services said it has assigned ZIIL its “A+” long-term counterparty credit and insurer financial strength ratings with a negative outlook.
S&P credit analyst Mark Coleman noted: “The ratings are based on Standard & Poor’s opinion that ZIIL is Core to the ZFS group as a significant vehicle for its international program business. Additional rating factors are ZIIL’s strong prospective competitive position, strong capitalization, and good operating performance. Offsetting these strengths are the uncertainties in the Irish pricing and claims environment.”
S&P said the “negative outlook on ZIIL reflects the negative outlook on other Core entities of ZFS. As a Core subsidiary of ZFS, the ratings on ZIIL will move in tandem with those on the parent. The outlook also reflects Standard & Poor’s expectations that (1) ZIIL will commence underwriting through its U.K. branch in the second quarter of 2005. Subject to regulatory approval, consolidation of further EU branches is expected in the next 12 months; (2) ZIIL’s net exposure to Global Corporate (GC) risks will continue to be substantially protected through internal reinsurance support from ZFS; (3) New business growth in ZIIL’s GC business will not exceed 15 percent of gross premium income after 2005; and 4) GC business will be renewed into ZIIL on a policy-by-policy basis. Failure to achieve these expectations may cause Standard & Poor’s to review the ratings and ZIIL’s status as a Core subsidiary of ZFS.”
In a separate announcement S&P also affirmed its ratings on ZFS (See related article.)
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