Zurich Insurance’s improved financial performance has earned it a ratings upgrade from Standard & Poor’s.

The Swiss insurer and its core operating entities now have an S&P rating of ‘AA’, up from ‘AA-‘. Similarly, Zurich Australia’s rating is now ‘AA-‘, improved over the previous ‘A+’ rating.

Zurich also has an S&P stable outlook.

S&P explained that a ratings upgrade recognizes Zurich’s upward trajectory as well as strong fundamentals.

“Zurich’s 2020 performance, with a return on equity (ROE) of 10.7 percent, combined ratio of 98.4m and stable fee contribution from Farmers Group Inc., continued to demonstrate very strong operating performance compared with the GMI peer group,” S&P said.

The ratings entity added that Zurich typically performs well, though it suffered a bit in 2015. Since then, S&P said, Zurich has rebounded and then some.

Zurich “has consistently delivered on its strategic plan resulting in very strong five-year average [return on equity] of 11.2 percent,” S&P said. “The group benefits from strict and conservative underwriting limits, which safeguards it from larger losses, like from COVID-19 or during the busy U.S. hurricane season in 2017.”

As a result, Zurich has booked steadier earnings than its peers, even in years with large losses, according to Standard & Poor’s. That track record puts in in league with other strong, steady performers such as Allianz, Chubb and Prudential, according to the ratings agency.

“Overall, we expect the group’s performance to remain resilient on account of globally diversified insurance offerings where [Zurich] continues to benefit from favorable rate development in commercial lines,” S&P said.

Source: S&P Global Ratings