MOODY'S LOWERS INSURANCE FINANCIAL STRENGTH RATINGS OF ZURICH INSURANCE COMPANY AND ALPINA INSURANCE COMPANY LIMITED TO Aa1 FROM Aaa
London, 11-03-95 -- Moody's Investors Service announced today that it was downgrading the financial strength ratings of Zurich Insurance Company and its majority owned subsidiary Alpina Insurance Company Limited from Aaa to Aa1. These ratings were placed under review for possible downgrade on 11 April 1995, after Zurich Insurance announced that it planned to acquire, together with other investors, Kemper Corporation for approximately US$2 billion. Kemper Corporation is the parent company of a United States-based financial services group comprising two life insurers, and a mutual fund manager.
Moody's stated that Zurich Insurance Company is increasingly challenged by market and shareholder pressures in Europe and the United States, as well as rapid consolidation and commoditization trends in the insurance and asset management industries. Moody's added that management's decision to deploy a substantial amount of the group's capital to expand operations in the difficult U.S. life and nonlife industry, meaningfully altered the operating and financial leverage of the Zurich Insurance Company and the group.
Recognizing long-term global trends in the savings, pensions, and investment fields, Zurich Insurance has been expanding its life insurance business through its subsidiaries. In the last decade, the group expanded rapidly both organically and through acquisitions, and in the last year its pace accelerated as it engaged in three separate transactions in the United States: one with Home Insurance, a medium-sized commercial lines writer; another one with Re Capital, a small reinsurer; and the last and largest one with the Kemper Corporation. Prior to the acquisition announcement, the Kemper life insurance companies were rated Baa1 for financial strength.
Moody's also said that the Aa1 rating reflects Zurich Insurance's excellent performance over an extended period of time, as well as its still strong capitalization, consistent strategy, and credible management team. The company is a property and casualty insurer and reinsurer, and the main holding company of the group. It is acknowledged as one of the few global players in the international insurance industry. Zurich Insurance and its life insurance subsidiaries rank among the three largest life and nonlife insurers in Switzerland, and its reinsurance operations have attained a significant presence in some markets, notably those of London, the United States broker market, and Bermuda. Established in 1872, the company has managed to enter and to expand, with a notable degree of success, in some of the most competitive markets in the world, while at the same time increasing its profits.
The ratings affected are the following:
Zurich Insurance Company -- insurance financial strength rating, downgraded to Aa1 from Aaa.
Alpina Insurance Company Limited -- insurance financial strength rating, downgraded to Aa1 from Aaa.
Zurich Life Insurance Company of America -- still under review for downgrade, pending the acquisition of Kemper.
Zurich Reinsurance Centre Holdings, Inc. -- A1 senior debt rating is confirmed.
Zurich Insurance Company is the main operating company and ultimate holding company of the Zurich Insurance Group. At year-end 1994, the group reported consolidated assets of Sfr 91.5 billion (US$ 72 billion), and shareholder funds of Sfr 9.4 billion (US$ 7.5 billion). Zurich Insurance Company is based in Zurich, Switzerland.
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