Research Update: Zurich Insurance Group Outlook Revised To Stable On Announcement Of Nonbinding Offer For RSA; 'AA-' Ratings Affirmed

On Aug. 25, 2015, Zurich Insurance Co. Ltd. (Zurich) announced its conditional nonbinding offer to acquire RSA Insurance Group PLC's entire issued ordinary share capital for about $9 billion in cash, and, pending the satisfactory resolution of certain terms, RSA's board has indicated its willingness to recommend such a transaction to its shareholders. If the insurers pursue this transaction, we expect that our assessment of Zurich's financial risk profile will not fall below a strong level and that its competitive position will remain extremely strong; this is backed by our view of Zurich's ability to replenish capital through strong earnings. Still, we believe the potential transaction poses significant integration and execution risk, could increase the group?s financial leverage ratio, and

...On Aug. 25, 2015, Zurich Insurance Co. Ltd. (Zurich) announced its conditional + nonbinding offer to acquire RSA Insurance Group PLC's entire issued ordinary share capital for about $9 billion in cash, and, pending the satisfactory resolution of certain terms, RSA's board has indicated its willingness to recommend such a transaction to its shareholders. If the insurers pursue this transaction, we expect that our assessment of Zurich's + financial risk profile will not fall below a strong level and that its competitive position will remain extremely strong; this is backed by our view of Zurich's ability to replenish capital through strong earnings. Still, we believe the potential transaction poses significant integration and + execution risk, could increase the group's financial leverage ratio, and could temporarily lower capital adequacy below the '##' level if completed. We are therefore revising our outlook on Zurich to stable from positive and + affirming our '##-' ratings. The stable...

Research Update