The ratings on the various operating entities of Switzerland-based insurance group Zurich Financial Services (collectively ZFS), including the members of the Zurich U.S. Intercompany Pool (ZUS), reflect the group's continued positive earnings momentum as a result of further improvements in business fundamentals, operational processes, and risk controls. Further factors supporting the ratings are ZFS' very strong competitive position and strong capitalization. Partially offsetting these strengths, however, are the unsatisfactory operating performance of the U.S. operation, ZUS, and the potential for further--albeit lower scale--reserve deficiencies. ZFS' operating performance is strong. The group has successfully demonstrated its ability to leverage its well-diversified portfolio across geographic areas and business lines. It has produced steady earnings improvements over the past three years, despite significant
