The ratings on Zurich Insurance Co. and the core operating subsidiaries of Zurich Insurance Group (ZIG) reflects ZIG's very strong competitive position, very strong underlying performance, and strong enterprise risk management (ERM). These strengths are partly offset by our opinion that ZIG's capitalization, although improved, remains a relative rating weakness. The group's average underlying operating performance in 2007-2011 was very strong, despite unfavorable financial markets and operating conditions. The business operating profit (BOP) after-tax return on equity (ROE) reached 10.2% in 2011, after 12.9% in 2010, versus the group's target of 16%. The five-year average BOP-RoE was 15.2%, we believe as a result of sound and effective segmental and geographic earnings diversification, partly offset by adverse global economic and capital
