After Zurich Insurance Group completed its 100% acquisition of specialist insurer Beazley, Fitch Ratings has upgraded the Insurer Financial Strength (IFS) Rating of Beazley Insurance DAC to ‘AA’ from ‘A+’, and also upgraded the Long-Term Issuer Default Ratings (IDRs) of the Dublin subsidiary and Beazley plc to ‘AA-‘ from ‘A’.
On October 1st, Zurich completed its £8.1 billion takeover of London-headquartered specialist insurer Beazley, and subsequently appointed Kristof Terryn as CEO of Beazley and Zurich Global Specialty.
Today, Fitch, a global credit rating agency, alongside upgrading Beazley Insurance DAC’s IFS Rating and Beazley’s IDRs, has removed the rating from Rating Watch Positive, and confirmed that the outlooks are stable.
The deal creates a huge, global specialty insurance business, with Zurich CEO Mario Greco stating previously that by 2029, “the integration of Beazley will generate incremental revenue growth of over $1 billion per annum.”
Fitch’s upgrades reflect its assessment of Beazley’s strategic importance to Zurich, which it determines as ‘Very Important.’
“This results in a two-notch uplift from Beazley’s standalone credit quality of ‘a+’ for its IFS Rating, given ZIG’s stronger credit quality. The Stable Outlook reflects the Stable Outlook on ZIG’s ratings and Fitch’s expectation that Beazley will remain strategically ‘Very Important’ to the group,” said Fitch. “Beazley’s standalone credit assessment continues to reflect its strong company profile, very strong financial performance and capitalisation, and conservative approach to reserving and investments.”
Fitch expects Beazley to be central to Zurich’s combined specialty business, and also provide the global insurer with a leading position in the Lloyd’s market, including cyber, where Beazley is a top market player.
“The acquisition supports ZIG’s strategic objective of expanding its specialty insurance franchise. Fitch expects Beazley to continue operating as ZIG’s specialty business platform while retaining its brand and underwriting culture. This should support continuity in underwriting discipline, client relationships and the retention of key personnel,” said Fitch.
The rating agency also expects Zurich to provide strong support to Beazley if needed, and feels that Beazley’s integration into Zurich strengthens its financial flexibility as well as access to capital.
Fitch has also highlighted Beazley’s strong company profile, supported by its favourable diversification by geography and business, noting that its insurance written premiums grew 7% to USD 6.1 billion last year.
In terms of synergies, Fitch expects the combined specialty platform to generate business volumes of around USD 15 billion, driven by the combination of Beazley’s specialty underwriting capabilities and Lloyd’s franchise with Zurich’s global distribution, capital resources, and broader insurance platform.
