AM Best upgrades ratings of Zenith subsidiaries

AM Best has upgraded the long-term issuer credit ratings to “a+” from “a” and affirmed the financial strength rating of A of Zenith Insurance Company and ZNAT Insurance Company, which are members of Zenith National Insurance Group (Zenith National).

The outlook of these ratings is stable and according to AM Best reflect Zenith National’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The upgrade reflects Zenith National’s position as a member of the Fairfax Financial Holdings (Fairfax), which includes the implicit support available from its affiliation with Fairfax. As part of the Fairfax group, the insurance operations benefit from the favourable financial flexibility and significant levels of cash and marketable securities held at the ultimate holding company level. In addition, Zenith National benefits from shared resources including ERM, reinsurance, actuarial, talent and investment portfolio management services among other less quantifiable benefits such as best practices and capital management.

“Zenith National continues to record solid operating profitability in the workers’ compensation market despite this segment’s challenging market conditions,” said AM Best. “Zenith National’s very strong balance sheet strength assessment is supported by its risk-adjusted capitalization being consistently at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and its steady track record of favourable loss reserve development, which has materially benefited its underwriting income. Zenith National’s niche expertise and presence in the agricultural workers’ compensation market has provided inroads toward developing its ancillary property/casualty offerings to clients in that space. These products have been profitable, and despite their recent increase in volatility, they have helped to mitigate partially the impact of softening market conditions in the workers’ compensation market over the past several years.”