S&P gives Zurich notes A+

S&P said it assigned its A+ long-term issue rating to the U.S. dollar-denominated, dated junior subordinated notes to be issued by Zurich Finance (Ireland) DAC. The notes are guaranteed by Zurich Insurance Co. Ltd. under its $18 billion euro medium-term note program.

The securities benefit from Zurich Insurance’s guarantee that meets the agency’s criteria for credit substitution. “Therefore, we rate these notes as if they were a subordinated obligation of ZIC,” S&P said in a press release.

The rating is two notches below Zurich Insurance’s AA rating. “This reflects our standard approach for rating subordinated debt issues. The consolidated group's regulatory solvency ratio, measured by the Swiss solvency test, stood at 203% as of Sept. 30, 2021. We therefore do not deduct a further notch for additional nonpayment risk to derive the rating on the notes. We base the rating on our understanding that noteholders will be subordinated to ZIC's senior creditors,” the agency said.

S&P said it deducts another notch because under certain conditions, Zurich has the option to defer interest.

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