Less than a week after A.M. Best announced that it would change the outlook on “A+” financial strength rating of Zurich Insurance Co. Ltd. to negative, Standard & Poor’s has weighed in with a different verdict.

On Wednesday, S&P said affirmed its “AA-” insurer financial strength rating for the global multiline insurer and all its core subsidiaries, keeping a stable outlook on the ratings.

The stable outlook reflects S&P view that Zurich will maintain its very strong business risk and financial risk profiles, the rating agency said.

Both S&P and A.M. Best put out their rating agencies reacted to Zurich’s announcement that it does not to intend to make an offer to acquire RSA Insurance Group PLC and the news that Zurich expects $275 million in losses from port of Tianjin explosion and prior-year reserve strengthening that will impact results by about $300 million.

Commenting on the losses, S&P said, “We therefore expect the combined ratio to increase to about 100 in 2015 and the return on equity (ROE) to decrease to about 8-9 percent, which is below our previous base-case earnings assumptions. We believe the group’s current earnings are more in line with, and no longer outperforming, those of its global multiline insurance peers.”

As for terminating activities related to an RSA deal, S&P said this “reduces uncertainties regarding potential execution risks, an increase in financial leverage, and a temporary drop in capital adequacy.”

S&P expects Zurich to post net income of at least $3 billion in 2015, and $3.5 billion in 2016-2017, along with a double-digit ROE and improved combined ratios in the 96-98 range. “This is based on our assumption that reserve-strengthening measures on the group’s North American long-tail business will have one-time effects in 2015 and be partly offset by reserve redundancies in other parts of the group’s business,” S&P said.

Presenting customary statements about what would prompt an upgrade or downgrade, S&P said it considers a positive rating action over the next 24 months to be a remote but that outperforming peers might prompt an upgrade. On the down side, S&P said ratings could be lowered “if, contrary to our current expectations, capital adequacy drops below the ‘A’ level for a protracted period. This might result from any unexpected and prolonged negative claims trends in long-tail non-life insurance; unexpected material investment losses; or other substantial weakening of capital.”

Source: Standard & Poor’s