S&P gives A to Zurich Insurance notes

Standard & Poor's said it assigned its A long-term issue rating to the junior subordinated notes proposed by Zurich Insurance Co. Ltd. (AA-/positive/A-1+) under its $18 billion euro medium-term note program.

The rating reflects the agency’s methodology for junior subordinated debt issues: S&P rated the notes two notches below the long-term counterparty credit rating on Zurich Insurance. The notes will be purchased by Ireland-based special-purpose-vehicle Willow No. 2 (Ireland) okc, which will simultaneously issue repackaged notes that are collateralized by Zurich Insurance’s junior subordinated notes.

S&P said the rating is based on its understanding that the holders of the notes will be subordinated to Zurich Insurance’s senior creditors, and that Zurich Insurance has the option of deferring interest if, during the previous six-month period: No dividend has been declared or paid by the ultimate parent Zurich Insurance Group; and no other payments have been made in respect of securities issued or guaranteed by: (a) Zurich Insurance that rank junior or pari passu with the notes; or (b) Zurich Insurance Group.

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