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Governance, capital and group supervision

The legal structure of the group

The group’s legal structure has two Swiss levels. At the top stands Zurich Insurance Group Ltd, the holding company whose shares are listed on the SIX Swiss Exchange. Below it, Zurich Insurance Company Ltd is both the main operating insurance carrier of the group and the holding company for most of its subsidiaries, among them Zurich Holding Company of America, Farmers Group, Inc. and the principal European companies. Zurich Insurance Company Ltd is supervised by FINMA under the Insurance Supervision Act and the Insurance Supervision Ordinance.1 The group organises its business in four geographical regions, Europe, Middle East and Africa, North America, Asia-Pacific and Latin America, with property and casualty, life and Farmers as the main business lines.

The same report gives the solvency position of the operating company. At the end of 2025, Zurich Insurance Company Ltd had risk-bearing capital of 40.8 billion dollars against target capital of 17.0 billion dollars, which yields a Swiss Solvency Test ratio of 241 per cent. Its core capital amounted to 28.2 billion dollars and its supplementary capital to 12.6 billion dollars. The company held financial strength ratings of AA from Standard & Poor’s, Aa2 from Moody’s and A+ from AM Best.2 The difference between the solo ratio of 241 per cent and the group ratio of 259 per cent reflects the different scope of consolidation and the treatment of intra-group positions. The mechanics of the Swiss Solvency Test belong to the next chapter.

Group supervision by FINMA

FINMA supervises Zurich not only as a Swiss insurer but also as an insurance group. Under the Insurance Supervision Act, an insurance group exists where several companies form an economic unit that is mainly active in insurance. FINMA’s group supervision covers group solvency, the risk situation and concentrations, intra-group transactions and compliance with governance requirements. Its principal guidance on these matters is FINMA Circular 2016/04 on insurance groups and conglomerates. For internationally active groups, FINMA coordinates its oversight with foreign supervisors in supervisory colleges.3

At the international level, the International Association of Insurance Supervisors lists Zurich among the internationally active insurance groups (IAIGs), to which its Common Framework (ComFrame) applies. The register of January 2026 names FINMA as group-wide supervisor for four Swiss groups, namely Helvetia Baloise, Swiss Life, Swiss Re and Zurich, out of sixty IAIGs identified by supervisors from nineteen jurisdictions.4 Zurich is, in other words, supervised from Zurich for its worldwide business, which gives FINMA a role in global insurance supervision out of proportion to the size of the Swiss domestic market. The revision of the Insurance Supervision Act in force since 1 January 2024, discussed in the next chapter, strengthened FINMA’s tools for the recovery and resolution of insurers, which matter above all for groups of this size.

The Farmers Exchanges

No part of the Zurich group is more often misunderstood than Farmers. The Farmers Insurance Exchange and its sister exchanges in the United States are reciprocal insurers, a form of mutual organisation owned by their policyholders. They are not subsidiaries of Zurich. Zurich’s interest lies in Farmers Group, Inc., a wholly owned subsidiary, which together with some of its own subsidiaries acts as “attorney-in-fact” of the exchanges and provides them with non-claims and ancillary management services in return for fees. The group’s financial condition report states the point with legal precision: “Zurich Insurance Group has no ownership interest in the Farmers Exchanges.”5

The structure has important consequences. The underwriting risk of the exchanges’ motor and home business in the United States, with its exposure to hurricanes, wildfires and litigation, lies primarily with the exchanges and their policyholders. Zurich earns a management fee calculated on the exchanges’ premiums, a business that behaves more like an asset manager’s revenue than like an insurer’s underwriting result. In 2025 Farmers Management Services earned a record business operating profit of 2.2 billion dollars, while the exchanges grew their policy count by more than 150,000, the first net increase in over a decade, with a combined ratio of 84.6 per cent and a surplus ratio of 52.9 per cent.6 Zurich also participates in the exchanges’ business through their all-lines quota share reinsurance treaty, in which the group’s Farmers Re has taken a share and retroceded part of it to Zurich Global, so that the separation is not absolute.7 For a Swiss-supervised group, the Farmers arrangement is a lawful and stable source of fee income from a regulated American business in which it carries only limited capital risk.

Notes

  1. Zurich Insurance Company Ltd, Financial Condition Report 2025, approved 9 April 2026, https://www.zurich.com/-/media-assets/project/zurich/dotcom/investor-relations/docs/financial-reports/2025/fcr-switzerland-zurich-insurance-company-ltd-2025-en.pdf. The report states that it was not externally audited or reviewed by FINMA. ↩
  2. Zurich Insurance Company Ltd, Financial Condition Report 2025, https://www.zurich.com/-/media-assets/project/zurich/dotcom/investor-relations/docs/financial-reports/2025/fcr-switzerland-zurich-insurance-company-ltd-2025-en.pdf, section on solvency. ↩
  3. FINMA, “Tools used in the context of insurance groups and conglomerates”, https://www.finma.ch/en/supervision/insurers/groups-and-conglomerates/. ↩
  4. International Association of Insurance Supervisors, “Register of Internationally Active Insurance Groups (IAIGs)”, 7 January 2026, https://www.iais.org/uploads/2026/01/260107-Register-of-Internationally-Active-Insurance-Groups-IAIGs.pdf. ↩
  5. Zurich Insurance Company Ltd, Financial Condition Report 2025, https://www.zurich.com/-/media-assets/project/zurich/dotcom/investor-relations/docs/financial-reports/2025/fcr-switzerland-zurich-insurance-company-ltd-2025-en.pdf. ↩
  6. Zurich Insurance Group, news release “Zurich delivers USD 8.9bn operating profit, raises dividend to CHF 30, strong progress toward 2027 targets”, 19 February 2026, https://www.zurich.com/media/news-releases/2026/2026-0219-01. ↩
  7. “Zurich rejoins Farmers quota share after reinsurers cut back at 1.1”, Insurance Insider US, https://insuranceinsiderus.com/article/2b9b9k0tisfdtu0ppkqgx/global-insurers-section/zurich-rejoins-farmers-quota-share-after-reinsurers-cut-back-at-1-1, reporting that Farmers Re increased its participation in the Farmers Exchanges’ all-lines quota share treaty from 1.75 to 8.5 per cent and retroceded 6.75 per cent to Zurich Global. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.

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