Zurich Is a Rare Structurally Advantaged Multiline Insurer With a Narrow Moat

Zurich Insurance is one of the best-quality companies in our European insurance coverage, and it is a truly unique business. The ownership of Farmers Management Services provides the company with an unusual uplift in returns delivered to shareholders. We believe this business and these returns are well protected by the long-standing attorney-in-fact agreement. The relationship between Farmers Exchanges and Farmers Management Services has been in place since the exchanges were founded nearly 100 years ago. This makes it unlikely the relationship will change because any change would have to be agreed upon by every single Farmers Exchanges policyholder. That would involve a lot of paperwork. Margins and returns in FMS touch 30%; in the world of insurance, that's almost unprecedented.