A.M. Best Downgrades Zurich Specialties; Removes Rating From Under Review; Assigns Issuer Credit Rating and Negative Outlook.OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A (Excellent) of Zurich Specialties London Limited (ZSL ZSL Zoological Society of London (UK) ZSL Zero Slot LAN ZSL Zylog Systems Limited (Edison, New Jersey) ) (United Kingdom). The rating has been removed from under review with negative implications. At the same time, A.M. Best has assigned an issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "bbb" to ZSL. A negative outlook has been assigned on all ratings. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. reflects the diminished importance of ZSL within the Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance Group (ZFS (1) (Zettabyte File System) A distributed file system from Sun that was added to OpenSolaris in 2005 and Solaris 10 in 2006. With support for 128 bits, compared to 64 for NTFS and other contemporary file systems, storage capacity is unlimited for all practical ) (Switzerland). (See "Rating Members of Insurance Groups" at http://www.ambest.com/ratings/membergroups.pdf.) It also reflects the company's declining business profile, as evidenced by the continuing reduction in gross written premium. In addition, ZSL's weak financial performance has resulted in the deterioration of its risk-adjusted capitalisation. A.M. Best believes that ZSL's business profile in the London insurance market has weakened as a consequence of its decision to exit several lines of business, resulting in the continuing decrease in gross written premium (for 2004 a 25% reduction in gross written premium). A.M. Best believes ZSL's importance to ZFS will continue to diminish; its contribution of premium to the group is likely to continue to decrease; and the company's contribution to consolidated group earnings is expected to be minimal as it is unlikely to generate significant profit in 2005. A.M. Best anticipates that the current year loss ratio will remain stable at approximately 70%. At the same time, A.M. Best believes that there remains the potential for reserve strengthening during 2005 which would result in a loss ratio of above 100%. A.M. Best expects management expenses to reduce as a consequence of a decrease in underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. expenses as several lines of business have been exited. A.M. Best expects that ZSL's risk-adjusted capitalisation will be partially restored in 2005 as a result of the continuing reduction in gross premiums. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
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