Press Release - JANUARY 19, 2017

A.M. Best Revises Outlooks to Stable for Zale Indemnity Company and Zale Life Insurance Company

 Edward J. Zonenberg
Senior Financial Analyst — P/C
+1 908 439 2200, ext. 5135

Jason MacKenzie
Financial Analyst — L/H
+1 908 439 2200, ext. 5649

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


A.M. Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” of Zale Indemnity Company (ZIC) (Irving, Texas) and its wholly owned subsidiary, Zale Life Insurance Company (Zale Life) (Phoenix, AZ).

The outlooks were revised downward based on recent changes to the companies’ reinsurance led by management’s decision to utilize an offshore reinsurer affiliate, which effectively lessens the future profitability prospects for these two captive insurers. Despite these outlook changes, the Credit Ratings (ratings) of ZIC reflect its favorable balance sheet, strong liquidity and the benefits associated with its niche single parent captive orientation. As a captive insurer of Signet Jewelers Ltd., the largest diamond jewelry retailer in the world, ZIC benefits from its direct customer access, the organization’s long standing expertise in the jewelry retail marketplace, and the synergies derived from the products offered. These factors are offset by the recent changes in ZIC’s reinsurance and the effects on future profitability, as most of ZIC’s business is now ceded to an offshore affiliate. Although ZIC’s net revenue and earnings are now limited to one line of business, the company remains a viable captive insurer whose rating outlooks are based on continued operating profitability, favorable cash flows and strong capitalization.

In conjunction with the revised outlook on ZIC, the ratings outlook for Zale Life has been revised to stable from positive. The ratings for Zale Life reflect its role as the provider of credit-related insurance products (credit life, credit accident and health) within Zale Corporation, its favorable level of risk-adjusted capitalization, strong liquidity and the high credit quality of its investment portfolio. Offsetting rating factors include a limited business profile, modest premium growth and high utilization of an offshore reinsurance affiliate, which is expected to offset earnings growth.

ZIC is a single parent captive owned by Zale Delaware, Inc., which is a wholly owned subsidiary of Zale Corporation (Zale Corp.), and ultimately owned by Signet Jewelers Ltd. In February 2014, Signet Jewelers Ltd. agreed to buy Zale Corporation for $1.4 billion. ZIC writes warranty coverages providing extended service contracts for Zale Corp. customers. ZIC also provides liability coverage that indemnifies the parent company for the replacement of merchandise if it is stolen from the customer as one of the benefits offered through Zale’s Lifetime Jewelry Protection Plan with Limited Theft Replacement Service. Other coverages include credit property, credit involuntary unemployment, credit disability and credit leave of absence coverage on a direct basis for Zale’s private label credit card customers.

A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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