CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 24, 2003 12:00 AM (EST)
A.M. Best Co. has downgraded the financial strength ratings to A- (Excellent) from A (Excellent) of Centre Solutions (Bermuda) Limited (Centre) (Hamilton, Bermuda) and its operating subsidiaries. All ratings remain under review with implications changed to developing from negative.
The downgrade reflects Centre's diminished capital profile and more recent lackluster operating performance due to continued adverse loss reserve development in its discontinued lines of business. The company's capital has declined significantly since December 31, 2002, following the announcement that credit enhancement and life/health lines of business were being placed into run-off. Centre's new focus will be on business opportunities exclusively in the area of structured risk property/casualty insurance and reinsurance.
Following extensive internal and external reserve reviews, Centre has recorded reserve strengthening of approximately $485 million through September 30, 2003, in addition to impaired asset write-offs and restructuring charges. Capital has declined from $914 million at December 31, 2002, to approximately $620 million at September 30, 2003.
The under review status with developing implications reflects uncertainty with regard to the level and nature of capital support to be provided to Centre from its parent company, Zurich Financial Services Group (ZFS) (Zurich, Switzerland). In A.M. Best's opinion, additional capital support will be necessary not only to enhance Centre's market position as a provider of structured risk insurance and reinsurance solutions but also to mitigate the continued potential for additional adverse reserve development in discontinued classes of business. Resolution of the under review status is predicated on the completion of further due diligence on Centre's current loss reserve position and finalization of the capital support provided to Centre from ZFS.
The financial strength ratings of A (Excellent) have been downgraded to A- (Excellent) for Centre Solutions (Bermuda) Ltd. and the following subsidiaries:
- Centre Insurance International Company
- Centre Reinsurance International Company
- Centre Reinsurance Limited
- Centre Solutions (US) Ltd
- CentreLine Reinsurance Limited
- Centre Solutions (Asia) Ltd
- Centre Insurance Company
- ZC Specialty Insurance Company
- Centre Life Insurance Company
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.