CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 12, 2004 12:00 AM (EST)
A.M. Best Co. has downgraded the financial strength rating to B+ (Very Good) from A- (Excellent) of Centre Solutions (Bermuda) Ltd (Hamilton, Bermuda) (Centre) and its operating subsidiaries. The under review status for all ratings has been changed to negative from developing.
On November 24, 2003, A.M. Best downgraded Centre's financial strength rating to A- (Excellent) from A (Excellent) and changed the under review implications to developing. At that time, A.M. Best had expressed concerns with regard to the adequacy and nature of capital support to be provided to Centre from its parent company, Zurich Financial Services Group (ZFS) (Zurich, Switzerland). Subsequently, ZFS did provide an additional $250 million of capital to Centre, increasing its overall shareholders' equity to approximately $900 million as of February 29, 2004.
However, in A.M. Best's opinion, while the additional capital provided improvement to Centre's risk-adjusted capitalization, the company may continue to be exposed to further adverse loss reserve development from discontinued classes of business. A.M. Best believes that additional capital may be necessary to insulate Centre from its historical business exposures.
The current downgrade reflects the lack of adequate and timely capital support to maintain Centre's previous A- (Excellent) rating. As a result, A.M. Best believes there is increased uncertainty regarding Centre's future as a viable underwriting entity within ZFS. Furthermore, in A.M. Best's opinion, Centre's operations are now ancillary to ZFS and are essentially in run off.
Resolution of the current under review status is predicated on the completion of further due diligence by A.M. Best on Centre's current loss reserve and liquidity positions.
The following financial strength ratings have been downgraded to B+ (Very Good) from A- (Excellent):
- Centre Solutions (Bermuda) Ltd
- 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.