OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Financial Strength Rating to B+
(Good) from B++ (Good) and the Long-Term Issuer Credit Ratings to “bbb-”
from “bbb+” of Zale Indemnity Company (ZIC) (Irving, TX) and its
wholly owned subsidiary, Zale Life Insurance Company (Zale Life)
(Phoenix, AZ). The outlook of these Credit Ratings (ratings) remains
stable.
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The ratings reflect ZIC’s and Zale Life’s balance sheet strength, which
A.M. Best categorizes as very strong, as well as each company’s marginal
operating performance, very limited business profile and appropriate
enterprise risk management.
The ratings were downgraded based on management’s recent decision to
discontinue writing all credit products, and most warranty and extended
service products, which dramatically lessens the future business
prospects and long-term profitability prospects for these two insurers.
Despite these rating downgrades, ZIC’s ratings reflect its very strong
balance sheet, solid cash flow and what is expected to be a very orderly
runoff of its business. As a captive insurer of Signet Jewelers Ltd.,
the largest diamond jewelry retailer in the world, ZIC has been a
provider of third-party credit insurance and warranty coverage to the
customers of its affiliated retailers. Most of this business has either
been reinsured or will be discontinued, hence the change in the ratings.
Zale Life’s ratings reflect its solid level of risk-adjusted
capitalization, strong liquidity and the high credit quality of its
investment portfolio. Offsetting rating factors include a very limited
business profile and the immaterial net levels of net premiums due to
high utilization of an offshore reinsurance affiliate.
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 www.ambest.com/captive.
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. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
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Senior
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or
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or
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or
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Director, Public Relations