Standard & Poor’s (S&P) has removed Zurich Specialities London (ZSL) from CreditWatch and affirmed it’s a long-term counterparty credit and insurer financial strength ratings.
ZSL was placed on CreditWatch on 18 December 2003.
The outlook for the ratings is negative, said S&P.
“The rating action follows a review of ZSL's reserves and reflects the company's strategic importance to the Zurich Financial Services group alongside a good business position in the London market specialties lines, a good capital position, and a conservative investment profile,” said S&P credit analyst Paul Oates.
Offsetting factors in the ratings are ZSL's marginal operating results, which stem from reserve deteriorations on closed books of business.
It said the negative outlook reflects concern over future deterioration on the reserves and the extent to which this may affect the company's strategic importance to ZFS.
”The negative outlook reflects the continuing uncertainty in the reserves risks for certain discontinued lines and the potential impact that this may have on the prospective operating performance,” said Oates.
“Although ZSL took decisive steps to solve this problem during 2003, uncertainty still remains on this book.
A related issue is the extent to which ZFS will continue to support ZSL in the longer term if ZSL were to continue to fall short of return benchmarks set by the group. ZSL currently benefits from a stop-loss protection from ZFS, which expires on Dec. 31, 2004, said S&P.
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