A.M. Best Downgrades Credit Ratings of Zale Indemnity Company and Zale Life Insurance Company


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.

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.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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A.M. Best
Edward J. Zonenberg, +1-908-439-2200, ext. 5135
Senior Financial Analyst—P/C
Jason MacKenzie, +1-908-439-2200, ext. 5649
Financial Analyst—L/H
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations

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