Best Downgrades Bermuda’s Centre Solutions Rating

March 15, 2004

A.M. Best Co. announced that it has downgraded the financial strength rating to “B+” (Very Good) from “A-” (Excellent) of Centre Solutions (Bermuda) Ltd. and its operating subsidiaries. Best also changed the under review status for all ratings 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,” said the announcement. “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.”

Best noted, however than in its 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 rating agency indicated that the “current downgrade reflects the lack of adequate and timely capital support to maintain Centre’s previous “A-” (Excellent) rating.” As a result, Best said it “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.”

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