Standard & Poor's has lowered its long and short-term ratings of Zurich Financial Services to single 'A+' / 'A-' from double 'A-' / 'A-1' plus, respectively.
At the same time, Standard & Poor's lowered its counterparty credit ratings on Zurich Group Holding, to single 'A-' from single 'A'. All ratings were placed on Creditwatch with negative implications.
S&P's credit analyst Karin Clemens said: "Standard & Poor's has had to re-evaluate the quality of the ZFS group's underlying long-term earnings capacity.
She added: "The rating actions follow ZFS' announcement today that it will increase its net non-life reserves by $2bn following a third-party actuarial review, write down asset values by $1bn, and incur restructuring charges of $0.5bn in 2002.
Despite the ratings downgrade, S&P said that ZFS is in a healthy position overall, benefiting from a well diversified business position. S&P said that upon successful completion of the ZFS rights issue they would remove the ratings from Creditwatch.
