Centre Solutions Limited Downgraded

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NU Online News Service, Nov. 25, 3:35 p.m.EST--A.M. Best Co. has downgraded the financial strengthratings of Centre Solutions (Bermuda) Limited (Centre) (Hamilton,Bermuda) and its operating subsidiaries to "A-minus" (Excellent)from "A" (Excellent). All ratings remain under review withimplications changed to developing from negative.[@@]

The downgrade reflects Centre's diminished capital profile and morerecent lackluster operating performance due to continued adverseloss reserve development in its discontinued lines of business. Thecompany's capital has declined significantly since Dec. 31, 2002,following the announcement that credit enhancement and life/healthlines of business were being placed into runoff. Centre's new focuswill be on business opportunities exclusively in the area ofstructured risk property/casualty insurance and reinsurance,according to A.M. Best

Following extensive internal and external reserve reviews, Centrehas recorded reserve strengthening of approximately $485 millionthrough Sept. 30, 2003, in addition to impaired asset write-offsand restructuring charges. Capital has declined from $914 millionat Dec. 31, 2002, to approximately $620 million at Sept. 30,2003.

The under review status with developing implications reflectsuncertainty with regard to the level and nature of capital supportto be provided to Centre from its parent company, Zurich FinancialServices Group in Zurich, Switzerland. A.M. Best said, in itsopinion, additional capital support will be necessary not only toenhance Centre's market position as a provider of structured riskinsurance and reinsurance solutions but also to mitigate thecontinued potential for additional adverse reserve development indiscontinued classes of business.

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Resolution of the under review status is predicated on thecompletion of further due diligence on Centre's current lossreserve position and finalization of the capital support providedto Centre from ZFS, A.M. Best said.

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The financial strength ratings of "A" (Excellent) have beendowngraded to "A-minus" (Excellent) for Centre Solutions (Bermuda)Ltd. and the following subsidiaries:

--Centre Insurance International Company
--Centre Reinsurance International Company
--Centre Reinsurance Limited
--Centre Solutions (U.S.) Ltd
--Centre Line Reinsurance Limited
--Centre Solutions (Asia) Ltd
--Centre Insurance Company
--ZC Specialty Insurance Company
--Centre Life Insurance Company

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