Zale Indemnity Company is a single parent captive owned by Zale Delaware, which is a wholly-owned subsidiary of Zale Corporation, and ultimately owned by Signet Jewelers, a diamond jewellery retailer.
A.M. Best originally assigned Zale Indemnity and Zale Life a “positive outlook” in November 2015.
According to the ratings agency, the revised outlook is based on recent changes to the company’s reinsurance, led by its management’s decision to utilise an offshore reinsurer affiliate.
A.M. Best suggested this change would “effectively lessen the future profitability prospects” for the captive insurers.
Although Zale Indemnity’s outlook was downgraded, A.M. Best affirmed its financial strength rating of “B++ (Good)” and its long-term issuer credit ratings of “bbb+”.
The ratings agency explained that the affirmation reflects the company’s “favourable” balance sheet, “strong” liquidity and the benefits associated with its niche single parent captive operation.