AM Best revises outlooks for Zale Indemnity


AM Best has revised the outlooks to positive from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit ratings of “bbb+” for Zale Indemnity Company and its wholly-owned subsidiary, Zale Life Insurance Company.

The ratings for Zale Indemnity, which acts as a captive insurer for the customers of its intermediate parent, Zale Corporation, reflect the strong underwriting and operating results generated over the long term, as well as its solid risk-adjusted capitalisation and the role of the company in providing complementary insurance services for the customers of its parent’s jewellery operations, according to AM Best, 

Zale Corp was acquired by Signet Jewelers in 2014 with Zale’s jewellery stores continuing to be managed as a separate brand. Zale Indemnity provides a number of insurance products to Zale jewellery customers, principally warranty and extended service contracts and, through its Zale Life subsidiary, credit life insurance.

The ratings for Zale Life reflect its role as a provider of credit insurance within Zale Corp, its favourable level of risk-adjusted capitalisation, strong liquidity and the high credit quality of its investment portfolio. AM best said offsetting rating factors include the company’s limited business profile and modest level of premium growth, which remains highly correlated to US economic growth and Signet’s retail jewellery sales, given its acquisition of Zale Corporation and its subsidiaries.

AM Best says the outlooks reflect the improving business prospects and profile of the Zale Indemnity and Zale Life as affiliates of Signet. Positive rating factors for Zale Indemnity according to the firm include continued stability at both the captive and the parent while maintaining strong operating results and risk-adjusted capitalisation. Positive rating factors for Zale Life would include expansion of its business profile resulting in organic earnings growth.

Other negative triggers for Zale Life and Zale Indemnity according to AM Best would include deterioration in operating results, risk-adjusted capitalisation or an adverse decline in the overall strength of the US economy given that both companies’ sales are correlated to US retail jewellery sales.

Zale Indemnity Company, Zale Life Insurance Company, North America

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