Zurich Downgraded

September 30, 2002

A.M. Best Co. downgraded the financial strength rating of Zurich Financial Services and its core operating subsidiaries to “A” from “A+.” A.M. Best has also downgraded the ratings on debt issued or guaranteed by Zurich Insurance Company to “A” and “A-” from “A+” and “A” respectively and the debt issued by several subsidiaries within the group to “BBB+” from “A-.” All ratings have been placed under review with developing implications.

These actions follow the confirmation of A.M. Best’s concerns with the group’s ability to restore earnings momentum to levels commensurate with a Superior-rated company and to replenish its capital base. Reported half-year losses of USD 2 billion and the need to strengthen non-life insurance and reinsurance reserves will significantly erode the overall group’s risk-based adjusted capital.

A.M. Best is currently discussing with management a series of proposed measures, including raising up to USD 2.5 billion of new equity, divesting non core operations and cutting its equity exposure to 10 percent. Resolution of the under-review status will be predicated on the outcome of the proposed capital raising and A.M. Best’s view of the group’s ability to complete the proposed re-structuring in a timely manner.

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