ZFS Subs Outlook Revised to Stable

September 18, 2003

Standard & Poor’s Ratings Services revised its outlook on the core operating entities of the Switzerland-based composite insurance group Zurich Financial Services (collectively ZFS) and the outlook on the group holding company, Zurich Group Holding (ZGH), to stable from negative.

According to an S&P announcement, it also affirmed its “A+/A-1” counterparty credit and insurer financial strength ratings on the core operating entities of ZFS. In addition, Standard & Poor’s affirmed its “A-” counterparty credit rating on ZGH.

“The outlook revision reflects Standard & Poor’s expectation that management’s ongoing efforts to improve the group’s operating profitability will result in a sustainable turnaround in earnings performance, even in a continued difficult operating environment,” said S&P credit analyst Karin Clemens. The rating is further supported by S&P’s positive view of management, a very strong business position, and strong capitalization. These positive factors are partly offset, by the need for further reserve strengthening at Centre Solutions (Bermuda) Ltd.

Management has implemented a comprehensive improvement program that covers all facets of the operations, including pricing, underwriting and claims management, the transformation of business models, as well as significant cost reductions. In doing so, management has demonstrated strong execution skills despite a difficult operating environment. ZFS has successfully completed its $5 billion risk-based capital improvement program and is on track and even slightly ahead of plan in implementing its $1 billion operational improvement program in 2003.

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