A.M. Best Affirms Ratings of Zale Life Insurance Company

A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-”of Zale Life Insurance Company (Zale Life) (Phoenix, AZ), a subsidiary of Zale Corporation (Zale) (headquartered in Irving, TX) [NYSE: ZLC]. The outlook for both ratings is stable.

The ratings of Zale Life reflect its role as a provider of credit life and credit disability products for its parent organization, its cost efficient captive distribution channel and favorable risk-adjusted capitalization. Offsetting factors include its modest level of premiums in its core business line, its narrow business profile and relatively flat operating earnings.

While Zale Life’s core business lines are profitable and stable, overall earnings remain relatively modest with limited growth potential. In addition, the company’s market profile is limited in scope. Moreover, the current economic climate limits Zale Life and Zale’s growth potential. However, Zale Life has completed a licensing initiative with the plan of transferring premium production of an affiliate onto Zale Life’s paper. This business transfer initiative should assist Zale Life in its premium and earnings growth in the longer term. A.M. Best will continue to monitor this initiative, with the expectation that Zale Life will report more favorable premium growth trends in the near term.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.