The future of Bermuda-based Centre Solutions is clouded in doubt.

Yesterday Zurich Financial Services confirmed it was looking at options for its subsidiary. This comes amid speculation that Centre would cease to write new business and run off its existing contracts.

In response to a series of questions from The Royal Gazette, ZFS spokesperson Shannon Bell, said it was company policy not to comment on “market rumour or speculation”.

However, she added: “Zurich has been exploring all strategic options - including internal options - to strengthen Centre's capital base and will share details once the decisions are made.”

Ms Bell said: “On September 5, Zurich Financial Services announced it would sharpen its strategic focus, concentrating on core insurance markets in the US, UK and Continental Europe.

“Furthermore, Zurich announced it would conduct a thorough review of all businesses and re-deploy capital into profitable growth opportunities.”

The ZFS strategy follows its downgrading in February by Standard & Poor's to double A minus.

Centre Solutions was formed in 1988. The name was changed from Centre Re in 1998 to reflect the company's increasingly diverse portfolio, which includes finite risk re-insurance, securitization, credit enhancements, structured asset finance, project finance transactions and residual asset value insurance to insurers, financial institutions, corporations and reinsurers worldwide.

However recent downgrades by Moody's and Standard and Poor's are believed to have undermined the credit enhancement part of Centre's business.

A recent Standard and Poor's report stated that: “With Centre's recent decline from the ‘AA' ratings level, its participation in ratings-sensitive transactions will likely be reduced.” It also stated that: “The outlook on Centre is constrained by the outlook on ZFS.”

The questions put to ZFS yesterday were as follows:

”Our understanding is that Centre was up for sale, and that an offer memorandum has been circulating within the financial community in recent months. Is it true that a number of offers for the purchase of the business were made and turned down?

Further, our understanding is that Centre may exit the Credit Guarantee and//or Credit Enhancement business. Can you confirm this?

We also now understand - from sources in the insurance industry - that all or part of the Centre Solutions business will be put into run-off? Can you confirm or deny?

If so, are Centre Solutions personnel likely to be laid off, and how many would be affected? Have there already been lay-offs? (We would also like to confirm how many staff are in the local office, we have been told between 80 and 90?)

If not, will Centre Solutions make a statement reassuring employees and customers? We have spoken to a number of Bermuda-based staff who have said they know “something” is going on, and that they are “very nervous” but are not being told anything by management.”