Fitch Ratings has changed its outlook on Zurich Insurance Company, the main operating company of Zurich Financial Services, from positive to negative, but kept the company’s insurer financial strength rating at A+.

Fitch says the downgrade in outlook reflects a decline in capital adequacy last year for Zurich Financial Services, due mainly to a combination of a 24% decline in shareholders’ equity, reduced value-in-force in the life portfolio, and an increase in intangible assets related to acquisitions made during the year.

“The outlook revision reflects the decline in Zurich’s capital adequacy during 2008 and Fitch’s view that the group’s level of capitalisation is below expectations for the current rating level,” the ratings agency said in a statement.

“The action also reflects Fitch’s opinion that there are likely to be greater challenges in rebuilding the capital base in the current financial environment.”

Fitch Ratings claims many insurers are facing significant pressures from the financial crisis, mainly via sharp declines in the market values of their investment holdings, and also through diminished financial flexibility.