AM Best has revised the outlook for Zurich Insurance Company and some affiliates to negative from stable, following unexpectedly high losses.

The ratings agency believes the Tianjin port explosion in China will contribute to a $US200 million ($283.45 million) third-quarter operating loss for the general insurance arm.

It says implementing remedial action will be challenging due to competition on rates, weakened economic demand and the unfavourable investment environment.

“Furthermore, the impact of any management action to restore profitability is likely to take time to materialise into a better-quality insurance portfolio, leaving Zurich exposed to the occurrence of further large losses that have affected the group’s results during the year.”

AM Best has also affirmed Zurich’s financial strength rating of A+ and issuer credit rating of AA-.