S&P Keeps Swiss Re on CreditWatch

May 30, 2006

In a comment on its CreditWatch placement of Swiss Reinsurance Co. and its core operating companies, Standard & Poor’s Ratings Services has said that the long-term counterparty credit and insurer financial strength ratings on all entities remain on CreditWatch with negative implications, where they were placed on Nov. 18, 2005.

S&P noted that it’s decision followed “Swiss Re’s announcement that it had reached an agreement with U.S.-based General Electric Co. (AAA/Stable/A-1+) to acquire the latter’s reinsurance operations, GE Insurance Solutions Corporation (GEIS; BBB+/Watch Pos/–; main group operating entities are rated A/Watch Pos/–, which factors in the parent’s support).”

S&P plans to resolve the CreditWatch placement “when the transaction to acquire GEIS completes, which is expected to be in June 2006. Regulatory approval from the U.K. Financial Services Authority is pending.” The current placement “reflects the execution risk associated with integrating a group of the size and complexity of GEIS, which is rated lower than Swiss Re,” S&P continued. “The ratings on GEIS partly reflect the state of flux that it has been in for a number of years, caused by uncertainty over the long-term ownership of the group.

“These risks are partly offset, however, by Swiss Re’s track record of successful transatlantic acquisitions and the advanced integration planning already in place. If the transaction is completed as currently constituted, we expect that the ratings on Swiss Re and its core operating companies would be lowered to ‘AA-‘ with a stable outlook. If the transaction does not proceed, the ratings on Swiss Re would be affirmed at their current level.”

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