Best Revises Outlook on Employers Re Corp Group, Westport, First Specialty

November 2, 2004

A.M. Best Co. has revised the rating outlook to negative from stable on the A (Excellent) financial strength ratings for Employers Reinsurance Corporation (Overland Park, Kan.) and GE Reinsurance Corporation (Barrington, Ill.) – together Employers Re Corp Group–First Specialty Insurance Corporation and Westport Insurance Corporation (both of Overland Park, Kan.). Concurrently, A.M. Best has assigned issuer credit ratings of “a” with a negative outlook to Employers Reinsurance Corporation and GE Reinsurance Corporation.

The negative outlook has been precipitated by the projected decline in the companies’ risk-adjusted capitalization levels associated with estimated losses from Hurricanes Charley, Frances, Ivan and Jeanne. While the companies’ risk-adjusted capitalization remains within the excellent range following these recent events, their projected levels of capitalization are only marginally supportive of the current ratings and fall short of originally projected levels. It is management’s intention to completely restore the capital level of each company by year-end 2004.

Notwithstanding, the ratings are exposed in the short term to the potential for further shock losses, adverse loss development or volatility stemming from their investment portfolios.

Furthermore, despite ownership by General Electric, A.M. Best believes that financial flexibility remains constrained within these property/casualty (re)insurance subsidiaries.

The negative outlook will remain in place until statutory risk-adjusted capital is restored to a level that enables each company to withstand stresses typical of its industry sector while continuing to maintain a reasonable cushion in capitalization supportive of the assigned ratings.

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