S&P Puts ERC, GE Solutions on CreditWatch Negative

December 21, 2004

Standard & Poor’s Ratings Services announced that it has placed its “A+” counterparty credit and financial strength ratings on Employers Reinsurance Corp. (ERC), its “A-” counterparty credit rating on GE Insurance Solutions Corp., and various ratings on several of their affiliates on CreditWatch with negative implications.

“These rating actions stem from our ongoing concerns about the group’s continuing reserve strengthening for past accident years,” explained S&P credit analyst Laline Carvalho.

S&P indicated that it “expects to resolve the CreditWatch status of the ratings in the first quarter of 2005 following a review of year-end 2004 statutory financials.” The rating agency added, “although a definitive conclusion cannot be established prior to that time,” it “believes that the ratings will not change by more than two notches.”

Carvalho noted that the “current ratings on ERC and GE Insurance Solutions reflect the company’s strong global reinsurance franchise, moderately improving operating performance, and conservative investment portfolio. The ratings also reflect GE Insurance Solutions’ position as a non-strategic subsidiary of General Electric Co. Partially offsetting these factors is the company’s lower business diversification.”

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