A.M. Best Places Ratings of GE Global Group Under Review.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 21, 2002 A.M. Best Co. has placed the A+ (Superior) financial strength ratings of Employers Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Corp. (ERC (database) ERC - An extended entity-relationship model. ) (Overland Park Overland Park, city (1990 pop. 111,790), Johnson co., NE Kans., a residential suburb of Kansas City; inc. 1960. There is printing and publishing, and the manufacture of apparel, aircraft parts, cement, prepared foods, salt, chemicals, marine accessories, and signs. , Kan.) and its affiliated domestic and international non-life and life reinsurance companies, cumulatively comprising the GE Global Insurance Group (GE Global), under review with negative implications. Concurrently, the existing "a" rating on senior debt securities issued by the group's direct parent, GE Global Insurance Holding Corp., were also placed under review with negative implications. These rating actions follow General Electric Co.'s (NYSE NYSE See: New York Stock Exchange :GE) Nov. 21, 2002, announcement concerning its indirect wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , GE Global, incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. a charge in the fourth quarter 2002 of $1.4 billion after tax and that it intends to sell its life reinsurance business in the first half of 2003. As part of this announcement, GE also indicated that it will make a capital contribution of approximately $1.8 billion to support ERC's operations. This continued adverse development of ERC's non-life business follows a previously revised October 2002 forecast for year-end 2002 results of between $350-$450 million in net losses. Overall, A.M. Best believes GE Global's operating performance continues to perform below expectations of Superior-rated companies due to weak operating fundamentals in its property/casualty businesses. Adverse loss development arising from inadequate pricing in its property/casualty business written between 1998-2000 has resulted in cumulative losses in excess of $3.5 billion over the past three years. The ratings of GE Global will remain under review pending further discussions with management regarding GE Global's progress toward improving underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance, re-balancing its significant book of excess casualty business, restoring underwriting performance to consistently stronger levels, the disposition of the life reinsurance business and GE's long-term commitment to GE Global. Concurrent with these rating actions, A.M. Best has also placed under review with negative implications the financial strength ratings of A (Excellent) of First Specialty Insurance Corp. and Westport Insurance Corp. (both of Jefferson City Jefferson City, city (1990 pop. 35,481), state capital and seat of Cole co., central Mo., on the south bank of the Missouri River, near the mouth of the Osage; inc. 1825. , Mo.). For a complete list of debt and financial strength ratings for GE Global Insurance Group, visit www.ambest.com/press/geglobal3.pdf. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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