Fitch Comments on Completion of Swiss Re's Acquisition of GE Insurance Solutions.LONDON & CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. commented today that Swiss 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. Company's (Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. ) ratings remain on Rating Watch Negative and GE Insurance Solutions Corp's (GE Insurance) ratings remain on Rating Watch Positive following the announcement made by Swiss Re on 12 June that the acquisition of GE Insurance has been completed (see list of ratings below). Fitch is in the process of finalizing its analysis of this complex transaction, particularly with regard to prospective capitalization, profitability, and reserve adequacy relative to the current rating levels. The agency will also consider potential synergies that the combined group may develop. Fitch expects to complete this analysis and to resolve the outstanding Rating Watches over the next few days. The ratings of Swiss Re and GE Insurance were placed on Rating Watch on Nov. 18, 2005 when the transaction was originally announced. Fitch's decision to place Swiss Re's ratings on Rating Watch Negative reflected the agency's concerns surrounding the execution risk relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the integration of this significant acquisition together with GE Insurance Solution's poor record of adverse reserve development and weak earnings. Partially offsetting these concerns were potential synergies that the combined group may develop, an improvement in Swiss Re's overall diversification and scale, as well as additional pre-tax reserves of approximately US$3.4 billion being provided by GE Insurance Solutions. Fitch's decision to place GE Insurance and its primary subsidiary, Employers Reinsurance Corporation (ERC (database) ERC - An extended entity-relationship model. ), on Rating Watch Positive reflected potential benefits derived from the companies becoming a core part of a financially stronger organization with a significant and committed presence in the global reinsurance markets. The following ratings remain on Rating Watch Negative: Swiss Reinsurance Company --Long-term Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'AA+'; --6.13% mandatory convertible securities mandatory convertible security A debt security that automatically converts to another security, generally shares of common stock, on a specified date. due 2007 'AA'; --Insurer financial strength (IFS) 'AA+'. Reassure America Life Insurance Co. --IFS 'AA+'. The following issues remain on Rating Watch Positive: GE Insurance Solutions Corp. --Long-term IDR 'A+'; --7% senior unsecured notes due 2026 'A'; --6.45% senior unsecured notes due 2019 'A'; --7.5% senior unsecured notes due 2010 'A'; --7.75% senior unsecured notes due 2030 'A'. Employers Reinsurance Corporation --IFS 'AA-'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. The issuers did not participate in the rating process other than through the medium of their public disclosure. |
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