The article which appeared Friday concerning Standard & Poor’s decision to lower its ratings on Swiss Re from ‘AAA’ to ‘AA+’ incorrectly identified Employers Re (ERC) as one of the three remaining holders of a triple-A’ rating. ERC, the principle reinsurance operation of triple ‘A’ rated General Electric, is in fact also rated ‘AA+’ by S&P.
ERC was for many years given the same rating as GE, but S&P changed its criteria last May to distinguish between what it considers “Core” and “Strategically Important” financial services businesses owned by major corporations. The change in criteria dictated a downgrade of ERC’s ratings.
S&P indicated at the time that “since GE is a multi-faceted enterprise versus an insurance parent, ERC cannot be considered a ‘Core’ subsidiary. Standard & Poor’s has also concluded that unless a unit is ‘Core,’ that unit cannot receive credit support above AA+ from its parent. Under the previous rules, ERC had received one notch of rating support as a GE business. Under the new rules, ERC is not eligible for that incremental support.”
It also indicated that no change had actually occurred in ERC’s financial strength. In late September S&P announced, however, that it had placed ERC’s ratings under review for a possible downgrade. No action has yet been taken following this announcement.
Editor’s Comment:
The Insurance Journal wishes to thank Douglas Min for bringing this error to our attention. It’s gratifying to learn that our articles are closely followed, and we urge any of our readers who may find similar errors to let us know about them, as the accuracy of our reports is our prime consideration.
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