Best Downgrades GE Global Insurance Debt Ratings; Revises Outlook to Negative

June 16, 2004

A.M. Best Co. announced that it has downgraded the debt ratings of various senior unsecured notes of GE Global Insurance Holdings Corporation to “bbb+” from “a-” and has revised the outlook to negative from stable. (See related article in “National” section.)

“This rating action is the consequence of A.M. Best’s recently completed annual review of GE Global’s property and casualty insurance and reinsurance subsidiaries,” said the rating agency. The review “focused on risk-adjusted capitalization, adequacy of current carried reserves, historical and prospective earnings capabilities, business profile, financial flexibility and strategic importance.”

Best noted that the “downgrade of the senior debt ratings of GE Global is reflective of the issuer credit rating that was assigned to its largest subsidiary and lead operating company, Employers Re, and the notching applied after taking into consideration the linkage to its ultimate parent, General Electric. As of December 2003, GE Global’s financial leverage–debt as a percent of total adjusted capital–was 17.2 percent, which more than adequately supports its current debt ratings; however, cash and fixed charge coverages have been weak in recent years but provided three times coverage of its obligations at year-end 2003.”

Best listed the following GE Global debt securities that have been downgraded and assigned a negative outlook:
— to “bbb+” from “a-” on senior unsecured notes 6.45 percent $400 million, due 2019
— to “bbb+” from “a-” on senior unsecured notes 7.00 percent $600 million, due 2026
— to “bbb+” from “a-” on senior unsecured notes 7.50 percent $350 million, due 2010
— to “bbb+” from “a-” on senior unsecured notes 7.75 percent $350 million, due 2030
— to “bbb+” from “a-” on senior unsecured shelf

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