Fitch Updates GE Global Holding Corp.

July 12, 2002

Fitch Ratings has downgraded and removed from Rating Watch Negative the long-term issuer and senior debt rating of GE Global Insurance Holding Corporation (GE Global) to ‘A+’ from ‘AA’. Fitch has also downgraded and removed from Rating Watch Negative the insurer financial strength (IFS) rating of Employers Reinsurance Corp. (ERC), GE Global’s main operating subsidiary, to ‘AA+’ from ‘AAA’. The Rating Outlook is Stable.

The rating action reflects Fitch’s view that, for ratings purposes, ERC should no longer be treated as a core operation of General Electric Co. (GE), ERC’s ultimate parent company. GE’s management has publicly commented that they are continuing to assess ERC’s strategic fit within the GE organization. Therefore, Fitch’s rating action was based on analysis that focused on ERC’s financial and competitive profile on a stand-alone basis.

The IFS rating continues to be supported by ERC’s strong capitalization and broad product line. Additionally, ERC maintains a leading position in U.S. reinsurance markets through its excellent competitive position and significant market share.

However, ERC’s stand-alone financial profile has been weakened due to recent years’ volatile operating performance. Adverse development in prior years loss reserves, primarily in the 1998 to 2000 period stemming from inadequate pricing in the property and casualty insurance and reinsurance industry, and the events of Sept. 11, 2001 have pressured earnings over the past two and a half years.

On June 27, 2002, ERC announced that it was adjusting prior year estimates, including reserve adjustments, by about $350 million after tax, resulting in a loss of $240 million in the second quarter.

GE Global’s strong senior debt and long-term issuer ratings incorporate its excellent competitive position in property/casualty reinsurance, a significant position in global life and health reinsurance, as well as strong niche positions in healthcare and specialty property/casualty lines.

The two notch downgrade of GE Global’s senior debt and long-term issuer ratings reflect Fitch’s notching methodology in which notching between the IFS and debt ratings widens as ratings move down the rating scale.

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