S&P’s Moves Employers Re ‘AA+’ Ratings to WatchNeg

October 1, 2002

Standard & Poor’s has placed its double-‘A’-plus counterparty credit and financial strength ratings on Employers Reinsurance Corp. and its wholly owned subsidiaries (collectively referred to as ERC) on CreditWatch with negative implications following parent General Electric Co.’s announcement that ERC’s third-quarter underwriting results have deteriorated further and that the prospects for the full year are disappointing.

Standard & Poor’s also said that it placed its double-‘A’-minus senior
debt rating on GE Global Insurance Holding Corp., the parent company of GE Capital Services’s reinsurance businesses, on CreditWatch negative because of ERC’s dominant position in the group that services the company’s debt.

In the last three years, ERC has strengthened reserves by more than
$2.0 billion (excluding World Trade Center-related losses) for business
written largely since 1996.

Standard & Poor’s will re-evaluate the stand-alone ratings on the ERC
companies and ERC’s strategic role within GE. The CreditWatch status of the ratings is expected to be resolved prior to year-end 2002 after reviewing ERC’s loss reserve studies and plans for capital replenishment and having discussions with GE regarding its long-term commitment to ERC.

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