Moody's Puts GE Insurance Solutions On Review

NU Online News Service, Jan. 27, 10:10 a.m.EST?Moody's Investors Service said it has placed ratingsof GE Insurance Solutions and its business units under review forpossible downgrade, after the news that the reinsurer would post a$472 million after-tax charge.[@@]

The New York-based ratings firm's action affects "A1" seniorunsecured debt for GE Insurance Solutions as well as its otherrated operating subsidiaries. GE Insurance Solutions is part ofFairfield, Conn.-based General Electric Company.

Moody's said its action follows GE's announcement that itexpects GE Insurance Solutions to record a $472 million after-taxcharge for the quarter related to adverse reserve development onprior-year reserves.

This charge, the ratings firm noted, significantly reduces GEInsurance Solutions' earnings for 2004 and is outside of Moody'scurrent ratings' expectations. The charge also shows that despiterepeated reserve charges over the past five years, the companycontinues to revise its estimates for its underwriting performance,according to Moody's.

The Moody's review for possible downgrade will focus on theoperating performance and capitalization of GE Insurance Solutions'operating companies, including the potential for continued adversedevelopment on prior-year reserves.

Moody's also noted the impact of a moderating pricingenvironment and mix changes on the group's portfolio.