Fitch Puts ERC On Rating Watch

NU Online News Service July 2, 3:21 p.m. EST?Fitch Ratings said it has placed the "AA" long-term issuer rating of GE Global Insurance Holdings, Corp. and the "AAA" insurer financial strength rating of Employers Reinsurance Corp., GE Global's main operating subsidiary, on "Rating Watch Negative."

Fitch said it believes ERC is increasingly being viewed as a strategic rather than core operation of General Electric, ERC's ultimate parent company.

Fitch anticipates resolving the Rating Watch Negative on ERC as early as the next several days in conjunction with a review of the company's relative importance to the GE organization and an assessment of GE's commitment to ERC.

Fitch said its rating action reflects the view that ERC might not be seen as a core operation, coupled with ERC's "recent volatile operating performance that has weakened ERC's financial profile when viewed on a 'stand alone' basis and has made GE's support increasingly important to maintaining ERC's 'AAA' rating."

The rating firm noted that ERC announced last week that it was adjusting prior-year estimates, including reserve adjustments, by about $350 million after taxes, resulting in a loss of $240 million in the second quarter. Projected year-end 2002 results would be roughly breakeven, down from a previously expected $200 million in income.

Fitch said the ratings are based primarily on public information.

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Fitch Puts ERC On Rating Watch

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