Moody's Downgrades GE Insurance Solutions
NU Online News Service, April 29, 3:51 p.m. EDT?Moody's Investors Service has cut various ratings of GE Insurance Solutions and its units, citing its concerns over the insurer's financial performance and prospects of a spin-off by its parent company, General Electric Company.[@@]
The ratings agency cut senior debt ratings of GE Insurance Solutions to "Baa1″ from "A1″ and lowered the insurance financial strength rating of Employers Reinsurance Corporation, a GE Insurance Solutions business unit, to "A1″ from "Aa2."
The outlook for the ratings is now stable, Moody's said.
Moody's said one factor was a view that the operating performance has been–and is expected to continue to be–at a level well below its previous, higher rating. The ratings agency also discussed the prospect for future ownership and support from the ultimate parent, GE.
Moody's said it "believes that GE may look to sell or spin-off GE Insurance Solutions at a time when its financial performance has improved and there is market interest."
The downgrade also reflects Moody's expectation of additional, but moderate, reserve charges and lingering concerns about the profitability as prices continue to soften.
But GE Insurance Solutions representative defended the insurer's strength. "Our view is that our business has never been stronger financially or strategically. We have $7.4 billion in statutory capital, highest level in our history. We are well-position for the soft market ahead," said GE Insurance Solutions spokesman Dean Davison.
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