Reacting to the news that Swiss Re completed its acquisition of GE Insurance Solutions Corp., Standard & Poor's lowered Swiss Re's financial strength rating, while three other rating agencies expressed caution on the merge.
Citing concerns with the risks Swiss Re faces associated with integrating companies the size and complexity of GE Insurance, S&P in London cut Swiss Re's "double-A" to "double-A-minus." The action applied to Swiss Reinsurance Co. and its core entities, and the rating's outlook is stable.
At the same time, S&P upgraded financial strength ratings for some GE entities–namely Employers Reinsurance Corp. and GE Reinsurance Corp.–to "A-plus" from "A."
Ratings on other subsidiaries of GE Insurance, including "A" ratings on GE Frankona Reinsurance Ltd., Coregis Insurance Co. and Westport Insurance Corp., remain on CreditWatch with developing implications, S&P said.
Commenting on the Swiss Re downgrade, S&P credit analyst Simon Marshall said in a statement: "There are significant integration challenges, given the size and complexity of GEIS and the state of flux that it has been in for a number of years caused by the uncertainty over the long-term ownership of the group. These risks are partly offset, however, by Swiss Re's track record of successful trans-Atlantic acquisitions and the advanced integration already in place."
The upgrade of Employers Reinsurance Corp. and GE Reinsurance Corp. reflects the companies' position as strategically important subsidiaries of Swiss Re, S&P said.
Separately, A.M. Best, Moody's Investors Service and Fitch Ratings all commented on execution risk and other issues, but took no immediate actions to upgrade or downgrade any of the Swiss Re or GE entities (see related story).
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