Standard & Poor's Changes Rating Criteria, Rates ERC AA+; New Criteria for All Financial Services Groups OVERLAND PARK, Kan.--(BUSINESS WIRE)--May 29, 2002--Standard & Poor's today issued AA+ counterparty credit and financial strength ratings on Employers Reinsurance Corporation (ERC) and its wholly owned subsidiaries. Standard & Poor's said the outlook is stable.
The rating reflects no change in Standard & Poor's view of ERC's financial strength. Standard & Poor's has also affirmed its view that ERC is a strategically important component of the General Electric Company. Additionally, the change does not affect ERC's liquidity or trigger any debt obligations.
However, the new rating represents a change in ratings criteria by Standard & Poor's to distinguish between what they consider Core and Strategically Important financial services businesses owned by major corporations.
Using their new criteria, Standard & Poor's has determined that since GE is a multi-faceted enterprise versus an insurance parent, ERC cannot be considered a Core subsidiary. Standard & Poor's has also concluded that unless a unit is Core, that unit cannot receive credit support above AA+ from its parent. Under the previous rules, ERC had received one notch of rating support as a GE business. Under the new rules, ERC is not eligible for that incremental support.
The Standard & Poor's AA+ rating on ERC reflects their analysis of ERC on a stand-alone basis without any support from its parent. Standard & Poor's said the rating reflects ERC's very strong stand alone financial characteristics, citing ERC's strong market position, very strong capitalization and liquidity, improved financial leverage and strategic importance to its parent.
ERC remains one of the world's strongest, best capitalized reinsurers and will continue to serve its diverse, global client base effectively. ERC's statutory surplus has grown to $4.9 billion, up 18.5% since 1998. Stockholders' equity, excluding unrealized gains on investment securities, of ERC's immediate parent, GE Global Insurance Holding Corporation, has increased 24.6% to $6.3 billion during that same period. The company also has $45 billion in assets. The company continues to take steps to improve its operating performance.
The S&P announcement has no impact on GE's AAA credit rating. Employers Reinsurance Corporation, a GE company, is the world's fourth-largest reinsurer and a premier global provider of risk solutions. ERC serves clients in property and casualty reinsurance, life and health reinsurance, commercial insurance, and other risk management services. More information on ERC is available at www.ercgroup.com.
--30--djm/dx*
CONTACT: Employers Reinsurance Corporation
Dean Davison, 913/676-5147
Jeff Wilson
GE Capital Corporate Finance
[email protected]
1-203-749-6340