Fitch Ratings placed the “AA” long-term issuer rating of GE Global Insurance Holdings Corp. (GE Global) and the “AAA” insurer financial strength rating of Employers Reinsurance Corp. (ERC), GE Global’s main operating subsidiary, on rating watch negative. Fitch believes that ERC is increasingly being viewed as a strategic rather than core operation of General Electric (GE), ERC’s ultimate parent company. The rating action reflects this view coupled with a recent volatile operating performance by ERC that has weakened it’s financial profile when viewed on a “stand alone” basis and has made GE’s support increasingly important to maintaining ERC’s “AAA” rating.
On June 27, ERC announced it was adjusting prior year estimates, including reserve adjustments, by about $350 million after tax, resulting in a loss of $240 million in the second quarter. Projected year-end 2002 results would be roughly break even, down from a previously expected $200 million.
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