A.M. Best Places Subs of GE Insurance Solutions Corp. Under Review; Negative Implications Noted

A.M. Best Co. has placed the financial strength ratings of the subsidiaries of GE Insurance Solutions Corp (formerly known as GE Global Insurance Holding Corp) (GE Insurance) (Overland, Kan.) under review with negative implications.

A.M. Best has also placed the issuer credit ratings of “a” of Employers Reinsurance Corporation (Overland Park) and GE Reinsurance Corporation (Barrington, Ill.), together known as Employers Re Corp Group, and the issuer credit and senior debt ratings of “bbb+” of GE Insurance under review with negative implications.

These rating actions follow an initial meeting with management following General Electric’s (GE) recent announcement that GE Insurance will be taking an additional $472 million after tax charge in the fourth quarter associated with adverse reserve development stemming primarily from the 1997-2001 accident years. This brings the total after tax adverse reserve development in 2004 to $750 million, placing further pressure on the group’s level of risk-adjusted capitalization.

In November 2004, A.M. Best revised the rating outlook to negative from stable for Employers Re Corp Group following a reported deterioration in risk-adjusted capitalization levels resulting from estimated losses emanating from Hurricanes Charley, Frances, Ivan and Jeanne. At that time, although management indicated its intention to completely restore the capital level of each company by year-end 2004, A.M. Best believed that the marginal levels of risk-adjusted capitalization left each company exposed in the short term to the potential for further shock losses, adverse loss development or volatility in their investment portfolio stemming from changes in interest rates.

Furthermore, A.M. Best believed that despite the ultimate ownership by GE, the financial flexibility remained constrained within the property/casualty (re)insurance subsidiaries.

The ratings will remain under review with negative implications over the next 90 days while A.M. Best has further discussions with management regarding the timing, level and quality of capital restoration measures. In the absence of a tangible, long-term plan including support from GE, the ratings will likely be downgraded given the historical poor underwriting performance primarily related to 2001 and prior accident years and a decline in risk-adjusted capitalization.

The financial strength ratings of A (Excellent) have been placed under review with negative implications for the following subsidiaries of GE Insurance Solutions Corp:

— Employers Reinsurance Corporation

— GE Reinsurance Corporation

— First Specialty Insurance Corporation

— Westport Insurance Corporation

The financial strength rating of A- (Excellent) has been placed under review with negative implications for The Medical Protective Company, a subsidiary of GE Insurance Solutions Corp. Additionally, the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Employers Reassurance Corporation have been placed under review with negative implications.

The financial strength rating of B+ (Very Good) has been placed under review with negative implications for Coregis Insurance Company, a subsidiary of GE Insurance Solutions Corp.

The issuer credit rating of “bbb+” has been placed under review with negative implications for GE Insurance Solutions Corp.

The following debt ratings have been placed under review with negative implications:

GE Insurance Solutions Corp (formerly GE Global Insurance Holding Corp)–

— “bbb+” on $400 million 6.45% senior unsecured notes, due 2019

— “bbb+” on $600 million 7.00% senior unsecured notes, due 2026

— “bbb+” on $350 million 7.50% senior unsecured notes, due 2010

— “bbb+” on $350 million 7.75% senior unsecured notes, due 2030

— “bbb+” on the senior unsecured shelf.