Swiss Re and core subs on negative watch

The long-term counterparty credit and insurer financial strength ratings on Swiss Reinsurance Co. and its core operating companies will remain on CreditWatch with negative implications, according to Standard & Poor’s Ratings Services.
Swiss Re and its entities were placed on CreditWatch on Nov. 18, 2005, following the reinsurers announcement that it agreed to acquire U.S.-based General Electric Co.’s (AAA/Stable/A-1+) reinsurance operations, GE Insurance Solutions Corporation (GEIS; BBB+/Watch Pos/–; main group operating entities are rated A/Watch Pos/–, which factors in the parent’s support).
The CreditWatch placement, S&P’s says, will be resolved when the transaction to acquire GEIS completes, which is expected to be in June 2006. Regulatory approval from the U.K. Financial Services Authority is pending.
The CreditWatch status reflects the execution risk associated with integrating a group of the size and complexity of GEIS, which S&P’s says is rated lower than Swiss Re.
The ratings on GEIS partly reflect the state of flux that it has been in for a number of years, caused by uncertainty over the long-term ownership of the group. These risks are partly offset, according to S&P’s due to Swiss Re’s track record of successful transatlantic acquisitions and the advanced integration planning already in place.
If the transaction is completed as currently constituted, S&P”s expects that the ratings on Swiss Re and its core operating companies will be lowered to ‘AA-‘ with a stable outlook. If the transaction does not proceed, the ratings on Swiss Re would be affirmed at their current level.