Swiss Re, GE Insurance placed on CreditWatch

Standard & Poor’s Ratings Services is keeping Swiss Reinsurance on CreditWatch with negative implications — and GE Insurance Solutions Corporation on CreditWatch with a positive outlook — pending Swiss Re’s completed acquisition of GE Insurance, expected in mid-2006.
S&P recently placed Swiss Reinsurance Co. (Swiss Re) and its core operating companies on CrreditWatch. “The long-term counterparty credit and insurer financial strength ratings on all [Swiss Re] entities remain on CreditWatch with negative implications, where they were placed on Nov. 18, 2005, following Swiss Re’s announcement that it had reached an agreement with U.S.-based General Electric Co. (AAA/Stable/A-1+) to acquire the latter’s reinsurance operations, GE Insurance Solutions Corporation,” S&P’s said in a release.
“The CreditWatch placement will be resolved when the transaction to acquire GEIS completes, which is expected to be mid-2006,” said Standard & Poor’s credit analyst Simon Marshall.
In a press release, S&P’s says “the CreditWatch status reflects the execution risk associated with integrating a group of the size and complexity of GEIS, which 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, however, by 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, we expect that the ratings on Swiss Re and its core operating companies would 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 [‘AA’] level.”
In the meantime, S&P’s has also placed GE Insurance Solutions Corporation (GEIS), Employers Reinsurance Corp. (ERC), and related affiliates on CreditWatch.
“The ‘BBB+’ long-term counterparty credit and senior unsecured debt ratings on GEIS and the ‘A’ long-term counterparty credit and financial strength ratings on ERC and affiliates remain on CreditWatch with positive implications, where they were placed on Nov. 18, 2005, pending the closing of their expected acquisition by Swiss Reinsurance Co. (Swiss Re; AA/Watch Neg/A-1+),” S&P’s announced.
The ‘BBB+’ counterparty credit and senior unsecured debt ratings on GEIS may also be raised on completion of the acquisition, reflecting Standard & Poor’s expectation that Swiss Re will assume GEIS’ debt as part of the transaction, S&P’s announced.