Moody's Puts GE Insurance Solutions On Review

NU Online News Service, Jan. 27, 10:10 a.m. EST?Moody's Investors Service said it has placed ratings of GE Insurance Solutions and its business units under review for possible downgrade, after the news that the reinsurer would post a $472 million after-tax charge.[@@]

The New York-based ratings firm's action affects "A1" senior unsecured debt for GE Insurance Solutions as well as its other rated operating subsidiaries. GE Insurance Solutions is part of Fairfield, Conn.-based General Electric Company.

Moody's said its action follows GE's announcement that it expects GE Insurance Solutions to record a $472 million after-tax charge for the quarter related to adverse reserve development on prior-year reserves.

This charge, the ratings firm noted, significantly reduces GE Insurance Solutions' earnings for 2004 and is outside of Moody's current ratings' expectations. The charge also shows that despite repeated reserve charges over the past five years, the company continues to revise its estimates for its underwriting performance, according to Moody's.

The Moody's review for possible downgrade will focus on the operating performance and capitalization of GE Insurance Solutions' operating companies, including the potential for continued adverse development on prior-year reserves.

Moody's also noted the impact of a moderating pricing environment and mix changes on the group's portfolio.