GE’s sale of its insurance operations to Swiss Re

An excellent article regarding GE's sale of its insurance operations to Swiss Re is in the current issue of Fortune at, http://www.fortune.com/fortune/articles/0,15114,1135407,00.html. I encourage everyone to think of how this applies to many other insurance companies because GE's situation is not isolated by any means. Another way of thinking of this is that Swiss Re paid $6.8 billion per the article, but only after GE promised to add $3.4 billion in reserves. In other words, GE's insurance division was discounted by half. What if other carriers' values are also only worth half their market value due to historic under reserving? Even if their under reserving is less significant, maybe 25% of their values, the impact is still huge. Also consider whether all companies whose under reserving equals half the corporation's market value would maintain an adequate rating if the under reserving was stated? Do all these carriers have parent companies or other access to capital that can contribute half their market value on short notice? These questions then beg the question, just how stable is the P&C industry? Are all of your adequately rated carriers truly adequately stable?

Published on December 14, 2005

We can help you answer these questions with our selection of services:
If you are interested in learning the stability of your companies, consider utilizing our Company Stability Analysis Service. Through this service, we provide a detailed report showing the critical components of your carriers' stabilities. To learn more about our service, click on www.burand-associates.com/Services/ServicesSub6.htm.

If you are interested in learning the characteristics of stable carriers and also learning the characteristics of carriers that may appear stable today and carry high ratings but have a high probability of suffering downgrades/laying off business/becoming less competitive within the next three years, you may be interested in our report: P&C Insurance Company Growth & Market Share -- 2004. For more details, click on www.programbusiness.com/tracking/SFtracker.asp?SFid=307 .

Or, for a more comprehensive view of the industry, agents have found our report, 2005 State of the P&C Insurance Industry, very valuable. Click on www.burand-associates.com/CoolStuff/CoolStuffMain.htm#IndustryReport to learn more.

    
    

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