A.M. Best Affirms Ratings of Employers Reassurance Corporation and Union Fidelity Life Insurance Company

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and
issuer credit ratings of "a-" of Employers Reassurance Corporation
(ERAC)(Mission, KS) and its subsidiary, Union Fidelity Life Insurance Company
(UFLIC) (Schaumburg, IL). The outlook for all ratings is stable.

The rating affirmations reflect the ongoing parental capital contributions
ultimately provided by General Electric Company (GE) to support both companies`
financial strength positions and run-off operating profiles. GE has invested
$2.4 billion of incremental cash into ERAC and UFLIC over the last five years.

ERAC and UFLIC maintain acceptable levels of risk-adjusted capitalization as GE
has always promptly and fully honored its commitment to replenish capital to
prudent levels following sizable net losses. The losses are partially
attributable to reserve increases on the in-force books of long-term care
business and ERAC`s level-term traditional life business (Regulation XXX). In
addition to substantial investment impairments, poor 2008 statutory operating
results were exacerbated by significant reserving increases that reflect
additional actuarial reserves being recorded due to low interest rates and
falling equity markets.

The ratings also recognize ERAC`s conservative liability profile and financial
strength given its ability to self-fund its Regulation XXX reserves.

Although in run off, the remaining reserves of ERAC and UFLIC exceed $24 billion
and run out over many years. Longer term, both companies` operating results may
be assisted by annual reserve releases that will commence within the next few
years if financial markets normalize. As progress is made in management efforts
to increase administrative efficiency and to downsize the closed books of
business, A.M. Best anticipates that statutory financial results will come
closer to break-even and the historical volatile operating performance will
stabilize. Accordingly, A.M. Best will continue to monitor the ongoing
performance of these blocks of business and fully expects that GE will continue
to maintain the capitalization of ERAC and UFLIC in compliance with its
commitment and regulatory standards.

For Best`s Credit Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors that may have been considered, can be found
at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts:
Richard Baldwin, 908-439-2200, ext. 5664
richard.baldwin@ambest.com
or
William Pargeans, 908-439-2200, ext. 5359
william.pargeans@ambest.com
or
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009