<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                 ---------------
                                    FORM 10-K
                                 ---------------

            [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998
                                             
                                       OR

           [] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from ________to________

                                 ---------------
                         Commission file number 0-27394
                                 ---------------

                     GE Global Insurance Holding Corporation
              (Exact name of registrant as specified in its charter)

                Delaware                                  95-3435367
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                  Identification No.)

   5200 Metcalf, Overland Park, Kansas      66201       (913) 676-5200
(Address of principal executive offices) (Zip Code) (Registrant's telephone
                                                    number, including area code)

                                 ---------------

                         SECURITIES REGISTERED PURSUANT
                          TO SECTION 12(b) OF THE ACT:

                                                        Name of each  
         Title of each class                    exchange on which registered
         -------------------                    ----------------------------
   7% Notes Due February 15, 2026                  New York Stock Exchange
                         

                         SECURITIES REGISTERED PURSUANT
                          TO SECTION 12(g) OF THE ACT:

                               Title of each class
                               -------------------
                    Common Stock, par value $5,000 per share

                           
Indicate by check mark whether the  registrant(1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [x] No[ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [x]

Aggregate  market  value  of the  voting  stock  held  by  nonaffiliates  of the
registrant at March 24, 1999. None.

At March 24, 1999,  1,000 shares of common stock with a par value of $5,000 were
outstanding.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b)
OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH THE REDUCED  DISCLOSURE
FORMAT.


<PAGE>
<TABLE>
<CAPTION>
                                      TABLE OF CONTENTS                                                                           

                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
    
PART I
   Item 1.   Business........................................................................1
   Item 2.   Properties.....................................................................12
   Item 3.   Legal Proceedings..............................................................12
   Item 4.   Submission of Matters to a Vote of Security Holders............................12


PART II
   Item 5.   Market for the Registrant's Common Equity and Related Stockholder Matters......12
   Item 6.   Selected Financial Data........................................................12
   Item 7.   Management's Discussion and Analysis of Financial Condition
                and Results of Operations...................................................13
   Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.....................22
   Item 8.   Financial Statements and Supplementary Data....................................22
   Item 9.   Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure....................................................22


PART III
   Item 10.  Directors and Executive Officers of the Registrant.............................22
   Item 11.  Executive Compensation.........................................................22
   Item 12.  Security Ownership of Certain Beneficial Owners and Management.................23
   Item 13.  Certain Relationships and Related Transactions.................................23


PART IV
   Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K................23
</TABLE>


<PAGE>
                                     PART I

Item 1.  Business.

GE Global Insurance  Holding  Corporation ("GE Global  Insurance" and,  together
with  its  subsidiaries,  ("the  Company"),  through  its  direct  and  indirect
subsidiaries,  is principally engaged in the reinsurance  business in the United
States and  throughout  the world.  All  outstanding  common  stock of GE Global
Insurance  is owned by General  Electric  Capital  Services,  Inc.  ("GE Capital
Services"),  which in turn is  wholly-owned  by General  Electric  Company  ("GE
Company").

The  principal  executive  offices of GE Global  Insurance  are  located at 5200
Metcalf, Overland Park, Kansas 66201 (Telephone number (913) 676-5200).


Overview of the Reinsurance Industry

Reinsurance  is a form of insurance in which a reinsurer  indemnifies  a primary
insurer  against  part or all of the  liability  assumed by the primary  insurer
under one or more insurance policies.  Reinsurance may provide a primary insurer
with several major benefits:  a reduction in net liability of individual  risks,
protection  against  catastrophic  losses,  reduction of financial  leverage and
stabilization  of  operating  results.  Reinsurance  may also  provide a primary
insurer the  ability to  increase  its  underwriting  capacity  by allowing  the
primary  insurer to accept  larger risks and to more rapidly  expand its book of
business.

The  global   reinsurance   industry   continues  to  be  impacted  by  industry
consolidation,  excess market capacity and primary insurers seeking  alternative
forms of risk transfer such as insurance  captives,  structured  securities  and
derivative products.  Global reinsurers are offering ways to meet the demands of
this  changing  global  market by expanding  their  markets,  entering  into new
reinsurance niches,  offering new reinsurance products and spreading their risks
geographically.  This changing reinsurance environment may affect the industry's
profitability which has historically been influenced by the insurance industry's
underwriting cycle, changes in interest rates and catastrophic events.


General

GE Global Insurance is one of the largest  reinsurance groups in the world, with
subsidiaries  providing risk management  solutions for well over a century.  The
Company writes substantially all types of property and casualty,  healthcare and
life  reinsurance  and some lines of primary  health,  property and casualty and
excess workers' compensation insurance.

The Company  conducts  business and  services its accounts  through a network of
local offices  located in cities  throughout the world. As of December 31, 1998,
the  Company  had 19 offices  in the North  American  region,  10 offices in the
European  region,  10  offices in the  Asia/Pacific  region and 3 offices in the
Latin American region.

As one of the largest direct  writers of  reinsurance in the world,  the Company
works directly with its clients which enhances the Company's ability to evaluate
its  clients  and their  respective  risks and  allows  the  Company  to be more
responsive to the individual  needs of its customers.  The Company  utilizes its
network of local offices throughout the world to service the particular needs of
its  reinsurance  clients.  This  system  enables the Company to provide a wider
range of services  targeted at the needs of a particular  market. To enhance its
responsiveness  to customer  needs in the  property and  casualty  segment,  the
Company  operates in a  decentralized  environment  with respect to underwriting
decisions and customer service.

The Company also competes in the reinsurance broker market throughout the world.
During  1998 and in early  1999,  the Company  has  significantly  expanded  its
presence  in the  reinsurance  broker  market by  acquiring  Kemper  Reinsurance
Company  ("Kemper Re") and Eagle Star  Reinsurance  Company Limited ("Eagle Star
Re")  (See  Notes  3 and  17 to  the  consolidated  financial  statements).  The
acquisitions of Kemper Re and Eagle Star Re significantly  enhance the Company's
distribution  channel in the  worldwide  reinsurance  broker  market and further
enables the Company to respond to the growing risk  management  needs of a wider
and more diverse group of  customers.  The  acquisitions  of Kemper Re and Eagle
Star Re position the Company as one of the largest reinsurance broker writers in
the world.


                                        1


<PAGE>
The Company manages and diversifies its risk through the careful underwriting of
risks,  active claims  management and the purchase of  retrocessional  coverage.
Retrocessional  coverage  represents  a form of  secondary  reinsurance  where a
reinsurer seeks reinsurance coverage on a specified reinsurance  agreement.  The
Company  monitors  adherence  to  underwriting  guidelines  through  the  use of
computer systems and internal audits.

The  Company's  business  strategy  is  to  continue  to  increase  revenues  by
concentrating   on  select   profitable   customer   segments   and   delivering
comprehensive risk transfer and risk management solutions.  The Company does not
intend,  however,  to increase premium income at the expense of its underwriting
results.

The Company, as a result of General Electric Capital  Corporation's ("GE Capital
Corporation" - a wholly-owned  subsidiary of GE Capital Services) acquisition of
Coregis  Insurance Company  ("Coregis"),  acquired the renewal rights of certain
domestic property and casualty  business to continue  expansion of its specialty
insurance  product line in 1997.  During 1998, the Company,  either  directly or
through  its   affiliates,   acquired   three  major   property   and   casualty
insurance/reinsurance  businesses  which  strengthens its global presence in the
Fortune 1000 commercial property markets,  the  broker-serviced  markets and the
healthcare product lines.

The Company has established a Financial  Market Products ("FMP") unit which will
address the needs of  customers  seeking  innovative  risk  transfer  solutions,
globally. FMP will partner with an affiliate,  GECC Capital Markets Group, Inc.,
to deliver the full range of services desired by this growing customer  segment.
Other than start-up  administrative  expenses, the Company's 1998 results do not
reflect any significant revenues or operating results from products and services
being contemplated by the FMP unit.

On January 6, 1998,  the  Company  purchased  the assets and assumed the renewal
rights  of  Industrial  Risk  Insurers  ("IRI"),  a leader in  providing  highly
protected risk property  insurance,  for a cash  consideration  of approximately
$235  million.  The  business  underwritten  through  IRI is  managed by a joint
venture formed between the Company and The Hartford Steam Boiler  Inspection and
Insurance  Company ("HSB") as stipulated by a management  agreement.  IRI writes
business utilizing the licensing authority of HSB and the business  underwritten
is  subsequently  allocated  to HSB and the Company in  accordance  with certain
reinsurance agreements between HSB and the Company. The expansion into these two
niche  markets  positions  the  Company to  continue  to meet the demands of the
changing domestic market and provide services to a new base of customers.
     
In the fourth quarter of 1998, the Company completed the acquisitions of Medical
Protective  Corporation ("Medical Protective") and Kemper Re. Medical Protective
is the oldest medical professional  liability insurer of physicians and dentists
in the United States.  The cash  consideration of approximately $628 million was
financed be GE Capital Corporation via an interim loan agreement. Kemper Re is a
property and casualty  reinsurance  company  principally  doing business through
intermediaries.  The  cash  consideration  of  approximately  $468  million  was
financed by utilizing existing unused credit facilities.

Also in recent years,  the Company has expanded its global business  through the
extension  of its local  office  network.  The Company  opened  offices in Kuala
Lumpar and  Shanghai  in 1998,  Buenos  Aires and  Montreal  in 1997 and Sydney,
Melbourne,  Brisbane and Auckland in 1996.  Consistent with its global expansion
strategy,  the  Company  anticipates  further  expanding  its  presence  in  the
Asia/Pacific and Latin American regions.

Unless otherwise  indicated,  all financial data has been prepared in accordance
with United States generally accepted accounting principles ("GAAP").


                                        2


<PAGE>
Lines of Business

The   Company's   two   business   segments   are  (1)   property  and  casualty
insurance/reinsurance  ("P&C") and (2) life reinsurance. The Company's principal
product lines under the property and casualty  segment are traditional  property
and  casualty  reinsurance,   healthcare  reinsurance  and  specialty  insurance
(generally  primary property and casualty  insurance) and its principal  product
lines under the life  reinsurance  segment are traditional  life reinsurance and
financial  reinsurance.  The Company also provides primary insurance products to
hospitals, health maintenance organizations and medical professionals as part of
its  healthcare  product line and to niche  customers  as part of its  specialty
insurance product line.

Unless  otherwise  indicated,  the Company's  domestic  results include business
written in the United States  (including  business  written in the United States
where  the  reinsured  is  outside  the  United  States)  and  Canada,  and  the
international  results  include all other business  written by the Company.  The
geographic breakdown,  based on net premiums written, of the Company's principal
product lines is summarized as follows:

<TABLE>
<CAPTION>
                                                           Year ended December 31,
                                  -------------------------------------------------------------------------
(In millions)                             1998                      1997                      1996
                                  ---------------------     ---------------------     ---------------------
                                                Inter-                    Inter-                    Inter-
                                  Domestic     national     Domestic     national     Domestic     national
                                  ---------------------     ---------------------     ---------------------
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>

Property and Casualty Segment     
   Property and Casualty.........  $1,487       $2,306       $1,038       $1,592       $1,167       $2,196
   Healthcare....................     514           83          432           92          405            -
   Specialty.....................     498            -          339            -          169            -
Life Segment.....................     422          674          512          540          189          447
                                   ------       ------       ------       ------       ------       ------
   Total.........................  $2,921       $3,063       $2,321       $2,224       $1,930       $2,643
                                   ======       ======       ======       ======       ======       ======
</TABLE>

The  following  is  a  summary   description  of  the  Company's   domestic  and
international business based on principal product lines:


Property and Casualty Insurance/Reinsurance Segment

Property  and  Casualty   Reinsurance.   The  Company's  largest  product  line,
traditional property and casualty  reinsurance,  accounted for approximately 63%
of the Company's  worldwide net premiums written in 1998. The Company's  premium
volume in the property and casualty  segment is derived  principally from treaty
agreements,  which enable the Company to maintain lower  operating costs because
fewer  personnel are required to  administer  treaty  business than  facultative
business.  Most of the  Company's  casualty  business is written on an excess of
loss basis  because it better  enables the  Company to control  its  exposure on
business that has a relatively longer "tail".

The  Company's  property  business  is  written  on both an excess of loss and a
proportional  basis.  Generally,  the  Company  is the  lead  reinsurer  for any
domestic program in which it participates, enabling it to negotiate the terms of
the reinsurance. The Company also acts as the lead reinsurer on a portion of its
international business.

The Company's  domestic  property and casualty  business is conducted  primarily
throughout  the United States and Canada.  For the year ended December 31, 1998,
approximately  48% of the  Company's  domestic  net  premiums  written  from the
property  and  casualty   segment  were  derived  from   property   reinsurance,
approximately  45% from casualty  reinsurance  and  approximately  7% from other
lines of reinsurance.  Based on 1998 net premiums written,  approximately 63% of
the Company's domestic property and casualty reinsurance was written on a direct
basis, with the remainder written through brokers.


                                        3


<PAGE>
The Company's  international  property and casualty business services  worldwide
markets, including most European countries and countries in the Middle East, Far
East and Latin America. For the year ended December 31, 1998,  approximately 46%
of the Company's  international  net premiums written from property and casualty
reinsurance  was  derived  from  property  reinsurance,  approximately  25% from
casualty reinsurance, approximately 24% from aviation and marine reinsurance and
approximately  5% from other lines of  reinsurance.  Based on 1998 net  premiums
written,  approximately 59% of the Company's international property and casualty
business  was written on a direct  basis,  with the  remainder  written  through
brokers.

In  recent  years,  insurance  companies  have  directed  more  business  to the
better-capitalized,   more   highly-rated   reinsurers,   which  has  led  to  a
consolidation in the reinsurance industry. In competing with a smaller number of
global  reinsurers,  the Company has found that a number of its global customers
are increasingly demanding that reinsurers provide a broader range of coverages.
In response to this trend,  the Company has  expanded  the property and casualty
risks it reinsures beyond its more traditional property and casualty reinsurance
business to include risks such as errors and  omissions,  directors and officers
and  non-standard  auto  liability.  In  addition to the  expansion  of lines of
business,  property and casualty  reinsurance has aligned its marketing  efforts
with its core expertise in areas such as aviation,  national accounts and global
accounts.  Management believes that the Company is well positioned to compete on
a global basis in these markets.

The property and casualty  reinsurance  industry has  experienced  a significant
increase in  catastrophic  exposure and loss during the last  decade.  Increased
population  density,  particularly in regions  susceptible to tropical storms or
earthquakes, and the higher incidence and greater severity of catastrophes,  has
increased the losses incurred in many recent catastrophes.  As a result of these
developments,  the Company has taken  steps to limit its  exposure by  carefully
monitoring  and  allocating  its  property  and  casualty  exposure  to specific
geographic zones, both domestically and internationally.

Healthcare. As part of the Company's property and casualty business segment, the
Company  provides  insurance and reinsurance for the healthcare  industry,  also
targeting  employers,  public  entities,  manufacturers  and others for  certain
product lines.  Coverages  include primary insurance and reinsurance for medical
professional  liability and reinsurance  protecting primary insurers  (including
self-insurers)  in the healthcare  market (i.e.,  reinsurance of long-term care,
excess   workers'   compensation,   stop  loss  insurance  and  provider  excess
coverages).

The  healthcare  industry  continues  to  change  and  evolve  due to  voluntary
healthcare  reform,  expansion  of  managed  healthcare  initiatives,  increased
competition and the uncertainty related to the extent of government  regulation.
In addition,  companies  that  historically  specialized in one line of business
have  expanded  their lines of business  and are now writing  multiple  lines of
business.  The  Company,  to serve  the  growing  needs of  their  clients,  has
developed new and innovative  healthcare  products and has expanded coverages to
include   various   other  lines  of  business.   Additionally,   the  Company's
international  operations  have begun to write  accident and health  reinsurance
from the property and casualty insurance/reinsurance segment.

The Company  believes that it is well  positioned  to compete in the  healthcare
market because of its wide range of experience in providing healthcare liability
coverage and accident and health coverage,  leveraging it acquisition of Medical
Protective and utilizing multiple products and disciplines to provide healthcare
solutions.

Specialty Insurance.  An additional component of the Company's domestic property
and casualty  business is its specialty  insurance product line, which generally
consists of commercial property and casualty policies written on a primary basis
in niche markets.  The Company's  specialty  business  concentrates on providing
commercial   insurance  products  for  target  markets,   usually   professional
associations  and  homogeneous  groups.  The  acquisition  of the renewal rights
associated  with Coregis has  significantly  increased the  specialty  business'
premium volume and has provided access to several new customer groups. Specialty
products include professional liability programs, communications/media liability
coverages and some niche programs in the general  property/casualty  area.  This
coverage  provides  insurance for errors and omissions  (E&O) arising out of the
professional  activities  of the insureds and  commercial  property and casualty
coverages for niche programs.


                                        4


<PAGE>
Professional  classes  underwritten  include  lawyers,   property  and  casualty
insurance  agents and  brokers,  life and health  insurance  agents and brokers,
directors and officers  (not-for-profit) and a few miscellaneous classes such as
travel agents,  computer consultants and marketing consultants.  The majority of
this  business  provides  coverage to lawyers and property and casualty and life
insurance agents and brokers.

Competition  for the  classes of  business  underwritten  within  the  Company's
specialty  insurance product line has recently  increased as more companies have
redirected their resources to the specialty niche business.  In order to compete
for this  business,  the Company has provided  value-added  services,  including
enhanced  underwriting and automated processing services,  to its specialty line
customers.


Life Reinsurance Segment

Life  Reinsurance.  The Company is engaged in the  reinsurance  of various  life
insurance products,  including term, whole and universal life, annuities,  group
long-term health and health products and provides financial  reinsurance to life
insurers.  Based  on  net  premiums  written,  life  reinsurance  accounted  for
approximately 19% of the Company's worldwide business in 1998.

With respect to life  reinsurance,  the Company  writes mostly on a direct basis
with  primary  insurers.   The  Company's  life  reinsurance  business  consists
principally of treaty business and is written generally on a pro-rata basis. The
Company's  domestic life  reinsurance  business is written in every state in the
United States. The Company's  international  life reinsurance  business services
worldwide markets,  including France,  Germany,  Greece,  Israel, Italy, Mexico,
Scandinavia,  Singapore,  Spain  and the  United  Kingdom.  For the  year  ended
December  31,  1998,  approximately  65% of  the  Company's  international  life
reinsurance net premiums written were for traditional life reinsurance, with the
balance for healthcare reinsurance.

The Company  believes  that  increases in life  expectancy,  decreases in public
funding for social programs in Europe and  deregulation of the life  reinsurance
markets in Europe and Japan present  increased  opportunities  for the Company's
life  reinsurance  business  line. In response to these trends,  the Company has
expanded its international life reinsurance market by increasing its presence in
the market for reinsurance of annuity providers.

Financial  Reinsurance.  Financial  reinsurance is primarily designed to enhance
the  current  statutory  surplus of the ceding  company  while  reducing  future
statutory  earnings  as amounts  are  repaid to the  reinsurer.  This  financial
transaction is effectively  collateralized by anticipated  future income streams
from selected insurance policies.  The Company writes financial reinsurance on a
direct basis and through  brokers and generally  only for companies  with credit
ratings  of not less than "A" at the  inception  of the  policy  and that have a
minimum  capital and surplus of $15 million.  The two  principal  categories  of
transactions are financial reinsurance and financial risk reinsurance. Financial
reinsurance  typically  has a duration  of three to five years.  Financial  risk
reinsurance  represents a longer term traditional risk sharing arrangement where
reinsurance  is  provided  on  existing  portfolios  of in force  business.  The
Company's  focus in the  past  year has been on  expanding  the  financial  risk
reinsurance line.


Property and Casualty Reserves for Unpaid Claims and Claim Expenses

Domestic.  The Company's domestic  subsidiaries maintain reserves to cover their
estimated  ultimate  liability for unpaid claims and claim expenses with respect
to reported  and  unreported  claims  incurred as of the end of each  accounting
period (net of estimated related salvage and subrogation claims). These reserves
are estimates that involve actuarial and statistical projections of the expected
cost of the ultimate  settlement  and  administration  of unpaid claims based on
facts  and  circumstances  then  known,  estimates  of  future  trends in claims
severity  and other  variable  factors  such as  inflation  and new  concepts of
liability.   The  inherent   uncertainties  of  estimating  claim  reserves  are
exacerbated for reinsurers by the significant  periods of time that often elapse
between the  occurrence of an insured  claim,  the reporting of the claim to the
primary insurer and,  ultimately,  to the reinsurer,  and the primary  insurer's
payment of that  claim and  subsequent  indemnification  by the  reinsurer  (the
"tail").  As a  consequence,  actual claims and claim expenses paid may deviate,
perhaps  substantially,  from  estimates  reflected in the insurance  companies'
reserves in their  financial  statements.  Adjustments  to  previously  reported
reserves  for net claims  and claim  expenses  are  reflected  in the  financial
statements in the period in which the adjustment occurs.


                                        5


<PAGE>
When a claim is  reported  to a ceding  company,  the  ceding  company's  claims
personnel  establish a "case  reserve" for the estimated  amount of the ultimate
payment.  The estimate reflects the informed judgment of such personnel based on
general  insurance  reserving  practices and on the  experience and knowledge of
such personnel regarding the nature and value of the specific type of claim. The
Company, in turn,  typically  establishes a case reserve when it receives notice
of a claim from the ceding  company.  Such reserves are based on an  independent
evaluation  by the  Company's  claims  departments,  taking  into  consideration
coverage,  liability,  severity of injury or damage, jurisdiction, an assessment
of the ceding company's  ability to evaluate and handle the claim and the amount
of reserves  recommended  by the ceding  company.  Case  reserves  are  adjusted
periodically  by the claims  departments  based on subsequent  developments  and
audits of ceding companies.

In accordance with industry practice,  the Company maintains reserves for claims
incurred but not reported ("IBNR"). Such reserves are established to provide for
future case reserves and loss payments on incurred claims that have not yet been
reported to an insurer or reinsurer.  In calculating IBNR reserves,  the Company
uses generally  accepted actuarial  reserving  techniques that take into account
quantitative loss experience data, together with, where appropriate, qualitative
factors.  IBNR  reserves are based on claim  experience  and are grouped both by
class of business and by accident year.  IBNR reserves are also adjusted to take
into  account  certain  additional  factors,  such as  changes  in the volume of
business  written,  reinsurance  contract  terms  and  conditions,  the  mix  of
business,  claims  processing and inflation,  that can be expected to affect the
Company's liability for claims over time.

International.  The Company's  international  property and casualty  reinsurance
operations establish their reserves using analytical techniques similar to those
utilized by GE Global Insurance's domestic subsidiaries. They also maintain IBNR
reserves using actuarial and statistical projections.  The potential for adverse
development  of the  Company's  reserves  for  its  international  business,  as
compared to that of its domestic business,  is reduced because the international
operations  have a relatively  low  proportion of longer tail  exposures.  As of
December 31, 1998,  approximately 2% of the Company's net international reserves
($69  million)  related to  business  acquired  by the  Company  from  Assurance
Compagniet  Baltica  Aktiesellskab  ("Baltica")  in  1988.  At the  time  of the
acquisition, the Company obtained from Baltica a 90% loss development guarantee,
pursuant to which  Baltica is  obligated to pay the Company 90% of the amount of
claim reserve  development  (adjusted for certain income and expenses) from 1988
through  December 31, 1997. The Company is currently  negotiating the settlement
of this loss development guarantee with Baltica.

Reserve Development. The development of the Company's net balance sheet property
and casualty liabilities for unpaid claims and claim expenses for accident years
1988 through 1998 is summarized in the following table:

Net  Liability.  The first row of data shows the  estimated  net  liability  for
unpaid claims and claim expenses at December 31 for each year from 1988 to 1998.
The liability includes both case and IBNR reserves as of each year-end date, net
of anticipated recoveries from other reinsurers.  The rows immediately following
the first row of data show  cumulative paid data at December 31, as of one year,
two years, ..., 10 years of subsequent payments.

Net Liability Re-estimated. The middle rows of data show the re-estimated amount
for previously  reported net liability based on experience as of the end of each
subsequent calendar year's results. This estimate is changed as more information
becomes known about the underlying  claims for individual  years. The cumulative
redundancy  (deficiency)  shown in the  table is the  aggregate  net  change  in
estimates over the period of years  subsequent to the calendar year reflected at
the top of the  respective  columns.  The amount in the line titled  "Redundancy
(Deficiency) at December 31, 1998", represents for each calendar year (the "Base
Year")  the  aggregate  change in (i) the  Company's  original  estimate  of net
liability  for  unpaid  claims  and claim  expenses  for all years  prior to and
including  the Base  Year  compared  to (ii)  the  Company's  re-estimate  as of
December 31, 1998, of net liability for unpaid claims and claim expenses for all
years prior to and including the Base Year. A redundancy means that the original
estimate  was  greater  than the  re-estimate  and a  deficiency  means that the
original  estimate  was  less  than  the  re-estimate.  By way of  example,  the
deficiency for the year 1994,  calculated as of December 31, 1998,  represents a
deficiency  in the  Company's  original  estimate  of  unpaid  claims  and claim
expenses for 1994 and prior years.

The last seven lines of data present the  development of reserves on a "gross of
reinsurance"  basis,  reconciled to the "net of reinsurance"  basis shown in the
immediately preceding table.


                                        6


<PAGE>
<TABLE>
<CAPTION>
                                              Changes in Historical Reserves for Unpaid Claims and Claim Expenses
                                                  For the Last Ten Years - GAAP Basis as of December 31, 1998

                                                                    Year ended December 31,                  
                            --------------------------------------------------------------------------------------------------------
(In millions)                1988     1989     1990     1991      1992      1993      1994      1995      1996      1997      1998
                            --------------------------------------------------------------------------------------------------------
<S>                           <C>      <C>      <C>      <C>       <C>       <C>       <C>       <C>      <C>      <C>       <C>
     
Net liability for unpaid  
   claims and claim
   expenses                 $3,087   $3,338   $3,579   $3,596   $ 3,991   $ 4,525   $ 5,071   $ 9,351   $ 9,458   $ 9,114   $12,495
Paid (cumulative) as of:  
One year later.........        681      706      747      665       802       949     1,115     1,964     1,949     2,176       ---
Two years later........      1,064    1,125    1,119    1,103     1,274     1,602     1,804     3,130     3,189       ---       ---
Three years later......      1,432    1,469    1,524    1,499     1,739     2,054     2,341     3,933       ---       ---       ---
Four years later.......      1,687    1,746    1,772    1,784     2,036     2,424     2,708       ---       ---       ---       ---
Five years later.......      1,919    1,929    1,989    2,008     2,293     2,690       ---       ---       ---       ---       ---
Six years later........      2,065    2,072    2,173    2,208     2,485       ---       ---       ---       ---       ---       ---
Seven years later......      2,221    2,229    2,348    2,362       ---       ---       ---       ---       ---       ---       ---
Eight years later......      2,347    2,380    2,482      ---       ---       ---       ---       ---       ---       ---       ---
Nine years later.......      2,478    2,495      ---      ---       ---       ---       ---       ---       ---       ---       ---
Ten years later........      2,581      ---      ---      ---       ---       ---       ---       ---       ---       ---       ---

Net liability
   re-estimated as of:
One year later.........     $3,134   $3,390   $3,616   $3,625   $ 3,919   $ 4,612   $ 5,173   $ 9,192   $ 9,229   $ 9,179       ---
Two years later........      3,220    3,482    3,583    3,587     4,066     4,656     5,313     8,959     9,127       ---       ---
Three years later......      3,346    3,462    3,564    3,701     4,095     4,793     5,256     8,907       ---       ---       ---
Four years later.......      3,360    3,472    3,654    3,687     4,238     4,747     5,155       ---       ---       ---       ---
Five years later.......      3,406    3,537    3,635    3,818     4,154     4,668       ---       ---       ---       ---       ---
Six years later........      3,470    3,521    3,758    3,771     4,075       ---       ---       ---       ---       ---       ---
Seven years later......      3,494    3,626    3,734    3,711       ---       ---       ---       ---       ---       ---       ---
Eight years later......      3,582    3,608    3,674      ---       ---       ---       ---       ---       ---       ---       ---
Nine years later.......      3,575    3,567      ---      ---       ---       ---       ---       ---       ---       ---       ---
Ten years later........      3,549      ---      ---      ---       ---       ---       ---       ---       ---       ---       ---
Redundancy (Deficiency)
   at December 31, 1998       (462)    (229)     (95)    (115)      (84)     (143)      (84)      444       331       (65)      ---
Effect of foreign
   exchange (1)                  7       16      (16)     (20)        4        26        11      (309)     (228)       81       ---
                            ------   ------   ------   ------   -------   -------   -------   -------   -------   -------   -------
Redundancy (Deficiency)
   at December 31, 1998,  
   excluding foreign
   exchange                 $ (455)  $ (213)  $ (111)  $ (135)  $   (80)  $  (117)  $   (73)  $   135   $   103   $    16   $   ---
                            ======   ======   ======   ======   =======   =======   =======   =======   =======   =======   =======
</TABLE>

<TABLE>
<CAPTION>
(In millions)                                                     1992      1993      1994      1995      1996      1997      1998
                                                                --------------------------------------------------------------------
<S>                                                                <C>       <C>       <C>       <C>       <C>       <C>       <C>

Balance at December 31 - gross...............................   $ 4,815   $ 5,312   $ 6,020   $11,145   $10,869   $10,936   $15,342
Less reinsurance recoverables................................      (824)     (787)     (949)   (1,794)   (1,411)   (1,822)   (2,847)
                                                                -------   -------   -------   -------   -------   -------   -------
Balance at December 31 - net.................................     3,991     4,525     5,071     9,351     9,458     9,114    12,495
                                                                -------   -------   -------   -------   -------   -------   -------
Latest re-estimated liability - gross........................     5,179     5,726     6,298    10,630    10,797    11,065       ---
Latest re-estimated reinsurance recoverables.................    (1,104)   (1,058)   (1,143)   (1,723)   (1,670)   (1,886)      ---
                                                                -------   -------   -------   -------   -------   -------   -------
Latest re-estimated liability - net..........................     4,075     4,668     5,155     8,907     9,127     9,179       ---
                                                                -------   -------   -------   -------   -------   -------   -------
Gross redundancy (deficiency)................................      (364)     (414)     (278)      515        72      (129)      ---
Effect of foreign exchange (1)...............................         4        27        11      (377)     (271)      101       ---
                                                                -------   -------   -------   -------   -------   -------   -------
Gross redundancy (deficiency), excluding foreign exchange....   $  (360)  $  (387)  $  (267)  $   138   $  (199)  $   (28)  $   ---
                                                                =======   =======   =======   =======   =======   =======   =======
</TABLE>
                                                                                
(1)  The  results of the  Company's  international  operations  translated  from
     functional  currencies  into U.S.  dollars are included  with the Company's
     U.S.   underwriting   operations  in  this  table.   The  foreign  currency
     translation impact on the cumulative  redundancy  (deficiency)  arises from
     the  difference  between  reserve  developments  translated at the exchange
     rates at the end of the  year in  which  the  liabilities  were  originally
     estimated  and the  exchange  rates  at the end of the  year in  which  the
     liabilities were re-estimated.


Note:  For a description of the purpose of the above table and the various table
sections,  please refer to the immediately  preceding  section entitled "Reserve
Development."


                                        7


<PAGE>
A number of major  trends  that  occurred  within the  insurance  industry,  the
economy in general and several  Company-specific  factors have had a significant
effect on the Company's  liabilities for unpaid claims and claim expenses during
the period covered by the preceding  table. The claims and claim expense reserve
deficiencies  developed  to December 31,  1998,  as  reflected in the  preceding
table,  included reserve deficiencies of approximately $130 million in 1988, $79
million  in 1989,  $48  million in 1990 and $23  million in 1991  related to the
general  liability  business on the books of Puritan  Excess and  Surplus  Lines
Insurance Company ("PESLIC") before the Company's acquisition of PESLIC in 1994.
Prior  to  1994,  PESLIC  was  owned by GE  Capital  Corporation.  Additionally,
beginning  in  1985,  the  Company  strengthened  the  reserves  for its  excess
liability  and  workers'  compensation   business  for  qualified   self-insured
employers.  Claims and claim expense  reserve  development  in the mid 1980's in
these  businesses  reflected the  inadequate  premium rates which  resulted from
intense competition in the market during that period.

In the  late  1980's,  the  reinsurance  market  generally  reacted  to the rate
deficiencies and the resulting  claims and claim expense reserve  development by
increasing rates and strengthening  claims and claim expense  reserves.  This is
reflected,  with respect to the Company,  in the  significant  reductions in the
reserve deficiencies in recent years.

To a lesser  degree,  development  of  asbestos  and  environmental  claims  has
affected the Company's  results.  Higher than anticipated levels of inflation in
certain  lines of  reinsurance  businesses  has also had an  adverse  effect  on
liabilities  for  claims  and  claim  expenses,  particularly  in excess of loss
reinsurance.  Partially offsetting the above factors is favorable development in
recent  years  in  medical  professional   liability  and  facultative  casualty
businesses, as well as an increase in net retentions by ceding companies.

The Company's  reconciliation  of its beginning and ending property and casualty
reserves for unpaid  claims and claim  expenses on a GAAP basis is summarized as
follows:

<TABLE>
<CAPTION>
                                                      Year ended December 31,       
                                                 ----------------------------------
(In millions)                                      1998         1997         1996
                                                 ----------------------------------
<S>                                                 <C>          <C>          <C>
    
Balance at January 1 - gross.................... $10,936      $10,869      $11,145 
Less reinsurance recoverables...................  (1,822)      (1,411)      (1,794)
                                                 -------      -------      -------
Balance at January 1 - net......................   9,114        9,458        9,351
                                                 -------      -------      -------

Claims and expenses incurred:
   Current year.................................   3,286        2,438        2,763
   Prior years..................................    (126)          71          106
                                                 -------      -------      -------
                                                   3,160        2,509        2,869
                                                 -------      -------      -------

Claims and expenses paid:
   Current year.................................  (1,074)        (612)        (485)
   Prior years..................................  (2,176)      (1,949)      (1,990)
                                                 -------      -------      -------
                                                  (3,250)      (2,561)      (2,475)
                                                 -------      -------      -------

Claim reserves related to acquired companies....   3,470            -            -

Foreign exchange and other......................       1         (292)        (287)
                                                 -------      -------      -------
Balance at December 31 - net....................  12,495        9,114        9,458
Add reinsurance recoverables....................   2,847        1,822        1,411
                                                 -------      -------      -------
Balance at December 31 - gross.................. $15,342      $10,936      $10,869
                                                 =======      =======      =======
</TABLE>

The  liabilities  for claims and claim  expenses in the preceding  table include
long-term  disability  claims that are  discounted  at a 6% rate. As a result of
discounting the Company's  long-term  disability  claims,  total liabilities for
claims  and  claim  expenses  have been  reduced  by an  estimated  2% and 3% at
December  31,  1998 and 1997,  respectively.  The  amortization  of  discount is
included in current  operating  results as part of the development of prior year
liabilities.


                                        8


<PAGE>
Long-term disability discounts accrued as a percentage of claims, claim expenses
and policy  benefits  were less than 1%,  approximately  1% and 5% for the years
ended December 31, 1998, 1997 and 1996,  respectively.  Discounts amortized as a
percentage  of claims,  claim  expenses and policy  benefits  were less than 1%,
approximately  1% and 2% for the years ended  December 31, 1998,  1997 and 1996,
respectively.

The Company's  reconciliation  of its property and casualty  reserves for unpaid
claims and claim expenses  between  statutory basis and GAAP basis is summarized
as follows:

<TABLE>
<CAPTION>
                                                                December 31,                  
                                                      ---------------------------------
(In millions)                                          1998         1997         1996
                                                      ---------------------------------
<S>                                                      <C>         <C>          <C>
    
Statutory basis reserves for U.S. companies - net.... $ 7,679     $ 5,527      $ 5,875
Adjustments to GAAP basis (1)........................     667        (118)        (435)
                                                      -------     -------      -------
GAAP basis reserves for U.S. companies - net.........   8,346       5,409        5,440
GAAP basis reserves for non-U.S. companies - net.....   4,149       3,705        4,018
                                                      -------     -------      -------
Total GAAP basis reserves - net......................  12,495       9,114        9,458
Add reinsurance recoverables.........................   2,847       1,822        1,411
                                                      -------     -------      -------
GAAP basis reserves - gross.......................... $15,342     $10,936      $10,869
                                                      =======     =======      =======
</TABLE>

(1)  Statutory  basis  reserve  offsets and  reserves  reclassified  to contract
     deposit assets or liabilities based on risk transfer  provisions of FAS No.
     113.

Environmental  and Asbestos  Exposure.  Included in the Company's  liability for
claims  and claim  expenses  are  liabilities  for  environmental  and  asbestos
exposures.  These claims and claim  expenses are  primarily  related to policies
written  prior  to 1986 as the  policies  written  since  1986  have  tended  to
explicitly  exclude  environmental  and asbestos risks from coverage and most of
the environmental and asbestos  exposures arise from risks located in the United
States.  During 1997,  the  Company's  international  operations  completed  the
initial process of identifying  environmental  and asbestos claims that had been
reserved in prior periods but were  initially  aggregated  and coded under other
general  lines  of  business  rather  than  being  specifically   identified  as
environmental or asbestos claims.

The three-year  development of claims and claim expense reserves associated with
the  Company's  asbestos  and  environmental  claims,  including  case  and IBNR
reserves, is summarized as follows:

<TABLE>
<CAPTION>
                                                     Year ended December 31,         
                                                 -------------------------------
(In millions)                                     1998       1997          1996
                                                 -------------------------------
<S>                                               <C>        <C>           <C>
    
Balance at January 1 - gross.................... $ 462      $ 368         $ 436 
Less reinsurance recoverables...................  (193)      (174)         (240)
                                                 -----      -----         -----
Balance at January 1 - net......................   269        194           196

Claims and expenses incurred....................    35         54            19
Claim identification and IBNR allocation........     -         43 (1)         -
Claims and expenses paid........................   (39)       (22)          (21)
Claim reserves related to acquired companies....   524          -             - 
                                                 -----      -----         -----

Balance at December 31 - net....................   789        269           194
Add reinsurance recoverables....................   206        193           174
                                                 -----      -----         -----
Balance at December 31 - gross.................. $ 995      $ 462         $ 368
                                                 =====      =====         =====
</TABLE>

(1)  Prior to 1997,  the  Company's  international  operations  were  unable  to
     identify and segregate recorded claim reserves that related to asbestos and
     environmental exposures as they were grouped with claim reserves in various
     lines of business such as general liability. Beginning in 1997, the Company
     began  identifying and segregating  the asbestos and  environmental  claims
     related to its international operations.

These  amounts are  management's  best  estimate,  based on currently  available
information,  of claims  and claim  expense  payments  and  recoveries  that are
expected to develop in future years.


                                        9


<PAGE>
The  Company  monitors  evolving  case law and its  effect  on  asbestos-related
illness and toxic waste cleanup claims. Changing domestic and foreign government
regulations and legislation, including continuing congressional consideration of
federal Superfund law, newly reported claims, new contract  interpretations  and
other factors could  significantly  affect future claim  development.  While the
Company has recorded its best estimate of its liabilities  for  asbestos-related
illness and toxic waste cleanup claims based on currently available information,
it is possible that additional  liabilities  may arise in the future.  It is not
possible to estimate with any certainty the amount of additional  net claims and
claim expenses,  or the range of net claims and claim expenses,  if any, that is
reasonably  possible;   therefore,   there  can  be  no  assurance  that  future
liabilities  will not  materially  affect the Company's  results of  operations,
financial position or cash flows.

Breast Implant Exposure.  The Company has minimal exposure to products liability
claims  involving  silicone  breast  implants.  The  Company  has,  in the past,
generally  avoided the products  liability  reinsurance  business,  specifically
pharmaceutical and chemical exposures.

Year 2000 Exposure. The Company has evaluated the possibility of experiencing an
increase in property and casualty  insurance  and  reinsurance  claims and claim
expenses  arising  as a result of Year  2000-related  exposures.  Management  is
unable to reasonably  estimate the amount or range of loss that may occur due to
the uncertainty  surrounding the likelihood of computer system failures and what
portion, if any, will be deemed to be insured losses.  Accordingly,  the Company
is unable to  determine  whether  such losses may have an adverse  effect on its
results of  operations,  financial  position or cash flows.  The Company's  loss
mitigation strategy includes adding Year 2000 considerations to its underwriting
guidelines,  as well as its decisions to purchase  retrocessional  coverage.  In
addition,  the Company employs an active claims  management  strategy which will
include the coordinated handling of any Year 2000-related claims.


Life and Health  Reserves for Future Policy  Benefits and  Accumulated  Contract
   Values

Future policy benefits for  traditional  life and health  reinsurance  contracts
represent  the  present  value of such  benefits  based on  mortality  and other
assumptions  which were  appropriate at the time the policies were issued or, in
the event the policies were acquired by the Company from another insurer, at the
date of acquisition.  Interest rate  assumptions used in calculating the present
value  range  from  3.00% to 8.50%  per annum at  December  31,  1998.  Payments
received from sales of universal life and investment contracts are recognized by
providing   liabilities  equal  to  the  accumulated   contract  values  of  the
policyholders'  contracts.  Interest  rates  credited to such universal life and
investment  contracts  are  guaranteed  for the policy terms with renewal  rates
determined by the Company.  Such  crediting  interest rates ranged from 3.00% to
9.00% per annum in 1998.


Regulatory Matters

GE Global  Insurance  and its domestic  subsidiaries  are subject to  regulation
under the insurance statutes,  including insurance holding company statutes,  of
various  states,   including  Missouri,   Kansas,   Indiana  and  Illinois,  the
domiciliary states of GE Global Insurance's principal domestic insurance company
subsidiaries.  The international  subsidiaries of ERC (the "ERC Frankona Group")
are subject to regulation under insurance statutes of various foreign countries.

General.   The  regulation  and  supervision  to  which  GE  Global  Insurance's
subsidiaries  are  subject  relate   primarily  to  licensing   requirements  of
reinsurers,  the  standards  of solvency  that must be met and  maintained,  the
amount of  dividends  that may be paid by such  subsidiaries,  the nature of and
limitations  on  investments,  restrictions  on the  size of  risks  that may be
insured  or  reinsured,  deposits  of  securities  for  the  benefit  of  ceding
companies,  periodic  examinations  of the  financial  condition  and affairs of
reinsurers,  the form and content of financial  statements  required to be filed
with regulatory authorities and reserves for unearned premiums, losses and other
purposes.  In  general,  such  regulation  is for the  protection  of the ceding
companies and, ultimately,  their policyholders,  rather than securityholders of
the  regulated  reinsurer.  GE Global  Insurance  believes  it is,  and that its
subsidiaries   are,  in  material   compliance  with  all  applicable  laws  and
regulations pertaining to their business and operations.


                                       10


<PAGE>
U.S.  Insurance  Regulation.  U.S.  domestic  property  and  casualty  and  life
insurers,  including  reinsurers,  are subject to  regulation by their states of
domicile  and by those states in which they are  licensed.  The rates and policy
terms of primary  insurance  policies  generally are closely  regulated by state
insurance departments.  While reinsurance is not regulated as closely as primary
insurance,  some states do impose  control over certain terms and  conditions of
reinsurance  agreements by virtue of their authority to grant or deny credit for
ceded reinsurance by its domiciled primary insurers. In addition, as a practical
matter, the rates permitted to be charged by primary insurers can have an effect
on the rates that are charged by reinsurers.

Risk-Based Capital. The National Association of Insurance Commissioners ("NAIC")
has adopted minimum risk-based capital  requirements to evaluate the adequacy of
statutory  capital  and surplus in relation  to an  insurance  company's  risks.
Regulatory compliance with risk-based capital requirements is defined by a ratio
of a company's regulatory total adjusted capital to its authorized control level
risk-based  capital,  as defined by the NAIC.  At December 31, 1998,  each of GE
Global Insurance's domestic insurance company subsidiaries  exceeded the minimum
risk-based capital requirements.

Insurance  Holding Company  Regulations.  The insurance holding company laws and
regulations vary from state to state, but generally require an insurance holding
company to register with its domiciliary  state insurance  regulatory agency and
file certain  reports that include  current  information  concerning the capital
structure,  ownership,  management,  financial  condition  and general  business
operations of the insurance holding company and its subsidiary insurers that are
licensed in the state.  State insurance  holding  company laws and  regulations,
with  respect to domestic  insurers,  also require  prior  notice or  regulatory
approval  of changes in control  of an  insurer or its  holding  company  and of
material inter-affiliate transactions within the holding company structure.

Dividends by  Subsidiaries.  Because the  operations of GE Global  Insurance are
conducted primarily through Employers Reinsurance Corporation ("ERC") and Kemper
Re, GE Global Insurance is dependent upon dividends and tax allocation and other
payments primarily from ERC and Kemper Re to service its debt and meet its other
obligations.  The payment of dividends and other payments to GE Global Insurance
by ERC and Kemper Re are  subject to  limitations  imposed by the  Missouri  and
Illinois Insurance Codes,  respectively.  The payment of dividends to ERC by its
principal life reinsurance  subsidiaries,  Employers Reassurance Corporation and
ERC Life  Reinsurance  Corporation,  are subject to  limitations  imposed by the
Kansas and Missouri Insurance Codes, respectively.  No prediction can be made as
to whether any  legislative  proposals  relating  to  dividend  rules in Kansas,
Missouri or Illinois will be made, whether any such legislative proposal will be
adopted in the future,  or the effect,  if any, any such proposal  would have on
the Company.

The maximum  amount  available  for the payment of dividends  during 1999 by ERC
without prior  regulatory  approval is $410 million after  December 30, 1999. Of
this amount,  $96 million is committed to pay dividends on the  preferred  stock
issued by ERC to GE Capital Corporation.  Kemper Re will not be able to make any
dividend  payments  during 1999  without the prior  approval of the  Director of
Insurance for the State of Illinois.

International Regulations. Based on 1998 net premiums written, approximately 51%
of the Company's business is carried on outside of the United States. The degree
of regulation and  supervision in foreign  jurisdictions  varies from minimal in
some to stringent in others.  Licenses issued by foreign  authorities to the ERC
Frankona Group are subject to  modification  or revocation by such  authorities,
and such subsidiaries could be prevented from conducting  business in certain of
the jurisdictions  where they currently  operate.  In the past, the ERC Frankona
Group has been allowed to modify their  operations to conform with new licensing
requirements   in  all   jurisdictions   that  are  material  to  the  Company's
international operations.

In addition to licensing  requirements,  the ERC Frankona  Group is regulated in
various  jurisdictions  with respect to, among other  things,  currency,  policy
language  and terms,  methods of  accounting  and  auditing,  amount and type of
security  deposits,  amount  and  type of  reserves,  amount  and  type of local
investment  and  the  share  of  profits  to be  returned  to  policyholders  on
participating policies. Regulations governing constitution of technical reserves
(including  equalization reserves) in some countries could hinder the remittance
of profits and repatriation of assets and the payment of dividends; however, the
Company does not believe that these  regulations  will have a material impact on
the ERC Frankona Group's operations.


                                       11


<PAGE>
Item 2.  Properties.

The Company conducts business from various facilities, most of which are leased.
In  addition,  the Company  owns its  administrative  offices in Overland  Park,
Kansas, Copenhagen, Denmark and Munich, Germany.


Item 3.  Legal Proceedings.

There are no pending legal  proceedings  beyond the ordinary  course of business
that could have a material financial effect on the Company.


Item 4.  Submission of Matters to a Vote of Security Holders.

Omitted


                                     PART II


Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
            Matters.

All of the common stock of GE Global Insurance,  its sole class of common equity
on the date hereof,  is owned by GE Capital Services.  Accordingly,  there is no
public trading market for the Company's common equity.  GE Global Insurance paid
dividends on its common stock on December 30, 1998 of $270 million.


Item 6.  Selected Financial Data.

<TABLE>
<CAPTION>
                           Consolidated Financial Data

                                                                 Year ended December 31,                   
                                               ------------------------------------------------------------
(In millions)                                    1998         1997         1996         1995         1994
                                               ------------------------------------------------------------
<S>                                               <C>          <C>          <C>          <C>          <C>
    
Total revenues................................ $ 7,203      $ 5,784      $ 5,751      $ 4,798      $ 3,148 
Net premiums written..........................   5,984        4,545        4,573        3,561        2,573
Net investment income.........................     985          910          837          676          528
Net realized gains on investments.............     432          303          223          191          103
Earnings before income taxes..................   1,070          882          780          561          409
Net earnings..................................     779          648          567          437          358
Total investments.............................  21,987       18,343       16,479       15,394        9,850
Total assets..................................  35,047       27,532       25,388       25,613       14,496
Stockholder's equity.......................... $ 6,020      $ 5,374      $ 4,760      $ 4,191      $ 2,722
Return on equity (average)....................    13.7%        12.8%        12.7%        12.6%        12.7%
Stockholder's equity, excluding unrealized
   gains (losses) on investment securities.... $ 5,088      $ 4,628      $ 4,260      $ 3,755      $ 2,888
Return on equity (average), excluding
   unrealized gains (losses) on investment          
   securities.................................    16.0%        14.6%        14.1%        13.2%        13.0%
</TABLE>


                                       12


<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and Results
            of Operations

Overview

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Net  premiums  written  increased  $1,439  million  or  32% in  1998,  primarily
attributable  to growth in various  product  lines,  including  new P&C business
associated  with the  acquisition of the renewal rights of business from IRI and
Coregis and the acquisitions of Medical  Protective and Kemper Re. This increase
was partially offset by three significant quota share life reinsurance contracts
obtained  in 1997 that did not recur in 1998,  the  impact of  foreign  currency
translation  in  association  with  the  strengthening  of the U.S.  dollar  and
continued competitive market conditions.

Net earnings  increased  $131  million or 20% in 1998,  including an increase in
after-tax net realized gains on investments of $75 million.  Excluding after-tax
net realized gains on investments,  net earnings increased $56 million or 12% in
1998. This increase was primarily  attributable to a $75 million increase in net
investment  income,  primarily due to the acquisitions of Medical Protective and
Kemper Re and continued growth in the investment  portfolios,  and a $47 million
increase in other revenues,  primarily due to an increase in revenues  generated
from  investment-related  life  reinsurance  products and financial  reinsurance
transactions.   These   increases  were  partially   offset  by  a  decrease  in
underwriting  results reflecting  increased  underwriting and operating expenses
associated with the acquisitions and continued competitive market conditions.


Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Net premiums  written in 1997 were $4,545 million  compared to $4,573 million in
1996.  The  slight  decrease  was  primarily   attributable  to  a  decrease  in
international P&C net premiums written reflecting competitive market conditions,
the repositioning of certain  portfolios to minimize loss  accumulations and the
impact of foreign currency  translation in association with the strengthening of
the U.S.  dollar.  This decrease in  international  P&C net premiums written was
substantially  offset by an  increase  in domestic  business  reflecting  strong
growth in life reinsurance  business and the assumption of the renewal rights of
a  portfolio  of  specialty  P&C  business  obtained  as a result of GE  Capital
Corporation's acquisition of the renewal rights of business from Coregis.

Net  earnings  increased  $81 million or 14% in 1997,  including  an increase in
after-tax net realized gains on investments of $49 million.  Excluding after-tax
net realized gains on investments,  net earnings  increased $32 million or 7% in
1997. This increase was primarily  attributable to a $73 million increase in net
investment  income,   primarily  due  to  continued  growth  in  the  investment
portfolios,  and a $61 million  increase in other revenues,  primarily due to an
increase in revenues generated from investment-related life reinsurance products
and financial reinsurance transactions. These increases were partially offset by
a decrease in P&C underwriting  results  reflecting  increased  underwriting and
operating expenses and competitive market conditions.


                                       13


<PAGE>
Domestic Property and Casualty Business

<TABLE>
<CAPTION>
                                                    Year ended December 31,           
                                                 -------------------------------
(In millions)                                     1998        1997        1996
                                                 -------------------------------
<S>                                                <C>         <C>         <C>
    
Net premiums written............................ $2,499      $1,809      $1,741 
Net underwriting loss...........................    (58)        (64)        (98)
Net investment income...........................    419         389         390
Earnings before income taxes....................    601         489         415
Net realized gains on investments...............    311         212         169
Earnings before income taxes, excluding
   net realized gains on investments............    290         277         246
GAAP ratios (1):
   GAAP claims and claim expense ratio..........   68.9%       70.8%       75.7%
   GAAP underwriting expense ratio..............   33.6%       33.0%       29.7%
                                                  -----       -----       -----
   GAAP combined ratio..........................  102.5%      103.8%      105.4%
                                                  =====       =====       =====
</TABLE>

(1)  Represents  data for the applicable  periods  calculated in accordance with
     GAAP.  Claims and claim expense ratio represents  incurred claims and claim
     expenses as a percentage of net premiums earned. Underwriting expense ratio
     represents  acquisition costs and other  underwriting  expenses  (excluding
     amortization of intangibles,  interest expense and minority interest in net
     earnings of  consolidated  subsidiaries)  as a  percentage  of net premiums
     earned.  The  combined  ratio  represents  the sum of the  claims and claim
     expense ratio and the underwriting expense ratio.


Net  premiums  written  increased  $690  million  or  38%  in  1998,   primarily
attributable  to growth in various  product  lines,  including  new P&C business
associated  with the  acquisition of the renewal rights of business from IRI and
Coregis and the  acquisitions  of Medical  Protective  and Kemper Re,  partially
offset  by  continued  competitive  market  conditions.   Net  premiums  written
increased  $68 million or 4% in 1997,  primarily  attributable  to new  business
associated  with GE Capital  Corporation's  acquisition of the renewal rights of
business from Coregis and growth in the national  accounts  business,  partially
offset by the termination of certain long-term disability business and continued
competitive market conditions.
 
Typically,  the underwriting performance of P&C business is measured in terms of
a  combined  ratio.  The  combined  ratio is the sum of the loss  ratio  and the
underwriting  expense  ratio,  with  a  ratio  lower  than  100%  indicating  an
underwriting  profit and a ratio greater than 100%  indicating  an  underwriting
loss. Although the combined ratio has been greater than 100% for the three years
presented  above,  the  operating  results  of  insurance/reinsurance  companies
include net investment income which generally yields an overall operating profit
as reflected above in the caption  "Earnings before income taxes,  excluding net
realized gains on investments."

The lower  combined  ratio in 1998  primarily  reflects a general  reduction  in
incurred  losses caused by a decline in both the frequency and overall  severity
of  claims,   partially   offset  by  an   increase  in   hurricane   and  other
weather-related  catastrophe  losses. The lower combined ratio in 1997 primarily
reflects a reduction in catastrophe costs due to a decline in both the frequency
and severity of catastrophe  losses,  although it was moderately  impacted by an
increase in underwriting and operating costs associated with the  implementation
of new strategic business initiatives.

Net  investment   income  increased  $30  million  or  8%  in  1998,   primarily
attributable  to the  acquisitions  of  Medical  Protective  and  Kemper  Re and
continued  growth in the investment  portfolios.  Net investment  income of $389
million in 1997 was comparable to the $390 million in 1996.

Earnings  before income  taxes,  excluding  net realized  gains on  investments,
increased $13 million or 5% in 1998,  primarily  attributable to the decrease in
the combined ratio and the increase in net investment  income  discussed  above.
Earnings  before income  taxes,  excluding  net realized  gains on  investments,
increased $31 million or 13% in 1997, primarily  attributable to the decrease in
the combined ratio discussed above.


                                       14


<PAGE>
International Property and Casualty Business

<TABLE>
<CAPTION>
                                                     Year ended December 31,        
                                                 -------------------------------
(In millions)                                     1998        1997        1996
                                                 -------------------------------
<S>                                                <C>         <C>         <C>
    
Net premiums written............................ $2,389      $1,684      $2,196 
Net underwriting gain (loss)....................    (31)        (64)         18
Net investment income...........................    286         292         266
Earnings before income taxes....................    312         241         247
Net realized gains on investments...............     87          48          31
Earnings before income taxes, excluding
   net realized gains on investments............    225         193         216
GAAP ratios (1):
   GAAP claims and claim expense ratio..........   70.5%       70.1%       68.0%
   GAAP underwriting expense ratio..............   30.9%       33.4%       31.2%
                                                  -----       -----        ----
   GAAP combined ratio..........................  101.4%      103.5%       99.2%
                                                  =====       =====        ====
</TABLE>

(1)  Represents  data for the applicable  periods  calculated in accordance with
     GAAP.  Claims and claim expense ratio represents  incurred claims and claim
     expenses as a percentage of net premiums earned. Underwriting expense ratio
     represents  acquisition costs and other  underwriting  expenses  (excluding
     amortization of intangibles,  interest expense and minority interest in net
     earnings of  consolidated  subsidiaries)  as a  percentage  of net premiums
     earned.  The  combined  ratio  represents  the sum of the  claims and claim
     expense ratio and the underwriting expense ratio.


Net  premiums  written  increased  $705  million  or  42%  in  1998,   primarily
attributable  to growth in various  product  lines,  including  new P&C business
associated with the acquisition of Kemper Re,  partially offset by the impact of
foreign currency  translation in association with the  strengthening of the U.S.
dollar  and  continued  competitive  market  conditions.  Net  premiums  written
decreased  $512 million or 23% in 1997,  including an  approximate  $235 million
decrease  resulting from foreign  currency  translation in association  with the
strengthening  of the U.S.  dollar.  Excluding  the impact of  foreign  currency
translation,  net premiums written decreased  approximately $277 million in 1997
reflecting a $58 million  increase in ceded premium  resulting  from an expanded
retrocession  program,  the repositioning of certain portfolios to minimize loss
accumulations   and  a  general   decrease  in  premium  rates  associated  with
competitive market conditions.

The lower  combined  ratio in 1998  primarily  reflects a general  reduction  in
incurred  losses caused by a decline in both the frequency and overall  severity
of claims, partially offset by the an increase in aviation,  hurricane and other
weather-related  catastrophe losses. The higher combined ratio in 1997 primarily
reflects less  favorable loss  experience,  a general  decline in  international
premium rates and market conditions,  increased underwriting and operating costs
associated with the  implementation  of new strategic  business  initiatives and
certain large catastrophe  losses such as the Eastern Europe floods and aviation
losses.

Net investment income decreased $6 million or 2% in 1998, primarily attributable
to market  conditions,  partially  offset by the  acquisition  of Kemper Re. Net
investment income increased $26 million or 10% in 1997,  primarily  attributable
to continued growth in the investment portfolios, partially offset by the impact
of foreign  currency  translation in association  with the  strengthening of the
U.S. dollar.

Earnings  before income  taxes,  excluding  net realized  gains on  investments,
increased $32 million or 17% in 1998, primarily  attributable to the decrease in
the combined ratio discussed above. Earnings before income taxes,  excluding net
realized gains on investments,  decreased $23 million or 11% in 1997,  primarily
attributable  to the increase in the combined ratio discussed  above,  partially
offset  by the  increase  in net  investment  income  discussed  above and a $27
million  increase  in  other  revenues,  primarily  due to fees  generated  from
financial reinsurance transactions.


                                       15


<PAGE>
Life Reinsurance Business

<TABLE>
<CAPTION>
                                                       Year ended December 31,    
                                                      --------------------------
(In millions)                                          1998       1997      1996
                                                      --------------------------
<S>                                                     <C>        <C>      <C>
    
Revenues............................................. $1,525     $1,283     $881 
Earnings before income taxes.........................    157        152      118
</TABLE>

Revenues,  which consist of net premiums  earned,  net  investment  income,  net
realized gains on investments and other revenues,  including fees generated from
investment-related   life   reinsurance   products  and  financial   reinsurance
transactions, increased $242 million or 19% in 1998. This increase was primarily
attributable to growth in the traditional life and credit life business and fees
generated  from  investment-related  life  reinsurance  products  and  financial
reinsurance  transactions.  Revenues  increased  $402  million  or 46% in  1997,
primarily  attributable  to growth in the domestic  traditional  life and credit
life business,  principally  related to four significant quota share reinsurance
contracts,  and fees generated from investment-related life reinsurance products
and financial reinsurance transactions.

Earnings before income taxes increased $5 million or 3% in 1998,  including a $9
million  decrease in net realized gains on  investments.  Excluding net realized
gains on investments,  earnings before income taxes increased $14 million or 13%
in  1998,  primarily  attributable  to an  increase  in net  investment  income,
primarily  due to  continued  growth  in the  investment  portfolios,  and  fees
generated  from  investment-related  life  reinsurance  products  and  financial
reinsurance  tranactions.  Earnings before income taxes increased $34 million in
1997,  including a $20 million  increase in net realized  gains on  investments.
Excluding  net  realized  gains on  investments,  earnings  before  income taxes
increased  $14  million in 1997,  primarily  attributable  to an increase in net
investment  income,   primarily  due  to  continued  growth  in  the  investment
portfolios, and fees generated from investment-related life reinsurance products
and financial reinsurance transactions.


Liquidity and Capital Resources

GE Global  Insurance's  ability to meet its obligations,  including debt service
and operating  expenses,  and pay dividends to its shareholder depends primarily
upon its  receipt of  sufficient  funds  from its  insurance  subsidiaries.  The
payment of dividends by ERC and Kemper Re are subject to restrictions  set forth
in the insurance laws of Missouri and Illinois,  respectively,  as well as other
restrictions.  Historically,  the Company's liquidity requirements have been met
by  funds  provided  from   operations  and  from  the  maturity  and  sales  of
investments.

Cash flows from  operating  activities,  which  primarily  consists  of premiums
collected  during  the  period in excess of  payments  made for claims and claim
expenses,   decreased  $586  million  in  1998.   This  decrease  was  primarily
attributable to an increase in claim  settlements  relative to the collection of
premiums, the timing of reinsurance  settlements in association with catastrophe
loss  recoverables  and an increase in  underwriting  and operating cash outlays
associated  with the  acquisition of the renewal rights of business from IRI and
Coregis and the  acquisitions  of Medical  Protective  and Kemper Re. Cash flows
from operating activities increased $31 million in 1997, primarily  attributable
to a decrease in claim  settlements  relative  to the  collection  of  premiums,
partially  offset by an increase in  underwriting  and  operating  cash  outlays
associated with the implementaion of new strategic business initiatives.

Cash  flows  used for  investing  activities  decreased  $423  million  in 1998,
primarily  attributable to an increase in the maturity and sales of investments,
partially offset by the  acquisitions of Medical  Protective and Kemper Re. Cash
flows used for investing  activities  increased $290 million in 1997,  primarily
attributable  to the purchase of other  invested  assets and the  acquisition of
minority  shares  associated  with the Company's  1995  acquisition  of Frankona
Ruckversicherungs-Aktiengesellschaft ("Frankona Re").

Cash flows from financing  activities  increased $182 million in 1998, primarily
attributable  to  an  increase  in  the  proceeds  from  short-term   borrowings
associated with the acquisitions of Medical  Protective and Kemper Re, partially
offset by the change in contract  deposits  associated with the commutation of a
financial  reinsurance  treaty and an increase in dividends  paid to affiliates.
Cash flows from financing  activities  decreased $47 million in 1997,  primarily
attributable to an increase in dividends paid to affiliates, partially offset by
the change in contract  deposits and an increase in the proceeds from short-term
borrowings.


                                       16


<PAGE>
In 1996, GE Global Insurance executed a $1 billion shelf registration  statement
of senior unsecured debt securities rated AA by Standard & Poor's, of which $600
million was  outstanding  as of December 31, 1998. On March 1, 1999, the Company
issued the remaining $400 million of redeemable senior unsecured debt securities
at 6.45% per annum that are  scheduled  to mature on March 1, 2019.  The Company
received  $395 million in net  proceeds  from the issuance of these notes (after
deduction of underwriting  discounts and commissions)  which was used to repay a
significant  portion  of  the  outstanding   short-term   borrowings  under  the
intercompany  credit  agreement with GE Capital Services in association with the
funding of the Kemper Re acquisition.

In addition,  the Company has a one-year $600 million revolving credit agreement
with GE Capital  Services  which  enables  the Company to borrow from GE Capital
Services at an interest  rate per annum  equal to GE Capital  Services'  cost of
funds for a one year period.  The agreement shall be automatically  extended for
successive terms of one year each unless  terminated in accordance with terms of
the agreement.


Investments

General. The Company follows a conservative  investment strategy that emphasizes
maintaining  a high quality  investment  portfolio.  The primary goals include a
growing stream of investment income and improving total investment returns.  All
investments are administered  under  guidelines  established and approved by the
Company's Board of Directors.  The Company's  guidelines  specify credit quality
and  concentration   limits  with  respect  to  both  fixed  income  and  equity
securities.

In structuring its fixed maturity portfolios, the Company considers the duration
of its  assets  and  claims and claim  expense  reserves.  Most  fixed  maturity
portfolios have total return  benchmarks  against which relative  performance is
measured. The total return benchmarks include investment income and realized and
unrealized  gains and losses on investments.  Equity funds are managed for total
return, and performance is measured against equity benchmarks.

On a worldwide  basis,  the Company manages 64% of its  investments  internally.
General  Electric  Investment  Corporation  manages  an  additional  15%  of the
Company's  investments,  and the  balance  is managed  by  unaffiliated  outside
managers.

The Company's investment results are summarized as follows:

<TABLE>
<CAPTION>
                                                             Year ended December 31,              
                                               ---------------------------------------------------
(In millions)                                    1998       1997       1996      1995       1994
                                               ---------------------------------------------------
<S>                                               <C>        <C>        <C>       <C>        <C>
    
Average invested assets (at cost)............. $18,794    $16,417    $15,195   $12,153     $9,020 
Net investment income.........................     985        910        837       676        528
Net effective yield...........................     5.2%       5.5%       5.5%      5.6%       5.9%
Net realized gains on investments............. $   432    $   303    $   223    $  191     $  103
Unrealized gains (losses) on investment
   securities before deferred income taxes....   1,554      1,189        799       684       (251)
</TABLE>

The Company continues to seek  opportunities to enhance investment yield through
a  conservative,  primarily  fixed  maturity  investment  strategy.  Its current
investment  strategy does not  contemplate  material  additional  investments in
non-investment  grade  debt  securities,   commercial  real  estate,  commercial
mortgages, equity securities or derivatives.


                                       17


<PAGE>
Domestic  Investment  Operations.  The Company's  domestic property and casualty
investment portfolios are principally invested in tax-exempt state and municipal
bonds,  which the Company believes provide the most attractive  after-tax yield.
Some  additional  commitment was made to equity  securities,  primarily  through
limited partnership arrangements, in 1996 to enhance total investment returns in
the longer term. The Company's  domestic life investment  portfolios are largely
invested in taxable debt securities.

The Company's domestic fixed maturity portfolios  categorized by rating based on
market values are summarized as follows:

<TABLE>
<CAPTION>
                                                      Domestic Property
                                                        and Casualty          Domestic Life   
                                                      ---------------------------------------
                                                                     December 31,
                                                      ---------------------------------------
                                                       1998       1997       1998       1997
                                                      ---------------------------------------
<S>                                                    <C>        <C>        <C>        <C> 
   
U.S. government and government agency securities.....   9.0%       1.4%       6.6%       8.3% 
Aaa..................................................  39.0       48.9        4.5        1.8
Aa...................................................  26.9       27.1        6.7        2.8
A....................................................  12.2       11.4       20.9       16.9
Baa..................................................   1.2        0.5       13.5        9.4
Ba...................................................   0.2        0.1        2.1        1.5
Canadian securities..................................   2.5        3.9        0.0        0.0
Mortgage-backed and other asset-backed securities....   3.9        0.3       37.6       45.8
Other................................................   5.1        6.4        8.1       13.5
                                                      -----      -----      -----      -----
   Total............................................. 100.0%     100.0%     100.0%     100.0%
                                                      =====      =====      =====      =====
</TABLE>

Ratings are as assigned by Moody's when  available,  or by S&P and  converted to
the generally comparable Moody's rating.

The  Company's  emphasis on  investment  quality is evidenced  by the  preceding
table, which indicates that the bonds in the Company's investment portfolios are
principally  invested in either U.S. government and government agency securities
or issues rated "A" or above.  The Canadian  securities  held by the Company are
similar in quality to the other  securities  held in its  domestic  property and
casualty  portfolio.  Bonds held by the Company in its domestic life  portfolios
include  mortgage-backed  and other asset-backed  securities that are matched to
the liability  profile of specific life  reinsurance  contracts.  Investments in
mortgage-backed  and other  asset-backed  securities  are  limited to lower risk
tranches  and do not include  any  interest  only or  principal  only  elements.
Mortgage-backed  and other asset-backed  securities in the Company's  investment
portfolio were principally issued by Federal agencies.  The balance of the other
securities held in the domestic life portfolios are principally U.S.  government
and  government  agency  securities  and other  bonds with an  investment  grade
rating. The Company does not contemplate  significant  additional  investment in
non-investment  grade  securities  in either the  property  and casualty or life
portfolios.

International Investment Operations.  The investment portfolios of the Company's
international  operations  (other  than  certain  equity  portfolios,  which are
managed by outside managers) are managed by the ERC Frankona Group's  investment
personnel based in Munich,  within  guidelines  established by the management of
the ERC  Frankona  Group and under the overall  supervision  and review of ERC's
investment department.

The  principal  objective of the ERC Frankona  Group's  investment  policy is to
manage  the   investment   portfolios  on  a  total  return  basis  taking  into
consideration  the duration and currency  structure of the ERC Frankona  Group's
reinsurance  liabilities.  The ERC Frankona  Group's  investment  portfolios are
geographically  diversified with investments principally from the major European
markets and the United States.


                                       18


<PAGE>
As of December 31, 1998, the fair value of the ERC Frankona Group's  investments
totaled $7,256 million,  an increase of $891 million from December 31, 1997. The
composition of ERC Frankona Group's investments is summarized as follows:

<TABLE>
<CAPTION>
                                                                 December 31,    
                                                               -----------------
                                                                1998       1997
                                                               -----------------
            <S>                                                 <C>        <C> 
   
            Fixed maturity securities.........................  81.3%      81.4% 
            Equity securities.................................  12.6%      13.2%
            Other invested assets.............................   6.1%       5.4%
                                                               -----      -----

            Total............................................. 100.0%     100.0%
                                                               =====      =====
</TABLE>

The ERC Frankona Group's investment  portfolios are globally  diversified,  with
most  fixed  maturities  having a term less than ten years.  The fixed  maturity
securities consist of high credit quality  securities,  and almost all bonds are
investment grade securities with a comparable average rating equal to or above a
Moody's or S&P "AA" rating.  Fixed maturity securities include German and Danish
mortgage-backed  securities,  although  these  mortgage-backed  securities  have
significantly  less  principal  and interest  prepayment  risk than typical U.S.
mortgage-backed securities, as the German and Danish tax and social environments
are not  conducive  to risks of  prepayment  of interest and  principal.  Equity
securities  and other  invested  assets were  internationally  diversified  with
principal holdings in Germany, the United Kingdom and the United States.


Interest Rate and Currency Risk Management

In normal operations,  the Company must deal with effects of changes in interest
rates and currency exchange rates. The following discussion presents an overview
of how such  changes  are  managed,  a view of  their  potential  effects,  and,
finally, what considerations arise from recent developments in Asia.

The  Company  utilizes  various  financial  instruments,  such as  currency  and
interest rate swaps,  options and currency forwards to manage risks. The Company
is exclusively an end user of these  financial  instruments,  which are commonly
referred  to as  derivatives.  The  Company  does not engage in any  derivatives
trading,  market-making  or  other  speculative  activities  in  the  derivative
markets.

The  Company  manages  its  exposure to  currency  principally  by matching  the
underlying reinsurance  liabilities with the corresponding assets. Any remaining
significant  net  asset/liability  positions in a given currency are hedged with
forward  currency  purchase  or sale  contracts  to  further  mitigate  currency
exposures. The Company also hedges its currency risk on a portion of its foreign
subsidiary  investments by utilizing currency swaps that have been designated to
modify currency exposure associated with specific debt instruments.

On a limited  basis,  and as part of ongoing  customer  activities,  the Company
utilizes  interest  rate swaps and options to minimize its exposure to movements
in interest  rates and  financial  markets that have a direct  correlation  with
certain of its reinsurance products.

Substantially all derivative transactions are executed by the Company's Treasury
Department  which works closely with GE Capital  Treasury  personnel to maintain
controls on all exposures, adhere to stringent counterparty credit standards and
actively  monitor  marketplace  exposures.  Although  the  Company is exposed to
credit risk that the  counterparty  may not be able to comply with the terms and
conditions of the contracts, the Company utilizes only highly rated institutions
as counterparties to the derivative transactions.


                                       19


<PAGE>
The  Securities  and  Exchange  Commission  requires  that  registrants  include
information  about  potential  effects of changes in interest rates and currency
exchange in their financial  statements.  Although the rules offer  alternatives
for  presenting  this   information,   none  of  the   alternatives  is  without
limitations. The following discussion is based on so-called "shock-tests," which
model  effects of interest rate and currency  shifts on the  reporting  company.
Shock  tests,  while  probably  the  most  meaningful  analysis  permitted,  are
constrained by several factors,  including the necessity to conduct the analysis
based  on a  single  point  in  time  and by  their  inability  to  include  the
extraordinarily  complex  market  reactions  that normally  would arise from the
market shifts modeled.  While the following  results of shock tests for interest
rates and currencies may have some limited use as benchmarks, they should not be
viewed as forecasts:

     One  means  of   assessing   exposure  to  interest   rate   changes  is  a
     duration-based  analysis that  measures the potential  loss in net earnings
     resulting  from a  hypothetical  decrease  in  interest  rates of 100 basis
     points across all maturities (sometimes referred to as a "parallel shift in
     the yield  curve").  Under  this  model,  it is  estimated  that,  all else
     constant,  such  a decrease,  including repricing effects in the securities
     portfolio,  would  reduce the 1999 net  earnings  of the  Company  based on
     December 31, 1998 positions by an insignificant amount.

     One  means of assessing  exposure to changes in currency  exchange rates is
     to  model  effects  on  reported  earnings  using a  sensitivity  analysis.
     Year-end  1998  consolidated   currency   exposures,   including  financial
     instruments  designated and effective as hedges,  were analyzed to identify
     Company  assets and  liabilities  denominated  in other than their relevant
     functional  currency.  Net unhedged  exposures in each  currency  were then
     remeasured assuming a 10 percent decrease (20 percent for hyperinflationary
     economies) in currency exchange rates compared with the U.S. dollar.  Under
     this model, it is estimated that, all else constant,  such a decrease would
     reduce the 1999 net  earnings  of the Company  based on  December  31, 1998
     positions by an insignificant amount.

Recent economic  developments  in parts of Asia have altered  somewhat the risks
and opportunities of Company activities in affected economies.  These activities
encompass  providing  certain  reinsurance  products and investing in marketable
securities  within those Asian  economies.  As such,  exposure  exists to, among
other  things,  increased  receivable  delinquencies  and  potential  bad debts,
impairment of marketable  securities and increased  reinsurance claims activity.
Conversely,  new reinsurance  opportunities may arise and the  liberalization of
financial and  reinsurance  regulation may open new  opportunities  to penetrate
Asian markets. Taken as a whole, while this situation bears close monitoring and
increased  management  attention,  the current  situation is expected to have an
immaterial impact on the Company's results of operations, financial position and
cash flows in 1999.


Cyclicality

The property and casualty reinsurance industry has been highly cyclical.  Demand
for reinsurance is significantly  influenced by underwriting  results of primary
property and casualty  insurance  companies and prevailing  general economic and
reinsurance  premium  rates.  The  cyclical  trends  in  the  industry  and  the
industry's  profitability  can also be affected  significantly  by volatile  and
unpredictable developments, including changes in what the Company believes to be
the  propensity  of courts to grant large  awards,  natural  disasters and other
catastrophic  events (such as hurricanes,  windstorms,  earthquakes,  floods and
fires),  fluctuations  in  interest  rates and other  changes in the  investment
environment which affect inflationary pressures that may tend to affect the size
of losses experienced by ceding primary insurance companies.


                                       20


<PAGE>
Year 2000

Year 2000 will test the capability of business processes to function  correctly.
The  Company,  in  conjunction  with GE  Company  and GE Capital  Services,  has
undertaken a global  effort to identify  and mitigate  Year 2000 issues in their
information systems, products and services, facilities and suppliers, as well as
to assess the extent to which Year 2000 issues will affect its  customers.  Each
business  within the GE Company  structure has a Year 2000 leader who oversees a
multi-functional  remediation  project team responsible for applying a Six Sigma
quality  approach in four phases:  (1)  define/measure  - identify and inventory
possible  sources of Year 2000  issues;  (2) analyze - determine  the nature and
extent of Year 2000 issues and develop  project  plans to address  those issues;
(3) improve - execute  project plans and perform a majority of the testing;  and
(4) control - complete  testing,  continue  monitoring  readiness  and  complete
necessary  contingecy  plans.  The progress of this program is monitored at each
business and Company-wide  reviews with senior management are conducted monthly.
The first three  phases of the program  have been  completed  for a  substantial
majority of  mission-critical  activities.  Management  plans to have nearly all
significant information systems, product and services and facilities through the
control phase of the program by mid-1999.

The  scope  of the  global  Year  2000  effort  encompasses  many  thousands  of
applications  and computer  programs;  products  and  services;  facilities  and
facilities-related  equipment;  suppliers and customers. Business operations are
also  affected  by the Year  2000  readiness  of  customers  and  infrastructure
suppliers in areas such as utilities,  communications,  transportation and other
services.  In this  environment,  there will likely be instances of failure that
could cause  disruptions  in business  processes for the  Company's  businesses,
affect their customers'  ability to repay amounts owed or result in an increased
level of insurance  claims  activity.  The likelihood and effects of failures in
the  customer  base,  infrastructure  systems and in the supply  chain cannot be
estimated.  However,  with  respect  to  operations  under its  direct  control,
management  does not expect,  in view of its Year 2000  program  efforts and the
diversity of its businesses,  suppliers and customers,  that occurrences of Year
2000 failures will have a material  adverse effect on the results of operations,
financial position or liquidity of the Company.

Including  amounts  attributable  to  recent   acquisitions,   total  Year  2000
remediation  expenditures are expected to be approximately $4 million,  of which
approximately  90%  was  spent  by the  end of  1998.  Substantially  all of the
remainder is expected to be spent in 1999. Most of these costs are not likely to
be incremental  costs,  but rather will represent the  redeployment  of existing
resources.  The activities  involved in the Year 2000 effort necessarily involve
estimates and  projections  of activities and resources that will be required in
the future. These estimates and projections could change as work progresses.

In addition,  the Company has  evaluated  the  possibility  of  experiencing  an
increase in property and casualty  insurance  and  reinsurance  claims and claim
expenses  arising  as a result of Year  2000-related  exposures.  Management  is
unable to reasonably  estimate the amount or range of loss that may occur due to
the uncertainty  surrounding the likelihood of computer system failures and what
portion, if any, will be deemed to be insured losses.  Accordingly,  the Company
is unable to  determine  whether  such losses may have an adverse  effect on its
results of  operations,  financial  position or cash flows.  The Company's  loss
mitigation strategy includes adding Year 2000 considerations to its underwriting
guidelines,  as well as its decisions to purchase  retrocessional  coverage.  In
addition,  the Company employs an active claims  management  strategy which will
include the coordinated handling of any Year 2000-related claims.


                                       21


<PAGE>
New Accounting Standards

New accounting standards issued in 1998 are described below:

Statement of  Financial  Accounting  Standards  (SFAS) No. 133,  Accounting  for
Derivative Instruments and Hedging Activities, requires that, upon adoption, all
derivative  instruments  (including certain derivative  instruments  embedded in
other  contracts) be  recognized  in the balance  sheet at fair value,  and that
changes in such fair values be recognized in earnings  unless  specific  hedging
criteria are met.  Changes in the values of derivatives  that meet these hedging
criteria will ultimately  offset related  earnings  effects of the hedged items;
effects  of  certain  changes  in fair  value are  recorded  in  equity  pending
recognition  in  earnings.  The Company  will adopt the  Statement on January 1,
2000.  The impact of adoption will be determined by several  factors,  including
the specific  hedging  instruments  in place and their  relationships  to hedged
items, as well as market conditions. Management has not estimated the effects of
adoption as it believes that such  determination  will not be  meaningful  until
closer to the adoption date.


Effects of Inflation

The Company's  ultimate claims and claim expense costs on claims not yet settled
is  increased by the effects of  inflation,  and changes in the  inflation  rate
therefore could become a significant  factor in determining  appropriate  claims
and claim expense reserves, as well as reinsurance premium rates. Generally, the
Company's  methods  used to estimate  claims and claim  expense  reserves and to
calculate reinsurance premium rates take into account the anticipated effects of
inflation in estimating the ultimate claims and claim expense costs. The Company
uses both insurance industry data and government  economic indices in estimating
the  effects of  inflation  on  reinsurance  premium  rates and claims and claim
expense reserves.  However, until claims are ultimately settled, the full effect
of inflation on the Company's results cannot be known.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

Information  about  potential  effects of changes in interest rates and currency
exchange on the Company is discussed on pages 19-20.


Item 8.  Financial Statements and Supplementary Data.

The Company's  Consolidated  Financial Statements and the Independent  Auditors'
Report thereon and the Supplementary Financial Statement Schedules listed on the
accompanying Index to Financial Statements and Financial Statement Schedules are
filed as part of this report.


Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
            Financial Disclosure.

Not applicable


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant.

Omitted


Item 11.  Executive Compensation.

Omitted


                                       22


<PAGE>
Item 12.  Security Ownership of Certain Beneficial Owners and Management.

Omitted


Item 13.  Certain Relationships and Related Transactions.

Omitted


                                     PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

   (a) 1.  Financial Statements and Schedules.

           The consolidated financial statements of the Company filed as part of
           this  report  are  listed  in the  Index  to  Consolidated  Financial
           Statements and Financial Statement Schedules (page 24).

   (a) 2.  Financial Statement Schedules.

           The consolidated  financial  statement schedules of the Company filed
           as part of this  report  are  listed  in the  Index  to  Consolidated
           Financial Statements and Financial Statement Schedules (page 24).

   (a) 3.  Listing of Exhibits.

           3.1    A  complete  copy  of the  Articles  of  Incorporation  of the
                  Company,  as last amended on August 30, 1995, and currently in
                  effect.  (Incorporated  by  reference  to  Exhibit  3.1 of the
                  Company's Form 10-K for the year ended December 31, 1995.)

           3.2    A complete copy of the By-laws of the Company, as last amended
                  on February 26, 1995,  and currently in effect.  (Incorporated
                  by  reference  to Exhibit  3.2 of the  Company's  Registration
                  Statement on Form 10, File No. 0-27394.)

           10.1   First  Whole  Account  Aggregate  Excess of Loss  Retrocession
                  Agreement (E1), between Employers Reinsurance  Corporation and
                  National  Indemnity  Company, dated  January 1, 1998 (portions
                  redacted  in accordance with application  for  confidentiality
                  previously filed).

           10.2   Second Whole  Account  Aggregate  Excess of Loss  Retrocession
                  Agreement (E2), between Employers Reinsurance  Corporation and
                  Zurich  Reinsurance  (North America), Inc. of  New York, dated
                  January  1,  1998  (portions  redacted  in   accordance   with
                  application for confidentiality previously filed).

           10.3   Second Whole  Account  Aggregate  Excess of Loss  Retrocession
                  Agreement (E2), between Employers Reinsurance  Corporation and
                  National Union Fire Insurance Company of Pittsburgh, PA, dated
                  January 1, 1998  (portions   redacted   in   accordance   with
                  application for confidentiality previously filed). 

           12     Computation of ratio of earnings to fixed charges.

           23     Consent of KPMG LLP.


   (b)     Reports on Form 8-K.

           None.


                                       23


<PAGE>
                                   ITEM 14(a)

                     GE Global Insurance Holding Corporation
                                and Subsidiaries

                                    Index to
                        Consolidated Financial Statements
                                       and
                          Financial Statement Schedules


                                                                            Page
                                                                            ----
                                                                           
Consolidated Financial Statements
   Independent Auditors' Report..............................................25
   Consolidated Statement of Earnings........................................26
   Consolidated Statement of Financial Position..............................27
   Consolidated Statement of Stockholder's Equity............................29
   Consolidated Statement of Cash Flows......................................30
   Notes to Consolidated Financial Statements................................31

Financial Statement Schedules
   Schedule II - Condensed Financial Information of Registrant...............57
   Schedule III - Supplementary Insurance Information........................61


                                       24


<PAGE>
                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholder
GE Global Insurance Holding Corporation:


We have audited the accompanying  consolidated  statements of financial position
of GE Global Insurance  Holding  Corporation and subsidiaries as of December 31,
1998  and  1997,   and  the  related   consolidated   statements   of  earnings,
stockholder's  equity  and cash  flows for each of the  years in the  three-year
period ended December 31, 1998. Our audits also included the financial statement
schedules listed in the Index at Item 14(a) as of December 31, 1998 and 1997 and
for each of the years in the three-year  period ended  December 31, 1998.  These
consolidated  financial  statements and schedules are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of GE Global Insurance
Holding  Corporation and  subsidiaries as of December 31, 1998 and 1997, and the
results  of their  operations  and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedules,  when  considered  in  relation to the basic  consolidated  financial
statements  taken as a whole,  present  fairly,  in all material  respects,  the
information set forth therein.


                                                                        KPMG LLP


Kansas City, Missouri
January 22, 1999


                                       25


<PAGE>
<TABLE>
<CAPTION>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

                       Consolidated Statement of Earnings


                                                         Year ended December 31,    
                                                      ------------------------------
(In millions)                                          1998        1997        1996
                                                      ------------------------------
<S>                                                     <C>         <C>         <C>
    
Revenues
Net premiums written (Note 10)                        $5,984      $4,545      $4,573 
                                                      ======      ======      ======

Net premiums earned (Note 10)                         $5,635      $4,467      $4,648
Net investment income (Note 4)                           985         910         837
Net realized gains on investments (Note 4)               432         303         223
Other revenues                                           151         104          43
                                                      ------      ------      ------
Total revenues                                         7,203       5,784       5,751
                                                      ------      ------      ------

Costs and Expenses
Claims, claim expenses and policy benefits             4,103       3,260       3,373
Insurance acquisition costs                            1,357       1,073       1,106
Amortization of intangibles                               89          78          82
Interest expense                                          55          42          42
Other operating costs and expenses                       444         366         284
Minority interest in net earnings of consolidated          
   subsidiaries (Notes 3 and 11)                          85          83          84
                                                      ------      ------      ------
Total costs and expenses                               6,133       4,902       4,971
                                                      ------      ------      ------

Earnings before income taxes                           1,070         882         780
                                                      ------      ------      ------

Provision for income taxes (Note 7):
   Current                                               324         (37)        207
   Deferred                                              (33)        271           6
                                                      ------      ------      ------
                                                         291         234         213
                                                      ------      ------      ------

Net earnings                                          $  779      $  648      $  567
                                                      ======      ======      ======
</TABLE>


See Notes to Consolidated Financial Statements.


                                       26


<PAGE>
<TABLE>
<CAPTION>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

                  Consolidated Statement of Financial Position


                                                                        December 31,       
                                                                    ---------------------
(In millions)                                                         1998         1997
                                                                    ---------------------
<S>                                                                    <C>          <C>
    
Assets
Investments (Note 4):
   Fixed maturity securities available-for-sale, at fair value      $18,161      $14,816 
   Equity securities, at fair value                                   2,722        2,513
   Short-term investments, at amortized cost                            596          661
   Other invested assets                                                508          353
                                                                    -------      -------
   Total investments                                                 21,987       18,343

Cash                                                                    258          269

Securities and indebtedness of related parties                          564          318

Accrued investment income                                               424          369

Premiums receivable                                                   2,886        2,279

Funds held by reinsured companies                                       726          502

Reinsurance recoverables                                              3,915        2,791

Deferred insurance acquisition costs                                  1,203          844

Intangible assets (Note 5)                                            1,492          897

Other assets                                                          1,592          920
                                                                    -------      -------

Total assets                                                        $35,047      $27,532
                                                                    =======      =======
</TABLE>


                                       27


<PAGE>
<TABLE>
<CAPTION>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

            Consolidated Statement of Financial Position (continued)


                                                                        December 31,      
                                                                    ---------------------
(In millions)                                                         1998         1997
                                                                    ---------------------
<S>                                                                    <C>          <C>
    
Liabilities and equity
Claims and claim expenses (Note 6)                                  $15,852      $10,961 
Accumulated contract values                                           2,271        2,305
Future policy benefits for life and health contracts                  1,664        1,604
Unearned premiums                                                     2,165        1,244
Other reinsurance balances                                            1,487        1,125
Income taxes payable (Note 7)                                           138          191
Contract deposit liabilities                                          1,485        1,812
Other liabilities                                                       635          518
Deferred income taxes (Note 7)                                          539          646
Long-term borrowings (Note 9)                                           557          556
Indebtedness to related parties (Note 8)                              1,058           19
                                                                    -------      -------
   Total liabilities                                                 27,851       20,981
                                                                    -------      -------

Minority interest in equity of consolidated
   subsidiaries (Notes 3 and 11)                                      1,176        1,177
                                                                    -------      -------

Preferred stock, $100,000 par value; authorized,
   issued and outstanding - 1,500 shares                                150          150
Common stock, $5,000 par value; authorized,
   issued and outstanding - 1,000 shares                                  5            5
Paid-in capital                                                         845          845
Retained earnings                                                     4,161        3,660
Accumulated unrealized gains on investment securities - net (a)         932          746
Accumulated foreign currency translation adjustments (a)                (73)         (32)
                                                                    -------      -------
   Total stockholder's equity                                         6,020        5,374
                                                                    -------      -------

Total liabilities and equity                                        $35,047      $27,532
                                                                    =======      =======
</TABLE>

(a)  The sum of  accumulated  unrealized  gains  on  investment  securities  and
     accumulated   foreign   currency   translation    adjustments   constitutes
     "Accumulated  nonowner  changes  other  than  earnings,"  as  shown  in the
     Consolidated  Statement of Stockholder's  Equity,  and was $859 million and
     $714 million at year-end 1998 and 1997, respectively.


See Notes to Consolidated Financial Statements.


                                       28


<PAGE>
<TABLE>
<CAPTION>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

                 Consolidated Statement of Stockholder's Equity


                                                                                       
                                                                                                           Accumulated   
                                                                                                            Nonowner
                                                                                                             Changes
                                                                 Preferred   Common   Paid-In   Retained   Other Than    
(In millions)                                                      Stock     Stock    Capital   Earnings    Earnings      Total
                                                                 ---------------------------------------------------------------
<S>                                                                 <C>       <C>      <C>        <C>         <C>          <C>

Balances, January 1, 1996                                           $150       $5      $845     $2,743        $448       $4,191 
                                                                                                                         ------
   Changes other than transactions with share owner:
      Net earnings                                                     -        -         -        567           -          567
      Net unrealized gains on investment securities (a)                -        -         -          -          64           64
      Foreign currency translation adjustments (b)                     -        -         -          -           3            3
                                                                                                                         ------
      Total changes other than transactions with share owner                                                                634
                                                                                                                         ------

   Dividends paid on preferred stock                                   -        -         -         (7)          -           (7)
   Dividends paid on common stock                                      -        -         -        (58)          -          (58)
                                                                    ----       --      ----     ------        ----        -----
                                                                                                                                  
Balances, December 31, 1996                                          150        5       845      3,245         515        4,760
                                                                                                                         ------
   Changes other than transactions with share owner:
      Net earnings                                                     -        -         -        648           -          648
      Net unrealized gains on investment securities (a)                -        -         -          -         246          246
      Foreign currency translation adjustments (b)                     -        -         -          -         (47)         (47)
                                                                                                                         ------
      Total changes other than transactions with share owner                                                                847
                                                                                                                         ------
 
   Dividends paid on preferred stock                                   -        -         -         (8)          -           (8)
   Dividends paid on common stock                                      -        -         -       (225)          -         (225)
                                                                    ----       --      ----     ------        ----       ------ 

Balances, December 31, 1997                                          150        5       845      3,660         714        5,374
                                                                                                                         ------
   Changes other than transactions with share owner:
      Net earnings                                                     -        -         -        779           -          779
      Net unrealized gains on investment securities (a)                -        -         -          -         186          186
      Foreign currency translation adjustments (b)                     -        -         -          -         (41)         (41)
                                                                                                                         ------
      Total changes other than transactions with share owner                                                                924
                                                                                                                         ------

   Dividends paid on preferred stock                                   -        -         -         (8)          -           (8)
   Dividends paid on common stock                                      -        -         -       (270)          -         (270)
                                                                    ----       --      ----     ------        ----       ------
Balances, December 31, 1998                                         $150       $5      $845     $4,161        $859       $6,020
                                                                    ====       ==      ====     ======        ====       ======
</TABLE>

(a)  Presented net of deferred taxes of $(141) million, $(146) million and $(51)
     million in 1998, 1997 and 1996, respectively.

(b)  Presented net of current and deferred taxes of $20 million, $17 million and
     $(3) million in 1998, 1997 and 1996, respectively.


See Notes to Consolidated Financial Statements.


                                       29


<PAGE>
<TABLE>
<CAPTION>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

                      Consolidated Statement of Cash Flows

                                                                     Year ended December 31,          
                                                               ----------------------------------
(In millions)                                                    1998         1997         1996  
                                                               ----------------------------------
<S>                                                               <C>          <C>          <C>
    
Cash Flows From Operating Activities
Net earnings                                                   $   779      $   648      $   567 
Adjustments to reconcile net earnings to cash
   from operating activities:
      Claims and claim expenses                                    732          621          489
      Future policy benefits for life and health contracts         161          211          157
      Unearned premiums                                            245          137            1
      Funds held by reinsured companies                           (118)          (5)         104
      Reinsurance recoverables                                    (689)         103          210
      Deferred income taxes                                        (33)         271            6
      Income taxes payable (receivable)                           (116)          25           66
      Other, net                                                    31         (510)        (460)
      Amortization of insurance acquisition costs                1,357        1,073        1,106
      Insurance acquisition costs deferred                      (1,606)      (1,374)      (1,157)
      Net realized gains on investments                           (432)        (303)        (223)
                                                               -------      -------      -------
   Cash from operating activities                                  311          897          866
                                                               -------      -------      -------

Cash Flows From Investing Activities
Fixed maturity securities available-for-sale:
   Purchases                                                    (4,788)      (6,058)      (6,219)
   Sales                                                         3,963        4,494        4,896
   Maturities                                                      843          734          610
Equity securities:
   Purchases                                                    (1,331)      (1,240)      (1,330)
   Sales                                                         1,602        1,383        1,178
Net (purchases) sales of short-term investments                    236         (231)         (28)
Cash paid for acquisitions and in force reinsurance
   transactions (Note 3)                                        (1,018)         (89)           -
Other investing activities                                        (161)         (70)         106
                                                               -------      -------      -------
   Cash used for investing activities                             (654)      (1,077)        (787)
                                                               -------      -------      -------

Cash Flows From Financing Activities
Change in contract deposits                                       (362)         513          460
Net contract accumulation payments                                 (42)        (160)        (161)
Proceeds from short-term borrowings (Note 8)                     1,061           23            -
Principal payments on short-term borrowings (Note 8)               (54)           -         (600)
Proceeds from long-term borrowings (Note 9)                          -            -          556
Dividends paid                                                    (278)        (233)         (65)
                                                               -------      -------      -------
   Cash from financing activities                                  325          143          190
                                                               -------      -------      -------

Effect of exchange rate changes on cash                              7          (71)        (347)
                                                               -------      -------      -------

Decrease in cash                                                   (11)        (108)         (78)
Cash at beginning of year                                          269          377          455
                                                               -------      -------      -------
Cash at end of year                                            $   258      $   269      $   377
                                                               =======      =======      =======
</TABLE>


See Notes to Consolidated Financial Statements.


                                       30


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


1.  Basis of Presentation

Principles of Consolidation

GE  Global  Insurance   Holding   Corporation  ("GE  Global   Insurance")  is  a
wholly-owned  subsidiary of General Electric Capital Services, Inc. ("GE Capital
Services"),  which is a wholly-owned subsidiary of General Electric Company ("GE
Company").  The  accompanying  consolidated  financial  statements  of GE Global
Insurance include the accounts and operations,  after intercompany eliminations,
of GE Global Insurance,  Employers  Reinsurance  Corporation  ("ERC") and Kemper
Reinsurance  Company ("Kemper Re"). ERC and Kemper Re are reinsurance  companies
with various  property/casualty  reinsurance,  life  reinsurance  and  insurance
intermediary subsidiaries.  GE Global Insurance owns 100% of the common stock of
ERC and Kemper Re,  representing  89.5% and 100% of ERC's and Kemper Re's voting
rights,  respectively,  and General  Electric  Capital  Corporation ("GE Capital
Corporation"  - a wholly-owned  subsidiary of GE Capital  Services) owns 100% of
ERC's  preferred  stock,  representing  10.5% of ERC's voting rights.  GE Global
Insurance and its consolidated subsidiaries are collectively referred to as "the
Company."

Other affiliates, generally companies in which the Company owns 20 to 50 percent
of the voting rights,  are included in other  invested  assets and valued at the
appropriate share of equity plus loans and advances.


Basis of Accounting

The  accompanying  consolidated  financial  statements have been prepared on the
basis of generally accepted  accounting  principles  ("GAAP"),  which, as to the
insurance  company  subsidiaries,   vary  from  statutory  accounting  practices
prescribed or permitted by insurance regulatory authorities.  The preparation of
financial  statements  in  conformity  with  GAAP  requires  management  to make
estimates and assumptions that affect reported amounts and related  disclosures.
Actual results could differ from those estimates.


2.  Summary of Significant Accounting Policies

Investments

The  Company's  fixed  maturity  and  marketable  equity  securities  have  been
designated  as  available-for-sale  and are  reported  at fair  value,  with net
unrealized gains or (losses) included in stockholder's equity, net of applicable
taxes.  Realized gains or (losses) on sales of investments are determined on the
specific-identification  method and include  adjustments  to the net  realizable
value of investments  for declines in value that are considered to be other than
temporary.  Investment income is recognized as earned and includes the accretion
of discounts and amortization of premiums related to fixed maturity securities.


Property and Casualty Insurance/Reinsurance Segment

Premiums   are   reported   as   earned   over   the   terms   of  the   related
insurance/reinsurance  treaties or  policies.  In general,  earned  premiums are
calculated on a pro rata basis,  are determined  based on reports  received from
reinsureds or are estimated if reports are not received timely from  reinsureds.
Premium  adjustments  under  retrospectively  rated  reinsurance  contracts  are
recorded based on estimated  claims and claim expenses,  including both case and
incurred  but not yet  reported  liabilities.  Assumed  foreign  reinsurance  is
accounted for using the periodic method.

Certain  insurance  acquisition  costs,  principally  commissions  and brokerage
expenses,  are deferred  and  amortized  over the  contract  period in which the
related  premiums  are  earned.   Future  investment  income  is  considered  in
determining the recoverability of deferred insurance acquisition costs.


                                       31


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

The  liabilities   for  claims  and  claim  expenses   represent  the  estimated
liabilities for reported claims plus those incurred but not yet reported and the
related estimated claim expenses.  The liabilities for claims and claim expenses
are  determined  using  case-basis  evaluations  and  statistical  analyses  and
represent estimates of the ultimate cost of all claims incurred through December
31  of  each  year.  Although  considerable  variability  is  inherent  in  such
estimates,  management  believes  that the  liabilities  for  claims  and  claim
expenses are adequate.  The estimates are  continually  reviewed and adjusted as
necessary; such adjustments are included in current operations and are accounted
for as changes in estimates.  Included in the  liabilities  for claims and claim
expenses  are $940  million and $1,000  million at  December  31, 1998 and 1997,
respectively,  of long-term  disability  claims that are discounted at a 6% rate
(See Note 12).

Amounts  recoverable  from reinsurers  related to the liabilities for claims and
claim expenses are estimated in a manner consistent with the related liabilities
associated with the reinsured policies.


Life Reinsurance Segment

The Company  provides  reinsurance for life and health  insurance and annuities.
These  products  can be  classified  into three  groups:  traditional  insurance
contracts,   universal  life  insurance  contracts  and  investment   contracts.
Insurance  contracts are broadly defined to include  contracts with  significant
mortality and/or morbidity risk, while investment  contracts are broadly defined
to include contracts without significant  mortality or morbidity risk. Universal
life insurance  contracts are insurance  contracts with terms that are not fixed
and guaranteed.

Revenues for traditional insurance contracts are recognized as revenues when due
or over the terms of the policies.  For universal  life contracts and investment
contracts,  premiums received are reported as liabilities ("accumulated contract
values"), not as revenues. Revenues from universal life contracts and investment
contracts  are  recognized  for  assessments  made  against  the  policyholder's
accumulated contract values for insurance, policy administration, surrenders and
other authorized charges.

Future policy benefits for traditional life and health  contracts  represent the
present value of such benefits  based on mortality and other  assumptions  which
were  appropriate  at the  time  the  policies  were  issued  or at the  date of
purchase.  Interest rate assumptions used in calculating the present value range
from 3.00% to 8.50% at December 31, 1998 and 1997.  Interest  rates  credited to
universal life contracts and investment  contracts are guaranteed for the policy
terms with renewal rates determined by management. Such crediting interest rates
ranged from 3.00% to 9.00% in 1998, 3.75% to 9.00% in 1997 and 3.25% to 9.00% in
1996.

Acquisition  costs include costs and expenses that vary with,  and are primarily
related to, the  acquisition  of insurance  and  investment  contracts,  such as
commissions and certain support costs,  such as underwriting and policy issuance
expenses.   For  universal  life  contracts  and   investment   contracts,   the
amortization  is  based  on the  anticipated  gross  profits  from  investments,
surrender and other charges net of interest credited,  mortality and maintenance
expenses.  As actual gross profits vary from projected gross profits, the impact
on amortization is included in net income. For traditional  insurance contracts,
the  acquisition  costs are  amortized  over the premium  paying  periods  using
assumptions  consistent  with  those used in  computing  future  policy  benefit
reserves.

The  actuarially  determined  present value of anticipated  net cash flows to be
realized from insurance,  annuity and investment  contracts in force at the date
of acquisition of life insurance enterprises is recorded as the present value of
future  profits and is amortized  over the  respective  policy terms in a manner
similar to  deferred  insurance  acquisition  costs.  Unamortized  balances  are
adjusted to reflect experience and impairment, if any.


                                       32


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

Funds Held by Reinsured Companies

Funds held by  reinsured  companies  represent  ceded  premiums  retained by the
ceding companies  according to contractual  terms.  The Company  generally earns
investment income on these balances during the periods that the funds are held.


Allowance for Doubtful Accounts

The Company  establishes  an allowance for  uncollectible  premiums  receivable,
reinsurance  recoverables  and other  doubtful  receivables.  The  allowance  is
recorded as a  valuation  account  that  reduces the  corresponding  asset.  The
allowance  totaled $80  million  and $48 million at December  31, 1998 and 1997,
respectively.


Goodwill

The  Company  amortizes  goodwill  recorded  in  connection  with  its  business
combinations  over periods  ranging from 15 to 30 years using the  straight-line
method.  If goodwill is identified with long-lived assets that are subject to an
impairment  loss,  and an  adjustment  is to be made to reflect fair value,  the
goodwill  shall be  reduced or  eliminated  before  the  carrying  value of such
long-lived  assets  is  written  down to  fair  value.  Goodwill  in  excess  of
associated  expected  operating  cash flows is  considered to be impaired and is
written down to fair value.


Statement of Cash Flows

Cash includes cash on hand,  demand deposits and  certificates  of deposit.  All
highly liquid  investments with an original maturity of three months or less are
classified as short-term  investments in the consolidated statement of financial
position,  and transactions as such are considered  investing  activities in the
consolidated statement of cash flows.


Reinsurance

Reinsurance  contracts that do not both transfer significant  insurance risk and
result in the reasonable  possibility  that the reinsurer (or  retrocessionaire)
may realize a significant  loss from the insurance  risk assumed are required to
be accounted for as deposits. These contract deposits are classified as contract
deposit assets  (included in "other assets") or "contract  deposit  liabilities"
and are accounted for as financing  transactions with interest income or expense
credited or charged to the contract deposits.


Income Taxes

GE   Global   Insurance,    together   with   its   domestic   property/casualty
insurance/reinsurance company subsidiaries,  one domestic life insurance company
subsidiary and its parent, GE Capital Services, are included in the consolidated
federal income tax return of GE Company.  GE Global  Insurance's  other domestic
life insurance company subsidiary is taxed as a life insurance company, and that
subsidiary files a separate income tax return.

The  international  insurance  company  subsidiaries of GE Global Insurance file
separate  income  tax  returns  in the  countries  where  the  subsidiaries  are
domiciled.

The Company  utilizes  the  liability  method,  whereby  deferred tax assets and
liabilities are determined based on differences  between the financial reporting
and tax bases of assets and  liabilities  and are measured using the enacted tax
rates and laws. The Company is required to establish a "valuation allowance" for
any  portion of the  deferred  tax asset that  management  believes  will not be
realized.


                                       33


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

Interest Rate and Currency Risk Management

As a matter of policy,  the Company does not engage in any derivatives  trading,
market-making or other  speculative  activities in the derivative  markets.  The
Company utilizes various  financial  instruments,  such as currency and interest
rate swaps,  options and currency forwards,  to lessen its exposure to movements
in interest rates and foreign currency exchange rates.

Interest rate and currency swaps that modify borrowings or designated assets are
accounted for on an accrual  basis.  The Company  requires all other  derivative
instruments, such as options and forwards, to be designated and accounted for as
hedges of specific  assets,  liabilities  or committed  transactions;  resulting
payments and receipts are  recognized  contemporaneously  with effects of hedged
transactions.

Instruments  used as hedges must be effective  at reducing  the risk  associated
with  the  exposure  being  hedged  and  must be  designated  as a hedge  at the
inception  of the  contract.  Accordingly,  changes  in market  values of hedged
instruments  must  be  highly  correlated  with  changes  in  market  values  of
underlying hedged items, both at inception of the hedge and over the life of the
hedge contract.  Any instrument  designated but ineffective as a hedge is marked
to market and recognized in operations immediately.


Foreign Currency Translation

The  Company  operates in a multiple  functional  currency  environment  whereby
revenues and expenses in functional  currencies  are  translated  using periodic
weighted average  exchange rates during the year and functional  currency assets
and  liabilities  are translated at the rates of exchange in effect at the close
of  the  year.  Gains  or  losses  resulting  from  translating  the  functional
currencies  into  U.S.  dollars  are  accumulated  in a  separate  component  of
stockholder's   equity,   entitled  "accumulated  foreign  currency  translation
adjustments."  The Company  partially  hedges its foreign  currency  risk on its
foreign subsidiary investments by utilizing a cross currency swap (See Note 14).
The gain on the cross currency swap,  which is included in "accumulated  foreign
currency translation adjustments", was $124 million and $192 million at December
31, 1998 and 1997, respectively. The net effect of foreign currency transactions
on operating results during 1998, 1997 and 1996 was immaterial.


Benefit Plans

Employees  of  the  Company  and  its  subsidiaries,   excluding   international
subsidiaries,  are covered by a trusteed,  noncontributory  defined benefit plan
and  unfunded  postretirement  plans  that  provide  medical  benefits  and life
insurance benefits to substantially all employees and their dependents.  Certain
of the Company's international subsidiaries also sponsor noncontributory defined
benefit  plans for their  employees.  The net effect of all benefit plans on the
consolidated statement of financial position and statement of earnings for 1998,
1997 and 1996 was immaterial.


                                       34


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


3.  Joint Ventures and Acquisitions

Subsequent to the Company's acquisition of over 93% of the outstanding shares of
Frankona Ruckversicherungs-Aktiengesellschaft ("Frankona Re") in July, 1995, the
Company has  continued  to purchase  the  remaining  outstanding  shares held by
minority  shareholders.  The majority of this activity occurred during 1997 as a
result of entering into an agreement with the remaining minority shareholders on
December  7, 1996,  whereby  the  Company  offered  to  purchase  the  remaining
outstanding shares at a stipulated price and guaranteed a specific  compensation
payment.  Specifically,  the Company paid cash of  approximately  $69 million in
1997 for shares  acquired  from the minority  shareholders,  and the purchase of
these shares was  accounted  for using the purchase  method of  accounting.  The
excess  of the  purchase  price  over the fair  market  value of the net  assets
acquired of  approximately  $40 million was  recognized as goodwill and is being
amortized over the remaining  initial  goodwill  amortization  period.  Minority
shareholders  who  elected not to redeem  their  outstanding  shares  under this
agreement will receive a stated future annual dividend and forfeited their right
to  participate  in the future net  earnings of Frankona  Re. As of December 31,
1998, the Company owns  approximately 99% of the outstanding  shares of Frankona
Re.

On January 6, 1998,  the  Company  purchased  the assets and assumed the renewal
rights  of  Industrial  Risk  Insurers  ("IRI"),  a leader in  providing  highly
protected risk property  insurance,  for a cash  consideration  of approximately
$235  million.  The  business  underwritten  through  IRI is  managed by a joint
venture formed between the Company and the Hartford Steam Boiler  Inspection and
Insurance  Company ("HSB") as stipulated by a management  agreement.  IRI writes
business utilizing the licensing authority of HSB and the business  underwritten
is  subsequently  allocated  to HSB and the Company in  accordance  with certain
reinsurance  agreements  between HSB and the Company.  In conjunction  with this
acquisition,  the  Company  purchased  $300  million of 7%  convertible  capital
securities  from a Delaware  business  trust formed by HSB's parent,  HSB Group,
Inc., to provide  capital for HSB to support the  anticipated  increase in gross
premiums  written  associated  with the IRI business.  The  acquisition has been
accounted for as a purchase; accordingly, the operating results of IRI have been
included in the Company's  consolidated  financial  statements since the date of
acquisition.

On October 15, 1998, the Company completed the acquisition of Medical Protective
Corporation  ("Medical  Protective")  for a cash  consideration of approximately
$628 million.  The cash consideration was financed by GE Capital Corporation via
an interim loan agreement. Medical Protective is the oldest medical professional
liability  insurer  of  physicians  and  dentists  in  the  United  States.  The
acquisition  has been  accounted for as a purchase;  accordingly,  the operating
results of Medical  Protective have been included in the Company's  consolidated
financial statements since the date of acquisition.

On October 27, 1998, the Company completed the acquisition of Kemper Reinsurance
Company ("Kemper Re") for a cash  consideration  of approximately  $468 million.
The  cash  consideration  was  financed  by  utilizing  existing  unused  credit
facilities. Kemper Re is a property and casualty reinsurance company principally
doing business through intermediaries. The acquisition has been accounted for as
a purchase;  accordingly,  the operating results of Kemper Re have been included
in  the  Company's   consolidated   financial   statements  since  the  date  of
acquisition.


                                       35


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


3.  Joint Ventures and Acquisitions (continued)

The  allocations of the purchase price for Medical  Protective and Kemper Re are
summarized as follows:

<TABLE>
                                            Medical
(In millions)                              Protective     Kemper Re      Total 
                                           ----------     ---------      -----
<S>                                            <C>           <C>           <C>

Assets acquired, excluding goodwill         $ 1,612       $ 3,228       $ 4,840                      
Goodwill                                        181           239           420 
Liabilities assumed                          (1,165)       (2,999)       (4,164) 
                                            -------       -------       ------- 
Total purchase price                        $   628       $   468       $ 1,096 
                                            =======       =======       =======
</TABLE>

The  following  unaudited  pro forma  information  has been  prepared  as if the
acquisitions  of Medical  Protective  and Kemper Re had  occurred  on January 1,
1997.  The pro forma  information  includes all  significant  adjustments to the
historical results that were directly  attributable to the transactions and were
expected to have a continuing effect on the Company.

<TABLE>
                                         Year ended December 31,
                         -------------------------------------------------------
                                   1998                          1997
                         -------------------------     -------------------------
(In millions)            As Reported     Pro Forma     As Reported     Pro Forma
                         -------------------------     -------------------------
<S>                          <C>            <C>            <C>            <C>   

Revenues                   $7,203         $8,098         $5,784         $6,944                        
Net earnings                  779            812            648            704  
</TABLE>


                                       36


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


4.  Investments

The amortized cost,  estimated fair value and gross  unrealized gains and losses
of fixed maturity  securities,  equity  securities,  short-term  investments and
other invested assets are summarized as follows:

<TABLE>
<CAPTION>
                                                                              December 31, 1998
                                                            -----------------------------------------------------
                                                                            Gross          Gross        Estimated 
                                                            Amortized     Unrealized     Unrealized       Fair
(In millions)                                                 Cost          Gains          Losses         Value  
                                                            -----------------------------------------------------
<S>                                                             <C>           <C>           <C>             <C>
    
Fixed maturity securities:
   U.S. government                                           $ 1,160        $   21         $  (3)        $ 1,178 
   International government                                    2,877           217            (2)          3,092
   Tax-exempt                                                  6,138           389            (1)          6,526
   Corporate                                                   4,694           198           (25)          4,867
   U.S. mortgage-backed and other asset-backed                 1,588            46            (4)          1,630
   International mortgage-backed and other asset-backed          821            47             -             868
                                                             -------        ------         -----         -------
   Total fixed maturity securities                            17,278           918           (35)         18,161
Equity securities                                              2,154           640           (72)          2,722
Short-term investments                                           596             -             -             596
Other invested assets                                            405           103             -             508
                                                             -------        ------         -----         -------
Total investments                                            $20,433        $1,661         $(107)        $21,987
                                                             =======        ======         =====         =======
</TABLE>


<TABLE>
<CAPTION>
                                                                              December 31, 1997
                                                            -----------------------------------------------------
                                                                            Gross          Gross        Estimated
                                                            Amortized     Unrealized     Unrealized       Fair
(In millions)                                                 Cost          Gains          Losses         Value  
                                                            -----------------------------------------------------
<S>                                                             <C>           <C>           <C>            <C>
    
Fixed maturity securities:
   U.S. government                                           $   561        $   17         $  (1)        $   577 
   International government                                    2,457           120            (3)          2,574
   Tax-exempt                                                  5,542           345             -           5,887
   Corporate                                                   3,342           107            (9)          3,440
   U.S. mortgage-backed and other asset-backed                 1,391            40            (3)          1,428
   International mortgage-backed and other asset-backed          865            45             -             910
                                                             -------        ------         -----         -------
   Total fixed maturity securities                            14,158           674           (16)         14,816
Equity securities                                              1,982           579           (48)          2,513
Short-term investments                                           661             -             -             661
Other invested assets                                            353             -             -             353
                                                             -------        ------         -----         -------
Total investments                                            $17,154        $1,253         $ (64)        $18,343
                                                             =======        ======         =====         =======
</TABLE>


                                       37


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


4.  Investments (continued)

The amortized  cost and  estimated  fair value of fixed  maturity  securities at
December 31, 1998 are summarized, by stated maturity, as follows:

<TABLE>
<CAPTION>
                                                                       Estimated 
                                                         Amortized       Fair
(In millions)                                              Cost          Value
                                                         -----------------------
 <S>                                                         <C>           <C> 
   
 Maturity:
    Due in 1999                                           $   560       $   565 
    Due in 2000-2003                                        3,749         3,886
    Due in 2004-2008                                        5,022         5,263
    Due after 2008                                          5,538         5,949
                                                          -------       -------
                                                           14,869        15,663
 Mortgage-backed and other asset-backed securities          2,409         2,498
                                                          -------       -------
 Total fixed maturity securities                          $17,278       $18,161
                                                          =======       =======
</TABLE>

The foregoing data is based on the stated  maturities of the securities.  Actual
maturities will differ for some securities  because borrowers may have the right
to call or prepay obligations with or without call or prepayment penalties.

Major categories of investment income are summarized as follows:

<TABLE>
<CAPTION>
                                                        Year ended December 31,
                                                       -------------------------
 (In millions)                                         1998      1997      1996
                                                       -------------------------
 <S>                                                   <C>       <C>       <C> 
   
 Gross investment income:
    Fixed maturity securities                          $853      $773      $737 
    Equity securities                                    59        63        45
    Short-term investments                               32        28        19
    Securities and indebtedness of related parties       19        18        21
    Other                                                33        41        35
                                                       ----      ----      ----
                                                        996       923       857
 Investment expenses                                    (11)      (13)      (20)
                                                       ----      ----      ----
 Net investment income                                 $985      $910      $837
                                                       ====      ====      ====
</TABLE>

                                                               
                                       38


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


4.  Investments (continued)

The Company's  sales  proceeds and realized  gains and losses on securities  are
summarized as follows:

<TABLE>
<CAPTION>
                                                                Year ended December 31,
                                                            -------------------------------
(In millions)                                                1998        1997        1996
                                                            -------------------------------
<S>                                                           <C>         <C>         <C>
  
Sales proceeds from fixed maturity securities               $3,963      $4,494      $4,896  
                                                            ======      ======      ======

Net realized gains on investments  before income taxes:      
   Fixed maturiy securities:
      Gross realized gains                                  $  124      $  119      $  108
      Gross realized losses                                    (15)        (18)        (36)
   Equity securities:
      Gross realized gains                                     412         285         201
      Gross realized losses                                    (89)        (83)        (50)
                                                            ------      ------      ------
   Total net realized gains before income taxes                432         303         223
Provision for income taxes                                    (164)       (110)        (79)
                                                            ------      ------      ------
Net realized gains on investments, after income taxes       $  268      $  193      $  144
                                                            ======      ======      ======
</TABLE>

The change in net  unrealized  gains  (losses),  before income  taxes,  on fixed
maturity  securities  was $225 million,  $174 million and $(91) million in 1998,
1997 and 1996,  respectively;  the  corresponding  amounts for equity securities
were $37  million,  $216  million  and $206  million  in  1998,  1997 and  1996,
respectively;  and the  corresponding  amount for other invested assets was $103
million in 1998.

The Company had investments in fixed maturity  securities with a carrying amount
of $475 million and $565 million at December 31, 1998 and 1997, respectively, on
deposit with state insurance departments to satisfy regulatory requirements.


                                       39


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


5.  Intangible Assets

The Company's intangible assets are summarized as follows:

<TABLE>
<CAPTION>
                                                                  December 31,
                                                                 ---------------
(In millions)                                                     1998      1997 
                                                                 ---------------
<S>                                                                <C>      <C> 
    
Goodwill                                                         $1,212     $712
Present value of future profits ("PVFP")                            128      141
Value of insurance in force                                          28       44
Customer list                                                       124        -
                                                                 ------     ----
                                                                 $1,492     $897
                                                                 ======     ====
</TABLE>

The Company's  intangible  assets are shown net of accumulated  amortization  of
$628 million and $540 million at December 31, 1998 and 1997, respectively.

The PVFP was  determined  using risk adjusted  discount rates from 8% to 15% and
the interest  rates  selected for the  valuation  were  determined  based on the
applicable  interest rates in the country of risk inherent in the realization of
the estimated future profits.  PVFP is being amortized using the interest method
over the duration of the related life business,  approximately  20 years, as the
premiums on the books of business are recognized.

The Company's  intangible  assets other than goodwill and PVPF include the value
of  property  and  casualty  business  recorded  in  connection  with GE Capital
Services'  acquisition  of ERC in  1984  and the  value  of a  customer  listing
recorded in  connection  with the  acquisition  of the IRI business in 1998 (See
Note 3). These items are being amortized using the  straight-line  method over a
16 year period and a 20 year period, respectively.


                                       40


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


6.  Claims and Claim Expenses

The  Company's  reconciliation  of its  beginning  and  ending  claims and claim
expense liabilities, net of reinsurance, is summarized as follows:

<TABLE>
<CAPTION>
                                                                   Year ended December 31,
                                                              ----------------------------------
(In millions)                                                   1998         1997         1996
                                                              ----------------------------------
<S>                                                              <C>          <C>          <C>
    
Balance at January 1 - gross                                  $10,961      $10,869      $11,145 
Less reinsurance recoverables                                  (1,822)      (1,411)      (1,794)
                                                              -------      -------      -------
Balance at January 1 - net                                      9,139        9,458        9,351
                                                              -------      -------      -------

Claims and expenses incurred:
   Current year                                                 3,904        2,449        2,763
   Prior years                                                    (56)          71          106
                                                              -------      -------      -------
                                                                3,848        2,520        2,869
                                                              -------      -------      -------

Claims and expenses paid:
   Current year                                                (1,387)        (626)        (485)
   Prior years                                                 (2,309)      (1,949)      (1,990)
                                                              -------      -------      -------
                                                               (3,696)      (2,575)      (2,475)
                                                              -------      -------      -------

Claim reserves related to acquired companies (See Note 3)       3,470            -            -

Foreign exchange and other                                        155         (264)        (287)
                                                              -------      -------      -------
Balance at December 31 - net                                   12,916        9,139        9,458
Add reinsurance recoverables                                    2,936        1,822        1,411
                                                              -------      -------      -------
Balance at December 31 - gross                                $15,852      $10,961      $10,869
                                                              =======      =======      =======
</TABLE>

Prior-year  claims  and  expenses  incurred  in  the  preceding  table  resulted
principally  from settling  claims  established  in earlier  accident  years for
amounts  that  differed  from  expectations  and  due to  changes  in  estimates
associated with a lag in receiving  underwriting  reports from ceding  companies
that causes development of both premiums and claims, especially as it relates to
the international operations.


                                       41


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


6.  Claims and Claim Expenses (continued)

In  establishing  the  liabilities  for  claims  and claim  expenses  related to
asbestos-related  illnesses and toxic waste cleanup,  management considers facts
currently  known  and the  current  state  of the law and  coverage  litigation.
Liabilities  are  recognized  for known  claims  (including  the cost of related
litigation)  when  sufficient  information  has been  developed  to indicate the
involvement of specific  insurance or  reinsurance  contracts and management can
reasonably estimate its liability. In addition, amounts have been established to
cover additional exposures on both known and unasserted claims, and estimates of
the liabilities are reviewed and updated continually.

The gross  liabilities  for  asbestos-related  illness and toxic  waste  cleanup
claims and claim  expenses and the related  reinsurance  recoverables  were $995
million and $206 million,  respectively, at December 31, 1998. These amounts are
management's best estimate, based on currently available information,  of future
claim and claim expense  payments and recoveries that are expected to develop in
future  years.  The  Company  monitors  evolving  case  law  and its  effect  on
asbestos-related   illness  and  toxic  waste  cleanup  claims.   Changing  U.S.
government  regulations  and  legislation,  including  continuing  Congressional
consideration of a Federal  Superfund law, newly reported  claims,  new contract
interpretations  and other  factors  could  significantly  affect  future  claim
development. While the Company has recorded its best estimate of its liabilities
for  asbestos-related  illness and toxic waste cleanup claims based on currently
available  information,  it is possible that additional liabilities may arise in
the future.  It is not  possible to estimate  with any  certainty  the amount of
additional  net loss,  or the range of net loss,  that is  reasonably  possible;
therefore, there can be no assurance that future liabilities will not materially
affect the Company's results of operations, financial position or cash flows.

No amounts have been  established for claims and claim expenses  related to Year
2000. The Company is currently  monitoring the  possibility of claims arising in
the future under specific insurance or reinsurance  contracts and will establish
liabilities,  if appropriate,  at such time when sufficient information has been
developed  to  indicate a  liability  has been  incurred  and can be  reasonably
estimated.  Management is unable to  reasonably  estimate the amount or range of
loss  that may  occur  due to the  uncertainty  surrounding  the  likelihood  of
computer system failures and what portion, if any, will be deemed to be incurred
losses. Accordingly,  the Company is unable to determine whether such losses may
have an adverse effect on its results of operations,  financial position or cash
flows.  The  Company's  loss  mitigation  strategy  includes  adding  Year  2000
considerations  to its  underlying  guidelines,  as  well  as its  decisions  to
purchase  retrocessional  coverage.  In addition,  the Company employs an active
claims  management  strategy which will include the coordinated  handling of any
Year 2000-related claims.


7.  Income Taxes

The Company's provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
                                                 Year ended December 31,
                  -------------------------------------------------------------------------------------
                            1998                          1997                          1996
                  -------------------------     -------------------------     -------------------------
                  United    Inter-              United    Inter-              United    Inter-
(In millions)     States   national   Total     States   national   Total     States   national   Total
                  -------------------------     -------------------------     -------------------------
<S>               <C>        <C>      <C>       <C>        <C>      <C>        <C>      <C>       <C>

Current           $210       $114     $324      $(77)      $ 40     $(37)      $79      $128      $207 
Deferred           (93)        60      (33)      172         99      271         7        (1)        6
                  ----       ----     ----      ----       ----     ----       ---      ----      ----
Total             $117       $174     $291      $ 95       $139     $234       $86      $127      $213
                  ====       ====     ====      ====       ====     ====       ===      ====      ====
</TABLE>

The change in the Company's  current and deferred  income tax provisions in 1998
primarily  reflects the reversal of loss reserve  discounting  in 1997 and three
quota share life  reinsurance  contracts  obtained in 1997 that did not recur in
1998. The change in the Company's  current and deferred income tax provisions in
1997 primarily reflects the reversal of loss reserve discounting,  tax provision
adjustments to the 1996 tax return and new life reinsurance  agreements  entered
into in 1997.


                                       42


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


7.  Income Taxes (continued)

Income taxes paid (recovered) by the Company totaled $390 million, $(53) million
and $158 million in 1998, 1997 and 1996, respectively.

The  Company's  effective  income tax rate on  pre-tax  income is lower than the
prevailing U.S. corporate federal income tax rate and is summarized as follows:

<TABLE>
<CAPTION>
                                                        Year ended December 31,
                                                       -------------------------
                                                       1998      1997      1996
                                                       -------------------------
<S>                                                    <C>       <C>       <C> 
   
Corporate federal income tax rate                       35 %      35 %      35 % 
Tax-exempt investment income                           (10)      (11)      (14)
Intercompany dividend payment                            3         3         4
Other items, net                                        (1)        -         2
                                                       ---       ---       ---
Effective tax rate                                      27 %      27 %      27 %
                                                       ===       ===       ===
</TABLE>

The  significant  components  of the  Company's  net  deferred  tax  assets  and
liabilities are summarized as follows:

<TABLE>
<CAPTION>
                                                                December 31,
                                                             -------------------
(In millions)                                                 1998        1997
                                                             -------------------
<S>                                                            <C>         <C>
    
Deferred tax assets:
   Claims and claim expenses                                 $  496      $  324 
   Unearned premiums                                            106          89
   Foreign tax credit carryforwards                             153         116
   Foreign currency translation                                  63          41
   Accruals not currently deductible                             17          40
   Contract deposit assets                                      110           - 
   Other                                                         91          80
                                                             ------      ------
   Total gross deferred tax assets                            1,036         690
   Valuation allowance                                          (55)        (54)
                                                             ------      ------
   Total deferred tax assets                                    981         636
                                                             ------      ------

Deferred tax liabilities:
   Deferred insurance acquisition costs                         339         261
   Tax reserves in excess of book reserves                      237         210
   Net unrealized gains on investment securities                597         443
   Contract deposit liabilities                                 126         204
   Present value of future profits                               52          44
   Other                                                        169         120
                                                             ------      ------
   Total deferred tax liabilities                             1,520       1,282
                                                             ------      ------
Net deferred tax liability                                   $ (539)     $ (646)
                                                             ======      ======
</TABLE>


                                       43


<PAGE>
                    GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


7.  Income Taxes (continued)

A valuation  allowance is provided  when it is more likely than not that certain
deferred  tax  assets  will not be  realized.  The  Company  has  established  a
valuation  allowance for deferred tax assets  associated with foreign tax credit
carryforwards  that  exceed the  projected  future  benefit of such  foreign tax
credits.  The net change in the  valuation  allowance  for  deferred  tax assets
associated  with the  foreign  tax credits was an increase of $1 million in 1998
and a decrease of $12 million in 1997.  The changes in the  valuation  allowance
were the result of the changes in the  Company's  judgment of the future  years'
realizability  of the  deferred  tax  assets  associated  with the  foreign  tax
credits.  The  changes in the  Company's  judgment  were a result of  additional
foreign  tax  credit  capacity  attributable  to  the  inclusion  of  one of the
Company's  domestic life  insurance  company  subsidiaries  in the  consolidated
federal income tax return of GE Company beginning in 1997.

One of the Company's  domestic life  insurance  company  subsidiaries  has a net
operating  loss  carryover  for  federal  income tax  purposes of $54 million at
December 31, 1998,  which is  available  to offset prior and/or  future  federal
taxable income, that expires in the year 2019.

The Company did not have a payable to (recoverable from) GE Capital Services for
income taxes due at December 31, 1998 or 1997.


8.  Indebtedness to/from Related Parties

The Company and GE Capital  Corporation are  participants in a revolving  credit
agreement that involves an international  cash pooling  arrangement on behalf of
certain European  affiliates of the Company.  In such roles,  either participant
may make short-term loans to the other as part of the cash pooling  arrangement.
Each such borrowing shall be repayable upon demand,  but not to exceed 364 days.
This unsecured line of credit has an interest rate per annum equal to GE Capital
Services'  cost of funds for the currency in which such borrowing is denominated
and is available  for a term of five years and shall be  automatically  extended
for successive terms of one year each,  unless terminated in accordance with the
terms of the agreement.  The total amount drawn (loaned) on this credit facility
by the  Company was $(265)  million and $19 million as of December  31, 1998 and
1997, respectively.

The Company has in place a revolving  credit  agreement with GE Capital Services
for an amount up to $600 million.  This agreement is automatically  extended for
successive  terms of one year each,  unless  terminated in  accordance  with the
terms of the  agreement,  with an  interest  rate per annum  equal to GE Capital
Services' cost of funds.  During 1998, the Company utilized this credit facility
primarily to fund the majority of its acquisition of Kemper Re (See Note 3). The
total amount drawn on this credit facility,  including accrued interest payable,
was $426 million as of December 31, 1998. Interest accrued on such borrowings at
an annual  weighted-average  interest rate of 5.41% for the year ended  December
31,  1998,  with no interest  paid in 1998.  Prior to 1998,  no amounts had been
drawn on this credit facility.

In October  1998,  the Company  entered into an interim loan  agreement  with GE
Capital  Corporation  for  $625  million  to fund  its  acquisition  of  Medical
Protective  (See Note 3). This interim loan  agreement  has an interest rate per
annum equal to GE Capital  Corporation's cost of funds. Interest accrued on such
borrowings  at an annual  weighted-average  interest  rate of 5.34% for the year
ended December 31, 1998, with not interest paid in 1998.


                                       44


<PAGE>
                    GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


9.  Borrowings

In February  1996,  the Company  issued $600  million of senior  unsecured  debt
securities  at 7% per  annum,  which are not  redeemable  prior to  maturity  on
February 15, 2026. The Company  received $556 million in net proceeds from these
notes  (after  deduction  of  underwriting  discounts  and  commissions  and the
original issue discount and cost of an interest rate "lock"  contract) which was
used to repay short-term borrowings.  Total interest paid on such borrowings was
$42 million, $42 million and $29 million in 1998, 1997 and 1996, respectively.


                                       45


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


10.  Supplemental Financial Statement and Reinsurance Data

Insurance  premiums written and earned in 1998, 1997 and 1996 and life insurance
in force as of December 31, 1998, 1997 and 1996 are summarized as follows:

<TABLE>
<CAPTION>
                                   Insurance Premiums Written
                               -----------------------------------
                               Property/ 
(In millions)                  Casualty        Life        Total
                               -----------------------------------
<S>                               <C>           <C>          <C>
   
1998:
   Direct                       $  535        $    4      $   539 
   Assumed                       5,300         1,314        6,614
   Ceded                          (947)         (222)      (1,169)
                                ------        ------      -------
   Net                          $4,888        $1,096      $ 5,984
                                ======        ======      =======

1997:
   Direct                       $  392        $    4       $  396
   Assumed                       3,778         1,170        4,948
   Ceded                          (677)         (122)        (799)
                                ------        ------       ------
   Net                          $3,493        $1,052       $4,545
                                ======        ======       ======

1996:
   Direct                       $  338        $    3       $  341
   Assumed                       4,118           791        4,909
   Ceded                          (519)         (158)        (677)
                                ------        ------       ------
   Net                          $3,937        $  636       $4,573
                                ======        ======       ======
</TABLE>

<TABLE>
<CAPTION>
                                    Insurance Premiums Earned                 
                               -----------------------------------       Life
                               Property/                               Insurance
(In millions)                  Casualty        Life        Total       In Force
                               -------------------------------------------------
<S>                               <C>           <C>          <C>           <C>
    
1998:
   Direct                       $  509        $    4      $   513      $  2,291 
   Assumed                       4,911         1,322        6,233       317,571
   Ceded                          (888)         (223)      (1,111)      (56,378)
                                ------        ------      -------      --------
   Net                          $4,532        $1,103      $ 5,635      $263,484
                                ======        ======      =======      ========

1997:
   Direct                       $  369        $    3      $   372      $  1,865
   Assumed                       3,815         1,058        4,873       266,840
   Ceded                          (661)         (117)        (778)      (54,870)
                                ------        ------      -------      --------
   Net                          $3,523        $  944      $ 4,467      $213,835
                                ======        ======      =======      ========

1996:
   Direct                       $  339        $    3      $   342      $  1,478
   Assumed                       4,183           787        4,970       196,250
   Ceded                          (507)         (157)        (664)      (32,445)
                                ------        ------      -------      --------
   Net                          $4,015        $  633      $ 4,648      $165,283
                                ======        ======      =======      ========
</TABLE>


                                       46


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


10.  Supplemental Financial Statement and Reinsurance Data (continued)

Claims,  claim expenses and policy benefits  incurred in 1998, 1997 and 1996 are
summarized as follows:

<TABLE>
<CAPTION>
                                                Property/
(In millions)                                   Casualty     Life        Total 
                                                --------------------------------
<S>                                               <C>         <C>          <C>
    
1998:
   Direct                                       $  377      $    3      $   380 
   Assumed                                       3,761       1,169        4,930
   Ceded                                          (978)       (229)      (1,207)
                                                ------      ------      -------
   Net                                          $3,160      $  943      $ 4,103
                                                ======      ======      =======

1997:
   Direct                                       $  390      $    2      $   392
   Assumed                                       2,611         818        3,429
   Ceded                                          (520)        (41)        (561)
                                                ------      ------      -------
   Net                                          $2,481      $  779      $ 3,260
                                                ======      ======      =======

1996:
   Direct                                       $  346      $    3      $   349
   Assumed                                       3,058         593        3,651
   Ceded                                          (535)        (92)        (627)
                                                ------      ------      -------
   Net                                          $2,869      $  504      $ 3,373
                                                ======      ======      =======
</TABLE>

The Company's insurance company subsidiaries both cede reinsurance to and assume
reinsurance from other insurance companies.  That portion of the risks exceeding
each subsidiary's  retention limit is reinsured with other insurers. The Company
also  acquires  other  reinsurance  coverages  with  retentions  and limits that
management  believes are appropriate for the circumstances.  In the accompanying
consolidated financial statements,  premiums,  claims, claim expenses and policy
benefits  and  deferred   insurance   acquisition  costs  are  reported  net  of
reinsurance ceded; reinsurance  liabilities,  unearned premiums and accruals are
reported gross of reinsurance ceded.

The   Company's   insurance   company   subsidiaries   remain  liable  to  their
policyholders  if  their  reinsurers  are  unable  to  meet  their   contractual
obligations  under  the  applicable  reinsurance  agreements.  To  minimize  its
exposure  to  significant  losses  from  reinsurance  insolvencies,  the Company
evaluates the financial condition of its reinsurers and monitors  concentrations
of credit risk arising from similar geographic  regions,  activities or economic
characteristics  of the reinsurers.  There was no significant  concentration  of
reinsurance  recoverables  and  prepaid  reinsurance  premiums  due from any one
reinsurer at December 31, 1998.

For financial reinsurance assumed, the Company reports revenue for the risk fees
charged  for  those  services.  Statutory  policyholder's  surplus  of the  life
insurance company  subsidiaries has been reduced  approximately  $388 million at
December 31, 1998 in connection with financial reinsurance assumed. Such amounts
are secured by future  profits on the reinsured  business.  The  Company's  life
insurance  subsidiaries  are also subject to the risk that the ceding  companies
may become insolvent,  and the right of offset would not be permitted;  however,
management does not believe such risk is significant.


                                       47


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


11.  Stockholder's Equity

ERC has  issued  11,673  shares of  $100,000  par value,  nonredeemable,  voting
preferred  stock  to  GE  Capital  Corporation.  This  preferred  stock  accrues
preferential  and cumulative  dividends at an annual rate that is the average of
the yield on high grade industrial preferred stock and the yield on medium grade
industrial preferred stock as of the close of the week preceding December 31, as
published by Moody's Investors Service, Inc. ERC may, upon approval by its Board
of Directors,  redeem the preferred  stock,  in whole or in part, at 100% of the
par value of the preferred stock plus all dividends  accrued thereon to the date
of redemption.  Preferred stock  dividends paid by ERC totaled $85 million,  $82
million and $80 million in 1998, 1997 and 1996, respectively.

GE Global  Insurance  has issued 1,500 shares of $100,000 par value,  nonvoting,
cumulative preferred stock to GE Capital Corporation. Dividends on the preferred
stock are paid at a rate of 5% per annum if, as and when  declared  by the Board
of Directors of the Company,  and totaled $8 million,  $8 million and $7 million
in 1998, 1997 and 1996, respectively.


12.  Statutory Accounting Practices

ERC and its domestic  insurance company  subsidiaries are domiciled in Missouri,
Kansas  and  Indiana.  Kemper  Re  is  domiciled  in  Illinois.  Statutory-basis
financial  statements  are  prepared in  accordance  with  accounting  practices
prescribed  or  permitted  by  the  respective   state  insurance   departments.
"Prescribed"  statutory accounting practices include state laws, regulations and
general  administrative  rules,  as well as a  variety  of  publications  of the
National Association of Insurance Commissioners ("NAIC").  "Permitted" statutory
accounting practices encompass all accounting practices that are not prescribed;
such  practices  may differ  from state to state,  may  differ  from  company to
company  within a state and may change in the future.  There are no  significant
permitted accounting practices that vary from prescribed  accounting  practices,
except as noted below.

Stockholder's  equity and net  income,  as  reported  to the  domiciliary  state
insurance  departments in accordance with its prescribed or permitted  statutory
accounting practices,  for the Company's domestic insurance company subsidiaries
are summarized as follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                               -----------------
(In millions)                                                   1998       1997
                                                               -----------------
<S>                                                              <C>        <C>
    
Stockholder's equity:
   ERC                                                         $4,099     $4,584 
   Property and casualty subsidiaries of ERC                      569        672
   Life and annuity subsidiaries of ERC                         2,213      2,176
   Kemper Re                                                      755          -
   Property and casualty subsidiary of Kemper Re                  373          -
</TABLE>


                                       48


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


12.  Statutory Accounting Practices (continued)

<TABLE>
<CAPTION>
                                                       Year ended December 31,
                                                      --------------------------
(In millions)                                          1998       1997      1996
                                                      --------------------------
<S>                                                    <C>        <C>       <C> 
   
Net income (loss):
   ERC                                                $ 671      $ 533      $434 
   Property and casualty subsidiaries of ERC            112         62        54
   Life and annuity subsidiaries of ERC                 168       (285)      278
   Kemper Re                                           (146)         -         -
   Property and casualty subsidiary of Kemper Re         40          -         -
</TABLE>

The payment of stockholder  dividends by insurance  companies  without the prior
approval of  regulators is limited to formula  amounts  based on net  investment
income and/or net income,  capital and surplus  determined  in  accordance  with
statutory  accounting  practices,  as well as the timing and amount of dividends
paid in the preceding 12 months. The maximum amount available for the payment of
dividends during 1999 by ERC without prior  regulatory  approval is $410 million
after  December  30,  1999.  Of this  amount,  $96 million is  committed  to pay
dividends on the preferred stock issued by ERC to GE Capital Corporation. Kemper
Re will not be able to make any dividend  payments during 1999 without the prior
approval of the Director of Insurance for the State of Illinois.

ERC has received written  approval from the Missouri  Department of Insurance to
discount  its  claims  and  claim  expense   liabilities  related  to  long-term
disability business. Prescribed statutory accounting practice does permit claims
and  claim  expense  liabilities  associated  with  long-term  disability  to be
accounted  for  on a  discounted  basis  although  the  Missouri  Department  of
Insurance  requires  that  insurance  companies  obtain  written  permission  to
discount certain claims and claim expense liabilities.  Included in the discount
recognized for statutory  purposes is a benefit of $327 million and $356 million
at December 31, 1998 and 1997, respectively, for long-term disability claims and
claim expense liabilities.

ERC has also received written approval from the Missouri Department of Insurance
to take  credit for certain  unauthorized  reinsurance  by  obtaining a parental
guarantee from GE Global Insurance.

The National Association of Insurance Commissioners ("NAIC") has adopted minimum
risk-based  capital  requirements to evaluate the adequacy of statutory  capital
and surplus in relation to an insurance company's risks.  Regulatory  compliance
with  risk-based  capital  requirements  is  defined  by a ratio of a  company's
regulatory  total adjusted  capital to its authorized  control level  risk-based
capital,  as  defined  by the  NAIC.  Each  of GE  Global  Insurance's  domestic
insurance  company   subsidiaries   exceeded  the  minimum   risk-based  capital
requirements at December 31, 1998.

The Company's  international  insurance company  subsidiaries  prepare statutory
financial  statements based on local laws and regulations.  Some  jurisdictions,
such  as  the  United  Kingdom,   impose  complex  regulatory   requirements  on
reinsurance companies, while other jurisdictions,  such as Germany, impose fewer
requirements.  Local reinsurance  business conducted by the Company's  insurance
company  subsidiaries in some countries  require licenses issued by governmental
authorities.  These  licenses  may be  subject  to  modification  or  revocation
dependent on such  factors as amount and types of reserves  and minimum  capital
and solvency  tests.  Jurisdictions  may impose fines,  censure and/or  criminal
sanctions for violation of regulatory requirements.


                                       49


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)




13.  Contingencies

There are no pending legal  proceedings  beyond the ordinary  course of business
that could have a material financial effect on the Company.


14.  Fair Value of Financial Instruments

This  note  discloses  fair  value  information  about the  Company's  financial
instruments,  whether or not  recognized in the balance  sheet,  for which it is
practical to estimate the value.  No attempt has been made to estimate the value
of anticipated  future  business or the value of assets or liabilities  that are
not  considered  financial  instruments.  Fair  value  estimates  are  made at a
specific point in time based on relevant market  information about the financial
instrument.  In cases where quoted market prices are not available,  fair values
are estimated using  discounted cash flow or other valuation  techniques.  These
estimates may be subjective in nature and involve  uncertainties and, therefore,
cannot  be  determined  with  precision.   Changes  in  the  assumptions   could
significantly  affect the estimates.  As such, the derived fair value  estimates
cannot necessarily be substantiated by comparison to independent markets and may
differ from the amounts that might be involved in an immediate settlement of the
instrument.  Fair value  disclosures  are not  required  for  certain  financial
instruments,  the most  significant  of these for the Company are the  insurance
liabilities and related assets,  other than financial  guarantees and investment
contracts.

Certain financial  instruments that are reflected in the accompanying  financial
statement at fair value or for which fair values are disclosed  elsewhere in the
notes to the financial statements are not included in the following  disclosure.
The most  significant of which are investments,  cash,  amounts due from related
parties,  accrued investment income, separate accounts and other receivables and
payables.  Fair values of other  financial  instruments  have been determined as
follows:

Accumulated contract values - Based on expected future cash flows, discounted at
currently   offered  interest  rates  for  similar   contracts  with  maturities
consistent with those remaining for the contracts being valued.

Financial guaranty  reinsurance - Based on estimated premium rates that would be
charged and commissions that would be allowed at the financial statement date.

Borrowings - Based on quoted  market prices or market  comparables  and includes
the effects of counterparty creditworthiness.

All other instruments - Based on comparable  transactions,  market  comparables,
discounted future cash flows, quoted market prices, and/or estimates of the cost
to terminate or otherwise settle obligations to counterparties.


                                       50


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


14.  Fair Value of Financial Instruments (continued)

Information  about certain  financial  instruments that were not carried at fair
value at December 31, 1998 and 1997, is summarized as follows:

<TABLE>
<CAPTION>
                                                      December 31, 1998                            December 31, 1997
                                          ------------------------------------------   ------------------------------------------
                                                          Assets (liabilities)                         Assets (liabilities)
                                                     -------------------------------              -------------------------------
                                                                Estimated Fair Value                         Estimated Fair Value 
                                          Notional   Carrying   --------------------   Notional   Carrying   -------------------- 
(In millions)                              Amount     Amount      High       Low        Amount     Amount      High       Low
                                          ------------------------------------------   ------------------------------------------
<S>                                          <C>        <C>        <C>        <C>         <C>        <C>        <C>        <C>

Assets:
   Purchased options                       $   15    $    10    $    38    $    29      $   13    $    10    $    30    $    17
   Options, including "floors"                 27          4          5          5           1          -          -          -
   Other cash financial instruments           (a)        114        114        114         (a)          -          -          -

Liabilities:
   Borrowings and related instruments
      Borrowings (b)                          (a)       (557)      (557)      (557)        (a)       (575)      (575)      (575)
      Interest rate swaps                      25          -         (1)        (1)         50          -          -          -
      Currency forwards                       617          -         (1)        (1)          -          -          -          -
      Investment contract benefits            (a)     (1,284)    (1,270)    (1,270)        (a)     (1,342)    (1,329)    (1,329)
      Financial guaranty reinsurance        4,425        (44)       (41)       (56)      4,545        (60)       (55)       (75)
      Performance guarantees, 
         principally letters of credit        193        (a)          -          -         146        (a)          -         (1)
Other firm commitments: 
   Currency forwards                            -          -          -          -       1,067         11         11         11
   Cross currency swaps                     1,039         59        183        183       1,073        192        192        192
</TABLE>

(a)  Not applicable.
(b)  See Note 9.

The  Company  uses S&P 500  indexed  call  options  to hedge  the  equity  index
component of several  single-premium  equity-indexed  annuities  reinsured.  The
Company,  having paid a premium for these  options,  has the right to purchase a
notional investment in the S&P 500 index at a fixed price on a specific date.

Foreign currency forward purchase  contracts are employed to manage exposures to
changes in currency exchange rates.  These financial  instruments  generally are
used as hedges of identified  assets,  liabilities  or net  functional  currency
positions.

Cross currency  swaps are used by the Company to hedge foreign  currency risk on
net investment  exposure  resulting from exchange rate  fluctuations  in foreign
currency denominated assets and liabilities.  On a limited basis, and as part of
ongoing  customer  activities,  the  Company  utilizes  interest  rate swaps and
options to minimize its exposure to  movements in interest  rates and  financial
markets that have a direct correlation with certain of its reinsurance products.

The Company is exposed to credit-related  losses in the event of non-performance
by  the  counterparties  to  various  contracts,  but it  does  not  expect  the
counterparties  to  fail to meet  their  obligations  given  their  high  credit
ratings.


                                       51


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


15.  Segment Information

The Company  conducts  its  operations  principally  through the  following  two
business segments:

Property and Casualty Insurance/Reinsurance Segment (Property/Casualty)

The domestic property/casualty  operations of the Company include reinsurance of
most property/casualty lines of business, including general liability, property,
excess workers' compensation and auto liability in the United States, Canada and
business  written in the United States where the reinsured is outside the United
States.  In addition,  the Company  provides  insurance and  reinsurance for the
healthcare  industry,  conducts  excess and surplus  lines and direct  specialty
insurance  business  and  participates  in  financially   oriented   reinsurance
treaties.

International  property/casualty  operations are conducted through  subsidiaries
and branch offices located in Australia, Denmark, England, France, Germany, Hong
Kong, Ireland, Italy, Japan, Lebanon, Luxembourg, Malaysia, Mexico, New Zealand,
Singapore and Spain, and include  reinsurance of  property/casualty  business in
those countries and elsewhere outside the United States and Canada.


Life Reinsurance Segment (Life)

The  domestic  and   international   life  operations  of  the  Company  include
reinsurance of life and health insurance and annuity products and  participation
in financially oriented reinsurance treaties.  The international life operations
are conducted  through  subsidiaries  and branch  offices as detailed  above and
include  reinsurance of life business in those  countries and elsewhere  outside
the United States and Canada.

The Company's industry segment activity is summarized as follows:

<TABLE>
<CAPTION>
                                                  1998 - Industry Segments
                                            ------------------------------------
                                            Property/     
(In millions)                               Casualty       Life     Consolidated
                                            ------------------------------------
<S>                                             <C>         <C>           <C>
    
Net premiums written                         $ 4,888      $1,096      $ 5,984 
                                             =======      ======      =======

Net premiums earned                          $ 4,532      $1,103      $ 5,635
Net investment income                            705         280          985
Net realized gains on investments                398          34          432
Other revenues                                    43         108          151
                                             -------      ------      -------
Total revenues                                 5,678       1,525        7,203
                                             -------      ------      -------

Claims, claim expenses and policy benefits     3,160         943        4,103
Insurance acquisition costs                    1,095         262        1,357
Other operating costs and expenses               510         163          673
                                             -------      ------      -------
Total costs and expenses                       4,765       1,368        6,133
                                             -------      ------      -------

Earnings before income taxes                 $   913      $  157      $ 1,070
                                             =======      ======      =======

Total assets at December 31                  $25,754      $9,293      $35,047
                                             =======      ======      =======
</TABLE>


                                       52


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


15.  Segment Information (continued)

<TABLE>
<CAPTION>
                                                  1997 - Industry Segments
                                            ------------------------------------
                                            Property/
(In millions)                               Casualty       Life     Consolidated
                                            ------------------------------------
<S>                                             <C>         <C>          <C>  
  
Net premiums written                         $ 3,493      $1,052      $ 4,545 
                                             =======      ======       =======

Net premiums earned                          $ 3,523      $  944      $ 4,467
Net investment income                            681         229          910
Net realized gains on investments                260          43          303
Other revenues                                    37          67          104
                                             -------      ------      -------
Total revenues                                 4,501       1,283        5,784
                                             -------      ------      -------

Claims, claim expenses and policy benefits     2,481         779        3,260
Insurance acquisition costs                      883         190        1,073
Other operating costs and expenses               407         162          569
                                             -------      ------      -------
Total costs and expenses                       3,771       1,131        4,902
                                             -------      ------      -------

Earnings before income taxes                 $   730      $  152      $   882
                                             =======      ======      =======

Total assets at December 31                  $19,356      $8,176      $27,532
                                             =======      ======      =======
</TABLE>

<TABLE>
<CAPTION>
                                                  1996 - Industry Segments
                                            ------------------------------------
                                            Property/
(In millions)                               Casualty       Life     Consolidated
                                            ------------------------------------
<S>                                             <C>         <C>          <C> 
   
Net premiums written                         $ 3,937      $  636      $ 4,573 
                                             =======      ======      =======

Net premiums earned                          $ 4,015      $  633      $ 4,648
Net investment income                            656         181          837
Net realized gains on investments                200          23          223
Other revenues                                    (1)         44           43
                                             -------      ------      -------
Total revenues                                 4,870         881        5,751
                                             -------      ------      -------

Claims, claim expenses and policy benefits     2,869         504        3,373
Insurance acquisition costs                      989         117        1,106
Other operating costs and expenses               350         142          492
                                             -------      ------      -------
Total costs and expenses                       4,208         763        4,971
                                             -------      ------      -------

Earnings before income taxes                 $   662      $  118      $   780
                                             =======      ======      =======

Total assets at December 31                  $18,880      $6,508      $25,388
                                             =======      ======      =======
</TABLE>


                                       53


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


15.  Segment Information (continued)

The Company's  business by geographic area is summarized in the following table.
Allocations  to the domestic  geographic  area include  business  related to the
United States and Canada, as well as business written in the United States where
the  reinsured is outside the United  States.  International  business  includes
business   written  by   subsidiaries   located   outside  the  United   States,
predominantly in Europe.

<TABLE>
<CAPTION>
                                                        Geographic Area
                                          -------------------------------------------
(In millions)                             Domestic     International     Consolidated
                                          -------------------------------------------
<S>                                          <C>             <C>              <C>
    
1998:
   Revenues                               $ 3,808         $ 3,395          $ 7,203 
   Earnings before income taxes               674             396            1,070
   Identifiable assets at December 31      21,475          13,572           35,047

1997:
   Revenues                               $ 2,943         $ 2,841          $ 5,784
   Earnings before income taxes               566             316              882
   Identifiable assets at December 31      16,622          10,910           27,532

1996:
   Revenues                               $ 2,692         $ 3,059          $ 5,751
   Earnings before income taxes               442             338              780
   Identifiable assets at December 31      13,659          11,729           25,388
</TABLE>


16.  Unaudited Quarterly Financial Data

The Company's  quarterly  financial  results and other data in 1998 and 1997 are
summarized as follows:

<TABLE>
<CAPTION>
                                            Year ended December 31, 1998
                                     -------------------------------------------
                                      First      Second       Third      Fourth
(In millions)                        Quarter     Quarter     Quarter     Quarter
                                     -------------------------------------------
<S>                                    <C>         <C>         <C>         <C>
    
Net premiums earned                  $1,207      $1,434      $1,269      $1,725 
Net investment income                   236         234         250         265
Total costs and expenses              1,304       1,527       1,389       1,913
Net earnings                            205         196         228         150
</TABLE>

<TABLE>
<CAPTION>
                                            Year ended December 31, 1997
                                     -------------------------------------------
                                      First      Second       Third      Fourth
(In millions)                        Quarter     Quarter     Quarter     Quarter
                                     -------------------------------------------
<S>                                    <C>         <C>         <C>         <C>
    
Net premiums earned                  $1,344      $1,214      $  996      $  913
Net investment income                   224         211         242         233
Total costs and expenses              1,443       1,322       1,143         994
Net earnings                            158         155         167         168
</TABLE>


                                       54


<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


17.  Subsequent Events

On March 1, 1999, the Company issued $400 million of redeemable senior unsecured
debt  securities  at 6.45% per annum  that are  scheduled  to mature on March 1,
2019.  The Company  received  $395 million in net proceeds  from the issuance of
these notes (after deduction of underwriting  discounts and  commissions)  which
was used to repay a significant portion of the outstanding short-term borrowings
under the intercompany credit agreement with GE Capital Services (See Note 8).

On  March  4,  1999,  the  Company  completed  the  acquisition  of  Eagle  Star
Reinsurance Company Limited ("Eagle Star Re") from Zurich Financial Services for
a cash consideration of approximately $346 million, subject to final negotiation
of the closing date balance sheet. The cash  consideration  was provided through
existing funds.  Eagle Star Re is a leading London Market  non-life  reinsurance
company  principally  doing business  through  intermediaries.  The  transaction
excludes  substantially  all business  written by Eagle Star Re before 1993. The
acquisition  has been  accounted  for as a purchase;  accordingly,  the purchase
price has been allocated to the underlying assets and liabilities based on their
respective estimated fair values at the date of the acquisition.


                                       55


<PAGE>
                          Financial Statement Schedules


                                       56


<PAGE>
<TABLE>
<CAPTION>
                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

                  Condensed Financial Information of Registrant
                                (Parent Company)

                              Statement of Earnings


                                                        Year ended December 31,
                                                       -------------------------
(In millions)                                          1998      1997      1996
                                                       -------------------------
<S>                                                    <C>       <C>       <C>
    
Revenues
Net investment income                                  $  2      $  -      $  - 
Equity in undistributed earnings                        168       387       472
Dividends from subsidiaries                             654       298       123
                                                       ----      ----      ----
Total revenues                                          824       685       595
                                                       ----      ----      ----

Costs and Expenses
Interest expense                                         49        42        42
Other operating costs and expenses                       20        15         1
                                                       ----      ----      ----
Total costs and expenses                                 69        57        43
                                                       ----      ----      ----

Earnings before income taxes                            755       628       552

Provision for income taxes                              (24)      (20)      (15) 
                                                       ----      ----      ----

Net earnings                                           $779      $648      $567
                                                       ====      ====      ====
</TABLE>


See Notes to Condensed Financial Information of Registrant.


                                       57


<PAGE>
<TABLE>
<CAPTION>
                                                                            Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

            Condensed Financial Information of Registrant (continued)
                                (Parent Company)

                         Statement of Financial Position


                                                                       December 31,
                                                                    -------------------
(In millions)                                                        1998        1997
                                                                    -------------------
<S>                                                                   <C>         <C>
    
Assets
Investment in subsidiaries                                          $6,943      $5,899 
Short-term investments, at amortized cost                               50          40
Other assets                                                            30           7
                                                                    ------      ------

Total assets                                                        $7,023      $5,946
                                                                    ======      ======

Liabilities and equity
Other liabilities                                                   $   20      $   16
Long-term borrowings                                                   557         556
Indebtedness to related parties                                        426           -
                                                                    ------      ------
   Total liabilities                                                 1,003         572
                                                                    ------      ------
Preferred stock, $100,000 par value; authorized,
   issued and outstanding - 1,500 shares                               150         150
Common stock, $5,000 par value; authorized,
   issued and outstanding - 1,000 shares                                 5           5
Paid-in capital                                                        845         845
Retained earnings                                                    4,161       3,660
Accumulated unrealized gains on investment securities - net (a)        932         746
Accumulated foreign currency translation adjustments (a)               (73)        (32)
                                                                    ------      ------
   Total stockholder's equity                                        6,020       5,374
                                                                    ------      ------

Total liabilities and equity                                        $7,023      $5,946
                                                                    ======      ======
</TABLE>

(a)  The sum of  accumulated  unrealized  gains  on  investment  securities  and
     accumulated   foreign   currency   translation    adjustments   constitutes
     "Accumulated  nonowner  changes  other  than  earnings,"  as  shown  in the
     Consolidated  Statement of Stockholder's  Equity,  and was $859 million and
     $714 million at year-end 1998 and 1997, respectively.


See Notes to Condensed Financial Information of Registrant.


                                       58


<PAGE>
<TABLE>
<CAPTION>
                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

            Condensed Financial Information of Registrant (continued)
                                (Parent Company)

                             Statement of Cash Flows


                                                      Year ended December 31,
                                                    ----------------------------
(In millions)                                        1998       1997       1996
                                                    ----------------------------
<S>                                                  <C>        <C>         <C> 
   
Cash Flows From Operating Activities
Net earnings                                        $ 779      $ 648      $ 567 
Adjustments to reconcile net earnings to cash
   from operating activities:
      Equity in undistributed earnings               (432)      (387)      (472) 
      Other, net                                      (22)         5          -
                                                    -----      -----      -----
   Cash from operating activities                     325        266         95
                                                    -----      -----      -----

Cash Flows From Investing Activities
Net (purchases) sales of short-term investments       (10)       (33)        14
Investment in subsidiary                             (463)         -          -
                                                    -----      -----      -----
   Cash from (used for) investing activities         (473)       (33)        14
                                                    -----      -----      -----

Cash Flows From Financing Activities
Proceeds from short-term borrowings                   426          -          -
Principal payments on short-term borrowings             -          -       (600)
Proceeds from long-term borrowings                      -          -        556
Dividends paid                                       (278)      (233)       (65)
                                                    -----      -----      -----
   Cash from (used for) financing activities          148       (233)      (109)
                                                    -----      -----      -----

Increase (decrease) in cash                             -          -          -
Cash at beginning of year                               -          -          -
                                                    -----      -----      -----
                                                                                                
Cash at end of year                                 $   -      $   -      $   -
                                                    =====      =====      =====
</TABLE>

                                                                                
See Notes to Condensed Financial Information of Registrant.


                                       59


<PAGE>
                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES

             Notes to Condensed Financial Information of Registrant
                                (Parent Company)


1.  Basis of Presentation

GE  Global  Insurance   Holding   Corporation  ("GE  Global   Insurance")  is  a
wholly-owned  subsidiary of General Electric Capital Services, Inc. ("GE Capital
Services"), which is a wholly-owned subsidiary of General Electric Company.

GE Global Insurance's primary assets are its 100% investment in the common stock
of ERC, a Missouri-domiciled  property/casualty  reinsurance company, and Kemper
Re, an  Illinois-domiciled  property/casualty  reinsurance  company  principally
doing business through intermediaries.  ERC and Kemper Re own 100% of the common
stock of various other property/casualty insurance/reinsurance, life reinsurance
and reinsurance intermediary companies.

In accordance  with the  requirements  of Regulation  S-X of the  Securities and
Exchange  Commission,  the financial  statements of the registrant are condensed
and omit many disclosures presented in the consolidated financial statements and
the notes thereto.


2.  Dividends from Subsidiaries 

Cash dividends paid to GE Global Insurance by its consolidated subsidiaries were
$390  million,   $298  million  and  $123  million  in  1998,   1997  and  1996,
respectively.  In addition,  on December 31, 1998, ERC  transferred to GE Global
Insurance,  as a noncash  dividend,  100% of its $264 million  investment in the
common stock of First Excess Reinsurance Corporation ("First Excess"). GE Global
Insurance then contributed the common stock of First Excess to Kemper Re.


                                       60


<PAGE>
<TABLE>
<CAPTION>
                                                                                              Schedule III

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                                AND SUBSIDIARIES
 
                       Supplementary Insurance Information
     

      Column A            Column B            Column C             Column D        Column E       Column F
----------------------------------------------------------------------------------------------------------
                          Deferred
                          Insurance       Claims and Claim                        Accumulated       Net
                         Acquisition     Expenses and Future       Unearned        Contract       Premiums 
(In millions)               Costs          Policy Benefits         Premiums         Values         Earned
                         ---------------------------------------------------------------------------------
<S>                          <C>                  <C>                 <C>             <C>            <C>
   
December 31, 1998:
   Property/Casualty       $  459              $15,342              $1,934          $    -         $4,532 
   Life                       744                2,174                 231           2,271          1,103
                           ------              -------              ------          ------         ------
   Total                   $1,203              $17,516              $2,165          $2,271         $5,635
                           ======              =======              ======          ======         ======

December 31, 1997:
   Property/Casualty       $  266              $10,936              $1,126          $    -         $3,523
   Life                       578                1,629                 118           2,305            944
                           ------              -------              ------          ------         ------
   Total                   $  844              $12,565              $1,244          $2,305         $4,467
                           ======              =======              ======          ======         ======

December 31, 1996:
   Property/Casualty       $  244              $10,869              $1,161          $    -         $4,015
   Life                       251                  831                   9           1,643            633
                           ------              -------              ------          ------         ------
   Total                   $  495              $11,700              $1,170          $1,643         $4,648
                           ======              =======              ======          ======         ======
</TABLE>

<TABLE>
<CAPTION>
                          Column G            Column H             Column I        Column J       Column K
                         ---------------------------------------------------------------------------------

                                                                 Amortization        Other
                            Net             Claims, Claim        of Deferred       Operating       
                         Investment      Expenses and Policy      Insurance          Costs          Net
(In millions)              Income              Benefits          Acquisition          and         Premiums 
                                                                    Costs          Expenses       Written
                         ---------------------------------------------------------------------------------
<S>                        <C>                    <C>                 <C>             <C>            <C>
    
December 31, 1998:
   Property/Casualty       $705                $ 3,160              $1,095          $  510         $4,888 
   Life                     280                    943                 262             163
                           ----                -------              ------          ------
   Total                   $985                $ 4,103              $1,357          $  673
                           ====                =======              ======          ======

December 31, 1997:
   Property/Casualty       $681                $ 2,481              $  883          $  407         $3,493
   Life                     229                    779                 190             162
                           ----                -------              ------          ------
   Total                   $910                $ 3,260              $1,073          $  569
                           ====                =======              ======          ======

December 31, 1996:
   Property/Casualty       $656                $ 2,869              $  989          $  350         $3,937
   Life                     181                    504                 117             142
                           ----                -------              ------          ------
   Total                   $837                $ 3,373              $1,106          $  492
                           ====                =======              ======          ======
</TABLE>


                                       61


<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


<TABLE>
<CAPTION>
                                                       GE GLOBAL INSURANCE HOLDING CORPORATION

March 25, 1999                                         By:                  /s/ Robert J. Dellinger
                                                          ------------------------------------------------------------            
                                                                              Robert J. Dellinger
                                                               Senior Vice President and Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the date
indicated.

              <S>                                                   <C>                                      <C>

              Signatures                                           Title                                     Date
              ----------                                           -----                                     ----

            /s/ KAJ AHLMANN             President, Chief Executive Officer and Director                 March 25, 1999
---------------------------------------
              Kaj Ahlmann               (Principal Executive Officer)


        /s/ ROBERT J. DELLINGER         Senior Vice President, Chief Financial Officer and Director     March 25, 1999
---------------------------------------
          Robert J. Dellinger           (Principal Financial Officer)


        /s/ DENNIS D. DAMMERMAN         Chairman                                                        March 25, 1999
---------------------------------------
          Dennis D. Dammerman


          /s/ JAMES A. PARKE            Director                                                        March 25, 1999
---------------------------------------
            James A. Parke


         /s/ JOHN M. CONNELLY           Senior Vice President, General Counsel and Director             March 25, 1999
---------------------------------------
           John M. Connelly


         /s/ TAMMIE A. WAHAUS           Second Vice President, Controller                               March 25, 1999
---------------------------------------
           Tammie A. Wahaus             (Principal Accounting Officer)
</TABLE>


                                       62