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, 2002


                                       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         66202           (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 7, 2003. None.

At March 7, 2003,  1,600  shares of common  stock with a par value of $5,000 per
share 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.


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                                TABLE OF CONTENTS

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<S>                                                                                                             <C>
PART I
   Item 1.    Business...........................................................................................3
   Item 2.    Properties........................................................................................15
   Item 3.    Legal Proceedings.................................................................................15
   Item 4.    Submission of Matters to a Vote of Security Holders...............................................16



PART II
   Item 5.    Market for the Registrant's Common Equity and Related Stockholder Matters.........................17
   Item 6.    Selected Financial Data...........................................................................17
   Item 7.    Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.....................................................................18
   Item 7A.   Quantitative and Qualitative Disclosures About Market Risk........................................32
   Item 8.    Financial Statements and Supplementary Data.......................................................32
   Item 9.    Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure......................................................................32



PART III
   Item 10.   Directors and Executive Officers of the Registrant................................................32
   Item 11.   Executive Compensation............................................................................32
   Item 12.   Security Ownership of Certain Beneficial Owners and Management....................................32
   Item 13.   Certain Relationships and Related Transactions....................................................32
   Item 14.   Controls and Procedures...........................................................................32



PART IV
   Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K...................................33
   Signatures...................................................................................................72
   Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.....................................74
</TABLE>


<PAGE>

                                     PART I

Item 1.  Business.


GE Global Insurance Holding Corporation ("GE Global Insurance" herein,  together
with its consolidated businesses,  called "we", "us" or "our" unless the context
otherwise requires),  through its direct and indirect businesses, is principally
engaged in the  reinsurance  and  commercial  insurance  business  in the United
States and throughout the world. All of our outstanding common stock is owned by
General Electric Capital Services,  Inc. ("GE Capital Services"),  which in turn
is wholly-owned by General Electric Company ("GE Company").

Our  principal  executive  offices are located at 5200 Metcalf,  Overland  Park,
Kansas 66202 (Telephone number (913) 676-5200).

Our financial  information,  including the information  contained in this report
filed on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K;
and any amendments to the above mentioned reports, may be viewed on the Internet
at     www.ercgroup.com/global/company/company_financial_strength.shtml.      In
addition,      you     may     also     access     this      information      at
www.ge.com/en/company/investor/secfilings.htm.   Copies   are  also   available,
without charge,  from ERC Public  Relations and  Communications,  P.O. Box 2991,
Overland Park, Kansas, 66201.  Alternatively,  reports filed with the SEC may be
viewed or obtained at the SEC Public  Reference Room in Washington,  D.C., or at
the SEC's Internet site at www.sec.gov.

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 is operating in an unprecedented  environment in
the aftermath of the events of September 11, 2001.  After years of the effect of
excess market capacity,  the global market finds itself in a capacity crunch and
with  many  market  participants  declining  to  write  coverage  that  includes
terrorism.  The challenges  associated with quantifying terrorism risk today are
significant.  Primary insurers continue to consider  alternatives to traditional
risk  transfer,   including  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

We are one of the  largest  reinsurance  groups in the  world,  with  businesses
providing  risk  management   solutions  for  well  over  a  century.  We  write
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.

We conduct  business and service our accounts through a network of local offices
located in cities throughout the world.

As one of the  largest  direct  writers of  reinsurance  in the  world,  we work
directly  with our  clients,  enhancing  our ability to evaluate our clients and
their  respective  risks which allows us to be more responsive to the individual
needs of our customers.  We utilize our network of local offices  throughout the
world to service the particular  needs of our reinsurance  clients.  This system
enables  us to  provide a wider  range of  services  targeted  at the needs of a
particular market.

We are also one of the largest broker market writers in the world.  In the U.S.,
the  majority  of our  broker  market  business  is  written  by GE  Reinsurance
Corporation  ("GE Re"). Our  international  businesses in the United Kingdom and
Germany write the majority of our London market and other  foreign-based  broker
market business.  We view the broker market as another distribution channel that
enables us to respond to the growing risk  management  needs of a wider and more
diverse group of customers.

                                       3

<PAGE>

We manage and  diversify  our risk  through the careful  underwriting  of risks,
active claims management and the purchase of retrocessional coverage,  including
aggregate covers, on portions of risk. Retrocessional coverage represents a form
of  secondary  reinsurance  where a reinsurer  seeks  reinsurance  coverage on a
specified  portion of assumed risks.  We maintain strict  underwriting  controls
whereby  individual  underwriters  are assigned  maximum levels of  underwriting
authority based on specified lines of business.  The assumption of risks greater
than the specified maximum amount requires approvals of designated  individuals.
Adherence to these  underwriting  guidelines  is monitored  through  pre-renewal
account reviews,  periodic underwriting audits and online underwriting controls.
In addition to transactional  controls,  we employ  portfolio  monitoring of key
risks for all products and control new product  introductions through the use of
required  management  reviews  ("tollgates")  to approve  such new  products and
related underwriting guidelines.

Our business  strategy is to continue to increase  revenues by  concentrating on
select profitable  customer segments and delivering  comprehensive risk transfer
and risk management  solutions.  We do not intend,  however, to increase premium
income at the expense of our underwriting  results. In response to deteriorating
underwriting  results in recent years, we have continued our rigorous commitment
to improved  underwriting  initiatives aimed at ensuring consistent and diligent
underwriting  standards are applied to all risks.  Throughout 2002, we have been
disciplined  in  rejecting  risks  that  either  fail  to meet  the  established
standards  of price  or  terms  and  conditions,  or  involve  areas  for  which
sufficient  historical data does not exist to evaluate the risk adequately.  For
risks  that pass our  criteria,  we have  sought  to retain or even  judiciously
expand our business.  On the other hand, we have curtailed or exited business in
particular property and casualty channels when expected returns do not appear to
justify  the  risks.   Incorporated   into  these   evaluations   are  realistic
expectations of investment returns based on the current  investment  environment
(which are lower than those achieved in recent years) and the understanding that
greater levels of underwriting profits will be required in order to meet desired
levels of profitability in the forseeable future.

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

                                       4

<PAGE>


Lines of Business

Our two business  segments  are (1) property and casualty  insurance/reinsurance
and (2) life  reinsurance.  The  principal  product lines under the property and
casualty segment are traditional property and casualty  reinsurance,  healthcare
reinsurance and commercial  insurance  (generally  primary property and casualty
insurance) and our principal  product lines under the life  reinsurance  segment
are traditional life reinsurance and financial  reinsurance.  We provide primary
insurance products to hospitals,  health  maintenance  organizations and medical
professionals  as part of our healthcare  product line and to niche customers as
part of our commercial insurance product line.

Unless otherwise indicated, our 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. The geographic  breakdown,  based on
net premiums written, of our principal product lines is summarized as follows:
<TABLE>
<CAPTION>


                                                                   Year ended December 31,
                                        --------------------------------------------------------------------------------
(In millions)                                   2002                         2001                        2000
                                        ---------------------        -----------------------     -----------------------
                                                      Inter-                         Inter-                      Inter-
                                        Domestic     national        Domestic       national      Domestic      national
                                        ---------------------        -----------------------      ----------------------
<S>                                       <C>         <C>             <C>            <C>           <C>           <C>
Property and Casualty Segment
   Property and Casualty.............     $1,586      $1,831          $1,955         $1,797        $2,103        $2,677
   Healthcare........................      1,595          49           1,383             67         1,294            76
   Commercial........................        710           -             349              -           404             -
Life Segment.........................      1,069       1,052             790          1,051           832           805
                                          ------      ------          ------         ------        ------        ------
   Total.............................     $4,960      $2,932          $4,477         $2,915        $4,633        $3,558
                                          ======      ======          ======         ======        ======        ======

</TABLE>

The  following  is a  summary  description  of our  domestic  and  international
business based on principal product lines:

Property and Casualty Insurance/Reinsurance Segment

Property  and  Casualty  Reinsurance.  Our  largest  product  line,  traditional
property  and  casualty  reinsurance,  accounted  for  approximately  43% of our
worldwide net premiums  written in 2002.  The premium volume in the property and
casualty segment is derived principally from treaty agreements, which enables us
to maintain  lower  operating  costs  because  fewer  personnel  are required to
administer  treaty  business  than  facultative  business.  Most of our casualty
business is written on an  excess-of-loss  basis because it better enables us to
control our exposure and impact pricing on business that has a relatively longer
claim settlement pattern.

The  property  business is written on both an excess of loss and a  proportional
basis. Generally, we are the lead reinsurer for any domestic program in which we
participate,  enabling us to negotiate the terms of the reinsurance. We also act
as the lead reinsurer on a portion of our international business.

The 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, 2002,  approximately  47% of our
international  net premiums  written from property and casualty  reinsurance was
derived from property  reinsurance,  approximately 36% from casualty reinsurance
and  approximately 17% from aviation and marine  reinsurance.  Based on 2002 net
premiums written,  approximately 47% of the 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,  we have found that a number of our global  customers seek a
broad  range of  coverages.  While we offer a wide  range of  products,  we have
re-examined, re-underwritten, reduced or exited lines of business, contracts and
customers that we do not believe provide sufficient  long-term  returns.  In our
property and casualty  business,  we have aligned expert  underwriting  teams to
evaluate programs and risks in property,  aviation, marine and casualty, so that
we offer our clients  consistent  underwriting  and  world-class  expertise.  We
believe  that we are well  positioned  to  compete  on a  global  basis in these
markets.
                                       5
<PAGE>

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,  we have taken steps to limit our exposure by carefully monitoring
and allocating our property and casualty exposure to specific  geographic zones,
especially within the U.S., Europe, Japan and the Carribean.

The September  11, 2001 attack on America has also had a dramatic  affect on the
insurance and  reinsurance  industry.  The industry is playing a key role in the
recovery and  rebuilding  effort.  It is estimated  that insurers and reinsurers
will pay claims of more than $35  billion  during  the next  several  years.  We
initially  estimated that our net pre-tax losses would be $575 million from that
attack, and this estimate has not changed significantly to date. We have paid or
anticipate  that we will pay  claims  for  coverage  on the World  Trade  Center
complex and surrounding buildings, our portion of aviation coverage for the four
aircraft involved, life reinsurance claims and business interruption claims. The
attack has led to significant changes in underwriting guidelines and, outside of
the U.S., we no longer provide terrorism coverage in many treaties and policies.

Healthcare  and  Commercial  Insurance.  A large and  growing  component  of our
overall property and casualty business is our Healthcare and Commercial  product
lines  ("Commercial  Insurance"),   accounting  for  approximately  30%  of  our
worldwide net premiums written in 2002.  Commercial  Insurance provides an array
of direct property and casualty products for a diversified group of clients. The
main markets for  Commercial  Insurance  are  hospitals  (medical  malpractice),
dentists and doctors  (medical  malpractice),  Fortune 3000 companies  (property
related),  attorneys and insurance  agents  (general  liability - E&O coverage),
small  business  workers'   compensation  and  other  niche  commercial  markets
(property, auto, general liability).

The  healthcare  industry  represents  the largest  target market for Commercial
Insurance.  We provide medical malpractice insurance for individual  physicians,
dentists,  physician partnerships,  corporations and large group practices on an
occurrence and claims-made basis through our subsidiary--The  Medical Protective
Company   ("Medical   Protective"),   a   subsidiary   of   Medical   Protective
Corporation--the  oldest  professional  liability  carrier in the United States.
Commercial  Insurance also provides insurance and reinsurance for the healthcare
industry,  employers,  manufacturers  and  others  for  certain  product  lines.
Coverages  include primary  insurance and  reinsurance for medical  professional
liability and insurance protecting primary insurers (including self-insurers) in
the healthcare market (e.g.,  employer stop loss insurance,  HMO reinsurance and
provider excess coverages).

Another significant market of the Commercial  Insurance operation is the Program
Managers  business,  an  industry  leader in  providing  property  and  casualty
insurance  to specific  niche  customers.  In  addition  to the above  mentioned
markets,  Commercial Insurance targets profitable niches where our vast industry
expertise can be leveraged. We believe that we are well positioned to compete in
all markets in which we currently do business  because of our extensive range of
experience in analyzing, underwriting and managing commercial risks.

Life Reinsurance Segment

Life  Reinsurance.  We are engaged in the  reinsurance of various life insurance
products, including term, whole and universal life, annuities, group life, group
and individual  long-term health and disability  products and provide  financial
reinsurance to life insurers.  Based on net premiums  written,  life reinsurance
accounted for approximately 27% of our worldwide business in 2002.

With respect to life reinsurance, we write mostly on a direct basis with primary
insurers.  The life reinsurance business consists principally of treaty business
and is written  generally on a pro-rata  basis.  The domestic  life  reinsurance
business is written in every state in the United States.  The international life
reinsurance  business  services  worldwide  markets  with an emphasis in Western
Europe.  For  the  year  ended  December  31,  2002,  approximately  64%  of our
international  life  reinsurance net premiums  written were for traditional life
reinsurance, with the balance for health and disability reinsurance.

We believe that continued increases in life expectancy, consumer trends to shift
to more investment types of life insurance products, decreases in public funding
for social programs in Europe and deregulation of the life  reinsurance  markets
in Europe and Japan present  increased  opportunities  for our life  reinsurance
business line.

                                       6

<PAGE>

Financial  Reinsurance.  Within the Life  Reinsurance  segment,  we also write a
substantial amount of financial reinsurance business. Financial reinsurance does
not transfer  significant  underwriting  risk to the  reinsurer  and is designed
primarily to enhance the current  statutory  surplus of the ceding company while
reducing future statutory earnings as amounts are repaid to the reinsurer. These
financial  transactions  are effectively  collateralized  by anticipated  future
income streams from selected insurance policies. Financial reinsurance typically
has a duration of three to five  years.  These  types of  arrangements  often do
contain  significant  credit  risk;  we manage this risk by only  entering  into
transactions  of this  nature  with  highly-rated  companies  and then  actively
monitoring the financial status of such entities.

Property and Casualty Reserves for Unpaid Claims and Claim Expenses

Our insurance/reinsurance  businesses 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  recoveries).  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, new concepts of liability
and change in claim settlement  procedures.  Insurance  reserves,  by their very
nature,  do not represent an exact  calculation  of liability and, while we have
established  reserves  equal to the current  best  estimate of ultimate  losses,
there   remains  a  high   likelihood   that   further   changes  in  such  loss
estimates--either  upward or downward--will occur in the future.  Adjustments to
previously  reported  reserves for net claims and claim  expenses are considered
changes in estimates for accounting  purposes and are reflected in the financial
statements in the period in which the adjustment occurs.

There is a high  degree of  uncertainty  inherent in the  estimates  of ultimate
losses  underlying  the  liability for unpaid  claims and claim  expenses.  This
inherent   uncertainty  is  particularly   significant   for   liability-related
exposures,  including  latent claim  issues (such as asbestos and  environmental
related coverage  disputes) due to the extended period,  often many years,  that
transpires   between  a  loss  event,   receipt  of  related  claims  data  from
policyholders and/or primary insurers and ultimate settlement of the claim. This
situation is then further  exacerbated for  reinsurance  entities (as opposed to
primary  insurers)  due to  lags  in  receiving  current  claims  data.  Because
reinsurance  protection is often provided on an  "excess-of-loss"  basis whereby
the  reinsurer  is only  obligated  to pay  losses in excess of  pre-established
limits,  notification  is only required to be provided to the reinsurer when the
claim is assessed as having a reasonable  possibility  of exceeding  the primary
insurer's retention  thresholds.  This notification can often be years after the
loss event was initially reported to the primary insurer.

We continually  update loss estimates using both  quantitative  information from
our reserving  actuaries and qualitative  information from other sources.  While
detailed  analysis  is  performed  on a  quarterly  basis to assess the  overall
adequacy  of  recorded  claim  reserves,  a  more  comprehensive  evaluation  is
undertaken  on an annual  basis.  This more  comprehensive  review is  generally
undertaken  and  completed  during  the  fourth  quarter of each year using both
reported and paid claims  activity as of September  30. This more  comprehensive
review encompasses all major reserve segments, with specific additional emphasis
focused on those lines of  business in which  recent  reported  claims  activity
differs significantly from anticipated levels.

The  liability  for claims and claim  expenses  includes  two  components:  case
reserves for reported  claims and IBNR reserves  (incurred but not reported) for
unreported  claims that are estimated to have  occurred  prior to the end of the
respective  accounting  period.  Case reserves are  established  by  experienced
professionals   from  our  claims  teams  based  on   case-specific   facts  and
circumstances  and  are  updated  continually  as  further  information  becomes
available.  Determining  required IBNR reserves is a more complex and often more
subjective  process involving  qualified  actuaries familiar with the underlying
exposures in the portfolio.

With respect to our primary insurance activities, our claims personnel establish
a "case reserve" for the estimated amount of the ultimate payment when the claim
is  reported.  The estimate  reflects the informed  judgment of the claims staff
based  on  general  insurance  reserving  practices  and on the  experience  and
knowledge  regarding  the nature and value of the specific  type of claim.  With
respect  to  our  reinsurance   activities  (as  opposed  to  primary  insurance
activities),  we typically  establish a case reserve when we receive notice of a
claim from the ceding company. Such reinsurance-related reserves are based on an
independent  evaluation  by our 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. For both primary and reinsurance
business,  recorded  case  reserves  are  adjusted  periodically  by our  claims

                                       7
<PAGE>

departments  based  on  subsequent  developments  and  audits  of  documentation
supporting the underlying  claims. We have reorganized our claim teams in recent
years into integrated groups aligned with our business structure.  In the course
of this reorganization,  the team recognized that best practices existed in many
of the original claims teams.  In order to leverage these best practices  across
the new claims  organization,  the Global  Claims Team  launched  the Claims Six
Sigma initiative.  Claims Six Sigma has focused on establishing common processes
in areas such as claims adjudication, subrogation, auditing, alternative dispute
resolution and use of structured settlements.

In accordance  with GAAP, we also maintain  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, we use 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 or  underwriting  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 our
liability for claims over time.

The  methodology we employ in  establishing  IBNR reserves for a given reserving
segment  consists of a combination  of the use of expected loss ratios  ("ELRs")
and loss  development  factor  based  methodologies  ("LDFs").  The  ELRs,  when
multiplied  by  earned  premiums,  generate  an  expected  ultimate  loss  for a
portfolio of business. For the most recent underwriting year, ELRs initially are
established  jointly by the reserving and  underwriting  teams. The underwriting
teams are comprised of professional underwriters and pricing actuaries. The ELRs
reflect  recent  years'  underwriting  results,  adjusted  for known  changes in
pricing, loss trends,  contract terms and conditions and other factors that will
likely influence actual  underwriting  results achieved (using both quantitative
and subjective  analysis).  As new information  becomes available regarding loss
trends,  pricing levels, and other factors that influence  underwriting results,
ELRs for prior periods are reviewed jointly by underwriting,  pricing actuaries,
reserving   actuaries,   and  selected  business  leaders,   and  revised  where
appropriate.

The  reserving  actuaries  select loss  development  factors based on prior year
claim experience.  The selected loss development factors are used to extrapolate
future loss  development in order to generate  ultimate loss estimates driven by
actual loss experience. While the LDF methods are statistically based, they also
incorporate subjective interpretations of the underlying claim trends.

The LDF-based approach is generally viewed as preferable once an acceptable base
of observable loss activity is available.  Accordingly, for more recent/immature
experience periods, the ELR-based approach is generally more heavily relied upon
due to the  lack of  historical  loss  data on  which  to  perform  the LDF loss
projections. As the experience period matures (i.e., more data becomes available
over time), the weights given to the ELRs are generally shifted to the LDF-based
loss projections.

We apply the ELR and LDF reserving  approaches to over 300 individual  reserving
segments,  each possessing unique actuarial development trends.  However,  these
300  reserving  segments can generally be broadly  assigned to  property-related
exposures or liability-related  exposures.  For property-related  exposures, the
insured "loss event" is normally  readily  apparent (e.g.,  losses due to fires,
windstorms or vehicle  accidents) and the related claims are generally  received
within a relatively short period  following such event.  Property claims involve
relatively  infrequent  disputes as to coverage or determination of damages but,
in such an event,  the disputes are normally  fully  settled  within a few years
following the underlying event. As a result,  the migration within our reserving
process from  reliance on ELRs to the more claims  driven LDF  approach  happens
quite  quickly.  Compared  to  property-related   exposures,   liability-related
exposures  are  often  significantly  more  complicated  and  routinely  involve
situations in which claims are  identified  and  submitted  many years after the
occurrence of the insured  "loss event" giving rise to such claims.  As would be
expected, these types of claims also involve a higher incidence of dispute as to
coverage,  interpretation of contract wording and fair compensation for damages.
Consequently,  it generally  takes a number of years before a sufficient base of
reported  claims  experience  develops  in order to  support  reliable  LDF loss
projections.  Accordingly,  we rely on ELRs within the  reserving  process  much
longer for liability-related exposures than for property-related exposures.

                                       8

<PAGE>

Reserve  Development.  The  development  of our net balance  sheet  property and
casualty  liabilities  for unpaid claims and claim  expenses for accident  years
1992 through 2002 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 1992 to 2002.
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
favorable  (adverse)  development 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 "Cumulative
favorable (adverse) development, excluding foreign exchange" represents for each
calendar  year (the  "Base  Year")  the  aggregate  change  in (i) our  original
estimate of net  liability  for unpaid  claims and claim  expenses for all years
prior to and  including  the Base Year  compared to (ii) our  re-estimate  as of
December 31, 2002, of net liability for unpaid claims and claim expenses for all
years prior to and including the Base Year. Favorable development means that the
original estimate was greater than the re-estimate and adverse development means
that the original estimate was less than the re-estimate.

                                       9

<PAGE>
<TABLE>
<CAPTION>
                                           Changes in Historical Reserves for Unpaid Claims and Claim Expenses
                              For the Last Ten Years - GAAP Basis as of December 31, 2002 (Property & Casualty Operations)

                                                                    Year ended December 31,
                             -------------------------------------------------------------------------------------------------------
(In millions)                 1992     1993    1994      1995     1996     1997      1998      1999       2000       2001      2002
                             -------------------------------------------------------------------------------------------------------
<S>                         <C>      <C>      <C>      <C>      <C>      <C>      <C>       <C>        <C>        <C>        <C>
   Net liability for unpaid
   claims and claim
   expenses                 $3,991   $4,525   $5,071   $9,351   $9,458   $9,114   $12,495   $13,210    $12,202    $12,303    $15,140

Cumulative paid as of:
One year later.......          802      949    1,115    1,964    1,949    2,176     2,867     4,811      4,758      4,798        ---
Two years later......        1,274    1,602    1,804    3,130    3,189    3,241     5,803     7,782      8,035        ---        ---
Three years later....        1,739    2,054    2,341    3,933    3,881    4,863     7,263     9,962        ---        ---        ---
Four years later.....        2,036    2,424    2,708    4,464    5,294    5,648     8,648       ---        ---        ---        ---
Five years later.....        2,293    2,690    2,988    5,686    5,919    6,245       ---       ---        ---        ---        ---
Six years later......        2,485    2,952    3,318    6,151    6,350      ---       ---       ---        ---        ---        ---
Seven years later....        2,688    3,181    3,540    6,488      ---      ---       ---       ---        ---        ---        ---
Eight years later....        2,841    3,353    3,771      ---      ---      ---       ---       ---        ---        ---        ---
Nine years later.....        2,985    3,534      ---      ---      ---      ---       ---       ---        ---        ---        ---
Ten years later......        3,122      ---      ---      ---      ---      ---       ---       ---        ---        ---        ---

Net liability re-estimated
   as of:
One year later.......       $3,919   $4,612   $5,173   $9,192   $9,229   $9,179   $12,410   $13,749    $13,314    $16,341        ---
Two years later......        4,066    4,656    5,313    8,959    9,127    8,655    12,115    14,504     16,798        ---        ---
Three years later....        4,095    4,793    5,256    8,907    8,549    8,453    11,987    17,001        ---        ---        ---
Four years later.....        4,238    4,747    5,155    8,392    8,252    8,601    13,708       ---        ---        ---        ---
Five years later.....        4,154    4,668    4,902    8,029    8,389    9,231       ---       ---        ---        ---        ---
Six years later......        4,075    4,487    4,804    8,180    8,707      ---       ---       ---        ---        ---        ---
Seven years later....        3,942    4,402    4,854    8,454      ---      ---       ---       ---        ---        ---        ---
Eight years later....        3,906    4,461    5,159      ---      ---      ---       ---       ---        ---        ---        ---
Nine years later.....        3,946    4,704      ---      ---      ---      ---       ---       ---        ---        ---        ---
Ten years later......        4,125      ---      ---      ---      ---      ---       ---       ---        ---        ---        ---
Cumulative favorable
   (adverse) development      (134)    (179)     (88)     897      751     (117)   (1,213)   (3,791)    (4,596)    (4,038)       ---
Effect of foreign
   exchange (1)                (12)      16       (9)    (620)    (608)    (289)     (587)     (400)       598        381        ---
                             -----    -----    -----    -----    -----    -----    ------    ------     ------     ------     ------
Cumulative favorable
   (adverse) development,
   excluding foreign         $(146)   $(163)   $ (97)    $277   $  143    $(406)  $(1,800)   $(4,191)  $(3,998)   $(3,657)    $  ---
   exchange                  =====    =====    =====     ====   ======    =====   =======    =======   =======    =======     ======

</TABLE>
<TABLE>
<CAPTION>

(In millions)                         1993     1994     1995      1996      1997      1998      1999      2000      2001      2002
                                      ----------------------------------------------------------------------------------------------

<S>                 <C>             <C>      <C>      <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Balance at December 31-gross        $5,312   $6,020   $11,145   $10,869   $10,936   $15,342   $17,435   $16,932   $20,882   $23,839
Less reinsurance recoverables         (787)    (949)   (1,794)   (1,411)   (1,822)   (2,847)   (4,225)   (4,730)   (8,579)   (8,699)
                                    ------   ------   -------   -------   -------   -------   -------   -------   -------   -------
Balance at December 31-net           4,525    5,071     9,351     9,458     9,114    12,495    13,210    12,202    12,303    15,140
                                    ------   ------   -------   -------   -------   -------   -------   -------   -------   -------
Latest re-estimated liability-
   gross                             5,881    6,408    10,085    10,394    11,431    17,372    22,311    22,796    26,829       ---
Less re-estimated reinsurance
   recoverables                     (1,177)  (1,249)   (1,631)   (1,687)   (2,200)   (3,664)   (5,310)   (5,998)  (10,488)      ---
                                    ------   ------   -------   -------   -------   -------   -------   -------   -------   -------
Latest re-estimated liability-net    4,704    5,159     8,454     8,707     9,231    13,708    17,001    16,798    16,341       ---
                                    ------   ------   -------   -------   -------   -------   -------   -------   -------   -------
Gross cumulative development          (569)    (388)    1,060       475      (495)   (2,030)   (4,876)   (5,864)   (5,947)      ---
Effect of foreign exchange (1)          17        2      (717)     (674)     (285)     (706)     (444)    1,035       838       ---
                                    ------   ------   -------   -------   -------   -------   -------   -------   -------   -------
Gross cumulative development,
   excluding foreign exchange       $ (552)  $ (386)  $   343   $  (199)  $  (780)  $(2,736)  $(5,320)  $(4,829)  $(5,109)  $   ---
                                    ======   ======   =======   =======   =======   =======   =======   =======   =======   =======
</TABLE>

(1)  The  results of  our  international  operations  translated from functional
     currencies into U.S. dollars are included with our 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."

                                       10

<PAGE>

A number of trends that occurred within the insurance  industry,  the economy in
general and several factors specific to us have had a significant  impact on our
recorded  liabilities  for unpaid claims and claim  expenses  during the periods
covered by the preceding table.

In the early to mid  1990's,  generally  adequate  pricing  existed  within  the
overall property and casualty insurance/reinsurance  industry. This is reflected
in the preceding table,  with respect to us, by the relatively modest subsequent
year  reserve  development  applicable  to these  years.  Starting  in the later
1990's,  there was significant  downward  pressure on premium pricing within the
industry  as a number of major  industry  players  were  attempting  to increase
market share.  Based on an observable  acceleration  in reported  claim activity
relative to associated premiums, beginning in 2000, it started becoming apparent
that the level of price  erosion  that  occurred  in the  primary  property  and
casualty insurance  industry in recent years was significantly  greater than had
been previously contemplated.

The  negative  impacts  of this  price  erosion  on  property-related  exposures
manifested  itself  within a few years due to the  relatively  short  historical
settlement  period (i.e.,  the time between when an insured property loss occurs
and the time it is  fully  settled)  applicable  to  these  types of  coverages.
Liability-related  exposures,  on the other hand, are often  significantly  more
complicated and routinely involve  situations in which claims are identified and
submitted  many years after the  occurrence  of the insured  "loss event" giving
rise to such claims. As would be expected,  these types of claims also involve a
higher incidence of dispute as to coverage,  interpretation  of contract wording
and fair compensation for damages. Consequently,  there is a much longer period,
often many  years,  that  transpires  between a loss  event,  receipt of related
claims data from policyholders  and/or primary insurers and ultimate  settlement
of the  claim.  This  situation  is then  further  exacerbated  for  reinsurance
entities  (as  opposed to primary  insurers)  due to lags in  receiving  current
claims  data.   Because   reinsurance   protection  is  often   provided  on  an
"excess-of-loss"  basis whereby the reinsurer is only obligated to pay losses in
excess of pre-established  limits,  notification is only required to be provided
to the reinsurer  when the claim is assessed as having a reasonable  possibility
of exceeding the primary insurer's retention  thresholds.  This notification can
often be years  after  the loss  event was  initially  reported  to the  primary
insurer. As a result of the above, it took a number of years before we were able
to obtain a clearer  picture of the actual level of pricing  insufficiency  that
existed for  liability-related  exposures  from 1997 through  2001  underwriting
years and reflect such realities in our recorded claim reserves.

During the fourth quarter of 2002, we completed our annual  comprehensive review
of recorded  claim  reserves.  As part of this review,  in response to continued
escalation in reported  claim  activity and the resulting  realization  that the
level of price erosion related to  liability-related  exposures  underwritten in
1997  through  2001  were   significantly   greater  than  had  been  previously
contemplated,  we concluded that our best estimate of ultimate losses was higher
in the range of reasonably  possible loss scenarios than  previously  estimated.
Accordingly, we recognized a fourth quarter pre-tax charge of approximately $2.5
billion to increase  recorded  reserves to reflect  the revised  indications  of
remaining  liability.  The  significant  components of this adverse  development
included hospital medical  malpractice  ($300 million),  product liability ($300
million),  professional  liability  ($250  million),  umbrella  liability  ($200
million),  workers  compensation  ($200  million),  individual  liability  ($150
million) and asbestos-related  exposures ($150 million). With amounts recognized
in  previous  quarters  of 2002,  the overall  2002  pre-tax  charge for adverse
development  related  to  our  property  and  casualty  operations  amounted  to
approximately $3.6 billion.

The significant indicated  deficiencies reflected in the preceding table for the
more recent accident years is primarily attributable to recognition during 2000,
2001 and 2002 of adverse development with respect to liability-related exposures
underwritten  during the 1997 through 2001 time frame.  Also contributing to the
indicated  deficiencies  were higher than expected  industry-wide  property loss
projections   related  to  the  1998  Hurricane  Georges  and  certain  European
windstorms occurring in December 1999.

                                       11


<PAGE>
The  reconciliation  of our 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)                                                2002         2001         2000
                                                         -------------------------------------

<S>                <C>                                     <C>          <C>          <C>
Balance at January 1 - gross.............................  $20,882      $16,932      $17,435
Less reinsurance recoverables............................   (8,579)      (4,730)      (4,225)
                                                           -------      -------      -------
Balance at January 1 - net...............................   12,303       12,202       13,210
                                                           -------      -------      -------

Claims and expenses incurred:
   Current year..........................................    3,865        4,579        4,401
   Prior years...........................................    3,568          811          934
                                                           -------      -------      -------
                                                             7,433        5,390        5,335
                                                           -------      -------      -------
Claims and expenses paid:
   Current year..........................................     (472)        (761)      (1,290)
   Prior years...........................................   (4,797)      (4,758)      (4,811)
                                                           -------      -------      -------
                                                            (5,269)      (5,519)      (6,101)
                                                           --------     -------      -------

Claim reserves related to acquired companies.............      285            -          279

Foreign exchange and other...............................      388          230         (521)
                                                           -------      -------      -------
Balance at December 31 - net.............................   15,140       12,303       12,202
Add reinsurance recoverables.............................    8,699        8,579        4,730
                                                           -------      -------      -------
Balance at December 31 - gross...........................  $23,839      $20,882      $16,932
                                                           =======      =======      =======
</TABLE>

The  liabilities  for claims and claim  expenses in the preceding  table include
long-term disability claims and certain workers' compensation claims (limited to
run-off business in a Bermuda-domiciled  subsidiary) that are discounted at a 6%
and 3%  rate,  respectively,  for  all  years  presented.  As a  result  of this
discount,  total  liabilities for claims and claim expenses have been reduced by
an  estimated  1% at December  31, 2002 and 2001.  The  accretion of discount is
included in current  operating  results as part of the development of prior year
liabilities.  Discounts amortized as a percentage of claims,  claim expenses and
policy benefits were less than 1% for each of the years ended December 31, 2002,
2001 and 2000.

The reconciliation of 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)                                                         2002            2001           2000
                                                               ---------------- --------------- ---------------

<S>                                                                 <C>             <C>             <C>
Statutory basis reserves for U.S. companies - net.........          $ 9,728         $ 5,786         $ 6,213
Adjustments to arrive at GAAP basis (1)...................              490             664             500
                                                                    -------         -------         -------
GAAP basis reserves for U.S. companies - net..............           10,218           6,450           6,713
GAAP basis reserves for non-U.S. companies - net..........            4,922           5,853           5,489
                                                                    -------         -------         -------
Total GAAP basis reserves - net...........................           15,140          12,303          12,202
Add reinsurance recoverables..............................            8,699           8,579           4,730
                                                                    -------         -------         -------
GAAP basis reserves - gross...............................          $23,839         $20,882         $16,932
                                                                    =======         =======         =======
</TABLE>


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

Asbestos and  Environmental  Exposure.  Included in our liability for claims and
claim expenses are liabilities for asbestos and environmental  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
asbestos  and  environmental  risks from  coverage  and most of the asbestos and
environmental exposures arise from risks located in the United States.

                                       12

<PAGE>
The three-year  development of claims and claim expense reserves associated with
our asbestos and  environmental  claims,  including case and IBNR  reserves,  is
summarized as follows:
<TABLE>
<CAPTION>

                                                                          Year ended December 31,
                                                                --------------------------------------------
(In millions)                                                        2002           2001           2000
                                                                -------------- -------------- --------------

<S>                <C>                                               <C>            <C>            <C>
Balance at January 1 - gross..............................           $786           $829           $800
Less reinsurance recoverables.............................           (165)          (183)          (195)
                                                                     ----           ----           ----
Balance at January 1 - net................................            621            646            605

Claims and expenses incurred..............................            121             23             99
Claims and expenses paid..................................            (86)           (48)           (58)
                                                                     ----           ----           ----

Balance at December 31 - net..............................            656            621            646
Add reinsurance recoverables..............................            287            165            183
                                                                     ----           ----           ----
Balance at December 31 - gross............................           $943           $786           $829
                                                                     ====           ====           ====
</TABLE>

The  amounts  in the  preceding  table  represent  our best  estimate,  based on
currently  available  information,  of claims  and claim  expense  payments  and
recoveries for asbestos and environmental exposures that are expected to develop
in future years. In connection with a comprehensive  reserve review completed in
the  fourth  quarter  of 2002,  we  benchmarked  our  recorded  asbestos-related
reserves against certain of our industry  competitors  having similar exposures.
The most  common  benchmarking  approach  involves  the  comparison  of what are
referred to as "survival ratios." A survival ratio is a measure of the number of
years it would  take to  exhaust  recorded  asbestos  reserves  based on  recent
payment  activity.  This ratio is derived by taking the current ending  reserves
and dividing it by the average  annual  payments for the most recent three years
(generally  excluding  large  one-time  settlements  such as those  involving  a
commutation  of a  block  of  business).  Based  on  our  industry  benchmarking
analysis, we made the decision to increase specific asbestos-related reserves to
reflect a 12-year survival ratio. This resulted in an approximately $150 million
pre-tax  charge,  which was a component of the overall $2.5 billion charge taken
for adverse development in the fourth quarter.

While our portfolio  does not have  asbestos and toxic waste  cleanup  exposures
commensurate with many of our insurance and reinsurance competitors, we actively
monitor evolving case law and its effect on  asbestos-related  illness and toxic
waste cleanup claims.  Additionally,  we have implemented an active  commutation
program to lessen these  exposures.  While we have recorded our best estimate of
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.  There are many factors that may  significantly  affect our
asbestos-related claim development and the resulting liability for those claims.
Among these factors are changing domestic and foreign government regulations and
legislation  (including  continuing   congressional   consideration  of  federal
Superfund legislation), newly reported claims, and new contract interpretations.
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  our  results  of  operations,
financial position or cash flows.

Other Mass Tort Exposures. In addition to asbestos and environmental  exposures,
we also may have  exposures  to other mass  torts  involving  primarily  product
liability issues such as tobacco products, gun manufacturers and silicone breast
implants.  We have, in the past,  generally limited our exposure to the products
liability reinsurance business,  and, based on currently available  information,
future liabilities  resulting from these matters are not expected to be material
to our results of operations, financial position or cash flows.

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 that we acquired the policies  from  another  insurer,  at the date of
acquisition.  Interest rate  assumptions  used in calculating  the present value
generally  ranged from 5-9% per annum at December  31, 2002.  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 generally  guaranteed for a specified time period with
renewal  rates  determined  by the issuing  insurance  company.  Such  crediting
interest rates ranged from 3-8% per annum in 2002.

                                       13

<PAGE>

Regulatory Matters

GE Global Insurance and its U.S. domiciled insurance subsidiaries are subject to
regulation under the insurance  statutes,  including  insurance  holding company
statutes, of various states, including Missouri,  Kansas, Illinois,  Indiana and
Vermont,  the domiciliary  states of our principal  domestic  insurance  company
subsidiaries.  The international businesses of Employers Reinsurance Corporation
(the "GE Frankona Re Group") are subject to regulation under insurance  statutes
of various foreign countries.

General.  The  regulation  and  supervision  to which our businesses are subject
relate primarily to licensing requirements of insurers/reinsurers, the standards
of solvency that must be met and maintained, the amount of dividends that may be
paid  by  such  businesses,  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 security holders of the regulated  reinsurer.  We believe it is, and
that our businesses  are, in material  compliance  with all applicable  laws and
regulations pertaining to our business and operations.

U.S.  Insurance  Regulation.  U.S.  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.

Effective January 1, 2001, each of our U.S. domiciliary state regulators adopted
provisions which required that insurance companies prepare their statutory basis
financial  statements in accordance with the revised NAIC  Accounting  Practices
and  Procedures  Manual.  This manual was intended to establish a  comprehensive
basis of statutory  accounting  principles which is recognized and adhered to if
not in conflict with domestic statutes and/or regulations, or when such statutes
or  regulations  are silent.  As a result of adopting  these  revised  statutory
accounting  principles,  aggregate cumulative  adjustments totaling $234 million
were  recorded by Employers  Reinsurance  Corporation  ("ERC"),  GE  Reinsurance
Corporation ("GE Re") and The Medical Protective Company ("Medical  Protective")
as an increase  to  unassigned  funds  (surplus)  at January 1, 2001,  primarily
related to the establishment of net deferred tax assets.

Risk-Based Capital.  Each of the U.S.  domiciliary state regulators have adopted
the NAIC minimum risk-based capital requirements which are used by regulators 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 our U.S.  insurance  company  subsidiaries  exceeded  the minimum
risk-based capital requirements at December 31, 2002.

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 ERC, GE Re, Medical Protective  Corporation and CORE
Insurance  Holdings  ("CORE",  a reinsurance  holding  company whose  underlying
reinsurance  operations  are in run-off),  it is dependent upon  dividends,  tax
allocation and other payments  primarily from ERC, GE Re, Medical Protective and
CORE Insurance Company ("CORE  Insurance," the U.S. insurance company subsidiary
of CORE) to  service  its debt and meet its other  obligations.  The  payment of
dividends and other  payments to us by ERC, GE Re,  Medical  Protective and CORE
Insurance are subject to limitations imposed by the Missouri,  Illinois, Indiana
and Vermont Insurance Codes, respectively.  The  payment of dividends  to ERC by

                                       14
<PAGE>

its principal life reinsurance  subsidiaries,  Employers Reassurance Corporation
and ERC Life Reinsurance  Corporation  ("ERC Life"),  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, Illinois, Indiana or Vermont 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 us.

The maximum  amount  available  for the payment of dividends  during 2003 by ERC
without prior regulatory  approval is $488 million.  Of this amount, $88 million
is committed to pay dividends on the preferred stock issued by ERC to GE Capital
Corporation.  The maximum amount  available for the payment of dividends  during
2003 by Medical Protective without prior regulatory  approval is $74 million. GE
Re and CORE Insurance will not be able to make any dividend payments during 2003
without the prior approval of their respective state regulators.

International Regulations. Based on 2002 net premiums written, approximately 37%
of our  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 GE
Frankona Re Group are subject to modification or revocation by such authorities,
and such businesses  could be prevented from  conducting  business in certain of
the jurisdictions  where they currently operate. In the past, the GE Frankona Re
Group has been allowed to modify their  operations to conform with new licensing
requirements  in all  jurisdictions  that  are  material  to  our  international
operations.

In addition to licensing requirements,  the GE Frankona Re 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, we
do not  believe  that these  regulations  will have a material  impact on the GE
Frankona Re Group's future operations.

Effective January 1, 2001, certain of our international  businesses (licensed in
the  European  Union  ("EU")  member  states) are required to comply with the EU
Directive on Supplementary Supervision of Insurance Undertakings in an Insurance
Group.  This  directive  is  designed to address  solvency  issues for groups of
insurance companies and supplements the solvency tests historically performed on
individual  insurance  companies.  The primary objective of this directive is to
assess the overall capital available to the group,  rather than on an individual
company  basis,  and  identify  potential  risks.  At  December  31,  2002,  the
international insurance company businesses that are subject to the EU Directives
are in compliance with such, on both an individual and group basis.


Item 2.  Properties.

We conduct  business  from  various  facilities,  most of which are  leased.  In
addition,  we own our  administrative  offices in Overland Park, Kansas and Fort
Wayne, Indiana.


Item 3.  Legal Proceedings.

There are no pending legal  proceedings  beyond the ordinary  course of business
that in our opinion,  based on information available at the date of this report,
would have a material adverse effect on our consolidated results of operation or
financial condition, except as noted in the following paragraphs.

As a result of the September 11, 2001 terrorist  attack,  the World Trade Center
complex  in New York  City  ("WTC")  was  destroyed.  Industrial  Risk  Insurers
("IRI"),  an affiliate of ERC, was one of the primary insurers of the WTC with a
policy limit of $237 million.  The principal  lessee of the WTC is alleging that
the  damage to  (i.e.,  the loss of) each of the "twin  towers"  was a  separate
occurrence,  requiring  payment of up to two times the policy limits.  It is the
contention  of all insurers of the WTC that the policies  were written in such a
way that the loss constituted one occurrence. Suit has been filed by the insured
in the United States  District Court in New York seeking a declaratory  judgment
on this  question.  IRI is a  party  to  this  suit,  as are  several  of  ERC's
reinsureds.  Discovery in the suit is continuing,  and trial is expected in late
2003 or 2004. Both IRI and ERC have retrocessional coverage on their exposure to
WTC losses covering a portion of losses incurred. We believe there is compelling
support for the contention that the loss constituted a single occurrence, and we
are  prepared to defend this  position  vigorously.  We have  established  claim
reserves on this basis. In addition,  we have provided  reinsurance  coverage to
various  other primary  insurers of the WTC and, if it is ultimately  determined
that the loss of each of the WTC towers constitutes a separate insured event, we
may incur  some  level of  additional  claims  as a result  of this  reinsurance

                                       15
<PAGE>

coverage.  We believe that our maximum  exposure  resulting  from an unfavorable
outcome to this matter is approximately $300 million.

ERC is in dispute  with a  reinsured  involving  approximately  $150  million of
coverage.  The reinsured has filed claims for $100 million and the full limit of
$150 million is expected to be requested  by the end of 2003.  To date,  ERC has
made payments  totaling  approximately $40 million under a reservation of rights
but has refused to pay anything  further.  ERC is contesting  liability based on
the manner in which claims are computed and may seek rescission of the agreement
if the matter proceeds to arbitration. ERC has not posted additional reserves to
cover amounts not paid to date.

ERC filed suit against a cedant seeking  damages and rescission of a reinsurance
contract  covering  non-standard  auto  insurance  assumed by ERC.  ERC  asserts
several legal theories to support its claims,  including  misrepresentation  and
negligence.  The cedant filed a counterclaim  asserting breach of contract,  and
asserted  that ERC's actions  have,  among other things,  impacted its financial
status.  The cedant alleges the total amount due under the reinsurance  contract
could reach  approximately  $80 million.  The case is in discovery  and trial is
unlikely  until  late 2003 or 2004.  We  believe  there is  compelling  evidence
supporting  our  damages  claim as well as our  position  that this  reinsurance
contract should be rescinded. We intend to pursue this matter vigorously.


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

Omitted

                                       16




<PAGE>
                                     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 GE Global Insurance's common equity.


Item 6.  Selected Financial Data.

                           Consolidated Financial Data
<TABLE>
<CAPTION>

                                                                    Year ended December 31,
                                                ----------------------------------------------------------------
(In millions)                                       2002         2001         2000         1999         1998
                                                ----------------------------------------------------------------

<S>                                              <C>           <C>          <C>          <C>          <C>
Total revenues.............................      $ 9,276       $ 9,191      $10,131      $ 9,031      $ 7,203
Net premiums written.......................        7,892         7,392        8,191        7,147        5,984
Net investment income......................        1,072         1,202        1,315        1,151          985
Net realized gains on investments..........          241           436          522          699          432
Earnings (loss) before income taxes and
   cumulative effect of change in
   accounting principle ...................       (2,755)         (466)         605          988        1,070
Net earnings (loss)........................       (1,733)         (195)         581          720          779
Total investments..........................       26,822        22,495       21,191       21,539       21,987
Total assets...............................       51,786        45,118       38,564       37,561       35,047
Stockholder's equity.......................      $ 6,664       $ 6,362      $ 6,025      $ 5,575      $ 6,020
Return on equity (average).................        (26.6%)        (3.1%)       10.0%        12.4%        13.7%
Stockholder's equity, excluding unrealized
   gains (losses) on investment securities.      $ 6,515       $ 6,339      $ 5,882      $ 5,524      $ 5,088
Return on equity (average), excluding
   unrealized gains (losses) on investment
   securities..............................        (27.0%)        (3.2%)       10.2%        13.6%        16.0%
</TABLE>


                                       17

<PAGE>


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

Overview

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Net premiums  written and net premiums  earned  increased  $500 million (7%) and
$602 million (8%),  respectively,  in 2002.  Substantially  all of the growth in
premiums earned is  attributable to price increases  achieved in direct property
and casualty insurance.  Assumed reinsurance  premiums earned grew only slightly
($81  million  or 1%) during  2002 as the  positive  impacts  of higher  premium
pricing stemming from the recent hardening price environment  within the overall
property and casualty insurance/reinsurance industry were largely negated by our
actions  initiated in 2001 and 2002 to exit certain  reinsurance  product lines,
policies, contracts and specific customers for which, given the risk, acceptable
future  levels of profit did not seem  achievable.  Ceded  reinsurance  premiums
earned  also grew only  slightly  ($40  million  or 1%)  during  2002 due to the
unusually  high level of 2001  ceded  premium  activity  driven by the events of
September 11, 2001 being offset by similarly elevated 2002 ceded premium levels.
The high  2002  ceded  premiums  resulted  from the  combination  of  increasing
contingent premium cost estimates (including  reinstatement premiums) related to
prior year loss events and higher general retrocession costs.

Total revenues  increased only $85 million (1%) in 2002. The modest  increase in
2002  revenues  was  principally  driven by the  growth in net  premiums  earned
discussed  above being largely  offset by a decrease in  investment-related  and
other revenue components.  Net investment income decreased $130 million (11%) in
2002 principally due to the lower interest rate environment that existed in 2002
as compared to 2001. Net realized  gains on  investments  decreased $195 million
(45%) in 2002 due to reduced opportunity for gains within the overall investment
portfolio combined with higher levels of other-than-temporary impairment charges
recognized. The decrease in total investment-related revenues is consistent with
experience of the insurance industry as a whole. The $192 million (52%) decrease
in other  revenues in 2002 is primarily  attributable  to the lack of comparable
non-recurring  revenues generated in 2001 related to the favorable resolution of
issues involving an acquisition and certain non-trade receivables.

We incurred a loss before  cumulative  effect of change in accounting  principle
(see further  discussion of this accounting change in note 2 to the accompanying
consolidated  financial  statements) of $1.7 billion in 2002, compared to a loss
of $184 million in 2001. The significant 2002 net loss is primarily attributable
to the  recognition of  approximately  $3.7 billion ($2.4 billion  after-tax) of
adverse development related to prior year loss events,  including a $2.5 billion
($1.6 billion after-tax) charge recognized during the fourth quarter. Due to the
impacts of existing retrocession  coverages previously purchased,  the recording
of this adverse  development  both increased  incurred claims and claim expenses
and, to a lesser extent,  decreased  premium  revenues  (principally  because of
higher levels of contingent ceded premiums following these reserve adjustments).

There is a high  degree of  uncertainty  inherent in the  estimates  of ultimate
losses  underlying  the  liability for unpaid  claims and claim  expenses.  This
inherent   uncertainty  is  particularly   significant   for   liability-related
exposures,  including  latent claim  issues (such as asbestos and  environmental
related coverage  disputes) due to the extended period,  often many years,  that
transpires   between  a  loss  event,   receipt  of  related  claims  data  from
policyholders and/or primary insurers and ultimate settlement of the claim. This
situation is then further  exacerbated for  reinsurance  entities (as opposed to
primary  insurers)  due to  lags  in  receiving  current  claims  data.  Because
reinsurance  protection is often provided on an  "excess-of-loss"  basis whereby
the  reinsurer  is only  obligated  to pay  losses in excess of  pre-established
limits,  notification  is only required to be provided to the reinsurer when the
claim is assessed as having a reasonable  possibility  of exceeding  the primary
insurer's retention  thresholds.  This notification can often be years after the
loss event was initially reported to the primary insurer.

We continually  update loss estimates using both  quantitative  information from
our reserving  actuaries and qualitative  information from other sources.  While
detailed  analysis  is  performed  on a  quarterly  basis to assess the  overall
adequacy  of  recorded  claim  reserves,  a  more  comprehensive  evaluation  is
undertaken on an annual basis.  Consistent with historical practices,  this more
comprehensive  review was completed during the fourth quarter of 2002 using both
reported and paid claims  activity as of September  30. This more  comprehensive
review was performed on all major  reserve  segments,  with specific  additional
emphasis  focused on those  lines of business in which  recent  reported  claims
activity  differed  significantly  from  anticipated  levels.

                                       18
<PAGE>

The  liability  for claims and claim  expenses  includes  two  components:  case
reserves for reported  claims and IBNR reserves  (incurred but not reported) for
unreported  claims that are estimated to have  occurred  prior to the end of the
respective  accounting  period.  Case reserves are  established  by  experienced
professionals   from  our  claims  teams  based  on   case-specific   facts  and
circumstances  and  are  updated  continually  as  further  information  becomes
available.  Determining  required IBNR reserves is a more complex and often more
subjective  process involving  qualified  actuaries familiar with the underlying
exposures in the portfolio.

The  methodology we employ in  establishing  IBNR reserves for a given reserving
segment  consists of a combination  of the use of expected loss ratios  ("ELRs")
and loss  development  factor  based  methodologies  ("LDFs").  The  ELRs,  when
multiplied  by  earned  premiums,  generate  an  expected  ultimate  loss  for a
portfolio of business. For the most recent underwriting year, ELRs initially are
established  jointly by the reserving and  underwriting  teams. The underwriting
teams are comprised of professional underwriters and pricing actuaries. The ELRs
reflect  recent  years'  underwriting  results,  adjusted  for known  changes in
pricing, loss trends,  contract terms and conditions and other factors that will
likely influence actual  underwriting  results achieved (using both quantitative
and subjective  analysis).  As new information  becomes available regarding loss
trends,  pricing levels, and other factors that influence  underwriting results,
ELRs for prior periods are reviewed jointly by underwriting,  pricing actuaries,
reserving   actuaries,   and  selected  business  leaders,   and  revised  where
appropriate.

The  reserving  actuaries  select loss  development  factors based on prior year
claim experience.  The selected loss development factors are used to extrapolate
future loss  development in order to generate  ultimate loss estimates driven by
actual loss experience. While the LDF methods are statistically based, they also
incorporate subjective interpretations of the underlying claim trends.

The LDF-based approach is generally viewed as preferable once an acceptable base
of observable loss activity is available.  Accordingly, for more recent/immature
experience periods, the ELR-based approach is generally more heavily relied upon
due to the  lack of  historical  loss  data on  which  to  perform  the LDF loss
projections. As the experience period matures (i.e., more data becomes available
over time), the weights given to the ELRs are generally shifted to the LDF-based
loss projections.

We apply the ELR and LDF reserving  approaches to over 300 individual  reserving
segments,  each possessing unique actuarial development trends.  However,  these
300  reserving  segments can generally be broadly  assigned to  property-related
exposures or liability-related  exposures.  For property-related  exposures, the
insured "loss event" is normally  readily  apparent (e.g.,  losses due to fires,
windstorms or vehicle  accidents) and the related claims are generally  received
within a relatively short period  following such event.  Property claims involve
relatively  infrequent  disputes as to coverage or determination of damages but,
in such an event,  the disputes are normally  fully  settled  within a few years
following the underlying event. As a result,  the migration within our reserving
process from  reliance on ELRs to the more claims  driven LDF  approach  happens
quite  quickly.  Compared  to  property-related   exposures,   liability-related
exposures  are  often  significantly  more  complicated  and  routinely  involve
situations in which claims are  identified  and  submitted  many years after the
occurrence of the insured  "loss event" giving rise to such claims.  As would be
expected, these types of claims also involve a higher incidence of dispute as to
coverage,  interpretation of contract wording and fair compensation for damages.
Consequently,  it generally  takes a number of years before a sufficient base of
reported  claims  experience  develops  in order to  support  reliable  LDF loss
projections.  Accordingly,  we rely on ELRs within the  reserving  process  much
longer for liability-related exposures than for property-related exposures.

The  above-described  reserving  approach  provides a preliminary view as to the
range of indicated  changes in estimates  of ultimate  losses and the  resulting
impact on recorded claim-related reserves.  Considerable effort is then expended
by management  (including  business general management and constituents from our
underwriting,  pricing actuaries, reserving actuaries, claims and finance teams)
to fully  understand  the  preliminary  view,  including  changes in  underlying
methodologies and assumptions. This includes assessing the relative weight given
to emerging claim trends  resulting from recent business process changes in such
areas as  underwriting  standards,  pricing,  terms and  conditions  and  claims
handling.  Based on this  analysis,  we select a "best  estimate"  of  remaining
liability--within  the range of reasonably possible loss scenarios--to record in
the financial statements.  In making this determination,  we consider both (1) a
balance  sheet  perspective--i.e.,   that  the  recorded  reserves  represent  a
reasonable  estimate of the remaining liability for events occurring through the
balance  sheet  date and (2) an  income  statement  perspective--i.e.,  that the
reported operating results reasonably  reflect  information  obtained during the
current  reporting  period.

                                       19
<PAGE>

Higher than  anticipated  levels of reported claims  activity,  particularly for
liability-related  exposures  underwritten  in 1997 through 2001,  combined with
updated pricing and underwriting  metrics,  caused us to both (1) accelerate the
migration  from  an  ELR  to  an  LDF  based  reserving   approach  for  certain
liability-related  reserving  segments and (2) update ELRs  assigned to the more
recent  accident/underwriting years in response to the reported claims activity.
As a result of these  changes,  we concluded  that our best estimate of ultimate
losses  was  higher in the range of  reasonably  possible  loss  scenarios  than
previously estimated. Accordingly, we recognized a fourth quarter pre-tax charge
of  approximately  $2.5  billion to  increase  recorded  reserves to reflect the
revised indications of remaining liability.  The significant  components of this
adverse  development  included  hospital  medical  malpractice  ($300  million),
product  liability  ($300  million),   professional  liability  ($250  million),
umbrella  liability  ($200  million),   workers   compensation  ($200  million),
individual  liability  ($150  million)  and  asbestos-related   exposures  ($150
million). With amounts recognized in previous quarters of 2002, our overall 2002
pre-tax charge for adverse  development  amounted to approximately $3.7 billion.
Insurance loss  provisions are based on the best available  estimates at a given
time.  As  described  on page 29 under the caption  "Insurance  Liabilities  and
Reserves," these estimates will be adjusted in the future as required.

We have continued our rigorous commitment to improved  underwriting  initiatives
aimed at ensuring consistent and diligent underwriting  standards are applied to
all risks.  Throughout  2002, we have been  disciplined in rejecting  risks that
either fail to meet the established  standards of price or terms and conditions,
or involve areas for which sufficient historical data does not exist to evaluate
the risk adequately.  For risks that pass our criteria, we have sought to retain
or even judiciously expand our business. On the other hand, we have curtailed or
exited  business in  particular  property and casualty  channels  when  expected
returns do not appear to justify the risks.  Incorporated into these evaluations
are realistic expectations of investment returns based on the current investment
environment  (which  are lower  than  those  achieved  in recent  years) and the
understanding  that greater levels of  underwriting  profits will be required in
order to meet desired levels of profitability in the foreseeable future.

In addition to the underwriting results discussed above, 2002 reported operating
results  as  compared  to 2001 were also  impacted  by (1) the  January  1, 2002
implementation of SFAS 142, Goodwill and Other Intangible Assets, which resulted
in goodwill no longer being  amortized (2001  amortization  totaled $86 million,
$70 million  after-tax) and (2) a general  increase in other operating costs and
expenses.  In addition,  income tax benefits  partially  offset the  significant
pre-tax operating loss generated in 2002. Such recorded tax benefits include the
impact of us holding a significant  portion of our overall investment  portfolio
in securities that are substantially exempt from U.S taxation.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net premiums written and net premiums earned decreased $799 million (or 10%) and
$816 million (also 10%), respectively, in 2001. The majority of this decrease is
attributable to the $698 million of premiums ceded in connection with the events
of September 11, 2001 as discussed below. The remaining  decrease in premiums is
attributable  to (1) the decision to exit certain lines of business and customer
relationships as part of a reunderwriting  initiative undertaken in 2001 and (2)
additional ceded premiums  resulting from claims made on prior year retrocession
coverages in place as a result of the adverse  development  on prior year losses
recognized  in 2001,  somewhat  offset by general  growth in premiums due to the
combination  of recent  hardening  of pricing  within the overall  property  and
casualty  insurance/reinsurance  industry and a focus on growth  within  certain
niche markets.

Excluding the decrease in net premiums earned,  the remaining revenue categories
decreased  $124 million,  principally  as a result of lower levels of investment
income  resulting  from the  general  decline  in  interest  rates in 2001 and a
reduction in net realized gains on  investments,  somewhat offset by an increase
in other revenues.

We incurred a loss before  cumulative  effect of change in accounting  principle
(see further  discussion of this accounting change in note 2 to the accompanying
consolidated  financial  statements)  of $184  million in 2001,  as  compared to
earnings of $581 million in 2000. Operating results for 2001 as compared to 2000
were adversely  impacted by approximately  $575 million related to the insurance
losses  arising  from the events of  September  11,  2001.  This  amount,  which
primarily  resulted  from  contingent  premium  payments  contained  in  certain
retrocession  agreements,  comprises $698 million recorded as a reduction in net
premiums earned,  and $78 million reflecting  additional claims,  claim expenses
and policy benefits,  partially offset by $201 million reflecting a reduction in
insurance  acquisition  costs.  The  gross  losses  arising  from the  events of
September 11, 2001 (estimated to be $3.3 billion) relate to underlying insurance
policies  and  reinsurance   contracts   providing  general  property,   general
liability,  aviation,  business interruption,  workers compensation and life and
health-related  coverages.  Historical  experience related to large catastrophic
events has shown that a broad range of total  insurance  industry loss estimates
often  exists  following  such an event  and it is not  unusual  for there to be
significant  subsequent  revisions  in such  estimates.  Our  best  estimate  of

                                       20
<PAGE>

existing  net  liability,   net  of  estimated   recoveries  under  retrocession
arrangements,  has not changed significantly from our initial estimate.  Further
information  regarding  potential  litigation  associated  with  the  events  of
September  11,  2001  is  discussed  in note  13 to the  consolidated  financial
statements.

Our retrocession  program  includes  aggregate excess of loss coverages in which
accident   year  losses   exceeding   a  specified   loss  ratio  are  ceded  to
retrocessionaires.  These contracts also contain  contingent  premium provisions
whereby we are required to cede additional premiums equal to a specified portion
of the covered  losses.  As described in more detail in the section that follows
titled "Aggregate  Excess-of-Loss Program," the accident year losses incurred in
2001,  primarily as a result of the insurance  losses arising from the events of
September 11, 2001, exceeded the specified loss ratio and, accordingly, accruals
for reinsurance  recoverables  and ceded premium  payables were reflected in the
accompanying  consolidated  financial statements in accordance with the terms of
the underlying retrocession contracts.  The associated reinsurance  recoverables
will be collected  when the  underlying  paid losses exceed the  specified  loss
ratios.  Substantially  all of our  retrocessionaires  are large,  highly  rated
reinsurance  entities or members of similarly rated reinsurance  groups. At this
time, we do not anticipate that any significant portion of estimated  recoveries
will be uncollectible.

Operating  results  in  2001  were  also  adversely  affected  by the  continued
deterioration   of  underwriting   results,   reflecting   higher  property  and
casualty-related losses (principally as a result of adverse development relating
to  prior-year  loss  events) and the  continued  effects of low premiums in the
property and casualty  insurance/reinsurance  industry in recent  years.  As our
underwriting  results  in 2001,  typical  of the global  property  and  casualty
industry,  were  realized,  we began  underwriting  initiatives  that  increased
premium prices for given levels of coverage.  These  initiatives  resulted in us
reconsidering and clarifying the product lines, policies, contracts and specific
customers  for which,  given the risk,  acceptable  future levels of profit seem
achievable.  For these businesses,  we have sought to retain or even expand such
business. On the other hand, we have identified particular property and casualty
business  channels  from which  returns do not appear to justify the risks.  For
these channels, new business will be significantly curtailed or exited.

The  majority of the adverse  development  in 2001  related to higher  projected
ultimate losses for liability  coverages,  especially in the hospital liability,
nonstandard  automobile  (automobile  insurance extended to higher-risk drivers)
and commercial general liability lines of business.

Income tax benefits  partially  offset the  significant  pre-tax  operating loss
generated in 2001. Such recorded tax benefits  include the impact of our holding
a significant portion of the overall investment portfolio in securities that are
substantially  exempt from U.S.  taxation and the treatment as a purchase  price
adjustment for tax of certain amounts  received from the seller as resolution of
issues in a previous acquisition.

Aggregate Excess-of-Loss Program

The  ceding  of a  portion  of  the  risks  underwritten  by our  insurance  and
reinsurance businesses to other insurers and reinsurers--commonly referred to as
retrocession--is  an integral part of our overall risk management  program.  Our
coordinated retrocession program ranges from the ceding of individual risks that
we are not  prepared  to  accept  in part or whole;  to  portfolio  arrangements
designed to address  concentrations  of  specified  risks above our  agreed-upon
retention thresholds;  to aggregate excess-of-loss treaties principally designed
to reduce company-wide  volatility associated with large unanticipated insurance
events.

During each of the years in the  three-year  period ended  December 31, 2002, we
entered into aggregate  excess-of-loss  reinsurance  treaties providing coverage
when  company-wide  accident  year  loss  ratios  exceed  the  attachment  point
specified in the respective contracts.  In general, the terms of these aggregate
treaties  require  the  payment of an initial  premium  to our  reinsurers  upon
inception of the contract. On these contracts, we also pay additional contingent
premiums  when we incur  losses that are  subject to recovery  under the treaty.
Alternatively,  certain contracts allow for the required  additional  contingent
premiums to be paid to our reinsurers  (plus  financing  charges) when we settle
the related losses and loss expenses (often many years after the incurred date).
Other  than the  referenced  contingent  premiums  paid or accrued at the time a
claim for recovery is recognized (plus financing  costs, if applicable),  we are
not obligated to pay any  additional  future  premiums  under the terms of these
aggregate  treaties.  The  total  financing  charges  related  to our  aggregate
excess-of-loss program for 2003 are estimated to be approximately $120 million.

                                       21

<PAGE>

During 1999 through  2001,  accident  year loss ratios  exceeded the  attachment
point  specified in our  aggregate  excess-of-loss  reinsurance  contracts  and,
accordingly,  we have accrued for the expected recovery on an undiscounted basis
(consistent with our establishment of the related undiscounted  reserves--a GAAP
requirement).  Additionally,  during each of the years 2002,  2001 and 2000, the
recognition of adverse development related to prior year loss events resulted in
additional  recoveries  being  accrued  under  the  aggregate  contracts.  As of
December  31,  2002,  the  coverage  under  the  1999,  2000 and 2001  aggregate
contracts has been substantially  exhausted.  No claim is currently  anticipated
with respect to the 2002 aggregate contract as the accident year losses and loss
expenses  recognized to date are less than the attachment point specified in the
2002  contracts.  The  impact  of  these  aggregate  contracts  on our  reported
operating results for 2002, 2001 and 2000 was as follows:
<TABLE>
<CAPTION>

                                                                         Year ended December 31,
                                                                 -----------------------------------------
(In millions)                                                       2002           2001           2000
                                                                 -----------   ------------   ------------

<S>                                                                <C>           <C>            <C>
Ceded written and earned premiums, net of ceding commission        $(364)        $ (723)        $ (671)
Additional ceded premiums representing finance charges on
   deferred premium payments                                        (143)          (115)             -
Ceded incurred losses and loss adjustment expenses                   336          1,490          1,084
                                                                 -----------   ------------   ------------
Net pre-tax (cost) benefit                                         $(171)        $  652         $  413
                                                                 ===========   ============   ============
</TABLE>

Our insurance  company  businesses  remain liable to their  policyholders if the
reinsurers they cede to are unable to meet their  contractual  obligations under
the applicable reinsurance  agreements.  To minimize our exposure to significant
losses from  reinsurance  insolvencies,  we  routinely  evaluate  the  financial
condition of our  reinsurers and monitor  concentrations  of credit risk arising
from similar geographic regions,  activities or economic  characteristics of the
reinsurers.  Of the $10.9 billion of  consolidated  reinsurance  recoverables at
December 31, 2002,  approximately 33% is due from 4 specific  retrocessionaires,
primarily in connection with our aggregate excess-of- loss retrocession program.
All of these  retrocessionaires  are large, highly rated reinsurance entities or
members  of  similarly  rated  reinsurance  groups.  At  this  time,  we do  not
anticipate that any  significant  portion of recorded  reinsurance  recoverables
will be uncollectible.

Domestic Property and Casualty Business
<TABLE>
<CAPTION>

                                                                             Year ended December 31,
                                                               -----------------------------------------------------
(In millions)                                                          2002              2001             2000
                                                               -----------------------------------------------------

<S>                                                                   <C>               <C>              <C>
Net premiums written......................................            $3,891            $3,687           $3,801
Net underwriting loss.....................................            (2,665)           (1,305)            (419)
Net investment income.....................................               458               530              606
Earnings (loss) before income taxes and cumulative
     effect of change in accounting principle.............            (2,036)             (586)             250
Net realized gains on investments.........................               219               268              128
Earnings (loss) before income taxes and cumulative
    effect of change in accounting principle, excluding
    net realized gains on investments.....................            (2,255)             (854)             122
GAAP ratios (1):
   GAAP claims and claim expense ratio....................             136.4%            102.2%            77.4%
   GAAP underwriting expense ratio........................              33.8%             33.1%            34.4%
                                                                       -----             -----            -----
   GAAP combined ratio....................................             170.2%            135.3%           111.8%
                                                                       =====             =====            =====
</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 businesses) 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  $204  million  or  6%  in  2002,   primarily
attributable to the positive impacts of higher premium pricing stemming from the
recent  hardening  price  environment  within the overall  property and casualty
insurance/reinsurance  industry.  This growth was  partially  negated by actions
initiated in 2001 and 2002 to exit certain  product lines,  policies,  contracts
and specific  customers for which,  given the risk,  acceptable future levels of
profit did not seem achievable.  Ceded  reinsurance  premiums written  decreased

                                     22
<PAGE>

only modestly  ($129 million or 10%) during 2002 due to the unusually high level
of 2001 ceded premium  activity driven by the events of September 11, 2001 being
largely offset by similarly  escalated 2002 ceded premium levels.  The high 2002
ceded premiums  written  resulted from the combination of increasing  contingent
premium cost estimates (including  reinstatement premiums) related to prior loss
events and higher general  retrocession  costs. Net premiums  written  decreased
$114 million or 3% in 2001, primarily attributable to (1) higher levels of ceded
losses under aggregate  excess-of-loss  retrocession programs (both current year
principally  as a result of the events of September 11, 2001 and prior years due
to continued  adverse  claim  development)  and (2) the decision to exit certain
lines  of  business  and  customer  relationships  as part  of a  reunderwriting
initiative undertaken in 2001, somewhat offset by general growth in premiums due
to the  combination of recent  hardening of pricing within the overall  property
and casualty insurance/reinsurance industry and a focus on growth within certain
niche markets.

Typically,  the  underwriting  performance of property and casualty  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 combined ratio lower than 100%
indicating  an  underwriting  profit  and a  combined  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 has a
positive impact on overall operating profitability.

The significant increase in the combined ratio in 2002 is primarily attributable
to the  recognition  of adverse  development  related to prior year loss events,
including a significant charge recognized during the fourth quarter.  Due to the
impacts of existing retrocession  coverages previously purchased,  the recording
of this adverse  development  both increased  incurred claims and claim expenses
and, to a lesser extent,  decreased  premium  revenues  (principally  because of
higher levels of contingent ceded premiums following these reserve adjustments).
The escalated combined ratio for 2001 is partially attributable to higher levels
of ceded premiums and incurred losses resulting from the events of September 11,
2001. Excluding this impact, the 2001 combined ratio would have been 126.6%. The
relatively  high combined  ratios in 2001 (excluding the impact of the events of
September  11,  2001) and, to a lesser  extent,  in 2000  primarily  reflect the
effects of  continued  insufficient  pricing  within the  overall  property  and
casualty  insurance/reinsurance industry in recent years and adverse development
on prior year recorded losses.  The majority of the adverse  development in 2001
related to higher projected ultimate losses for liability coverages,  especially
in the hospital liability, nonstandard automobile (automobile insurance extended
to higher-risk drivers) and commercial general liability lines of business.

The  reduction  in net  investment  income of $72 million  (14%) in 2002 and $76
million  (13%)  in  2001  is  primarily  due  to  the  declining  interest  rate
environment  experienced  in both 2002 and 2001.  The  decrease in net  realized
gains on investments in 2002 is  attributable  to reduced  opportunity for gains
within  the  overall  investment   portfolio  combined  with  higher  levels  of
other-than-temporary  impairment  charges  recognized.  The  decrease  in  total
investment-related  revenues is  consistent  with  experience  of the  insurance
industry as a whole.

Earnings  (loss)  before  income  taxes  and  cumulative  effect  of  change  in
accounting  principle,  excluding net realized gains on  investments,  decreased
$1.4  billion  in  2002,  primarily  attributable  to the  factors  driving  the
significant  increase in the  combined  ratio  discussed  above and, to a lesser
extent, a decrease in investment-related  income.  Earnings (loss) before income
taxes and  cumulative  effect of change in accounting  principle,  excluding net
realized  gains on  investments,  decreased  $976  million  in  2001,  primarily
attributable  to the increase in the combined ratio  (including the  significant
impact of the events of September  11, 2001) and the decrease in net  investment
income.

                                       23


<PAGE>

International Property and Casualty Business
<TABLE>
<CAPTION>

                                                                            Year ended December 31,
                                                               ---------------------------------------------------
(In millions)                                                        2002               2001             2000
                                                               ----------------- --------------- -----------------

<S>                                                                 <C>                <C>              <C>
Net premiums written......................................          $1,880             $1,864           $2,754
Net underwriting loss.....................................          (1,014)              (618)            (509)
Net investment income.....................................             222                303              347
Earnings (loss) before income taxes and cumulative
     effect of change in accounting principle.............            (818)              (140)             117
Net realized gains on investments.........................              15                112              297
Loss before income taxes and cumulative effect of
    change in accounting principle, excluding net
    realized gains on investments.........................            (833)              (252)            (180)
GAAP ratios (1):
   GAAP claims and claim expense ratio....................           120.4%             100.5%            91.6%
   GAAP underwriting expense ratio........................            33.8%              38.1%            26.4%
                                                                     -----              -----            -----
   GAAP combined ratio....................................           154.2%             138.6%           118.0%
                                                                     =====              =====            =====
</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 businesses) 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  only $16  million or 1% in 2002.  This modest
increase was primarily  attributable  to the positive  impacts of higher premium
pricing stemming from the recent hardening price environment  within the overall
property and casualty  insurance/reinsurance  industry being largely  negated by
actions  initiated in 2001 and 2002 to exit  certain  product  lines,  policies,
contracts and specific  customers for which,  given the risk,  acceptable future
levels of profit did not seem  achievable.  Ceded  reinsurance  premiums written
grew somewhat  during 2002 ($406 million or 36%) due to the unusually  high 2001
ceded  premium  activity  driven by the events of September  11, 2001 being more
than matched by elevated 2002 ceded premium levels. The high 2002 ceded premiums
written  resulted from the  combination  of increasing  contingent  premium cost
estimates  (including  reinstatement  premiums) related to prior loss events and
higher general  retrocession  costs. Net premiums written decreased $890 million
or 32% in 2001,  primarily  attributable  to (1) higher  levels of ceded  losses
under the aggregate excess-of-loss  retrocession program principally as a result
of the events of September  11, 2001 and (2) the decision to exit certain  lines
of business and customer  relationships as part of a  reunderwriting  initiative
undertaken  in 2001,  somewhat  offset by general  growth in premiums due to the
recent   hardening  of  pricing   within  the  overall   property  and  casualty
insurance/reinsurance industry.

Consistent with experience in the domestic property and casualty  business,  the
significant increase in the combined ratio in 2002 is primarily  attributable to
the  recognition  of adverse  development  related  to prior  year loss  events,
including a significant charge recognized during the fourth quarter.  Due to the
impacts of existing retrocession  coverages previously purchased,  the recording
of this adverse  development  both increased  incurred claims and claim expenses
and, to a lesser extent,  decreased  premium  revenues  (principally  because of
higher levels of contingent ceded premiums following these reserve adjustments).
The elevated combined ratio for 2001 is partially  attributable to higher levels
of ceded premiums and incurred losses resulting from the events of September 11,
2001. Excluding this impact, the 2001 combined ratio would have been 114.8%. The
relatively  high combined  ratios in 2001 (excluding the impact of the events of
September  11,  2001) and,  to a lesser  extent in 2000,  primarily  reflect the
effects of  continued  insufficient  pricing  within the  overall  property  and
casualty  insurance/reinsurance industry in recent years and adverse development
on prior year recorded  losses.  The increase in the combined ratio in 2000 also
includes  the impact of  significant  adverse  development  relating  to certain
European windstorms occurring late in 1999.

                                       24


<PAGE>

Life Reinsurance Business
<TABLE>
<CAPTION>
                                                                            Year ended December 31,
                                                                     --------------------------------------
(In millions)                                                            2002        2001         2000
                                                                     --------------------------------------

<S>                                                                      <C>        <C>          <C>
Revenues..................................................               $2,642     $2,466       $2,207
Earnings before income taxes and cumulative
     effect of change in accounting principle.............                   98        260          238
</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  $176  million or 7% in 2002 and $259  million or 12% in
2001. The revenue growth in 2002 was primarily related to the acquisition during
the year of a relatively  substantial  block of traditional life business in the
U.S.,  somewhat offset by a decrease in net realized gains on  investments.  The
increase  in  revenues  in 2001 was  primarily  attributable  to  growth  in the
international  traditional  life and health business  (principally in Europe and
Latin  America),  somewhat  offset  by a  decrease  in  net  realized  gains  on
investments.

Earnings  before  income  taxes and  cumulative  effect of change in  accounting
principle  decreased  $162  million  or 62% in  2002,  including  a $49  million
decrease in net realized gains on  investments.  Excluding net realized gains on
investments,  earnings  before income taxes and  cumulative  effect of change in
accounting   principle  decreased  $113  million  or  55%  in  2002,   primarily
attributable to increased claim activity in 2002 as compared to 2001with respect
to mortality and certain health-related  products.  Earnings before income taxes
and cumulative effect of change in accounting principle increased $22 million or
9% in  2001,  including  a  $41  million  decrease  in  net  realized  gains  on
investments. Excluding net realized gains on investments, earnings before income
taxes and  cumulative  effect of change in  accounting  principle  increased $63
million or 45% in 2001,  primarily  attributable  to the  increase  in  revenues
discussed  above  and  more  favorable  claim  experience  as  compared  to 2000
(particularly in the international individual disability line of business).

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 the receipt of sufficient funds from its insurance businesses.  The payment
of dividends by ERC, GE Re, Medical Protective and CORE Insurance are subject to
restrictions set forth in the insurance laws of Missouri,  Illinois, Indiana and
Vermont,  respectively,  as  well  as  other  restrictions.   Historically,  our
liquidity  requirements have been met by funds provided from operations and from
the  maturity and sales of  investments.  In the recent past (such as in 2002 in
response to the significant fourth quarter charge taken for adverse  development
and in 2001 in response to the events of September  11),  capital  contributions
from our ultimate  parent--GE  Company--have  been a liquidity source.  However,
there are no contractual  capital support agreements in place and,  accordingly,
there can be no assurances as to the level of any future capital contributions.

Cash flows from  operating  activities,  which  primarily  consists  of premiums
collected during the period (net of related acquisition costs) and payments made
for claims and claim expenses,  increased $2.1 billion in 2002. This increase is
primarily attributable to the relatively immediate positive cash impact stemming
from the  recent  hardening  premium  price  environment.  While  reported  2002
GAAP-basis  underwriting  results  were  significantly  depressed as compared to
2001, the majority of this was attributable to reserve strengthening actions for
liability-related  exposures underwritten in 1997-2001. The cash impact of these
actions  will be spread  out over a number  of future  years.  Cash  flows  from
operating activities increased $74 million in 2001, primarily  attributable to a
decrease in claim settlements  relative to the collection of premiums,  somewhat
offset  by  an  increase  in  reinsurance   recoverables   under  our  aggregate
excess-of-loss retrocession program.

Cash flows from investing  activities  decreased $2.1 billion in 2002, primarily
attributable to growth in net purchases of investment  securities as a result of
the increased  operating cash flows discussed  above.  Cash flows from investing
activities  decreased  $1.3  billion in 2001,  primarily  attributable  to a net
increase  in the  purchase  of  investment  securities  as a result  of the cash
inflows from higher  volumes of contract  deposits  within the life  reinsurance
operations and the capital  contributions  discussed below under cash flows from
financing activities.

Cash flows from financing  activities  increased $596 million in 2002, primarily
attributable  to an increase in the level of capital  contributions  received in

                                       25
<PAGE>

2002 ($1.8 billion) as compared to 2001 ($400  million),  partially  offset by a
decrease in the level of contract deposits within the life reinsurance  business
segment and a decrease in the level of short-term  borrowings  (including  those
involving  a  related  party  credit   facility).   The  $1.8  billion   capital
contribution  received in 2002 was made to replenish capital sufficient to cover
the after-tax  impact of the $2.5 billion  charge taken in the fourth quarter to
strengthen  prior year claim  reserves.  Cash  flows from  financing  activities
increased  $944  million  in 2001,  primarily  attributable  to an  increase  in
contract deposit  liabilities  resulting from growth within the life reinsurance
business  segment  and  capital  contributions  received  to  replenish  capital
sufficient  to cover losses  associated  with the events of September  11, 2001,
somewhat offset by a decrease in short-term borrowings.

In  connection  with  the 2002  $1.8  billion  capital  contribution  and  other
transactions,  we transferred our international property and casualty businesses
from  ERC  Life  to  GE  Investments,   Inc.   ("GEII"),   and  following  those
transactions, we own all the outstanding shares of Class C common stock of GEII.
The Class C stock is intended to reflect the value and the financial performance
of  the  transferred  businesses.  Because  GE  has  delegated  control  of  the
transferred  businesses to us, we continue to consolidate the financial  results
of those businesses with our results. Our Class C shares represent less than 20%
of the outstanding  common stock of GEII. The following table providees  summary
balance sheet information of the transferred businesses as of December 31, 2002:
<TABLE>
<CAPTION>


Assets                               (In millions)
------
<S>                                     <C>
Total investments                       $ 5,535
Reinsurance recoverables                  5,723
Premiums receivable                       2,360
Other assets                              3,150
                                        -------
                                        $16,768
                                        =======
</TABLE>
<TABLE>
<CAPTION>

Liabilities and Equity
----------------------
<S>                                     <C>
Claims and claim expenses               $10,901
Other liabilities                         3,428
Equity                                    2,439
                                        -------
                                        $16,768
                                        =======
</TABLE>


We have a one-year  $600  million  revolving  credit  agreement  with GE Capital
Services which enables us 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 is automatically extended for successive terms of one year each unless
terminated  in  accordance  with  terms  of  the  agreement.  The  total  amount
outstanding on this credit facility,  including  accrued interest  payable,  was
$190 million and $109 million as of December 31, 2002 and 2001, respectively.

During 2002,  certain  external  credit rating agencies  announced  actions with
respect to GE Global  Insurance and its  businesses.  Those rating agencies made
similar  announcements  with regard to other property and casualty insurance and
reinsurance  entities at about the same time.  A.M.  Best lowered its  financial
strength group rating for us from A++ (superior) to A+ (superior).  Debt ratings
for us affect $1.7 billion of outstanding debt. These ratings were also adjusted
negatively  in 2002,  but remained  investment  grade.  We do not believe  these
actions will materially affect our liquidity or capital resources or the ability
to write future business.

Off-Balance Sheet Arrangements

We have not utilized  forms of  off-balance  sheet  arrangements,  such as asset
securitizations, involving special purpose entities to facilitate improved share
owner returns and securities  transactions,  transfer  selected  credit risk, or
engage in  speculative  activities  and have not provided  financial  support to
special purpose entities under any liquidity or credit support agreements.

Investments

General.   We  follow  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 our
Board of Directors.  Our guidelines  specify  credit  quality and  concentration
limits with respect to both fixed maturity and equity securities.

                                       26
<PAGE>

In structuring  our fixed maturity  portfolios,  we consider the duration of our
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 portfolios are managed for total return
and performance is measured against equity benchmarks.

On a worldwide  basis,  based on data as of December 31, 2002,  we manage 23% of
our investments  internally.  GE Asset  Management  Incorporated,  an affiliate,
manages an  additional  58% of our  investments,  and the  balance is managed by
unaffiliated outside managers.

Investment results are summarized as follows:
<TABLE>
<CAPTION>

                                                                         Year ended December 31,
                                                     -----------------------------------------------------------------
(In millions)                                            2002         2001         2000         1999         1998
                                                     -----------------------------------------------------------------

<S>                                                    <C>          <C>          <C>          <C>          <C>
Average invested assets (at cost)...........           $24,487      $21,697      $21,197      $20,940      $18,794
Net investment income.......................             1,072        1,202        1,315        1,151          985
Net effective yield.........................               4.4%         5.5%         6.2%         5.5%         5.2%
Net realized gains on investments...........           $   241      $   436      $   522      $   699      $   432
Net unrealized gains on investment securities,
   before deferred income taxes.............               295           49          244           92        1,554
</TABLE>

The increase in net unrealized gains on investment  securities,  before deferred
income  taxes in 2002 is primarily  due to the effects of a general  decrease in
interest rates which occurred during the year.

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

Domestic Investment  Operations.  A substantial portion of our domestic property
and  casualty  investment  portfolios  are  invested  in  tax-exempt  state  and
municipal bonds,  which we believe provide the most attractive  after-tax yield.
Our domestic life  investment  portfolios  are largely  invested in taxable debt
securities.

Our 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,
                                                                   ---------------------------------------------------
                                                                       2002         2001          2002          2001
                                                                   ---------------------------------------------------

<S>                                                                    <C>          <C>           <C>           <C>
U.S. government and government agency securities............           1.5%         1.0%          2.0%          2.0%
Aaa.........................................................          34.3         40.5           2.5           2.1
Aa..........................................................          19.3         26.0          12.0           9.1
A...........................................................           8.2         12.0          27.8          29.3
Baa.........................................................           6.8          2.0          12.5          13.1
Ba..........................................................           0.7          0.5           1.3           1.1
Canadian securities.........................................           3.9          4.1          11.5          10.1
Mortgage-backed and other asset-backed securities...........          22.2         11.1          28.0          32.0
Other.......................................................           3.1          2.8           2.4           1.2
                                                                     -----        -----         -----         -----
   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.

Our emphasis on investment  quality is evidenced by the preceding  table,  which
indicates that the bonds in our investment  portfolios are principally  invested
in either U.S. government and government agency securities or issues rated "Baa"
or above.  The  Canadian  securities  held are  similar  in quality to the other
securities held in our domestic portfolio. Fixed maturity securities held in our
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  securities.  Mortgage-backed  and  other  asset-backed
securities  in our  investment  portfolio  were  principally  issued by  Federal

                                       27

<PAGE>
agencies.  The  majority  of the  balance of other  securities  held in both the
domestic   property  and  casualty  and  domestic  life   portfolios   represent
investments  in non-rated debt  securities.  We do 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  our
international  operations  (other  than  certain  equity  portfolios,  which are
managed  by  outside  managers)  are  managed  by the  GE  Frankona  Re  Group's
investment  personnel  based in Munich,  within  guidelines  established  by the
management  of the GE Frankona Re Group and under the  overall  supervision  and
review  of  ERC's  investment  department.  The  principal  objective  of the GE
Frankona Re 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 GE Frankona Re Group's reinsurance liabilities. The GE Frankona
Re Group's investment portfolios are geographically diversified with investments
principally from the major European markets and the United States.

As of  December  31,  2002,  the  fair  value  of the  GE  Frankona  Re  Group's
investments  totaled $7,093  million,  an increase of $496 million from December
31, 2001. The composition of GE Frankona Re Group's investments is summarized as
follows:
<TABLE>
<CAPTION>

                                                                 December 31,
                                                            --------------------
                                                              2002         2001
                                                            --------------------

<S>                                                           <C>          <C>
   Fixed maturity securities............................      87.3%        89.1%
   Equity securities....................................       7.6          8.1
   Other invested assets................................       5.1          2.8
                                                             -----        -----

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

Most fixed  maturity  securities  within the GE Frankona  Re Group's  investment
portfolios  have a term of 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 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

Interest rate and currency risk  management is important in our normal  business
activities.  We use  derivative  financial  instruments to mitigate or eliminate
certain  financial  and  market  risks,  including  those  related to changes in
interest rates and currency  exchange  rates.  As a matter of policy,  we do not
engage in derivatives  trading,  derivatives  market-making or other speculative
activities.  More detailed information regarding these financial instruments, as
well as strategies and policies for their use, is contained in notes 2 and 14 to
the consolidated financial statements.

We manage our exposure to currency  principally  by matching  investment  assets
with the underlying insurance/reinsurance liabilities. 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.  We
also hedge our currency  risk by  utilizing  cross  currency  swaps and currency
forwards.  We manage our  exposure to  interest  rates  principally  by matching
floating  rate  liabilities  with  corresponding  floating  rate  assets  and by
matching fixed rate liabilities with corresponding fixed rate assets. Certain of
the products  reinsured within the life segment include fixed rate interest rate
features that are matched with fixed rate investments of a similar duration.

On a limited basis,  and as part of ongoing customer  activities,  we use equity
options to minimize  exposure to movements in equity  markets that have a direct
correlation  with certain of its  reinsurance  products.  Additionally,  we have
entered  into a limited  number of credit  default  swaps to lessen  exposure on
certain financial guarantee reinsurance business.



                                       28
<PAGE>

Substantially   all  derivative   transactions  are  executed  by  our  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 we are exposed to credit risk
that the counterparty may not be able to comply with the terms and conditions of
the  contracts,  we use only highly  rated  institutions  as  counterparties  to
derivative transactions.

The U.S.  Securities and Exchange  Commission  requires that registrants provide
information  about  potential  effects of changes in interest rates and currency
exchange rates.  The following  discussion is based on so-called  "shock tests,"
which  model  effects of  interest  rate and  currency  shifts on the  reporting
company.  While the  following  results of shock  tests for  changes in interest
rates and currency exchange rates 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,  with all else constant,  we estimate
     that such a decrease,  including  repricing  in the  securities  portfolio,
     would reduce our 2003 net earnings  based on year-end 2002  positions by an
     insignificant  amount.  Based on positions at year-end  2001, the pro forma
     effect on 2002 net  earnings of such a decrease in interest  rates was also
     estimated to be an insignificant amount.

     Our  geographic  distribution  of  operations  is  diverse.  One  means  of
     assessing  exposure  to  changes  in  currency  exchange  rates is to model
     effects on reported  earnings  using a  sensitivity  analysis.  We analyzed
     year-end  2002  consolidated   currency   exposures,   including  financial
     instruments  designated  and  effective as hedges,  to identify  assets and
     liabilities denominated in other than their relevant functional currencies.
     Net unhedged  exposures in each  currency  were then  remeasured  generally
     assuming  a  10  percent  decrease  (substantially  greater  decreases  for
     hyperinflationary  currencies) in currency exchange rates compared with the
     U.S.  dollar.  Under this model,  we estimated at year-end 2002 that such a
     decrease would have an insignificant effect on 2003 earnings.

Cyclicality

The  property  and  casualty  reinsurance  industry  has been  highly  cyclical.
Underwriting  results of primary property and casualty  insurance  companies and
prevailing  general  economic  and  reinsurance   premium  rates   significantly
influences  demand for reinsurance.  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 we  believe  to be the
propensity  of  courts  to grant  large  awards,  natural  disasters  and  other
catastrophic events (such as hurricanes, windstorms,  earthquakes, floods, fires
and,  as  experienced  in 2001,  intentional  events  such as  terrorist  acts),
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.

Effects of Inflation

Our  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, our
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. We use both insurance
industry  data and  government  economic  indices in  estimating  the effects of
inflation on claims and claim expense  reserves and  reinsurance  premium rates.
However,  until claims are ultimately  settled,  the full effect of inflation on
our results cannot be known.

Critical Accounting Policies

Accounting  policies  discussed in this section are those that we consider to be
critical  to  an  understanding  of  our  financial   statements  because  their
application  places the most  significant  demands  on our  ability to judge the
effect of  inherently  uncertain  matters on our financial  results.  For all of
these  policies,  we  caution  that  future  events  rarely  develop  exactly as
forecast, and the best estimates routinely require adjustment.

Insurance liabilities and reserves differ for short and long-duration  insurance
contracts.  Short-duration  contracts such as property and casualty policies are
accounted for based on actuarial  estimates of losses  inherent in that period's
claims,   including  losses  for  which  claims  have  not  yet  been  reported.
Short-duration  contract  loss  estimates  rely  on  actuarial  observations  of
ultimate  loss  experience  for  similar  historical   events.   Measurement  of
long-duration  insurance  liabilities  (such as term and  whole  life  insurance
policies)  also  is  based  on  approved   actuarial   techniques  that  include

                                       29
<PAGE>

assumptions   about   mortality,   lapse  rates  and  future  yield  on  related
investments.  Historical  insurance industry experience indicates that a greater
degree of inherent variability exists in assessing the ultimate amount of losses
under   short-duration   property  and  casualty   contracts   than  exists  for
long-duration  mortality  exposures.  This inherent  variability is particularly
significant  for  liability-related  exposures,  including  latent claims issues
(such as asbestos and environmental  related coverage disputes),  because of the
extended period of time--often many years--that  transpires between when a given
claim  event  occurs  and the  ultimate  full  settlement  of such  claim.  This
situation is then further  exacerbated for  reinsurance  entities (as opposed to
primary  insurers) due to coverage often being  provided on an  "excess-of-loss"
basis and the resulting lags in receiving  current claims data.  Benefit-related
insurance  liabilities  totaled $31.8  billion at year-end  2002. Of that total,
approximately  $25.2 billion  ($16.1  billion net of  reinsurance  recoverables)
related to unpaid claims and claims  adjustment  expenses  under  short-duration
insurance contracts.

We  continually  evaluate the potential for changes in loss  estimates  with the
support  of  qualified   reserving  actuaries  and  use  the  results  of  these
evaluations  both  to  adjust  recorded  reserves  and  to  proactively   modify
underwriting  criteria and product  offerings.  For actuarial analysis purposes,
reported and paid claims  activity is  segregated  into more than 300  reserving
segments,  each having  differing  historical  settlement  trends.  A variety of
actuarial  methodologies  are then  applied to the  underlying  data for each of
these  reserving  segments  in  arriving at an  estimated  range of  "reasonably
possible" loss scenarios. Factors such as line of business, length of historical
settlement pattern,  recent changes in underwriting standards and unusual trends
in reported claims activity will generally affect which actuarial  methodologies
are given  more  weight for  purposes  of  determining  the "best  estimate"  of
ultimate losses in a particular reserving segment.

As discussed on pages 18-20, in recent periods and continuing  throughout  2002,
the level of  reported  claims  activity  related  to prior  year  loss  events,
particularly for liability-related  exposures underwritten in 1997 through 2001,
has been  significantly  higher than  anticipated.  Full  consideration of these
trends was  incorporated  into a  comprehensive  reserve study  completed in the
fourth  quarter  of 2002.  Insurance  reserves,  by their  very  nature,  do not
represent an exact  calculation  of  liability  and,  while we have  established
reserves equal to the current best estimate of ultimate losses,  there remains a
high likelihood that further  changes in such loss  estimates--either  upward or
downward--will  occur  in  the  future.   Further  information  about  insurance
liabilities is provided in note 6.

Impairment of  investment  securities  results in a charge to operations  when a
market  decline  below cost is  considered  other than  temporary.  We regularly
review each  investment  security for impairment  based on criteria that include
the extent to which cost  exceeds  market  value,  the  duration  of that market
decline and the financial health of and specific  prospects for the issuer.  Our
investment  securities  amounted  to  $26.4  billion  at  year-end  2002.  Gross
unrealized  gains and losses  included in that carrying  amount  related to debt
securities were $549 million and $142 million,  respectively.  Gross  unrealized
gains  and  losses  on  equity  securities  were $9  million  and $121  million,
respectively.  Of securities with unrealized  losses at year-end 2002, and based
on application  of our  accounting  policy for  impairment,  approximately  $130
million  of  portfolio  value,  including  approximately  $14  million  from the
telecommunications and cable industries, is at risk of being charged to earnings
in 2003. We actively  perform  comprehensive  market  research,  monitor  market
conditions  and  segment  our  investments  by credit  risk in order to minimize
impairment risks.  Further information is provided in notes 2 and 4 and on pages
26-28, which discusses the investment securities portfolio.

Losses on  uncollectible  premium  receivables and reinsurance  recoverables are
recognized  when  they  are  incurred.   Measurement  of  such  losses  requires
consideration  of historical loss  experience,  including the need to adjust for
current  conditions,  and  judgments  about the  probable  effects  of  relevant
observable  data,  including  present  economic  conditions  such as delinquency
rates, financial health of specific customers, collateral value (such as letters
of credit and funds held  balances) and legal  right-of-offset  of related claim
liabilities.  Exposure  to  losses  on  uncollectible  premium  receivables  and
reinsurance  recoverables  at year-end  2002 was  approximately  $15.3  billion,
against  which an  allowance  for losses of $181 million was  provided.  Further
information  is  provided  in  notes 2, 6 and 10 to the  consolidated  financial
statements.  While losses depend to a large degree on future economic conditions
(including  the  impact  of  future  claims  experience),  we do not  anticipate
significant receivable write-offs in 2003.

Projections  of  future  cash  flows  are  required  in  order  to both  perform
impairment  testing for certain  asset  categories  and to properly  account for
reinsurance  arrangements.  The  more  significant  asset  categories  requiring
routine impairment testing using a cash flow based methodology  include deferred
insurance  acquisition costs,  present value of future profits and goodwill.  At
year-end 2002, these asset categories  totaled $3.7 billion.  While any required

                                       30
<PAGE>

future  impairment  actions  will  depend to a large  degree on future  economic
conditions  (including the impact of future claims  experience  and, to a lesser
extent,  investment yields), we do not anticipate significant impairment charges
in 2003.  The  reinsurance-specific  requirements  necessitating  projections of
future cash flows  include  "risk  transfer"  testing for both assumed and ceded
business at contract  inception  and,  for certain  ceded  contracts  containing
retrocessionaire limits expressed in terms of an "economic loss," throughout the
life of the underlying contract. At year-end 2002, approximately $1.3 billion of
reinsurance  recoverables  related to contracts containing economic loss limits.
As part of our continuing  updates of recorded  liabilities for claims and claim
expenses,  we also  periodically  reassess  the  expected  pay-out  patterns and
resulting cash flow  projections and make indicated  adjustments to the recorded
reinsurance  recoverables.  We do not anticipate significant  adjustments during
2003.

Other loss  contingencies are recorded as liabilities when it is probable that a
liability has been incurred and the amount of the loss is reasonably  estimable.
Disclosure is required when there is a reasonable  possibility that the ultimate
loss will  exceed  the  recorded  provision.  Contingent  liabilities  are often
resolved over long time periods. Estimating probable losses requires analysis of
multiple  forecasts that often depend on judgments  about  potential  actions by
third parties such as regulators.

Other  significant   accounting  policies,  not  involving  the  same  level  of
measurement  uncertainties as those discussed above, are nevertheless  important
to an  understanding  of the financial  statements.  Policies related to revenue
recognition,  financial  instruments and business combinations require difficult
judgments  on complex  matters  that are often  subject to  multiple  sources of
authoritative  guidance.  Certain of these  matters are among  topics  currently
under reexamination by accounting standards setters and regulators.  Although no
specific  conclusions reached by these standard setters appear likely to cause a
material  change in our accounting  policies,  outcomes cannot be predicted with
confidence.  Also see note 2, Summary of Significant Accounting Policies,  which
discusses  accounting  policies that must be selected when there are  acceptable
alternatives.

New Accounting Standards--Currently Effective

The  Financial  Accounting  Standards  Board's  ("FASB")  Statement of Financial
Accounting  Standards  ("SFAS")  142,  Goodwill  and  Other  Intangible  Assets,
generally became  effective for us on January 1, 2002. Under SFAS 142,  goodwill
is no  longer  amortized  but is  tested  for  impairment  using  a  fair  value
methodology.  We stopped  amortizing  goodwill  effective  January 1, 2002.  The
result of our  applying  the new rules as of  January 1,  2002,  resulted  in no
impairment charge.

The cumulative effect of accounting  change in 2001 related to the adoption,  as
of January 1, 2001,  of SFAS 133,  Accounting  for  Derivative  Instruments  and
Hedging  Activities,  as  amended.  Adoption  of  this  standard  resulted  in a
one-time, non-cash charge that reduced 2001 earnings by $11 million.

New Accounting Standards--Not Yet Effective

In January 2003, the FASB issued Interpretation No. ("FIN") 46, Consolidation of
Variable Interest  Entities,  which we intend to adopt on July 1, 2003. FIN 46's
consolidation  criteria are based on analysis of risks and rewards, not control,
and  represent a significant  and complex  modification  of previous  accounting
principles.  FIN  46  represents  an  accounting  change,  not a  change  in the
underlying  economics  of asset  sales.  Under its  provisions,  certain  assets
previously sold to special purpose entities  (SPE's) could be consolidated  and,
if  consolidated,  any assets and  liabilities now on the books related to those
SPE's would be removed.  Because we have not traditionally  engaged in the types
of  securitization  vehicles  within  the  scope  of FIN 46,  we do not  believe
adoption of the interpretation will impact our future results.

The Derivatives Implementation Group ("DIG") of the FASB is currently discussing
the accounting treatment under SFAS 133 for modified coinsurance arrangements in
which funds are withheld by the ceding insurer. In 2003, the DIG might determine
that these types of  arrangements  include an embedded  derivative  that must be
bifurcated  from the host  instrument.  This issue would also be  applicable  to
other funds withheld  arrangements  that incorporate  credit risk exposures that
are unrelated or only partially related to the creditworthiness of the issuer of
that instrument. We are currently evaluating the effect that this interpretation
may have upon our operations, and at this time, we do not believe it will have a
material negative consequence on future operating results.

                                       31

<PAGE>

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

Information  about  potential  effects of changes in interest rates and currency
exchange on us is discussed on pages 28-29.


Item 8.  Financial Statements and Supplementary Data.

Our  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


Item 12.    Security Ownership of Certain Beneficial Owners and Management.

Omitted


Item 13.    Certain Relationships and Related Transactions.

Omitted


Item 14.   Controls and Procedures


Within the 90-day period prior to the filing of this report,  we,  including the
Chief Executive Officer and Chief Financial Officer,  conducted an evaluation of
the  effectiveness  of the  design and  operation  of the  company's  disclosure
controls and  procedures  as defined in Exchange Act Rule 13a-14.  Based on that
evaluation,  the  Chief  Executive  Officer  and  the  Chief  Financial  Officer
concluded that the company's  disclosure  controls and procedures were effective
as of the date of that  evaluation.  There have been no  significant  changes in
internal  controls,  or in factors  that  could  significantly  affect  internal
controls, subsequent to the date the Chief Executive Officer and Chief Financial
Officer completed their evaluation.

                                       32

<PAGE>


                                     PART IV


Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

   (a)1.  Financial Statements and Schedules.

          The consolidated financial statements filed as part of this report are
          listed in the Index to Consolidated Financial Statements and Financial
          Statement Schedules (page 34).

   (a)2.  Financial Statement Schedules.

          The consolidated  financial  statement schedules filed as part of this
          report are listed in the Index to  Consolidated  Financial  Statements
          and Financial Statement Schedules (page 34).


   (a)3.  Listing of Exhibits.

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

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

          10.1      Whole   Account   Aggregate   Excess of  Loss   Retrocession
                    Reinsurance   Agreement,   between   Employers   Reinsurance
                    Corporation,   GE  Reinsurance   Corporation,   GE  Frankona
                    Ruckversicherungs-Aktiengesellschaft  and XL Re Ltd.,  dated
                    January 1, 2002 (material  omitted and separately filed with
                    the Securities and Exchange Commission pursuant to a request
                    for confidential treatment).

          10.2      Whole   Account   Aggregate   Excess  of  Loss  Retrocession
                    Reinsurance   Agreement,   between   Employers   Reinsurance
                    Corporation,   GE  Reinsurance   Corporation,   GE  Frankona
                    Ruckversicherungs-Aktiengesellschaft and Tokio Millennium Re
                    Ltd., dated January 1, 2002 (material omitted and separately
                    filed with the Securities and Exchange  Commission  pursuant
                    to a request for confidential treatment).

          10.3      Whole   Account   Aggregate  Excess  of  Loss   Retrocession
                    Reinsurance   Agreement,   between   Employers   Reinsurance
                    Corporation,   GE  Reinsurance   Corporation,   GE  Frankona
                    Ruckversicherungs-Aktiengesellschaft     and    Underwriters
                    Reinsurance  Company  (Barbados) Inc., dated January 1, 2002
                    (material  omitted and separately  filed with the Securities
                    and   Exchange   Commission   pursuant   to  a  request  for
                    confidential treatment).

             12     Computation of ratio of earnings to fixed charges.


     (b)1.Reports on Form 8-K.

          A current  report on Form 8-K was filed on November  21,  2002,  under
          Item 5. setting forth,  among other things,  increased  reserves at GE
          Global Insurance.

                                       33

<PAGE>



                                   ITEM 15(a)

                     GE Global Insurance Holding Corporation
                           and Consolidated Subsidiaries

                                    Index to
                        Consolidated Financial Statements
                                       and
                          Financial Statement Schedules


                                                                            Page
                                                                            ----
Consolidated Financial Statements
   Independent Auditors' Report...............................................35
   Consolidated Statement of Earnings.........................................36
   Consolidated Statement of Financial Position...............................37
   Consolidated Statement of Stockholder's Equity.............................39
   Consolidated Statement of Cash Flows.......................................40
   Notes to Consolidated Financial Statements.................................41

Financial Statement Schedules
   Schedule II - Condensed Financial Information of Registrant................67
   Schedule III - Supplementary Insurance Information.........................71


                                       34
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


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


We have audited the accompanying consolidated statement of financial position of
GE Global  Insurance  Holding  Corporation and  consolidated  subsidiaries as of
December 31, 2002 and 2001, 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,  2002.  In  connection   with  our  audits  of  the
consolidated  financial  statements,  we also  audited the  financial  statement
schedules listed in the Index at Item 15(a) as of December 31, 2002 and 2001 and
for each of the years in the three-year  period ended  December 31, 2002.  These
consolidated  financial  statements and schedules are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements and financial statement schedules based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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  consolidated  subsidiaries as of December 31, 2002 and
2001,  and the results of their  operations and their cash flows for each of the
years in the  three-year  period ended  December 31, 2002,  in  conformity  with
accounting principles generally accepted in the United States of America.  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.

As discussed in note 2 to the consolidated financial statements,  the Company in
2002 changed its method of accounting for goodwill and other intangible  assets,
and in 2001 changed its method of  accounting  for  derivative  instruments  and
hedging activities.
                                                                        KPMG LLP


Kansas City, Missouri
January 27, 2003

                                       35

<PAGE>





                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

                       Consolidated Statement of Earnings
<TABLE>
<CAPTION>



                                                                             Year ended December 31,
                                                                        -------------------------------
(In millions)                                                             2002        2001        2000
                                                                        -------------------------------
<S>                                                                     <C>          <C>        <C>
Revenues
Net premiums written                                                    $ 7,892      $7,392     $ 8,191
                                                                        =======      ======     =======

Net premiums earned                                                     $ 7,787      $7,185     $ 8,001
Net investment income                                                     1,072       1,202       1,315
Net realized gains on investments                                           241         436         522
Other revenues                                                              176         368         293
                                                                        -------      ------     -------
Total revenues                                                            9,276       9,191      10,131
                                                                        -------      ------     -------

Costs and Expenses
Claims, claim expenses and policy benefits                                9,282       6,975       6,727
Insurance acquisition costs                                               1,867       1,830       1,913
Amortization of intangibles                                                  24          92         143
Interest expense                                                            124         102         126
Other operating costs and expenses                                          645         569         529
Minority interest in net earnings of consolidated
   subsidiaries                                                              89          89          88
                                                                        -------      ------      ------
Total costs and expenses                                                 12,031       9,657       9,526
                                                                        -------      ------      ------
Earnings (loss) before income taxes and cumulative effect of
    change in accounting principle                                       (2,755)       (466)        605
                                                                        --------     ------      ------
Income tax (expense) benefit:
   Current                                                                  851         297         109
   Deferred                                                                 171         (15)       (133)
                                                                        -------      ------      ------
                                                                          1,022         282         (24)
                                                                        -------      ------      ------
Earnings (loss) before cumulative effect of change in
     accounting principle                                                (1,733)       (184)        581
                                                                        -------      ------      ------

Cumulative effect of change in accounting principle                           -         (11)          -
                                                                        -------      ------      ------

Net earnings (loss)                                                     $(1,733)     $ (195)     $  581
                                                                        =======      ======      ======
</TABLE>


See Notes to Consolidated Financial Statements.

                                       36

<PAGE>





                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

                  Consolidated Statement of Financial Position

<TABLE>
<CAPTION>

                                                                                        December 31,
                                                                                ---------------------------
(In millions)                                                                      2002              2001
                                                                                ---------------------------
Assets
Investments:
   Fixed maturity securities available-for-sale, at fair value                   $22,200           $19,769
   Equity securities, at fair value                                                  627               641
   Short-term investment securities, at amortized cost                             3,620             1,748
   Other invested assets                                                             375               337
                                                                                 -------           -------
   Total investments                                                              26,822            22,495

Cash                                                                                 911               470

Securities and indebtedness of related parties                                       786               296

Accrued investment income                                                            383               386

Premiums receivable                                                                4,447             4,376

Funds held by reinsured companies                                                    815               720

Reinsurance recoverables                                                          10,901            10,367

Deferred insurance acquisition costs                                               1,882             1,615

Intangible assets                                                                  2,001             1,727

Other assets                                                                       2,838             2,666
                                                                                 -------           -------

Total assets                                                                     $51,786           $45,118
                                                                                 =======           =======


                                       37
<PAGE>



                                                                                         December 31,
                                                                                -------------------------------
(In millions)                                                                     2002                  2001
                                                                                -------------------------------

<S>                                                                              <C>                   <C>
Liabilities and equity
Claims and claim expenses                                                        $25,157               $22,033
Accumulated contract values                                                        2,826                 2,909
Future policy benefits for life and health contracts                               3,852                 2,965
Unearned premiums                                                                  3,231                 2,763
Other reinsurance balances                                                         4,325                 2,935
Contract deposit liabilities                                                         887                   915
Other liabilities                                                                  1,762                 1,181
Long-term borrowings                                                               1,656                 1,655
Indebtedness to related parties                                                      190                   217
                                                                                 -------              --------
   Total liabilities                                                              43,886                37,573
                                                                                 -------              --------
Minority interest in equity of consolidated
   subsidiaries                                                                    1,236                 1,183
                                                                                 -------              --------

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 - 1,600 shares                                               8                     5
Paid-in capital                                                                    3,222                 1,425
Retained earnings                                                                  3,262                 5,002
Accumulated unrealized gains on investment securities - net (a)                      149                    23
Accumulated foreign currency translation adjustments (a)                            (138)                 (241)
Derivatives qualifying as hedges (a)                                                  11                    (2)
                                                                                 -------               -------
   Total stockholder's equity                                                      6,664                 6,362
                                                                                 -------               -------

Total liabilities and equity                                                     $51,786               $45,118
                                                                                 =======               =======
</TABLE>


(a)  The sum  of  accumulated  unrealized   gains  on   investment   securities,
     accumulated  foreign  currency  translation   adjustments  and  derivatives
     qualifying as hedges constitutes  "Accumulated  nonowner changes other than
     earnings," as shown in the Consolidated  Statement of Stockholder's Equity,
     and was  $22  million  and  $(220)  million  at  year-end  2002  and  2001,
     respectively.

See Notes to Consolidated Financial Statements.

                                       38

<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

                 Consolidated Statement of Stockholder's Equity
<TABLE>
<CAPTION>


                                                                                                     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>           <C>
Balances, January 1, 2000                                $150         $5       $845      $4,630         $(55)         $5,575
                                                                                                                      ------
   Changes other than transactions with share owner:
     Net earnings                                           -          -          -         581            -             581
     Net unrealized gains on investment securities (a)      -          -          -           -          452             452
     Foreign currency translation adjustments (b)           -          -          -           -         (216)           (216)
     Reclassification adjustments  (c)                      -          -          -           -         (360)           (360)
                                                                                                                      ------
       Total changes other than transactions with
          share owner                                                                                                    457

   Dividends paid on preferred stock                        -          -          -          (7)           -              (7)
                                                         ----         --      -----        ----         ----          ------

Balances, December 31, 2000                               150          5        845       5,204         (179)          6,025

   Changes other than transactions with share owner:
     Net loss                                               -          -          -        (195)           -            (195)
     Net unrealized gains on investment securities (a)      -          -          -           -          162             162
     Foreign currency translation adjustments (b)           -          -          -           -           81              81
     Derivatives qualifying as hedges (d)                   -          -          -           -           (2)             (2)
     Reclassification adjustments (c)                       -          -          -           -         (282)           (282)
                                                                                                                       -----
       Total changes other than transactions with
          share owner                                                                                                   (236)
                                                                                                                       -----

    Capital contribution received                           -          -        580           -            -             580
    Dividends paid on preferred stock                       -          -          -          (7)           -              (7)
                                                         ----         --     ------      ------         -----         ------

Balances, December 31, 2001                               150          5      1,425       5,002          (220)         6,362
                                                                                                                      ------

    Changes other than transactions with share owner:
     Net loss                                               -          -          -      (1,733)            -         (1,733)
     Net unrealized gains on investment securities (a)      -          -          -           -           279            279
     Foreign currency translation adjustments (b)           -          -          -           -           103            103
     Derivatives qualifying as hedges (d)                   -          -          -           -            13             13
     Reclassification adjustments (c)                       -          -          -           -          (153)          (153)
                                                                                                                      ------
          Total changes other than transactions with                                                                  (1,491)
             share owner                                                                                              ------

     Capital contribution received in exchange for
        issuance of additional shares of common stock       -          3      1,797           -             -          1,800
     Dividends paid on preferred stock                      -          -          -          (7)            -             (7)
                                                         ----        ---     ------      ------         -----         ------

Balances, December 31, 2002                              $150         $8     $3,222      $3,262         $  22         $6,664
                                                         ====         ==     ======      ======         =====         ======

</TABLE>

(a)  Presented   net of taxes  of  $(151)  million,  $(78)  million  and  $(195)
     million in 2002, 2001 and 2000, respectively.
(b)  Presented  net  of  taxes of  $(33) million, $(62) million and $113 million
     in 2002,  2001 and 2000,  respectively.
(c)  Presented  net  of  taxes of  $88 million, $154 million and $189 million in
     2002, 2001 and 2000, respectively. (Note: In addition to net realized gains
     on  investment  securities, the  2000 reclassification  adjustment includes
     $27 million in  pre-tax  gains  related  to  available-for-sale  investment
     securities held by an investee accounted for under the equity method; these
     gains  were  included  in  other revenues in  the accompanying consolidated
     statement of earnings.)
(d)  Presented  net  of  taxes  of  $(7)  and  $1  million  in  2002  and  2001,
     respectively. See Notes to Consolidated Financial Statements.

                                       39
<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

                      Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>


                                                                               Year ended December 31,
                                                                       --------------------------------------
(In millions)                                                              2002         2001          2000
                                                                       --------------------------------------

<S>                                                                    <C>          <C>             <C>
Cash Flows From Operating Activities
Net earnings (loss)                                                    $ (1,733)    $   (195)       $  581
Adjustments to reconcile net earnings (loss) to cash
     from (used for) operating activities:
         Claims and claim expenses                                        2,968        3,863         1,084
         Future policy benefits for life and health contracts               543          271           589
         Unearned premiums                                                  272          129           207
         Funds held by reinsured companies                                  (85)          47          (103)
         Reinsurance recoverables                                          (489)      (3,697)       (1,579)
         Deferred income taxes                                             (171)          15           133
         Income taxes receivable                                            (64)        (133)         (120)
         Amortization of insurance acquisition costs                      1,867        1,830         1,913
         Insurance acquisition costs deferred                            (2,185)      (1,916)       (2,200)
         Net realized gains on investments                                 (241)        (436)         (522)
         Other reinsurance payables                                       1,370          872           188
         Other, net                                                           4         (717)         (312)
                                                                       --------      -------       -------
     Cash from (used for) operating activities                            2,056          (67)         (141)
                                                                       --------      -------       -------

Cash Flows From Investing Activities
Fixed maturity securities available-for-sale:
     Purchases                                                          (18,070)     (17,706)       (9,823)
     Sales                                                               14,250       14,797         7,235
     Maturities                                                           2,457        2,337           940
Equity securities:
     Purchases                                                             (635)        (459)       (1,175)
     Sales                                                                  527          191         3,522
Net purchases of short-term investments                                  (1,871)        (400)         (560)
Net cash paid for acquisitions and in-force reinsurance
     transactions                                                           (25)           -             -
Other investing activities                                                   79          100            28
                                                                       --------      -------        ------
     Cash from (used for) investing activities                           (3,288)      (1,140)          167
                                                                       --------      -------        ------

Cash Flows From Financing Activities
Change in contract deposits                                                 (28)         (33)           38
Net contract accumulation receipts (payments)                               (83)         746             6
Net proceeds (payments) under related party credit facility                (569)         (29)           51
Proceeds from short-term borrowings                                          82           20            20
Principal payments on short-term borrowings                                   -          (41)         (687)
Proceeds from long-term borrowings                                            -            -           691
Cash received upon assumption of insurance liabilities                      407            -             -
Capital contribution received                                             1,800          400             -
Proceeds from issuance of preferred stock of subsidiary                      50            -             -
Dividends paid                                                               (7)          (7)           (7)
                                                                       --------      -------        ------
     Cash from financing activities                                       1,652        1,056           112
                                                                       --------      -------        ------

Effect of exchange rate changes on cash                                      21          425          (301)
                                                                       --------      -------        ------

Increase (decrease) in cash                                                 441          274          (163)
Cash at beginning of year                                                   470          196           359
                                                                        -------      -------        ------
Cash at end of year                                                     $   911      $   470        $  196
                                                                        =======      =======        ======
</TABLE>


See Notes to Consolidated Financial Statements.

                                       40

<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

                   Notes to Consolidated Financial Statements


1.   Basis of Presentation

Principles of Consolidation

GE Global Insurance Holding Corporation ("GE Global Insurance"),  referred to as
"we",  "us" or "our" in this report,  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").   Our  accompanying
consolidated  financial  statements  include the accounts and operations,  after
intercompany  eliminations,  of  GE  Global  Insurance,   Employers  Reinsurance
Corporation  ("ERC"),  GE Reinsurance  Corporation ("GE Re"), Medical Protective
Corporation and CORE Insurance Holdings ("CORE").  ERC and GE Re are reinsurance
companies and Medical  Protective  Corporation is an insurance  holding company,
with each having various  property and casualty  insurance/reinsurance  and life
reinsurance businesses.  CORE is a reinsurance holding company, whose underlying
reinsurance  operations are in run-off.  We own 100% of the common stock of ERC,
GE Re, Medical Protective Corporation and CORE, representing 89.5% of the voting
rights  of ERC and  100% of the  voting  rights  for GE Re,  Medical  Protective
Corporation  and  CORE.  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.

Other  affiliates,  generally  companies in which we own 20 to 50 percent of the
voting rights or otherwise  have  significant  influence,  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  accounting  principles  generally  accepted  in the  United  States of
America  ("GAAP"),  which,  as to the insurance  company  businesses,  vary from
statutory  accounting  practices prescribed or permitted by insurance regulatory
authorities.  The  preparation of financial  statements in conformity  with GAAP
requires us to make estimates and assumptions  that affect reported  amounts and
related disclosures. Actual results could differ from those estimates.

Certain  reclassifications  of prior year  balances have been made to conform to
the current year presentation.

2.   Summary of Significant Accounting Policies

Investments

Substantially  all  of our  fixed  maturity  securities  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 and certain other adjustments. Such reported fair values
are based  primarily  on quoted  market  prices  or,  if quoted  prices  are not
available, are valued by third party pricing vendors.  Investment securities are
regularly  reviewed for impairment  based on criteria that include the extent to
which cost exceeds  market  value,  the  duration of the market  decline and the
financial  health of and specific  prospects for the issuer.  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.

                                       41

<PAGE>



                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.   Summary of Significant Accounting Policies (continued)

Property and Casualty Insurance/Reinsurance Segment

Premiums   are   reported   as   earned   over   the   terms   of  the   related
insurance/reinsurance  policies or  treaties.  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.

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

The  liabilities   for  claims  and  claim  expenses   represent  the  estimated
liabilities  for reported claims plus those claims incurred but not yet reported
and the related estimated claim settlement 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,  we believe 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
$1,320 million and $820 million at December 31, 2002 and 2001, respectively,  of
long-term disability claims and certain workers' compensation claims (limited to
run-off business in a Bermuda-domiciled  subsidiary) that are discounted at a 6%
and 3% rate, respectively.


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

We also provide  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 from  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
generally  ranged  from  3-9% at  December  31,  2002 and 2001.  Interest  rates
credited to universal  life  contracts  and  investment  contracts are generally
guaranteed  for a specified  time period with renewal  rates  determined  by the
issuing insurance  company.  Such crediting interest rates generally ranged from
3-9% in 2002, 2001 and 2000.

                                       42

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.   Summary of Significant Accounting Policies (continued)

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  traditional  insurance  contracts,  the  acquisition  costs  are
amortized  over the premium  paying  periods or, in the case of  limited-payment
contracts,   over  the  estimated  benefit  payment  periods  using  assumptions
consistent  with those used in computing  future policy  benefit  reserves.  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.

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 (an intangible asset) 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.

Funds Held by Reinsured Companies

Funds held by  reinsured  companies  represent  ceded  premiums  retained by the
ceding companies according to contractual terms.  Investment income is generally
earned on these balances during the periods that the funds are held.

Allowance for Doubtful Accounts

We establish an allowance for  uncollectible  premiums  receivable,  reinsurance
recoverables  and other doubtful  accounts at the time such losses are estimated
to have been incurred.  Measurement  of such losses  requires  consideration  of
historical loss experience, including the need to adjust for current conditions,
and judgments about the probable effects of relevant observable data,  including
present  economic  conditions  such as delinquency  rates,  financial  health of
specific  customers,  collateral value (such as letters of credit and funds held
balances) and legal right-of-offset of related claim liabilities.  The allowance
is recorded as a valuation  account that reduces the  corresponding  asset.  The
allowance  totaled  $181 million and $159 million at December 31, 2002 and 2001,
respectively.

Intangible Assets

As of  January  1,  2002,  we  completed  adoption  of  Statement  of  Financial
Accounting  Standards ("SFAS") 142, Goodwill and Other Intangible Assets.  Under
SFAS 142,  goodwill is no longer  amortized but is tested for impairment using a
fair value  approach,  at the  "reporting  unit" level.  A reporting unit is the
operating  segment,  or a business one level below that  operating  segment (the
"component" level) if discrete  financial  information is prepared and regularly
reviewed by management at the component level. We recognize an impairment charge
for any  amount by which the  carrying  amount of a  reporting  unit's  goodwill
exceeds its fair value. Discounted cash flows are used to establish fair values.
When  available  and as  appropriate,  we use  comparative  market  multiples to
corroborate  discounted  cash flow results.  When a business  within a reporting
unit is disposed of,  goodwill is  allocated to the gain or loss on  disposition
using the relative fair value methodology.

We amortize  the cost of other  intangibles  over their  estimated  useful lives
unless  such  lives are deemed  indefinite.  Amortizable  intangible  assets are
tested for impairment based on undiscounted cash flows and, if impaired, written
down to fair value based on either  discounted  cash flows or appraised  values.
Intangible  assets with  indefinite  lives are tested for impairment and written
down to fair value as required.

                                       43

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.   Summary of Significant Accounting Policies (continued)

Prior to January 1, 2002,  we amortized  goodwill  recorded in  connection  with
business  combinations  over  periods  ranging  from 15 to 30  years  using  the
straight-line  method and amortized other intangible assets on appropriate bases
over their estimated  lives.  If goodwill was identified with long-lived  assets
that were subject to an impairment  loss,  and an  adjustment  was to be made to
reflect fair value,  the goodwill was reduced or eliminated  before the carrying
value of such  long-lived  assets was written  down to fair  value.  Goodwill in
excess of associated expected operating cash flows was considered to be impaired
and was 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 investment securities 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  transaction  are  accounted  for as
deposits.  These deposits are classified as contract deposit assets (included in
"other assets") or "contract  deposit  liabilities" and are generally  accounted
for similar to financing  transactions  with interest income or expense credited
or charged to the contract deposits.

Income Taxes

GE  Global   Insurance,   together  with  its  domestic  property  and  casualty
insurance/reinsurance  subsidiaries,  various non-insurance subsidiaries and its
parent, GE Capital Services, are included in the consolidated federal income tax
return of GE Company. Our two domestic life insurance  subsidiaries are taxed as
life insurance  companies,  and those  subsidiaries  each file separate  federal
income tax returns.

Our international  insurance company businesses file separate income tax returns
in the countries where they are domiciled or operate.

We utilize the liability method in accounting for income taxes, 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. We establish a "valuation  allowance"  for
any portion of the deferred tax asset that is not believed to be realizable.

Foreign Currency Translation

We operate 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."  It is our
general  policy to offset  currency  risk related to insurance  claims and claim
expenses by maintaining  investment  securities  matched to the major currencies
represented  in our recorded net  claim-related  liabilities.  This  approach to
reducing currency risk is sometimes  supplemented by the use of foreign currency
forward purchase or sale contracts.  In addition, we partially hedge the foreign
currency risk on foreign subsidiary net investments and certain foreign currency
denominated  intercompany  loans by utilizing  cross  currency swaps and foreign
currency forward purchase or sale contracts. (See

                                       44

<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


2.       Summary of Significant Accounting Policies (continued)

Note 14). As a result,  while  foreign  currency  may have  impacted  individual
asset,  liability,  revenue  or  expense  categories,  the net effect of foreign
currency  transactions  on operating  results during 2002, 2001 and 2000 was not
material.

Benefit Plans

The  majority of our U.S.  employees  participate  in a  trusteed,  contributory
defined  benefit pension plan and certain  postretirement  plans sponsored by GE
Company.  GE Company,  in turn,  charges us for our relative  share of the costs
associated with the overall GE Company Group Pension and  Postretirement  Plans.
Certain of our  international  businesses also sponsor  noncontributory  defined
benefit pension plans for their employees or participate in GE Company sponsored
contributory  defined benefit plans.  The net effect of all benefit plans on the
consolidated statement of financial position and statement of earnings for 2002,
2001 and 2000 was not material.

Accounting Changes

Under SFAS 142,  goodwill is no longer amortized but is tested for impairment on
at least an annual basis using a fair value  methodology.  We stopped amortizing
goodwill effective January 1, 2002.

Under SFAS 142, we were required to test all existing goodwill for impairment as
of January 1, 2002, on a reporting  unit basis.  The result of testing  goodwill
resulted in no impairment charge.

At January 1, 2001, we adopted SFAS 133,  Accounting for Derivative  Instruments
and Hedging Activities,  as amended.  Under SFAS 133, all derivative instruments
are  recognized in the balance sheet at their fair values.  Further  information
about derivatives and hedging is provided in note 14.

The cumulative effect of adopting this accounting change at January 1, 2001, was
as follows:

   (In millions)                                                    Earnings (a)
                                                                    ------------

    Adjustment to fair value of derivatives                             $(17)
    Income tax effect                                                      6
                                                                        ----
    Total                                                               $(11)
                                                                        ====
     (a) For earnings effect, amount shown is net of adjustment to hedged items.

The cumulative  effect on earnings of adopting SFAS 133 was due to the effect of
marking to market options and currency contracts used for hedging.  Decreases in
the fair values of these  instruments were attributable to movements in embedded
interest rates since inception of the hedging arrangements.

This accounting  change did not involve cash, and we expect that it will have no
more than a modest effect on future results.


                                       45

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


3.       Acquisitions

In December  2002, we increased  our ownership of CORE from 41.5% to 100%.  This
was  accomplished  through a coordinated  series of  transactions  in which CORE
redeemed all of its existing  outstanding  common  shareholders  (including  the
41.5%  interest  held by ERC) and  simultaneously  issued 100% of a new class of
common  stock to GE Global  Insurance  in exchange  for an $80  million  capital
infusion.  The results of CORE have been included in the consolidated  financial
statements  from the date of acquisition.  Prior to  acquisition,  CORE had been
included in other invested assets and was accounted for using the equity method.
The purchase price was allocated to the assets acquired and liabilities  assumed
based on our best estimates of fair values.  Because the estimated fair value of
the net assets acquired  approximated the purchase price, no additional goodwill
was recognized on this transaction.

In July 2002, we entered into an indemnity  reinsurance  agreement  covering the
majority of the life  reinsurance  division of  American  United Life  Insurance
Company ("AUL"),  including AUL's life,  long-term care and  international  life
reinsurance business. As part of the transaction, we also acquired 100% interest
in a third-party  administrator,  which provides services for the long-term care
business. The overall transaction was accounted for as a purchase;  accordingly,
the purchase  price was  allocated to assets  acquired and  liabilities  assumed
based on estimated  fair values and operating  results have been included in our
consolidated  financial  statements since the date of acquisition.  Total assets
acquired approximated $730 million, including present value of future profits of
$228 million and goodwill of $18 million.


4.   Investments

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


                                                                                     December 31, 2002
                                                                  ------------------------------------------------------
                                                                                     Gross         Gross      Estimated
                                                                     Amortized    Unrealized    Unrealized       Fair
           (In millions)                                               Cost          Gains        Losses        Value
                                                                  ------------------------------------------------------

<S>                                                                   <C>            <C>          <C>         <C>
           Fixed maturity securities:
              U.S. government                                         $    365       $  10        $   -       $    375
              International government                                   4,364          75           (11)        4,428
              Tax-exempt                                                 5,739         140           (24)        5,855
              Corporate                                                  6,767         221           (97)        6,891
              U.S. mortgage-backed and other asset-backed                3,816          90            (9)        3,897
              International mortgage-backed and other
                asset-backed                                               742          13            (1)          754
                                                                       -------        ----          ----       -------
             Total fixed maturity securities                            21,793         549          (142)       22,200
           Equity securities                                               739           9          (121)          627
           Short-term investment securities                              3,620           -             -         3,620
           Other invested assets                                           375           -             -           375
                                                                       -------        ----          ----       -------
           Total investments                                           $26,527        $558         $(263)      $26,822
                                                                       =======        ====         =====       =======

</TABLE>


                                       46
<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

4.   Investments (continued)
<TABLE>
<CAPTION>


                                                                                     December 31, 2001
                                                                  --------------------------------------------------------
                                                                                     Gross         Gross        Estimated
                                                                     Amortized     Unrealized    Unrealized       Fair
           (In millions)                                               Cost          Gains         Losses         Value
                                                                  ------------- -------------- ------------- -------------

<S>                                                                      <C>          <C>          <C>            <C>
           Fixed maturity securities:
              U.S. government                                            $ 237        $  4         $  (1)         $ 240
              International government                                   3,565          65           (26)         3,604
              Tax-exempt                                                 6,068          73           (76)         6,065
              Corporate                                                  6,341         114          (130)         6,325
              U.S. mortgage-backed and other asset-backed                2,551          49           (13)         2,587
              International mortgage-backed and other
                asset-backed                                               939          12            (3)           948
                                                                       -------         ---          ----         ------
             Total fixed maturity securities                            19,701         317          (249)        19,769
           Equity securities                                               660          19           (38)           641
           Short-term investment securities                              1,748           -             -          1,748
           Other invested assets                                           337           -             -            337
                                                                       -------        ----         -----        -------
           Total investments                                           $22,446        $336         $(287)       $22,495
                                                                       =======        ====         =====        =======
</TABLE>


The amortized  cost and  estimated  fair value of fixed  maturity  securities at
December 31, 2002 are summarized, by stated maturity, as follows:
<TABLE>
<CAPTION>


                                                                       Estimated
                                                            Amortized     Fair
   (In millions)                                              Cost       Value
                                                           ---------------------

<S>         <C>                                             <C>        <C>
   Maturity:
     Due in 2003                                            $ 1,052    $  1,056
     Due in 2004-2007                                         4,067       4,135
     Due in 2008-2012                                         6,119       6,201
     Due after 2012                                           5,997       6,157
                                                             ------    --------
                                                             17,235      17,549
   Mortgage-backed and other asset-backed securities          4,558       4,651
                                                             ------      ------
   Total fixed maturity securities                          $21,793     $22,200
                                                            =======     =======
</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.

                                       47

<PAGE>



                    GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

4.   Investments (continued)

Major categories of investment income are summarized as follows:
<TABLE>
<CAPTION>


                                                        Year ended December 31,
                                                      --------------------------
   (In millions)                                       2002      2001      2000
                                                      --------------------------

<S>                                                 <C>         <C>      <C>
   Gross investment income:
      Fixed maturity securities                     $    925    $1,049   $1,081
      Equity securities                                   13        14       82
      Short-term investment securities                    44        73       66
      Securities and indebtedness of related parties      19        23       22
      Other                                               90        64       79
                                                      ------    ------   ------
                                                       1,091     1,223    1,330
   Investment expenses                                ------    ------    ------
                                                         (19)      (21)     (15)
                                                      ------    ------    -----
   Net investment income                              $1,072    $1,202   $1,315
                                                      ======    ======   ======
</TABLE>


The sales  proceeds and realized  gains and losses on investment  securities are
summarized as follows:
<TABLE>
<CAPTION>


                                                                     Year ended December 31,
                                                                 -------------------------------
   (In millions)                                                   2002        2001        2000
                                                                 -------------------------------

<S>                                                              <C>         <C>         <C>
        Sales proceeds from investment securities                $14,777     $14,988     $10,757
                                                                 =======     =======     =======

        Net realized gains on investments before
         income taxes:
            Fixed maturity securities:
              Gross realized gains                                  $373        $517        $194
              Gross realized losses                                  (96)        (81)        (87)
            Equity securities:
              Gross realized gains                                    31          43         696
              Gross realized losses                                  (67)        (43)       (281)
                                                                    ----        ----        ----
            Total net realized gains before income taxes             241         436         522
        Provision for income taxes                                   (88)       (154)       (178)
                                                                    ----        ----        ----
        Net realized gains on investments, after income taxes       $153        $282        $344
                                                                    ====        ====        ====
</TABLE>


The change in net  unrealized  gains  (losses),  before income  taxes,  on fixed
maturity  securities was $339 million,  $(147) million and $511 million in 2002,
2001 and 2000,  respectively;  the  corresponding  amounts for equity securities
were $(93)  million,  $(48) million and $(330)  million in 2002,  2001 and 2000,
respectively;  and the corresponding  amount for other invested assets was $(29)
million in 2000.

We had investments in fixed maturity securities with a carrying amount of $1,385
million and $1,090  million at  December  31,  2002 and 2001,  respectively,  on
deposit with state and provincial  insurance  departments to satisfy  regulatory
requirements.


                                       48
<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


5.  Intangible Assets
<TABLE>
<CAPTION>

                                                      At December 31, 2002            At December 31, 2002
                                                 -------------------------------------------------------------
    (In millions)                                   Gross                           Gross
                                                   Carrying      Accumulated       Carrying      Accumulated
                                                    Amount       Amortization       Amount       Amortization
                                                 -----------    --------------    ----------    --------------
<S>                                 <C>             <C>             <C>             <C>             <C>
    Intangibles Subject to Amortization
    Present value of future profits ("PVFP")        $  509          $(128)          $  267          $(102)
    Capitalized software                               190            (69)             185            (43)
    All other                                           15             (1)             136            (29)
                                                    ------          -----           ------          -----
                                                       714           (198)             588           (174)
    Intangibles Not Subject to Amortization
    Goodwill                                         2,071           (586)           1,850           (537)
                                                    ------          -----           ------          -----

    Total                                           $2,785          $(784)          $2,438          $(711)
                                                    ======          =====           ======          =====
</TABLE>


The only changes to recorded  goodwill  during the year ended December 31, 2002,
other than those  attributed to movements in foreign  currency  exchange  rates,
were additions of $104 million,  representing  amounts  reclassified  from other
intangible  assets as of the January 1, 2002  adoption date of SFAS 142, and $18
million  relating to the AUL  acquisiton  (See Note 3). The 2002 increase in the
gross  carrying  amount  of  PVFP  is  also  primarily  attributable  to the AUL
acquisition.

Consolidated  amortization  expense  related  to  intangible  assets,  excluding
goodwill,  for 2002, 2001 and 2000 was $57 million, $44 million and $54 million,
respectively.  The  estimated  percentage  of the December  31,  2002,  net PVFP
balance to be amortized over each of the next five years follows:

       2003 . . . . . . . . . . . . . . . . . . . . . . . .      7.4%
       2004 . . . . . . . . . . . . . . . . . . . . . . . .      7.2%
       2005 . . . . . . . . . . . . . . . . . . . . . . . .      7.0%
       2006 . . . . . . . . . . . . . . . . . . . . . . . .      6.2%
       2007 . . . . . . . . . . . . . . . . . . . . . . . .      6.1%

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 and the risk  inherent in the
realization  of the  estimated  future  profits  at the  date of the  respective
acquisitions.  PVFP is  being  amortized  using  the  interest  method  over the
duration of the related life business,  approximately  20 years, as the premiums
or gross profits on the books of business are recognized.  Amortization  expense
for PVFP in future periods will be affected by  acquisitions,  realized  capital
gains/losses  or other factors  affecting  the ultimate  amount of gross profits
realized from certain lines of business.  Similarly, future amortization expense
for other  intangibles  will depend on  acquisition  activity and other business
transactions.

The amount of goodwill  amortization  included in the accompanying  consolidated
statement of earnings (net of income taxes) in 2001 and 2000 was $70 million and
$84 million, respectively.

                                       49

<PAGE>



                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

6.   Claims and Claim Expenses

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

<TABLE>
<CAPTION>

                                                                Year ended December 31,
                                                        ---------------------------------------
(In millions)                                             2002            2001           2000
                                                        ---------------------------------------

<S>                <C>                                  <C>             <C>             <C>
Balance at January 1 - gross                            $22,033         $17,678         $18,134
Less reinsurance recoverables                            (8,961)         (4,924)         (4,314)
                                                        -------         -------         -------
Balance at January 1 - net                               13,072          12,754          13,820
                                                        -------         -------         -------

Claims and expenses incurred:
  Current year                                            5,271           5,979           5,525
  Prior years                                             3,698             811             934
                                                        -------         -------         -------
                                                          8,969           6,790           6,459
                                                        -------         -------         -------

Claims and expenses paid:
  Current year                                             (928)         (1,076)         (1,650)
  Prior years                                            (5,726)         (5,596)         (5,290)
                                                        -------         -------         -------
                                                         (6,654)         (6,672)         (6,940)
                                                        -------         -------         -------

Claim reserves related to acquired companies                285               -             279

Foreign exchange and other                                  415             200            (864)
                                                        -------         -------         -------

Balance at December 31 - net                             16,087          13,072          12,754
Add reinsurance recoverables                              9,070           8,961           4,924
                                                        -------         -------         -------
Balance at December 31 - gross                          $25,157         $22,033         $17,678
                                                        =======         =======         =======
</TABLE>


There is a high  degree of  uncertainty  inherent in the  estimates  of ultimate
losses  underlying  the  liability for unpaid  claims and claim  expenses.  This
inherent   uncertainty  is  particularly   significant   for   liability-related
exposures,  including  latent claim  issues (such as asbestos and  environmental
related coverage  disputes) due to the extended period,  often many years,  that
transpires   between  a  loss  event,   receipt  of  related  claims  data  from
policyholders and/or primary insurers and ultimate settlement of the claim. This
situation is then further  exacerbated for  reinsurance  entities (as opposed to
primary  insurers)  due to  lags  in  receiving  current  claims  data.  Because
reinsurance  protection is often provided on an  "excess-of-loss"  basis whereby
the  reinsurer  is only  obligated  to pay  losses in excess of  pre-established
limits,  notification  is only required to be provided to the reinsurer when the
claim is assessed as having a reasonable  possibility  of exceeding  the primary
insurer's retention  thresholds.  This notification can often be years after the
loss event was initially reported to the primary insurer.

We continually  update loss estimates using both  quantitative  information from
our reserving  actuaries and qualitative  information from other sources.  While
detailed  analysis  is  performed  on a  quarterly  basis to assess the  overall
adequacy  of  recorded  claim  reserves,  a  more  comprehensive  evaluation  is
undertaken on an annual basis.  Consistent with historical practices,  this more
comprehensive  review was completed during the fourth quarter of 2002 using both
reported and paid claims  activity as of September  30. This more  comprehensive
review was performed on all major  reserve  segments,  with specific  additional
emphasis  focused on those  lines of business in which  recent  reported  claims
activity differed significantly from anticipated levels.

                                       50

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

6.   Claims and Claim Expenses (continued)

In the chart on the preceding page, "Claims and expenses  incurred--prior years"
represents  additional losses (adverse  development)  recognized in any year for
loss  events that  occurred  before the  beginning  of that year.  Such  adverse
development amounted to 28%, 6% and 7% of beginning of year net loss reserves in
2002,  2001 and 2000,  respectively.  The  continued  and  escalating  levels of
reported  claims  activity  beyond  what we had  anticipated,  particularly  for
liability-related  exposures  underwritten  in 1997 through  2001,  caused us to
reconsider  our  approach  to  reserving  for  these  risks  as part of the 2002
comprehensive fourth quarter reserve review. Based on a detailed analysis of the
underlying  data,  we decided to  incorporate  certain  changes into our overall
reserving methodology.  As a result of these changes, we concluded that our best
estimate of ultimate losses was higher in the range of reasonably  possible loss
scenarios than previously estimated. Accordingly, we recognized a fourth quarter
pre-tax charge of approximately  $2.5 billion to increase  recorded  reserves to
reflect  the  revised  indications  of  remaining  liability.   The  significant
components of this adverse  development  included  hospital medical  malpractice
($300 million),  product liability ($300 million),  professional liability ($250
million),   umbrella  liability  ($200  million),   workers  compensation  ($200
million),  individual  liability ($150 million) and  asbestos-related  exposures
($150  million).  With  amounts  recognized  in previous  quarters of 2002,  our
overall 2002 pre-tax charge for adverse  development  amounted to  approximately
$3.7 billion.

The majority of the adverse development in 2001, and to a lesser extent in 2000,
also related to higher projected ultimate losses on liability-related exposures,
especially  in  the  hospital  liability,   nonstandard  automobile  (automobile
insurance  extended to  higher-risk  drivers) and commercial  general  liability
lines of business. Contributing to the adverse development reflected in 2000 was
a  significant  increase in  industry-wide  loss  estimates  resulting  from the
European windstorms of December 1999.

In  establishing  the  liabilities  for  claims  and claim  expenses  related to
asbestos-related  illnesses and toxic waste cleanup, we consider 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 we can reasonably  estimate the
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.  In  connection  with the  comprehensive
reserve  review  completed in the fourth  quarter of 2002,  we  benchmarked  our
recorded  asbestos-related  reserves against certain of our industry competitors
having similar  exposures.  The most common  benchmarking  approach involves the
comparison of what are referred to as "survival  ratios." A survival  ratio is a
measure  of the  number  of years it would  take to  exhaust  recorded  asbestos
reserves based on recent payment  activity.  This ratio is derived by taking the
current ending  reserves and dividing it by the average annual  payments for the
most recent three years (generally  excluding large one-time settlements such as
those  involving a commutation  of a block of  business).  Based on our industry
benchmarking   analysis,   we   made   the   decision   to   increase   specific
asbestos-related reserves to reflect a 12-year survival ratio.

The gross  liabilities  for  asbestos-related  illness and toxic  waste  cleanup
claims and claim  expenses and the related  reinsurance  recoverables  were $943
million and $287 million,  respectively, at December 31, 2002. These amounts are
our best estimate, based on currently available information, of future claim and
claim  expense  payments and  recoveries  that are expected to develop in future
years. We monitor 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 we have
recorded our best estimate of our 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 our results of operations,
financial position or cash flows.

                                       51

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

6.   Claims and Claim Expenses (continued)

Operating  results  for 2001 as  compared  to 2000 were  adversely  impacted  by
approximately  $575 million  related to the  insurance  losses  arising from the
events of  September  11, 2001.  This  amount,  which  primarily  resulted  from
contingent  premium  payments  contained  in  certain  retrocession  agreements,
comprises $698 million recorded as a reduction in net premiums  earned,  and $78
million  reflecting  additional  claims,  claim  expenses  and policy  benefits,
partially offset by $201 million reflecting a reduction in insurance acquisition
costs. The gross losses arising from the events of September 11, 2001 (estimated
to be $3.3 billion)  relate to  underlying  insurance  policies and  reinsurance
contracts  providing general property,  general  liability,  aviation,  business
interruption,  workers  compensation  and  life  and  health-related  coverages.
Historical  experience  related  to large  catastrophic  events has shown that a
broad range of total insurance  industry loss estimates  often exists  following
such an event  and it is not  unusual  for  there to be  significant  subsequent
revisions in such estimates. Our best estimate of existing net liability, net of
estimated   recoveries  under   retrocession   arrangements,   has  not  changed
significantly from our initial estimate. Further information regarding potential
litigation associated with the events of September 11, 2001 is discussed in note
13.


7.   Income Taxes

The impact of income taxes on our consolidated  operating  results is summarized
below (with  income tax benefits  reflected  as positive  amounts and income tax
expenses reflected as negative amounts):
<TABLE>
<CAPTION>



                                                   Year ended December 31,
                  ----------------------------------------------------------------------------------------
                             2002                             2001                         2000
                  --------------------------      -------------------------      -------------------------
                  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            $653      $198     $  851       $206       $91      $297       $  73     $ 36      $109
Deferred            138        33        171         49       (64)      (15)       (202)      69      (133)
                   ----      ----     ------       ----       ---      ----        ----     ----      ----
Total              $791      $231     $1,022       $255       $27      $282       $(129)    $105      $ 24
                   ====      ====     ======       ====       ===      ====        ====     ====      ====
</TABLE>



Income taxes paid  (received)  totaled  $(721)  million,  $(177) million and $22
million in 2002, 2001 and 2000, respectively.

Our effective income tax rate on pre-tax income differs from the prevailing U.S.
corporate federal income tax rate and is summarized as follows:
<TABLE>
<CAPTION>

                                                                 Year ended December 31,
                                                               ---------------------------
                                                               2002        2001       2000
                                                               ---------------------------

<S>                                                            <C>          <C>        <C>
Corporate federal income tax rate                              (35)%       (35)%        35%
Tax-exempt investment income                                    (3)        (22)        (20)
Acquisition purchase price adjustment                            -          (7)         (1)
German restructuring                                             -           -         (12)
Tax on international activities                                  -          (4)         (5)
Intercompany dividend payment                                    1           5           4
Other items, net                                                 -           2           3
                                                               ---          --         --
Effective tax rate                                             (37)        (61)%        4%
                                                               ===          ==         ==
</TABLE>
                                       52

<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

7.   Income Taxes (continued)

We hold a significant portion of our overall investment  portfolio in securities
that  are  substantially  exempt  from  U.S.  taxation  (principally  state  and
municipal bonds). This is the most significant factor for all years presented in
reconciling  the  prevailing 35% U.S.  corporate  federal income tax rate to our
lower effective tax rate.  Additional  significant  factors  contributing to the
lower  effective  tax rate  include  (1) 2001 -  treatment  of a purchase  price
adjustment for tax of certain amounts  received from the seller as resolution of
issues in a previous  acquisition and (2) 2000 - tax benefits  attributable to a
step-up  in the tax  basis of  certain  assets  following  the  conversion  of a
corporate subsidiary to a partnership for German tax purposes.

The  significant  components of our net deferred tax assets and  liabilities are
summarized as follows:

<TABLE>
<CAPTION>


                                                                  December 31,
                                                              ------------------
(In millions)                                                   2002       2001
                                                              ------------------

<S>                                                           <C>        <C>
Deferred tax assets:
   Claims and claim expenses                                  $  331     $  362
   Unearned premiums                                             147        119
   Foreign tax credit carryforwards                               31         37
   Foreign currency translation                                  263        361
   Contract deposit assets                                       161        103
   Other                                                          91        126
                                                              ------     ------
     Total deferred tax assets                                 1,024      1,108
   Valuation Allowance                                           (14)         -
                                                              ------     ------
Total deferred tax assets after valuation allowance            1,010      1,108
                                                              ------     ------

Deferred tax liabilities:
   Deferred insurance acquisition costs                         (516)      (510)
   Net unrealized gains on investment securities                 (55)      (106)
   Software                                                      (36)       (42)
   Contract deposit liabilities                                    -       (154)
   Cross currency swaps                                            -       (113)
   Other                                                        (164)      (170)
                                                              ------     ------
     Total deferred tax liabilities                             (771)    (1,095)
                                                              ------     ------
Net deferred tax asset                                        $  239     $   13
                                                              ======     ======
</TABLE>


Income  taxes  receivable  totaled $186 million and $122 million at December 31,
2002 and 2001, respectively.




                                       53


<PAGE>

                      GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

              Notes to Consolidated Financial Statements (continued)


8.   Indebtedness to/from Related Parties

We, along with GE Capital  Corporation,  are  participants in a revolving credit
agreement that involves an international  cash pooling  arrangement on behalf of
certain of our European  affiliates.  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.
This credit  facility has a current  expiration date of October 21, 2003, but is
automatically  extended for successive terms of one year each, unless terminated
in accordance  with the terms of the agreement.  We had a net receivable of $459
million  under this credit  facility  at December  31, 2002 and a net payable of
$110 million at December 31, 2001.

A revolving  credit agreement is in place with GE Capital Services for an amount
up to $600 million that expires January 1, 2004, with an interest rate per annum
equal to GE Capital  Services' cost of funds.  This  agreement is  automatically
extended for successive terms of one year each,  unless terminated in accordance
with the terms of the  agreement.  The total amount  outstanding  on this credit
facility,  including accrued interest payable, was $190 million and $108 million
as of  December  31,  2002 and  2001,  respectively.  Interest  accrued  on such
borrowings at an annual weighted-average  interest rate of 1.9% and 4.1% for the
years ended  December 31, 2002 and 2001,  respectively.  No interest was paid in
2002, 2001 or 2000.

In October  1998,  we entered  into an interim  loan  agreement  with GE Capital
Corporation  for $625  million to fund our  acquisition  of  Medical  Protective
Corporation. This interim loan agreement had an interest rate per annum equal to
GE Capital Corporation's cost of funds. The total balance outstanding under this
interim loan agreement,  including accrued interest payable, was $666 million as
of December 31, 1999,  which was repaid in 2000 using  proceeds  from  long-term
borrowings  (See  Note 9).  Interest  accrued  on such  borrowings  at an annual
weighted-average  interest  rate of 6.16% for the year ended  December 31, 2000.
Total interest paid in 2000 was $62 million.

9.   Borrowings

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

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

In June  2000,  we issued  $350  million of  redeemable  senior  unsecured  debt
securities at 7.5% per annum,  that are scheduled to mature on June 15, 2010 and
$350 million of redeemable  senior unsecured debt securities at 7.75% per annum,
that are  scheduled to mature on June 15, 2030.  We received $691 million in net
proceeds  from the  issuance of these notes  (after  deduction  of  underwriting
discounts  and  commissions)  which  was  used to repay  outstanding  short-term
borrowings under an interim loan agreement with GE Capital Corporation (See Note
8).

Total interest paid on borrowings was $121 million, $121 million and $93 million
in 2002, 2001 and 2000, respectively.

                                       54

<PAGE>


                      GE GLOBAL INSURANCE HOLDING CORPORATION
                            AND CONSOLIDATED SUBSIDIARIES

              Notes to Consolidated Financial Statements (continued)

10.  Supplemental Financial Statement and Reinsurance Data

Insurance  premiums written and earned in 2002, 2001 and 2000 and life insurance
in-force as of December 31, 2002, 2001 and 2000 are summarized as follows:
<TABLE>
<CAPTION>

                                        Insurance Premiums Written
                                 ---------------------------------------
                                  Property/
(In millions)                     Casualty         Life           Total
                                 ---------------------------------------

<S>                                <C>            <C>            <C>
2002:
  Direct                           $2,687         $    -         $2,687
  Assumed                           5,759          2,574          8,333
  Ceded                            (2,675)          (453)        (3,128)
                                   ------         ------         ------
  Net                              $5,771         $2,121         $7,892
                                   ======         ======         ======

2001:
  Direct                           $1,857         $    9         $1,866
  Assumed                           6,092          2,408          8,500
  Ceded                            (2,398)          (576)        (2,974)
                                   ------         ------         ------
  Net                              $5,551         $1,841         $7,392
                                   ======         ======         ======

2000:
  Direct                           $1,455         $    6         $1,461
  Assumed                           6,644          2,044          8,688
  Ceded                            (1,545)          (413)        (1,958)
                                   ------         ------         ------
  Net                              $6,554         $1,637         $8,191
                                   ======         ======         ======
</TABLE>



<TABLE>
<CAPTION>

                                            Insurance Premiums Earned
                                 --------------------------------------------     Life
                                  Property/                                     Insurance
  (In millions)                   Casualty           Life        Total          In-Force
                                 ---------------------------------------------------------
<S>                                <C>             <C>           <C>            <C>
2002:
  Direct                           $2,383          $    -        $2,383         $      -
  Assumed                           5,804           2,641         8,445          917,110
  Ceded                            (2,520)           (521)       (3,041)        (288,603)
                                   ------          ------        ------         --------
  Net                              $5,667          $2,120        $7,787         $628,507
                                   ======          ======        ======         ========

2001:
  Direct                           $1,812          $   10        $1,822         $      -
  Assumed                           5,916           2,448         8,364          624,668
  Ceded                            (2,426)           (575)       (3,001)        (176,593)
                                   ------          ------        ------         --------
  Net                              $5,302          $1,883        $7,185         $448,075
                                   ======          ======        ======         ========

2000:
  Direct                           $1,228          $    6        $1,234         $  3,284
  Assumed                           6,753           2,025         8,778          583,279
  Ceded                            (1,604)           (407)       (2,011)        (174,206)
                                   ------          ------        ------         --------
  Net                              $6,377          $1,624        $8,001         $412,357
                                   ======          ======        ======         ========
</TABLE>



                                     55
<PAGE>


                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

10.  Supplemental Financial Statement and Reinsurance Data (continued)

Claims,  claim expenses and policy benefits  incurred in 2002, 2001 and 2000 are
summarized as follows:
<TABLE>
<CAPTION>


                                  Property/
 (In millions)                    Casualty           Life         Total
                                  --------------------------------------

<S>                                <C>             <C>           <C>
2002:
  Direct                           $1,814          $    -        $1,814
  Assumed                           6,816           2,232         9,048
  Ceded                            (1,198)           (382)       (1,580)
                                   ------          ------        ------
  Net                              $7,432          $1,850        $9,282
                                   ======          ======        ======

2001:
  Direct                           $2,689          $    -        $2,689
  Assumed                           7,588           2,073         9,661
  Ceded                            (4,888)           (487)       (5,375)
                                   ------          ------        ------
  Net                              $5,389          $1,586        $6,975
                                   ======          ======        ======

2000:
  Direct                           $  682          $    -        $  682
  Assumed                           7,113           1,754         8,867
  Ceded                            (2,460)           (362)       (2,822)
                                   ------          ------        ------
  Net                              $5,335          $1,392        $6,727
                                   ======          ======        ======
</TABLE>


The  ceding  of a  portion  of  the  risks  underwritten  by our  insurance  and
reinsurance businesses to other insurers and reinsurers--commonly referred to as
retrocession--is  an integral part of our overall risk management  program.  Our
coordinated retrocession program ranges from the ceding of individual risks that
we are not  prepared  to  accept  in part or whole;  to  portfolio  arrangements
designed to address  concentrations  of  specified  risks above our  agreed-upon
retention thresholds;  to aggregate excess-of-loss treaties principally designed
to reduce company-wide  volatility associated with large unanticipated insurance
events.

During each of the years in the  three-year  period ended  December 31, 2002, we
entered into aggregate  excess-of-loss  reinsurance  treaties providing coverage
when  company-wide  accident  year  loss  ratios  exceed  the  attachment  point
specified in the respective contracts.  In general, the terms of these aggregate
treaties  require  the  payment of an initial  premium  to our  reinsurers  upon
inception of the contract. On these contracts, we also pay additional contingent
premiums  when we incur  losses that are  subject to recovery  under the treaty.
Alternatively,  certain contracts allow for the required  additional  contingent
premiums to be paid to our reinsurers  (plus  financing  charges) when we settle
the related losses and loss expenses (often many years after the incurred date).
Other  than the  referenced  contingent  premiums  paid or accrued at the time a
claim for recovery is recognized (plus financing  costs, if applicable),  we are
not obligated to pay any  additional  future  premiums  under the terms of these
aggregate treaties.

During 1999 through  2001,  accident  year loss ratios  exceeded the  attachment
point  specified in our  aggregate  excess-of-loss  reinsurance  contracts  and,
accordingly,  we have accrued for the expected recovery on an undiscounted basis
(consistent with our establishment of the related undiscounted  reserves--a GAAP
requirement).  Additionally,  during each of the years 2002,  2001 and 2000, the
recognition of adverse development related to prior year loss events resulted in
additional  recoveries  being  accrued  under  the  aggregate  contracts.  As of
December  31,  2002,  the  coverage  under  the  1999,  2000 and 2001  aggregate
contracts has been substantially  exhausted.  No claim is currently  anticipated
with respect to the 2002 aggregate contract as the accident year losses and loss
expenses

                                       56

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


10.   Supplemental Financial Statement and Reinsurance Data (continued)

recognized  to date are less than the  attachment  point  specified  in the 2002
contracts.  The impact of these  aggregate  contracts on our reported  operating
results for 2002, 2001 and 2000 was as follows:
<TABLE>
<CAPTION>


                                                                         Year ended December 31,
                                                                  ---------------------------------------
(In millions)                                                       2002           2001           2000
                                                                  --------       --------      ----------

<S>                                                                <C>           <C>            <C>
Ceded written and earned premiums, net of ceding commission        $(364)        $ (723)        $ (671)
Additional ceded premiums representing finance charges on
   deferred premium payments                                        (143)          (115)             -
Ceded incurred losses and loss adjustment expenses                   336          1,490          1,084
                                                                   -----         ------         ------
Net pre-tax (cost) benefit                                         $(171)        $  652         $  413
                                                                   =====         ======         ======
</TABLE>


Our insurance  businesses remain liable to their policyholders if the reinsurers
they  cede to are  unable  to  meet  their  contractual  obligations  under  the
applicable  reinsurance  agreements.  To minimize  our  exposure to  significant
losses from  reinsurance  insolvencies,  we  routinely  evaluate  the  financial
condition of our  reinsurers and monitor  concentrations  of credit risk arising
from similar geographic regions,  activities or economic  characteristics of the
reinsurers.  Of the $10.9 billion of  consolidated  reinsurance  recoverables at
December 31, 2002,  approximately 33% is due from 4 specific  retrocessionaires,
primarily in connection with our aggregate excess of loss retrocession  program.
All of these  retrocessionaires  are large, highly rated reinsurance entities or
members  of  similarly  rated  reinsurance  groups.  At  this  time,  we do  not
anticipate that any  significant  portion of recorded  reinsurance  recoverables
will be uncollectible.

For financial  reinsurance  assumed,  premiums received are reported as contract
deposit  liabilities,  not as  revenues.  We  report  revenue  for the risk fees
charged for those services.  Statutory  policyholder's surplus of life insurance
company subsidiaries has been reduced approximately $102 million at December 31,
2002 in connection with financial reinsurance assumed, principally due to ceding
commissions paid in connection with such transactions being expensed as incurred
for statutory reporting purposes.  Such amounts are secured by future profits on
the reinsured business.  Our 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, we do not believe such risk is significant.

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 of 7.5%. 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
$89 million,  $89 million and $88 million in 2002, 2001 and 2000,  respectively.
These  dividends  are  classified  as  "Minority  interest  in net  earnings  of
consolidated subsidiaries" in the Consolidated Statement of Earnings.

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 our Board
of Directors, and totaled $7.5 million in each of the years 2002, 2001 and 2000.


                                       57
<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

11.  Stockholder's Equity (continued)

In December 2002, we received a capital contribution from our parent, GE Capital
Services,  totaling $1.8 billion in exchange for the issuance of 600  additional
shares of common stock. This capital  contribution was made to replenish capital
sufficient to cover the after-tax impact of the $2.5 billion charge taken in the
fourth quarter to strengthen prior year claim reserves. During 2001, we received
capital  contributions  from our  parent,  GE Capital  Services,  totaling  $580
million-$400  million in the form of cash and $180  million in the form of other
assets.  The $400 million  capital  contribution  was made to replenish  capital
sufficient to cover  estimated  after-tax  losses  associated with the events of
September 11, 2001.

12.   Statutory Accounting Practices

ERC and its U.S.  insurance  company  subsidiaries are domiciled in Missouri and
Kansas,  GE Re is domiciled in Illinois,  Medical  Protective  Company ("Medical
Protective,"  a subsidiary of Medical  Protective  Corporation)  is domiciled in
Indiana and CORE Insurance Company ("CORE Insurance," the U.S. insurance company
subsidiary  of  CORE)  is  domiciled  in  Vermont.   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. As of December 31, 2002, there were no significant
premitted  accounting  practices that vary from prescribed  accounting practices
being utilized by our U.S. insurance company subsidiaries.

Effective January 1, 2001, each of our U.S. domiciliary state regulators adopted
provisions which required that insurance companies prepare their statutory basis
financial  statements in accordance with the revised NAIC  Accounting  Practices
and  Procedures  Manual.  This manual was intended to establish a  comprehensive
basis of statutory  accounting  principles which is recognized and adhered to if
not in conflict with domestic statutes and/or regulations, or when such statutes
or  regulations  are silent.  As a result of adopting  these  revised  statutory
accounting  principles,  aggregate  cumulative  adjustments of $234 million were
recorded  by  ERC,  GE Re and  Medical  Protective  as a  change  in  accounting
principle.  This change resulted in an increase to unassigned funds (surplus) at
January 1, 2001,  primarily  related to the  establishment  of net  deferred tax
assets.

Statutory  surplus and net income  (loss),  as reported to the U.S.  domiciliary
state  insurance  departments  in  accordance  with its  prescribed or permitted
statutory accounting practices,  for our U.S. insurance company subsidiaries are
summarized in the following  chart.  The  significant  decrease in the statutory
surplus for the life and annuity  subsidiaries of ERC is primarily  attributable
to a  corporate  reorganization,  which  transferred  interest  of our  non-U.S.
property and casualty businesses directly to ERC.
<TABLE>
<CAPTION>

                                                                 December 31,
                                                              ------------------
   (In millions)                                                2002       2001
                                                              ------------------

<S>                                                           <C>        <C>
     Statutory surplus:
       ERC                                                    $4,876     $4,858
       Property and casualty subsidiaries of ERC                 344        263
       Life and annuity subsidiaries of ERC                    1,170      2,568
       GE Re                                                     623        735
       Medical Protective                                        402        408
       CORE Insurance                                             13          -
</TABLE>


                           58
<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

12.      Statutory Accounting Practices (continued)
<TABLE>
<CAPTION>

                                                       Year ended December 31,
                                                     ---------------------------
    (In millions)                                     2002        2001      2000
                                                     ---------------------------

<S>                                                    <C>        <C>       <C>
    Net income (loss):
      ERC 1                                        ($1,056)       ($40)     $263
      Property and casualty subsidiaries of ERC        (42)         40         9
      Life and annuity subsidiaries of ERC            (211)        270       665
      GE Re                                           (307)        (71)       80
      Medical Protective                               (14)         74        81
      CORE Insurance                                     6           -         -
</TABLE>
      1 Adjusted to exclude  effect of $1.8  billion intercompany  dividend from
        ERC Life in 2002.

The payment of stockholder  dividends by U.S.  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 2003 by ERC without prior regulatory approval is
$488 million.  Of this amount,  $88 million is committed to pay dividends on the
preferred  stock  issued by ERC to GE Capital  Corporation.  The maximum  amount
available for the payment of dividends during 2003 by Medical Protective without
prior regulatory  approval is $74 million.  GE Re and CORE Insurance will not be
able to make any dividend  payments  during 2003  without the prior  approval of
their respective state regulators.

Each of our U.S.  domiciliary  state  regulators  have  adopted the NAIC minimum
risk-based  capital  requirements  which are used by  regulators 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 our U.S.
insurance  company   subsidiaries   exceeded  the  minimum   risk-based  capital
requirements at December 31, 2002.

Our international  insurance  company  businesses  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 our  insurance  company  businesses  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
also impose fines, censure and/or criminal sanctions for violation of regulatory
requirements.

Effective January 1, 2001, certain of our international  operations (licensed in
the  European  Union  ("EU")  member  states) are required to comply with the EU
Directive on Supplementary Supervision of Insurance Undertakings in an Insurance
Group.  This  directive  is  designed to address  solvency  issues for groups of
insurance companies and supplements the solvency tests historically performed on
individual  insurance  companies.  The primary objective of this directive is to
assess the overall capital available to the group,  rather than on an individual
company  basis,  and  identify  potential  risks.  At  December  31,  2002,  our
international  insurance businesses that are subject to the EU Directives are in
compliance with such, on both an individual and group basis.

                                       59

<PAGE>
                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


13.   Contingencies and Commitments

There are no pending legal  proceedings  beyond the ordinary  course of business
that, in our opinion, based on information available at the date of this report,
would have a material adverse effect on our  consolidated  results of operations
or financial condition, except as noted in the following paragraphs.

As a result of the September 11, 2001 terrorist  attack,  the World Trade Center
complex  in New York  City  ("WTC")  was  destroyed.  Industrial  Risk  Insurers
("IRI"),  an affiliate of ERC, was one of the primary insurers of the WTC with a
policy limit of $237 million.  The principal  lessee of the WTC is alleging that
the  damage to  (i.e.,  the loss of) each of the "twin  towers"  was a  separate
occurrence,  requiring  payment of up to two times the policy limits.  It is the
contention  of all insurers of the WTC that the policies  were written in such a
way that the loss constituted one occurrence. Suit has been filed by the insured
in the United States  District Court in New York seeking a declaratory  judgment
on this  question.  IRI is a  party  to  this  suit,  as are  several  of  ERC's
reinsureds.  Discovery in the suit is continuing,  and trial is expected in late
2003 or 2004. Both IRI and ERC have retrocessional coverage on their exposure to
WTC losses covering a portion of losses incurred. We believe there is compelling
support for the contention that the loss constituted a single occurrence, and we
are  prepared to defend this  position  vigorously.  We have  established  claim
reserves on this basis. In addition,  we have provided  reinsurance  coverage to
various  other primary  insurers of the WTC and, if it is ultimately  determined
that the loss of each of the WTC towers constitutes a separate insured event, we
may incur  some  level of  additional  claims  as a result  of this  reinsurance
coverage.  We believe that our maximum  exposure  resulting  from an unfavorable
outcome to this matter is approximately $300 million.

ERC is in dispute  with a  reinsured  involving  approximately  $150  million of
coverage.  The reinsured has filed claims for $100 million and the full limit of
$150 million is expected to be requested  by the end of 2003.  To date,  ERC has
made payments  totaling  approximately $40 million under a reservation of rights
but has refused to pay anything  further.  ERC is contesting  liability based on
the manner in which claims are computed and may seek rescission of the agreement
if the matter proceeds to arbitration. ERC has not posted additional reserves to
cover amounts not paid to date.

ERC filed suit against a cedant seeking  damages and rescission of a reinsurance
contract  covering  non-standard  auto  insurance  assumed by ERC.  ERC  asserts
several legal theories to support its claims,  including  misrepresentation  and
negligence.  The cedant filed a counterclaim  asserting breach of contract,  and
asserted  that ERC's actions  have,  among other things,  impacted its financial
status.  The cedant alleges the total amount due under the reinsurance  contract
could reach  approximately  $80 million.  The case is in discovery  and trial is
unlikely  until  late 2003 or 2004.  We  believe  there is  compelling  evidence
supporting  our damages claim as well as the  contention  that this  reinsurance
contract should be rescinded. We intend to pursue this matter vigorously.

In the normal course of business, we make commitments to fund future investments
in certain  venture  capital  partnerships.  Such unfunded  commitments  totaled
approximately  $51  million at December  31, 2002 and are  expected to be funded
over the next 1-5 years.

14.   Derivatives and Other Financial Instruments

Our global  business  activities  routinely deal with  fluctuations  in interest
rates,  currency exchange rates and other asset prices. We apply strict policies
to managing each of these risks,  including prohibitions on derivatives trading,
derivatives  market-making  or  other  speculative  activities.  These  policies
require the use of derivative  instruments  in concert with other  techniques to
reduce or eliminate these risks.

Cash Flow Hedges

Under  SFAS 133,  cash flow  hedges are hedges  that use simple  derivatives  to
offset the variability of expected future cash flows. Variability can arise from
changes in interest rates or currency exchange rates. For example, certain loans
used to finance our foreign operations are denominated in functional  currencies
other  than the U.S.  dollar  reporting  currency.  To  eliminate  the  currency

                                       60
<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


14. Derivatives and Other Financial Instruments (continued)

exposure,  we will  contractually  commit to pay a fixed rate of interest in the
functional  currency to a counterparty  who will pay us a fixed rate of interest
in the reporting  currency (a "currency  swap").  These  currency swaps are then
designated  as a cash  flow  hedge  of the  associated  foreign  currency  fixed
rateloan.  If, as would be expected,  the  derivative is perfectly  effective in
offsetting  variability due to changes in currency  exchange rates on the loans,
changes in its fair value are  recorded  in a separate  component  in equity and
released to earnings  contemporaneously  with the earnings effects of the hedged
item. In 2002,  there were no amounts excluded from the measure of effectiveness
and no earnings effect from ineffectiveness of cash flow hedges.

At December 31, 2002,  amounts  related to  derivatives  qualifying as cash flow
hedges amounted to an increase in equity of $13.3 million, of which $1.4 million
is  expected to be  transferred  to  earnings  in 2003.  In 2002,  there were no
forecasted  transactions  that  failed to  occur.  At  December  31,  2002,  the
remaining term of the derivative  instrument  hedging a forecasted  transaction,
except that related to variability due to changes in foreign  currency  exchange
rates on an existing financial instrument, was approximately 3 years.

Net Investment Hedges

The net  investment  hedge  designation  under  SFAS  133  refers  to the use of
derivative  contracts or cash instruments to hedge the foreign currency exposure
of a net  investment in a foreign  operation.  We  principally  manage  currency
exposures  that result from net  investments  in  affiliates  by funding  assets
denominated  in local currency with debt  denominated in that same currency.  In
certain  circumstances,  such exposures are managed using currency forwards and,
until the first quarter of 2001, cross currency swaps.

Derivatives Not Designated as Hedges

SFAS 133 specifies  criteria that must be met in order to apply any of the three
classes of hedge accounting.  For example, hedge accounting is not permitted for
hedged items that are marked to market through  earnings.  We use derivatives to
hedge exposures when it makes economic sense to do so,  including  circumstances
in which the  hedging  relationship  does not qualify  for hedge  accounting  as
described in the following  paragraph.  Under SFAS 133,  derivatives that do not
qualify for hedge accounting are marked to market through earnings.

We use option  contracts,  including  caps,  floors and collars,  as an economic
hedge of changes in equity  prices on certain  types of assets and  liabilities.
For example, we use equity options to hedge the risk of changes in equity prices
embedded in insurance liabilities  associated with certain equity-linked annuity
contracts.

Fair Value of Derivatives

At December  31,  2002,  the fair value of  derivatives  in a gain  position and
recorded in "other assets" was $295 million and the fair value of derivatives in
a loss position and recorded in "other liabilities" was $47 million.

Counterparty Credit Risk

The risk that counterparties to derivative  contracts will be financially unable
to make payments to us according to the terms of the agreements is  counterparty
credit  risk.  We  are  exposed  to  credit-related   losses  in  the  event  of
non-performance by the counterparties to various contracts, but we do not expect
the  counterparties to fail to meet their obligations due to rigid  counterparty
credit exposure policies employed.

                                       61
<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

14. Derivatives and Other Financial Instruments (continued)

Financial Instruments

Assets  and  liabilities  that  are  reflected  in  the  accompanying  financial
statements 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;
such items include  investments,  cash,  amounts due from or to related parties,
accrued  investment income,  separate  accounts,  other receivables and payables
and, beginning in 2001, derivative financial instruments.  Apart from certain of
our borrowings and marketable securities, few of the instruments discussed below
are actively traded and their fair values must often be determined using models.
Although we have made every effort to develop the fairest representation of fair
values for this  section,  it would be unusual if the estimates  could  actually
have  been   realized  at  December   31,  2002  or  2001.   Other   assets  and
liabilities--those  not carried at fair  value--are  discussed below.

Borrowings - Based on quoted market prices or market comparables.

Investment  Contracts - 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.

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.

<TABLE>
<CAPTION>

                                                    December 31, 2002                             December 31, 2001
                                         ------------------------------------------  --------------------------------------------
                                                          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:
  Other cash financial instruments            (a)        131      131       131         (a)          45         46         46

Liabilities:
  Borrowings (b)                              (a)     (1,656)  (1,810)   (1,810)        (a)      (1,655)    (1,795)    (1,795)
  Investment contracts                        (a)     (1,746)  (1,822)   (1,822)        (a)      (1,846)    (1,851)    (1,851)
  Financial guaranty reinsurance           1,635         (17)     (17)      (24)     1,930           (9)       (10)       (13)

</TABLE>

(a) These financial instruments do not have notional amounts.
(b) See Note 9.

                                       62

<PAGE>

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

15.   Segment Information

We conduct  our  operations  principally  through  the  following  two  business
segments:

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

Our  domestic   property/casualty   operations   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,  we provide  insurance and  reinsurance for the healthcare
industry,  conduct  excess  and  surplus  lines and direct  specialty  insurance
business and participate in financially oriented reinsurance treaties.

International  property/casualty  operations are conducted  through a network of
businesses  and  branch  offices  located   throughout  the  world  and  include
reinsurance of property/casualty business in those countries and elsewhere.


Life Reinsurance Segment (Life)

Our domestic and international life operations  include  reinsurance of life and
health insurance and annuity products and participation in financially  oriented
reinsurance  treaties.  The international  life operations are conducted through
businesses and branch offices as detailed above and include  reinsurance of life
business in those countries and elsewhere.

Our industry segment activity is summarized as follows:
<TABLE>
<CAPTION>



                                                  2002 - Industry Segments
                                            ------------------------------------
                                                Property/
(In millions)                                   Casualty     Life   Consolidated
                                            -----------------------------------

<S>                                             <C>         <C>         <C>
Net premiums written                            $ 5,771     $ 2,121     $ 7,892
                                                =======     =======     =======

Net premiums earned                             $ 5,667     $ 2,120     $ 7,787
Net investment income                               680         392       1,072
Net realized gains on investments                   234           7         241
Other revenues                                       53         123         176
                                                -------     -------     -------
Total revenues                                    6,634       2,642       9,276
                                                -------     -------     -------

Claims, claim expenses and policy benefits        7,432       1,850       9,282
Insurance acquisition costs                       1,412         455       1,867
Other operating costs and expenses                  643         239         882
                                                -------     -------     -------
Total costs and expenses                          9,487       2,544      12,031
                                                -------     -------     -------

Earnings (loss) before income taxes             $(2,853)    $    98     $(2,755)
                                                =======     =======     =======

Total assets at December 31                     $38,405     $13,381     $51,786
                                                =======     =======     =======

</TABLE>

                                       63
<PAGE>

                    GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


15. Segment Information (continued)

<TABLE>
<CAPTION>
                                                    2001 - Industry Segments
                                               ---------------------------------
                                               Property/
(In millions)                                  Casualty       Life  Consolidated
                                               ---------------------------------

<S>                                            <C>          <C>        <C>
Net premiums written                           $  5,551     $  1,841   $  7,392
                                               ========     ========   ========

Net premiums earned                            $  5,302     $  1,883   $  7,185
Net investment income                               833          369      1,202
Net realized gains on investments                   380           56        436
Other revenues                                      210          158        368
                                               --------     --------   --------
Total revenues                                    6,725        2,466      9,191
                                               --------     --------   --------

Claims, claim expenses and policy benefits        5,389        1,586      6,975
Insurance acquisition costs                       1,397          433      1,830
Other operating costs and expenses                  665          187        852
                                               --------     --------    -------
Total costs and expenses                          7,451        2,206      9,657
                                               --------     --------    -------

Earnings (loss) before income taxes and
   cumulative effect of change in
   accounting principle                        $   (726)    $    260    $  (466)
                                               ========    =========    =======


Total assets at December 31                     $33,611     $11,507     $45,118
                                                =======     =======     =======
</TABLE>


<TABLE>
<CAPTION>

                                                  2000 - Industry Segments
                                           -------------------------------------
                                             Property/
(In millions)                                Casualty      Life     Consolidated
                                           -------------------------------------
<S>                                          <C>          <C>          <C>
Net premiums written                         $  6,554     $  1,637     $  8,191
                                             ========     ========     ========

Net premiums earned                          $  6,377     $  1,624     $  8,001
Net investment income                             953          362        1,315
Net realized gains on investments                 425           97          522
Other revenues                                    169          124          293
                                             --------     --------     --------
Total revenues                                  7,924        2,207       10,131
                                             --------     --------     --------

Claims, claim expenses and policy benefits      5,335        1,392        6,727
Insurance acquisition costs                     1,553          360        1,913
Other operating costs and expenses                669          217          886
                                             --------      -------     --------
Total costs and expenses                        7,557        1,969        9,526
                                             --------      -------     --------

Earnings before income taxes                 $    367      $   238     $    605
                                             ========      =======     ========

Total assets at December 31                   $28,200      $10,364      $38,564
                                              =======      =======      =======
</TABLE>
                                       64

<PAGE>

                    GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)


15.  Segment Information (continued)

Our  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 companies  located outside the United States,  predominantly
in Europe.
<TABLE>
<CAPTION>


                                                                               Geographic Area
                                                            -----------------------------------------------------
(In millions)                                                  Domestic         International      Consolidated
                                                            -----------------------------------------------------

<S>                                                           <C>                 <C>                <C>
2002:
   Revenues                                                   $  5,994            $  3,282           $  9,276
   Loss before income taxes                                     (2,115)               (640)            (2,755)
   Identifiable assets at December 31                           29,958              21,828             51,786

2001:
   Revenues                                                   $  5,829            $  3,362          $   9,191
   Earnings (loss) before income taxes and cumulative
          effect of change in accounting principle                (468)                  2               (466)
   Identifiable assets at December 31                           27,489              17,629             45,118

2000:
   Revenues                                                   $  5,617            $  4,514           $ 10,131
   Earnings before income taxes                                    357                 248                605
   Identifiable assets at December 31                           23,285              15,279             38,564

</TABLE>


16.  Unaudited Quarterly Financial Data

Our quarterly  financial  results and other data in 2002 and 2001 are summarized
as follows:
<TABLE>
<CAPTION>


                                            Year ended December 31, 2002
                                   ---------------------------------------------
                                    First       Second        Third      Fourth
(In millions)                      Quarter      Quarter      Quarter     Quarter
                                   ---------------------------------------------

<S>                                <C>          <C>          <C>         <C>
Net premiums earned                $1,991       $1,719       $2,116      $1,961
Net investment income                 271          272          272         257
Total costs and expenses            2,246        2,367        2,781       4,637
Net earnings (loss)                    85         (217)        (123)     (1,478)
</TABLE>

<TABLE>
<CAPTION>

                                            Year ended December 31, 2001
                                   ---------------------------------------------
                                    First       Second       Third       Fourth
                                   Quarter      Quarter     Quarter      Quarter
                                   ---------------------------------------------

<S>                                <C>          <C>          <C>         <C>
Net premiums earned                $2,011       $2,000       $1,066      $2,108
Net investment income                 316          290          303         293
Total costs and expenses            2,332        2,339        2,100       2,886
Net earnings (loss)                    71          126         (238)       (154)

</TABLE>

                                       65


<PAGE>

























                          Financial Statement Schedules








                                       66



<PAGE>

                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

                  Condensed Financial Information of Registrant
                                (Parent Company)

                              Statement of Earnings
<TABLE>
<CAPTION>



                                                      Year ended December 31,
                                               ---------------------------------
(In millions)                                    2002         2001         2000
                                               ---------------------------------

<S>                                            <C>          <C>            <C>
Revenues
Net investment income                          $   11       $   12         $ 11
Equity in undistributed earnings (losses)      (1,879)        (239)         582
Dividends from subsidiaries                       253          136           88
Other income                                       26           21            7
                                               ------       ------         ----
Total revenues                                 (1,589)         (70)         688

Costs and Expenses
Interest expense                                  125          127          121
Other operating costs and expenses                 75           52           34
                                               ------       ------         ----
Total costs and expenses                          200          179          155
                                               ------       ------         ----

Earnings (loss) before income taxes            (1,789)        (249)         533

Income tax benefit                                 56           54           48
                                               ------         ----         ----

Net earnings (loss)                           $(1,733)       $(195)        $581
                                              =======        =====         ====
</TABLE>



See Notes to Condensed Financial Information of Registrant.

                                       67

<PAGE>


                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

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

                         Statement of Financial Position

<TABLE>
<CAPTION>

                                                                December 31,
                                                           ---------------------
(In millions)                                                2002          2001
                                                           ---------------------
<S>                                                        <C>           <C>
Assets
Cash                                                       $   14        $   24
Investment in consolidated subsidiaries                     8,178         7,944
Fixed maturity securities available for sale,
    at fair value                                               -             5
Short-term investments, at amortized cost                     166            12
Indebtedness of related parties                               215           198
Other assets                                                   24            25
                                                           ------        ------

Total assets                                               $8,597        $8,208
                                                           ======        ======

Liabilities and equity
Other liabilities                                          $   87        $   81
Long-term borrowings                                        1,656         1,655
Indebtedness to related parties                               190           110
                                                           ------        ------
   Total liabilities                                        1,933         1,846
                                                           ------        ------


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 - 1,600 shares                        8             5
Paid-in capital                                             3,222         1,425
Retained earnings                                           3,262         5,002
Accumulated unrealized gains on investment
    securities - net (a)                                      149            23
Accumulated foreign currency translation
    adjustments - (a)                                        (138)         (241)
Derivatives qualifying as hedges - (a)                         11            (2)
                                                           ------        ------
   Total stockholder's equity                               6,664         6,362
                                                           ------        ------

Total liabilities and equity                               $8,597        $8,208
                                                           ======        ======
</TABLE>


(a)  The  sum  of   accumulated  unrealized   gains  on  investment  securities,
     accumulated  foreign  currency  translation   adjustments  and  derivatives
     qualifying as hedges constitutes  "Accumulated  nonowner changes other than
     earnings," as shown in the Consolidated  Statement of Stockholder's Equity,
     and was  $22  million  and  $(220)  million  at  year-end  2002  and  2001,
     respectively.

See Notes to Condensed Financial Information of Registrant.


                                       68
<PAGE>

                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES

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

                             Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                         Year ended December 31,
                                                                    --------------------------------
(In millions)                                                          2002        2001       2000
                                                                    --------------------------------


<S>                                                                  <C>           <C>         <C>
Cash Flows From Operating Activities
Net earnings (loss)                                                  $(1,733)      $(195)      $581
Adjustments to reconcile net earnings (loss) to cash
   from operating activities:
     Equity in undistributed earnings                                  1,879         239       (625)
     Other, net                                                            6         (12)        54
                                                                      ------       -----       ----
   Cash from operating activities                                        152          32         10
                                                                      ------       -----       ----

Cash Flows From Investing Activities
Fixed maturity securities available-for-sale:
     Purchases                                                             -         (46)         -
     Sales                                                                 5          33          -
Net (purchases) sales of short-term investments                         (154)         77         (7)
Capital contribution to subsidiary                                       (80)          -          -
Investments in consolidated subsidiaries                                   -        (440)      (108)
Other investing activities                                                (8)          -          -
                                                                       -----       -----       ----
   Cash used for investing activities                                   (237)       (376)      (115)
                                                                       -----       -----       ----

Cash Flows From Financing Activities
Proceeds from related party borrowings                                    82           -        126
Payments on related party borrowings                                       -         (26)      (708)
Proceeds from long-term borrowings                                         -           -        691
Capital contributions received                                             -         400          -
Dividends paid                                                            (7)         (7)        (7)
                                                                       -----       -----       ----
   Cash from financing activities                                         75         367        102
                                                                       -----       -----       ----

Increase (decrease) in cash                                              (10)         23         (3)
Cash at beginning of year                                                 24           1          4
Cash at end of year                                                    $  14       $  24       $  1
                                                                       =====       =====       ====
</TABLE>


See Notes to Condensed Financial Information of Registrant.

                                       69

<PAGE>


                                                                     Schedule II

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED 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., which is a
wholly-owned subsidiary of General Electric Company ("GE Company").

GE Global Insurance's primary assets are its 100% investment in the common stock
of the following companies:  1) ERC, a Missouri-domiciled  property and casualty
reinsurance  company,  2) GE Re, an  Illinois-domiciled  property  and  casualty
reinsurance  company  principally  doing  business  through  intermediaries,  3)
Medical Protective Corporation,  an Indiana-domiciled  insurance holding company
and 4) CORE, a Delaware-domiciled  reinsurance holding company, whose underlying
reinsurance   operations  are  in  run-off.   ERC,  GE  Re,  Medical  Protective
Corporation  and CORE own 100% of the common stock of various other property and
casualty insurance/reinsurance and life reinsurance companies.

GE Global Insurance is included in the consolidated federal income tax return of
GE Company.  The provision for estimated taxes payable includes the effect of GE
Global Insurance on the consolidated return.

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
$253  million,   $136  million  and  $109  million  in  2002,   2001  and  2000,
respectively.


                                       70


<PAGE>


                                                                    Schedule III

                     GE GLOBAL INSURANCE HOLDING CORPORATION
                          AND CONSOLIDATED SUBSIDIARIES

                       Supplementary Insurance Information
<TABLE>
<CAPTION>



    Column A                 Column B         Column C             Column D       Column E          Column F
------------------------------------------------------------------------------------------------------------
                             Deferred       Claims and Claim
                            Insurance         Expenses and                       Accumulated          Net
                           Acquisition        Future Policy        Unearned        Contract        Premiums
(In millions)                 Costs         Benefit Reserves       Premiums         Values          Earned
                           ---------------------------------------------------------------------------------

<S>                         <C>                  <C>                <C>             <C>             <C>
December 31, 2002:
   Property/Casualty        $  493               $23,839            $3,038          $    -          $5,667
   Life                      1,389                 5,170               193           2,826           2,120
                            ------               -------            ------          ------          ------
   Total                    $1,882               $29,009            $3,231          $2,826          $7,787
                            ======               =======            ======          ======          ======

December 31, 2001:
   Property/Casualty        $  504               $20,882            $2,598          $    -          $5,302
   Life                      1,111                 4,116               165           2,909           1,883
                            ------               -------            ------          ------          ------
   Total                    $1,615               $24,998            $2,763          $2,909          $7,185
                            ======               =======            ======          ======          ======

December 31, 2000:
   Property/Casualty        $  547               $16,932            $2,368          $    -          $6,377
   Life                        947                 3,382               216           2,161           1,624
                            ------               -------            ------          ------          ------
   Total                    $1,494               $20,314            $2,584          $2,161          $8,001
                                                                    ======          ======          ======
</TABLE>

<TABLE>
<CAPTION>



                             Column G         Column H              Column I       Column J        Column K
                           ----------------------------------------------------------------------------------
                                                                 Amortization      Other
                                            Claims, Claim         of Deferred     Operating
                               Net          Expenses and           Insurance       Costs            Net
                            Investment     Policy Benefits        Acquisition       and           Premiums
                             Inconme          Incurred               Costs        Expenses         Written
                           ----------------------------------------------------------------------------------

<S>                         <C>               <C>                  <C>              <C>            <C>
December 31, 2002:
   Property/Casualty        $  680            $7,432               $1,412           $643           $5,771
   Life                        392             1,850                  455            239
                            ------            ------               ------           ----
   Total                    $1,072            $9,282               $1,867            882
                            ======            ======               ======           ====

December 31, 2001:
   Property/Casualty        $  833            $5,389               $1,397            665           $5,551
   Life                        369             1,586                  433            187
                            ------             -----               ------           ----
   Total                    $1,202            $6,975               $1,830           $852
                            ======            ======               ======           ====

December 31, 2000:
   Property/Casualty        $  953            $5,335               $1,553           $669           $6,554
   Life                        362             1,392                  360            217
                            ------            ------               ------           ----
   Total                    $1,315            $6,727               $1,913           $886
                            ======            ======               ======           ====
</TABLE>


                                       71
<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 7, 2003                                                  By:  /s/ Marc A. Meiches
                                                                   ------------------------------
                                                                    Marc A. Meiches
                                                                    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/ RONALD R. PRESSMAN           President, Chief Executive Officer and Director                March 7, 2003
----------------------------------------
          Ronald R. Pressman             (Principal Executive Officer)

          /s/ MARC A. MEICHES            Senior Vice President, Chief Financial Officer and Director    March 7, 2003
----------------------------------------
            Marc A. Meiches              (Principal Financial Officer)

        /s/ DENNIS D. DAMMERMAN          Chairman                                                       March 7, 2003
----------------------------------------
          Dennis D. Dammerman

          /s/ JAMES A. PARKE             Director                                                       March 7, 2003
----------------------------------------
            James A. Parke

        /s/ NICHOLAS J. SPAETH           Senior Vice President and General Counsel                      March 7, 2003
----------------------------------------
          Nicholas J. Spaeth

        /s/ WILLIAM J. STEILEN           Vice President and Controller                                  March 7, 2003
----------------------------------------
          William J. Steilen             (Principal Accounting Officer)
</TABLE>


                                       72

<PAGE>



                     GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES


                            CERTIFICATION PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002



                                  CERTIFICATION


I, Ronald R. Pressman, certify that:

1.   I  have  reviewed  this  annual report on Form 10-K of GE Global  Insurance
     Holding Corporation;

2.   Based on  my  knowledge,  this  annual  report does  not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based  on  my  knowledge,  the financial  statements,  and other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and  I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

       a) designed  such  disclosure  controls and  procedures  to  ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

       b) evaluated  the  effectiveness of  the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

       c) presented  in  this   annual    report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The  registrant's  other  certifying  officers and I have disclosed,  based
     on our most recent evaluation,  to the registrant's  auditors and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

       a) all significant deficiencies  in  the design  or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

       b) any  fraud,  whether  or  not material,  that  involves  management or
          other  employees  who  have a  significant  role  in the  registrant's
          internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.


Date:  March 7, 2003




 /s/ Ronald R. Pressman
-------------------------
Ronald R. Pressman
Chief Executive Officer

                                       74

<PAGE>

                    GE GLOBAL INSURANCE HOLDING CORPORATION
                           AND CONSOLIDATED SUBSIDIARIES


                            CERTIFICATION PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002



                                  CERTIFICATION


I, Marc A. Meiches, certify that:

1.   I  have  reviewed  this  annual report on Form 10-K of GE Global  Insurance
     Holding Corporation;

2.   Based on  my  knowledge,  this  annual  report does  not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based  on  my  knowledge,  the financial  statements,  and other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and  I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

       a) designed  such  disclosure  controls and  procedures  to  ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

       b) evaluated  the  effectiveness of  the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

       c) presented  in  this   annual    report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The  registrant's  other  certifying  officers and I have disclosed,  based
     on our most recent evaluation,  to the registrant's  auditors and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

       a) all significant deficiencies  in  the design  or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

       b) any  fraud,  whether  or  not material,  that  involves  management or
          other  employees  who  have a  significant  role  in the  registrant's
          internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual report whether there were significant  changes in internal  controls
     or in other  factors  that could  significantly  affect  internal  controls
     subsequent  to the  date  of our  most  recent  evaluation,  including  any
     corrective  actions with regard to  significant  deficiencies  and material
     weaknesses.


Date:  March 7, 2003




 /s/ Marc A. Meiches
-------------------------
Marc A. Meiches
Chief Financial Officer


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