NU Online News Service, Nov. 21, 9:35 p.m. – The General Electric Company, Fairfield, Conn., is exploring the sale of both the life and the property-casualty businesses of GE Employers Reinsurance Corp., Overland Park, Kan., according to company spokesman Dean Davison.
The company hopes to complete the sale of the life reinsurance unit in the first half of 2003, Davison said.
ERC no longer fits GE’s business model, Jeff Immelt, GE chairman, said today during a discussion of 2002 and 2003 earnings.
Immelt said that ERC had not met GE’s performance expectations. Management has a responsibility to maximize investor returns and “exit with deal certainty,” he said.
ERC has had a cost-of-capital return of only 8.5% since 1984, and GE will be spending $1.4 billion in the fourth quarter to strengthen the unit’s reserves, Immelt said.
Originally, GE had expected the unit to report $734 million in 2002 claims losses, but now the company is expecting it to report $1.2 billion in losses, Immelt added.
Factors contributing to the increased claims costs include an update on World Trade Center losses and large European losses, Immelt said.