GE likely to ‘sell down’ its reinsurance operations

The head of General Electric’s (re)insurance arm has confirmed that the giant conglomerate will probably sell or spin-off all its underwriting units in due course.

Published on August 25, 2005

Ron Pressman was speaking only a month after the group confirmed the sale of a healthcare subsidiary Medical Protective Corp to Berkshire Hathaway for $825mn.

GE will probably “sell down to no involvement in the insurance sector”, he explained to Bloomberg.

“Two to three years from now it probably will be a more robust (mergers and acquisitions) market. We’re patient. If something comes at us soon, great. If it takes a couple of years, so be it,” he added.

Insurance businesses such as Medical Protective can operate better if they are not “trapped” and “starved for capital”, he commented.

Speculation over GE’s commitment to its insurance arm has followed the company since 2002 which saw the injection of $1.8bn after-tax to recapitalize its loss struck reinsurance operations following a series of heavy reserve charges.

At the time, the company was thought to have entered into discussions with Berkshire Hathaway about a possible sale but nothing came to fruition.

Separately, GE Insurance Solutions revealed this week that its chief operating officer Rick Smith would leave the company next month to become the chairman and chief executive of consumer credit rating company Equifax.