For GE, Potential Land Mines Linger in Insurance
The company has provided more transparency, but its assumptions for the legacy insurance business aren’t conservative.
A close look at GE’s numbers.
Photographer: Bloomberg/BloombergGeneral Electric Co.’s annual filing marked a step forward in the company’s efforts to be more transparent, but the added disclosures on its insurance operations also underscore the ongoing risks in that legacy business.
There was no outright bad news in the 10-K report released late Tuesday and GE went to much greater lengths than in the past to explain the state of its insurance liabilities and the relationship between its financial and industrial arms. That counts as a victory for the company as it tries to claw its way back from a crisis of cash flow and credibility. Notably, GE still expects to contribute a total of $14.5 billion to shore up its long-term care insurance reserves, in line with the funding gap it disclosed in January 2018. I had been concerned that number may grow as GE completed its statutory-reserve stress test; the fact that it didn’t is probably what drove the stock higher on Wednesday. “We are putting GE on firmer financial footing,” CEO Larry Culp said in a letter to shareholders that was also released late Tuesday, one day after the company announced the sale of its biopharmaceutical business to Danaher Corp. for $21.4 billion.