STAMFORD, Connecticut (AP) — General Electric Co. sold most of its insurance unit to Swiss Reinsurance Co. Friday for $6.8 billion in cash and stock, completing a strategy to leave a troublesome segment and redeploy cash to investors and faster-growing businesses.
GE, the industrial products, financial services and media conglomerate based in Fairfield, boosted its dividend and expanded its stock repurchase plan as it announced the deal.
The sale of most of GE Insurance Solutions fulfills a strategy the company began three years ago to sell its insurance businesses.
Over the last five years, the Insurance Solutions business lost $700 million and required the infusion of $3.2 billion of capital, company officials said.
"We think this is a tremendous drag that has been eliminated from this company going forward," GE Chairman and Chief Executive Jeff Immelt said during a conference call with analysts.
GE also found the insurance business too volatile. GE incurred $377 million in hurricane-related reinsurance losses in the third quarter.
GE expects to incur an after-tax loss of about $2.8 billion from the sale.
GE has sold five insurance businesses in recent years as part of a larger strategy of reshaping the portfolio of the world’s largest company by market value by making major acquisitions in health care and entertainment. Immelt said GE will continue to make about $3 billion to $5 billion in industrial acquisitions annually, but he said the portfolio is in good shape to deliver double-digit earnings growth even when the economy slows.
GE should consider selling more slower-growth businesses, such as lighting and appliances, said Robert Schenosky, an industrial analyst with Jefferies & Co.
