On the heels of General Electric Co.’s (GE) announcement last week that it was exiting the bulk of its financial businesses, The Deal’s Dan Freed highlighted a nearly $28 billion insurance liability that GE may not be able to unload at any price. GE is keeping businesses including insurance and reinsurance for life and health risks and providing certain annuity products. Particularly problematic is long term care insurance, lifetime policies that pay for people who cannot perform basic functions on their own. GE likely opted to keep the businesses because it isn’t clear whether there are any buyers willing to take on the risks. In its latest 10-K filing, GE puts its total insurance liabilities at $27.578 billion. GE acknowledged in a slide presentation last week that insurance would be a drag on future GE Capital returns. A GE spokesperson declined to comment on why GE isn’t selling these assets, but said they are in runoff. According to an investment banker, GE has tried shopping some of the insurance businesses in the past but hasn’t been able to find a buyer. GE last week announced that it would sell most of the real estate and financial services assets of GE Capital to Blackstone Group (BX) and Wells Fargo & Co. (WFC) for $26.5 billion. Under terms of the transaction, GE agreed to sell a $9 billion commercial real estate mortgage portfolio in the U.S., U.K. and Canada to Wells Fargo at the same time as it sold a package of real estate assets, including commercial office properties, to Blackstone for $14 billion.
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