GE Mulls Break-Up After Huge Charges

US turbine-making giant GE is considering its break-up to cover a $15bn shortfall in reserves out to 2024.

CEO John Flannery said January 16 there is “an examination of options… that could result in many permutations including separately traded assets.” He said GE would remain focused on power, aviation and healthcare, but added that those divisions would also not be excluded from that review.

The manufacturing-to-financial products giant announced January 16 that a reserve testing for GE Capital’s run-off insurance portfolio, NALH, had necessitated an after-tax charge of $6.2bn in 4Q 2017. 

GE Capital now expects to make statutory reserve contributions of some $15bn over seven years, after NALH’s primary regulator, the Kansas Insurance Department, approved a phased contribution of $3bn in 1Q2018 and $2bn annually from 2019 through 2024.

GE though said a review of sorts was ongoing before the reserves announcement and that, since becoming CEO August 2017, Flannery had promised to take a comprehensive look at every aspect of GE. The company last year merged its oil & gas equipment division with drilling services firm Baker Hughes, to become BHGE.

It also announced January 17 that Peter Stracar has been appointed to head GE’s European region, succeeding Mark Hutchinson who retired January 1. Stracar will report to Alex Dimitrief, CEO of GE’s Global Growth Organisation.