ERC Life And P-C Operations Up For Sale
By Jim Connolly, NU Life-Health Senior Editor
NU Online News Service, Nov. 22, 9:49 a.m. EST?The life and property-casualty business of GE Employers Reinsurance Corp. are up for sale, and a deal to dispose of the life reinsurance unit is planned for the first half of 2003, the reinsurer's spokesman Dean Davison said.
ERC, based in Overland Park, Kan., does not fit the business model of General Electric, Jeff Immelt, GE chairman and chief executive officer, said yesterday during an analyst call to discuss earnings in 2002 and 2003.
In his remarks and comments accompanying slides, Mr. Immelt said that ERC has not met GE's performance expectation. Management responsibility concerning ERC would be to maximize investor returns and "exit with deal certainty."
In his presentation, Mr. Immelt noted that since 1984, ERC has had an 8.5 percent cost of capital return.
During the presentation, Mr. Immelt added that an additional $1.4 billion fourth-quarter 2002 after-tax reserve strengthening was anticipated for the reinsurance operations.
According to the presentation slides, $734 million in 2002 claims losses was initially anticipated for the unit. However, a Nov. 15 actuarial update provided a new estimate of $1.162 billion in loss experience for the year.
Factors contributing to increased claims cost included an update on World Trade Center losses, as well as large European losses.
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