GE under investigation for huge loss in insurance business

US industrial group General Electric said Wednesday it is under investigation by the Security and Exchange Commission (SEC) after disclosing a 6.2-billion-US-dollar charge in its former insurance business for the fourth quarter of 2017.

The charge stems from its insurance subsidiary underestimating the cost to pay for people who lived longer than projected.

GE pulled out of the long-term care insurance business in 2006, but the company is still saddled with obligations of contracts signed in the 1990s and early 2000s.

"We've been notified by the SEC that they are investigating the process leading to the insurance-reserve increase and fourth-quarter charge, as well as GE's revenue recognition and controls for long-term service agreements," Jamie Miller, GE's chief financial officer, said during a conference call with analysts and investors on Wednesday.

Miller said the investigation is in its early stages and the company is cooperating fully.

Sales of GE fell by 1 percent to 122.1 billion US dollars in 2017 and operating profit margins contracted by 5.7 percentage points to 5.7 percent, according to data released by the company on Wednesday.

(ASIA PACIFIC DAILY)