Earlier this month, General Electric took a $6.2 billion charge to its insurance unit for the fourth quarter. And the company said it will set aside another $15 billion over seven years to bolster reserves at GE Capital.
The charge had to do with long-term care policies (to pay for nursing homes and other late-life care) GE holds on its books.
So, one of the oldest and most highly-regarded companies in America just made a small, $21 billion miscalculation. Oops.
Keep in mind, GE’s entire market cap is only $140 billion.
The insurance charge, along with costs tied to the US tax plan, led GE to a $9.64 billion loss in the fourth quarter.
Then last week, GE announced the Securities and Exchange Commission (SEC) was investigating the company’s accounting practices(specifically how the company books revenue from long-term service contracts on things like power-plant repairs and jet-engine maintenance).
But this isn’t GE’s first run in with the SEC…