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GE in Major Insurance Divestiture

It will sell 30% of its mortgage- and life-insurance assets in an IPO.
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General Electric

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said it plans to sell 30% of its life- and mortgage-insurance operations in an initial public offering, furthering its goal of reducing insurance's role at GE Financial to about 20% of assets.

The transaction will comprise the assets of GE Financial Assurance Holdings, a business with about $10 billion of book value that represents half of GE's insurance operations and 20% of the financial divisions assets. No price has been set for the IPO, which will be registered in the first half of next year.

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GE said the divestiture, following which it will gradually reduce its stake over three years, is part of a plan to reallocate capital to create a faster growing company.

"We have made tremendous progress, but in doing so we have limited the capital available to our insurance businesses," it said. "As a separate public company, Genworth will be able to pursue its own strategy with direct access to the capital markets to fund its own business initiatives."

GE will retain certain consumer marketing and financing operations, including GE Mortgage-Mexico and Partnership Marketing Group, as well as U.K.-based GE Life. GE's other principal insurance business, Employers Reinsurance Corporation, will not be part of the IPO.

GE closed at $28.44 Tuesday, up 63 cents, or 2.4%, after being upgraded by Merrill Lynch. It added another 8 cents in the after-hours market.