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GE Subpoenaed in Reinsurance Probe

The company is confident its contracts were accounted for properly.
Author:

The

Securities and Exchange Commission

subpoenaed

General Electric

(GE) - Get Report

as part of its ongoing investigation into finite-risk reinsurance contracts, the company said Monday.

GE, whose titanic financial services unit is a major player in the commercial finance and insurance industries, received the subpoena Friday from the SEC's New York regional office. It seeks documents relating to "certain loss mitigation insurance products" and "is general in nature," the company said.

State and federal regulators have been conducting a far-reaching inquiry into finite reinsurance, most famously targeting a 5-year-old contract between

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American International Group

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and

Berkshire Hathaway

(BRKA)

that AIG has since admitted involved limited risk transfer and was really just a loan used to burnish its financial statements.

GE said its GE Insurance Solutions unit has made "limited use of reinsurance with finite characteristics to manage the risk of catastrophic events."

The parent said its audit staff and auditor KPMG "have conducted numerous reviews of these agreements during the past several years as part of the company's intensive strategic reviews of Insurance Solutions' operations, and the company is confident that Insurance Solutions' risk transfer agreements have been properly structured, properly accounted for with appropriate risk transfer, and properly disclosed."

GE said it will cooperate with the subpoena.