General Electric has confirmed receiving a subpoena from the New York Regional Office of the Securities & Exchange Commission on April 29. The subpoena seeks documents relating to 'certain loss mitigation insurance products.'
The subpoena relates to investigations into finite-risk reinsurance products, for which US officials have been probing across the insurance industry for situations of abuse.
According to GE, one of its businesses, GE Insurance Solutions, has made limited use of reinsurance with finite characteristics to manage the risks of catastrophic events such as storms or hurricanes, and to protect itself and GE shareowners from the volatility that is inherent in its business.
However in a press release, the diversified energy and financial services company said that it was confident that its Insurance Solutions’ risk transfer agreements have been properly structured, properly accounted for with appropriate risk transfer, and properly disclosed.
The move comes in the follow up to investigations being launched into other reinsurance participating companies, with the most high profile case being that of AIG. The global insurance titan is being probed over allegedly wrongly accounting for reinsurance in its books to deceive investors about the health of the company’s finances.
General Electric said it would cooperate fully with the SEC’s investigation.