STAMFORD, Conn. -- General Electric Co. sold most of its insurance unit to Swiss Reinsurance Co. yesterday for $6.8 billion in cash and stock, completing a strategy to leave a troublesome segment and redeploy cash to investors and faster-growing businesses.
GE, the industrial products, financial services, and media conglomerate based in Fairfield, Conn., boosted its dividend and expanded its stock repurchase plan as it disclosed the deal.
The sale of most of GE Insurance Solutions fulfills a strategy the company began three years ago to sell its insurance businesses.
Over the last five years, the Insurance Solutions business lost $700 million and required the infusion of $3.2 billion, company officials said.
''We think this is a tremendous drag that has been eliminated from this company going forward," GE chairman and chief executive Jeffrey R. Immelt said during a conference call with analysts.
GE also found the insurance business too volatile. GE incurred $377 million in hurricane-related reinsurance losses in the third quarter.
GE expects to incur an aftertax loss of about $2.8 billion from the sale.
GE has sold five insurance businesses in recent years as it reshapes its portfolio by making major acquisitions in healthcare and entertainment. Immelt said GE will continue to make about $3 billion to $5 billion in industrial acquisitions annually, but he said the portfolio is in good shape to deliver double-digit earnings growth even when the economy slows.
GE, the world's largest company in market value, said its board has raised the quarterly dividend 14 percent to 25 cents a share, for a full-year 2006 total dividend of $1 a share, up from the current 88 cents a share.
The board also expanded the existing share repurchase plan from $15 billion through 2007 to $25 billion through 2008.
GE said it expects earnings per share of $1.92 to $2.02 next year, up 12 to 17 percent.
Under the deal, GE will own 10 to 13 percent of Swiss Re's common stock and will nominate GE vice chairman Dennis Dammerman to serve on the company's board.
GE said the deal should be completed by the middle of 2006, but it is still subject to regulatory approval.