General Electric's (GE) leadership has its work cut out for it at its insurance "teach-in" on Thursday.
The conference will come to pass after a Wednesday that saw the second-largest one-day drop in GE shares of the Larry Culp era at the company.
The insurance business has been a sore spot for the Boston-based industrial giant in recent years, adding to pain across the power and industrial-based businesses that stung the shares on Wednesday.
Most notable of recent mishaps in the segment was the $6.2 billion after-tax charge disclosed in January 2018, which was followed by an announcement of a plan to set aside $15 billion over seven years to cover hundreds of thousands of years-old claims.
"At a time when we are moving forward as a company, a charge of this magnitude from a legacy insurance portfolio in run-off for more than a decade is deeply disappointing," former CEO John Flannery said at the time.
That precipitated a number of investor lawsuits and backlash against the company, which saw its stock fall precipitously.
The hangover of this business has been an albatross around the company's neck that has raised questions among analysts as to how GE will continue to come up with cash.
"We anticipate a deep-dive into the assumptions and calculations that determined that GE will need to fund another $9 billion into its insurance subsidiaries through 2024," RBC Capital Markets analyst Deane Dray said. "The key assumptions that will likely be discussed include morbidity, mortality, terminations, premium rate increases, discount rates, and more."
A timeline and a more firm actuarial estimation will be necessary to be highlighted by VP of Investor Communications Steve Winoker and senior members of the Insurance leadership team.
Considering traditionally strong businesses like GE Capital Aviation Services are still on the block by analyst estimations, and its prominent BioPharma business is being sold to Larry Culp's former company, Danaher (DHR) , the bleeding at this business needs to be clotted soon.
It will be incumbent upon the company, perhaps more so than any time in the past year, to explain how the tourniquet can be applied.
A webcast for the event can be found on GE's investor relations website. The broadcast will begin at 10 a.m. ET.
