U.S. industrial group General Electric said Wednesday it is under investigation by the Security and Exchange Commission (SEC) after disclosing 6.2 billion U.S. dollars charge in its former insurance business.
The company revealed last week it would take a 6.2 billion dollars charge for the fourth quarter of 2017, because its insurance subsidiary underestimated the cost to pay for people who lived longer than projected.
GE pulled out of the long-term care insurance business in 2006, but the company is still saddled with obligations of contracts signed in 1990s and early 2000s.
"We've been notified by the SEC that they are investigating the process leading to the insurance-reserve increase and fourth-quarter charge, as well as GE's revenue recognition and controls for long-term service agreements," Jamie Miller, GE'S chief financial officer, said during a conference call with analysts and investors on Wednesday.
Miller said the investigation is in its early stages and the company is cooperating fully.
Sales of GE fell by 1 percent to 122.1 billion dollars in 2017 and operating profit margins contracted by 5.7 percentage points to 5.7 percent, according to data released by the company on Wednesday.