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The shares of General Electric fell after a major credit rating agency echoed concerns over the case raised last week by Bernie Madoff, the whistleblower. Harry Markopolos.
Fitch Ratings released an insurance update that looked at 16 long-term care providers – and identified GE's portfolio as the second risk. The only long-term care insurer deemed to be riskier was Genworth Financial, which was split from GE in 2004.
Fitch called GE's insurance business "below average" in terms of reserves and said his exposure to expensive long-term care insurance payments was "very high."
The comments come just days after Markopolos on Thursday labeled the maker of bulbs "more fraudulent than Enron" – dropping the title to 11%. Like Fitch, Markopolos also targeted GE's long-term care insurance business, saying losses could force GE into bankruptcy.
GE shares slipped 3.3% to $ 8.38.
With more than 250,000 long-term care insurance policies and gross reserves of just $ 21 billion, GE is one of the few US insurers struggling with decades-old care commitments that have proven to be very challenging. more expensive to manage than at the time of the sale, explained Anthony Beato, Fitch's Director of Insurance.
Beato added that the long-term care market, which covers home support and nursing expenses, "remains a scourge" for insurers.
GE replied that he was not under-reserved compared to his peers.
"Our current reserves are well managed for the characteristics of our long-term care portfolio," he wrote to The Post. "Our future liabilities depend on variables that will be played over decades, not years."
The conglomerate also received the approval of Joe Ritchie, an analyst at Goldman Sachs, who, after reviewing "reserves by policy" across the industry, said in a report that GE seemed better placed than many of his peers.
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