Thread by @adanthar

Today's GE whistleblower news is pretty big at first glance but this report is 175 pages. So I'm gonna tweet a live summary of this thing out to my 75 followers because I have no life 1/x

Report URL: fm.cnbc.com/applications/c…

Page 1: 95% of GE's entire insurance business is 8 deals. On its own, sounds not great, not terrible. The report claims massive losses on all 8 (impressive) 2/x

Page 3: But they have reinsurance (insurance on their insurance)! Err, the reinsurance company they contract with is also failing.

Also on page 3: Using a normal ins co's accounting methods on GE's balance sheets shows they'd need 18.5 billion reserved to pay out. 3/x

Page 4: there's also the time they bought 62% of Baker Hughes (oil and gas co), then sold off 12% of the investment a year later losing 2B on the trade, but didn't write down the remaining 50% of BH to account for the new lower price (another 9.1b cut) 4/x

Pages 5-6, summarized: why is GE claiming good returns on parts of its business when even its joint venture partners in those same parts claim they're losing money? also, how can your industrial biz (a huge chunk of GE) earn 14.7% over 7 years while GE itself is earning 1.6%? 5/x

Page 14: a chart from GE showing their business lines consistently do double digit profit margins, except a single -3% in the power unit in 2018 which led to a...22 billion dollar writedown? what? something smells *terrible* here 6/x

Pages ~20-30: the single biggest liability is a 29B unfunded life insurance mandate. The company insures ~infinity old people on those "pay $X starting now and your premium never changes/we'll pay out $Y as long as you keep paying" policies 7/x

These things used to be very common. Then life expectancy raised as did medical expenses - so now you're stuck paying costs of care for endless 80-90 year olds. The policies themselves havent been sold for many years but GE is still on the hook for the ones it has. 8/x

Actual title of page 45:
~95% of GE’s Reinsurance Agreements Are Among
the Worst in the LTC Market and Will Only Get Worse As LTC Policyholders Age

lol. 9/x

Page 61: GE has known it was on the hook for this 29B for at least six years now. It's done nothing, except that one time when Kansas found they didn't have enough reserves to cover part of this. So GE told KS they'd pay it back over 7 years because they don't have the $ now 10/x

Meanwhile, they spent over 100 billion on shareholder dividends and some equally crazy amount on stock buybacks to keep the price up (it's cratered > 50% since 2012 anyway) 11/x

Pages 40-80 summarized: GE is on the hook for many tens of billions in these long term care policies but has very little money to cover this. Every other ins co has more than enough reserved as per various state/fed laws, so why does GE think it's an exception? 12/x

Page 83 title:

"GE’s Future Cash Flow

The $159 Billion Problem"

Yikes

13/x

The rest of the report restates the earlier claims and goes into several specific case studies (Baker Hughes, GE Aviation and others). The points made are compelling.

14/x

Not going to summarize all of them, because I'm not an accountant (and especially not a forensic accountant) and can't comment on whether the *many* claims of accounting fraud are accurate.

(there are enough claims there that only a fraction being true is enough to BK GE) 15/x

TLDR: if you have any kind of exposure to GE as of now, head for the hills 16/16