Socked by $6.2B charge, GE again mulls breakup

General Electric’s new boss said he’s weighing potentially dramatic changes, including a breakup into separate businesses, after the iconic manufacturer said it would take a major charge related to a legacy insurance operation.

“We are looking aggressively at the best structure or structures for our portfolio to maximize the potential of our businesses,” Chief Executive Officer John Flannery said Tuesday on a conference call with analysts. A review “could result in many, many different permutations, including separately traded assets, really in any one of our units, if that’s what made sense.”

Flannery renewed the discussion of a potential breakup after disclosing a $6.2 billion charge related to an old portfolio of longterm care insurance, another setback for a company already struggling with flagging demand in some key markets. The CEO, who took over for Jeffrey Immelt in August, is cutting costs and selling assets after GE posted last year’s biggest drop on the Dow Jones industrial average.

While Flannery vowed last year to consider all options for GE, he emphasized a plan in November to focus the company on jet engines, power-generation equipment and health-care machines. He also said the company would sell $20 billion in other assets, taking the spotlight off the possibility of a more ambitious restructuring.

Flannery said Tuesday he would continue to review the company’s strategic options and update investors in the spring.

GE had staged a modest rebound this year through Friday, with a 7.5 percent advance.

GE will take a $9.5 billion pretax charge related to GE Capital’s North American Life and Health portfolio, according to a company statement. The aftertax impact of $6.2 billion will be $7.5 billion when adjusted to the rate following the recent U.S. tax overhaul. GE’s finance unit will pay $15 billion over seven years to fill a shortfall in reserves.

“Needless to say, at a time when we are moving forward as a company, I am deeply disappointed at the magnitude of the charge,” Flannery said on the call. “It’s especially frustrating to have this type of development when we’ve been making progress on many of our key objectives.”

The Boston-based company hasn’t done any new business in the long-term care market since 2006. Still, it was saddled with

obligations on contracts written years ago. The liabilities can swell when claims costs are higher than expected or when investment income fails to meet projections .

GE said dividends from GE Capital to the parent company would remain suspended for the “foreseeable future” after the payment was halted during the portfolio review.

Investors have been bracing since GE warned last year about potential problems in its longterm care portfolio. At a shareholder meeting in November, Chief Financial Officer Jamie Miller said the company was likely to take a charge in excess of $3 billion.

While an “outsized charge” had been anticipated, the financial impact is “far in excess” of even the worst-case scenario expectations, Tom Gallagher, an analyst at Evercore, said in a note to clients.

JOHN MINCHILLO / AP Above, General Electric’s Global Operations Center in Cincinnati, as seen Tuesday. GE’s CEO told analysts he was considering a possible breakup of the company into separate units.