General Electric Capital to acquire First Colony Financial services division pays $1.8 billion for insurer


STAMFORD, Conn. -- General Electric Co.'s financial services unit said it will buy First Colony Corp. for $1.8 billion as it expands into insurance and retirement planning.

General Electric Capital Corp. will pay $36.15 a share for Lynchburg, Va.-based First Colony, a life insurer that sells annuities, term insurance and structured settlements.

The acquisition will add $11 billion of assets to GE Capital's insurance and savings businesses, bringing the assets at GE Capital to $185 billion.

GE Capital is trying to offer more retirement-related financial services and advice. Opportunities are growing in the field as companies shift from traditional pension plans to 401(k) plans and individual retirement accounts, GE Capital Assurance and Great Northern Annuity President Patrick Welch said yesterday.

"It's really our goal to be the leader in providing solutions for wealth accumulation," he said. "Americans are getting older and they're living longer so they have to have a longer time perspective."

GE Capital's Seattle-based Great Northern Annuity unit sells annuities, insurance and mutual funds. The company expects the acquisition to boost 1997 earnings, but Welch declined to say how much.

GE Capital specializes in financial services. Businesses include equipment management and mortgage financing.

GE's strategy reflects how the lines between life insurance companies and financial service companies are blurring as they compete for the retirement savings of baby boomers. In the past year, GE Capital has also purchased the life insurance unit of American Express Co. and two units of Aon Corp.

"The target is the baby boomer type of market," said Ira Zuckerman, an analyst with Nutmeg Securities Ltd. "They're a significant player in that portion of the life insurance industry."

Zuckerman predicted that GE Capital will continue to make acquisitions, adding, "I would not be surprised if they went after a major mutual fund as well."

Welch acknowledged that the company is "always open to the opportunity to accelerate growth through acquisitions." He wouldn't comment on any specific buyout plans.

First Colony's American Life Insurance Co. and First Colony Life Insurance Co. will become units of GE Capital Assurance.

Pub Date: 8/06/96

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