GE May Spin Off Reinsurance Unit

General Electric Co. is considering selling a 20% stake in its property and casualty reinsurance unit to the public and spinning off the remainder to investors later this year, people familiar with the situation said.

An initial public offering for shares in Employers Reinsurance Corp., a unit of GE’s financial arm GE Capital, could raise $2 billion, and the unit as a whole could fetch about $10 billion, the people said.

Employers Reinsurance has suffered declining profit in recent years, as claims exceeded forecasts and reinsurers cut prices to gain market share. It posted a loss last year because of $386 million in claims on policies for the World Trade Center and the airplanes used in the terrorist attacks.

The sale also may increase the chance that GE Capital will buy CIT, the financial services company owned by Tyco International, said Credit Suisse First Boston analyst Michael Regan.

Shares of GE fell 22 cents to $40.19 on the New York Stock Exchange.