Movers: GE, insurers fall sharply post-Japan earthquake

chart_ws_stock_generalelectriccompany.top.pngGeneral Electric shares have fallen sharply since Friday's earthquake. Click the chart for more data on GE. By Ken Sweet, contributing writer


NEW YORK (CNNMoney) -- Shares of General Electric dropped 2% Tuesday as investors questioned the future earnings potential of the industrial conglomerate's energy business in a post-Japanese earthquake environment.

The decline follows a 3.5% drop in GE (GE, Fortune 500) shares the day before.

chart_ws_stock_aflacinc.03.png
chart_ws_stock_prudentialfinancialinc.03.png

GE has become the U.S. company most tied to the Japanese crisis because it designed the six nuclear reactors at Japan's Fukushima Daiichi nuclear power plant. Current reports say Tokyo Electric Power Co. employees have been ordered to evacuate, and it appears a meltdown is highly possible at at least one of the reactors.

Analysts believe the selloff in GE shares is overblown. While GE's nuclear business may see an earnings drop, they say the rest of the company remains well-diversified.

Nuclear energy remains a small part of GE's overall business. The division had about $1 billion in revenue in 2010, compared with the $40 billion GE took in at its entire GE Energy business, according to a GE spokeswoman.

GE had about $152 billion in overall sales in 2010, making its nuclear division contribute less than 1% of total revenue.

Despite nuclear energy being a small part of its business, GE has been pushing to grow the company's nuclear energy division, especially as global energy conversation focuses around low-carbon forms of energy production.

"While nuclear energy has never been a big chunk of what GE does, it was always highlighted as a growth part of GE's business, particularly as nuclear energy was gaining more momentum," said Morningstar analyst Daniel Holland.

Last year the company added five new sales offices in Asia, and last week it announced it would begin selling its latest generation nuclear reactor model.

A meltdown at the old GE-branded nuclear reactors in Japan, combined with a chilly political climate for nuclear energy, could create more difficult headwinds for GE to grow that business, analysts said.

There is also the potential for legal liability related to the Japanese nuclear reactors, but analysts do not think that will eventually be the case. While the reactors were GE-designed, they were run and managed by the Tokyo Electric Power Co.

Deane Dray, an analyst with Citigroup, said GE is expected to remain financially insulated from any liability related to a possible nuclear meltdown due to a Japanese law that places the responsibility for nuclear accidents on the shoulders of the plant operator, not designer.

Insurers continue to decline on liability worries

Shares of Prudential (PRU, Fortune 500), Hartford Financial (HIG, Fortune 500) and Aflac (AFL, Fortune 500) also dropped sharply Tuesday as investors worried about how much exposure insurers have following Friday's earthquake and the potential of a nuclear meltdown.

Aflac, which does 75% of its business in Japan, saw its shares fall 6% in midday trading. The drop comes despite the company saying that only 5% of its in-force policies were from areas affected by the earthquake. Aflac reaffirmed its 2011 full-year guidance.

Prudential shares were down 2%. The New Jersey-based company recently increased its business in Japan, buying parts of AIG's non-life insurance business in Asia for $5 billion back in September.

Risk management firm AIR Worldwide gave an early estimate Sunday that the total amount of quake-related claims would be between $15.5 billion and $35.5 billion. The estimate is only for earthquake-related damages and does not take into full account the damages from the tsunami and the possibility of a meltdown at the Fukushima nuclear power plant.

With that in account, AIR expects this earthquake to cost more than Hurricane Katrina.  To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.05%3.98%
15 yr fixed3.44%3.40%
5/1 ARM3.89%3.82%
30 yr refi4.04%3.98%
15 yr refi3.44%3.40%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 25,373.27 -403.34 -1.56%
Nasdaq 7,599.38 -151.46 -1.95%
S&P 500 2,811.02 -45.25 -1.58%
Treasuries 2.31 -0.08 -3.47%
Data as of 12:52pm ET
Company Price Change % Change
Advanced Micro Devic... 26.27 -1.14 -4.14%
General Electric Co 9.58 -0.31 -3.18%
Bank of America Corp... 27.84 -0.65 -2.27%
Apple Inc 178.44 -4.34 -2.37%
Ford Motor Co 9.80 -0.18 -1.76%
Data as of 12:37pm ET

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.