Presidential appointment at GE has the industry wondering.

A new president has been brought in at GE Capital Mortgage Corp. amid major underwriting losses at its insurance division.

Shortly after a quarter in which the mortgage insurance division took a $180 million hit to reserves to cover expected losses, the position of president and chief operating officer was created for Mike Zafirovski, a highly regarded executive who most recently led General Electric's acquisition of Avis Lease-Europe.

Industry observers were quick to label the appointment a slap at GE Capital Mortgage's chairman, Gregory T. Barmore. Several said that the 30-year veteran had been "kicked upstaris" because of corporate unhappiness over the insurance losses.

But GE officials were just as quick to deny vociferously that the transfer of Mr. Zafirovski was related to dissatisfaction with the performance of Mr. Barmore or the company.

The appointment came as a response to quick growth at the company, according to Mr. Barmore, and it will allow him more time to focus on long-term issues.

Mr. Zafirovski will have responsibility for overseeing day-to-day business operations at GE Capital Mortgage, including mortgage insurance, mortgage servicing, and conduit operations.

As for the losses, "we are just doing what insurance companies are supposed to -- we protected investors against losses," Mr. Barmore said, stressing that General Electric Mortgage Insurance recorded net income of $27.7 million in the first three quarters of this year, compared to $82.6 million in the same period last year.

Much of the underwriting losses can be attributed to so-called pool insurance, a line of business GE recently exited. Pool insurance policies insure investors in large pools of mortgage-backed securities against defaults in the underlying loans.

GE wrote billions of dollars of such policies in the early 1990s, with much of the underlying collateral in southern California. A sharp downturn in housing prices in the region, combined with a refinancing boom that pushed premiums down, led to deep losses.

Most of the losses were for policies written from 1990 to 1992, and GE believes that the $180 million of reserves will be sufficient to handle losses.

"We did very little of this type of insurance in 1993 and 1994," said Mr. Barmore. The magnitude of the losses, however, was apparently far from routine.

The result of the charge to reserves was an underwriting loss of $93.5 million for the first three quarters of this year, compared to a gain of $35 million in the same period last year. After monies taken for in the most recent quarter, the insurance reserve stood at $485.8 million, according to Mr. Barmore.

Under the new organizational structure, all divisions of GE Capital Mortgage will report to Mr. Zafirovski, including the mortgage insurance unit, headed by Martin H. Heck.

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