notes to consolidated financial statements Note 10 Investment Securities 2006 2005 Gross Gross Gross Gross Amortized unrealized unrealized Estimated Amortized unrealized unrealized Estimated December 31 (In millions) cost gains losses fair value cost gains losses fair value GE Debt U.S. corporate $ 307 $ 24 $ $ 331 $ 307 $ 2 $ $ 309 Equity 10 2 (1) 11 26 131 (5) 152 317 26 (1) 342 333 133 (5) 461 GECS Debt U.S. corporate 21,323 1,042 (203) 22,162 20,578 1,317 (339) 21,556 State and municipal 915 38 (4) 949 810 47 (2) 855 Mortgage-backed (a) 6,356 38 (46) 6,348 5,748 44 (56) 5,736 Asset-backed 8,066 436 (23) 8,479 8,433 205 (19) 8,619 Corporate non-U.S. 1,664 92 (5) 1,751 2,043 209 (10) 2,242 Government non-U.S. 1,296 105 (3) 1,398 675 91 766 U.S. government and federal agency 820 45 (6) 859 803 61 (5) 859 Equity 4,500 1,060 (14) 5,546 879 231 (33) 1,077 44,940 2,856 (304) 47,492 39,969 2,205 (464) 41,710(b) ELIMINATIONS (7) (1) (8) (17) (6) (23) Total $45,250 $2,881 $(305) $47,826 $40,285 $2,332 $(469) $42,148 (a) Substantially collateralized by U.S. residential mortgages. (b) Included $16 million in 2005 of debt securities related to consolidated, liquidating securitization entities. See note 28. 86 ge 2006 annual report
notes to consolidated financial statements The following tables present the gross unrealized losses and estimated fair values of our investment securities. Less than 12 months 12 months or more Gross Gross Estimated unrealized Estimated unrealized December 31 (In millions) fair value losses fair value losses 2006 Debt U.S. corporate $2,478 $ (52) $ 4,260 $(151) State and municipal 164 (2) 77 (2) Mortgage-backed 668 (4) 1,851 (42) Asset-backed 1,393 (15) 674 (8) Corporate non-U.S. 112 (3) 93 (2) Government non-U.S. 33 (3) U.S. government and federal agency 66 (1) 247 (5) Equity 40 (12) 3,895 (3) Total $4,954 $ (92) $11,097 $(213) 2005 Debt U.S. corporate $3,633 $(131) $ 2,584 $(208) State and municipal 77 (2) Mortgage-backed 1,858 (22) 1,190 (34) Asset-backed 1,494 (10) 383 (9) Corporate non-U.S. 221 (8) 53 (2) U.S. government and federal agency 297 (5) Equity 84 (25) 38 (13) Total $7,664 $(203) $ 4,248 $(266) Our portfolio at December 31, 2006 and 2005, contained securities that had been, for 12 months or more, in an unrealized loss position for reasons other than changes in market interest rates. The level of this unrealized loss was insignifi cant, individually and in the aggregate, at December 31, 2006, refl ecting improved pricing in the commercial aircraft Enhanced Equipment Trust Certificate market. We review all of our investment securities routinely for other than temporary impairment as described in note 1. In accordance with that policy, we have provided for all amounts that we did not expect either to collect in accordance with the contractual terms of the instruments or to recover based on underlying collateral values. We presently intend to hold our investment securities in an unrealized loss position at December 31, 2006, at least until we can recover their respective amortized cost and we have the ability to hold our debt securities until their maturities. CONTRACTUAL MATURITIES OF GECS INVESTMENT IN DEBT SECURITIES (EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES) Amortized Estimated (In millions) cost fair value Due in 2007 $ 1,832 $ 1,826 2008–2011 4,766 4,784 2012–2016 3,470 3,545 2017 and later 15,950 16,964 We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations. Supplemental information about gross realized gains and losses on investment securities follows. (In millions) 2006 2005 2004 GE Gains $ 125 $ 6 $ 15 Losses, including impairments (1) (5) Net 124 1 15 GECS Gains 313 509 371 Losses, including impairments (181) (132) (149) Net 132 377 222 Total $ 256 $ 378 $ 237 In the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. Proceeds from investment securities sales amounted to $12,394 million, $14,047 million and $11,685 million in 2006, 2005 and 2004, respectively, principally from the short-term nature of the investments that support the guaranteed investment contracts portfolio. ge 2006 annual report 87
Previous Page Next Page