| 2004 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31 (In millions) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||
| GE | ||||||||||||
| Available-for-sale securities | ||||||||||||
| Debt – U.S. corporate | $ | 350 | $ | — | $ | — | $ | 350 | ||||
| Equity | 58 | 8 | (3 | ) | 63 | |||||||
| GE securities | 408 | 8 | (3 | ) | 413 | |||||||
| GECS | ||||||||||||
| Available-for-sale securities | ||||||||||||
| Debt: | ||||||||||||
| U.S. corporate | 51,739 | 2,921 | (565 | ) | 54,095 | |||||||
| State and municipal | 12,779 | 337 | (35 | ) | 13,081 | |||||||
| Mortgage-backed | 15,314 | 235 | (75 | ) | 15,474 | |||||||
| Asset-backed | 11,584 | 291 | (52 | ) | 11,823 | |||||||
| Corporate – non-U.S. | 17,431 | 788 | (45 | ) | 18,174 | |||||||
| Government – non-U.S. | 9,722 | 274 | (27 | ) | 9,969 | |||||||
| U.S. government and federal agency | 1,448 | 84 | (3 | ) | 1,529 | |||||||
| Equity | 2,059 | 413 | (25 | ) | 2,447 | |||||||
| Trading securities | (a) | (a) | (a) | 8,560 | ||||||||
| GECS securities | 122,076 | 5,343 | (827 | ) | 135,152 | (b) | ||||||
| ELIMINATIONS | (17 | ) | (12 | ) | — | (29 | ) | |||||
| Total | $ | 122,467 | $ | 5,339 | $ | (830 | ) | $ | 135,536 | |||
| (a) | Not applicable. |
| (b) | Included $1,147 million in 2004 and $1,566 million in 2003 of debt securities related to consolidated, liquidating securitization entities. |
| 2003 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31 (In millions) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||
| GE | ||||||||||||
| Available-for-sale securities | ||||||||||||
| Debt – U.S. corporate | $ | 350 | $ | — | $ | (28 | ) | $ | 322 | |||
| Equity | 42 | 18 | (2 | ) | 58 | |||||||
| GE securities | 392 | 18 | (30 | ) | 380 | |||||||
| GECS | ||||||||||||
| Available-for-sale securities | ||||||||||||
| Debt: | ||||||||||||
| U.S. corporate | 52,299 | 2,558 | (684 | ) | 54,173 | |||||||
| State and municipal | 12,707 | 382 | (23 | ) | 13,066 | |||||||
| Mortgage-backed | 13,441 | 271 | (93 | ) | 13,619 | |||||||
| Asset-backed | 12,503 | 250 | (84 | ) | 12,669 | |||||||
| Corporate – non-U.S. | 14,720 | 557 | (89 | ) | 15,188 | |||||||
| Government – non-U.S. | 8,558 | 169 | (65 | ) | 8,662 | |||||||
| U.S. government and federal agency | 1,616 | 58 | (19 | ) | 1,655 | |||||||
| Equity | 2,526 | 393 | (117 | ) | 2,802 | |||||||
| Trading securities | (a) | (a) | (a) | 7,055 | ||||||||
| GECS securities | 118,370 | 4,638 | (1,174 | ) | 128,889 | (b) | ||||||
| ELIMINATIONS | — | — | — | — | ||||||||
| Total | $ | 118,762 | $ | 4,656 | $ | (1,204 | ) | $ | 129,269 | |||
| (a) | Not applicable. |
| (b) | Included $1,147 million in 2004 and $1,566 million in 2003 of debt securities related to consolidated, liquidating securitization entities. |
Investment securities included in our general account portfolio above and designated as trading represent actively managed debt and equity securities of certain non-U.S. insurance contractholders who retain the related risks and rewards, except in the event of our bankruptcy or liquidation. Changes in unrealized gains and losses on these securities are recognized currently in earnings. During 2004, the net gain on investment securities classified as trading and included in earnings was $293 million.
A substantial portion of our mortgage-backed securities are collateralized by U.S. residential mortgages.
Following are estimated fair value of, and gross unrealized losses on, our available-for-sale investment securities.
| Less than 12 months | 12 months or more | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31 (In millions) | Estimated fair value | Gross unrealized losses | Estimated fair value | Gross unrealized losses | ||||||||
| 2004 | ||||||||||||
| Debt: | ||||||||||||
| U.S. corporate | $ | 8,092 | $ | (212 | ) | $ | 2,347 | $ | (353 | ) | ||
| State and municipal | 3,603 | (33 | ) | 63 | (2 | ) | ||||||
| Mortgage-backed | 5,572 | (55 | ) | 563 | (20 | ) | ||||||
| Asset-backed | 2,501 | (20 | ) | 485 | (32 | ) | ||||||
| Corporate – non-U.S. | 4,235 | (26 | ) | 822 | (19 | ) | ||||||
| Government – non-U.S. | 1,370 | (10 | ) | 1,142 | (17 | ) | ||||||
| U.S. government and federal agency | 237 | (2 | ) | 43 | (1 | ) | ||||||
| Equity | 253 | (20 | ) | 71 | (8 | ) | ||||||
| Total | $ | 25,863 | $ | (378 | ) | $ | 5,536 | $ | (452 | ) | ||
| 2003 | ||||||||||||
| Debt: | ||||||||||||
| U.S. corporate | $ | 7,915 | $ | (255 | ) | $ | 2,360 | $ | (457 | ) | ||
| State and municipal | 1,620 | (23 | ) | 2 | — | |||||||
| Mortgage-backed | 4,299 | (86 | ) | 135 | (7 | ) | ||||||
| Asset-backed | 2,279 | (26 | ) | 1,523 | (58 | ) | ||||||
| Corporate – non-U.S. | 2,925 | (71 | ) | 123 | (18 | ) | ||||||
| Government – non-U.S. | 3,317 | (60 | ) | 24 | (5 | ) | ||||||
| U.S. government and federal agency | 256 | (19 | ) | — | — | |||||||
| Equity | 402 | (81 | ) | 105 | (38 | ) | ||||||
| Total | $ | 23,013 | $ | (621 | ) | $ | 4,272 | $ | (583 | ) | ||
Securities in an unrealized loss position for 12 months or more at December 31, 2004 and 2003, included investment securities collateralized by commercial aircraft, primarily Enhanced Equipment Trust Certificates, with unrealized losses of $291 million and $355 million, respectively, and estimated fair values of $941 million and $1,072 million, respectively. We review all of our investment securities routinely for other than temporary impairment as described on page 80. In accordance with that policy, we provide for all amounts that we do not expect either to collect in accordance with the contractual terms of the instruments or to recover based on underlying collateral values. For our securities collateralized by commercial aircraft, that review includes our best estimates of the securities’ cash flows, underlying collateral values, and assessment of whether the borrower is in compliance with terms and conditions. We believe that our securities, which are current on all payment terms, are in an unrealized loss position because of ongoing negative market reaction to commercial airline industry difficulties. We do not anticipate changes in the timing and amount of estimated cash flows and we expect full recovery of our amortized cost. Should our cash flow expectation prove to be incorrect, the current aggregate market values of aircraft collateral, based on information from independent appraisers, exceeded totals of both the market values and the amortized cost of our securities at December 31, 2004.
CONTRACTUAL MATURITIES OF GECS INVESTMENT IN AVAILABLE- FOR-SALE DEBT SECURITIES (EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES)
| (In millions) | Amortized cost | Estimated fair value | ||||
|---|---|---|---|---|---|---|
| Due in | ||||||
| 2005 | $ | 7,802 | $ | 7,906 | ||
| 2006 – 2009 | 22,305 | 22,593 | ||||
| 2010 – 2014 | 26,947 | 27,639 | ||||
| 2015 and later | 36,065 | 38,710 | ||||
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 available-for-sale investment securities follows.
| (In millions) | 2004 | 2003 | 2002 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| GE | |||||||||
| Gains | $ | 15 | $ | 3 | $ | — | |||
| Losses, including impairments | — | (38 | ) | (76 | ) | ||||
| Net | 15 | (35 | ) | (76 | ) | ||||
| GECS | |||||||||
| Gains | 749 | 1,322 | 1,578 | ||||||
| Losses, including impairments | (342 | ) | (914 | ) | (1,277 | ) | |||
| Net | 407 | 408 | 301 | ||||||
| Total | $ | 422 | $ | 373 | $ | 225 | |||
Proceeds from available-for-sale securities sales amounted to $27,100 million, $36,600 million and $46,400 million in 2004, 2003 and 2002, respectively.
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