GE 2005 Annual Report Download - page 119
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(119)
Note 19
GECS Investment Contracts, Insurance Liabilities and Insurance Annuity Benefits
December 31 (In millions) 2005 2004
Investment contracts $ 16,039 $ 18,268
Guaranteed investment contracts of SPEs 11,685 11,648
Total investment contracts 27,724 29,916
Life insurance benefits(a) 15,538 15,398
Unpaid claims and claims adjustment expenses 1,690 1,729
Unearned premiums 430 405
Universal life benefits 340 945
Total $ 45,722 $ 48,393
(a) Life insurance benefits are accounted for mainly by a net-level-premium method using estimated yields generally ranging from 3.0% to
8.5% in both 2005 and 2004.
When insurance affiliates cede insurance to third parties, they are not relieved of their primary obligation to
policyholders. Losses on ceded risks give rise to claims for recovery; we establish allowances for probable losses on
such receivables from reinsurers as required.
We recognize reinsurance recoveries as a reduction of the Statement of Earnings caption “Investment
contracts, insurance losses and insurance annuity benefits.” Reinsurance recoveries were $183 million, $223 million
and $434 million for the years ended December 31, 2005, 2004 and 2003, respectively.
Note 20
All Other Liabilities
This caption includes liabilities for various items including non-current compensation and benefits, deferred income,
interest on tax liabilities, accrued participation and residuals, environmental remediation, asset retirement
obligations, derivative instruments, product warranties and a variety of sundry items.
Accruals for non-current compensation and benefits amounted to $13,832 million and $12,502 million for
year-end 2005 and 2004, respectively. These amounts include post-retirement benefits, international and
supplemental pension benefits, and other compensation and benefit accruals such as deferred incentive
compensation.
We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and
state laws. Liabilities for remediation costs at each site are based on our best estimate of undiscounted future costs,
excluding possible insurance recoveries. When there appears to be a range of possible costs with equal likelihood,
liabilities are based on the low end of such range. Uncertainties about the status of laws, regulations, technology and
information related to individual sites make it difficult to develop a meaningful estimate of the reasonably possible
aggregate environmental remediation exposure. However, even in the unlikely event that remediation costs
amounted to the high end of the range of costs for each site, the resulting additional liability would not be material to
our financial position, results of operations or liquidity.