GE 2005 Annual Report Download - page 133

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(133)
FINANCIAL INSTRUMENTS
2005 2004
Assets (liabilities) Assets (liabilities)
December 31 (In millions)
Notional
amount
Carrying
amount (net)
Estimated
fair value
Notional
amount
Carrying
amount (net)
Estimated
fair value
GE
Assets
Investments and notes receivable(a) $ (b ) $573 $625 $ (b ) $ 3,465 $ 3,545
Liabilities
Borrowings(c)(d)
(b ) (10,208) (10,223) (b ) (11,034 ) (11,144)
Other financial instruments(a) (b ) –
–
(b ) (758 ) (855)
GECS
Assets
Loans (b ) 223,855 224,259 (b ) 216,035 217,155
Other commercial and residential
mortgages held for sale (b ) 6,696 6,696 (b ) 5,143 5,113
Other financial instruments (b ) 4,138 4,494 (b ) 2,972 3,184
Liabilities
Borrowings(c)(d)
(b ) (362,069) (369,972) (b ) (355,501 ) (362,851)
Investment contract benefits (b ) (9,877) (9,862) (b ) (12,539 ) (12,520)
Insurance – credit life(e)
2,365 (8) (8) 2,210 (13 ) (13)
(a) 2004 amounts included financial instruments associated with VUE that were settled in 2005. See note 16 for further information.
(b) These financial instruments do not have notional amounts.
(c) Included effects of interest rate and cross-currency swaps.
(d) See note 18.
(e) Net of reinsurance of $292 million and $105 million at December 31, 2005 and 2004, respectively.
Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the
above disclosures; such items include cash and equivalents, investment securities and derivative financial
instruments. Other assets and liabilities-those not carried at fair value-are discussed below. Apart from certain of our
borrowings and certain marketable securities, few of the instruments discussed below are actively traded and their
fair values must often be determined using financial models. There is no assurance that such estimates could actually
have been realized at December 31, 2005 or 2004.
A description of how we estimate fair values follows.
Loans
Based on quoted market prices, recent transactions and/or discounted future cash flows, using rates at which similar
loans would have been made to similar borrowers.
Borrowings
Based on discounted future cash flows using current market rates which are comparable to market quotes.
Investment contract benefits
Based on expected future cash flows, discounted at currently offered rates for immediate annuity contracts or cash
surrender values for single premium deferred annuities.