GE 2008 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2008 GE annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

management’s discussion and analsis
ge 2008 annual report 25
The Australia/New Zealand mortgages are generally prime
credit, and 94% of the portfolio is covered by private mortgage
insurance for the full amount of the mortgage, which is customary
in this market.
The French mortgage portfolio is generally prime credit, and
29% is insured for mortgage loans greater than 80% LTV (for the
mortgage balance in excess of 80%).
Segment Operations
Our five segments are focused on the broad markets they serve:
Energy Infrastructure, Technology Infrastructure, NBC Universal,
Capital Finance and Consumer & Industrial. In addition to pro-
viding information on segments in their entirety, we have also
provided supplemental information for certain businesses within
the segments for greater clarity.
Segment profit is determined based on internal performance
measures used by the Chief Executive Officer to assess the
performance of each business in a given period. In connection
with that assessment, the Chief Executive Officer may exclude
matters such as charges for restructuring; rationalization and
other similar expenses; in-process research and development and
certain other acquisition-related charges and balances; technology
and product development costs; certain gains and losses from
dispositions; and litigation settlements or other charges, respon-
sibility for which preceded the current management team.
Segment profit always excludes the effects of principal pension
plans, results reported as discontinued operations and accounting
changes. Segment profit excludes or includes interest and other
financial charges and income taxes according to how a particular
segment’s management is measured — excluded in determining
segment profit, which we sometimes refer to as “operating
profit,” for Energy Infrastructure, Technology Infrastructure, NBC
Universal and Consumer & Industrial; included in determining
segment profit, which we sometimes refer to as “net earnings,”
for Capital Finance.
We have reclassified certain prior-period amounts to conform
to the current period’s presentation. For additional information
about our segments, see Note 27.
The commercial real estate business consists of a real estate
investment portfolio, a real estate lending portfolio, and a single
tenant financing portfolio. The real estate investment and lending
portfolios are global and consist of approximately 8,000 individual
properties in 2,600 cities in 31 countries with an average property
investment of under $10 million.
Þ Our real estate investment portfolio includes approximately
3,200 properties located in 900 cities and 22 countries, with
71% of this portfolio outside the U.S., primarily located in
Europe, the U.K., Asia, Canada and Mexico, across a wide variety
of property types including office, industrial/warehouse, and
multifamily.
Þ Our real estate lending portfolio is secured by approximately
4,800 properties in 1,900 cities and 25 countries, with 44%
of the assets securing this portfolio located outside the U.S.,
across a wide variety of property types including office, multi-
family and hotel.
ÞThe single tenant financing portfolio has approximately
4,200 properties in 1,360 cities in the U.S. and Canada, and
an average loan size under $3 million.
The U.S. consumer portfolio includes private-label credit card
and sales financing for over 56 million accounts. The portfolio
includes customers across the U.S. and no metropolitan statistical
area accounts for more than 4% of the portfolio. The average
credit line for the private-label portfolio is $600. The non-U.S.
portfolio accounts for 80% of all consumer risk activities and
includes consumer mortgages, auto loans, personal loans and
credit card financing in 43 countries. Western Europe, the U.K.,
Eastern Europe and Australia/New Zealand are the primary non-
U.S. markets. Mortgages represent 43% of the total consumer
portfolio. The average loan-to-value (LTV) at origination of the
total global mortgage portfolio is approximately 74%. Western
Europe, Australia and New Zealand, Ireland and the U.K. account
for approximately 80% of the mortgage book. GE employees
underwrite all mortgages and originate to hold all mortgages on
book. We exited the U.S. mortgage business in 2007.
The U.K. mortgage business tightened underwriting criteria
throughout 2008 and reduced volume by 54% in response to the
weakening home price environment in the U.K. Since mid-2006,
the first mortgage loans originated in the U.K. that were greater
than 80% LTV are covered by private mortgage insurance for
the mortgage balance in excess of 80%. Insured mortgages
account for approximately 73% of the portfolio above 80% LTV
at origination.