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62 ge 2008 annual report
notes to consolidated financial statements
GE Life
During the fourth quarter of 2006, we completed the sale of
GE Life, our U.K.-based life insurance operation, to Swiss
Reinsurance Company (Swiss Re) for $910 million. As a result, we
recognized after-tax losses of $3 million in both 2008 and 2007,
and $267 million in 2006. GE Life revenues from discontinued
operations were $2,096 million in 2006. In total, GE Life losses
from discontinued operations, net of taxes, were $3 million in
both 2008 and 2007, and $178 million in 2006 .
GE Insurance Solutions
During the second quarter of 2006, we completed the sale of
the property and casualty insurance and reinsurance businesses
and the European life and health operations of GE Insurance
Solutions to Swiss Re for $9,297 million, including the assumption
of $1,700 million of debt. We received $5,359 million in cash
and $2,238 million of newly issued Swiss Re common stock,
representing a 9% interest in Swiss Re. As a result of the exit,
we recognized earnings of $1 million and $16 million in 2008
and 2007, compared with losses of $134 million in 2006. GE
Insurance Solutions revenues from discontinued operations
were $2,815 million in 2006. In total, GE Insurance Solutions loss
from discontinued operations, net of taxes, was $15 million in
2008, compared with earnings of $15 million and $148 million in
2007 and 2006, respectively.
Genworth
During the first quarter of 2006, we completed the sale of our
remaining 18% investment in Genworth through a secondary
public offering of 71 million shares of Class A Common Stock and
direct sale to Genworth of 15 million shares of Genworth Class
B Common Stock. As a result of initial and secondary public
offerings, we recognized after-tax gains of $3 million, $85 million
(primarily from a tax adjustment related to the 2004 initial public
offering) and $220 million in 2008, 2007 and 2006, respectively.
Genworth revenues from discontinued operations were $5 million
in 2006. In total, Genworth loss from discontinued operations,
net of taxes, was $9 million in 2008, compared with earnings of
$79 million and $193 million in 2007 and 2006, respectively.
WMC
During the fourth quarter of 2007, we completed the sale of our
U.S. mortgage business. As a result, we recognized an after-tax
loss of $62 million in 2007. In connection with the transaction,
WMC retained certain obligations related to loans sold prior to the
disposal of the business, including WMC’s contractual obligations
to repurchase previously sold loans as to which there was an early
payment default or with respect to which certain contractual
representations and warranties were not met. Reserves related
to these obligations were $244 million at December 31, 2008,
and $265 million at December 31, 2007. The amount of these
reserves is based upon pending and estimated future loan
repurchase requests, the estimated percentage of loans validly
tendered for repurchase, and our estimated losses on loans
repurchased. Based on our historical experience, we estimate
that a small percentage of the total loans we originated and sold
will be tendered for repurchase, and of those tendered, only a
limited amount will qualify as “validly tendered,” meaning the
loans sold did not satisfy specified contractual obligations. The
amount of our current reserve represents our best estimate of
losses with respect to our repurchase obligations. However, actual
losses could exceed our reserve amount, if actual claim rates,
valid tenders or losses we incur on repurchased loans, are higher
than historically observed. WMC revenues from discontinued
operations were $(71) million, $(1,424) million and $536 million
in 2008, 2007 and 2006, respectively. In total, WMC’s losses
from discontinued operations, net of taxes, were $41 million and
$987 million in 2008 and 2007, respectively, compared with
earnings of $29 million in 2006.
Plastics and Advanced Materials
During the third quarter of 2007, we completed the sale of our
Plastics business to Saudi Basic Industries Corporation for
$11,577 million in cash. We sold this business because of its
cyclicality, rising costs of natural gas and raw materials, and
the decision to redeploy capital resources into higher-growth
businesses. Also, during the fourth quarter of 2006, we sold our
Advanced Materials business. As a result of these sales, we
recognized after-tax gains of $21 million, $1,578 million and
$441 million during 2008, 2007 and 2006, respectively. Plastics
and Advanced Materials revenues from discontinued operations
were $4,286 million and $8,795 million in 2007 and 2006,
respectively. In total, Plastics and Advanced Materials earnings
from discontinued operations, net of taxes, were $40 million,
$1,867 million and $959 million in 2008, 2007 and 2006,
respectively.