GE 2011 Annual Report Download - page 129

GE 2011 ANNUAL REPORT 127
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NON-U.S. RESIDENTIAL MORTGAGES
For our secured non-U.S. residential mortgage book, we assess
the overall credit quality of the portfolio through loan-to-value
ratios (the ratio of the outstanding debt on a property to the value
of that property at origination). In the event of default and repos-
session of the underlying collateral, we have the ability to
remarket and sell the properties to eliminate or mitigate the
potential risk of loss. The table below provides additional informa-
tion about our non-U.S. residential mortgages based on
loan-to-value ratios.
Loan-to-value ratio
December 31 (In millions) 80% or less
Greater than
80% to 90%
Greater
than 90%
2011
Non-U.S. residential
mortgages $20,379 $6,145 $ 9,646
2010
Non-U.S. residential
mortgages $22,403 $7,023 $10,585
The majority of these fi nancing receivables are in our U.K. and
France portfolios and have re-indexed loan-to-value ratios of 84%
and 56%, respectively. We have third-party mortgage insurance
for approximately 68% of the balance of Consumer non-U.S.
residential mortgage loans with loan-to-value ratios greater than
90% at December 31, 2011. Such loans were primarily originated in
the U.K. and France.
INSTALLMENT AND REVOLVING CREDIT
For our unsecured lending products, including the non-U.S. and
U.S. installment and revolving credit and non-U.S. auto portfolios,
we assess overall credit quality using internal and external credit
scores. Our internal credit scores imply a probability of default
which we consistently translate into three approximate credit
bureau equivalent credit score categories, including (a) 681 or
higher, which are considered the strongest credits; (b) 615 to 680,
considered moderate credit risk; and (c) 614 or less, which are
considered weaker credits.
Internal ratings translated to approximate
credit bureau equivalent score
December 31 (In millions) 681 or higher 615 to 680 614 or less
2011
Non-U.S. installment and
revolving credit $ 9,913 $4,838 $3,793
U.S. installment and revolving
credit 28,918 9,398 8,373
Non-U.S. auto 3,927 1,092 672
2010
Non-U.S. installment and
revolving credit $10,192 $5,749 $4,191
U.S. installment and revolving
credit 25,940 8,846 9,188
Non-U.S. auto 5,379 1,330 849
Of those fi nancing receivable accounts with credit bureau equiva-
lent scores of 614 or less at December 31, 2011, 95% relate to
installment and revolving credit accounts. These smaller balance
accounts have an average outstanding balance less than one
thousand U.S. dollars and are primarily concentrated in our retail
card and sales fi nance receivables in the U.S. (which are often
subject to profi t and loss-sharing arrangements), and closed-end
loans outside the U.S., which minimizes the potential for loss in
the event of default. For lower credit scores, we adequately price
for the incremental risk at origination and monitor credit migra-
tion through our risk ratings process. We continuously adjust our
credit line underwriting management and collection strategies
based on customer behavior and risk profi le changes.
CONSUMER—OTHER
Secured lending in Consumer—Other comprises loans to small and
medium-sized enterprises predominantly secured by auto and
equipment, inventory fi nance and cash fl ow loans. We develop our
internal risk ratings for this portfolio in a manner consistent with
the process used to develop our Commercial credit quality indica-
tors, described above. We use the borrower’s credit quality and
underlying collateral strength to determine the potential risk of
loss from these activities.
At December 31, 2011, Consumer—Other fi nancing receiv-
ables of $5,580 million, $757 million and $907 million were rated
A, B, and C, respectively. At December 31, 2010, Consumer—
Other fi nancing receivables of $6,415 million, $822 million and
$1,067 million were rated A, B, and C, respectively.