GE 2014 Annual Report Download - page 227

GE 2014 FORM 10-K 207
FINANCIAL STATEMENTS VARIABLE INTEREST ENTITIES
CONSOLIDATED VARIABLE INTEREST ENTITIES
We consolidate VIEs because we have the power to direct the activities that significantly affect the VIE’s economic
performance, typically because of our role as either servicer or manager for the VIE. Our consolidated VIEs fall into three main
groups, which are further described below:
x Trinity comprises two consolidated entities that hold investment securities, the majority of which are investment-grade,
and were funded by the issuance of GICs. The GICs include conditions under which certain holders could require
immediate repayment of their investment should the long-term credit ratings of GECC fall below AA-/Aa3 or the short-term
credit ratings fall below A-1+/P-1. The outstanding GICs are subject to their scheduled maturities and individual terms,
which may include provisions permitting redemption upon a downgrade of one or more of GECC’s ratings, among other
things, and are reported in investment contracts, insurance liabilities and insurance annuity benefits.
x Consolidated Securitization Entities (CSEs) were created to facilitate securitization of financial assets and other forms of
asset-backed financing that serve as an alternative funding source by providing access to variable funding notes and term
markets. The securitization transactions executed with these entities are similar to those used by many financial
institutions and all are non-recourse. We provide servicing for substantially all of the assets in these entities.
The financing receivables in these entities have similar risks and characteristics to our other financing receivables and
were underwritten to the same standard. Accordingly, the performance of these assets has been similar to our other
financing receivables; however, the blended performance of the pools of receivables in these entities reflects the eligibility
criteria that we apply to determine which receivables are selected for transfer. Contractually the cash flows from these
financing receivables must first be used to pay third-party debt holders as well as other expenses of the entity. Excess
cash flows are available to GE. The creditors of these entities have no claim on other assets of GE.
x Other remaining assets and liabilities of consolidated VIEs relate primarily to three categories of entities: (1) joint ventures
that lease equipment with $1,598 million of assets and $686 million of liabilities; (2) other entities that are involved in
power generating and leasing activities with $667 million of assets and no liabilities; and (3) insurance entities that, among
other lines of business, provide property and casualty and workers’ compensation coverage for GE with $1,162 million of
assets and $541 million of liabilities.