Investment Securities

6 Months Ended

Jun. 30, 2011

Investment Securities [Abstract]

Investment Securities

3. Investment securities

Substantially all of our investment securities are classified as available-for-sale. These comprise mainly investment grade debt securities supporting obligations to annuitants, policyholders and holders of guaranteed investment contracts (GICs) in our run-off insurance operations and Trinity, and investment securities at our treasury operations. We do not have any securities classified as held to maturity.

	At
	June 30, 2011								December 31, 2010
			Gross		Gross						Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Amortized		unrealized		unrealized		Estimated
(In millions)	cost		gains		losses		fair value		cost		gains		losses		fair value
GE
Debt – U.S. corporate	$	1	$	0	$	0	$	1	$	1	$	0	$	0	$	1
Equity – available-for-sale		18		0		0		18		18		0		0		18
		19		0		0		19		19		0		0		19
GECS
Debt
U.S. corporate		20,818		1,809		(116)		22,511		21,233		1,576		(237)		22,572
State and municipal		3,182		120		(244)		3,058		2,961		45		(282)		2,724
Residential mortgage-
backed(a)		2,876		131		(319)		2,688		3,092		95		(378)		2,809
Commercial mortgage-backed		2,881		172		(203)		2,850		3,009		145		(230)		2,924
Asset-backed		3,853		33		(145)		3,741		3,407		16		(193)		3,230
Corporate – non-U.S.		2,810		133		(91)		2,852		2,883		116		(132)		2,867
Government – non-U.S.		2,693		88		(85)		2,696		2,242		82		(58)		2,266
U.S. government and federal
agency		3,302		62		(28)		3,336		3,358		57		(47)		3,368
Retained interests		32		16		(3)		45		55		10		(26)		39
Equity
Available-for-sale		886		224		(31)		1,079		500		213		(8)		705
Trading		475		0		0		475		417		0		0		417
		43,808		2,788		(1,265)		45,331		43,157		2,355		(1,591)		43,921
Eliminations		(10)		0		0		(10)		(2)		0		0		(2)
Total	$	43,817	$	2,788	$	(1,265)	$	45,340	$	43,174	$	2,355	$	(1,591)	$	43,938

(a)Substantially collateralized by U.S. mortgages. Of our total residential mortgage-backed securities (RMBS) portfolio at June 30, 2011, $1,657million relates to securities issued by government sponsored entities and $1,031 million relates to securities of private label issuers. Securities issued by private label issuers are collateralized primarily by pools of individual direct mortgage loans of individual financial institutions.

The fair value of investment securities increased to $45,340 million at June 30, 2011, from $43,938 million at December 31, 2010, primarily driven by improved market conditions and purchases in our financial services businesses.

The following tables present the estimated fair values and gross unrealized losses of our available-for-sale investment securities

	In loss position for
	Less than 12 months					12 months or more
			Gross					Gross
	Estimated		unrealized			Estimated		unrealized
(In millions)	fair value		losses		(a)	fair value		losses		(a)
June 30, 2011
Debt
U.S. corporate	$	1,341	$	(29)		$	992	$	(87)
State and municipal		322		(20)			586		(224)
Residential mortgage-backed		318		(8)			943		(311)
Commercial mortgage-backed		962		(129)			705		(74)
Asset-backed		65		(4)			882		(141)
Corporate – non-U.S.		339		(7)			788		(84)
Government – non-U.S.		1,115		(3)			129		(82)
U.S. government and federal agency		0		0			224		(28)
Retained interests		0		0			6		(3)
Equity		71		(31)			0		0
Total	$	4,533	$	(231)		$	5,255	$	(1,034)
December 31, 2010
Debt
U.S. corporate	$	2,375	$	(81)		$	1,519	$	(156)
State and municipal		949		(43)			570		(239)
Residential mortgage-backed		188		(4)			1,024		(374)
Commercial mortgage-backed		831		(104)			817		(126)
Asset-backed		113		(5)			910		(188)
Corporate – non-U.S.		448		(12)			804		(120)
Government – non-U.S.		661		(6)			107		(52)
U.S. government and federal agency		1,822		(47)			0		0
Retained interests		0		0			34		(26)
Equity		49		(8)			0		0
Total	$	7,436	$	(310)		$	5,785	$	(1,281)

(a)       At June 30, 2011, other-than-temporary impairments previously recognized through other comprehensive income (OCI) on securities still held amounted to $(472) million, of which $(358) million related to RMBS. Gross unrealized losses related to those securities at June 30, 2011 amounted to $(615) million, of which $(547) million related to RMBS.

We regularly review investment securities for impairment using both qualitative and quantitative criteria. We presently do not intend to sell the vast majority of our debt securities and believe that it is not more likely than not that we will be required to sell these securities that are in an unrealized loss position before recovery of our amortized cost. We believe that the unrealized loss associated with our equity securities will be recovered within the foreseeable future. The methodologies and significant inputs used to measure the amount of credit loss for our investment securities during the three andsix months ended June 30, 2011 have not changed from those described in our 2010 consolidated financial statements. See Note 3 in our 2010 consolidated financial statements for additional information regarding these methodologies and inputs.

During the second quarter of 2011, we recorded other-than-temporary impairments of $113 million, of which $54 million was recorded through earnings ($5 million relates to equity securities) and $59 million was recorded in accumulated other comprehensive income (AOCI). At April 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $536 million. During the second quarter, we recognized first time impairments of $19 million and incremental charges on previously impaired securities of $24 million. These amounts included $18 million related to securities that were subsequently sold.

During the second quarter of 2010, we recorded other-than-temporary impairments of $101 million, of which $56 million was recorded through earnings and $45 million was recorded in AOCI. At April 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $381 million. During the second quarter of 2010, we recognized first time impairments of $36 million and incremental charges on previously impaired securities of $17 million. These amounts included $7 million related to securities that were subsequently sold.

During the six months ended June 30, 2011, we recorded other-than-temporary impairments of $184 million, of which $118 million was recorded through earnings ($10 million relates to equity securities) and $66 million was recorded in AOCI. At January 1, 2011, cumulative impairments recognized in earnings associated with debt securities still held were $500 million. During the six months ended June 30, 2011, we recognized first time impairments of $20 million and incremental charges on previously impaired securities of $81 million. These amounts included $41 million related to securities that were subsequently sold.

During the six months ended June 30, 2010, we recorded other-than-temporary impairments of $259 million, of which $135 million was recorded through earnings ($1 million relates to equity securities) and $124 million was recorded in AOCI. At January 1, 2010, cumulative impairments recognized in earnings associated with debt securities still held were $340 million. During the six months ended June 30, 2010, we recognized first time impairments of $92 million and incremental charges on previously impaired securities of $35 million. These amounts included $39 million related to securities that were subsequently sold.

Contractual Maturities of GECS Investment in Available-for-Sale Debt Securities (Excluding Mortgage-
Backed and Asset-Backed Securities)
	Amortized		Estimated
(In millions)	cost		fair value
Due in
2011	$	2,958	$	2,985
2012-2015		7,298		7,580
2016-2020		4,730		4,922
2021 and later		17,811		18,958

We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.

Supplemental information about gross realized gains and losses on available-for-sale investment securities follows.

	Three months ended June 30,				Six months ended June 30,
(In millions)	2011		2010		2011		2010
GE
Gains	$	0	$	0	$	0	$	0
Losses, including impairments		0		0		0		0
Net		0		0		0		0
GECS
Gains		45		37		161		126
Losses, including impairments		(56)		(62)		(127)		(144)
Net		(11)		(25)		34		(18)
Total	$	(11)	$	(25)	$	34	$	(18)

Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. In some of our bank subsidiaries, we maintain a certain level of purchases and sales volume principally of non-U.S. government debt securities. In these situations, fair value approximates carrying value for these securities.

Proceeds from investment securities sales and early redemptions by the issuer totaled $4,833 million and $3,524 million in the three months ended June 30, 2011 and 2010, respectively, and $9,972 million and $7,315 million in the six months ended June 30, 2011 and 2010, respectively, principally from the sales of short-term securities in our bank subsidiaries and treasury operations.

We recognized net pre-tax gains on trading securities of $52 million and $4 million in the three months ended June 30, 2011 and 2010, respectively, and $55 million and $19 million in the six months ended June 30, 2011 and 2010, respectively.