Investment Securities

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investment Securities

NOTE 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 and policyholders in our run-off insurance operations and supporting obligations to holders of guaranteed investment contracts (GICs) in Trinity. We do not have any securities classified as held-to-maturity.

	March 31, 2015								December 31, 2014
			Gross		Gross						Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Amortized		unrealized		unrealized		Estimated
(In millions)	cost		gains		losses		fair value		cost		gains		losses		fair value
Debt
U.S. corporate	$	20,015	$	4,322	$	(52)	$	24,285	$	19,889	$	3,967	$	(69)	$	23,787
State and municipal		4,967		667		(50)		5,584		5,181		624		(56)		5,749
Residential mortgage-backed(a)		1,129		100		(4)		1,225		1,578		153		(6)		1,725
Commercial mortgage-backed		2,421		181		(5)		2,597		2,903		170		(10)		3,063
Asset-backed		301		11		(17)		295		8,084		9		(175)		7,918
Corporate – non-U.S.		914		137		(1)		1,050		1,021		115		(1)		1,135
Government – non-U.S.		1,287		182		(1)		1,468		1,646		152		(2)		1,796
U.S. government and federal agency		5,029		86		-		5,115		1,957		56		-		2,013
Retained interests		16		1		-		17		16		1		-		17
Equity
Available-for-sale		144		55		(1)		198		197		58		(1)		254
Trading		19		-		-		19		21		-		-		21
Total	$	36,242	$	5,742	$	(131)	$	41,853	$	42,493	$	5,305	$	(320)	$	47,478

(a)Substantially collateralized by U.S. mortgages. At March 31, 2015, $1,191million related to securities issued by government-sponsored entities and $34million related to securities of private-label issuers. Securities issued by private-label issuers are collateralized primarily by pools of individual direct mortgage loans of financial institutions.

The fair value of investment securities decreased to $41,853 million at March 31, 2015, from $47,478 million atDecember 31, 2014, primarily due to asset-backed debt securities collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries, which were transferred to assets of businesses held for sale in connection with the GE Capital Exit Plan. This decrease was partially offset by purchases of U.S. government and federal agency securities primarily at Synchrony Financial and Trinity.

ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF 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)
March 31, 2015
Debt
U.S. corporate	$	820	$	(22)		$	295	$	(30)
State and municipal		206		(2)			203		(48)
Residential mortgage-backed		127		(1)			97		(3)
Commercial mortgage-backed		101		-			26		(5)
Asset-backed		58		-			77		(17)
Corporate – non-U.S.		27		(1)			2		-
Government – non-U.S.		403		(1)			-		-
U.S. government and federal agency		1,497		-			1		-
Equity		11		(1)			-		-
Total	$	3,250	$	(28)		$	701	$	(103)	(b)
December 31, 2014
Debt
U.S. corporate	$	554	$	(16)		$	836	$	(53)
State and municipal		81		(1)			348		(55)
Residential mortgage-backed		30		-			159		(6)
Commercial mortgage-backed		165		(1)			204		(9)
Asset-backed		7,493		(158)			77		(17)
Corporate – non-U.S.		42		(1)			3		-
Government – non-U.S.		677		(2)			14		-
U.S. government and federal agency		705		-			1		-
Retained interests		-		-			-		-
Equity		14		(1)			-		-
Total	$	9,761	$	(180)		$	1,642	$	(140)

(a) Included gross unrealized losses related to securities that had other-than-temporary impairments previously recognized of an insignificant amount at March 31, 2015.

(b)The majority relate to debt securities held to support obligations to holders of GICs and more than 70% are debt securities that were considered to be investment-grade by the major rating agencies at March 31, 2015.  

We regularly review investment securities for other-than-temporary impairment (OTTI) using both qualitative and quantitative criteria. For debt securities, our qualitative review considers our ability and intent to hold the security and the financial condition of and near-term prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. Our quantitative review considers whether there has been an adverse change in expected future cash flows. Unrealized losses are not indicative of the amount of credit loss that would be recognized and at March 31, 2015 are primarily due to increases in market yields subsequent to our purchase of the securities. We presently do not intend to sell the vast majority of our debt securities that are in an unrealized loss position and believe that it is not more likely than not that we will be required to sell the vast majority of these securities before anticipated recovery of our amortized cost. The methodologies and significant inputs used to measure the amount of credit loss for our investment securities during 2015 have not changed. For equity securities, we consider the duration and the severity of the unrealized loss. We believe that the unrealized loss associated with our equity securities will be recovered within the foreseeable future.

Our corporate debt portfolio comprises securities issued by public and private corporations in various industries, primarily in the U.S. Substantially all of our corporate debt securities are rated investment grade by the major rating agencies.

Our RMBS portfolio is collateralized primarily by pools of individual, direct mortgage loans, of which substantially all are in a senior position in the capital structure of the deals, not other structured products such as collateralized debt obligations. Of the total RMBS held at March 31, 2015, $1,191 million and $34 million related to agency and non-agency securities, respectively. Additionally, $65 million was related to residential subprime credit securities, primarily supporting obligations to annuitants and policyholders in our run-off insurance operations. Substantially all of the subprime exposure is related to securities backed by mortgage loans originated in 2005 and prior and are investment grade.

Our commercial mortgage-backed securities (CMBS) portfolio is collateralized by both diversified pools of mortgages that were originated for securitization (conduit CMBS) and pools of large loans backed by high-quality properties (large loan CMBS), a majority of which were originated in 2008 and prior. The vast majority of the securities in our CMBS portfolio have investment-grade credit ratings.

PRE-TAX, OTHER-THAN-TEMPORARY IMPAIRMENTS ON INVESTMENT SECURITIES
	Three months ended March 31
(In millions)	2015		2014
Total pre-tax, OTTI recognized	$	3	$	10
Pre-tax, OTTI recognized in AOCI		-		(4)
Pre-tax, OTTI recognized in earnings(a)	$	3	$	6

(a)Included pre-tax, other-than-temporary impairments recorded in earnings related to equity securities of an insignificant amount and $1million inthe three months endedMarch 31, 2015 and 2014, respectively.

CHANGES IN CUMULATIVE CREDIT LOSS IMPAIRMENTS RECOGNIZED ON DEBT SECURITIES STILL HELD
	Three months ended March 31
(In millions)	2015		2014
Cumulative credit loss impairments recognized, beginning of period	$	557	$	853
Credit loss impairments recognized on securities not previously impaired		-		-
Incremental credit loss impairments recognized on securities previously impaired		-		1
Less credit loss impairments previously recognized on securities sold
during the period or that we intend to sell		4		51
Cumulative credit loss impairments recognized, end of period	$	553	$	803

CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES
(EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES)
	Amortized		Estimated
(In millions)	cost		fair value
Due
Within one year	$	4,719	$	4,732
After one year through five years		3,694		3,955
After five years through ten years		5,146		5,634
After ten years		18,653		23,181

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

GROSS REALIZED GAINS AND LOSSES ON AVAILABLE-FOR-SALE INVESTMENT SECURITIES
	Three months ended March 31
(In millions)	2015		2014
Gains	$	97	$	13
Losses, including impairments		(14)		(7)
Net	$	83	$	6

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 issuers totaled $3,561 million and $1,327 million in the three months endedMarch 31, 2015 and 2014, respectively, principally from sales of short-term government securities in our bank subsidiaries and redemptions of non-U.S. corporate and asset-backed securities in our CLL business.  In addition, proceeds from investment securities sales in the three months endedMarch 31, 2015included $1,627 million principally from sales of CMBS, RMBS and state and municipal securities at Trinity.

We recognized pre-tax gains (losses) on trading securities of $(2) million and $(5) million in the three months endedMarch 31, 2015 and 2014, respectively