General Electric Company
Financial Services
-Overview/Strategy
Reorganized into six GE businesses as of July 5
Infrastructure
Financial Svcs.
Commercial
Industrial
NBCU
Healthcare
Consumer
Finance
– Energy
– Energy Fin. Svcs.
– Aircraft Engines
– Aviation Fin. Svcs.
– Oil & Gas
– Rail
– Cons. & Industrial
– Plastics
– Equipment Svcs.
– Real Estate
– Lending &
Leasing
– Insurance
– NBCU
– Healthcare
– Consumer
Finance
• Expands growth capability
• Leverages key talent
• Positions for seamless transitions
• Sustains strong risk disciplines
• Improves pipeline of leadership development
• Simplifies organization … speed Ç cost È
New organization drives significant benefits
Revenue + segment profit reported at this level of detail in addition to six business units above
No change to GECS/GECC financial assets / 10K
Legal structure & ratings commitment
100%
100%
Primary GE
Issuer/Guarantor
Explicit support
GE support to ensure GECC 1.1x
fixed-charge coverage ratio
Guarantee of up to $1B subordinated
debt
Implicit support examples
Acquisition capital – Heller (~$2.5B)
AAA/Aaa
AAA/Aaa
ERC
General Electric Capital
Corporation
General Electric
Company
General Electric
Capital Services, Inc.
Local funding entities
100%
Commitment to local markets
GECC unconditional guarantee
Parent rated “Triple-A”
Proceeds used primarily to
fund local assets
Access to deeper investor base
Primary GE
Issuer/Guarantor
AAA/Aaa
GE Capital Auto Lease
Public Company
(Thailand)
GE Capital
Australia Funding
UK Funding
GE Capital
GE Capital
European Funding
GE Capital
Canada Funding
GE Japan
Funding KK
General Electric Capital
Corporation
Self funding growth
Commercial Finance
3.9
4.5
20%
3.0
1.5
33%
Consumer Finance
2.2
2.5
30%
1.0
1.5
60%
Subtotal
$7.0
$4.0
$3.0
+ Income and Sales Proceeds from Insurance/Other
’03 Net
Income
($ in Billions)
’04 Net
Income
Required
to support
15% growth
’04 Income
Available
For Div
Payout
Ratio
Blended
Dividend
Payout
= 43%
X-parent support paydown, GECS can
self fund growth & pay 40% dividend
For exa
mple in
2004:
= 40%
Dividend
GECS segment results
-a)
($ in millions – net earnings)
Commercial Finance
$1,451
$1,135
$3,916
$3,072
– Capital Solutions
444
351
1,055
870
– Real Estate
343
243
893
750
– Insurance 239
120
906
583
Consumer Finance
$810
$681
$2,280
$1,883
Infrastructure
–b)
$383
$251
$1,044
$723
Industrial
–b)
$66
$30
$112
$27
Corp. items & elims.
–b)
$(25)
$156
$(100)
$42
3Q‘05
3Q‘04
(a- On an after-tax basis
(b- Includes only portions of the segment that are Financial Services businesses
19.5%
CAGR
19.5%
CAGR
Net Income
Delivered double digit earnings growth over the last 25 years
GE’s Financial Services Businesses
Insurance strategy progress
9
Releasing capital for higher-returning opportunities
9
Intensifying focus on exit from Insurance Solutions
($ in billions)
$25
$(6)
$(6)
~$(3)
~$10
9
Edison
9
FGIC
9
GNW IPO
9
GNW secondary
– March ’05
– September ’05
9
MedPro
9
Complete GNW
12/31/2002
Positioned to grow in any environment
Growth through cycles
1985
1990
1995
2000
2005E
$0.4
$1.1
$2.4
$5.2
~$9.8
•
Use same Risk Management rigor in all interest rate
environments
•
Match funding is a mandatory and centralized discipline
•
Disciplined Capital Allocation process…focused on Returns
Fed Funds
Interest Rates (%)
3.8
5.5
7.0
7.8
6.5
x-Kidder, ’02 ERC reserve
strengthening
2002
2005E
2010F
Higher-returning Financial Services
100%
($ in billions)
9
Expanded capabilities:
– Dual Card Finance
– Full supply chain financing
– Inventory Finance
– Global mortgage
– “Verticals”
– GE Money branding
– U.S. large-cap lending
100%
Commercial
& Consumer
Finance
Insurance &
Equipment
~20%
~23%
++
~(3)%
~5%
Low
Business mix (assets)
Commercial Finance
Provider of global commercial real estate capital and services
Global provider of Innovative financial solutions across the entire supply chain
Financing for working capital & capital expansion
Provider of equipment, real estate and working capital financing to the global
Healthcare Industry
Global provider of Insurance and Reinsurance solutions
Group of businesses with small share in big markets
delivering through the cycles
Capital
Capital
Solutions
Solutions
Corporate
Corporate
Financial
Financial
Services
Services
Healthcare
Healthcare
Financial
Financial
Services
Services
Real
Real
Estate
Estate
Energy
Energy
Financial
Financial
Services
Services
Aviation
Aviation
Services
Services
Financing Global Energy, industrial and infrastructure development
1,300+ Commercial Aircraft – owned
Insurance
~22%
ROE
'96
'05E
Consistent growth through good and bad economic times
($ in billions)
'96
'05E
$59
~$193B
14%
CAGR
14%
CAGR
Assets
$1.0
~$4.2B
Net Income
Strong net income and asset growth
Insurance $32B
~$100B
$0.8B
~$1B
17%
CAGR
17%
CAGR
24%
12%
9%
8%
7%
5%
5%
4%
4%
4%
3%
2%
2%
2%
2%
2%
2%
2%
Diversified portfolio
Collateral
Healthcare
Industry
Hotels
Real Estate
Business
Services
Auto
Specialty
Retail
Other (48)
1% or Less
Machinery
equip
Trucking
11%
15%
4%
5%
5%
4%
6%
11%
13%
10%
15%
Real
Estate
Other
Corp. Jets
Trans. Equip
Fleet
Vehicles
Healthcare
Eqpt.
Cash
Flow
A/R + Inv
Dealer Inv
Franchise
FF&E/
Other Equip
Senior secured positions… broad spread of risk
Tech.
Hardware
Diversified Fin.
Chemical
Food & Beverage
Building Products
Consumer Services
Steel
Construction
Construction Material
Excluding GECAS and EFS
Sustained low delinquency
rates…
Delinquency / Non Earnings
0.50
0.70
0.90
1.10
1.30
1.50
1.70
1.90
'00
'01
'02
'03
'04
'05 E
Equipment delinquency
Non Earnings
0.50
0.70
0.90
1.10
1.30
1.50
1.70
1.90
2.10
'00
'01
'02
'03
'04
'05 E
(As a % of Financing Receivables)
Consumer Finance Overview
A Growing Global Consumer Finance Company
• Largest Provider Of Retailer Finance
Programs In The World
• 180,000 locations worldwide
• Only Global Independent Auto Finance
Company
• 45 relationships / 3MM cars
• A Fast Growing Personal Loan Company
• 3,400 locations; 225,000 cash access points
• An Emerging Global Mortgage Provider
• In 25 countries today…and expanding
• Largest Provider Of Retailer Finance
Programs In The World
• 180,000 locations worldwide
• Only Global Independent Auto Finance
Company
• 45 relationships / 3MM cars
• A Fast Growing Personal Loan Company
• 3,400 locations; 225,000 cash access points
• An Emerging Global Mortgage Provider
Consumer Finance
($ in billions)
'04
'05E
Assets
Net
Income
$2.5
~$3.0+
$151
~$175
Consistent, double-digit earnings growth
ROE
~31%
~31%
•
Less than 2% penetrated globally
•
Expand “direct to consumer” … personal
loans, deposits
•
Drive core growth through global IBs
–
Re-brand to GE Money
•
2004 was a solid BD year … announced
BAC (Cent Am) and Garanti Bank (Turkey)
deals in ’05
•
Continued risk management excellence
~20%
Business Overview – ’05E
Assets
Japan
Asia
Europe
Americas
Australia
Net Income – Geographic Split
47%
23%
17%
8%
5%
Japan
Asia
Australia
Europe
Americas
42%
27%
11%
15%
5%
2%
13%
29%
16%
28%
12%
Personal Loans
Sales
Finance
Cards
Auto
SME
Mortgages
Consumer – Asset Quality
2% 3% 4% 5% 6% 7%Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep
