The ratings on GMAC LLC (GMAC) reflect the significant risks facing the company because of its close business ties to its 49%-owner, GM (B/Negative/B-3). The ratings also reflect the benefits afforded by the diversity of GMAC's mortgage and insurance businesses, its generally high asset quality, and its significant long-range profit potential. Standard&Poor's Ratings Services recently affirmed its ratings on GMAC following the announcement of extremely weak fourth-quarter earnings, excluding the effects of nonrecurring items. GMAC's disappointing results reflect a precipitous decline in the financial performance of its 100%-owned mortgage subsidiary, Residential Cap LLC (BBB/Negative/A-3), owing to its exposure to the deteriorating subprime mortgage sector. However, while we expect Residential Cap's earnings to remain depressed during the next several
