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Investments and Cash (Tables)
 12 Months Ended
Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]  
Net Investment Income
Net Investment Income  

 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(in millions)
Income from fixed-maturity securities managed by third parties
$
298


$
306


$
335

Income from internally managed securities:
 
 
 
 
 
Fixed maturities
120


103


61

Other
9

 
8

 
37

Gross investment income
427


417


433

Investment expenses
(9
)

(9
)

(10
)
Net investment income
$
418

 
$
408

 
$
423
Net Realized Investment Gains (Losses)
Net Realized Investment Gains (Losses)
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(in millions)
Gross realized gains on available-for-sale securities (1)
$
95

 
$
28

 
$
44

Gross realized losses on available-for-sale securities
(12
)
 
(8
)
 
(15
)
Net realized gains (losses) on other invested assets
0

 
2

 
(8
)
Other-than-temporary impairment
(43
)
 
(51
)
 
(47
)
Net realized investment gains (losses)
$
40

 
$
(29
)
 
$
(26
)

____________________
(1)
Year ended December 31, 2017 includes a gain on Zohar II Notes used as consideration for the MBIA UK Acquisition. See Note 2, Acquisitions.
Roll Forward of Credit Losses in the Investment Portfolio
Roll Forward of Credit Losses
in the Investment Portfolio

 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(in millions)
Balance, beginning of period
$
134

 
$
108

 
$
124

Additions for credit losses on securities for which an other-than-temporary-impairment was not previously recognized
13

 
3

 
3

Reductions for securities sold and other settlements
(4
)
 
(4
)
 
(28
)
Additions for credit losses on securities for which an other-than-temporary-impairment was previously recognized
19

 
27

 
9

Balance, end of period
$
162

 
$
134

 
$
108
Fixed Maturity Securities and Short Term Investments by Security Type
Fixed-Maturity Securities and Short-Term Investments
by Security Type 
As of December 31, 2017

Investment Category
 
Percent
of
Total(1)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
AOCI(2)
Gain
(Loss) on
Securities
with
Other-Than-Temporary Impairment
 
Weighted
Average
Credit
Rating
 (3)
 
 
(dollars in millions)
Fixed-maturity securities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Obligations of state and political subdivisions
 
51
%
 
$
5,504

 
$
267

 
$
(11
)
 
$
5,760

 
$
23

 
AA
U.S. government and agencies
 
2

 
272

 
14

 
(1
)
 
285

 
—

 
AA+
Corporate securities
 
18

 
1,973

 
63

 
(18
)
 
2,018

 
(6
)
 
A
Mortgage-backed securities(4):
 
—

 
 
 
 
 
 

 
 
 
 

 

RMBS
 
8

 
852

 
26

 
(17
)
 
861

 
(1
)
 
BBB+
CMBS
 
5

 
540

 
12

 
(3
)
 
549

 
—

 
AAA
Asset-backed securities
 
7

 
730

 
166

 
0

 
896

 
136

 
B
Foreign government securities
 
3

 
316

 
6

 
(17
)
 
305

 
0

 
AA
Total fixed-maturity securities
 
94

 
10,187

 
554

 
(67
)
 
10,674

 
152

 
A+
Short-term investments
 
6

 
627

 
0

 
0

 
627

 
—

 
AAA
Total investment portfolio
 
100
%
 
$
10,814

 
$
554

 
$
(67
)
 
$
11,301

 
152

 
A+

Fixed-Maturity Securities and Short-Term Investments
by Security Type 
As of December 31, 2016

Investment Category
 
Percent
of
Total(1)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
AOCI(2)
Gain
(Loss) on
Securities
with
Other-Than-Temporary Impairment
 
Weighted
Average
Credit
Rating
 (3)
 
 
(dollars in millions)
Fixed-maturity securities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Obligations of state and political subdivisions
 
50
%
 
$
5,269

 
$
202

 
$
(39
)
 
$
5,432

 
$
13

 
AA
U.S. government and agencies
 
4

 
424

 
17

 
(1
)
 
440

 
—

 
AA+
Corporate securities
 
15

 
1,612

 
32

 
(31
)
 
1,613

 
(8
)
 
A-
Mortgage-backed securities(4):
 
 

 
 

 
 

 
 

 
 

 
 

 
 
RMBS
 
9

 
998

 
27

 
(38
)
 
987

 
(21
)
 
A-
CMBS
 
5

 
575

 
13

 
(5
)
 
583

 
—

 
AAA
Asset-backed securities
 
8

 
835

 
110

 
0

 
945

 
33

 
B
Foreign government securities
 
3

 
261

 
4

 
(32
)
 
233

 
—

 
AA
Total fixed-maturity securities
 
94

 
9,974

 
405

 
(146
)
 
10,233

 
17

 
A+
Short-term investments
 
6

 
590

 
0

 
0

 
590

 
—

 
AAA
Total investment portfolio
 
100
%
 
$
10,564

 
$
405

 
$
(146
)
 
$
10,823

 
$
17

 
A+
____________________
(1)
Based on amortized cost.
 
(2)
Also refer to Note 20, Other Comprehensive Income.
 
(3)
Ratings in the tables above represent the lower of the Moody’s and S&P Global Ratings, a division of Standard & Poor's Financial Services LLC (S&P) classifications except for bonds purchased for loss mitigation or risk management strategies, which use internal ratings classifications. The Company’s portfolio consists primarily of high-quality, liquid instruments.
 
(4)
Government-agency obligations were approximately 39% of mortgage backed securities as of December 31, 2017 and 42% as of December 31, 2016 based on fair value.
Fair Value of Available-for-Sale Municipal Bond Portfolio by State
Fair Value of Available-for-Sale Portfolio of
Obligations of State and Political Subdivisions
As of December 31, 2017 (1)
 
State
 
State
General
Obligation
 
Local
General
Obligation
 
Revenue Bonds
 
Fair
Value
 
Amortized
Cost
 
Average
Credit
Rating
 
 
(in millions)
Fixed-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
New York
 
$
13

 
$
44

 
$
568

 
$
625

 
$
598

 
AA
California
 
76

 
83

 
421

 
580

 
527

 
A
Texas
 
17

 
212

 
321

 
550

 
528

 
AA
Washington
 
93

 
87

 
214

 
394

 
381

 
AA
Florida
 
5

 
17

 
244

 
266

 
254

 
AA-
Massachusetts
 
70

 
—

 
151

 
221

 
208

 
AA
Illinois
 
18

 
51

 
131

 
200

 
189

 
A
Ohio
 
16

 
22

 
102

 
140

 
136

 
AA
Pennsylvania
 
33

 
21

 
76

 
130

 
125

 
A+
District of Columbia
 
43

 
—

 
85

 
128

 
123

 
AA
All others
 
138

 
263

 
1,233

 
1,634

 
1,577

 
AA-
Total
 
$
522

 
$
800

 
$
3,546

 
$
4,868

 
$
4,646

 
AA-


Fair Value of Available-for-Sale Portfolio of
Obligations of State and Political Subdivisions
As of December 31, 2016 (1)

State
 
State
General
Obligation
 
Local
General
Obligation
 
Revenue Bonds
 
Fair
Value
 
Amortized
Cost
 
Average
Credit
Rating
 
 
(in millions)
Fixed-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
New York
 
$
13

 
$
38

 
$
570

 
$
621

 
$
604

 
AA
California
 
73

 
62

 
391

 
526

 
497

 
A+
Texas
 
16

 
186

 
316

 
518

 
503

 
AA
Washington
 
81

 
68

 
201

 
350

 
348

 
AA
Florida
 
16

 
11

 
247

 
274

 
266

 
AA-
Massachusetts
 
74

 
—

 
149

 
223

 
215

 
AA
Illinois
 
18

 
65

 
127

 
210

 
205

 
A+
Arizona
 
—

 
3

 
122

 
125

 
122

 
AA
Georgia
 
—

 
9

 
104

 
113

 
109

 
A+
Pennsylvania
 
38

 
17

 
58

 
113

 
111

 
A+
All others
 
153

 
155

 
1,085

 
1,393

 
1,364

 
AA-
Total
 
$
482

 
$
614

 
$
3,370

 
$
4,466

 
$
4,344

 
AA-
____________________
(1)
Excludes $892 million and $966 million as of December 31, 2017 and 2016, respectively, of pre-refunded bonds, at fair value. The credit ratings are based on the underlying ratings and do not include any benefit from bond insurance.
Revenue Sources
Revenue Bonds
Sources of Funds
 
 
 
As of December 31, 2017
 
As of December 31, 2016
Type
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
 
(in millions)
Fixed-maturity securities:
 
 
 
 
 
 
 
 
Transportation
 
$
955

 
$
889

 
$
860

 
$
824

Water and sewer
 
670

 
641

 
545

 
531

Tax backed
 
600

 
570

 
617

 
601

Higher education
 
515

 
492

 
513

 
499

Municipal utilities
 
324

 
315

 
365

 
360

Healthcare
 
308

 
293

 
310

 
298

All others
 
174

 
169

 
160

 
158

Total
 
$
3,546

 
$
3,369

 
$
3,370

 
$
3,271
Fixed Maturity Securities Gross Unrealized Loss by Length of Time
Fixed-Maturity Securities
Gross Unrealized Loss by Length of Time
As of December 31, 2017
 
 
Less than 12 months
 
12 months or more
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
(dollars in millions)
Obligations of state and political subdivisions
$
166

 
$
(4
)
 
$
281

 
$
(7
)
 
$
447

 
$
(11
)
U.S. government and agencies
151

 
0

 
18

 
(1
)
 
169

 
(1
)
Corporate securities
201

 
(1
)
 
240

 
(17
)
 
441

 
(18
)
Mortgage-backed securities:
 
 
 
 
 
 
 

 


 


RMBS
191

 
(5
)
 
213

 
(12
)
 
404

 
(17
)
CMBS
29

 
0

 
80

 
(3
)
 
109

 
(3
)
Asset-backed securities
48

 
0

 
3

 
0

 
51

 
0

Foreign government securities
20

 
0

 
140

 
(17
)
 
160

 
(17
)
Total
$
806

 
$
(10
)
 
$
975

 
$
(57
)
 
$
1,781

 
$
(67
)
Number of securities(1)
 

 
244

 
 

 
264

 
 

 
499

Number of securities with other-than-temporary impairment(1)
 

 
17

 
 

 
15

 
 

 
31

 
Fixed-Maturity Securities
Gross Unrealized Loss by Length of Time
As of December 31, 2016

 
Less than 12 months
 
12 months or more
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
(dollars in millions)
Obligations of state and political subdivisions
$
1,110

 
$
(38
)
 
$
6

 
$
(1
)
 
$
1,116

 
$
(39
)
U.S. government and agencies
87

 
(1
)
 
—

 
—

 
87

 
(1
)
Corporate securities
492

 
(11
)
 
118

 
(20
)
 
610

 
(31
)
Mortgage-backed securities:
 

 
 

 
 

 
 

 
 
 
 
RMBS
391

 
(23
)
 
94

 
(15
)
 
485

 
(38
)
CMBS
165

 
(5
)
 
—

 
—

 
165

 
(5
)
Asset-backed securities
36

 
0

 
0

 
0

 
36

 
0

Foreign government securities
44

 
(5
)
 
114

 
(27
)
 
158

 
(32
)
Total
$
2,325

 
$
(83
)
 
$
332

 
$
(63
)
 
$
2,657

 
$
(146
)
Number of securities(1)
 

 
622

 
 

 
60

 
 

 
676

Number of securities with other-than-temporary impairment
 

 
8

 
 

 
9

 
 

 
17

___________________
(1)
The number of securities does not add across because lots consisting of the same securities have been purchased at different times and appear in both categories above (i.e., less than 12 months and 12 months or more). If a security appears in both categories, it is counted only once in the total column.
Distribution of Fixed Maturity Securities by Contractual Maturity
Distribution of Fixed-Maturity Securities
by Contractual Maturity
As of December 31, 2017
 
 
Amortized
Cost
 
Estimated
Fair Value
 
(in millions)
Due within one year
$
254

 
$
256

Due after one year through five years
1,574

 
1,604

Due after five years through 10 years
2,368

 
2,443

Due after 10 years
4,599

 
4,961

Mortgage-backed securities:
 

 
 

RMBS
852

 
861

CMBS
540

 
549

Total
$
10,187

 
$
10,674
Internally Managed Investment Portfolio
Internally Managed Portfolio
Carrying Value

 
As of December 31,
 
2017
 
2016
 
(in millions)
Assets purchased for loss mitigation and other risk management purposes:
 
 
 
   Fixed-maturity securities, at fair value
$
1,231

 
$
1,492

   Other invested assets
20

 
107

Alternative investments
69

 
48

Other
5

 
7

Total
$
1,325

 
$
1,654
Restrictions on Cash and Cash Equivalents
Cash and Restricted Cash

 
As of December 31,
 
2017
 
2016
 
2015
 
2014
 
(in millions)
Cash
$
144

 
$
118

 
$
166

 
$
75

Restricted cash (1)
0

 
9

 
0

 
19

Total cash and restricted cash
$
144

 
$
127

 
$
166

 
$
94

____________________
(1)
Amounts relate to cash held in trust accounts and are reported in other assets in consolidated balance sheets. See Note 13, Reinsurance and Other Monoline Exposures, for more information.