Sale of Businesses

12 Months Ended

Dec. 31, 2016

Sale of Businesses

(24) Sale of Businesses

European mortgage insurance business

On May 9, 2016, we completed the sale of our European mortgage insurance business to AmTrust Financial Services, Inc. and received net proceeds of approximately $50 million. As the held-for-sale criteria were satisfied during 2015, we recorded an estimated after-tax loss of approximately $141 million related to the sale, net of taxes of $1 million. In accordance with the accounting guidance for groups of assets that are held-for-sale, we recorded an impairment of $135 million in 2015 to record the carrying value of the business at its fair value, which was based on estimated proceeds less $5 million closing costs. Upon completion of the sale, we recorded an additional pre-tax loss of $9 million and a tax benefit of $27 million primarily related to the reversal of a deferred tax valuation allowance for a total net after-tax gain of $18 million in 2016.

The major assets and liability categories of our European mortgage insurance business were as follows as of December 31:

(Amounts in millions)	2016		2015
Assets
Investments:
Fixed maturity securities available-for-sale, at fair value	$	—	$	195
Other invested assets		—		6
Total investments		—		201
Cash and cash equivalents		—		28
Accrued investment income		—		3
Reinsurance recoverable		—		21
Other assets		—		14
Assets held for sale		—		267
Fair value less closing costs impairment		—		(140	)
Total assets held for sale	$	—	$	127
Liabilities
Liability for policy and contract claims	$	—	$	56
Unearned premiums		—		58
Other liabilities		—		12
Deferred tax liability		—		1
Liabilities held for sale	$	—	$	127

Deferred tax liabilities that result in future taxable or deductible amounts to the remaining consolidated group have been reflected in liabilities of continuing operations and not reflected in liabilities held for sale.

Lifestyle protection insurance

On December 1, 2015, we completed the sale of our lifestyle protection insurance business and received approximately $493 million with net proceeds of approximately $400 million. During 2015, we recorded an after-tax loss of approximately $381 million, net of taxes of $155 million. In 2016, we finalized the closing balance sheet and purchase price adjustments and recorded an after-tax loss of $29 million which primarily related to tax items and claim liabilities.

Summary operating results of discontinued operations were as follows for the years ended December 31:

(Amounts in millions)	2016			2015			2014
Revenues:
Premiums	$	—		$	627		$	731
Net investment income		—			74			100
Net investment gains (losses)		—			—			2
Policy fees and other income		—			—			3
Total revenues		—			701			836
Benefits and expenses:
Benefits and other changes in policy reserves		—			182			202
Acquisition and operating expenses		—			396			447
Amortization of deferred acquisition costs and intangibles		—			83			118
Interest expense		—			29			46
Total benefits and expenses		—			690			813
Income before income taxes and loss on sale		—			11			23
Provision (benefit) for income taxes		—			37			(134	)
Income (loss) before loss on sale		—			(26	)		157
Loss on sale, net of taxes		(29	)		(381	)		—
Income (loss) from discontinued operations, net of taxes	$	(29	)	$	(407	)	$	157

We retained liabilities for taxes and certain claims and sales practices that occurred while we owned the lifestyle protection insurance business. We have established our current best estimates for these liabilities, where appropriate; however, there may be future adjustments to these estimates.

In connection with the settlement of the U.K. pension plan as part of the sale of our lifestyle protection insurance business, we purchased a group annuity contract. The amounts associated with the group annuity contract were held in a third-party trust for the benefit of the participants until individual annuity contracts were transferred to the participants on September 1, 2016. As a result, the U.K. pension plan was completely settled in September 2016.

Life insurance business

On June 24, 2016, we completed the sale of our term life insurance new business platform to Pacific Life Insurance Company for a purchase price of $29 million. The sale primarily included a building located in Lynchburg, Virginia and software. As a result of this transaction, we recorded a pre-tax gain of $12 million and taxes of $4 million.