Variable Interest Entities (Tables)

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The following summarizes our investment funds, including related party investment funds and investment funds owned by consolidated VIEs:



	December 31,
	2016							2015
(In millions, except for percentages and years)	Carrying value		Percent of total		Life of underlying funds in years			Carrying value		Percent of total		Life of underlying funds in years
Investment funds
Private equity	$	268	38.9	%	0	–	7	$	263	35.9	%	0	–	7
Mortgage and real estate	118		17.2	%	0	–	4	101		13.8	%	0	–	7
Natural resources	5		0.7	%	1	–	2	6		0.8	%	0	–	1
Hedge funds	72		10.4	%	0	–	3	86		11.7	%	0	–	4
Credit funds	226		32.8	%	0	–	5	277		37.8	%	0	–	5
Total investment funds	689		100.0	%				733		100.0	%
Investment funds – related parties
Private equity – A-A Mortgage¹	343		28.6	%	3	–	3	225		22.6	%	6	–	7
Private equity – other	131		11.0	%	0	–	10	36		3.6	%	6	–	7
Mortgage and real estate	247		20.6	%	1	–	4	234		23.5	%	0	–	7
Natural resources	49		4.1	%	5	–	5	46		4.6	%	3	–	7
Hedge funds	192		16.0	%	9	–	9	256		25.6	%	0	–	1
Credit funds	236		19.7	%	2	–	3	200		20.1	%	3	–	10
Total investment funds – related parties	1,198		100.0	%				997		100.0	%
Investment funds owned by consolidated VIEs
Private equity – MidCap²	524		91.4	%	N/A			482		90.3	%	N/A
Credit funds	38		6.7	%	0	–	3	34		6.3	%	0	–	4
Mortgage and real assets	11		1.9	%	2	–	3	18		3.4	%	3	–	4
Total investment funds owned by consolidated VIEs	573		100.0	%				534		100.0	%
Total investment funds including related parties and funds owned by consolidated VIEs	$	2,460						$	2,264

¹A-A Mortgage Opportunities, LP (A-A Mortgage) is a platform to originate residential mortgage loans and mortgage servicing rights.
² Our total investment in MidCap, including amounts advanced under credit facilities, totaled $761 million and $782 million as of December 31, 2016 and 2015, respectively, which is greater than 10% of total AHL shareholders' equity at the respective period end dates.

The following represents the gains (losses) recorded for instruments within the consolidated VIEs for which we have elected the fair value option:



	Years ended December 31,
(In millions)	2016			2015			2014
Trading securities
Fixed maturity securities	$	(1	)	$	(5	)	$	(2	)
Equity securities	(78		)	(4		)	27
Investment funds	49			12			20
Loans held for investment	—			—			4
Total gains (losses)	$	(30	)	$	3		$	49

The following table presents the carrying value by ownership percentage of investment funds where we elected the fair value option, including related party investment funds and investment funds owned by consolidated VIEs:



	December 31,
(In millions)	2016		2015
Ownership Percentage
Greater than 3% – 49%	$	562	$	516
3% or less	99		152
Fair value option investment funds	$	661	$	668

The following summarizes the carrying value and maximum loss exposure of these non-consolidated VIEs:



	December 31,
	2016				2015
(In millions)	Carrying Value		Maximum Loss Exposure		Carrying Value		Maximum Loss Exposure
Investment funds	$	689	$	1,026	$	733	$	878
Investment in related parties – investment funds	1,198		1,485		997		1,454
Assets of consolidated variable interest entities – investment funds	573		593		534		558
Investment in fixed maturity securities	19,171		19,090		17,673		18,146
Investment in related parties – fixed maturity securities	530		536		525		554
Total non-consolidated VIEs	$	22,161	$	22,730	$	20,462	$	21,590

The following represents the hierarchy for assets and liabilities of our consolidated VIEs measured at fair value on a recurring basis:



	December 31, 2016
(In millions)	Total		Level 1		Level 2		Level 3
Assets of consolidated variable interest entities
Investments
AFS securities
Equity securities	$	161	$	161	$	—	$	—
Trading securities
Fixed maturity securities	50		—		—		50
Equity securities	117		74		—		43
Investment funds	562		—		—		562
Cash and cash equivalents	14		14		—		—
Total assets of consolidated VIEs measured at fair value	$	904	$	249	$	—	$	655



	December 31, 2015
(In millions)	Total		Level 1		Level 2		Level 3
Assets of consolidated variable interest entities
Investments
Trading securities
Fixed maturity securities	$	722	$	—	$	669	$	53
Equity securities	309		271		—		38
Investment funds	516		—		—		516
Cash and cash equivalents	6		6		—		—
Total assets of consolidated VIEs measured at fair value	$	1,553	$	277	$	669	$	607

The following table presents the carrying value by ownership percentage of equity method investment funds, including related party investment funds and investment funds owned by consolidated VIEs:



	December 31,
(In millions)	2016		2015
Ownership Percentage
100%	$	27	$	49
50% – 99%	478		322
Greater than 3% – 49%	1,294		1,225
Equity method investment funds	$	1,799	$	1,596

The following is a reconciliation for all VIE Level 3 assets and liabilities measured at fair value on a recurring basis:



	Year ended December 31, 2016
(In millions)	Beginning Balance		Total realized and unrealized gains (losses) included in income			Purchases/Borrowings		Sales/Repayments			Transfers in (out)²		Other		Ending Balance		Total gains (losses) included in earnings¹
Assets of consolidated variable interest entities
Trading securities
Fixed maturity securities	$	53	$	(1	)	$	—	$	(2	)	$	—	$	—	$	50	$	(1	)
Equity securities	38		3			2		—			—		—		43		3
Investment funds	516		49			17		(20		)	—		—		562		49
Total Level 3 assets of consolidated VIEs	$	607	$	51		$	19	$	(22	)	$	—	$	—	$	655	$	51

¹ Related to instruments held at end of period.
² See discussion of transfer out of Level 3 in the description of significant unobservable inputs below.



	Year ended December 31, 2015
(In millions)	Beginning Balance			Total realized and unrealized gains (losses) included in income			Purchases/Borrowings		Sales/Repayments			Transfers in (out)		Other²			Ending Balance		Total gains (losses) included in earnings¹
Assets of consolidated variable interest entities
Trading securities
Fixed maturity securities	$	57		$	(6	)	$	2	$	—		$	—	$	—		$	53	$	(6	)
Equity securities	62			(15		)	—		—			—		(9		)	38		(15		)
Investment funds	40			3			15		(15		)	—		473			516		(7		)
Loans held for investment	2,071			—			—		—			—		(2,071		)	—		—
Total Level 3 assets of consolidated VIEs	$	2,230		$	(18	)	$	17	$	(15	)	$	—	$	(1,607	)	$	607	$	(28	)
Liabilities of consolidated variable interest entities
Borrowings	$	(1,517	)	$	—		$	—	$	—		$	—	$	1,517		$	—	$	—
Total Level 3 liabilities of consolidated VIEs	$	(1,517	)	$	—		$	—	$	—		$	—	$	1,517		$	—	$	—

¹ Related to instruments held at end of period.
²Other activity primarily relates to the deconsolidation of MidCap Financial and its restructuring into MidCap.

Equity Method Investments

The following is the aggregated summarized financial information of equity method investees, including those where we elected the fair value option, and may be presented on a lag due to the availability of financial information from the investee:



	December 31,
(In millions)	2016		2015
Assets	$	40,120	$	51,649
Liabilities	5,886		6,990
Equity	34,234		44,659



	Years ended December 31,
(In millions)	2016		2015		2014
Net income	$	1,686	$	5,945	$	8,418

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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