Investments (Tables)
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3 Months Ended |
Mar. 31, 2022 |
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| Investments [Abstract] |
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| Investments by category and current or long-term classification |
The following table summarizes the Company's investments by category and current or long-term classification: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2022 | | December 31, 2021 | | (In millions) | | Current | | Long-term | | Total | | Current | | Long-term | | Total | | Debt securities | | $ | 803 | | | $ | 14,611 | | | $ | 15,414 | | | $ | 796 | | | $ | 16,162 | | | $ | 16,958 | | | Equity securities | | 50 | | | 821 | | | 871 | | | — | | | 603 | | | 603 | | | Commercial mortgage loans | | 13 | | | 1,546 | | | 1,559 | | | 40 | | | 1,526 | | | 1,566 | | | Policy loans | | — | | | 1,316 | | | 1,316 | | | — | | | 1,338 | | | 1,338 | | | Other long-term investments | | — | | | 3,845 | | | 3,845 | | | — | | | 3,574 | | | 3,574 | | | Short-term investments | | 190 | | | — | | | 190 | | | 428 | | | — | | | 428 | | | Total | | 1,056 | | | 22,139 | | | 23,195 | | | 1,264 | | | 23,203 | | | 24,467 | | Investments classified as assets of businesses held for sale (1) | | (325) | | | (4,446) | | | (4,771) | | | (344) | | | (4,765) | | | (5,109) | | | Investments per Consolidated Balance Sheets | | $ | 731 | | | $ | 17,693 | | | $ | 18,424 | | | $ | 920 | | | $ | 18,438 | | | $ | 19,358 | |
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| Debt Securities by Contractual Maturity |
The amortized cost and fair value by contractual maturity periods for debt securities were as follows at March 31, 2022: | | | | | | | | | | | | | | | | (In millions) | | Amortized
Cost | | Fair
Value | | Due in one year or less | | $ | 796 | | | $ | 799 | | | Due after one year through five years | | 4,978 | | | 4,948 | | | Due after five years through ten years | | 4,967 | | | 4,859 | | | Due after ten years | | 4,163 | | | 4,410 | | | Mortgage and other asset-backed securities | | 413 | | | 398 | | | Total | | $ | 15,317 | | | $ | 15,414 | |
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| Gross Unrealized Appreciation (Depreciation) on Debt Securities |
Gross unrealized appreciation (depreciation) on debt securities by type of issuer is shown below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (In millions) | | Amortized
Cost | | Allowance for Credit Loss | | Unrealized
Appreciation | | Unrealized
Depreciation | | Fair
Value | | March 31, 2022 | | | | | | | | | | | | Federal government and agency | | $ | 298 | | | $ | — | | | $ | 75 | | | $ | (4) | | | $ | 369 | | | State and local government | | 158 | | | — | | | 4 | | | (3) | | | 159 | | | Foreign government | | 2,467 | | | — | | | 142 | | | (114) | | | 2,495 | | | Corporate | | 11,981 | | | (23) | | | 409 | | | (374) | | | 11,993 | | | Mortgage and other asset-backed | | 413 | | | — | | | 4 | | | (19) | | | 398 | | | Total | | $ | 15,317 | | | $ | (23) | | | $ | 634 | | | $ | (514) | | | $ | 15,414 | | Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1) | | $ | 2,297 | | | $ | (5) | | | $ | 412 | | | $ | (52) | | | $ | 2,652 | | | December 31, 2021 | | | | | | | | | | | | Federal government and agency | | $ | 287 | | | $ | — | | | $ | 101 | | | $ | (1) | | | $ | 387 | | | State and local government | | 154 | | | — | | | 17 | | | — | | | 171 | | | Foreign government | | 2,468 | | | — | | | 194 | | | (46) | | | 2,616 | | | Corporate | | 12,361 | | | (23) | | | 1,008 | | | (80) | | | 13,266 | | | Mortgage and other asset-backed | | 505 | | | — | | | 17 | | | (4) | | | 518 | | | Total | | $ | 15,775 | | | $ | (23) | | | $ | 1,337 | | | $ | (131) | | | $ | 16,958 | | Investments supporting liabilities of the Company's run-off settlement annuity business (included in total above) (1) | | $ | 2,262 | | | $ | (5) | | | $ | 720 | | | $ | (10) | | | $ | 2,967 | |
(1) Net unrealized appreciation for these investments is excluded from Accumulated other comprehensive loss.
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| Summary of Debt Securities with a Decline in Fair Value |
The table below summarizes debt securities with a decline in fair value from amortized cost for which an allowance for credit losses has not been recorded, by investment grade and the length of time these securities have been in an unrealized loss position. These debt securities are primarily corporate securities with a decline in fair value that reflects an increase in market yields since purchase. Our allowance for credit losses on debt securities was not material as of March 31, 2022 and December 31, 2021. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2022 | | December 31, 2021 | | (Dollars in millions) | | Fair
Value | | Amortized
Cost | | Unrealized
Depreciation | | Number
of Issues | | Fair
Value | | Amortized
Cost | | Unrealized
Depreciation | | Number
of Issues | | One year or less | | | | | | | | | | | | | | | | | | Investment grade | | $ | 5,398 | | | $ | 5,730 | | | $ | (332) | | | 1,761 | | $ | 2,785 | | | $ | 2,861 | | | $ | (76) | | | 909 | | | Below investment grade | | 957 | | | 1,006 | | | (49) | | | 1,406 | | 561 | | | 578 | | | (17) | | | 781 | | | More than one year | | | | | | | | | | | | | | | | | | Investment grade | | 816 | | | 930 | | | (114) | | | 348 | | 382 | | | 412 | | | (30) | | | 143 | | | Below investment grade | | 226 | | | 245 | | | (19) | | | 137 | | 162 | | | 170 | | | (8) | | | 53 | | | Total | | $ | 7,397 | | | $ | 7,911 | | | $ | (514) | | | 3,652 | | | $ | 3,890 | | | $ | 4,021 | | | $ | (131) | | | 1,886 | |
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| Equity Security Investments |
The following table provides the values of the Company's equity security investments as of March 31, 2022 and December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2022 | | December 31, 2021 | | (In millions) | | Cost | | Carrying Value | | Cost | | Carrying Value | | Equity securities with readily determinable fair values | | $ | 840 | | | $ | 464 | | | $ | 257 | | | $ | 207 | | | Equity securities with no readily determinable fair value | | 280 | | | 407 | | | 270 | | | 396 | | | Total | | $ | 1,120 | | | $ | 871 | | | $ | 527 | | | $ | 603 | |
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| Summary of the Credit Risk Profile of the Commercial Mortgage Loan Portfolio |
The following table summarizes the credit risk profile of the Company's commercial mortgage loan portfolio as of March 31, 2022 and December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Dollars in millions) | | March 31, 2022 | | December 31, 2021 | | | Loan-to-Value Ratio | | Carrying Value | | Average Debt Service Coverage Ratio | | Average Loan-to-Value Ratio | | Carrying Value | | Average Debt Service Coverage Ratio | | Average Loan-to-Value Ratio | | | Below 60% | | $ | 555 | | | 2.21 | | | | $ | 560 | | | 2.18 | | | | | 60% to 79% | | 882 | | | 1.89 | | | | 883 | | | 1.89 | | | | | 80% to 100% | | 129 | | | 1.47 | | | | 129 | | | 1.47 | | | | | Allowance for credit losses | | (7) | | | | | | | (6) | | | | | | | | Total | | $ | 1,559 | | | 1.97 | | 61 | | % | $ | 1,566 | | | 1.96 | | 61 | | % |
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| Carrying Value Information for Other Long-Term Investments |
The following table provides the carrying value information for these investments: | | | | | | | | | | | | | | | | | Carrying value as of | | (In millions) | | March 31, 2022 | | December 31, 2021 | | Real estate investments | | $ | 1,212 | | | $ | 1,152 | | | Securities partnerships | | 2,463 | | | 2,272 | | | Other | | 170 | | | 150 | | | Total | | $ | 3,845 | | | $ | 3,574 | |
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| Summary of Derivative Instruments Held |
As of March 31, 2022 and December 31, 2021, the effects of derivative financial instruments used in these individual hedging strategies were not material to the Consolidated Financial Statements, including gains or losses reclassified from Accumulated other comprehensive loss into Shareholders' net income, amounts excluded from the assessment of hedge effectiveness and fair values of assets posted or held as collateral supporting the fair values of these derivative financial instruments. The following table summarizes the types and notional quantity of derivative instruments held by the Company: | | | | | | | | | | | | | | | | | | | | | | | | | Notional Value as of | | (In millions) | | | March 31, 2022 | | December 31, 2021 | | Purpose | | Type of Instrument | | | Fair value hedge: To hedge the foreign exchange-related changes in fair values of certain foreign-denominated bonds. The notional value of these derivatives matches the amortized cost of the hedged bonds. A majority of these instruments are denominated in Euros, with the remaining instruments denominated in British Pounds Sterling and Australian Dollars. | | Foreign currency swap contracts | | $ | 1,110 | | | $ | 1,081 | | Fair value hedge: To convert a portion of the interest rate exposure on the Company's long-term debt from fixed to variable rates. This more closely aligns the Company's interest expense with the interest income received on its cash equivalent and short-term investment balances. The variable rates are benchmarked to SOFR. | | Interest rate swap contracts | | $ | 750 | | | $ | 750 | | Net investment hedge: To reduce the risk of changes in net assets due to changes in foreign currency spot exchange rates for certain foreign subsidiaries that conduct their business principally in currencies other than the U.S. Dollar. The notional value of hedging instruments matches the hedged amount of subsidiary net assets. Foreign currency swap contracts are denominated in Euros, while foreign currency forward contracts are primarily denominated in Korean Won, with the remaining instruments denominated in New Zealand Dollars and Taiwan Dollars. | | Foreign currency swap contracts | | $ | 526 | | | $ | 526 | | | Foreign currency forward contracts | | $ | 1,360 | | | $ | 1,380 | | Economic hedge: To hedge the foreign exchange-related changes in fair value of U.S. dollar-denominated investment assets to reflect the local currency for the Company's foreign subsidiary in South Korea. The notional value of hedging instruments generally aligns with the fair value of the hedged investments. | | Foreign currency forward contracts | | $ | 749 | | | $ | 720 | | | | | | | | |
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| Realized Gains and Losses on Investments |
The following realized gains and losses on investments exclude amounts required to adjust future policy benefits for the run-off settlement annuity business (consistent with accounting for a premium deficiency), as well as realized gains and losses attributed to the Company's separate accounts because those gains and losses generally accrue directly to separate account policyholders: | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, | | | | (In millions) | | | | | | 2022 | | 2021 | | | | Net realized investment gains (losses), excluding credit loss expense and asset write-downs | | | | | | $ | (319) | | | $ | 10 | | | | | Credit loss (expense) recoveries | | | | | | — | | | (9) | | | | | | | | | | | | | | | | Net realized investment gains (losses), before income taxes | | | | | | $ | (319) | | | $ | 1 | | | |
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