Investments (Tables)

9 Months Ended

Sep. 30, 2012

Net Investment Income



Periods ended September 30	Three Months						Nine Months
(In millions)	2012			2011			2012			2011
Fixed maturity securities	$	507		$	494		$	1,528		$	1,505
Short term investments	2			2			5			6
Limited partnership investments	89			(93		)	184			32
Equity securities	4			4			10			16
Mortgage loans	5			2			13			6
Trading portfolio (a)	7			(1		)	18			5
Other	—			1			3			6
Gross investment income	614			409			1,761			1,576
Investment expense	(13		)	(15		)	(42		)	(45		)
Net investment income	$	601		$	394		$	1,719		$	1,531

___________________


(a)	There were no net unrealized gains (losses) related to changes in fair value of trading securities still held included in net investment income for the three or nine months ended September 30, 2012. Net unrealized losses related to changes in fair value on trading securities still held included in net investment income were $1 million for the three and nine months ended September 30, 2011.

Net realized investment gains (losses)

Net Realized Investment Gains (Losses)



Periods ended September 30	Three Months						Nine Months
(In millions)	2012			2011			2012			2011
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	75		$	56		$	193		$	233
Gross realized losses	(49		)	(85		)	(120		)	(222		)
Net realized investment gains (losses) on fixed maturity securities	26			(29		)	73			11
Equity securities:
Gross realized gains	5			1			10			7
Gross realized losses	(20		)	(2		)	(24		)	(10		)
Net realized investment gains (losses) on equity securities	(15		)	(1		)	(14		)	(3		)
Derivatives	(1		)	1			(1		)	—
Short term investments and other (a) (b)	(2		)	2			8			(7		)
Net realized investment gains (losses), net of participating policyholders’ interests	$	8		$	(27	)	$	66		$	1

____________________


(a)	The nine months ended September 30, 2011 included a $9 million loss related to the early extinguishment of debt in 2011.


(b)	Includes net unrealized gains (losses) related to changes in the fair value of securities for which the fair value option has been elected. There were no net unrealized gains (losses) included in the three months ended September 30, 2012 or 2011 or the nine months ended September 30, 2012. There were $1 million of net unrealized gains for the nine months ended September 30, 2011.

Components of other-than-temporary impairment losses recognized in earnings

The components of net other-than-temporary impairment (OTTI) losses recognized in earnings by asset type are summarized in the following table.



Periods ended September 30	Three Months				Nine Months
(In millions)	2012		2011		2012		2011
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	7	$	49	$	23	$	73
States, municipalities and political subdivisions	17		—		17		—
Asset-backed:
Residential mortgage-backed	20		21		49		95
Other asset-backed	—		4		—		4
Total asset-backed	20		25		49		99
U.S. Treasury and obligation of government-sponsored enterprises	—		—		1		—
Total fixed maturity securities available-for-sale	44		74		90		172
Equity securities available-for-sale:
Common stock	1		3		5		7
Preferred stock	19		—		19		1
Total equity securities available-for-sale	20		3		24		8
Net OTTI losses recognized in earnings	$	64	$	77	$	114	$	180

Summary of fixed maturity and equity securities

The following tables provide a summary of fixed maturity and equity securities.

Summary of Fixed Maturity and Equity Securities



September 30, 2012	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	19,209	$	2,634	$	32	$	21,811	$	—
States, municipalities and political subdivisions	9,415		1,450		53		10,812		—
Asset-backed:
Residential mortgage-backed	5,907		264		81		6,090		(12		)
Commercial mortgage-backed	1,582		123		17		1,688		(3		)
Other asset-backed	944		23		1		966		—
Total asset-backed	8,433		410		99		8,744		(15		)
U.S. Treasury and obligations of government-sponsored enterprises	182		11		1		192		—
Foreign government	588		26		—		614		—
Redeemable preferred stock	101		14		—		115		—
Total fixed maturity securities available-for-sale	37,928		4,545		185		42,288		$	(15	)
Total fixed maturity securities trading	17		—		—		17
Equity securities available-for-sale:
Common stock	22		24		—		46
Preferred stock	206		8		—		214
Total equity securities available-for-sale	228		32		—		260
Total	$	38,173	$	4,577	$	185	$	42,565



December 31, 2011	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)
(In millions)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	19,086	$	1,946	$	154	$	20,878	$	—
States, municipalities and political subdivisions	9,018		900		136		9,782		—
Asset-backed:
Residential mortgage-backed	5,786		172		183		5,775		99
Commercial mortgage-backed	1,365		48		59		1,354		(2		)
Other asset-backed	946		13		4		955		—
Total asset-backed	8,097		233		246		8,084		97
U.S. Treasury and obligations of government-sponsored enterprises	479		14		—		493		—
Foreign government	608		28		—		636		—
Redeemable preferred stock	51		7		—		58		—
Total fixed maturity securities available-for-sale	37,339		3,128		536		39,931		$	97
Total fixed maturity securities trading	6		—		—		6
Equity securities available-for-sale:
Common stock	30		17		—		47
Preferred stock	258		4		5		257
Total equity securities available-for-sale	288		21		5		304
Total	$	37,633	$	3,149	$	541	$	40,241

Securities in a gross unrealized loss position

The following tables summarize the estimated fair value and gross unrealized losses of available-for-sale fixed maturity and equity securities in a gross unrealized loss position by the length of time in which the securities have continuously been in that position.

Securities in a Gross Unrealized Loss Position



	Less than 12 Months				12 Months or Longer				Total
September 30, 2012	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
(In millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	600	$	18	$	210	$	14	$	810	$	32
States, municipalities and political subdivisions	84		1		227		52		311		53
Asset-backed:
Residential mortgage-backed	327		3		580		78		907		81
Commercial mortgage-backed	142		2		132		15		274		17
Other asset-backed	66		1		—		—		66		1
Total asset-backed	535		6		712		93		1,247		99
U.S. Treasury and obligations of government-sponsored enterprises	22		1		—		—		22		1
Total	$	1,241	$	26	$	1,149	$	159	$	2,390	$	185



	Less than 12 Months				12 Months or Longer				Total
December 31, 2011	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
(In millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	2,552	$	126	$	159	$	28	$	2,711	$	154
States, municipalities and political subdivisions	67		1		721		135		788		136
Asset-backed:
Residential mortgage-backed	719		36		874		147		1,593		183
Commercial mortgage-backed	431		39		169		20		600		59
Other asset-backed	389		4		—		—		389		4
Total asset-backed	1,539		79		1,043		167		2,582		246
Total fixed maturity securities available-for-sale	4,158		206		1,923		330		6,081		536
Equity securities available-for-sale:
Preferred stock	117		5		—		—		117		5
Total	$	4,275	$	211	$	1,923	$	330	$	6,198	$	541

The following table summarizes the activity for the three and nine months ended September 30, 2012 and 2011 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at September 30, 2012 and 2011 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).



Periods ended September 30	Three Months						Nine Months
(In millions)	2012			2011			2012			2011
Beginning balance of credit losses on fixed maturity securities	$	99		$	82		$	92		$	141
Additional credit losses for securities for which an OTTI loss was previously recognized	2			11			23			29
Credit losses for securities for which an OTTI loss was not previously recognized	—			10			2			11
Reductions for securities sold during the period	(3		)	(4		)	(11		)	(50		)
Reductions for securities the Company intends to sell or more likely than not will be required to sell	—			—			(8		)	(32		)
Ending balance of credit losses on fixed maturity securities	$	98		$	99		$	98		$	99

Contractual maturity

Contractual Maturity



	September 30, 2012				December 31, 2011
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,861	$	1,876	$	1,802	$	1,812
Due after one year through five years	13,382		14,176		13,110		13,537
Due after five years through ten years	8,490		9,337		8,410		8,890
Due after ten years	14,195		16,899		14,017		15,692
Total	$	37,928	$	42,288	$	37,339	$	39,931

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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