Investments (Tables)

9 Months Ended

Sep. 30, 2013

Net Investment Income



Periods ended September 30	Three Months						Nine Months
(In millions)	2013			2012			2013			2012
Fixed maturity securities	$	504		$	507		$	1,501		$	1,528
Short term investments	1			2			3			5
Limited partnership investments	93			89			303			184
Equity securities	3			4			9			10
Mortgage loans	6			5			17			13
Trading portfolio (a)	3			7			13			18
Other	1			—			2			3
Gross investment income	611			614			1,848			1,761
Investment expense	(14		)	(13		)	(40		)	(42		)
Net investment income	$	597		$	601		$	1,808		$	1,719

___________________


(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, 2013 or 2012.

Net realized investment gains (losses)

Net Realized Investment Gains (Losses)



Periods ended September 30	Three Months						Nine Months
(In millions)	2013			2012			2013			2012
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	51		$	75		$	132		$	193
Gross realized losses	(44		)	(49		)	(98		)	(120		)
Net realized investment gains (losses) on fixed maturity securities	7			26			34			73
Equity securities:
Gross realized gains	3			5			10			10
Gross realized losses	(5		)	(20		)	(27		)	(24		)
Net realized investment gains (losses) on equity securities	(2		)	(15		)	(17		)	(14		)
Derivatives	(1		)	(1		)	(4		)	(1		)
Short term investments and other	—			(2		)	5			8
Net realized investment gains (losses)	$	4		$	8		$	18		$	66

Components of net 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)	2013		2012		2013		2012
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	9	$	7	$	17	$	23
States, municipalities and political subdivisions	—		17		—		17
Asset-backed:
Residential mortgage-backed	2		20		5		49
Other asset-backed	1		—		2		—
Total asset-backed	3		20		7		49
U.S. Treasury and obligations of government-sponsored enterprises	—		—		—		1
Total fixed maturity securities available-for-sale	12		44		24		90
Equity securities available-for-sale:
Common stock	3		1		5		5
Preferred stock	2		19		22		19
Total equity securities available-for-sale	5		20		27		24
Net OTTI losses recognized in earnings	$	17	$	64	$	51	$	114

Summary of fixed maturity and equity securities

Summary of Fixed Maturity and Equity Securities



September 30, 2013	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	$	19,616	$	1,695	$	151	$	21,160	$	—
States, municipalities and political subdivisions	11,000		672		233		11,439		—
Asset-backed:
Residential mortgage-backed	4,779		141		101		4,819		(33		)
Commercial mortgage-backed	1,942		99		24		2,017		(3		)
Other asset-backed	942		16		2		956		—
Total asset-backed	7,663		256		127		7,792		(36		)
U.S. Treasury and obligations of government-sponsored enterprises	166		8		1		173		—
Foreign government	547		17		3		561		—
Redeemable preferred stock	94		12		—		106		—
Total fixed maturity securities available-for-sale	39,086		2,660		515		41,231		$	(36	)
Total fixed maturity securities trading	43		—		—		43
Equity securities available-for-sale:
Common stock	41		12		—		53
Preferred stock	148		1		3		146
Total equity securities available-for-sale	189		13		3		199
Total	$	39,318	$	2,673	$	518	$	41,473



December 31, 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	$	19,530	$	2,698	$	21	$	22,207	$	—
States, municipalities and political subdivisions	9,372		1,455		44		10,783		—
Asset-backed:
Residential mortgage-backed	5,745		246		71		5,920		(28		)
Commercial mortgage-backed	1,692		147		17		1,822		(3		)
Other asset-backed	929		23		—		952		—
Total asset-backed	8,366		416		88		8,694		(31		)
U.S. Treasury and obligations of government-sponsored enterprises	172		11		1		182		—
Foreign government	588		25		—		613		—
Redeemable preferred stock	113		13		1		125		—
Total fixed maturity securities available-for-sale	38,141		4,618		155		42,604		$	(31	)
Total fixed maturity securities trading	29		—		—		29
Equity securities available-for-sale:
Common stock	38		14		—		52
Preferred stock	190		7		—		197
Total equity securities available-for-sale	228		21		—		249
Total	$	38,398	$	4,639	$	155	$	42,882

Securities in a gross unrealized loss position

Securities in a Gross Unrealized Loss Position



	Less than 12 Months				12 Months or Longer				Total
September 30, 2013	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	$	3,521	$	146	$	45	$	5	$	3,566	$	151
States, municipalities and political subdivisions	2,413		179		122		54		2,535		233
Asset-backed:
Residential mortgage-backed	1,289		40		287		61		1,576		101
Commercial mortgage-backed	449		20		79		4		528		24
Other asset-backed	207		2		—		—		207		2
Total asset-backed	1,945		62		366		65		2,311		127
U.S. Treasury and obligations of government-sponsored enterprises	21		1		—		—		21		1
Foreign government	76		3		—		—		76		3
Total fixed maturity securities available-for-sale	7,976		391		533		124		8,509		515
Equity securities available-for-sale:
Preferred stock	86		3		—		—		86		3
Total	$	8,062	$	394	$	533	$	124	$	8,595	$	518



	Less than 12 Months				12 Months or Longer				Total
December 31, 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	$	846	$	13	$	108	$	8	$	954	$	21
States, municipalities and political subdivisions	254		5		165		39		419		44
Asset-backed:
Residential mortgage-backed	583		5		452		66		1,035		71
Commercial mortgage-backed	85		2		141		15		226		17
Total asset-backed	668		7		593		81		1,261		88
U.S. Treasury and obligations of government-sponsored enterprises	23		1		—		—		23		1
Redeemable preferred stock	28		1		—		—		28		1
Total	$	1,819	$	27	$	866	$	128	$	2,685	$	155

The following table summarizes the activity for the three and nine months ended September 30, 2013 and 2012 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at September 30, 2013 and 2012 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)	2013			2012			2013			2012
Beginning balance of credit losses on fixed maturity securities	$	89		$	99		$	95		$	92
Additional credit losses for securities for which an OTTI loss was previously recognized	1			2			2			23
Credit losses for securities for which an OTTI loss was not previously recognized	—			—			—			2
Reductions for securities sold during the period	(7		)	(3		)	(14		)	(11		)
Reductions for securities the Company intends to sell or more likely than not will be required to sell	—			—			—			(8		)
Ending balance of credit losses on fixed maturity securities	$	83		$	98		$	83		$	98

Contractual maturity

Contractual Maturity



	September 30, 2013				December 31, 2012
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,475	$	2,516	$	1,648	$	1,665
Due after one year through five years	10,687		11,304		13,603		14,442
Due after five years through ten years	10,586		10,901		8,726		9,555
Due after ten years	15,338		16,510		14,164		16,942
Total	$	39,086	$	41,231	$	38,141	$	42,604

- 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.

+ References+ Details