Investments (Tables)

9 Months Ended

Sep. 30, 2014

Net Investment Income



Periods ended September 30	Three Months						Nine Months
(In millions)	2014			2013			2014			2013
Fixed maturity securities	$	453		$	461		$	1,356		$	1,372
Short term investments	1			1			2			3
Limited partnership investments	29			93			199			303
Equity securities	2			3			7			9
Mortgage loans	7			6			22			17
Trading portfolio	2			3			8			13
Other	—			1			3			2
Gross investment income	494			568			1,597			1,719
Investment expense	(14		)	(13		)	(41		)	(39		)
Net investment income	$	480		$	555		$	1,556		$	1,680

Net realized investment gains (losses)

Net Realized Investment Gains (Losses)



Periods ended September 30	Three Months						Nine Months
(In millions)	2014			2013			2014			2013
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	51		$	47		$	124		$	119
Gross realized losses	(12		)	(45		)	(66		)	(97		)
Net realized investment gains (losses) on fixed maturity securities	39			2			58			22
Equity securities:
Gross realized gains	1			3			6			10
Gross realized losses	(4		)	(5		)	(4		)	(27		)
Net realized investment gains (losses) on equity securities	(3		)	(2		)	2			(17		)
Derivatives	—			(1		)	1			(4		)
Short term investments and other	1			2			8			9
Net realized investment gains (losses)	$	37		$	1		$	69		$	10

Components of net other-than-temporary impairment losses recognized in continuing 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)	2014		2013		2014		2013
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	6	$	8	$	9	$	16
Asset-backed:
Residential mortgage-backed	2		2		4		5
Other asset-backed	—		1		1		2
Total asset-backed	2		3		5		7
Total fixed maturity securities available-for-sale	8		11		14		23
Equity securities available-for-sale:
Common stock	2		3		3		5
Preferred stock	—		2		—		22
Total equity securities available-for-sale	2		5		3		27
Net OTTI losses recognized in earnings	$	10	$	16	$	17	$	50

Summary of fixed maturity and equity securities

Summary of Fixed Maturity and Equity Securities



September 30, 2014	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	$	17,480	$	1,704	$	40	$	19,144	$	—
States, municipalities and political subdivisions	11,217		1,295		53		12,459		—
Asset-backed:
Residential mortgage-backed	4,972		187		13		5,146		(54		)
Commercial mortgage-backed	2,079		87		8		2,158		(2		)
Other asset-backed	1,222		13		5		1,230		—
Total asset-backed	8,273		287		26		8,534		(56		)
U.S. Treasury and obligations of government-sponsored enterprises	25		5		—		30		—
Foreign government	456		16		1		471		—
Redeemable preferred stock	39		3		—		42		—
Total fixed maturity securities available-for-sale	37,490		3,310		120		40,680		$	(56	)
Total fixed maturity securities trading	20						20
Equity securities available-for-sale:
Common stock	35		11		—		46
Preferred stock	162		4		1		165
Total equity securities available-for-sale	197		15		1		211
Total	$	37,707	$	3,325	$	121	$	40,911



December 31, 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	$	19,352	$	1,645	$	135	$	20,862	$	—
States, municipalities and political subdivisions	11,281		548		272		11,557		—
Asset-backed:
Residential mortgage-backed	4,940		123		92		4,971		(37		)
Commercial mortgage-backed	1,995		90		22		2,063		(3		)
Other asset-backed	945		13		3		955		—
Total asset-backed	7,880		226		117		7,989		(40		)
U.S. Treasury and obligations of government-sponsored enterprises	139		6		1		144		—
Foreign government	531		15		3		543		—
Redeemable preferred stock	92		10		—		102		—
Total fixed maturity securities available-for-sale	39,275		2,450		528		41,197		$	(40	)
Total fixed maturity securities trading	36						36
Equity securities available-for-sale:
Common stock	36		9		—		45
Preferred stock	143		1		4		140
Total equity securities available-for-sale	179		10		4		185
Total	$	39,490	$	2,460	$	532	$	41,418

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, 2014	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	$	1,726	$	23	$	402	$	17	$	2,128	$	40
States, municipalities and political subdivisions	176		2		435		51		611		53
Asset-backed:
Residential mortgage-backed	208		3		254		10		462		13
Commercial mortgage-backed	506		4		112		4		618		8
Other asset-backed	507		4		13		1		520		5
Total asset-backed	1,221		11		379		15		1,600		26
U.S. Treasury and obligations of government-sponsored enterprises	—		—		5		—		5		—
Foreign government	35		—		8		1		43		1
Total fixed maturity securities available-for-sale	3,158		36		1,229		84		4,387		120
Equity securities available-for-sale:
Preferred stock	32		1		1		—		33		1
Total	$	3,190	$	37	$	1,230	$	84	$	4,420	$	121



	Less than 12 Months				12 Months or Longer				Total
December 31, 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	$	3,592	$	129	$	72	$	6	$	3,664	$	135
States, municipalities and political subdivisions	3,251		197		129		75		3,380		272
Asset-backed:
Residential mortgage-backed	1,293		29		343		63		1,636		92
Commercial mortgage-backed	640		22		—		—		640		22
Other asset-backed	269		3		—		—		269		3
Total asset-backed	2,202		54		343		63		2,545		117
U.S. Treasury and obligations of government-sponsored enterprises	13		1		—		—		13		1
Foreign government	111		3		—		—		111		3
Total fixed maturity securities available-for-sale	9,169		384		544		144		9,713		528
Equity securities available-for-sale:
Preferred stock	87		4		—		—		87		4
Total	$	9,256	$	388	$	544	$	144	$	9,800	$	532

The following table summarizes the activity for the three and nine months ended September 30, 2014 and 2013 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at September 30, 2014 and 2013 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)	2014			2013			2014			2013
Beginning balance of credit losses on fixed maturity securities	$	66		$	89		$	74		$	95
Additional credit losses for securities for which an OTTI loss was previously recognized	—			1			—			2
Reductions for securities sold during the period	(2		)	(7		)	(7		)	(14		)
Reductions for securities the Company intends to sell or more likely than not will be required to sell	—			—			(3		)	—
Ending balance of credit losses on fixed maturity securities	$	64		$	83		$	64		$	83

Contractual maturity

Contractual Maturity



	September 30, 2014				December 31, 2013
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,329	$	2,368	$	2,420	$	2,455
Due after one year through five years	8,888		9,455		9,496		10,068
Due after five years through ten years	12,446		12,951		11,667		11,954
Due after ten years	13,827		15,906		15,692		16,720
Total	$	37,490	$	40,680	$	39,275	$	41,197

- 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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