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Fair Value (Tables)
 9 Months Ended
Sep. 30, 2014
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis are summarized below.
September 30, 2014
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
33

 
$
18,948

 
$
173

 
$
19,154

States, municipalities and political subdivisions
—

 
12,389

 
80

 
12,469

Asset-backed:
 
 
 
 
 
 
 
Residential mortgage-backed
—

 
4,986

 
160

 
5,146

Commercial mortgage-backed
—

 
2,061

 
97

 
2,158

Other asset-backed
—

 
588

 
642

 
1,230

Total asset-backed
—

 
7,635

 
899

 
8,534

U.S. Treasury and obligations of government-sponsored enterprises
27

 
3

 
—

 
30

Foreign government
47

 
424

 
—

 
471

Redeemable preferred stock
30

 
12

 
—

 
42

Total fixed maturity securities
137

 
39,411

 
1,152

 
40,700

Equity securities
141

 
53

 
17

 
211

Other invested assets
—

 
44

 
—

 
44

Short term investments
1,199

 
612

 
—

 
1,811

Life settlement contracts, included in Other assets
—

 
—

 
86

 
86

Total assets
$
1,477

 
$
40,120

 
$
1,255

 
$
42,852

Liabilities
 
 
 
 
 
 
 
Other liabilities
$
—

 
$
(1
)
 
$
—

 
$
(1
)
Total liabilities
$
—

 
$
(1
)
 
$
—

 
$
(1
)
December 31, 2013
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
33

 
$
20,661

 
$
204

 
$
20,898

States, municipalities and political subdivisions
—

 
11,486

 
71

 
11,557

Asset-backed:
 
 
 
 
 
 
 

Residential mortgage-backed
—

 
4,640

 
331

 
4,971

Commercial mortgage-backed
—

 
1,912

 
151

 
2,063

Other asset-backed
—

 
509

 
446

 
955

Total asset-backed
—

 
7,061

 
928

 
7,989

U.S. Treasury and obligations of government-sponsored enterprises
116

 
28

 
—

 
144

Foreign government
81

 
462

 
—

 
543

Redeemable preferred stock
45

 
57

 
—

 
102

Total fixed maturity securities
275

 
39,755

 
1,203

 
41,233

Equity securities
126

 
48

 
11

 
185

Other invested assets
—

 
54

 
—

 
54

Short term investments
769

 
563

 
—

 
1,332

Life settlement contracts, included in Other assets
—

 
—

 
88

 
88

Separate account business
9

 
171

 
1

 
181

Total assets
$
1,179

 
$
40,591

 
$
1,303

 
$
43,073
Table of reconciliation for assets and liablities measured at fair value on a recurring basis using significant unobservable inputs
The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2014 and 2013.
Level 3
(In millions)
Balance at
July 1,
2014
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at September 30,
2014
 
Unrealized gains (losses) on Level 3 assets and liabilities held at September 30, 2014 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
194

 
$
—

 
$
(1
)
 
$
4

 
$
—

 
$
(3
)
 
$
—

 
$
(21
)
 
$
173

 
$
—

States, municipalities and political subdivisions
79

 
—

 
1

 
—

 
—

 
—

 
—

 
—

 
80

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
185

 
1

 
—

 
—

 
—

 
(17
)
 
11

 
(20
)
 
160

 
—

Commercial mortgage-backed
59

 
2

 
(2
)
 
28

 
—

 
(21
)
 
31

 
—

 
97

 
—

Other asset-backed
626

 
1

 
(4
)
 
80

 
—

 
(25
)
 
—

 
(36
)
 
642

 
—

Total asset-backed
870

 
4

 
(6
)
 
108

 
—

 
(63
)
 
42

 
(56
)
 
899

 
—

Total fixed maturity securities
1,143

 
4

 
(6
)
 
112

 
—

 
(66
)
 
42

 
(77
)
 
1,152

 
—

Equity securities
2

 
—

 
(1
)
 
16

 
—

 
—

 
—

 
—

 
17

 
—

Life settlement contracts
86

 
1

 
—

 
—

 
—

 
(1
)
 
—

 
—

 
86

 
1

Total
$
1,231

 
$
5

 
$
(7
)
 
$
128

 
$
—

 
$
(67
)
 
$
42

 
$
(77
)
 
$
1,255

 
$
1






Level 3
(In millions)
Balance at
July 1,
2013
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
September 30,
2013
 
Unrealized gains (losses) on Level 3 assets and liabilities held at September 30, 2013 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
202

 
$
1

 
$
—

 
$
6

 
$
(6
)
 
$
(8
)
 
$
17

 
$
(1
)
 
$
211

 
$
—

States, municipalities and political subdivisions
140

 
—

 
(3
)
 
—

 
—

 
(15
)
 
—

 
(27
)
 
95

 
—

Asset-backed:
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 


 
 
Residential mortgage-backed
428

 
—

 
(20
)
 
5

 
—

 
(21
)
 
—

 
(22
)
 
370

 
(1
)
Commercial mortgage-backed
165

 
(1
)
 
(2
)
 
10

 
—

 
(1
)
 
—

 
(14
)
 
157

 
—

Other asset-backed
387

 
—

 
1

 
56

 
—

 
(6
)
 
—

 
(5
)
 
433

 
(1
)
Total asset-backed
980

 
(1
)
 
(21
)
 
71

 
—

 
(28
)
 
—

 
(41
)
 
960

 
(2
)
Redeemable preferred stock
25

 
(1
)
 
1

 
—

 
—

 
(25
)
 
—

 
—

 
—

 
—

Total fixed maturity securities
1,347


(1
)

(23
)

77


(6
)

(76
)

17


(69
)

1,266


(2
)
Equity securities
13

 
(2
)
 
2

 
—

 
—

 
—

 
—

 
—

 
13

 
(2
)
Life settlement contracts
91

 
3

 
—

 
—

 
—

 
(4
)
 
—

 
—

 
90

 
—

Separate account business
2

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

 
—

Total
$
1,453

 
$
—

 
$
(21
)
 
$
77

 
$
(6
)
 
$
(80
)
 
$
17

 
$
(69
)
 
$
1,371

 
$
(4
)









    


    
The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014 and 2013.

Level 3
(In millions)
Balance at
January 1,
2014
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
September 30,
2014
 
Unrealized gains (losses) on Level 3 assets and liabilities held at September 30, 2014 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
204

 
$
2

 
$
—

 
$
30

 
$
(10
)
 
$
(13
)
 
$
8

 
$
(48
)
 
$
173

 
$
—

States, municipalities and political subdivisions
71

 
1

 
3

 
1

 
(10
)
 
—

 
14

 
—

 
80

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
331

 
(22
)
 
62

 
47

 
(174
)
 
(57
)
 
32

 
(59
)
 
160

 
—

Commercial mortgage-backed
151

 
4

 
(2
)
 
28

 
(60
)
 
(23
)
 
43

 
(44
)
 
97

 
—

Other asset-backed
446

 
2

 
—

 
457

 
(111
)
 
(115
)
 
—

 
(37
)
 
642

 
(1
)
Total asset-backed
928

 
(16
)
 
60

 
532

 
(345
)
 
(195
)
 
75

 
(140
)
 
899

 
(1
)
Total fixed maturity securities
1,203

 
(13
)
 
63

 
563

 
(365
)
 
(208
)
 
97

 
(188
)
 
1,152

 
(1
)
Equity securities
11

 
3

 
(5
)
 
16

 
(8
)
 
—

 
—

 
—

 
17

 
—

Life settlement contracts
88

 
23

 
—

 
—

 
—

 
(25
)
 
—

 
—

 
86

 
3

Separate account business
1

 
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
—

Total
$
1,303

 
$
13

 
$
58

 
$
579

 
$
(373
)
 
$
(233
)
 
$
97

 
$
(189
)
 
$
1,255

 
$
2





Level 3
(In millions)
Balance at
January 1,
2013
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
September 30,
2013
 
Unrealized gains (losses) on Level 3 assets and liabilities held at September 30, 2013 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
219

 
$
2

 
$
(1
)
 
$
129

 
$
(96
)
 
$
(34
)
 
$
43

 
$
(51
)
 
$
211

 
$
(2
)
States, municipalities and political subdivisions
96

 
(3
)
 
1

 
122

 
(79
)
 
(20
)
 
5

 
(27
)
 
95

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Residential mortgage-backed
413

 
2

 
(21
)
 
116

 
(10
)
 
(53
)
 
4

 
(81
)
 
370

 
(3
)
Commercial mortgage-backed
129

 
—

 
7

 
88

 
—

 
(10
)
 
21

 
(78
)
 
157

 
—

Other asset-backed
368

 
3

 
(1
)
 
230

 
(132
)
 
(30
)
 
—

 
(5
)
 
433

 
(2
)
Total asset-backed
910

 
5

 
(15
)
 
434

 
(142
)
 
(93
)
 
25

 
(164
)
 
960

 
(5
)
Redeemable preferred stock
26

 
(1
)
 
—

 
—

 
—

 
(25
)
 
—

 
—

 
—

 
—

Total fixed maturity securities
1,251


3


(15
)

685


(317
)

(172
)

73


(242
)

1,266


(7
)
Equity securities
34

 
(22
)
 
2

 
—

 
—

 
—

 
—

 
(1
)
 
13

 
(22
)
Other invested assets, including derivatives, net
—

 
—

 
—

 
—

 
(1
)
 
1

 
—

 
—

 
—

 
—

Short term investments
6

 
—

 
—

 
—

 
(6
)
 
—

 
—

 
—

 
—

 
—

Life settlement contracts
100

 
14

 
—

 
—

 
—

 
(24
)
 
—

 
—

 
90

 
(1
)
Separate account business
2

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

 
—

Total
$
1,393

 
$
(5
)
 
$
(13
)
 
$
685

 
$
(324
)
 
$
(195
)
 
$
73

 
$
(243
)
 
$
1,371

 
$
(30
)
Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets
The tables below present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the table below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company.
Assets
(In millions)
Fair Value at September 30, 2014
 
Valuation Technique
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
95

 
Discounted cash flow
 
Credit spread
 
2% - 12% (3%)
Equity securities
18

 
Market approach
 
Private offering price
 
$13 - $4,388 per share ($554)
Life settlement contracts
86

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
70% - 743% (193%)
Assets
(In millions)
Fair Value at December 31, 2013
 
Valuation Technique
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
142

 
Discounted cash flow
 
Credit spread
 
2% - 20% (4%)
Equity securities
10

 
Market approach
 
Private offering price
 
$360 - $4,268 per share ($1,148)
Life settlement contracts
88

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
70% - 743% (192%)
Carrying amount and estimated fair value of financial instrument assets and liabilities not measured at fair value
The carrying amount and estimated fair value of the Company's financial instrument assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are listed in the tables below.
September 30, 2014
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial assets
 
 
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
1

 
$
—

 
$
—

 
$
1

 
$
1

Mortgage loans
556

 
—

 
—

 
576

 
576

Financial liabilities
 
 
 
 
 
 
 
 
 
Short term debt
$
549

 
$
—

 
$
555

 
$
—

 
$
555

Long term debt
2,559

 
—

 
2,889

 
—

 
2,889


December 31, 2013
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial assets
 
 
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
23

 
$
—

 
$
—

 
$
23

 
$
23

Mortgage loans
508

 
—

 
—

 
515

 
515

Financial liabilities
 
 
 
 
 
 
 
 
 
Premium deposits and annuity contracts
$
57

 
$
—

 
$
—

 
$
58

 
$
58

Short term debt
549

 
—

 
575

 
—

 
575

Long term debt
2,011

 
—

 
2,328

 
—

 
2,328