Investments (Tables)

3 Months Ended

Mar. 31, 2015

The significant components of Net investment income are presented in the following table.



Three months ended March 31
(In millions)	2015			2014
Fixed maturity securities	$	443		$	452
Short term investments	2			1
Limited partnership investments	114			73
Equity securities	3			2
Mortgage loans	8			6
Trading portfolio	2			3
Other	—			2
Gross investment income	572			539
Investment expense	(14		)	(13		)
Net investment income	$	558		$	526

Net realized investment gains (losses)

Net realized investment gains (losses) are presented in the following table.



Three months ended March 31
(In millions)	2015			2014
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	33		$	53
Gross realized losses	(21		)	(15		)
Net realized investment gains (losses) on fixed maturity securities	12			38
Equity securities:
Gross realized gains	1			5
Gross realized losses	(1		)	—
Net realized investment gains (losses) on equity securities	—			5
Derivatives	(1		)	—
Short term investments and other	(1		)	3
Net realized investment gains (losses)	$	10		$	46

Components of Net other-than-temporary impairment losses recognized in earnings by asset type

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



Three months ended March 31
(In millions)	2015		2014
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	5	$	1
States, municipalities and political subdivisions	5		—
Asset-backed - residential mortgage-backed	1		1
Total fixed maturity securities available-for-sale	11		2
Equity securities available-for-sale:
Common stock	1		—
Net OTTI losses recognized in earnings	$	12	$	2

Summary of fixed maturity and equity securities

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



March 31, 2015	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	$	16,721	$	1,867	$	43	$	18,545	$	—
States, municipalities and political subdivisions	11,407		1,536		9		12,934		—
Asset-backed:
Residential mortgage-backed	4,998		241		13		5,226		(51		)
Commercial mortgage-backed	2,151		114		5		2,260		(3		)
Other asset-backed	1,109		15		1		1,123		—
Total asset-backed	8,258		370		19		8,609		(54		)
U.S. Treasury and obligations of government-sponsored enterprises	24		6		—		30		—
Foreign government	390		19		—		409		—
Redeemable preferred stock	39		3		—		42		—
Total fixed maturity securities available-for-sale	36,839		3,801		71		40,569		$	(54	)
Total fixed maturity securities trading	36						36
Equity securities available-for-sale:
Common stock	41		9		—		50
Preferred stock	172		7		4		175
Total equity securities available-for-sale	213		16		4		225
Total	$	37,088	$	3,817	$	75	$	40,830



December 31, 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	$	17,210	$	1,721	$	61	$	18,870	$	—
States, municipalities and political subdivisions	11,285		1,463		8		12,740		—
Asset-backed:
Residential mortgage-backed	5,028		218		13		5,233		(53		)
Commercial mortgage-backed	2,056		93		5		2,144		(2		)
Other asset-backed	1,234		11		10		1,235		—
Total asset-backed	8,318		322		28		8,612		(55		)
U.S. Treasury and obligations of government-sponsored enterprises	26		5		—		31		—
Foreign government	438		16		—		454		—
Redeemable preferred stock	39		3		—		42		—
Total fixed maturity securities available-for-sale	37,316		3,530		97		40,749		$	(55	)
Total fixed maturity securities trading	19						19
Equity securities available-for-sale:
Common stock	38		9		—		47
Preferred stock	172		5		2		175
Total equity securities available-for-sale	210		14		2		222
Total	$	37,545	$	3,544	$	99	$	40,990

Securities in a gross unrealized loss position

The following tables present the estimated fair value and gross unrealized losses of 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.



	Less than 12 Months				12 Months or Longer				Total
March 31, 2015	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	$	840	$	31	$	139	$	12	$	979	$	43
States, municipalities and political subdivisions	479		6		100		3		579		9
Asset-backed:
Residential mortgage-backed	318		5		148		8		466		13
Commercial mortgage-backed	175		3		62		2		237		5
Other asset-backed	187		1		5		—		192		1
Total asset-backed	680		9		215		10		895		19
U.S. Treasury and obligations of government-sponsored enterprises	3		—		—		—		3		—
Foreign government	13		—		1		—		14		—
Total fixed maturity securities available-for-sale	2,015		46		455		25		2,470		71
Equity securities available-for-sale:
Preferred stock	15		4		—		—		15		4
Total	$	2,030	$	50	$	455	$	25	$	2,485	$	75



	Less than 12 Months				12 Months or Longer				Total
December 31, 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	$	1,330	$	46	$	277	$	15	$	1,607	$	61
States, municipalities and political subdivisions	335		5		127		3		462		8
Asset-backed:
Residential mortgage-backed	293		5		189		8		482		13
Commercial mortgage-backed	264		2		99		3		363		5
Other asset-backed	607		10		7		—		614		10
Total asset-backed	1,164		17		295		11		1,459		28
U.S. Treasury and obligations of government-sponsored enterprises	3		—		4		—		7		—
Foreign government	3		—		3		—		6		—
Redeemable preferred stock	3		—		—		—		3		—
Total fixed maturity securities available-for-sale	2,838		68		706		29		3,544		97
Equity securities available-for-sale:
Preferred stock	17		2		1		—		18		2
Total	$	2,855	$	70	$	707	$	29	$	3,562	$	99

The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held as of March 31, 2015 and 2014 for which a portion of an OTTI loss was recognized in Other comprehensive income.



Three months ended March 31
(In millions)	2015			2014
Beginning balance of credit losses on fixed maturity securities	$	62		$	74
Reductions for securities sold during the period	(1		)	(2		)
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	$	61		$	69

Contractual maturity

The following table presents available-for-sale fixed maturity securities by contractual maturity.



	March 31, 2015				December 31, 2014
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,011	$	2,043	$	2,479	$	2,511
Due after one year through five years	8,760		9,340		9,054		9,605
Due after five years through ten years	12,401		13,108		12,055		12,584
Due after ten years	13,667		16,078		13,728		16,049
Total	$	36,839	$	40,569	$	37,316	$	40,749

Summary of aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments

The following tables present the aggregate contractual or notional amounts and estimated fair values related to derivative financial instruments.



March 31, 2015	Contractual/ Notional Amount		Estimated Fair Value
(In millions)	Contractual/ Notional Amount		Asset		Liability
Without hedge designation
Currency forwards	$	18	$	2	$	—
Equity warrants	5		—		—
Embedded derivative on funds withheld liability	184		—		5
Total			$	2	$	5



December 31, 2014	Contractual/ Notional Amount		Estimated Fair Value
(In millions)	Contractual/ Notional Amount		Asset		Liability
Without hedge designation
Currency forwards	$	9	$	—	$	—
Equity warrants	5		—		—
Embedded derivative on funds withheld liability	184		—		3
Total			$	—	$	3

- 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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