Investments (Tables)

6 Months Ended

Jun. 30, 2015

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



Periods ended June 30	Three Months						Six Months
(In millions)	2015			2014			2015			2014
Fixed maturity securities	$	452		$	451		$	895		$	903
Short term investments	—			—			2			1
Limited partnership investments	48			97			162			170
Equity securities	3			3			6			5
Mortgage loans	9			9			17			15
Trading portfolio	3			3			5			6
Other	—			1			—			3
Gross investment income	515			564			1,087			1,103
Investment expense	(15		)	(14		)	(29		)	(27		)
Net investment income	$	500		$	550		$	1,058		$	1,076

Net realized investment gains (losses)

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



Periods ended June 30	Three Months						Six Months
(In millions)	2015			2014			2015			2014
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	36		$	20		$	69		$	73
Gross realized losses	(48		)	(39		)	(69		)	(54		)
Net realized investment gains (losses) on fixed maturity securities	(12		)	(19		)	—			19
Equity securities:
Gross realized gains	—			—			1			5
Gross realized losses	(1		)	—			(2		)	—
Net realized investment gains (losses) on equity securities	(1		)	—			(1		)	5
Derivative financial instruments	11			1			10			1
Short term investments and other	2			4			1			7
Net realized investment gains (losses)	$	—		$	(14	)	$	10		$	32

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.



Periods ended June 30	Three Months				Six Months
(In millions)	2015		2014		2015		2014
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	11	$	2	$	16	$	3
States, municipalities and political subdivisions	13		—		18		—
Asset-backed:
Residential mortgage-backed	5		1		6		2
Other asset-backed	1		1		1		1
Total asset-backed	6		2		7		3
Total fixed maturity securities available-for-sale	30		4		41		6
Equity securities available-for-sale -- Common stock	—		1		1		1
Short term investments	1		—		1		—
Net OTTI losses recognized in earnings	$	31	$	5	$	43	$	7

Summary of fixed maturity and equity securities

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



June 30, 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	$	16,863	$	1,337	$	88	$	18,112	$	—
States, municipalities and political subdivisions	11,707		1,186		40		12,853		—
Asset-backed:
Residential mortgage-backed	4,940		175		15		5,100		(46		)
Commercial mortgage-backed	2,186		77		12		2,251		(2		)
Other asset-backed	1,044		12		1		1,055		—
Total asset-backed	8,170		264		28		8,406		(48		)
U.S. Treasury and obligations of government-sponsored enterprises	24		5		—		29		—
Foreign government	387		13		1		399		—
Redeemable preferred stock	33		2		—		35		—
Total fixed maturity securities available-for-sale	37,184		2,807		157		39,834		$	(48	)
Total fixed maturity securities trading	15						15
Equity securities available-for-sale:
Common stock	54		8		2		60
Preferred stock	154		4		2		156
Total equity securities available-for-sale	208		12		4		216
Total	$	37,407	$	2,819	$	161	$	40,065



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
June 30, 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	$	3,201	$	73	$	152	$	15	$	3,353	$	88
States, municipalities and political subdivisions	1,523		34		143		6		1,666		40
Asset-backed:
Residential mortgage-backed	451		6		167		9		618		15
Commercial mortgage-backed	557		9		61		3		618		12
Other asset-backed	135		1		18		—		153		1
Total asset-backed	1,143		16		246		12		1,389		28
U.S. Treasury and obligations of government-sponsored enterprises	3		—		—		—		3		—
Foreign government	20		1		1		—		21		1
Total fixed maturity securities available-for-sale	5,890		124		542		33		6,432		157
Equity securities available-for-sale:
Common Stock	21		2		—		—		21		2
Preferred stock	17		2		—		—		17		2
Total	$	5,928	$	128	$	542	$	33	$	6,470	$	161



	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 June 30, 2015 and 2014 for which a portion of an OTTI loss was recognized in Other comprehensive income.



Periods ended June 30	Three Months						Six Months
(In millions)	2015			2014			2015			2014
Beginning balance of credit losses on fixed maturity securities	$	61		$	69		$	62		$	74
Reductions for securities sold during the period	(2		)	(3		)	(3		)	(5		)
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	$	59		$	66		$	59		$	66

Contractual maturity

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



	June 30, 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	$	1,539	$	1,559	$	2,479	$	2,511
Due after one year through five years	7,507		7,956		9,054		9,605
Due after five years through ten years	14,099		14,549		12,055		12,584
Due after ten years	14,039		15,770		13,728		16,049
Total	$	37,184	$	39,834	$	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.



June 30, 2015	Contractual/ Notional Amount		Estimated Fair Value
(In millions)	Contractual/ Notional Amount		Asset		Liability
Without hedge designation
Equity warrants	$	5	$	—	$	—
Embedded derivative on funds withheld liability	183		—		(6		)
Total			$	—	$	(6	)



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