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Fair Value (Tables)
 6 Months Ended
Jun. 30, 2015
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 presented in the following tables.
June 30, 2015
 
 
 
 
 
 
Total
Assets/ Liabilities
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
28

 
$
17,958

 
$
141

 
$
18,127

States, municipalities and political subdivisions
—

 
12,768

 
85

 
12,853

Asset-backed:
 
 
 
 
 
 
 
Residential mortgage-backed
—

 
4,893

 
207

 
5,100

Commercial mortgage-backed
—

 
2,164

 
87

 
2,251

Other asset-backed
—

 
565

 
490

 
1,055

Total asset-backed
—

 
7,622

 
784

 
8,406

U.S. Treasury and obligations of government-sponsored enterprises
28

 
1

 
—

 
29

Foreign government
32

 
367

 
—

 
399

Redeemable preferred stock
24

 
11

 
—

 
35

Total fixed maturity securities
112

 
38,727

 
1,010

 
39,849

Equity securities
139

 
61

 
16

 
216

Other invested assets
—

 
43

 
—

 
43

Short term investments
692

 
900

 
—

 
1,592

Life settlement contracts, included in Other assets
—

 
—

 
75

 
75

Total assets
$
943

 
$
39,731

 
$
1,101

 
$
41,775

Liabilities
 
 
 
 
 

 
 

Other liabilities
$
—

 
$
(6
)
 
$
—

 
$
(6
)
Total liabilities
$
—

 
$
(6
)
 
$
—

 
$
(6
)
December 31, 2014
 
 
 
 
 
 
Total
Assets/Liabilities
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
32

 
$
18,695

 
$
162

 
$
18,889

States, municipalities and political subdivisions
—

 
12,646

 
94

 
12,740

Asset-backed:
 
 
 
 
 
 
 

Residential mortgage-backed
—

 
5,044

 
189

 
5,233

Commercial mortgage-backed
—

 
2,061

 
83

 
2,144

Other asset-backed
—

 
580

 
655

 
1,235

Total asset-backed
—

 
7,685

 
927

 
8,612

U.S. Treasury and obligations of government-sponsored enterprises
28

 
3

 
—

 
31

Foreign government
41

 
413

 
—

 
454

Redeemable preferred stock
30

 
12

 
—

 
42

Total fixed maturity securities
131

 
39,454

 
1,183

 
40,768

Equity securities
145

 
61

 
16

 
222

Other invested assets
—

 
41

 
—

 
41

Short term investments
681

 
963

 
—

 
1,644

Life settlement contracts, included in Other assets
—

 
—

 
82

 
82

Total assets
$
957

 
$
40,519

 
$
1,281

 
$
42,757

Liabilities
 
 
 
 
 
 
 
Other liabilities
$
—

 
$
3

 
$
—

 
$
3

Total liabilities
$
—

 
$
3

 
$
—

 
$
3
Table of reconciliation for assets and liablities measured at fair value on a recurring basis using significant unobservable inputs
The following tables present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Level 3
(In millions)
Balance as of
April 1,
2015
 
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 as of
June 30,
2015
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2015 recognized in Net income (loss)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
186

 
$
(2
)
 
$
(1
)
 
$
—

 
$
—

 
$
(7
)
 
$
—

 
$
(35
)
 
$
141

 
$
(3
)
States, municipalities and political subdivisions
86

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
—

 
85

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
232

 
1

 
(2
)
 
—

 
—

 
(11
)
 
—

 
(13
)
 
207

 
—

Commercial mortgage-backed
64

 
1

 
(1
)
 
9

 
—

 
(1
)
 
17

 
(2
)
 
87

 
—

Other asset-backed
553

 
2

 
1

 
47

 
(90
)
 
(17
)
 
—

 
(6
)
 
490

 
—

Total asset-backed
849

 
4

 
(2
)
 
56

 
(90
)
 
(29
)
 
17

 
(21
)
 
784

 
—

Total fixed maturity securities
1,121

 
2

 
(3
)
 
56

 
(90
)
 
(37
)
 
17

 
(56
)
 
1,010

 
(3
)
Equity securities
13

 
—

 
3

 
—

 
—

 
—

 
—

 
—

 
16

 
—

Life settlement contracts
79

 
4

 
—

 
—

 
—

 
(8
)
 
—

 
—

 
75

 
(2
)
Total
$
1,213

 
$
6

 
$
—

 
$
56

 
$
(90
)
 
$
(45
)
 
$
17

 
$
(56
)
 
$
1,101

 
$
(5
)

Level 3
(In millions)
Balance as of April 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 as of
June 30,
2014
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2014 recognized in Net income (loss)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
189

 
$
1

 
$
—

 
$
21

 
$
(6
)
 
$
(5
)
 
$
5

 
$
(11
)
 
$
194

 
$
—

States, municipalities and political subdivisions
86

 
1

 
1

 
1

 
(10
)
 
—

 
—

 
—

 
79

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
359

 
(24
)
 
47

 
22

 
(174
)
 
(19
)
 
—

 
(26
)
 
185

 
—

Commercial mortgage-backed
126

 
1

 
1

 
—

 
(60
)
 
(1
)
 
12

 
(20
)
 
59

 
—

Other asset-backed
439

 
—

 
4

 
229

 
(28
)
 
(18
)
 
—

 
—

 
626

 
(1
)
Total asset-backed
924

 
(23
)
 
52

 
251

 
(262
)
 
(38
)
 
12

 
(46
)
 
870

 
(1
)
Total fixed maturity securities
1,199

 
(21
)
 
53

 
273

 
(278
)
 
(43
)
 
17

 
(57
)
 
1,143

 
(1
)
Equity securities
2

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

 
—

Life settlement contracts
87

 
12

 
—

 
—

 
—

 
(13
)
 
—

 
—

 
86

 
1

Total
$
1,288

 
$
(9
)
 
$
53

 
$
273

 
$
(278
)
 
$
(56
)
 
$
17

 
$
(57
)
 
$
1,231

 
$
—






Level 3
(In millions)
Balance as of
January 1,
2015
 
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 as of
June 30,
2015
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2015 recognized in Net income (loss)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
162

 
$
(1
)
 
$
(1
)
 
$
12

 
$
(12
)
 
$
(21
)
 
$
37

 
$
(35
)
 
$
141

 
$
(3
)
States, municipalities and political subdivisions
94

 
1

 
—

 
—

 
—

 
(10
)
 
—

 
—

 
85

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
189

 
2

 
(2
)
 
72

 
—

 
(21
)
 
—

 
(33
)
 
207

 
—

Commercial mortgage-backed
83

 
2

 
—

 
15

 
—

 
(2
)
 
17

 
(28
)
 
87

 
—

Other asset-backed
655

 
3

 
10

 
82

 
(234
)
 
(20
)
 
—

 
(6
)
 
490

 
—

Total asset-backed
927

 
7

 
8

 
169

 
(234
)
 
(43
)
 
17

 
(67
)
 
784

 
—

Total fixed maturity securities
1,183

 
7

 
7

 
181

 
(246
)
 
(74
)
 
54

 
(102
)
 
1,010

 
(3
)
Equity securities
16

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
16

 
—

Life settlement contracts
82

 
17

 
—

 
—

 
—

 
(24
)
 
—

 
—

 
75

 
(1
)
Total
$
1,281

 
$
24

 
$
7

 
$
181

 
$
(246
)
 
$
(98
)
 
$
54

 
$
(102
)
 
$
1,101

 
$
(4
)
Level 3
(In millions)
Balance as of 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 as of
June 30,
2014
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2014 recognized in Net income (loss)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
204

 
$
2

 
$
1

 
$
26

 
$
(10
)
 
$
(10
)
 
$
8

 
$
(27
)
 
$
194

 
$
—

States, municipalities and political subdivisions
71

 
1

 
2

 
1

 
(10
)
 
—

 
14

 
—

 
79

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
331

 
(23
)
 
62

 
47

 
(174
)
 
(40
)
 
21

 
(39
)
 
185

 
—

Commercial mortgage-backed
151

 
2

 
—

 
—

 
(60
)
 
(2
)
 
12

 
(44
)
 
59

 
—

Other asset-backed
446

 
1

 
4

 
377

 
(111
)
 
(90
)
 
—

 
(1
)
 
626

 
(1
)
Total asset-backed
928

 
(20
)
 
66

 
424

 
(345
)
 
(132
)
 
33

 
(84
)
 
870

 
(1
)
Total fixed maturity securities
1,203

 
(17
)
 
69

 
451

 
(365
)
 
(142
)
 
55

 
(111
)
 
1,143

 
(1
)
Equity securities
11

 
3

 
(4
)
 
—

 
(8
)
 
—

 
—

 
—

 
2

 
—

Life settlement contracts
88

 
22

 
—

 
—

 
—

 
(24
)
 
—

 
—

 
86

 
2

Separate account business
1

 
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
—

Total
$
1,303

 
$
8

 
$
65

 
$
451

 
$
(373
)
 
$
(166
)
 
$
55

 
$
(112
)
 
$
1,231

 
$
1
Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets
The following tables 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.
June 30, 2015
Estimated Fair Value
 (In millions)
 
Valuation Technique(s)
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
97

 
Discounted cash flow
 
Credit spread
 
2% - 13% (3%)
Life settlement contracts
75

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
55% - 1676% (165%)
December 31, 2014
Estimated Fair Value
(In millions)
 
Valuation Technique(s)
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
101

 
Discounted cash flow
 
Credit spread
 
2% - 13% (3%)
Equity securities
16

 
Market approach
 
Private offering price
 
$12 - $4,391 per share ($600)
Life settlement contracts
82

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
55% - 1676% (163%)
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 assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are presented in the following tables.
June 30, 2015
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
Mortgage loans
$
622

 
$
—

 
$
—

 
$
640

 
$
640

Liabilities
 
 
 
 
 
 
 
 
 
Long term debt
$
2,560

 
$
—

 
$
2,843

 
$
—

 
$
2,843


December 31, 2014
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
1

 
$
—

 
$
—

 
$
1

 
$
1

Mortgage loans
588

 
—

 
—

 
608

 
608

Liabilities
 
 
 
 
 
 
 
 
 
Long term debt
$
2,559

 
$
—

 
$
2,883

 
$
—

 
$
2,883