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Fair Value (Tables)
 9 Months Ended
Sep. 30, 2016
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.
September 30, 2016
 
 
 
 
 
 
Total
Assets/Liabilities
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
19,557

 
$
261

 
$
19,818

States, municipalities and political subdivisions
—

 
13,500

 
1

 
13,501

Asset-backed:
 
 
 
 
 
 
 
Residential mortgage-backed
—

 
5,286

 
79

 
5,365

Commercial mortgage-backed
—

 
2,120

 
24

 
2,144

Other asset-backed
—

 
916

 
43

 
959

Total asset-backed
—

 
8,322

 
146

 
8,468

U.S. Treasury and obligations of government-sponsored enterprises
76

 
—

 
—

 
76

Foreign government
—

 
438

 
—

 
438

Redeemable preferred stock
20

 
—

 
—

 
20

Total fixed maturity securities
96

 
41,817

 
408

 
42,321

Equity securities
97

 
—

 
19

 
116

Other invested assets
—

 
5

 
—

 
5

Short term investments
432

 
911

 
—

 
1,343

Life settlement contracts, included in Other assets
—

 
—

 
67

 
67

Total assets
$
625

 
$
42,733

 
$
494

 
$
43,852

Liabilities
 
 
 
 
 

 
 

Other liabilities
$
—

 
$
8

 
$
—

 
$
8

Total liabilities
$
—

 
$
8

 
$
—

 
$
8

December 31, 2015
 
 
 
 
 
 
Total
Assets/Liabilities
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
17,592

 
$
168

 
$
17,760

States, municipalities and political subdivisions
—

 
13,172

 
2

 
13,174

Asset-backed:
 
 
 
 
 
 
 

Residential mortgage-backed
—

 
4,938

 
134

 
5,072

Commercial mortgage-backed
—

 
2,175

 
22

 
2,197

Other asset-backed
—

 
868

 
53

 
921

Total asset-backed
—

 
7,981

 
209

 
8,190

U.S. Treasury and obligations of government-sponsored enterprises
66

 
1

 
—

 
67

Foreign government
—

 
346

 
—

 
346

Redeemable preferred stock
35

 
—

 
—

 
35

Total fixed maturity securities
101

 
39,092

 
379

 
39,572

Equity securities
177

 
—

 
20

 
197

Other invested assets
—

 
17

 
—

 
17

Short term investments
448

 
1,134

 
—

 
1,582

Life settlement contracts, included in Other assets
—

 
—

 
74

 
74

Total assets
$
726

 
$
40,243

 
$
473

 
$
41,442

Liabilities
 
 
 
 
 

 
 

Other liabilities
$
—

 
$
(5
)
 
$
—

 
$
(5
)
Total liabilities
$
—

 
$
(5
)
 
$
—

 
$
(5
)
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).
Level 3
(In millions)
Balance as of
July 1,
2016
 
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
September 30,
2016
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2016 recognized in Net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
242

 
$
1

 
$
7

 
$
16

 
$
—

 
$
(5
)
 
$
—

 
$
—

 
$
261

 
$
—

States, municipalities and political subdivisions
2

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
—

 
1

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
134

 
—

 
(1
)
 
5

 
—

 
(1
)
 
—

 
(58
)
 
79

 
—

Commercial mortgage-backed
11

 
—

 
—

 
23

 
—

 
(8
)
 
—

 
(2
)
 
24

 
—

Other asset-backed
45

 
—

 
—

 
34

 
—

 
—

 
—

 
(36
)
 
43

 
—

Total asset-backed
190

 
—

 
(1
)
 
62

 
—

 
(9
)
 
—

 
(96
)
 
146

 
—

Total fixed maturity securities
434

 
1

 
6

 
78

 
—

 
(15
)
 
—

 
(96
)
 
408

 
—

Equity securities
19

 
(1
)
 
1

 
—

 
—

 
—

 
—

 
—

 
19

 
(2
)
Life settlement contracts
67

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
67

 
—

Total
$
520

 
$
—

 
$
7

 
$
78

 
$
—

 
$
(15
)
 
$
—

 
$
(96
)
 
$
494

 
$
(2
)

Level 3
(In millions)
Balance as of
July 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
September 30,
2015
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2015 recognized in Net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
141

 
$
—

 
$
—

 
$
27

 
$
(1
)
 
$
(11
)
 
$
—

 
$
(3
)
 
$
153

 
$
—

States, municipalities and political subdivisions
85

 
—

 
—

 
—

 
—

 
—

 
—

 
(24
)
 
61

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
207

 
2

 
(2
)
 
4

 
—

 
(7
)
 
—

 
—

 
204

 
—

Commercial mortgage-backed
87

 
5

 
(4
)
 
8

 
—

 
(15
)
 
—

 
(10
)
 
71

 
—

Other asset-backed
490

 
—

 
(6
)
 
43

 
(20
)
 
(32
)
 
—

 
(4
)
 
471

 
—

Total asset-backed
784

 
7

 
(12
)
 
55

 
(20
)
 
(54
)
 
—

 
(14
)
 
746

 
—

Total fixed maturity securities
1,010

 
7

 
(12
)
 
82

 
(21
)
 
(65
)
 
—

 
(41
)
 
960

 
—

Equity securities
16

 
—

 
(1
)
 
—

 
—

 
—

 
—

 
—

 
15

 
—

Life settlement contracts
75

 
5

 
—

 
—

 
—

 
(6
)
 
—

 
—

 
74

 
2

Total
$
1,101

 
$
12

 
$
(13
)
 
$
82

 
$
(21
)
 
$
(71
)
 
$
—

 
$
(41
)
 
$
1,049

 
$
2



















Level 3
(In millions)
Balance as of
January 1, 2016
 
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
September 30,
2016
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2016 recognized in Net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
168

 
$
1

 
$
14

 
$
163

 
$
(36
)
 
$
(15
)
 
$
—

 
$
(34
)
 
$
261

 
$
—

States, municipalities and political subdivisions
2

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
—

 
1

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
134

 
2

 
(2
)
 
15

 
—

 
(10
)
 
—

 
(60
)
 
79

 
—

Commercial mortgage-backed
22

 
—

 
—

 
32

 
—

 
(17
)
 
3

 
(16
)
 
24

 
—

Other asset-backed
53

 
—

 
2

 
69

 
(25
)
 
(1
)
 
2

 
(57
)
 
43

 
—

Total asset-backed
209

 
2

 
—

 
116

 
(25
)
 
(28
)
 
5

 
(133
)
 
146

 
—

Total fixed maturity securities
379

 
3

 
14

 
279

 
(61
)
 
(44
)
 
5

 
(167
)
 
408

 
—

Equity securities
20

 
(1
)
 
—

 
—

 
—

 
—

 
—

 
—

 
19

 
(2
)
Life settlement contracts
74

 
10

 
—

 
—

 
—

 
(17
)
 
—

 
—

 
67

 
2

Total
$
473

 
$
12

 
$
14

 
$
279

 
$
(61
)
 
$
(61
)
 
$
5

 
$
(167
)
 
$
494

 
$
—

















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
September 30,
2015
 
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2015 recognized in Net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
162

 
$
(1
)
 
$
(1
)
 
$
39

 
$
(13
)
 
$
(32
)
 
$
37

 
$
(38
)
 
$
153

 
$
—

States, municipalities and political subdivisions
94

 
1

 
—

 
—

 
—

 
(10
)
 
—

 
(24
)
 
61

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
189

 
4

 
(4
)
 
76

 
—

 
(28
)
 
—

 
(33
)
 
204

 
—

Commercial mortgage-backed
83

 
7

 
(4
)
 
23

 
—

 
(17
)
 
17

 
(38
)
 
71

 
—

Other asset-backed
655

 
3

 
4

 
125

 
(254
)
 
(52
)
 
—

 
(10
)
 
471

 
(1
)
Total asset-backed
927

 
14

 
(4
)
 
224

 
(254
)
 
(97
)
 
17

 
(81
)
 
746

 
(1
)
Total fixed maturity securities
1,183

 
14

 
(5
)
 
263

 
(267
)
 
(139
)
 
54

 
(143
)
 
960

 
(1
)
Equity securities
16

 
—

 
(1
)
 
—

 
—

 
—

 
—

 
—

 
15

 
—

Life settlement contracts
82

 
22

 
—

 
—

 
—

 
(30
)
 
—

 
—

 
74

 
1

Total
$
1,281

 
$
36

 
$
(6
)
 
$
263

 
$
(267
)
 
$
(169
)
 
$
54

 
$
(143
)
 
$
1,049

 
$
—
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 measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables 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.
September 30, 2016
Estimated Fair Value
(In millions)
 
Valuation Technique(s)
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
211

 
Discounted cash flow
 
Credit spread
 
2% - 40% (6%)
Life settlement contracts
67

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
55% - 1676% (162%)
December 31, 2015
Estimated Fair Value
(In millions)
 
Valuation Technique(s)
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
138

 
Discounted cash flow
 
Credit spread
 
3% - 184% (6%)
Life settlement contracts
74

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
55% - 1676% (164%)
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.
September 30, 2016
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
Mortgage loans
$
629

 
$
—

 
$
—

 
$
654

 
$
654

Liabilities
 
 
 
 
 
 
 
 
 
Long term debt
$
2,709

 
$
—

 
$
3,041

 
$
—

 
$
3,041


December 31, 2015
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
 
Mortgage loans
$
678

 
$
—

 
$
—

 
$
688

 
$
688

Liabilities
 
 
 
 
 
 
 
 
 
Short term debt
$
350

 
$
—

 
$
360

 
$
—

 
$
360

Long term debt
2,210

 
—

 
2,433

 
—

 
2,433