Fair Value (Tables)

12 Months Ended

Dec. 31, 2017

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. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises and foreign governments and redeemable preferred stock.



December 31, 2017							Total Assets/Liabilities at Fair Value
(In millions)	Level 1		Level 2		Level 3		Total Assets/Liabilities at Fair Value
Assets
Fixed maturity securities:
Corporate bonds and other	$	128	$	19,148	$	98	$	19,374
States, municipalities and political subdivisions	—		14,026		1		14,027
Asset-backed	—		7,751		335		8,086
Total fixed maturity securities	128		40,925		434		41,487
Equity securities	91		584		20		695
Short term and other	396		958		—		1,354
Total assets	$	615	$	42,467	$	454	$	43,536
Liabilities
Other liabilities	$	—	$	3	$	—	$	3
Total liabilities	$	—	$	3	$	—	$	3



December 31, 2016								Total Assets/Liabilities at Fair Value
(In millions)	Level 1		Level 2			Level 3		Total Assets/Liabilities at Fair Value
Assets
Fixed maturity securities:
Corporate bonds and other	$	112	$	19,285		$	130	$	19,527
States, municipalities and political subdivisions	—		13,239			1		13,240
Asset-backed	—		7,939			199		8,138
Total fixed maturity securities	112		40,463			330		40,905
Equity securities	91		—			19		110
Short term and other	475		858			—		1,333
Life settlement contracts, included in Other assets	—		—			58		58
Total assets	$	678	$	41,321		$	407	$	42,406
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 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)	Corporate bonds and other			States, municipalities and political subdivisions		Asset-backed			Equity securities			Derivative financial instruments			Life settlement contracts			Total
Balance as of January 1, 2017	$	130		$	1	$	199		$	19		$	—		$	58		$	407
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in Net income (loss)*	—			—		2			—			1			6			9
Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss)	3			—		3			3			—			—			9
Purchases	18			—		107			1			—			—			126
Sales	(5		)	—		—			(3		)	(1		)	(59		)	(68		)
Settlements	(54		)	—		(43		)	—			—			(5		)	(102		)
Transfers into Level 3	16			—		153			—			—			—			169
Transfers out of Level 3	(10		)	—		(86		)	—			—			—			(96		)
Balance as of December 31, 2017	$	98		$	1	$	335		$	20		$	—		$	—		$	454
Unrealized gains (losses) on Level 3 assets and liabilities held as of December 31, 2017 recognized in Net income (loss)*	$	—		$	—	$	—		$	—		$	—		$	—		$	—



Level 3 (In millions)	Corporate bonds and other			States, municipalities and political subdivisions			Asset-backed			Equity securities			Life settlement contracts			Total
Balance as of January 1, 2016	$	168		$	2		$	209		$	20		$	74		$	473
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in Net income (loss)*	1			—			—			(1		)	5			5
Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss)	1			—			(5		)	—			—			(4		)
Purchases	163			—			133			—			—			296
Sales	(36		)	—			(25		)	—			—			(61		)
Settlements	(103		)	(1		)	(32		)	—			(21		)	(157		)
Transfers into Level 3	—			—			61			—			—			61
Transfers out of Level 3	(64		)	—			(142		)	—			—			(206		)
Balance as of December 31, 2016	$	130		$	1		$	199		$	19		$	58		$	407
Unrealized gains (losses) on Level 3 assets and liabilities held as of December 31, 2016 recognized in Net income (loss)*	$	—		$	—		$	—		$	(2	)	$	(3	)	$	(5	)

Fair Value, Option, Qualitative Disclosures Related to Election

*Net realized and unrealized gains and losses from Level 3 securities and derivatives are reported in Net income (loss) as follows:



Major Category of Assets and Liabilities		Consolidated Statements of Operations Line Items
Fixed maturity securities available-for-sale ⁽¹⁾		Net realized investment gains (losses)
Fixed maturity securities trading		Net investment income
Equity securities ⁽¹⁾		Net realized investment gains (losses)
Other invested assets - Derivative financial instruments held in a trading portfolio		Net investment income
Other invested assets - Derivative financial instruments not held in a trading portfolio		Net realized investment gains (losses)
Life settlement contracts		Other revenues
Other liabilities - Derivative financial instruments		Net realized investment gains (losses)

(1) Unrealized gains and losses are reported within AOCI.

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 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. The valuation of life settlement contracts was based on the terms of the sale of the contracts to a third party; therefore, the contracts are not included in the table below.



December 31, 2017	Estimated Fair Value (In millions)		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Fixed maturity securities	$	136	Discounted cash flow	Credit spread	1% - 12% (3%)



December 31, 2016	Estimated Fair Value (In millions)		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Fixed maturity securities	$	106	Discounted cash flow	Credit spread	2% - 40% (4%)

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 Consolidated Balance Sheets are presented in the following tables.



December 31, 2017	Carrying Amount		Estimated Fair Value
(In millions)	Carrying Amount		Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	839	$	—	$	—	$	844	$	844
Note receivable	46		—		—		46		46
Liabilities
Short term debt	$	150	$	—	$	150	$	—	$	150
Long term debt	2,708		—		2,896		—		2,896



December 31, 2016	Carrying Amount		Estimated Fair Value
(In millions)	Carrying Amount		Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	591	$	—	$	—	$	594	$	594
Liabilities
Long term debt	$	2,710	$	—	$	2,952	$	—	$	2,952

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) the reasons for electing a fair value option for each eligible item or group of similar eligible items and (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures; (2) for items included in the income statement: (a) a description of how interest and dividends are measured and where they are reported in the income statement; (b) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) qualitative information about the reasons for the changes and (ii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided.

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