Investments (Tables)

3 Months Ended

Mar. 31, 2018

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



Three months ended March 31
(In millions)	2018			2017
Fixed maturity securities	$	446		$	455
Equity securities	10			1
Limited partnership investments	30			90
Mortgage loans	11			7
Short term investments	6			3
Trading portfolio	2			2
Other	—			1
Gross investment income	505			559
Investment expense	(15		)	(14		)
Net investment income	$	490		$	545

Net realized investment gains (losses)

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



Three months ended March 31
(In millions)	2018			2017
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	69		$	49
Gross realized losses	(51		)	(17		)
Net realized investment gains (losses) on fixed maturity securities	18			32
Equity securities	(15		)	—
Derivatives	5			1
Short term investments and other	4			3
Net realized investment gains (losses)	$	12		$	36

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

The components of OTTI losses recognized in earnings by asset type are presented in the following table.



Three months ended March 31
(In millions)	2018		2017
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	5	$	2
Asset-backed	1		—
OTTI losses recognized in earnings	$	6	$	2

Summary of fixed maturity and equity securities

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



March 31, 2018 ⁽¹⁾	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	$	17,538	$	1,177	$	115	$	18,600	$	—
States, municipalities and political subdivisions	11,682		1,205		12		12,875		—
Asset-backed:
Residential mortgage-backed	5,050		83		78		5,055		(27		)
Commercial mortgage-backed	1,948		29		22		1,955		—
Other asset-backed	1,185		10		7		1,188		—
Total asset-backed	8,183		122		107		8,198		(27		)
U.S. Treasury and obligations of government-sponsored enterprises	124		2		7		119		—
Foreign government	448		7		5		450		—
Redeemable preferred stock	9		1		—		10		—
Total fixed maturity securities available-for-sale	37,984		2,514		246		40,252		$	(27	)
Total fixed maturity securities trading	7						7
Total fixed maturity securities	$	37,991	$	2,514	$	246	$	40,259



December 31, 2017	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	$	1,625	$	28	$	18,807	$	—
States, municipalities and political subdivisions	12,478		1,551		2		14,027		(11		)
Asset-backed:
Residential mortgage-backed	5,043		109		32		5,120		(27		)
Commercial mortgage-backed	1,840		46		14		1,872		—
Other asset-backed	1,083		16		5		1,094		—
Total asset-backed	7,966		171		51		8,086		(27		)
U.S. Treasury and obligations of government-sponsored enterprises	111		2		4		109		—
Foreign government	437		9		2		444		—
Redeemable preferred stock	10		1		—		11		—
Total fixed maturity securities available-for-sale	38,212		3,359		87		41,484		$	(38	)
Total fixed maturity securities trading	3						3
Equity securities available-for-sale:
Common stock	21		7		1		27
Preferred stock	638		31		1		668
Total equity securities available-for-sale	659		38		2		695
Total fixed maturity and equity securities	$	38,874	$	3,397	$	89	$	42,182


(1)	As of January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The change in fair value of equity securities is now recognized through the income statement. See Note A to the Condensed Consolidated Financial Statements for additional information.

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, 2018 ⁽¹⁾	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	$	4,229	$	104	$	146	$	11	$	4,375	$	115
States, municipalities and political subdivisions	962		12		3		—		965		12
Asset-backed:
Residential mortgage-backed	2,570		55		504		23		3,074		78
Commercial mortgage-backed	668		11		200		11		868		22
Other asset-backed	441		5		15		2		456		7
Total asset-backed	3,679		71		719		36		4,398		107
U.S. Treasury and obligations of government-sponsored enterprises	59		4		26		3		85		7
Foreign government	214		5		4		—		218		5
Total	$	9,143	$	196	$	898	$	50	$	10,041	$	246



	Less than 12 Months				12 Months or Longer				Total
December 31, 2017	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	$	1,354	$	21	$	168	$	7	$	1,522	$	28
States, municipalities and political subdivisions	72		1		85		1		157		2
Asset-backed:
Residential mortgage-backed	1,228		5		947		27		2,175		32
Commercial mortgage-backed	403		4		212		10		615		14
Other asset-backed	248		3		18		2		266		5
Total asset-backed	1,879		12		1,177		39		3,056		51
U.S. Treasury and obligations of government-sponsored enterprises	49		2		21		2		70		4
Foreign government	166		2		4		—		170		2
Total fixed maturity securities available-for-sale	3,520		38		1,455		49		4,975		87
Equity securities available-for-sale:
Common stock	7		1		—		—		7		1
Preferred stock	93		1		—		—		93		1
Total equity securities available-for-sale	100		2		—		—		100		2
Total	$	3,620	$	40	$	1,455	$	49	$	5,075	$	89


(1)	As of January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The change in fair value of equity securities is now recognized through the income statement. See Note A to the Condensed Consolidated Financial Statements for additional information.

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, 2018 and 2017 and for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).



Three months ended March 31
(In millions)	2018			2017
Beginning balance of credit losses on fixed maturity securities	$	27		$	36
Reductions for securities sold during the period	(2		)	(4		)
Ending balance of credit losses on fixed maturity securities	$	25		$	32

Contractual maturity

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



	March 31, 2018				December 31, 2017
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,323	$	1,343	$	1,135	$	1,157
Due after one year through five years	8,277		8,495		8,165		8,501
Due after five years through ten years	15,802		16,093		16,060		16,718
Due after ten years	12,582		14,321		12,852		15,108
Total	$	37,984	$	40,252	$	38,212	$	41,484