Investments (Tables)

6 Months Ended

Jun. 30, 2018

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



Periods ended June 30	Three Months						Six Months
(In millions)	2018			2017			2018			2017
Fixed maturity securities	$	444		$	457		$	890		$	912
Equity securities	12			2			22			3
Limited partnership investments	40			16			70			106
Mortgage loans	14			8			25			15
Short term investments	6			3			12			6
Trading portfolio	3			4			5			6
Other	3			—			3			1
Gross investment income	522			490			1,027			1,049
Investment expense	(16		)	(15		)	(31		)	(29		)
Net investment income	$	506		$	475		$	996		$	1,020

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)	2018			2017			2018			2017
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains	$	37		$	56		$	106		$	105
Gross realized losses	(33		)	(12		)	(84		)	(29		)
Net realized investment gains (losses) on fixed maturity securities	4			44			22			76
Equity securities	(10		)	—			(25		)	—
Derivatives	4			(3		)	9			(2		)
Short term investments and other	1			9			5			12
Net realized investment gains (losses)	$	(1	)	$	50		$	11		$	86

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.



Periods ended June 30	Three Months				Six Months
(In millions)	2018		2017		2018		2017
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	—	$	2	$	5	$	4
Asset-backed	—		—		1		—
OTTI losses recognized in earnings	$	—	$	2	$	6	$	4

Summary of fixed maturity and equity securities

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



June 30, 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	$	17,883	$	938	$	203	$	18,618	$	—
States, municipalities and political subdivisions	10,856		1,161		8		12,009		—
Asset-backed:
Residential mortgage-backed	4,961		72		85		4,948		(25		)
Commercial mortgage-backed	2,082		23		33		2,072		—
Other asset-backed	1,557		9		9		1,557		—
Total asset-backed	8,600		104		127		8,577		(25		)
U.S. Treasury and obligations of government-sponsored enterprises	127		3		3		127		—
Foreign government	436		6		5		437		—
Redeemable preferred stock	9		1		—		10		—
Total fixed maturity securities available-for-sale	37,911		2,213		346		39,778		$	(25	)
Total fixed maturity securities trading	17						17
Total fixed maturity securities	$	37,928	$	2,213	$	346	$	39,795



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
June 30, 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	$	6,963	$	192	$	193	$	11	$	7,156	$	203
States, municipalities and political subdivisions	723		8		3		—		726		8
Asset-backed:
Residential mortgage-backed	3,183		68		344		17		3,527		85
Commercial mortgage-backed	913		16		228		17		1,141		33
Other asset-backed	632		6		27		3		659		9
Total asset-backed	4,728		90		599		37		5,327		127
U.S. Treasury and obligations of government-sponsored enterprises	49		1		19		2		68		3
Foreign government	178		3		40		2		218		5
Total	$	12,641	$	294	$	854	$	52	$	13,495	$	346



	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 June 30, 2018 and 2017 and for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).



Periods ended June 30	Three Months						Six Months
(In millions)	2018			2017			2018			2017
Beginning balance of credit losses on fixed maturity securities	$	25		$	32		$	27		$	36
Reductions for securities sold during the period	(4		)	(2		)	(6		)	(6		)
Ending balance of credit losses on fixed maturity securities	$	21		$	30		$	21		$	30

Contractual maturity

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



	June 30, 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	$	1,301	$	1,322	$	1,135	$	1,157
Due after one year through five years	8,211		8,421		8,165		8,501
Due after five years through ten years	16,138		16,240		16,060		16,718
Due after ten years	12,261		13,795		12,852		15,108
Total	$	37,911	$	39,778	$	38,212	$	41,484