Fair Value (Tables)

9 Months Ended

Sep. 30, 2018

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, foreign governments and redeemable preferred stock.



September 30, 2018								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	$	183	$	19,260		$	188	$	19,631
States, municipalities and political subdivisions	—		11,145			—		11,145
Asset-backed	—		8,554			298		8,852
Total fixed maturity securities	183		38,959			486		39,628
Equity securities:
Common stock	101		—			4		105
Non-redeemable preferred stock	51		625			14		690
Total equity securities	152		625			18		795
Short term and other	252		931			—		1,183
Total assets	$	587	$	40,515		$	504	$	41,606
Liabilities
Other liabilities	$	—	$	(6	)	$	—	$	(6	)
Total liabilities	$	—	$	(6	)	$	—	$	(6	)



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:
Common stock	23		—		4		27
Non-redeemable preferred stock	68		584		16		668
Total 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

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		Total
Balance as of July 1, 2018	$	94		$	1		$	273		$	17	$	—	$	385
Total realized and unrealized investment gains (losses):
Reported in Net realized investment gains (losses)	—			—			(2		)	1		—		(1		)
Reported in Net investment income	—			—			—			—		—		—
Reported in Other comprehensive income	—			—			—			—		—		—
Total realized and unrealized investment gains (losses)	—			—			(2		)	1		—		(1		)
Purchases	67			—			55			—		—		122
Sales	—			—			—			—		—		—
Settlements	(3		)	(1		)	(25		)	—		—		(29		)
Transfers into Level 3	30			—			29			—		—		59
Transfers out of Level 3	—			—			(32		)	—		—		(32		)
Balance as of September 30, 2018	$	188		$	—		$	298		$	18	$	—	$	504
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2018 recognized in Net income (loss)	$	—		$	—		$	(2	)	$	1	$	—	$	(1	)
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2018 recognized in Other Comprehensive Income	—			—			1			—		—		1



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 July 1, 2017	$	100		$	1	$	218		$	19	$	—	$	1		$	339
Total realized and unrealized investment gains (losses):
Reported in Net realized investment gains (losses)	1			—		—			—		—		—			1
Reported in Other revenues	—			—		—			—		—		—			—
Reported in Other comprehensive income	1			—		1			—		—		—			2
Total realized and unrealized investment gains (losses)	2			—		1			—		—		—			3
Purchases	13			—		39			—		—		—			52
Sales	—			—		—			—		—		(1		)	(1		)
Settlements	(11		)	—		(13		)	—		—		—			(24		)
Transfers into Level 3	15			—		101			—		—		—			116
Transfers out of Level 3	—			—		—			—		—		—			—
Balance as of September 30, 2017	$	119		$	1	$	346		$	19	$	—	$	—		$	485
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2017 recognized in Net income (loss)	$	—		$	—	$	—		$	—	$	—	$	—		$	—



Level 3 (In millions)	Corporate bonds and other			States, municipalities and political subdivisions			Asset-backed			Equity securities			Derivative financial instruments		Total
Balance as of January 1, 2018	$	98		$	1		$	335		$	20		$	—	$	454
Total realized and unrealized investment gains (losses):
Reported in Net realized investment gains (losses)	(1		)	—			5			(2		)	—		2
Reported in Net investment income	—			—			—			—			—		—
Reported in Other comprehensive income	(1		)	—			(6		)	—			—		(7		)
Total realized and unrealized investment gains (losses)	(2		)	—			(1		)	(2		)	—		(5		)
Purchases	69			—			126			—			—		195
Sales	(5		)	—			(72		)	—			—		(77		)
Settlements	(7		)	(1		)	(37		)	—			—		(45		)
Transfers into Level 3	35			—			42			—			—		77
Transfers out of Level 3	—			—			(95		)	—			—		(95		)
Balance as of September 30, 2018	$	188		$	—		$	298		$	18		$	—	$	504
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2018 recognized in Net income (loss)	$	—		$	—		$	(2	)	$	(2	)	$	—	$	(4	)
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2018 recognized in Other Comprehensive Income	(2		)	—			(2		)	—			—		(4		)



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
Total realized and unrealized investment gains (losses):
Reported in Net realized investment gains (losses)	1			—		1			—			1			—			3
Reported in Other revenues	—			—		—			—			—			6			6
Reported in Other comprehensive income	2			—		4			2			—			—			8
Total realized and unrealized investment gains (losses)	3			—		5			2			1			6			17
Purchases	18			—		90			1			—			—			109
Sales	(1		)	—		—			(3		)	(1		)	(59		)	(64		)
Settlements	(36		)	—		(26		)	—			—			(5		)	(67		)
Transfers into Level 3	15			—		153			—			—			—			168
Transfers out of Level 3	(10		)	—		(75		)	—			—			—			(85		)
Balance as of September 30, 2017	$	119		$	1	$	346		$	19		$	—		$	—		$	485
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2017 recognized in Net income (loss)	$	—		$	—	$	—		$	—		$	—		$	—		$	—

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 weighted average rate is calculated based on fair value.



September 30, 2018	Estimated Fair Value (In millions)		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
Fixed maturity securities	$	198	Discounted cash flow	Credit spread	1% - 12% (2%)



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%)

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, 2018	Carrying Amount		Estimated Fair Value
(In millions)	Carrying Amount		Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	868	$	—	$	—	$	847	$	847
Note receivable	35		—		—		35		35
Liabilities
Long term debt	$	2,680	$	—	$	2,734	$	—	$	2,734



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