

Years ended December 31
(In millions)	2019			2018			2017
Fixed maturity securities	$	1,817		$	1,795		$	1,812
Equity securities	85			18			12
Limited partnership investments	180			(22		)	207
Mortgage loans	51			50			34
Short term investments	34			26			15
Trading portfolio	9			7			12
Other	5			4			1
Gross investment income	2,181			1,878			2,093
Investment expense	(63		)	(61		)	(59		)
Net investment income	$	2,118		$	1,817		$	2,034

For the year ended December 31, 2019, $38 million of Net investment income was recognized due to the change in fair value of common stock still held as of December 31, 2019. For the year ended December 31, 2018, $24 million of losses were recognized in Net investment income due to the change in fair value of common stock still held as of December 31, 2018.

As of December 31, 2019 the Company held less than $1 million of non-income producing fixed maturity securities. As of December 31, 2018 the Company held no non-income producing fixed maturity securities. As of December 31, 2019 and 2018, no investments in a single issuer exceeded 10% of stockholders' equity, other than investments in securities issued by the U.S. Treasury and obligations of government-sponsored enterprises.



Years ended December 31
(In millions)	2019			2018			2017
Net investment gains (losses):
Fixed maturity securities:
Gross gains	$	125		$	168		$	186
Gross losses	(131		)	(164		)	(64		)
Net investment gains (losses) on fixed maturity securities	(6		)	4			122
Equity securities	66			(74		)	—
Derivatives	(11		)	9			(4		)
Short term investments and other	(20		)	9			(25		)
Net investment gains (losses)	$	29		$	(52	)	$	93

For the year ended December 31, 2019, $66 million of gains were recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of December 31, 2019. For the year ended December 31, 2018, $73 million of losses were recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of December 31, 2018. Net investment gains (losses) for the year ended December 31, 2019 included a $21 million loss related to the redemption of the Company's $500 million senior notes due August 2020. Net investment gains (losses) for the year ended December 31, 2017 included a $42 million loss related to the redemption of the Company's $350 million senior notes due November 2019.



Years ended December 31
(In millions)	2019		2018			2017
Net change in unrealized gains on investments:
Fixed maturity securities	$	2,620	$	(1,811	)	$	728
Equity securities ⁽¹⁾	—		—			32
Other	—		—			(2		)
Total net change in unrealized gains on investments	$	2,620	$	(1,811	)	$	758



Years ended December 31
(In millions)	2019		2018		2017
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	33	$	12	$	12
Asset-backed	11		9		1
Total fixed maturity securities available-for-sale	44		21		13
Equity securities available-for-sale	—		—		1
OTTI losses recognized in earnings	$	44	$	21	$	14



December 31, 2019	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	$	19,789	$	2,292	$	32	$	22,049	$	—
States, municipalities and political subdivisions	9,093		1,559		—		10,652		—
Asset-backed:
Residential mortgage-backed	4,387		133		1		4,519		(17		)
Commercial mortgage-backed	2,265		86		5		2,346		1
Other asset-backed	1,925		41		4		1,962		(3		)
Total asset-backed	8,577		260		10		8,827		(19		)
U.S. Treasury and obligations of government-sponsored enterprises	146		1		2		145		—
Foreign government	491		14		1		504		—
Redeemable preferred stock	10		—		—		10		—
Total fixed maturity securities available-for-sale	38,106		4,126		45		42,187		$	(19	)
Total fixed maturity securities trading	20		—		—		20
Total fixed maturity securities	$	38,126	$	4,126	$	45	$	42,207



December 31, 2018	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	$	18,764	$	791	$	395	$	19,160	$	—
States, municipalities and political subdivisions	9,681		1,076		9		10,748		—
Asset-backed:
Residential mortgage-backed	4,815		68		57		4,826		(20		)
Commercial mortgage-backed	2,200		28		32		2,196		—
Other asset-backed	1,975		11		24		1,962		—
Total asset-backed	8,990		107		113		8,984		(20		)
U.S. Treasury and obligations of government-sponsored enterprises	156		3		—		159		—
Foreign government	480		5		4		481		—
Redeemable preferred stock	10		—		—		10		—
Total fixed maturity securities available-for-sale	38,081		1,982		521		39,542		$	(20	)
Total fixed maturity securities trading	4		—		—		4
Total fixed maturity securities	$	38,085	$	1,982	$	521	$	39,546

The following tables present the estimated fair value and gross unrealized losses of fixed maturity 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
December 31, 2019	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	$	914	$	21	$	186	$	11	$	1,100	$	32
States, municipalities and political subdivisions	34		—		—		—		34		—
Asset-backed:
Residential mortgage-backed	249		1		30		—		279		1
Commercial mortgage-backed	381		3		20		2		401		5
Other asset-backed	449		3		33		1		482		4
Total asset-backed	1,079		7		83		3		1,162		10
U.S. Treasury and obligations of government-sponsored enterprises	62		2		2		—		64		2
Foreign government	59		1		1		—		60		1
Total	$	2,148	$	31	$	272	$	14	$	2,420	$	45



	Less than 12 Months				12 Months or Longer				Total
December 31, 2018	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	$	8,543	$	340	$	825	$	55	$	9,368	$	395
States, municipalities and political subdivisions	517		8		5		1		522		9
Asset-backed:
Residential mortgage-backed	1,932		23		1,119		34		3,051		57
Commercial mortgage-backed	728		10		397		22		1,125		32
Other asset-backed	834		21		125		3		959		24
Total asset-backed	3,494		54		1,641		59		5,135		113
U.S. Treasury and obligations of government-sponsored enterprises	21		—		19		—		40		—
Foreign government	114		2		124		2		238		4
Total	$	12,689	$	404	$	2,614	$	117	$	15,303	$	521

Based on current facts and circumstances, the Company believes the unrealized losses presented in the December 31, 2019 securities in a gross unrealized loss position table above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors. The Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded as of December 31, 2019.

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 December 31, 2019, 2018 and 2017 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).



Years ended December 31
(In millions)	2019			2018			2017
Beginning balance of credit losses on fixed maturity securities	$	18		$	27		$	36
Reductions for securities sold during the period	(8		)	(9		)	(9		)
Ending balance of credit losses on fixed maturity securities	$	10		$	18		$	27



December 31	2019				2018
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,334	$	1,356	$	1,350	$	1,359
Due after one year through five years	9,746		10,186		7,979		8,139
Due after five years through ten years	14,892		15,931		16,859		16,870
Due after ten years	12,134		14,714		11,893		13,174
Total	$	38,106	$	42,187	$	38,081	$	39,542

The carrying value of limited partnerships as of December 31, 2019 and 2018 was $1,752 million and $1,982 million, which includes net undistributed earnings of $229 million and $153 million. Limited partnerships comprising 60% of the total carrying value are reported on a current basis through December 31, 2019 with no reporting lag, 10% are reported on a one month lag and the remainder are reported on more than a one month lag. The number of limited partnerships held and the strategies employed provide diversification to the limited partnership portfolio and the overall invested asset portfolio.

Limited partnerships comprising 61% and 65% of the carrying value as of December 31, 2019 and 2018 employ hedge fund strategies. Limited partnerships comprising 33% and 30% of the carrying value as of December 31, 2019 and 2018 were invested in private debt and equity. The remainder was primarily invested in real estate strategies. Hedge fund strategies include both long and short positions in fixed income, equity and derivative instruments. These hedge fund strategies may seek to generate gains from mispriced or undervalued securities, price differentials between securities, distressed investments, sector rotation or various arbitrage disciplines. Within hedge fund strategies, approximately 55% were equity related, 23% were focused on distressed investments, 18% pursued a multi-strategy approach and 4% were fixed income related as of December 31, 2019.

The ten largest limited partnership positions held totaled $893 million and $876 million as of December 31, 2019 and 2018. Based on the most recent information available regarding the Company’s percentage ownership of the individual limited partnerships, the carrying value reflected on the Consolidated Balance Sheets represents approximately 2% of the aggregate partnership equity as of December 31, 2019 and 2018, and the related income reflected on the Consolidated Statements of Operations represents approximately 2%, 3% and 3% of the changes in aggregate partnership equity for the years ended December 31, 2019, 2018 and 2017.

There are risks inherent in limited partnership investments which may result in losses due to short-selling, derivatives or other speculative investment practices. The use of leverage increases volatility generated by the underlying investment strategies.

The Company’s hedge fund limited partnership investments contain withdrawal provisions that generally limit liquidity for a period of thirty days up to one year or longer. Private equity and other non-hedge funds generally do not permit voluntary withdrawals. Typically, hedge fund withdrawals require advance written notice of up to 90 days.

The Company may use derivatives in the normal course of business, primarily in an attempt to reduce its exposure to market risk (principally interest rate risk and foreign currency risk) stemming from various assets and liabilities. The Company's principal objective under such strategies is to achieve the desired reduction in economic risk, even if the position does not receive hedge accounting treatment.

The Company may enter into interest rate swaps, futures and forward commitments to purchase securities to manage interest rate risk. The Company may use foreign currency forward contracts to manage foreign currency risk.

Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to the instruments recognized on the Consolidated Balance Sheets. The Company generally requires that all over-the-counter derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement, and exchanges collateral under the terms of these agreements with its derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty. Gross estimated fair values of derivative positions are presented in Other invested assets and Other liabilities on the Consolidated Balance Sheets. The Company does not offset derivative positions against the fair value of collateral provided or positions subject to netting arrangements. There would be no significant difference in the balance included in such accounts if the estimated fair values were presented net as of December 31, 2019 and 2018.

The Company holds an embedded derivative on a funds withheld liability with a notional value of $182 million and $172 million and a fair value of $(7) million and $4 million as of December 31, 2019 and 2018. The embedded derivative on the funds withheld liability is accounted for separately and reported with the funds withheld liability in Other liabilities on the Consolidated Balance Sheets.

As part of its overall investment strategy, the Company invests in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to privately placed debt securities. As of December 31, 2019, the Company had commitments to purchase or fund approximately $945 million and sell approximately $85 million under the terms of these investments.

Securities with carrying values of approximately $2.7 billion and $2.5 billion were deposited by the Company’s insurance subsidiaries under requirements of regulatory authorities and others as of December 31, 2019 and 2018.

Cash and securities with carrying values of approximately $1.1 billion and $1.0 billion were deposited with financial institutions in trust accounts or as collateral for letters of credit to secure obligations with various third parties as of December 31, 2019 and 2018.