Investments (Tables)

3 Months Ended

Mar. 31, 2020

Investments [Abstract]

Net investment income

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

Three months ended March 31
(In millions)	2020			2019
Fixed maturity securities	$	438		$	455
Equity securities	(44		)	30
Limited partnership investments	(70		)	76
Mortgage loans	14			12
Short term investments	7			10
Trading portfolio	1			2
Other	—			2
Gross investment income	346			587
Investment expense	(17		)	(16		)
Net investment income	$	329		$	571

Net realized investment gains (losses)

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

Three months ended March 31
(In millions)	2020			2019
Net investment gains (losses):
Fixed maturity securities:
Gross gains	$	29		$	36
Gross losses	(104		)	(42		)
Net investment gains (losses) on fixed maturity securities	(75		)	(6		)
Equity securities	(133		)	42
Derivatives	5			(5		)
Mortgage loans	(13		)	—
Short term investments and other	—			—
Net investment gains (losses)	$	(216	)	$	31

Debt securities, available-for-sale, allowance for credit loss

Accrued interest receivable on available-for-sale fixed maturity securities totaled $390 million and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.

Three months ended March 31
(in millions)	Corporate and other bonds
Allowance for credit losses:
Beginning balance	$	—
Additions to the allowance for credit losses:
Impact of adopting ASC 326	6
For securities for which credit losses were not previously recorded	48
For available-for-sale securities accounted for as PCD assets	1
Reductions to the allowance for credit losses:
Securities sold during the period (realized)	5
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	1
Write-offs charged against the allowance	—
Recoveries of amounts previously written off	—
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	—
Ending balance as of March 31, 2020	$	49

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

The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.

Three Months ended March 31
(In millions)	2020		2019
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	91	$	6
Asset-backed	1		8
Impairment losses recognized in earnings	$	92	$	14

Summary of fixed maturity and equity securities

The following tables present a summary of fixed maturity securities.

March 31, 2020	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses(1)		Estimated Fair Value
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	20,181	$	1,419	$	817	$	49	$	20,734
States, municipalities and political subdivisions	8,957		1,536		2		—		10,491
Asset-backed:
Residential mortgage-backed	4,198		207		8		—		4,397
Commercial mortgage-backed	2,207		36		153		—		2,090
Other asset-backed	1,868		9		133		—		1,744
Total asset-backed	8,273		252		294		—		8,231
U.S. Treasury and obligations of government-sponsored enterprises	147		8		—		—		155
Foreign government	452		15		4		—		463
Redeemable preferred stock	9		—		—		—		9
Total fixed maturity securities available-for-sale	38,019		3,230		1,117		49		40,083
Total fixed maturity securities trading	15		—		—		—		15
Total fixed maturity securities	$	38,034	$	3,230	$	1,117	$	49	$	40,098

(1) As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Unrealized OTTI Losses (Gains) column that tracked subsequent valuation changes on securities for which a credit loss had previously been recorded has been replaced with the Allowance for Credit Losses column.

December 31, 2019	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)
(In millions)
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

Securities in a gross unrealized loss position

The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, 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, 2020	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	7,036	$	804	$	44	$	13	$	7,080	$	817
States, municipalities and political subdivisions	82		2		—		—		82		2
Asset-backed:
Residential mortgage-backed	166		7		22		1		188		8
Commercial mortgage-backed	1,185		151		12		2		1,197		153
Other asset-backed	1,510		131		9		2		1,519		133
Total asset-backed	2,861		289		43		5		2,904		294
U.S. Treasury and obligations of government-sponsored enterprises	2		—		—		—		2		—
Foreign government	76		4		—		—		76		4
Redeemable preferred stock	9		—		—		—		9		—
Total	$	10,066	$	1,099	$	87	$	18	$	10,153	$	1,117

	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)
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

Debt securities, available-for-sale

The following tables present the estimated fair value and gross unrealized losses of available-for-sale Corporate and other bonds in a gross unrealized loss position at March 31, 2020 across industry sectors and by rating distributions.

March 31, 2020	Estimated Fair Value		Gross Unrealized Losses
(In millions)
Corporate and other bonds:
Basic Materials	$	727	$	78
Communications	349		27
Consumer, cyclical - Other	390		56
Consumer, non-cyclical - Other	401		27
Energy - Oil & Gas	575		191
Energy - Pipelines	523		112
Entertainment	148		23
Financial - Other	1,711		89
Financial - Real Estate/REITS	599		45
Industrial	468		55
Retail	150		18
Technology	290		30
Transportation	73		5
Travel & Related	269		37
Utilities	407		24
Total Corporate and other bonds	$	7,080	$	817

March 31, 2020	Estimated Fair Value		Gross Unrealized Losses
(In millions)
Corporate and other bonds:
AAA	$	8	$	—
AA	134		4
A	608		17
BBB	4,987		516
Below investment grade	1,343		280
Total Corporate and other bonds	$	7,080	$	817

The following tables present the estimated fair value and gross unrealized losses of available-for-sale Commercial mortgage-backed securities in a gross unrealized loss position at March 31, 2020 by property type and by rating distributions.

March 31, 2020	Estimated Fair Value		Gross Unrealized Losses
(In millions)
Commercial mortgage-backed:
Conduits (multi property, multi borrower pools)	$	211	$	11
Single asset, single borrower	986		142
Total Commercial mortgage-backed	$	1,197	$	153

March 31, 2020	Estimated Fair Value		Gross Unrealized Losses
(In millions)
Commercial mortgage-backed:
US Government, Government agencies and Government sponsored enterprises	$	1	$	—
AAA	60		1
AA	245		17
A	214		22
BBB	484		78
Below investment grade	193		35
Total Commercial mortgage-backed	$	1,197	$	153

The following tables present the estimated fair value and gross unrealized losses of available-for-sale Other asset-backed securities in a gross unrealized loss position at March 31, 2020 by underlying collateral and by rating distributions.

March 31, 2020	Estimated Fair Value		Gross Unrealized Losses
(In millions)
Other asset-backed:
Auto	$	290	$	6
Collateralized loan obligations	418		60
Franchise	414		39
Other	397		28
Total Other asset-backed	$	1,519	$	133

March 31, 2020	Estimated Fair Value		Gross Unrealized Losses
(In millions)
Other asset-backed:
AAA	$	49	$	1
AA	83		2
A	821		74
BBB	566		56
Below investment grade	—		—
Total Other asset-backed	$	1,519	$	133

Contractual maturity

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

	March 31, 2020				December 31, 2019
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,331	$	1,325	$	1,334	$	1,356
Due after one year through five years	11,554		11,812		9,746		10,186
Due after five years through ten years	13,078		13,069		14,892		15,931
Due after ten years	12,056		13,877		12,134		14,714
Total	$	38,019	$	40,083	$	38,106	$	42,187

Financing receivable credit quality indicators

The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination as of March 31, 2020:

	Mortgage Loans Amortized Cost Basis by Origination Year (1)
As of March 31, 2020	2020		2019		2018		2017		2016		Prior		Total
DSCR ≥1.6x
LTV less than 55%	$	60	$	32	$	19	$	92	$	41	$	130	$	374
LTV 55% to 65%	—		32		29		55		4		—		120
LTV greater than 65%	—		5		—		—		—		—		5
DSCR 1.2x - 1.6x
LTV less than 55%	—		33		10		13		16		126		198
LTV 55% to 65%	—		73		32		32		—		—		137
LTV greater than 65%	—		85		—		—		—		—		85
DSCR ≤1.2
LTV less than 55%	—		1		11		27		—		9		48
LTV 55% to 65%	—		14		14		—		—		—		28
LTV greater than 65%	—		22		—		—		24		—		46
Total	$	60	$	297	$	115	$	219	$	85	$	265	$	1,041