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INVESTMENTS
 12 Months Ended
Dec. 31, 2018
Investments [Abstract]  
INVESTMENTS INVESTMENTSNet Investment Income

The components of net investment income for the years ended December 31 were as follows:
(In millions)
2018
 
2017
 
2016
Fixed maturity securities
 
$
3,142

 
 
 
$
3,173

 
 
 
$
3,308

 
Equity securities
 
38

 
 
 
42

 
 
 
35

 
Other investments
 
369

 
 
 
94

 
 
 
31

 
Short-term investments and cash equivalents
 
41

 
 
 
25

 
 
 
11

 
Gross investment income
 
3,590

 
 
 
3,334

 
 
 
3,385

 
Less investment expenses
 
148

 
 
 
114

 
 
 
107

 
Net investment income
 
$
3,442

 
 
 
$
3,220

 
 
 
$
3,278

 
Investment Holdings
The amortized cost for the Company's investments in fixed maturity securities, the cost for equity securities and the fair values of these investments at December 31 are shown in the following tables.
  
2018
(In millions)
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
  Fair
  Value
Securities available for sale, carried at fair value
through other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Japan government and agencies
 
$
30,637

 
 
 
$
3,700

 
 
 
$
140

 
 
 
$
34,197

 
Municipalities
 
385

 
 
 
32

 
 
 
9

 
 
 
408

 
Mortgage- and asset-backed securities
 
155

 
 
 
22

 
 
 
0

 
 
 
177

 
Public utilities
 
1,732

 
 
 
280

 
 
 
4

 
 
 
2,008

 
Sovereign and supranational
 
826

 
 
 
123

 
 
 
0

 
 
 
949

 
Banks/financial institutions
 
5,440

 
 
 
502

 
 
 
238

 
 
 
5,704

 
Other corporate
 
4,852

 
 
 
649

 
 
 
44

 
 
 
5,457

 
Total yen-denominated
 
44,027

 
 
 
5,308

 
 
 
435

 
 
 
48,900

 
  U.S. dollar-denominated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
137

 
 
 
9

 
 
 
1

 
 
 
145

 
Municipalities
 
1,343

 
 
 
120

 
 
 
8

 
 
 
1,455

 
Mortgage- and asset-backed securities
 
155

 
 
 
8

 
 
 
1

 
 
 
162

 
Public utilities
 
4,772

 
 
 
496

 
 
 
105

 
 
 
5,163

 
Sovereign and supranational
 
251

 
 
 
60

 
 
 
0

 
 
 
311

 
Banks/financial institutions
 
2,860

 
 
 
389

 
 
 
35

 
 
 
3,214

 
Other corporate
 
23,311

 
 
 
1,343

 
 
 
1,109

 
 
 
23,545

 
Total U.S. dollar-denominated
 
32,829

 
 
 
2,425

 
 
 
1,259

 
 
 
33,995

 
Total securities available for sale
 
$
76,856

(1) 
 
 
$
7,733

 
 
 
$
1,694

 
 
 
$
82,895

(1) 

(1) Includes perpetual securities ($1,139 at amortized cost and $1,140 at fair value)

  
2018
(In millions)
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair  
Value  
Securities held to maturity, carried at amortized cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Japan government and agencies
 
$
21,712

 
 
 
$
5,326

 
 
 
$
0

 
 
 
$
27,038

 
Municipalities
 
359

 
 
 
110

 
 
 
0

 
 
 
469

 
Mortgage- and asset-backed securities
 
14

 
 
 
1

 
 
 
0

 
 
 
15

 
Public utilities
 
2,727

 
 
 
254

 
 
 
8

 
 
 
2,973

 
Sovereign and supranational
 
1,551

 
 
 
289

 
 
 
0

 
 
 
1,840

 
Banks/financial institutions
 
1,445

 
 
 
158

 
 
 
20

 
 
 
1,583

 
Other corporate
 
2,510

 
 
 
332

 
 
 
38

 
 
 
2,804

 
Total yen-denominated
 
30,318

 
 
 
6,470

 
 
 
66

 
 
 
36,722

 
Total securities held to maturity
 
$
30,318

 
 
 
$
6,470

 
 
 
$
66

 
 
 
$
36,722

 


  
2018
(In millions)
 
 
 
 
 
 
Fair  
Value  
Equity securities, carried at fair value through
net earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities: (1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Yen-denominated
 
 
 
 
 
 
 
 
 
 
 
 
 
$
641

 
      U.S. dollar-denominated
 
 
 
 
 
 
 
 
 
 
 
 
 
346

 
Total equity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
$
987

(1) 
(1) Includes perpetual securities ($62 at fair value)
 
 
2017
(In millions)
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
  Fair
  Value
Securities available for sale, carried at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Japan government and agencies
 
$
27,980

 
 
 
$
3,363

 
 
 
$
271

 
 
 
$
31,072

 
Municipalities
 
314

 
 
 
28

 
 
 
12

 
 
 
330

 
Mortgage- and asset-backed securities
 
242

 
 
 
29

 
 
 
0

 
 
 
271

 
Public utilities
 
1,635

 
 
 
352

 
 
 
6

 
 
 
1,981

 
Sovereign and supranational
 
1,380

 
 
 
190

 
 
 
1

 
 
 
1,569

 
Banks/financial institutions
 
4,742

 
 
 
811

 
 
 
53

 
 
 
5,500

 
Other corporate
 
4,085

 
 
 
809

 
 
 
7

 
 
 
4,887

 
Total yen-denominated
 
40,378

 
 
 
5,582

 
 
 
350

 
 
 
45,610

 
  U.S dollar-denominated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
146

 
 
 
13

 
 
 
1

 
 
 
158

 
Municipalities
 
872

 
 
 
168

 
 
 
0

 
 
 
1,040

 
Mortgage- and asset-backed securities
 
161

 
 
 
12

 
 
 
0

 
 
 
173

 
Public utilities
 
5,116

 
 
 
884

 
 
 
27

 
 
 
5,973

 
Sovereign and supranational
 
267

 
 
 
73

 
 
 
0

 
 
 
340

 
Banks/financial institutions
 
2,808

 
 
 
633

 
 
 
8

 
 
 
3,433

 
Other corporate
 
25,384

 
 
 
2,620

 
 
 
418

 
 
 
27,586

 
Total U.S. dollar-denominated
 
34,754

 
 
 
4,403

 
 
 
454

 
 
 
38,703

 
Total securities available for sale
 
$
75,132

(1) 
 
 
$
9,985

 
 
 
$
804

 
 
 
$
84,313

(1) 

(1) Includes perpetual securities ($1,462 at amortized cost and $1,789 at fair value)


  
2017
(In millions)
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Securities held to maturity, carried at amortized cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Japan government and agencies
 
$
21,331

 
 
 
$
5,160

 
 
 
$
0

 
 
 
$
26,491

 
Municipalities
 
357

 
 
 
105

 
 
 
0

 
 
 
462

 
Mortgage- and asset-backed securities
 
26

 
 
 
1

 
 
 
0

 
 
 
27

 
Public utilities
 
3,300

 
 
 
398

 
 
 
0

 
 
 
3,698

 
Sovereign and supranational
 
1,523

 
 
 
312

 
 
 
0

 
 
 
1,835

 
Banks/financial institutions
 
2,206

 
 
 
190

 
 
 
9

 
 
 
2,387

 
Other corporate
 
2,687

 
 
 
485

 
 
 
0

 
 
 
3,172

 
Total yen-denominated
 
31,430

 
 
 
6,651

 
 
 
9

 
 
 
38,072

 
Total securities held to maturity
 
$
31,430

 
 
 
$
6,651

 
 
 
$
9

 
 
 
$
38,072

 


  
2017
(In millions)
 
 
 
 
 
 
Fair
Value
Equity securities, carried at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Yen-denominated
 
 
 
 
 
 
 
 
 
 
 
 
 
$
695

 
      U.S. dollar-denominated
 
 
 
 
 
 
 
 
 
 
 
 
 
328

 
Total equity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,023

 


The methods of determining the fair values of the Company's investments in fixed maturity securities and equity securities are described in Note 5.

During 2018, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category. During 2017, the Company reclassified three investments from the held-to-maturity category to the available-for-sale category as a result of the issuers' credit rating being downgraded to below investment grade. At the time of the transfer, the securities had an aggregate amortized cost of $773 million and an aggregate unrealized gain of $47 million. During 2016, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.Contractual and Economic Maturities

The contractual maturities of the Company's investments in fixed maturity securities at December 31, 2018, were as follows:
(In millions)
Amortized
Cost
 
Fair
Value
Available for sale: (1)
 
 
 
 
 
 
Due in one year or less
 
$
810

 
 
 
$
861

Due after one year through five years
 
8,313

 
 
 
8,312

Due after five years through 10 years
 
9,805

 
 
 
10,355

Due after 10 years
 
57,618

 
 
 
63,028

Mortgage- and asset-backed securities
 
310

 
 
 
339

Total fixed maturity securities available for sale
 
$
76,856

 
 
 
$
82,895

Held to maturity:
 
 
 
 
 
 
Due in one year or less
 
$
180

 
 
 
$
182

Due after one year through five years
 
915

 
 
 
948

Due after five years through 10 years
 
927

 
 
 
1,004

Due after 10 years
 
28,282

 
 
 
34,573

Mortgage- and asset-backed securities
 
14

 
 
 
15

Total fixed maturity securities held to maturity
 
$
30,318

 
 
 
$
36,722


(1) Includes perpetual securities, categorized in accordance with their respective economic maturities (the expected maturity date created by the combination of features in the financial instrument)

Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.Investment exposures that individually exceeded 10% of shareholders' equity as of December 31 were as follows:
 
2018
 
2017
(In millions)
Credit
Rating
 
Amortized
Cost
 
Fair
Value
 
Credit
Rating
 
Amortized
Cost
 
Fair
Value
Japan National Government(1)
A+
 
$51,207
 
$59,945
 
A
 
$48,399
 
$56,532
(1)Japan Government Bonds (JGBs) or JGB-backed securitiesRealized Investment Gains and Losses

Information regarding pretax realized gains and losses from investments for the years ended December 31 follows:
(In millions)
2018
 
2017
 
2016
 
Realized investment gains (losses):
 
 
 
 
 
 
Fixed maturity securities: (1)
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
Gross gains from sales
$
101

 
$
51

 
$
177

 
Gross losses from sales
(156
)
 
(68
)
 
(62
)
 
Foreign currency gains (losses) on sales and redemptions
73

 
(48
)
 
4

 
Other-than-temporary impairment losses
(64
)
 
(7
)
 
(26
)
 
Total fixed maturity securities
(46
)
 
(72
)
 
93

 
Equity securities (1),(2)
(131
)
 
71

(3) 
(35
)
(3) 
Loan receivables:
 
 
 
 
 
 
Loan loss reserves
(17
)
 
(8
)
 
(2
)
 
Other gains (losses) on loans
(2
)
 
0

 
0

 
Total loan receivables
(19
)
 
(8
)
 
(2
)
 
Derivatives and other:
 
 
 
 
 
 
Derivative gains (losses)
(224
)
 
(109
)
 
(255
)
 
Foreign currency gains (losses)
(10
)
 
(33
)
 
185

 
Total derivatives and other
(234
)
 
(142
)
 
(70
)
 
Total realized investment gains (losses)
$
(430
)
 
$
(151
)
 
$
(14
)
 

(1) Includes perpetual securities
(2) See Note 1 of the Notes to the Consolidated Financial Statements for the adoption of accounting guidance on January 1, 2018 related to financial instruments.
(3) Includes impairments of $22 in 2017 and $57 in 2016

The unrealized holding losses, net of gains, recorded as a component of realized investment gains and losses for the year ended December 31, 2018, that relates to equity securities still held at the December 31, 2018, reporting date was $124 million.Unrealized Investment Gains and Losses

Information regarding changes in unrealized gains and losses from investments recorded in AOCI for the years ended December 31 follows:
(In millions)
2018
 
2017
 
2016
Changes in unrealized gains (losses):
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities, available for sale (1)
 
$
(3,142
)
 
 
 
$
1,657

 
 
 
$
2,711

 
Equity securities (2)
 
0

 
 
 
71

 
 
 
88

 
Total change in unrealized gains (losses)
 
$
(3,142
)
 
 
 
$
1,728

 
 
 
$
2,799

 

(1) Includes perpetual securities
(2) See Note 1 and Note 11 of the Notes to the Consolidated Financial Statements for the adoption of accounting guidance and the cumulative effect of the change in accounting principle related to financial instruments effective January 1, 2018.

Effect on Shareholders' Equity

The net effect on shareholders' equity of unrealized gains and losses from investment securities at December 31 was as follows:
(In millions)
2018
 
2017
Unrealized gains (losses) on securities available for sale
 
$
6,039

 
 
 
$
9,358

 
Deferred income taxes
 
(1,805
)
 
 
 
(3,394
)
 
Shareholders’ equity, unrealized gains (losses) on investment securities
 
$
4,234

 
 
 
$
5,964

 

See Notes 1 and 10 for discussion of the accounting treatment of tax on amounts recorded in accumulated other comprehensive income pursuant to the Tax Act and Note 1 for the adoption of accounting guidance on January 1, 2018 related to financial instruments.

Gross Unrealized Loss Aging

The following tables show the fair values and gross unrealized losses of the Company's available-for-sale and held-to-maturity investments that were in an unrealized loss position, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31.
 
  
2018
  
Total
 
Less than 12 months
 
12 months or longer
(In millions)
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Fixed maturity securities: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. government and
agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
$
67

 
 
 
$
1

 
 
 
$
67

 
 
 
$
1

 
 
 
$
0

 
 
 
$
0

 
  Japan government and
agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated
 
3,604

 
 
 
140

 
 
 
3,604

 
 
 
140

 
 
 
0

 
 
 
0

 
  Municipalities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
515

 
 
 
8

 
 
 
515

 
 
 
8

 
 
 
0

 
 
 
0

 
  Yen-denominated
 
148

 
 
 
9

 
 
 
148

 
 
 
9

 
 
 
0

 
 
 
0

 
Mortgage- and asset-
backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
74

 
 
 
1

 
 
 
74

 
 
 
1

 
 
 
0

 
 
 
0

 
  Public utilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
1,585

 
 
 
105

 
 
 
892

 
 
 
48

 
 
 
693

 
 
 
57

 
  Yen-denominated
 
604

 
 
 
12

 
 
 
604

 
 
 
12

 
 
 
0

 
 
 
0

 
  Banks/financial institutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
625

 
 
 
35

 
 
 
340

 
 
 
19

 
 
 
285

 
 
 
16

 
  Yen-denominated
 
3,057

 
 
 
258

 
 
 
3,057

 
 
 
258

 
 
 
0

 
 
 
0

 
  Other corporate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
12,899

 
 
 
1,109

 
 
 
5,782

 
 
 
407

 
 
 
7,117

 
 
 
702

 
  Yen-denominated
 
1,306

 
 
 
82

 
 
 
1,306

 
 
 
82

 
 
 
0

 
 
 
0

 
  Total
 
$
24,484

 
 
 
$
1,760

 
 
 
$
16,389

 
 
 
$
985

 
 
 
$
8,095

 
 
 
$
775

 

(1) Includes perpetual securities



  
2017
  
Total
 
Less than 12 months
 
12 months or longer
(In millions)
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Fixed maturity securities: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. government and
agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
$
74

 
 
 
$
1

 
 
 
$
74

 
 
 
$
1

 
 
 
$
0

 
 
 
$
0

 
  Japan government and
agencies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated
 
5,255

 
 
 
271

 
 
 
1,264

 
 
 
9

 
 
 
3,991

 
 
 
262

 
  Municipalities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated
 
129

 
 
 
12

 
 
 
10

 
 
 
0

 
 
 
119

 
 
 
12

 
  Public utilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
785

 
 
 
27

 
 
 
221

 
 
 
3

 
 
 
564

 
 
 
24

 
  Yen-denominated
 
83

 
 
 
6

 
 
 
0

 
 
 
0

 
 
 
83

 
 
 
6

 
  Sovereign and supranational:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Yen-denominated
 
309

 
 
 
1

 
 
 
309

 
 
 
1

 
 
 
0

 
 
 
0

 
  Banks/financial institutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
362

 
 
 
8

 
 
 
316

 
 
 
5

 
 
 
46

 
 
 
3

 
  Yen-denominated
 
1,507

 
 
 
62

 
 
 
394

 
 
 
4

 
 
 
1,113

 
 
 
58

 
  Other corporate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  U.S. dollar-denominated
 
7,741

 
 
 
418

 
 
 
2,839

 
 
 
50

 
 
 
4,902

 
 
 
368

 
  Yen-denominated
 
440

 
 
 
7

 
 
 
349

 
 
 
4

 
 
 
91

 
 
 
3

 
  Total
 
$
16,685

 
 
 
$
813

 
 
 
$
5,776

 
 
 
$
77

 
 
 
$
10,909

 
 
 
$
736

 

(1) Includes perpetual securities

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's fixed maturity securities investments have been primarily related to general market changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For any significant declines in fair value of its fixed maturity securities, the Company performs a more focused review of the related issuers' credit profile. For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant predictions, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.

Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company.

Other Investments

The table below reflects the composition of the carrying value for other investments as of December 31.
(In millions)
2018
 
2017
Other investments:
 
 
 
 
 
 
 
Transitional real estate loans
 
$
4,377

 
 
 
$
1,235

 
Commercial mortgage loans
 
1,064

 
 
 
908

 
Middle market loans
 
1,478

 
 
 
859

 
Policy loans
 
232

 
 
 
210

 
Short-term investments
 
152

 
 
 
57

 
Other
 
403

 
 
 
133

 
Total other investments
 
$
7,706

 
 
 
$
3,402

 


Loans and Loan Receivables

The Company classifies its TREs, CMLs, and MMLs as held-for investment and includes them in the other investments line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for loan losses. The Company's allowance for loan losses is established using both general and specific allowances. The general allowance is used for loans grouped by similar risk characteristics where a loan-specific or market-specific risk has not been identified, but for which the Company estimates probable incurred losses. The specific allowance is used on an individual loan basis when it is probable that a loss has been incurred. As of December 31, 2018 and 2017, the Company's allowance for loan losses was $27 million and $11 million, respectively. As of December 31, 2018 and 2017, the Company had no loans that were past due in regards to principal and/or interest payments. Additionally, the Company held no loans that were on nonaccrual status or considered impaired as of December 31, 2018 and 2017. The Company had no troubled debt restructurings during the years ended December 31, 2018 and 2017.

Transitional Real Estate Loans

Transitional real estate loans are commercial mortgage loans that are typically relatively short-term floating rate instruments secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile. As of December 31, 2018, the Company had $605 million in outstanding commitments to fund transitional real estate loans. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

As of December 31, 2018, the Company had $25 million in outstanding commitments to fund commercial mortgage loans. These commitments are contingent on the final underwriting and due diligence to be performed.

Middle Market Loans

Middle market loans are generally considered to be below investment grade. The carrying value for middle market loans included an unfunded amount of $56 million and $109 million, as of December 31, 2018, and 2017, respectively, that is reflected in other liabilities on the consolidated balance sheets.

As of December 31, 2018, the Company had commitments of approximately $521 million to fund potential future loan originations related to this investment program. These commitments are contingent upon the availability of middle market loans that meet the Company's underwriting criteria.

Other

Other investments primarily includes investments in limited partnerships. As of December 31, 2018, the Company had $916 million in outstanding commitments to fund alternative investments in limited partnerships.Variable Interest Entities (VIEs)

As a condition of its involvement or investment in a VIE, the Company enters into certain protective rights and covenants that preclude changes in the structure of the VIE that would alter the creditworthiness of the Company's investment or its beneficial interest in the VIE.

For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature. The Company has not, nor has it been, required to purchase any securities issued in the future by these VIEs.

The Company's ownership interest in VIEs is limited to holding the obligations issued by them. The Company has no direct or contingent obligations to fund the limited activities of these VIEs, nor does it have any direct or indirect financial guarantees related to the limited activities of these VIEs. The Company has not provided any assistance or any other type of financing support to any of the VIEs it invests in, nor does it have any intention to do so in the future. For those VIEs in which the Company holds debt obligations, the weighted-average lives of the Company's notes are very similar to the underlying collateral held by these VIEs where applicable.

The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments held in the VIE.

VIEs - Consolidated

The following table presents the cost or amortized cost, fair value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported as of December 31.
Investments in Consolidated Variable Interest Entities
  
2018
 
2017
(In millions)
Cost or Amortized
Cost
 
Fair
Value
 
Cost or Amortized
Cost
 
Fair
Value
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities, available for sale (1)
 
$
3,849

 
 
 
$
4,466

 
 
 
$
4,538

 
 
 
$
5,509

 
Equity securities
 
160

 
 
 
160

 
 
 
606

 
 
 
753

 
Other investments (2)
 
5,856

 
 
 
5,834

 
 
 
2,341

 
 
 
2,328

 
Other assets (3)
 
182

 
 
 
182

 
 
 
151

 
 
 
151

 
Total assets of consolidated VIEs
 
$
10,047

 
 
 
$
10,642

 
 
 
$
7,636

 
 
 
$
8,741

 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other liabilities (3)
 
$
102

 
 
 
$
102

 
 
 
$
128

 
 
 
$
128

 
Total liabilities of consolidated VIEs
 
$
102

 
 
 
$
102

 
 
 
$
128

 
 
 
$
128

 

(1) Includes perpetual securities
(2) Consists of TREs, CMLs, MMLs, and alternative investments in limited partnerships
(3) Consists entirely of derivatives

The Company is substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these VIEs, the Company has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and is therefore considered to be the primary beneficiary of the VIEs that it consolidates. The Company also participates in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps, as appropriate, and utilizing the cash flows from these securities to service its investment. Neither the Company nor any of its creditors are able to obtain the underlying collateral of the VIEs unless there is an event of default or other specified event. For those VIEs that contain a swap, the Company is not a direct counterparty to the swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. The Company's consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and swap contracts, if applicable. With the exception of its investments in unit trust structures, the underlying collateral assets and funding of the Company's consolidated VIEs are generally static in nature.

Investments in Unit Trust Structures

The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes. As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S. GAAP.

VIEs - Not Consolidated

The table below reflects the amortized cost, fair value and balance sheet caption in which the Company's investment in VIEs not consolidated are reported as of December 31.

Investments in Variable Interest Entities Not Consolidated
 
2018
 
2017
(In millions)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities, available for sale (1)
 
$
4,575

 
 
 
$
4,982

 
 
 
$
5,004

 
 
 
$
5,724

 
Fixed maturity securities, held to maturity
 
2,007

 
 
 
2,254

 
 
 
2,549

 
 
 
2,929

 
Other investments
 
49

 
 
 
49

 
 
 
55

 
 
 
55

 
Total investments in VIEs not consolidated
 
$
6,631

 
 
 
$
7,285

 
 
 
$
7,608

 
 
 
$
8,708

 

(1) Includes perpetual securities

The Company holds alternative investments in limited partnerships that have been determined to be VIEs. These partnerships invest in private equity and structured investments. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as Other investments in the consolidated balance sheets.

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations from the VIEs that are irrevocably and unconditionally guaranteed by their corporate parents or sponsors. These VIEs are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the entity or the right to receive benefits from the entity. As such, the Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them.Securities Lending and Pledged Securities

The Company lends fixed maturity and public equity securities to financial institutions in short-term security-lending transactions. These short-term security-lending arrangements increase investment income with minimal risk. The Company's security lending policy requires that the fair value of the securities received as collateral be 102% or more of the fair value of the loaned securities and that unrestricted cash received as collateral be 100% or more of the fair value of the loaned securities. These securities continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. The Company receives cash or other securities as collateral for such loans. For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reported as an asset.

Details of our securities lending activities as of December 31 were as follows:
Securities Lending Transactions Accounted for as Secured Borrowings
2018
Remaining Contractual Maturity of the Agreements
(In millions)
Overnight
and
Continuous(1)
 
Up to 30
days
 
Greater
than 90
days
 
Total
Securities lending transactions:
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Japan government and agencies
$
0

 
$
387

 
$
1,190

 
$
1,577

Municipalities
5

 
0

 
0

 
5

Public utilities
27

 
0

 
0

 
27

Banks/financial institutions
74

 
0

 
0

 
74

Other corporate
549

 
0

 
0

 
549

Equity securities
10

 
0

 
0

 
10

          Total borrowings
$
665

 
$
387

 
$
1,190

 
$
2,242

Gross amount of recognized liabilities for securities lending transactions
 
 
$
1,052

Amounts related to agreements not included in offsetting disclosure in Note 4
 
 
$
1,190

(1) These securities are pledged as collateral under the Company's U.S. securities lending program and can be called at its discretion; therefore, they are classified as Overnight and Continuous.
Securities Lending Transactions Accounted for as Secured Borrowings
2017
Remaining Contractual Maturity of the Agreements
(In millions)
Overnight
and
Continuous(1)
 
Up to 30
days
 
 
Total
Securities lending transactions:
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
Japan government and agencies
$
0

 
$
49

 
 
$
49

Public utilities
73

 
0

 
 
73

Banks/financial institutions
54

 
0

 
 
54

Other corporate
415

 
0

 
 
415

Equity securities
15

 
0

 
 
15

          Total borrowings
$
557

 
$
49

 
 
$
606

Gross amount of recognized liabilities for securities lending transactions
 
$
606

Amounts related to agreements not included in offsetting disclosure in Note 4
 
$
0


(1) These securities are pledged as collateral under the Company's U.S. securities lending program and can be called at its discretion; therefore, they are classified as Overnight and Continuous.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of December 31, 2018 and 2017, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.

At December 31, 2018, debt securities with a fair value of $19 million were on deposit with regulatory authorities in the United States (including U.S. territories) and Japan. The Company retains ownership of all securities on deposit and receives the related investment income.

For general information regarding the Company's investment accounting policies, see Note 1.