XML 45 R30.htm IDEA: XBRL DOCUMENT

INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2018

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

Available-for-Sale Debt Securities

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)

Held-to-Maturity Securities



	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



	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

Equity Securities, FV-NI



	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)

Available-for-sale Securities



	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



	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)

Investments Classified by Contractual Maturity Date

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)

Investment Exposures Exceeding 10 Percent Shareholders Equity

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 securities

Gain (Loss) on Investments

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

Unrealized Gain (Loss) on Investments

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.

Net Effect on Shareholders' Equity of Unrealized Gains and Losses from Investment Securities

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.

Investments 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

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

Securities Lending Transactions Accounted for as Secured Borrowings

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.

Variable Interest Entity, Consolidated

Investments in Variable Interest Entities

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

Variable Interest Entity, Not Consolidated

Investments in Variable Interest Entities

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