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DERIVATIVE INSTRUMENTS (Tables)
 12 Months Ended
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

2018
 
2017
(In millions)
 
 
 
 
Asset
Derivatives
 
Liability
Derivatives
 
 
Asset
Derivatives
 
Liability
Derivatives
Hedge Designation/ Derivative
Type
Notional
Amount
 
Fair Value
 
Fair Value
Notional
Amount
 
Fair Value
 
Fair Value
Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency swaps
 
$
75

 
 
 
$
1

 
 
 
$
(4
)
 
 
$
75

 
 
 
$
0

 
 
 
$
(8
)
 
Total cash flow hedges
 
75

 
 
 
1

 
 
 
(4
)
 
 
75

 
 
 
0

 
 
 
(8
)
 
Fair value hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forwards
 
2,086

 
 
 
0

 
 
 
(34
)
 
 
7,640

 
 
 
2

 
 
 
(221
)
 
Foreign currency options
 
9,070

 
 
 
3

 
 
 
(1
)
 
 
7,670

 
 
 
0

 
 
 
(2
)
 
Interest rate swaptions
 
500

 
 
 
0

 
 
 
(1
)
 
 
0

 
 
 
0

 
 
 
0

 
Total fair value hedges
 
11,656

 
 
 
3

 
 
 
(36
)
 
 
15,310

 
 
 
2

 
 
 
(223
)
 
Net investment hedge:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forwards
 
0

 
 
 
0

 
 
 
0

 
 
5

 
 
 
0

 
 
 
0

 
Foreign currency options
 
0

 
 
 
0

 
 
 
0

 
 
434

 
 
 
12

 
 
 
(1
)
 
Total net investment hedge
 
0

 
 
 
0

 
 
 
0

 
 
439

 
 
 
12

 
 
 
(1
)
 
Non-qualifying strategies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency swaps
 
5,387

 
 
 
284

 
 
 
(230
)
 
 
5,386

 
 
 
296

 
 
 
(189
)
 
Foreign currency forwards
 
16,057

 
 
 
126

 
 
 
(117
)
 
 
3,683

 
 
 
20

 
 
 
(53
)
 
Foreign currency options
 
430

 
 
 
0

 
 
 
0

 
 
770

 
 
 
0

 
 
 
0

 
Credit default swaps
 
0

 
 
 
0

 
 
 
0

 
 
88

 
 
 
1

 
 
 
0

 
Interest rate swaps
 
4,750

 
 
 
3

 
 
 
0

 
 
0

 
 
 
0

 
 
 
0

 
Total non-qualifying strategies
 
26,624

 
 
 
413

 
 
 
(347
)
 
 
9,927

 
 
 
317

 
 
 
(242
)
 
Total derivatives
 
$
38,355

 
 
 
$
417

 
 
 
$
(387
)
 
 
$
25,751

 
 
 
$
331

 
 
 
$
(474
)
 
Balance Sheet Location
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
$
23,713

 
 
 
$
417

 
 
 
$
0

 
 
$
10,948

 
 
 
$
331

 
 
 
$
0

 
Other liabilities
 
14,642

 
 
 
0

 
 
 
(387
)
 
 
14,803

 
 
 
0

 
 
 
(474
)
 
Total derivatives
 
$
38,355

 
 
 
$
417

 
 
 
$
(387
)
 
 
$
25,751

 
 
 
$
331

 
 
 
$
(474
)
 
Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location The following table presents the gains and losses on derivatives and the related hedged items in fair value hedges for the years ended December 31.

Fair Value Hedging Relationships
(In millions)
 
 
Hedging Derivatives
 
Hedged Items
 
 
Hedging Derivatives
Hedged Items
 
Total
Gains
(Losses)
 
Gains (Losses)
Excluded from Effectiveness Testing(2)
 
Gains (Losses)
Included in Effectiveness Testing(1)
 
 Gains (Losses) (1)
 
Net Realized Gains (Losses) Recognized for Fair Value Hedge
2018:
 
 
 
 
 
 
 
 
 
 
Foreign currency
forwards
Fixed maturity securities
 
$
126

 
$
(104
)
 
$
230

 
$
(242
)
 
$
(12
)
Foreign currency
options
Fixed maturity securities
 
4

 
4

 
0

 
0

 
0

Interest rate
swaptions
Fixed maturity securities
 
(1
)
 
(1
)
 
0

 
0

 
0

   Total gains (losses)
 
$
129

 
$
(101
)
 
$
230

 
$
(242
)
 
$
(12
)
2017:
 
 
 
 
 
 
 
Foreign currency forwards
Fixed maturity and equity securities
 
$
98

 
$
(202
)
 
$
300

 
$
(278
)
 
$
22

Foreign currency options
Fixed maturity securities
 
21

 
10

 
11

 
(10
)
 
1

    Total gains (losses)
 
$
119

 
$
(192
)
 
$
311

 
$
(288
)
 
$
23

2016:
 
 
 
 
 
 
 
Foreign currency forwards
Fixed maturity and equity securities
 
$
207

 
$
(338
)
 
$
545

 
$
(566
)
 
$
(21
)
Foreign currency options
Fixed maturity securities
 
(95
)
 
(18
)
 
(77
)
 
70

 
(7
)
    Total gains (losses)
 
$
112

 
$
(356
)
 
$
468

 
$
(496
)
 
$
(28
)

(1) Gains and losses on foreign currency forwards and options and related hedged items are reported in the consolidated statement of earnings as realized investment gains (losses). For interest rate swaptions and related hedged items, gains and losses included in the hedge assessment are reported within net investment income. For the year ended December 31, 2018, those gains and losses on interest rate swaptions and related hedged items were immaterial.
(2) Gains (losses) excluded from effectiveness testing includes the forward point on foreign currency forwards and time value change on foreign currency options which are reported in the consolidated statement of earnings as realized investment gains (losses). It also includes the change in the fair value of the interest rate swaptions related to the time value of the swaptions which is recognized as a component of other comprehensive income (loss).
Schedule of Interest Rate Fair Value Hedges Hedged Items The following table shows the December 31, 2018 carrying amounts of assets designated and qualifying as hedged items in fair value hedges of interest rate risk and the related cumulative hedge adjustment included in the carrying amount.
(In millions)
Carrying Amount of the Hedged Assets/(Liabilities)(1)
 
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities)
 
 
2018
 
 
 
2018
 
Fixed maturity securities
 
$
6,593

 
 
 
$
294

 
(1) The balance includes $294 million of hedging adjustment on discontinued hedging relationships.
As of December 31, 2018, the total notional amount of the Company's interest rate swaptions was $500 million. The hedging adjustment related to these derivatives was immaterial.
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance The following table summarizes the impact to realized investment gains (losses) and other comprehensive income (loss) from all derivatives and hedging instruments for the years ended December 31.
 
2018
2017
2016
(In millions)
Realized Investment
Gains (Losses)
Other
Comprehensive
Income (Loss)(1)
Realized Investment
Gains (Losses)
Other
Comprehensive
Income (Loss)(1)
Realized
Investment
Gains (Losses)
Other
Comprehensive
Income (Loss)(1)
Qualifying hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       Foreign currency swaps
 
$
0

 
 
$
3

 
 
$
0

 
 
$
1

 
 
$
1

 
 
$
3

 
  Total cash flow hedges
 
0

(2) 
 
3

 
 
0

(2) 
 
1

 
 
1

(2) 
 
3

 
  Fair value hedges:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       Foreign currency forwards (3)
 
(116
)
 
 
 
 
 
(180
)
 
 
 
 
 
(359
)
 
 
 
 
       Foreign currency options (3)
 
4

 
 
 
 
 
11

 
 
 
 
 
(25
)
 
 
 
 
       Interest rate swaptions (3)
 
0

 
 
(1
)
 
 
0

 
 
0

 
 
0

 
 
0

 
  Total fair value hedges
 
(112
)
 
 
(1
)
 
 
(169
)
 
 
0

 
 
(384
)
 
 
0

 
  Net investment hedge:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       Non-derivative hedging
instruments
 
0

 
 
(32
)
 
 
0

 
 
(15
)
 
 
0

 
 
0

 
       Foreign currency forwards
 
0

 
 
0

 
 
0

 
 
(25
)
 
 
0

 
 
(118
)
 
       Foreign currency options
 
0

 
 
(8
)
 
 
0

 
 
5

 
 
0

 
 
73

 
   Total net investment hedge
 
0

 
 
(40
)
 
 
0

 
 
(35
)
 
 
0

 
 
(45
)
 
  Non-qualifying strategies:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       Foreign currency swaps
 
20

 
 
 
 
 
53

 
 
 
 
 
117

 
 
 
 
       Foreign currency forwards
 
(135
)
 
 
 
 
 
8

 
 
 
 
 
9

 
 
 
 
       Credit default swaps
 
0

 
 
 
 
 
(1
)
 
 
 
 
 
2

 
 
 
 
       Interest rate swaps
 
3

 
 
 
 
 
0

 
 
 
 
 
0

 
 
 
 
  Total non- qualifying strategies
 
(112
)
 
 
 
 
 
60

 
 
 
 
 
128

 
 
 
 
          Total
 
$
(224
)
 
 
$
(38
)
 
 
$
(109
)
 
 
$
(34
)
 
 
$
(255
)
 
 
$
(42
)
 
(1) Cash flow hedge items and the change in the fair value of interest rate swaptions related to the time value of the swaptions in fair value hedges are recorded as unrealized gains (losses) on derivatives and net investment hedge items are recorded in the unrealized foreign currency translation gains (losses) line in the consolidated statement of comprehensive income (loss).
(2) Impact of cash flow hedges reported as realized investment gains (losses) includes an immaterial amount of gains or losses reclassified from accumulated other comprehensive income (loss) into earnings. It also includes an immaterial amount excluded from effectiveness testing during the years ended December 31, 2018 and 2017 and $1 million during the year ended December 31, 2016.
(3)Impact shown net of effect of hedged items (see Fair Value Hedges section of this Note 4 for further detail)
Fair Value and Notional Amount of Derivatives with Counterparty Credit Risk The counterparties to these derivatives are financial institutions with the following credit ratings as of December 31:
 
2018
2017
(In millions)
Notional Amount
of Derivatives
Asset Derivatives
Fair Value
Liability Derivatives
Fair Value
Notional Amount
of Derivatives
Asset Derivatives
Fair Value
Liability Derivatives
Fair Value
Counterparties' credit rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
$
5,399

 
 
$
63

 
 
$
(23
)
 
 
$
4,708

 
 
$
52

 
 
$
(37
)
 
A
 
32,513

 
 
350

 
 
(311
)
 
 
20,604

 
 
271

 
 
(370
)
 
BBB
 
443

 
 
4

 
 
(53
)
 
 
439

 
 
8

 
 
(67
)
 
Total
 
$
38,355

 
 
$
417

 
 
$
(387
)
 
 
$
25,751

 
 
$
331

 
 
$
(474
)
 
Offsetting Assets Offsetting of Financial Assets and Derivative Assets
2018
 
 
 
Gross Amounts Not Offset
in Balance Sheet
 
 
(In millions)
Gross Amount of Recognized Assets
 
Gross Amount
Offset in
Balance Sheet
 
Net Amount of Assets Presented
 in Balance Sheet
 
Financial Instruments
 
Securities
Collateral
 
Cash Collateral Received
 
Net Amount
Derivative
  assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Derivative
      assets subject to a
      master netting
      agreement or
      offsetting
      arrangement
 

 
 
 

 
 
 

 
 
 

 
 


 
 

 
 
 

 
          OTC - bilateral
 
$
231

 
 
 
$
0

 
 
 
$
231

 
 
 
$
(152
)
 
 
$
(23
)
 
 
$
(55
)
 
 
 
$
1

 
          OTC - cleared
 
3

 
 
 
0

 
 
 
3

 
 
 
0

 
 
0

 
 
(3
)
 
 
 
0

 
    Total derivative
assets subject to a
master netting
agreement or
offsetting
arrangement
 
234

 
 
 
0

 
 
 
234

 
 
 
(152
)
 
 
(23
)
 
 
(58
)
 
 
 
1

 
    Derivative
      assets not subject
      to a master netting
      agreement or
      offsetting
      arrangement
 

 
 
 

 
 
 

 
 
 

 
 


 
 

 
 
 

 
          OTC - bilateral
 
183

 
 
 
 
 
 
 
183

 
 
 
 
 
 
 
 
 
 
 
 
 
183

 
    Total derivative
assets not subject
to a master netting
agreement or
offsetting
arrangement
 
183

 
 
 
 
 
 
 
183

 
 
 
 
 
 
 
 
 
 
 
 
 
183

 
    Total derivative
      assets
 
417

 
 
 
0

 
 
 
417

 
 
 
(152
)
 
 
(23
)
 
 
(58
)
 
 
 
184

 
Securities lending
   and similar
   arrangements
 
1,029

 
 
 
0

 
 
 
1,029

 
 
 
0

 
 
0

 
 
(1,029
)
 
 
 
0

 
    Total
 
$
1,446

 
 
 
$
0

 
 
 
$
1,446

 
 
 
$
(152
)
 
 
$
(23
)
 
 
$
(1,087
)
 
 
 
$
184

 


2017
 
 
 
Gross Amounts Not Offset
in Balance Sheet
 
 
(In millions)
Gross Amount of Recognized Assets
 
Gross Amount Offset in Balance Sheet
 
Net Amount of Assets Presented in Balance Sheet
 
Financial
Instruments
Securities Collateral
Cash Collateral Received
 
Net Amount
Derivative
  assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Derivative
      assets subject to a
      master netting
      agreement or
      offsetting
      arrangement
 


 
 
 


 
 
 


 
 
 


 
 


 
 


 
 
 

 
          OTC - bilateral
 
$
180

 
 
 
$
0

 
 
 
$
180

 
 
 
$
(82
)
 
 
$
0

 
 
$
(98
)
 
 
 
$
0

 
    Total derivative
assets subject to a
master netting
agreement or
offsetting
arrangement
 
180

 
 
 
0

 
 
 
180

 
 
 
(82
)
 
 
0

 
 
(98
)
 
 
 
0

 
    Derivative
      assets not subject
      to a master netting
      agreement or
      offsetting
      arrangement
 


 
 
 
 
 
 
 


 
 
 


 
 


 
 


 
 
 

 
          OTC - bilateral
 
151

 
 
 
 
 
 
 
151

 
 
 
 
 
 
 
 
 
 
 
 
 
151

 
    Total derivative
assets not subject
to a master netting
agreement or
offsetting
arrangement
 
151

 
 
 
 
 
 
 
151

 
 
 
 
 
 
 
 
 
 
 
 
 
151

 
    Total derivative
      assets
 
331

 
 
 
0

 
 
 
331

 
 
 
(82
)
 
 
0

 
 
(98
)
 
 
 
151

 
Securities lending
   and similar
   arrangements
 
592

 
 
 
0

 
 
 
592

 
 
 
0

 
 
0

 
 
(592
)
 
 
 
0

 
    Total
 
$
923

 
 
 
$
0

 
 
 
$
923

 
 
 
$
(82
)
 
 
$
0

 
 
$
(690
)
 
 
 
$
151

 
Offsetting Liabilities Offsetting of Financial Liabilities and Derivative Liabilities
2018
 
 
 
Gross Amounts Not Offset
in Balance Sheet
 
 
(In millions)
Gross Amount of Recognized Liabilities
 
Gross Amount Offset in Balance Sheet
 
Net Amount of Liabilities Presented in Balance Sheet
 
Financial Instruments
 
Securities Collateral
 
Cash Collateral Pledged
 
Net Amount
Derivative
  liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Derivative
      liabilities subject
      to a master netting
      agreement or
      offsetting
      arrangement
 


 
 
 


 
 
 


 
 
 


 
 


 
 


 
 
 


 
          OTC - bilateral
 
$
(285
)
 
 
 
$
0

 
 
 
$
(285
)
 
 
 
$
152

 
 
$
37

 
 
$
68

 
 
 
$
(28
)
 
    Total derivative
liabilities subject
to a master netting
agreement or
offsetting
arrangement
 
(285
)
 
 
 
0

 
 
 
(285
)
 
 
 
152

 
 
37

 
 
68

 
 
 
(28
)
 
    Derivative
      liabilities not
      subject to a
      master netting
      agreement or
      offsetting
      arrangement
 


 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 


 
          OTC - bilateral
 
(102
)
 
 
 
 
 
 
 
(102
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(102
)
 
    Total derivative
liabilities not
subject to a
master netting
agreement or
offsetting
arrangement
 
(102
)
 
 
 
 
 
 
 
(102
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(102
)
 
    Total derivative
      liabilities
 
(387
)
 
 
 
0

 
 
 
(387
)
 
 
 
152

 
 
37

 
 
68

 
 
 
(130
)
 
Securities lending
   and similar
   arrangements
 
(1,052
)
 
 
 
0

 
 
 
(1,052
)
 
 
 
1,029

 
 
0

 
 
0

 
 
 
(23
)
 
    Total
 
$
(1,439
)
 
 
 
$
0

 
 
 
$
(1,439
)
 
 
 
$
1,181

 
 
$
37

 
 
$
68

 
 
 
$
(153
)
 


2017
 
 
 
Gross Amounts Not Offset
in Balance Sheet
 
 
(In millions)
Gross Amount of Recognized Liabilities
 
Gross Amount Offset in Balance Sheet
 
Net Amount of Liabilities Presented in Balance Sheet
 
Financial Instruments
 
Securities Collateral
 
Cash Collateral Pledged
 
Net Amount
Derivative
  liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Derivative
      liabilities subject
      to a master netting
      agreement or
      offsetting
      arrangement
 


 
 
 


 
 
 


 
 
 


 
 


 
 


 
 
 

 
          OTC - bilateral
 
$
(346
)
 
 
 
$
0

 
 
 
$
(346
)
 
 
 
$
82

 
 
$
245

 
 
$
10

 
 
 
$
(9
)
 
    Total derivative
liabilities subject
to a master netting
agreement or
offsetting
arrangement
 
(346
)
 
 
 
0

 
 
 
(346
)
 
 
 
82

 
 
245

 
 
10

 
 
 
(9
)
 
    Derivative
      liabilities not
      subject to a
      master netting
      agreement or
      offsetting
      arrangement
 


 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 

 
          OTC - bilateral
 
(128
)
 
 
 
 
 
 
 
(128
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(128
)
 
    Total derivative
liabilities not
subject to a
master netting
agreement or
offsetting
arrangement
 
(128
)
 
 
 
 
 
 
 
(128
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(128
)
 
    Total derivative
      liabilities
 
(474
)
 
 
 
0

 
 
 
(474
)
 
 
 
82

 
 
245

 
 
10

 
 
 
(137
)
 
Securities lending
   and similar
   arrangements
 
(606
)
 
 
 
0

 
 
 
(606
)
 
 
 
592

 
 
0

 
 
0

 
 
 
(14
)
 
    Total
 
$
(1,080
)
 
 
 
$
0

 
 
 
$
(1,080
)
 
 
 
$
674

 
 
$
245

 
 
$
10

 
 
 
$
(151
)