LENDING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2017

Composition of Mortgages and other loans receivable

	December 31,			December 31,
(in millions)		2017		2016
Commercial mortgages^*	$	28,596	$	25,042
Residential mortgages		5,398		3,828
Life insurance policy loans		2,295		2,367
Commercial loans, other loans and notes receivable		1,056		2,300
Total mortgage and other loans receivable		37,345		33,537
Allowance for credit losses		(322)		(297)
Mortgage and other loans receivable, net	$	37,023	$	33,240

* Commercial mortgages primarily represent loans for offices, apartments and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 23 percent and 12 percent, respectively, at December 31, 2017, and 24 percent and 12 percent, respectively, at December 31, 2016).

Schedule of debt service coverage ratio and loan-to-value ratio for the commercial mortgage loans

The following table presents debt service coverage ratios and loan-to-value ratios for commercial mortgages:

	Debt Service Coverage Ratios^(a)
(in millions)		>1.20X		1.00X - 1.20X		<1.00X		Total
December 31, 2017
Loan-to-Value Ratios^(b)
Less than 65%	$	18,000	$	1,525	$	351	$	19,876
65% to 75%		6,038		193		184		6,415
76% to 80%		569		40		-		609
Greater than 80%		1,416		206		74		1,696
Total commercial mortgages	$	26,023	$	1,964	$	609	$	28,596

December 31, 2016
Loan-to-Value Ratios^(b)
Less than 65%	$	13,998	$	1,694	$	232	$	15,924
65% to 75%		5,946		575		62		6,583
76% to 80%		1,246		174		47		1,467
Greater than 80%		471		392		205		1,068
Total commercial mortgages	$	21,661	$	2,835	$	546	$	25,042

(a) The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio was 2.1X and 1.9X at December 31, 2017 and 2016, respectively.

(b) The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 57 percent and 58 percent at December 31, 2017, and 2016, respectively.

Schedule of credit quality indicators for the commercial mortgage loans

	Number															Percent
December 31, 2017	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total^(c)	Total $
Credit Quality Performance
Indicator:
In good standing	778	$	8,163	$	8,585	$	5,338	$	2,023	$	2,373	$	1,960	$	28,442	99	%
Restructured^(a)	5		-		115		23		-		16		-		154	1
90 days or less delinquent	-		-		-		-		-		-		-		-	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total^(b)	783	$	8,163	$	8,700	$	5,361	$	2,023	$	2,389	$	1,960	$	28,596	100	%
Allowance for credit losses:
Specific			-		3		1		-		1		-		5	-	%
General			72		94		37		6		15		18		242	1
Total allowance for credit losses		$	72	$	97	$	38	$	6	$	16	$	18	$	247	1	%
December 31, 2016
(dollars in millions)
Credit Quality Performance
Indicator:
In good standing	784	$	6,005	$	7,830	$	5,179	$	1,898	$	2,373	$	1,589	$	24,874	99	%
Restructured^(a)	4		-		134		18		-		16		-		168	1
90 days or less delinquent	-		-		-		-		-		-		-		-	-
>90 days delinquent or in
process of foreclosure	-		-		-		-		-		-		-		-	-
Total^(b)	788	$	6,005	$	7,964	$	5,197	$	1,898	$	2,389	$	1,589	$	25,042	100	%
Allowance for credit losses:
Specific		$	-	$	3	$	1	$	6	$	1	$	-	$	11	-	%
General			35		72		41		7		13		15		183	1
Total allowance for credit losses		$	35	$	75	$	42	$	13	$	14	$	15	$	194	1	%

(a) Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings see below.

(b) Does not reflect allowance for credit losses.

(c) Our commercial mortgage loan portfolio is current as to payments of principal and interest, for both periods presented. There were no significant amounts of nonperforming commercial mortgages (defined as those loans where payment of contractual principal or interest is more than 90 days past due) during any of the periods presented.

Schedule of changes in the allowance for losses on Mortgage and other loans receivable

	2017						2016						2015
Years Ended December 31,		Commercial		Other				Commercial		Other				Commercial		Other
(in millions)		Mortgages		Loans		Total		Mortgages		Loans		Total		Mortgages		Loans		Total
Allowance, beginning of year	$	194	$	103	$	297	$	171	$	137	$	308	$	159	$	112	$	271
Loans charged off		(22)		(3)		(25)		(13)		(2)		(15)		(23)		(6)		(29)
Recoveries of loans previously
charged off		-		1		1		11		-		11		4		1		5
Net charge-offs		(22)		(2)		(24)		(2)		(2)		(4)		(19)		(5)		(24)
Provision for loan losses		75		(26)		49		25		(32)		(7)		31		27		58
Other		-		-		-		-		-		-		-		3		3
Allowance, end of year	$	247 ^*	$	75	$	322	$	194 ^*	$	103	$	297	$	171 ^*	$	137	$	308

* Of the total allowance at the end of the year, $5 million, $11 million and $24 million relates to individually assessed credit losses on $82 million, $280 million and $507 million of commercial mortgages as of December 31, 2017, 2016 and 2015, respectively.