Investments (Tables)

12 Months Ended

Dec. 31, 2015

Net Investment Income and Investment Gains (Losses)

Net investment income is as follows:


Year Ended December 31	2015			2014			2013
(In millions)
Fixed maturity securities	$	1,751		$	1,803		$	1,827
Limited partnership investments		119			304			519
Short term investments		11			4			5
Equity securities		12			12			12
Income from trading portfolio (a)		2			64			90
Other		34			34			25

Total investment income		1,929			2,221			2,478
Investment expenses		(63	)		(58	)		(53	)

Net investment income	$	1,866		$	2,163		$	2,425

(a)	Includes net unrealized gains (losses) related to changes in fair value on trading securities still held of $(46), $42 and $(2) for the years ended December 31, 2015, 2014 and 2013.

Investment gains (losses) are as follows:


Year Ended December 31	2015			2014			2013
(In millions)
Fixed maturity securities	$	(66	)	$	41		$	41
Equity securities		(23	)		1			(22	)
Derivative instruments		10			(1	)		(9	)
Short term investments and other		8			13			6

Investment gains (losses) (a)	$	(71	)	$	54		$	16

(a)	Includes gross realized gains of $133, $178 and $198 and gross realized losses of $222, $136 and $179 on available-for-sale securities for the years ended December 31, 2015, 2014 and 2013.

Schedule of Net Change in Unrealized Gains (Losses) on Available-for-Sale Investments

Net change in unrealized gains (losses) on available-for-sale investments is as follows:


Year Ended December 31	2015			2014		2013
(In millions)
Fixed maturity securities	$	(1,114	)	$	1,511	$	(2,541	)
Equity securities		(6	)		6		(15	)
Other		1

Total net change in unrealized gains (losses) on available-for-sale investments	$	(1,119	)	$	1,517	$	(2,556	)

Components of OTTI Losses Recognized in Earnings by Asset Type

The components of OTTI losses recognized in earnings by asset type are as follows:


Year Ended December 31	2015		2014		2013
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	104	$	18	$	20
States, municipalities and political subdivisions		18		46
Asset-backed:
Residential mortgage-backed		8		5		19
Other asset-backed		1		1		2

Total asset-backed		9		6		21

Total fixed maturities available-for-sale		131		70		41

Equity securities available-for-sale:
Common stock		25		7		8
Preferred stock						26

Total equity securities available-for-sale		25		7		34

Short term investments						1

Net OTTI losses recognized in earnings	$	156	$	77	$	76

Amortized Cost and Fair Values of Securities

The amortized cost and fair values of securities are as follows:


December 31, 2015	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)

(In millions)

Fixed maturity securities:
Corporate and other bonds	$	17,097	$	1,019	$	347	$	17,769
States, municipalities and political subdivisions		11,729		1,453		8		13,174	$	(4	)
Asset-backed:
Residential mortgage-backed		4,935		154		17		5,072		(37	)
Commercial mortgage-backed		2,154		55		12		2,197
Other asset-backed		923		6		8		921

Total asset-backed		8,012		215		37		8,190		(37	)
U.S. Treasury and obligations of government- sponsored enterprises		62		5				67
Foreign government		334		13		1		346
Redeemable preferred stock		33		2				35

Fixed maturities available-for-sale		37,267		2,707		393		39,581		(41	)
Fixed maturities, trading		140				20		120

Total fixed maturities		37,407		2,707		413		39,701		(41	)

Equity securities:
Common stock		46		3		1		48
Preferred stock		145		7		3		149

Equity securities available-for-sale		191		10		4		197		-
Equity securities, trading		633		56		134		555

Total equity securities		824		66		138		752		-

Total	$	38,231	$	2,773	$	551	$	40,453	$	(41	)


December 31, 2014


Fixed maturity securities:
Corporate and other bonds	$	17,226	$	1,721	$	61	$	18,886
States, municipalities and political subdivisions		11,285		1,463		8		12,740
Asset-backed:
Residential mortgage-backed		5,028		218		13		5,233	$	(53	)
Commercial mortgage-backed		2,056		93		5		2,144		(2	)
Other asset-backed		1,234		11		10		1,235

Total asset-backed		8,318		322		28		8,612		(55	)
U.S. Treasury and obligations of government-sponsored enterprises		26		5				31
Foreign government		438		16				454
Redeemable preferred stock		39		3				42

Fixed maturities available-for-sale		37,332		3,530		97		40,765		(55	)
Fixed maturities, trading		137				17		120

Total fixed maturities		37,469		3,530		114		40,885		(55	)

Equity securities:
Common stock		38		9				47
Preferred stock		172		5		2		175

Equity securities available-for-sale		210		14		2		222		-
Equity securities, trading		523		96		113		506

Total equity securities		733		110		115		728		-

Total	$	38,202	$	3,640	$	229	$	41,613	$	(55	)

Securities Available-for-Sale in Gross Unrealized Loss Position

The available-for-sale securities in a gross unrealized loss position are as follows:


	Less than 12 Months				12 Months or Longer				Total
December 31, 2015	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
(In millions)
Fixed maturity securities:
Corporate and other bonds	$	4,882	$	302	$	174	$	45	$	5,056	$	347
States, municipalities and political subdivisions		338		8		75				413		8
Asset-backed:
Residential mortgage-backed		963		9		164		8		1,127		17
Commercial mortgage-backed		652		10		96		2		748		12
Other asset-backed		552		8		5				557		8

Total asset-backed		2,167		27		265		10		2,432		37
U.S. Treasury and obligations of government- sponsored enterprises		4								4
Foreign government		54		1						54		1
Redeemable preferred stock		3								3

Total fixed maturity securities		7,448		338		514		55		7,962		393
Common stock		3		1						3		1
Preferred stock		13		3						13		3

Total	$	7,464	$	342	$	514	$	55	$	7,978	$	397


December 31, 2014
Fixed maturity securities:
Corporate and other bonds	$	1,330	$	46	$	277	$	15	$	1,607	$	61
States, municipalities and political subdivisions		335		5		127		3		462		8
Asset-backed:
Residential mortgage-backed		293		5		189		8		482		13
Commercial mortgage-backed		264		2		99		3		363		5
Other asset-backed		607		10		7				614		10

Total asset-backed		1,164		17		295		11		1,459		28
U.S. Treasury and obligations of government- sponsored enterprises		3				4				7
Foreign government		3				3				6
Redeemable preferred stock		3								3

Total fixed maturity securities		2,838		68		706		29		3,544		97
Preferred stock		17		2		1				18		2

Total	$	2,855	$	70	$	707	$	29	$	3,562	$	99

Pretax Credit Loss Component Reflected in Retained Earnings on Fixed Maturity Securities

The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at December 31, 2015, 2014 and 2013 for which a portion of an OTTI loss was recognized in Other comprehensive income.


Year Ended December 31	2015			2014			2013
(In millions)
Beginning balance of credit losses on fixed maturity securities	$	62		$	74		$	95
Additional credit losses for securities for which an OTTI loss was previously recognized								2
Reductions for securities sold during the period		(9	)		(9	)		(23	)
Reductions for securities the Company intends to sell or more likely than not will be required to sell					(3	)

Ending balance of credit losses on fixed maturity securities	$	53		$	62		$	74

Available-for-Sale Fixed Maturity Securities by Contractual Maturity

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


December 31	2015				2014

	Cost or				Cost or
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value

(In millions)

Due in one year or less	$	1,574	$	1,595	$	2,479	$	2,511
Due after one year through five years		7,738		8,082		9,070		9,621
Due after five years through ten years		14,652		14,915		12,055		12,584
Due after ten years		13,303		14,989		13,728		16,049

Total	$	37,267	$	39,581	$	37,332	$	40,765

Summary of Aggregate Contractual or Notional Amount and Estimated Fair Value Related to Derivative Financial Instruments

The following tables present the aggregate contractual or notional amount and estimated fair value related to derivative financial instruments.


December 31	2015							2014

	Contractual/							Contractual/
	Notional		Estimated Fair Value					Notional		Estimated Fair Value
	Amount		Asset		(Liability)			Amount		Asset		(Liability)

(In millions)

With hedge designation:

Foreign exchange:
Currency forwards – short								$	70			$	(5	)

Without hedge designation:

Equity markets:
Options – purchased	$	501	$	16					544	$	24
– written		614			$	(28	)		292				(21	)
Futures – long		312				(1	)
Futures – short									130		2
Interest rate risk:
Futures – long		63
Foreign exchange:
Currency forwards – long		133		2					109				(3	)
– short		152							88		2
Currency options – long		550		7					151		7
Embedded derivative on funds
withheld liability		179		5					184				(3	)