Investments (Tables)

6 Months Ended

Jun. 30, 2016

Text Block [Abstract]

Net Investment Income and Investment Gains (Losses)

Net investment income is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
(In millions)
Fixed maturity securities	$	449		$	452		$	895		$	895
Limited partnership investments		47			50			7			210
Short term investments		2						5			3
Equity securities		4			3			7			6
Income (loss) from trading portfolio (a)		87			11			102			(4	)
Other		13			9			22			17
Total investment income		602			525			1,038			1,127
Investment expenses		(15	)		(15	)		(29	)		(29	)
Net investment income	$	587		$	510		$	1,009		$	1,098

(a) Includes net unrealized gains (losses) related to changes in fair value on trading securities still held of $60, $(10), $81 and $(17) for the three and six months ended June 30, 2016 and 2015.

Investment gains (losses) are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
(In millions)
Fixed maturity securities	$	4		$	(12	)	$	(13	)
Equity securities		3			(1	)		(2	)	$	(1)
Derivative instruments		(6	)		11			(13	)		10
Short term investments and other								1			(1)
Investment gains (losses) (a)	$	1		$	(2	)	$	(27	)	$	8

(a) Includes gross realized gains of $44, $36, $89 and $70 and gross realized losses of $37, $49, $104 and $71 on available-for-sale securities for the three and six months ended June 30, 2016 and 2015.

Components of Net Other-than-Temporary Impairment Losses Recognized in Earnings by Asset Type

The components of net other-than-temporary impairment (“OTTI”) losses recognized in earnings by asset type are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	13	$	11	$	29	$	16
States, municipalities and political subdivisions				13				18
Asset-backed:
Residential mortgage-backed		1		5		1		6
Other asset-backed		1		1		3		1
Total asset-backed		2		6		4		7
Total fixed maturities available-for-sale		15		30		33		41
Equity securities available-for-sale - common stock						5		1
Short term investments				1				1
Net OTTI losses recognized in earnings	$	15	$	31	$	38	$	43

Amortized Cost and Fair Values of Securities

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

June 30, 2016	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		$    17,613		$    1,684		$      93		$    19,204		$       (1)
States, municipalities and political subdivisions		11,661		2,114		2		13,773		(25)
Asset-backed:
Residential mortgage-backed		4,994		215		20		5,189		(21)
Commercial mortgage-backed		2,080		91		8		2,163
Other asset-backed		928		8		5		931
Total asset-backed		8,002		314		33		8,283		(21)
U.S. Treasury and obligations of government-sponsored enterprises		81		11				92
Foreign government		438		22				460
Redeemable preferred stock		33		2				35
Fixed maturities available-for-sale		37,828		4,147		128		41,847		(47)
Fixed maturities trading		457		4		1		460
Total fixed maturities		38,285		4,151		129		42,307		(47)
Equity securities:
Common stock		20		5		2		23
Preferred stock		97		6		3		100
Equity securities available-for-sale		117		11		5		123		-
Equity securities trading		525		108		89		544
Total equity securities		642		119		94		667		-
Total		$    38,927		$    4,270		$      223		$    42,974		$     (47)
December 31, 2015
(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)

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
June 30, 2016	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	$	1,032	$	43	$	562	$	50	$	1,594	$	93
States, municipalities and political subdivisions		68		2		10				78		2
Asset-backed:
Residential mortgage-backed		293		8		234		12		527		20
Commercial mortgage-backed		386		7		118		1		504		8
Other asset-backed		306		5		5				311		5
Total asset-backed		985		20		357		13		1,342		33
Foreign government		8				5				13
Total fixed maturity securities		2,093		65		934		63		3,027		128
Common stock		4		2						4		2
Preferred stock		23		3						23		3
Total	$	2,120	$	70	$	934	$	63	$	3,054	$	133
December 31, 2015
(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

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 as of June 30, 2016 and 2015 for which a portion of an OTTI loss was recognized in Other comprehensive income.

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
(In millions)
Beginning balance of credit losses on fixed maturity securities	$	48		$	61		$	53		$	62
Reductions for securities sold during the period		(7	)		(2	)		(12	)		(3	)
Ending balance of credit losses on fixed maturity securities	$	41		$	59		$	41		$	59

Available-for-Sale Fixed Maturity Securities by Contractual Maturity

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

	June 30, 2016				December 31, 2015
	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
(In millions)
Due in one year or less	$	1,817	$	1,855	$	1,574	$	1,595
Due after one year through five years		8,616		9,114		7,738		8,082
Due after five years through ten years		14,583		15,466		14,652		14,915
Due after ten years		12,812		15,412		13,303		14,989
Total	$	37,828	$	41,847	$	37,267	$	39,581

Summary of Aggregate Contractual or Notional Amounts and Gross Estimated Fair Values Related to Derivative Financial Instruments

A summary of the aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments follows. The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under the agreements and may not be representative of the potential for gain or loss on these instruments. Gross estimated fair values of derivative positions are currently presented in Equity securities, Receivables and Payable to brokers on the Consolidated Condensed Balance Sheets.

	June 30, 2016						December 31, 2015
	Contractual/						Contractual/
	Notional		Estimated Fair Value				Notional		Estimated Fair Value
	Amount		Asset		(Liability)		Amount		Asset		(Liability)
(In millions)
Without hedge designation:
Equity markets:
Options – purchased		$     229		$        24				$ 501		$  16
– written		198				$        (10)		614				$  (28)
Futures – long								312				(1)
– short		51				(1)
Interest rate risk:
Futures – long								63
Foreign exchange:
Currency forwards – long								133		2
– short								152
Currency options – long		250		1				550		7
Commodities:
Futures – long		62				(1)
Swaps – short		50
Embedded derivative on funds withheld liability		177				(8)		179		5