Fair Value (Tables)

6 Months Ended

Jun. 30, 2018

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises and foreign governments and redeemable preferred stock.


June 30, 2018	Level 1				Level 2			Level 3			Total
(In millions)

Fixed maturity securities:
Corporate bonds and other		$	166			$	18,932		$	94		$	19,192
States, municipalities and political subdivisions							12,008			1			12,009
Asset-backed							8,304			273			8,577
Fixed maturities available-for-sale			166				39,244			368			39,778
Fixed maturities trading							656			7			663
Total fixed maturities		$	166			$	39,900		$	375		$	40,441


Equity securities		$	683			$	604		$	18		$	1,305
Short term and other			3,361				1,050						4,411
Receivables							19						19
Payable to brokers			(11	)									(11	)

December 31, 2017

Fixed maturity securities:
Corporate bonds and other		$	128			$	19,145		$	98		$	19,371
States, municipalities and political subdivisions							14,026			1			14,027
Asset-backed							7,751			335			8,086
Fixed maturities available-for-sale			128				40,922			434			41,484
Fixed maturities trading			10				635			4			649
Total fixed maturities		$	138			$	41,557		$	438		$	42,133


Equity securities available-for-sale		$	91			$	584		$	20		$	695
Equity securities trading			527							2			529
Total equity securities		$	618			$	584		$	22		$	1,224



Short term and other		$	3,669			$	958					$	4,627
Receivables			1				4						5
Payable to brokers			(12	)									(12	)

Reconciliations of Assets and Liabilities Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs

The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2018 and 2017:


				Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)																													Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and
				Included in																			Transfers			Transfers							Liabilities
	Balance,			Net Income				Included in															into			out of				Balance,			Held at
2018	April 1			(Loss)				OCI				Purchases			Sales				Settlements				Level 3			Level 3				June 30			June 30
(In millions)

Fixed maturity securities:
Corporate bonds and other		$	100						$	(1	)		$	2		$	(5	)		$	(2	)									$	94
States, municipalities and political subdivisions			1																													1
Asset-backed			279							(1	)			41							(6	)		$	13		$	(53	)			273
Fixed maturities available-for-sale			380		$	-				(2	)			43			(5	)			(8	)			13			(53	)			368		$	-
Fixed maturities trading			7																													7
Total fixed maturities		$	387		$	-			$	(2	)		$	43			$ (5	)		$	(8	)		$	13		$	(53	)		$	375		$	-


Equity securities		$	20		$	(1	)									$	(1	)													$	18		$	(1	)


				Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)																											Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and
				Included in																	Transfers			Transfers							Liabilities
	Balance,			Net Income			Included in														into			out of				Balance,			Held at
2017	April 1			(Loss)			OCI			Purchases			Sales				Settlements				Level 3			Level 3				June 30			June 30
(In millions)

Fixed maturity securities:
Corporate bonds and other		$	121															$	(11	)					$	(10	)		$	100
States, municipalities and political subdivisions			1																											1
Asset-backed			256		$	1		$	1		$	13							(7	)		$	24			(70	)			218
Fixed maturities available-for-sale			378			1			1			13							(18	)			24			(80	)			319		$	-
Fixed maturities trading			5																											5			(1	)
Total fixed maturities		$	383		$	1		$	1		$	13		$	-			$	(18	)		$	24		$	(80	)		$	324		$	(1	)


Equity securities available-for-sale		$	19					$	1					$	(1	)													$	19
Equity securities trading			1																											1
Total equity securities		$	20		$	-		$	1		$	-		$	(1	)		$	-			$	-		$	-			$	20		$	-


Life settlement contracts		$	46											$	(45	)													$	1


				Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)																													Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and
				Included in																			Transfers			Transfers							Liabilities
	Balance,			Net Income				Included in															into			out of				Balance,			Held at
2018	January 1			(Loss)				OCI				Purchases			Sales				Settlements				Level 3			Level 3				June 30			June 30
(In millions)

Fixed maturity securities:
Corporate bonds and other		$	98		$	(1	)		$	(1	)		$	2		$	(5	)		$	(4	)		$	5						$	94
States, municipalities and political subdivisions			1																													1
Asset-backed			335			7				(6	)			71			(72	)			(12	)			13		$	(63	)			273
Fixed maturities available-for-sale			434			6				(7	)			73			(77	)			(16	)			18			(63	)			368		$	-
Fixed maturities trading			4			3																										7			3
Total fixed maturities		$	438		$	9			$	(7	)		$	73		$	(77	)		$	(16	)		$	18		$	(63	)		$	375		$	3


Equity securities		$	22		$	(3	)									$	(1	)													$	18		$	(3	)


				Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)																												Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and
				Included in																		Transfers			Transfers							Liabilities
	Balance,			Net Income				Included in														into			out of				Balance,			Held at
2017	January 1			(Loss)				OCI			Purchases			Sales				Settlements				Level 3			Level 3				June 30			June 30
(In millions)

Fixed maturity securities:
Corporate bonds and other		$	130						$	1		$	5		$	(1	)		$	(25	)					$	(10	)		$	100
States, municipalities and political subdivisions			1																												1
Asset-backed			199		$	1				3			51							(13	)		$	52			(75	)			218
Fixed maturities available-for-sale			330			1				4			56			(1	)			(38	)			52			(85	)			319		$	-
Fixed maturities trading			6			(1	)																								5			(1	)
Total fixed maturities		$	336		$	-			$	4		$	56		$	(1	)		$	(38	)		$	52		$	(85	)		$	324		$	(1	)


Equity securities available-for-sale		$	19						$	2		$	1		$	(3	)													$	19
Equity securities trading			1																												1
Total equity securities		$	20		$	-			$	2		$	1		$	(3	)		$	-			$	-		$	-			$	20		$	-


Life settlement contracts		$	58		$	6									$	(58	)		$	(5	)									$	1
Derivative financial instruments, net			-			1										(1	)														-

Net realized and unrealized gains and losses are reported in Net income as follows:


Major Category of Assets and Liabilities		Consolidated Condensed Statements of Income Line Items

Fixed maturity securities available-for-sale		Investment gains (losses)
Fixed maturity securities trading		Net investment income
Equity securities		Investment gains (losses) and Net investment income
Other invested assets		Investment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolio		Net investment income
Derivative financial instruments, other		Investment gains (losses) and Operating revenues and other
Life settlement contracts		Operating revenues and other

Quantitative Information about Significant Unobservable Inputs Utilized by Company in Fair Value Measurements of Level 3 Assets

The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available to the Company.


June 30, 2018	Estimated Fair Value	Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
	(In millions)

Fixed maturity securities	$ 130	Discounted cash flow	Credit spread		1	% –12% (3%)

December 31, 2017

Fixed maturity securities	$ 136	Discounted cash flow	Credit spread		1	% – 12% (3%)

Carrying Amount, Estimated Fair Value and Level of Fair Value Hierarchy of Company's Financial Assets and Liabilities

The carrying amounts reported on the Consolidated Condensed Balance Sheets for cash and short term investments not carried at fair value and certain other assets and liabilities approximate fair value due to the short term nature of these items.


	Carrying		Estimated Fair Value
June 30, 2018	Amount		Level 1	Level 2		Level 3		Total
(In millions)

Assets:
Other invested assets, primarily mortgage loans	$	865				$	850	$	850

Liabilities:
Short term debt		178		$	36		142		178
Long term debt		11,273			10,550		631		11,181

December 31, 2017

Assets:
Other invested assets, primarily mortgage loans	$	839				$	844	$	844

Liabilities:
Short term debt		278		$	156		122		278
Long term debt		11,236			10,966		525		11,491