Investments (Tables)

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Net investment income is as follows:


Year Ended December 31	2018			2017			2016
(In millions)

Fixed maturity securities	$	1,795		$	1,812		$	1,819
Limited partnership investments		22			277			199
Short term investments		43			18			9
Equity securities		18			12			10
Income (loss) from trading portfolio (a)		(54	)		87			112
Other		54			35			45
Total investment income		1,878			2,241			2,194
Investment expenses		(61	)		(59	)		(59	)
Net investment income	$	1,817		$	2,182		$	2,135

(a)	Net unrealized gains (losses) related to changes in fair value on securities still held were $(121), $39 and $44 for the years ended December 31, 2018, 2017 and 2016.

Summary of Investment Gains (Losses)

Investment gains (losses) are as follows:


Year Ended December 31	2018			2017			2016
(In millions)

Fixed maturity securities	$	4		$	122		$	54
Equity securities		(74	)					(5	)
Derivative instruments		9			(4	)		(2	)
Short term investments and other		4			4			3
Investment gains (losses) (a)	$	(57	)	$	122		$	50

(a)

Gross realized gains on available-for-sale securities were $168, $187 and $209 for the years ended December 31, 2018, 2017 and 2016. Gross realized losses on available-for-sale securities were $164, $65 and $160 for the years ended December 31, 2018, 2017 and 2016. Net realized losses of $73 were recognized due to the change in fair value of non-redeemable preferred stock still held for the year ended December 31, 2018.

Schedule of Net Change in Unrealized Gains (Losses) Investments

Net change in unrealized gains (losses) on investments is as follows:


Year Ended December 31	2018			2017			2016
(In millions)

Fixed maturity securities	$	(1,811)		$	728		$	225
Equity securities					32			(2)
Other					(2	)		1
Total net change in unrealized gains (losses) on investments	$	(1,811	)	$	758		$	224

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	2018		2017		2016
(In millions)

Fixed maturity securities available-for-sale:
Corporate and other bonds	$	12	$	12	$	59
Asset-backed		9		1		13
Total fixed maturity securities available-for-sale		21		13		72
Equity securities available-for-sale				1		9
Net OTTI losses recognized in earnings	$	21	$	14	$	81

Amortized Cost and Fair Values of Fixed Maturity and Equity Securities

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


December 31, 2018	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	$	18,764	$	791	$	395	$	19,160
States, municipalities and political subdivisions		9,681		1,076		9		10,748
Asset-backed:
Residential mortgage-backed		4,815		68		57		4,826	$	(20	)
Commercial mortgage-backed		2,200		28		32		2,196
Other asset-backed		1,975		11		24		1,962
Total asset-backed		8,990		107		113		8,984		(20	)
U.S. Treasury and obligations of government-sponsored enterprises		156		3				159
Foreign government		480		5		4		481
Redeemable preferred stock		10						10
Fixed maturities available-for-sale		38,081		1,982		521		39,542		(20	)
Fixed maturities trading		153		4				157
Total fixed maturities	$	38,234	$	1,986	$	521	$	39,699	$	(20	)


December 31, 2017
(In millions)

Fixed maturity securities:
Corporate and other bonds	$	17,210	$	1,625	$	28	$	18,807
States, municipalities and political subdivisions		12,478		1,551		2		14,027	$	(11	)
Asset-backed:
Residential mortgage-backed		5,043		109		32		5,120		(27	)
Commercial mortgage-backed		1,840		46		14		1,872
Other asset-backed		1,083		16		5		1,094
Total asset-backed		7,966		171		51		8,086		(27	)
U.S. Treasury and obligations of government-sponsored enterprises		111		2		4		109
Foreign government		437		9		2		444
Redeemable preferred stock		10		1				11
Fixed maturities available-for-sale		38,212		3,359		87		41,484		(38	)
Fixed maturities trading		649		2		2		649
Total fixed maturities		38,861		3,361		89		42,133		(38	)
Equity securities:
Common stock		21		7		1		27
Preferred stock		638		31		1		668
Equity securities available-for-sale		659		38		2		695		-
Equity securities trading		518		92		81		529
Total equity securities		1,177		130		83		1,224		-
Total fixed maturity and equity securities	$	40,038	$	3,491	$	172	$	43,357	$	(38	)

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, 2018	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	$	8,543	$	340	$	825	$	55	$	9,368	$	395
States, municipalities and political subdivisions		517		8		5		1		522		9
Asset-backed:
Residential mortgage-backed		1,932		23		1,119		34		3,051		57
Commercial mortgage-backed		728		10		397		22		1,125		32
Other asset-backed		834		21		125		3		959		24
Total asset-backed		3,494		54		1,641		59		5,135		113
U.S. Treasury and obligations of government-sponsored enterprises		21				19				40
Foreign government		114		2		124		2		238		4
Total fixed maturity securities	$	12,689	$	404	$	2,614	$	117	$	15,303	$	521


December 31, 2017
(In millions)

Fixed maturity securities:
Corporate and other bonds	$	1,354	$	21	$	168	$	7	$	1,522	$	28
States, municipalities and political subdivisions		72		1		85		1		157		2
Asset-backed:
Residential mortgage-backed		1,228		5		947		27		2,175		32
Commercial mortgage-backed		403		4		212		10		615		14
Other asset-backed		248		3		18		2		266		5
Total asset-backed		1,879		12		1,177		39		3,056		51
U.S. Treasury and obligations of government-sponsored enterprises		49		2		21		2		70		4
Foreign government		166		2		4				170		2
Total fixed maturity securities		3,520		38		1,455		49		4,975		87
Equity securities:
Common stock		7		1						7		1
Preferred stock		93		1						93		1
Total equity securities		100		2		-		-		100		2
Total fixed maturity and equity securities	$	3,620	$	40	$	1,455	$	49	$	5,075	$	89

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, 2018, 2017 and 2016 for which a portion of an OTTI loss was recognized in Other comprehensive income.


Year Ended December 31	2018			2017			2016
(In millions)

Beginning balance of credit losses on fixed maturity securities	$	27		$	36		$	53
Reductions for securities sold during the period		(9	)		(9	)		(16)
Reductions for securities the Company intends to sell or more likely than not will be required to sell								(1)
Ending balance of credit losses on fixed maturity securities	$	18		$	27		$	36

Available-for-Sale Fixed Maturity Securities by Contractual Maturity

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

December 31

2018

2017

Cost or
Amortized
Cost

Estimated
Fair Value

Cost or
Amortized
Cost

Estimated
Fair Value

(In millions)

Due in one year or less

$ 1,350

$ 1,359

$ 1,135

$ 1,157

Due after one year through five years

7,979

8,139

8,165

8,501

Due after five years through ten years

16,859

16,870

16,060

16,718

Due after ten years

11,893

13,174

12,852

15,108

Total

$ 38,081

$ 39,542

$ 38,212

$ 41,484

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	2018						2017

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

(In millions)

With hedge designation:

Interest rate swaps	$	500	$	11			$	500	$	4

Without hedge designation:

Equity markets:
Options – purchased		213		18				224		12
– written		239				$ (17)		290				$ (7)
Futures – short								265		1
Commodity futures – long		32						44
Embedded derivative on funds withheld liability		172		4				167				(3)