Fair Value (Tables)

12 Months Ended

Dec. 31, 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, foreign governments and redeemable preferred stock.


December 31, 2018	Level 1			Level 2		Level 3		Total

(In millions)

Fixed maturity securities:
Corporate bonds and other	$	196		$	19,392	$	222	$	19,810
States, municipalities and political subdivisions					10,748				10,748
Asset-backed					8,787		197		8,984

Fixed maturities available-for-sale		196			38,927		419		39,542
Fixed maturities trading					151		6		157

Total fixed maturities	$	196		$	39,078	$	425	$	39,699



Equity securities	$	704		$	570	$	19	$	1,293
Short term and other		2,647			1,111				3,758
Receivables					11				11
Payable to brokers		(23	)						(23)

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 tables below present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2018 and 2017:


																										Unrealized
																										Gains
																								Unrealized		(Losses)
																								Gains		Recognized in
																								(Losses)		Other
																								Recognized in		Comprehensive
			Net Realized Gains																					Net Income		Income (Loss)
			(Losses) and Net Change																					(Loss) on Level		on Level 3
			in Unrealized Gains																					3 Assets and		Assets and
			(Losses)														Transfers		Transfers					Liabilities		Liabilities
	Balance,		Included in			Included in											into		out of			Balance,		Held at		Held at
2018	January 1		Net Income			OCI			Purchases		Sales			Settlements			Level 3		Level 3			December 31		December 31		December 31
(In millions)

Fixed maturity securities:
Corporate bonds and other	$	98	$	(1	)	$	(4	)	$	117	$	(5	)	$	(9	)	$	35	$	(9	)	$	222			$	(5)
States, municipalities and political subdivisions		1													(1	)							-
Asset-backed		335		5			(8	)		162		(72	)		(64	)		42		(203	)		197	$	(2)		(4)

Fixed maturities available-for-sale		434		4			(12	)		279		(77	)		(74	)		77		(212	)		419		(2)		(9)
Fixed maturities trading		4		3								(1	)										6		2
Total fixed maturities	$	438	$	7		$	(12	)	$	279	$	(78	)	$	(74	)	$	77	$	(212	)	$	425	$	-	$	(9)


Equity securities	$	22	$	(2)							$	(1)										$	19	$	(2)


								Purchases		Sales			Settlements			Transfers into Level 3		Transfers out of Level 3			Balance, December 31		Unrealized Gains (Losses) Recognized in Net Income on Level 3 Assets and Liabilities Held at December 31



			Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses)
2017	Balance, January 1		Included in Net Income			Included in OCI

(In millions)

Fixed maturity securities:
Corporate bonds and other	$	130				$	3	$	18	$	(5	)	$	(54	)	$	16	$	(10	)	$	98
States, municipalities and political subdivisions		1																				1
Asset-backed		199	$	2			3		107					(43	)		153		(86	)		335

Fixed maturities available-for-sale		330		2			6		125		(5	)		(97	)		169		(96	)		434	$	-
Fixed maturities trading		6		(2	)																	4		(2)

Total fixed maturities	$	336	$	-		$	6	$	125	$	(5	)	$	(97	)	$	169	$	(96	)	$	438	$	(2)



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

Total equity securities	$	20	$	(1	)	$	3	$	3	$	(3	)	$	-		$	-	$	-		$	22	$	-



Life settlement contracts	$	58	$	6						$	(59	)	$	(5	)						$	-
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 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. The weighted average rate is calculated based on fair value.

December 31, 2018

Estimated

Fair Value

Valuation

Techniques

Unobservable

Inputs

Range

(Weighted

Average)

(In millions)

Fixed maturity securities

228

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 amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial assets and liabilities which are not measured at fair value on the Consolidated Balance Sheets are presented in the following tables. The carrying amounts and estimated fair values of short term debt and long term debt exclude capital lease obligations. The carrying amounts reported on the Consolidated 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
December 31, 2018	Amount		Level 1	Level 2		Level 3		Total
(In millions)

Assets:
Other invested assets, primarily mortgage loans	$	839				$	827	$	827

Liabilities:
Short term debt		15		$	14				14
Long term debt		11,345			10,111		653		10,764

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