Investments (Tables)

3 Months Ended

Mar. 31, 2020

Total investments at March 31, 2020 and December 31, 2019 were as follows:



	March 31, 2020						December 31, 2019
In millions	Current		Long-term		Total		Current		Long-term		Total
Debt securities available for sale	$	2,451	$	14,266	$	16,717	$	2,251	$	14,671	$	16,922
Mortgage loans	181		983		1,164		122		1,091		1,213
Other investments	—		1,591		1,591		—		1,552		1,552
Total investments	$	2,632	$	16,840	$	19,472	$	2,373	$	17,314	$	19,687

Debt Securities Available For Sale

Debt securities available for sale at March 31, 2020 and December 31, 2019 were as follows:



In millions	Gross Amortized Cost		Allowance for Credit Losses ⁽¹⁾			Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2020
Debt securities:
U.S. government securities	$	1,853	$	—		$	1,853	$	162	$	—		$	2,015
States, municipalities and political subdivisions	2,182		—			2,182		91		(7		)	2,266
U.S. corporate securities	7,128		(28		)	7,100		412		(109		)	7,403
Foreign securities	2,202		(18		)	2,184		112		(48		)	2,248
Residential mortgage-backed securities	574		—			574		38		—			612
Commercial mortgage-backed securities	662		—			662		43		(1		)	704
Other asset-backed securities	1,509		(2		)	1,507		7		(80		)	1,434
Redeemable preferred securities	35		—			35		1		(1		)	35
Total debt securities ⁽²⁾	$	16,145	$	(48	)	$	16,097	$	866	$	(246	)	$	16,717

December 31, 2019
Debt securities:
U.S. government securities	$	1,791	$	—		$	1,791	$	62	$	(1	)	$	1,852
States, municipalities and political subdivisions	2,202		—			2,202		108		(1		)	2,309
U.S. corporate securities	7,167		—			7,167		573		(3		)	7,737
Foreign securities	2,149		—			2,149		200		(1		)	2,348
Residential mortgage-backed securities	508		—			508		25		—			533
Commercial mortgage-backed securities	654		—			654		46		—			700
Other asset-backed securities	1,397		—			1,397		13		(5		)	1,405
Redeemable preferred securities	30		—			30		8		—			38
Total debt securities ⁽²⁾	$	15,898	$	—		$	15,898	$	1,035	$	(11	)	$	16,922

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(1)

Effective January 1, 2020, the Company adopted the available-for-sale debt security impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The new impairment model requires the write down of amortized cost through an allowance for credit losses, rather than through a reduction of the amortized cost basis of the available-for-sale debt security. As the Company adopted the new available-for-sale debt security impairment model on a prospective basis, there was no allowance for credit losses recorded on available-for-sale debt securities at December 31, 2019.

(2)

Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At March 31, 2020, debt securities with a fair value of $917 million, gross unrealized capital gains of $65 million and gross unrealized capital losses of $10 million and at December 31, 2019, debt securities with a fair value of $965 million, gross unrealized capital gains of $83 million and no gross unrealized capital losses were included in total debt securities, but support experience-related products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income.

Fair Value of Debt Securities by Contractual Maturity

The net amortized cost and fair value of debt securities at March 31, 2020 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.



In millions	Net Amortized Cost		Fair Value
Due to mature:
Less than one year	$	1,219	$	1,225
One year through five years	5,292		5,399
After five years through ten years	3,135		3,233
Greater than ten years	3,708		4,110
Residential mortgage-backed securities	574		612
Commercial mortgage-backed securities	662		704
Other asset-backed securities	1,507		1,434
Total	$	16,097	$	16,717

Debt Securities In An Unrealized Capital Loss Position

Summarized below are the debt securities the Company held at March 31, 2020 and December 31, 2019 that were in an unrealized capital loss position, aggregated by the length of time the investments have been in that position:



	Less than 12 months					Greater than 12 months					Total
In millions, except number of securities	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
March 31, 2020
Debt securities:
U.S. government securities	8	$	20	$	—	—	$	—	$	—	8	$	20	$	—
States, municipalities and political subdivisions	174	314		7		—	—		—		174	314		7
U.S. corporate securities	1,622	1,712		108		6	2		1		1,628	1,714		109
Foreign securities	513	630		48		—	—		—		513	630		48
Residential mortgage-backed securities	14	—		—		7	—		—		21	—		—
Commercial mortgage-backed securities	21	50		1		—	—		—		21	50		1
Other asset-backed securities	589	893		67		89	68		13		678	961		80
Redeemable preferred securities	6	11		1		—	—		—		6	11		1
Total debt securities	2,947	$	3,630	$	232	102	$	70	$	14	3,049	$	3,700	$	246

December 31, 2019
Debt securities:
U.S. government securities	52	$	168	$	1	—	$	—	$	—	52	$	168	$	1
States, municipalities and political subdivisions	66	115		1		2	5		—		68	120		1
U.S. corporate securities	181	305		2		2	—		1		183	305		3
Foreign securities	39	75		1		—	—		—		39	75		1
Residential mortgage-backed securities	30	16		—		9	—		—		39	16		—
Commercial mortgage-backed securities	16	49		—		—	—		—		16	49		—
Other asset-backed securities	138	254		1		187	182		4		325	436		5
Total debt securities	522	$	982	$	6	200	$	187	$	5	722	$	1,169	$	11

The maturity dates for debt securities in an unrealized capital loss position at March 31, 2020 were as follows:



	Supporting experience-rated products				Supporting remaining products				Total
In millions	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Due to mature:
Less than one year	$	7	$	—	$	163	$	3	$	170	$	3
One year through five years	30		1		1,082		44		1,112		45
After five years through ten years	61		4		776		60		837		64
Greater than ten years	55		4		515		49		570		53
Commercial mortgage-backed securities	1		—		49		1		50		1
Other asset-backed securities	16		1		945		79		961		80
Total	$	170	$	10	$	3,530	$	236	$	3,700	$	246

Activity in Mortgage Loan Portfolio

During the three months ended March 31, 2020 and 2019, the Company had the following activity in its mortgage loan portfolio:



	Three Months Ended March 31,
In millions	2020		2019
New mortgage loans	$	8	$	41
Mortgage loans fully repaid	44		52
Mortgage loans foreclosed	—		—

Mortgage Loan Internal Credit Rating

ased on the Company’s assessments at March 31, 2020 and December 31, 2019, the amortized cost basis of the Company's mortgage loans within each credit quality indicator by year of origination was as follows:



	Amortized Cost Basis by Year of Origination
In millions, except credit quality indicator	2020		2019		2018		2017		2016		Prior		Total
March 31, 2020
1	$	—	$	—	$	—	$	15	$	—	$	41	$	56
2 to 4	5		94		95		164		139		589		1,086
5 and 6	—		—		1		—		—		12		13
7	—		—		—		9		—		—		9
Total	$	5	$	94	$	96	$	188	$	139	$	642	$	1,164

December 31, 2019
1	$	—	$	—	$	—	$	15	$	—	$	43	$	58
2 to 4	5		88		93		206		140		611		1,143
5 and 6	—		—		—		—		—		12		12
7	—		—		—		—		—		—		—
Total	$	5	$	88	$	93	$	221	$	140	$	666	$	1,213

Net Investment Income

Sources of net investment income for the three months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended March 31,
In millions	2020			2019
Debt securities	$	144		$	156
Mortgage loans	15			17
Other investments	47			26
Gross investment income	206			199
Investment expenses	(8		)	(9		)
Net investment income (excluding net realized capital gains or losses)	198			190
Net realized capital gains (losses) ⁽¹⁾	(36		)	59
Net investment income ⁽²⁾	$	162		$	249

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(1)	Net realized capital losses include credit-related and yield-related impairment losses on debt securities of $45 million and $41 million, respectively, in the three months ended March 31, 2020. Net realized capital gains are net of other than temporary impairment losses on debt securities of $7 million in the three months ended March 31, 2019.


(2)	Net investment income includes $11 million for both the three months ended March 31, 2020 and 2019 related to investments supporting experience-rated products.

Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended March 31,
In millions	2020		2019
Proceeds from sales	$	723	$	1,489
Gross realized capital gains	20		35
Gross realized capital losses	35		2