Debt

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt

Note 15– Debt

(In millions)	2015		2014 (1)
Short-term:
Commercial paper	$	100	$	100
Other, including capital leases		49		47
Total short-term debt	$	149	$	147
Long-term:
Uncollateralized debt:
$600 million, 2.75% Notes due 2016	$	-	$	598
$250 million, 5.375% Notes due 2017		249		249
$131 million, 6.35% Notes due 2018		131		131
$251 million, 8.5% Notes due 2019		-		250
$250 million, 4.375% Notes due 2020 (2)		254		253
$300 million, 5.125% Notes due 2020 (2)		303		302
$78 million, 6.37% Notes due 2021		78		78
$300 million, 4.5% Notes due 2021 (2)		304		301
$750 million, 4% Notes due 2022		743		741
$100 million, 7.65% Notes due 2023		100		100
$17 million, 8.3% Notes due 2023		17		17
$900 million, 3.25% Notes due 2025		892		-
$300 million, 7.875% Debentures due 2027		299		298
$83 million, 8.3% Step Down Notes due 2033		82		82
$500 million, 6.15% Notes due 2036		498		498
$300 million, 5.875% Notes due 2041		295		295
$750 million, 5.375% Notes due 2042		743		743
Other, including capital leases		32		43
Total long-term debt	$	5,020	$	4,979
(1) As explained in Note 2(B), in the fourth quarter of 2015, the Company retrospectively adopted ASU 2015-03 that requires debt issuance costs to be netted against the carrying value of the debt. Amounts presented above for 2014 have been retrospectively adjusted to conform to the new guidance. The impact on 2014 balances was not material.
(2) The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 12 for further information about the Company’s interest rate risk management and these derivative instruments.

On March 11, 2015, the Company issued $900 million of 10-Year Notes due April 15, 2025 at a stated interest rate of 3.25% ($892million, net of discount and issuance costs, with an effective annual interest rate of 3.36%). Interest is payable on April 15 and October 15 of each yearbeginning October 15, 2015. The proceeds of this debt were used to repay debt maturing in 2016 and in 2019 as described below.

The Company may redeem the newly issued Notes, at any time, in whole or in part, at a redemption price equal to the greater of:

• 100% of the principal amount of the Notes to be redeemed; or
• the present value of the remaining principal and interest payments on the Notes being redeemed discounted at the applicableTreasury rate plus 17.5 basis points.

The following debt transactions occurred in April 2015:

• The Company redeemed its 2.75% Notes due 2016, including accrued interest from November 15, 2014 through thesettlement date of April 13, 2015. The redemption price equaled the present value of the remaining principal and interest payments onthe Notes being redeemed, discounted at a rate equal to the 10-year Treasury Rate plus a fixed spread of 30 basis points. TheCompany paid $626 million including accrued interest and expenses, resulting in a pre-tax loss on early debt extinguishment of $21 million ($14 million after-tax) that was recognized in the second quarter of 2015.
• The Company redeemed its 8.50% Notes due 2019, including accrued interest from November 1, 2014 through the settlement date of April 13, 2015. The redemption price equaled the present value of the remaining principal and interest payments on the Notes being redeemed, discounted at a rate equal to the 10-year Treasury Rate plus a fixed spread of 50 basis points. The Company paid $329 million including accrued interest and expenses, resulting in a pre-tax loss on early debt extinguishment of $79 million ($51 million after-tax) that was recognized in the second quarter of 2015.

The Company has a five-year revolving credit and letter of credit agreement for $1.5 billion that permits up to $500 million to be used for letters of credit. This agreement extends through December 2019 and is diversified among 16 banks with three banks each having12% of the commitment and the remainder spread among 13 banks. The credit agreement includes options to increase the commitment amount to $2 billion and to extend the term past December 2019, subject to consent by the administrative agent and the committing banks. The credit agreement is available for general corporate purposes including for the issuance of letters of credit. The credit agreement contains customary covenants and restrictions, including a financial covenant that the Company may not permit its leverage ratioto be greater than 0.50. The leverage ratio is total consolidated debt to total consolidated capitalization (each as defined in the credit agreement) and excludes net unrealized appreciation in fixed maturities and the portion of the post-retirement benefits liability adjustment attributable to pension that is included in accumulated other comprehensive loss on the Company's consolidated balance sheet.

The Company had $7.9 billion of borrowing capacitywithin the maximum debt coverage covenant in the letter of credit agreement, in addition to the $5.2 billion of debt outstanding as of December 31, 2015. This additional borrowing capacity includes the $1.5billion available under the credit agreement. Letters of credit outstanding as of December 31, 2015 totaled $19 million.

The Company was in compliance with its debt covenants as of December 31, 2015.

Maturities of long-term debt, excluding capital leases,are as follows (in millions): nonein 2016, $250 in 2017,$131 in 2018, none in 2019, $550 in 2020 and the remainder in years after 2020. Maturities of debt under capital lease arrangements are as follows (in millions): $23 in 2016,$12in 2017, $7 in 2018, $6 in 2019, none in 2020 and the remainder in years after 2020. Interest expense on long-term and short-term debt was $252 million in 2015, $265million in 2014, and $270 million in 2013. The 2015 expense excludes losses on the early extinguishment of debt.