Financing Receivables

The Company’s financing receivables include commercial mortgage loans, syndicated loans, consumer loans, policy loans, certificate loans and margin loans. Commercial mortgage loans, syndicated loans, consumer loans, policy loans and certificate loans are reflected in investments. Margin loans are recorded in receivables.

Allowance for Loan Losses

Policy and certificate loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy and certificate loans, the Company does not record an allowance for loan losses. The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As there is minimal risk of loss related to margin loans, the allowance for loan losses is immaterial.

The following table presents a rollforward of the allowance for loan losses for commercial mortgage loans, syndicated loans and consumer loans for the six months ended and the ending balance of the allowance for loan losses by impairment method:



	June 30,
	2015			2014
	(in millions)
Beginning balance	$	35		$	37
Charge-offs	(2		)	(4		)
Provisions	1			—
Ending balance	$	34		$	33

Individually evaluated for impairment	$	6		$	9
Collectively evaluated for impairment	28			24

The recorded investment in commercial mortgage loans, syndicated loans and consumer loans by impairment method was as follows:



	June 30, 2015		December 31, 2014
	(in millions)
Individually evaluated for impairment	$	42	$	42
Collectively evaluated for impairment	3,880		3,951
Total	$	3,922	$	3,993

As of June 30, 2015 and December 31, 2014, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $20 million and $13 million, respectively. Unearned income, unamortized premiums and discounts, and net unamortized deferred fees and costs are not material to the Company’s total loan balance.

During the three months ended June 30, 2015 and 2014, the Company purchased $28 million and $25 million, respectively, and sold $1 million and $6 million, respectively, of syndicated loans. During the six months ended June 30, 2015 and 2014, the Company purchased $41 million and $90 million, respectively, and sold $7 million and $10 million, respectively, consisting primarily of syndicated loans.

The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.

Credit Quality Information

Nonperforming loans, which are generally loans 90 days or more past due, were $10 million and $12 million as of June 30, 2015 and December 31, 2014, respectively. All other loans were considered to be performing.

Commercial Mortgage Loans

The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were 1% of total commercial mortgage loans at both June 30, 2015 and December 31, 2014. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. In addition, the Company reviews the concentrations of credit risk by region and property type.

Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:



	Loans				Percentage
	June 30, 2015		December 31, 2014		June 30, 2015		December 31, 2014
	(in millions)
East North Central	$	207	$	238	8	%	9	%
East South Central	63		62		2		2
Middle Atlantic	203		217		7		8
Mountain	254		245		9		9
New England	131		140		5		5
Pacific	743		694		27		25
South Atlantic	742		740		27		27
West North Central	237		233		9		9
West South Central	155		160		6		6
	2,735		2,729		100	%	100	%
Less: allowance for loan losses	23		25
Total	$	2,712	$	2,704

Concentrations of credit risk of commercial mortgage loans by property type were as follows:



	Loans				Percentage
	June 30, 2015		December 31, 2014		June 30, 2015		December 31, 2014
	(in millions)
Apartments	$	500	$	500	18	%	18	%
Hotel	38		34		1		1
Industrial	455		461		17		17
Mixed use	45		45		2		2
Office	540		545		20		20
Retail	967		988		35		36
Other	190		156		7		6
	2,735		2,729		100	%	100	%
Less: allowance for loan losses	23		25
Total	$	2,712	$	2,704

Syndicated Loans

The recorded investment in syndicated loans at June 30, 2015 and December 31, 2014 was $497 million and $511 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans at June 30, 2015 and December 31, 2014 were $5 million and $4 million, respectively.

Consumer Loans

The recorded investment in consumer loans at June 30, 2015 and December 31, 2014 was $690 million and $753 million, respectively. The Company considers the credit worthiness of borrowers (FICO score), collateral characteristics such as loan-to-value (“LTV”) and geographic concentration in determining the allowance for loan losses for consumer loans. At a minimum, management updates FICO scores and LTV ratios semiannually.

As of both June 30, 2015 and December 31, 2014, approximately 6% of consumer loans had FICO scores below 640. As of both June 30, 2015 and December 31, 2014, approximately 2% of the Company’s residential mortgage loans had LTV ratios greater than 90%. The Company’s most significant geographic concentration for consumer loans is in California representing 37% of the portfolio as of both June 30, 2015 and December 31, 2014. No other state represents more than 10% of the total consumer loan portfolio.

Troubled Debt Restructurings

The recorded investment in restructured loans was not material as of June 30, 2015 and December 31, 2014. The troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for the three months and six months ended June 30, 2015 and 2014. There are no material commitments to lend additional funds to borrowers whose loans have been restructured.