Financing Receivables

The Company’s financing receivables include commercial mortgage loans, syndicated loans, consumer loans, policy loans, certificate loans and margin loans. See Note 2 for information regarding the Company’s accounting policies related to loans and the allowance for loan losses.

Allowance for Loan Losses

The following table presents a rollforward of the allowance for loan losses for the years ended and the ending balance of the allowance for loan losses by impairment method:



	December 31,
	2016			2015			2014
	(in millions)
Beginning balance	$	32		$	35		$	37
Charge-offs	(5		)	(4		)	(4		)
Recoveries	—			—			1
Provisions	2			1			1
Ending balance	$	29		$	32		$	35

Individually evaluated for impairment	$	2		$	4		$	9
Collectively evaluated for impairment	27			28			26

The recorded investment in financing receivables by impairment method was as follows:



	December 31,
	2016		2015
	(in millions)
Individually evaluated for impairment	$	12	$	34
Collectively evaluated for impairment	3,480		3,910
Total	$	3,492	$	3,944

As of December 31, 2016 and 2015, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $7 million and $21 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 years ended December 31, 2016, 2015 and 2014, the Company purchased $92 million, $162 million and $227 million, respectively, and sold $271 million, $16 million and $13 million, respectively, of loans. Loans sold during the year ended December 31, 2016 consisted of consumer loans. See below for additional discussion on the sale of these 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 $2 million and $10 million as of December 31, 2016 and 2015, 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 nil and 1% of total commercial mortgage loans at December 31, 2016 and 2015, respectively. 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
	December 31,				December 31,
	2016		2015		2016		2015
	(in millions)
East North Central	$	198	$	211	7	%	8	%
East South Central	88		74		3		3
Middle Atlantic	203		210		8		8
Mountain	240		248		9		9
New England	91		123		3		4
Pacific	746		741		28		27
South Atlantic	783		782		29		28
West North Central	222		229		8		8
West South Central	131		137		5		5
	2,702		2,755		100	%	100	%
Less: allowance for loan losses	21		21
Total	$	2,681	$	2,734

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



	Loans				Percentage
	December 31,				December 31,
	2016		2015		2016		2015
	(in millions)
Apartments	$	504	$	504	19	%	18	%
Hotel	42		35		1		1
Industrial	446		459		17		17
Mixed use	49		35		2		1
Office	489		541		18		20
Retail	950		984		35		36
Other	222		197		8		7
	2,702		2,755		100	%	100	%
Less: allowance for loan losses	21		21
Total	$	2,681	$	2,734

Syndicated Loans

The recorded investment in syndicated loans at December 31, 2016 and 2015 was $482 million and $553 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 December 31, 2016 and 2015 were $1 million and $6 million, respectively.

Consumer Loans

The recorded investment in consumer loans at December 31, 2016 and 2015 was $308 million and $636 million, respectively. The Company considers the credit worthiness of borrowers (FICO score), collateral characteristics such as 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 December 31, 2016 and 2015, approximately 2% and 4%, respectively, of consumer loans had FICO scores below 640. At December 31, 2016 and 2015, approximately nil and 2%, respectively, of the Company’s consumer loans had LTV ratios greater than 90%. The Company’s most significant geographic concentration for consumer loans is in California representing 52% and 37% of the portfolio as of December 31, 2016 and 2015, respectively, and in Colorado and Washington representing 18% and 13%, respectively, of the portfolio as of December 31, 2016. No other state represents more than 10% of the total consumer loan portfolio.

On March 30, 2016, the Company sold $271 million of its consumer loans to a third party. The Company received cash proceeds of $260 million and recognized a loss of $11 million.

Troubled Debt Restructurings

The recorded investment in restructured loans was not material as of December 31, 2016, 2015 and 2014. The troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for the years ended December 31, 2016, 2015 and 2014. There are no commitments to lend additional funds to borrowers whose loans have been restructured.