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 the three months ended and the ending balance of the allowance for loan losses by impairment method:



	March 31,
	2017		2016
	(in millions)
Beginning balance	$	29	$	32
Provisions	—		(1		)
Ending balance	$	29	$	31

Individually evaluated for impairment	$	2	$	4
Collectively evaluated for impairment	27		27

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



	March 31, 2017		December 31, 2016
	(in millions)
Individually evaluated for impairment	$	18	$	12
Collectively evaluated for impairment	3,469		3,480
Total	$	3,487	$	3,492

As of March 31, 2017 and December 31, 2016, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $12 million and $7 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 March 31, 2017 and 2016, the Company purchased $70 million and $14 million, respectively, of syndicated loans. 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.

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 as of both March 31, 2017 and December 31, 2016. 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% and nil of total commercial mortgage loans as of March 31, 2017 and December 31, 2016, 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
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
	(in millions)
East North Central	$	203	$	198	8	%	7	%
East South Central	87		88		3		3
Middle Atlantic	200		203		7		8
Mountain	243		240		9		9
New England	89		91		3		3
Pacific	744		746		28		28
South Atlantic	790		783		29		29
West North Central	223		222		8		8
West South Central	133		131		5		5
	2,712		2,702		100	%	100	%
Less: allowance for loan losses	21		21
Total	$	2,691	$	2,681

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



	Loans				Percentage
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
	(in millions)
Apartments	$	531	$	504	20	%	19	%
Hotel	42		42		1		1
Industrial	461		446		17		17
Mixed use	50		49		2		2
Office	475		489		18		18
Retail	931		950		34		35
Other	222		222		8		8
	2,712		2,702		100	%	100	%
Less: allowance for loan losses	21		21
Total	$	2,691	$	2,681

Syndicated Loans

The recorded investment in syndicated loans as of both March 31, 2017 and December 31, 2016 was $482 million. 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 as of both March 31, 2017 and December 31, 2016 were $1 million.

Consumer Loans

The recorded investment in consumer loans as of March 31, 2017 and December 31, 2016 was $293 million and $308 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 March 31, 2017 and December 31, 2016, approximately 2% of consumer loans had FICO scores below 640. As of both March 31, 2017 and December 31, 2016, none of the Company’s consumer loans had LTV ratios greater than 90%. The Company’s most significant geographic concentrations for consumer loans are in California representing 53% and 52% of the portfolio as of March 31, 2017 and December 31, 2016, respectively. Colorado and Washington represent 17% and 13%, respectively, of the portfolio as of March 31, 2017 and 18% and 13%, respectively, as of December 31, 2016. 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 March 31, 2017 and December 31, 2016. 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 ended March 31, 2017 and 2016. There are no commitments to lend additional funds to borrowers whose loans have been restructured.