Financing Receivables

The Company’s financing receivables include commercial mortgage loans, syndicated loans, consumer loans, policy loans, certificate loans, advisor 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

Commercial Mortgage Loans, Syndicated Loans and Consumer Loans

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,
	2017			2016			2015
	(in millions)
Beginning balance	$	29		$	32		$	35
Charge-offs	(2		)	(5		)	(4		)
Provisions	(1		)	2			1
Ending balance	$	26		$	29		$	32

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

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



	December 31,
	2017		2016
	(in millions)
Individually evaluated for impairment	$	17	$	12
Collectively evaluated for impairment	3,258		3,480
Total	$	3,275	$	3,492

As of December 31, 2017 and 2016, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $17 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 years ended December 31, 2017, 2016 and 2015, the Company purchased $200 million, $92 million and $162 million, respectively, and sold $267 million, $271 million and $16 million, respectively, of loans. See below for further discussion on the sale of consumer loans.

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

Loans to Financial Advisors

As of December 31, 2017 and 2016, principal amounts outstanding for advisor loans were $509 million and $426 million, respectively, and allowance for loan losses were $23 million and $18 million, respectively. The allowance for loan losses related to loans to financial advisors is not included in the table disclosures above. Of the gross balance outstanding, the portion associated with financial advisors who are no longer affiliated with the Company was $19 million and $16 million at December 31, 2017 and 2016, respectively. The allowance for loan losses on these loans was $12 million and $10 million at December 31, 2017 and 2016, respectively.

Credit Quality Information

Nonperforming loans, which are generally loans 90 days or more past due, were $19 million and $15 million as of December 31, 2017 and 2016, 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 of total commercial mortgage loans as of both December 31, 2017 and 2016. 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,
	2017		2016		2017		2016
	(in millions)
East North Central	$	215	$	198	8	%	7	%
East South Central	90		88		3		3
Middle Atlantic	192		203		7		8
Mountain	256		240		9		9
New England	74		91		3		3
Pacific	812		746		29		28
South Atlantic	768		783		28		29
West North Central	235		222		8		8
West South Central	133		131		5		5
	2,775		2,702		100	%	100	%
Less: allowance for loan losses	19		21
Total	$	2,756	$	2,681

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



	Loans				Percentage
	December 31,				December 31,
	2017		2016		2017		2016
	(in millions)
Apartments	$	566	$	504	20	%	19	%
Hotel	40		42		1		1
Industrial	476		446		17		17
Mixed use	44		49		2		2
Office	492		489		18		18
Retail	937		950		34		35
Other	220		222		8		8
	2,775		2,702		100	%	100	%
Less: allowance for loan losses	19		21
Total	$	2,756	$	2,681

Syndicated Loans

The recorded investment in syndicated loans at December 31, 2017 and 2016 was $498 million and $482 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, 2017 and 2016 were $5 million and $1 million, respectively.

Consumer Loans

The recorded investment in consumer loans at December 31, 2017 and 2016 was $2 million and $308 million, respectively. During the years ended December 31, 2017 and 2016, the Company sold $252 million and $271 million, respectively, of its consumer mortgage loans and recorded a loss of $7 million and $11 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, approximately 2% of consumer loans had FICO scores below 640. Consumer loans with LTV ratios greater than 90% were not material at December 31, 2016. The Company’s most significant geographic concentration for consumer loans was in California, Colorado and Washington, which represented 52%, 18% and 13%, respectively, of the portfolio as of December 31, 2016. No other state represented more than 10% of the total consumer loan portfolio. Consumer loans as of December 31, 2017 were not material.

Troubled Debt Restructurings

The recorded investment in restructured loans was not material as of December 31, 2017 and 2016. 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, 2017, 2016 and 2015. There are no commitments to lend additional funds to borrowers whose loans have been restructured.