Financing Receivables

The Company’s financing receivables primarily include commercial mortgage loans, syndicated loans, policy loans, certificate loans, advisor loans and margin loans. Commercial mortgage loans, syndicated loans, policy loans and certificate loans are reflected in investments. Advisor loans and 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.

Commercial Mortgage Loans and Syndicated Loans

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



	June 30,
	2018			2017
	(in millions)
Beginning balance	$	26		$	29
Charge-offs	(2		)	—
Ending balance	$	24		$	29

Individually evaluated for impairment	$	—		$	2
Collectively evaluated for impairment	24			27

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



	June 30, 2018		December 31, 2017
	(in millions)
Individually evaluated for impairment	$	13	$	17
Collectively evaluated for impairment	3,226		3,258
Total	$	3,239	$	3,275

As of June 30, 2018 and December 31, 2017, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $13 million and $17 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, 2018 and 2017, the Company purchased $112 million and $66 million, respectively, of syndicated loans, and sold $33 million and $4 million, respectively, of syndicated loans. During the six months ended June 30, 2018 and 2017, the Company purchased $145 million and $136 million, respectively, of syndicated loans, and sold $36 million and $4 million, respectively, of syndicated loans.

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

Loans to Financial Advisors

As of June 30, 2018 and December 31, 2017, principal amounts outstanding for advisor loans were $510 million and $509 million, respectively, and allowance for loan losses were $22 million and $23 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 $17 million and $19 million as of June 30, 2018 and December 31, 2017, respectively. The allowance for loan losses on these loans was $12 million as of both June 30, 2018 and December 31, 2017.

Credit Quality Information

Nonperforming loans, which are generally loans 90 days or more past due, were $17 million and $19 million as of June 30, 2018 and December 31, 2017, 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 June 30, 2018 and December 31, 2017. 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, 2018		December 31, 2017		June 30, 2018		December 31, 2017
	(in millions)
East North Central	$	205	$	215	8	%	8	%
East South Central	87		90		3		3
Middle Atlantic	193		192		7		7
Mountain	245		256		9		9
New England	64		74		2		3
Pacific	812		812		30		29
South Atlantic	742		768		28		28
West North Central	223		235		8		8
West South Central	137		133		5		5
	2,708		2,775		100	%	100	%
Less: allowance for loan losses	19		19
Total	$	2,689	$	2,756

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



	Loans				Percentage
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
	(in millions)
Apartments	$	576	$	566	21	%	20	%
Hotel	39		40		1		1
Industrial	463		476		17		17
Mixed use	48		44		2		2
Office	451		492		17		18
Retail	912		937		34		34
Other	219		220		8		8
	2,708		2,775		100	%	100	%
Less: allowance for loan losses	19		19
Total	$	2,689	$	2,756

Syndicated Loans

The recorded investment in syndicated loans as of June 30, 2018 and December 31, 2017 was $531 million and $498 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 as of June 30, 2018 and December 31, 2017 were $2 million and $5 million, respectively.

Troubled Debt Restructurings

The recorded investment in restructured loans was not material as of June 30, 2018 and December 31, 2017. 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, 2018 and 2017. There are no commitments to lend additional funds to borrowers whose loans have been restructured.