Financing Receivables |
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Financing Receivables [Text Block] | Financing Receivables The Company’s financing receivables primarily include commercial mortgage loans, syndicated loans, policy loans, certificate loans, advisor loans, margin loans and the reinsurance deposit receivable. Commercial mortgage loans, syndicated loans, policy loans and certificate loans are reflected in investments. Advisor loans, margin loans and the reinsurance deposit receivable 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. The Company does not have an allowance for loan losses for the reinsurance deposit receivable as the receivable is supported by a trust and there is minimal risk of loss. 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:
The recorded investment in financing receivables by impairment method was as follows:
As of June 30, 2019 and December 31, 2018, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $14 million and $24 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, 2019 and 2018, the Company purchased $41 million and $112 million, respectively, of syndicated loans, and sold $14 million and $33 million, respectively, of syndicated loans. During the six months ended June 30, 2019 and 2018, the Company purchased $74 million and $145 million, respectively, of syndicated loans, and sold $27 million and $36 million, respectively, of syndicated loans. The Company has not acquired any loans with deteriorated credit quality as of the acquisition date. Financial Advisor Loans The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. As of June 30, 2019 and December 31, 2018, principal amounts outstanding for advisor loans were $603 million and $558 million, respectively. As of June 30, 2019 and December 31, 2018, allowance for loan losses were $27 million and $25 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 $15 million and $18 million as of June 30, 2019 and December 31, 2018, respectively. The allowance for loan losses on these loans was $11 million and $13 million as of June 30, 2019 and December 31, 2018, respectively. Credit Quality Information Nonperforming loans, which are generally loans 90 days or more past due, were $13 million and $16 million as of June 30, 2019 and December 31, 2018, 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 less than 1% of total commercial mortgage loans as of both June 30, 2019 and December 31, 2018. 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:
Concentrations of credit risk of commercial mortgage loans by property type were as follows:
Syndicated Loans The recorded investment in syndicated loans as of June 30, 2019 and December 31, 2018 was $549 million and $548 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 both June 30, 2019 and December 31, 2018 were not material. Troubled Debt Restructurings The recorded investment in restructured loans was not material as of both June 30, 2019 and December 31, 2018. Troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for both the three months and six months ended June 30, 2019 and 2018. There are no commitments to lend additional funds to borrowers whose loans have been restructured. Reinsurance Deposit Receivable The reinsurance deposit receivable was $1.6 billion as of June 30, 2019. In the first quarter of 2019, the Company reinsured approximately $1.7 billion of fixed annuity polices sold through third parties, which is approximately 20% of in force fixed annuity account balances. The arrangement contains investment guidelines and a trust to meet the Company’s risk management objectives. The transaction was effective as of January 1, 2019. For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability related to insurance risk in accordance with applicable accounting standards. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits made are included in receivables. As amounts are received, consistent with the underlying fixed annuity contracts, the reinsurance deposit receivable is adjusted. The reinsurance deposit receivable is accreted using the interest method and the adjustment is reported in other revenues.
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