XML 71 R11.htm IDEA: XBRL DOCUMENT v3.19.3
Investments
 9 Months Ended
Sep. 30, 2019
Investments [Abstract]  
Investments INVESTMENTS
 
Fixed Maturities
 
The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:
 
 
Amortized
 
Gross Unrealized
 
Fair
(at September 30, 2019, in millions)
 
Cost
 
Gains
 
Losses
 
Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 
$
2,001

 
$
20

 
$
1

 
$
2,020

Obligations of states, municipalities and political subdivisions:
 
 

 
 

 
 

 
 

Local general obligation
 
15,418

 
881

 
2

 
16,297

Revenue
 
9,666

 
626

 
1

 
10,291

State general obligation
 
1,196

 
69

 
—

 
1,265

Pre-refunded
 
1,991

 
72

 
—

 
2,063

Total obligations of states, municipalities and political subdivisions
 
28,271

 
1,648

 
3

 
29,916

Debt securities issued by foreign governments
 
1,118

 
13

 
1

 
1,130

Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 
3,064

 
101

 
3

 
3,162

All other corporate bonds
 
30,518

 
1,238

 
25

 
31,731

Redeemable preferred stock
 
49

 
3

 
—

 
52

Total
 
$
65,021

 
$
3,023

 
$
33

 
$
68,011


 
 
 
Amortized
 
Gross Unrealized
 
Fair
(at December 31, 2018, in millions)
 
Cost
 
Gains
 
Losses
 
Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 
$
2,076

 
$
4

 
$
16

 
$
2,064

Obligations of states, municipalities and political subdivisions:
 
 

 
 

 
 

 
 

Local general obligation
 
14,473

 
219

 
120

 
14,572

Revenue
 
9,755

 
172

 
74

 
9,853

State general obligation
 
1,329

 
18

 
13

 
1,334

Pre-refunded
 
2,772

 
80

 
—

 
2,852

Total obligations of states, municipalities and political subdivisions
 
28,329

 
489

 
207

 
28,611

Debt securities issued by foreign governments
 
1,255

 
7

 
5

 
1,257

Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 
2,557

 
54

 
38

 
2,573

All other corporate bonds
 
29,307

 
156

 
583

 
28,880

Redeemable preferred stock
 
77

 
2

 
—

 
79

Total
 
$
63,601

 
$
712

 
$
849

 
$
63,464


 
Pre-refunded bonds of $2.06 billion and $2.85 billion at September 30, 2019 and December 31, 2018, respectively, were bonds for which states or municipalities have established irrevocable trusts, almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities.  These trusts were created to fund the payment of principal and interest due under the bonds.
 
Proceeds from sales of fixed maturities classified as available for sale were $1.80 billion and $3.19 billion during the nine months ended September 30, 2019 and 2018, respectively. Gross gains of $51 million and $47 million and gross losses of $6 million and $16 million were realized on those sales during the nine months ended September 30, 2019 and 2018, respectively.
 
Equity Securities
 
The cost and fair value of investments in equity securities were as follows:
 
 
 
 
 
 
Fair
(at September 30, 2019, in millions)
 
Cost
 
Gross Gains
 
Gross Losses
 
Value
Public common stock
 
$
340

 
$
36

 
$
6

 
$
370

Non-redeemable preferred stock
 
35

 
7

 
—

 
42

Total
 
$
375

 
$
43

 
$
6

 
$
412


 
 
 
 
 
 
 
Fair
(at December 31, 2018, in millions)
 
Cost
 
Gross Gains
 
Gross Losses
 
Value
Public common stock
 
$
338

 
$
2

 
$
24

 
$
316

Non-redeemable preferred stock
 
44

 
8

 
—

 
52

Total
 
$
382

 
$
10

 
$
24

 
$
368


 
For the nine months ended September 30, 2019, the Company recognized $49 million of net gains on equity securities still held as of September 30, 2019. For the nine months ended September 30, 2018, the Company recognized $5 million of net gains on equity securities still held as of September 30, 2018.

Unrealized Investment Losses
 
The following tables summarize, for all investments in an unrealized loss position at September 30, 2019 and December 31, 2018, the aggregate fair value and gross unrealized loss by length of time those securities have been continuously in an unrealized loss position.  The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4 herein and in note 4 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.  The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1 of notes to the consolidated financial statements in the Company’s 2018 Annual Report to determine whether such investments are other-than-temporarily impaired.
 
 
Less than 12 months
 
12 months or longer
 
Total
(at September 30, 2019, in millions)
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
Fixed maturities
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 
$
54

 
$
—

 
$
352

 
$
1

 
$
406

 
$
1

Obligations of states, municipalities and political subdivisions
 
413

 
3

 
13

 
—

 
426

 
3

Debt securities issued by foreign governments
 
67

 
—

 
157

 
1

 
224

 
1

Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 
288

 
1

 
235

 
2

 
523

 
3

All other corporate bonds
 
818

 
8

 
985

 
17

 
1,803

 
25

Total fixed maturities
 
$
1,640

 
$
12

 
$
1,742

 
$
21

 
$
3,382

 
$
33

 
 
 
Less than 12 months
 
12 months or longer
 
Total
(at December 31, 2018, in millions)
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
Fixed maturities
 
 
 
 
 
 
 
 
 
 
 
 

U.S. Treasury securities and obligations of U.S. government and government agencies and authorities
 
$
484

 
$
5

 
$
1,011

 
$
11

 
$
1,495

 
$
16

Obligations of states, municipalities and political subdivisions
 
5,241

 
82

 
3,298

 
125

 
8,539

 
207

Debt securities issued by foreign governments
 
96

 
—

 
328

 
5

 
424

 
5

Mortgage-backed securities, collateralized mortgage obligations and pass-through securities
 
593

 
9

 
1,070

 
29

 
1,663

 
38

All other corporate bonds
 
12,622

 
303

 
6,872

 
280

 
19,494

 
583

Total fixed maturities
 
$
19,036

 
$
399

 
$
12,579

 
$
450

 
$
31,615

 
$
849


 
At September 30, 2019, the amount of gross unrealized losses for all fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost was not significant.
 
Impairment Charges
 
Impairment charges included in net realized investment gains in the consolidated statement of income were $0 million for each of the three months ended September 30, 2019 and 2018, and $2 million and $1 million for the nine months ended September 30, 2019 and 2018, respectively.

The cumulative amount of credit losses on fixed maturities held at September 30, 2019 and 2018 that were recognized in the consolidated statement of income from other-than-temporary impairments (OTTI) and for which a portion of the OTTI was recognized in other comprehensive income (loss) in the consolidated balance sheet was $17 million and $54 million, respectively.  These credit losses represent less than 1% of the fixed maturity portfolio on a pre-tax basis and less than 1% of shareholders’ equity on an after-tax basis at both dates.  There were no significant changes in the credit component of OTTI during the three months and nine months ended September 30, 2019 and 2018 compared to what was disclosed in note 3 of notes to the consolidated financial statements in the Company’s 2018 Annual Report.