Investments

9 Months Ended

Sep. 30, 2011

Investments disclosure

Investments disclsoure [Text Block]

3. 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, 2011, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government and government agencies and authorities	$	2,125	$	106	$	—	$	2,231
Obligations of states, municipalities and political subdivisions:
Pre-refunded	6,599		533		1		7,131
All other	30,131		2,022		9		32,144
Total obligations of states, municipalities and political subdivisions	36,730		2,555		10		39,275
Debt securities issued by foreign governments	1,921		81		—		2,002
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	3,367		270		19		3,618
All other corporate bonds	15,880		1,026		69		16,837
Redeemable preferred stock	33		4		—		37
Total	$	60,056	$	4,042	$	98	$	64,000

	Amortized		Gross Unrealized				Fair
(at December 31, 2010, in millions)	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government and government agencies and authorities	$	1,914	$	94	$	—	$	2,008
Obligations of states, municipalities and political subdivisions:
Pre-refunded	6,787		505		1		7,291
All other	31,277		1,121		154		32,244
Total obligations of states, municipalities and political subdivisions	38,064		1,626		155		39,535
Debt securities issued by foreign governments	2,156		50		4		2,202
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	3,952		248		36		4,164
All other corporate bonds	14,051		876		51		14,876
Redeemable preferred stock	33		2		—		35
Total	$	60,170	$	2,896	$	246	$	62,820

Pre-refunded bonds of $7.13 billion and $7.29 billion at September 30, 2011 and December 31, 2010, respectively, were bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest.

Equity Securities

The cost and fair value of investments in equity securities were as follows:

			Gross Unrealized				Fair
(at September 30, 2011, in millions)	Cost		Gains		Losses		Value
Common stock	$	300	$	83	$	7	$	376
Non-redeemable preferred stock	167		30		3		194
Total	$	467	$	113	$	10	$	570

			Gross Unrealized				Fair
(at December 31, 2010, in millions)	Cost		Gains		Losses		Value
Common stock	$	198	$	106	$	—	$	304
Non-redeemable preferred stock	174		46		5		215
Total	$	372	$	152	$	5	$	519

Unrealized Investment Losses

The following tables summarize, for all investments in an unrealized loss position at September 30, 2011 and December 31, 2010, the aggregate fair value and gross unrealized losses by length of time those securities have been continuously in an unrealized loss position.

	Less than 12 months				12 months or longer				Total
(at September 30, 2011, 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	$	520	$	—	$	—	$	—	$	520	$	—
Obligations of states, municipalities and political subdivisions	731		5		115		5		846		10
Debt securities issued by foreign governments	54		—		—		—		54		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	292		8		137		11		429		19
All other corporate bonds	1,794		52		73		17		1,867		69
Redeemable preferred stock	—		—		—		—		—		—
Total fixed maturities	3,391		65		325		33		3,716		98
Equity securities
Common stock	79		7		—		—		79		7
Non-redeemable preferred stock	58		1		35		2		93		3
Total equity securities	137		8		35		2		172		10
Total	$	3,528	$	73	$	360	$	35	$	3,888	$	108

	Less than 12 months				12 months or longer				Total
(at December 31, 2010, 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	$	155	$	—	$	—	$	—	$	155	$	—
Obligations of states, municipalities and political subdivisions	5,854		149		139		6		5,993		155
Debt securities issued by foreign governments	419		4		13		—		432		4
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	77		1		420		35		497		36
All other corporate bonds	1,255		32		185		19		1,440		51
Redeemable preferred stock	—		—		3		—		3		—
Total fixed maturities	7,760		186		760		60		8,520		246
Equity securities
Common stock	3		—		3		—		6		—
Non-redeemable preferred stock	45		1		49		4		94		5
Total equity securities	48		1		52		4		100		5
Total	$	7,808	$	187	$	812	$	64	$	8,620	$	251

The following table summarizes, for all fixed maturities and equity securities reported at fair value for which fair value is less than 80% of amortized cost at September 30, 2011, the gross unrealized investment loss by length of time those securities have continuously been in an unrealized loss position of greater than 20% of amortized cost:

	Period For Which Fair Value Is Less Than 80% of Amortized Cost
(in millions)	3 Months or Less		Greater Than 3 Months, 6 Months or Less		Greater Than 6 Months, 12 Months or Less		Greater Than 12 Months		Total
Fixed maturities
Mortgage-backed securities	$	—	$	—	$	—	$	—	$	—
Other	5		2		4		9		20
Total fixed maturities	5		2		4		9		20
Equity securities	—		—		—		—		—
Total	$	5	$	2	$	4	$	9	$	20

Impairment Charges

Impairment charges included in net realized investment gains in the consolidated statement of income were as follows:

	Three Months Ended  September 30,				Nine Months Ended September 30,
(in millions)	2011		2010		2011		2010
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government and government agencies and authorities	$	—	$	—	$	—	$	—
Obligations of states, municipalities and political subdivisions	—		—		—		—
Debt securities issued by foreign governments	—		—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	5		1		9		3
All other corporate bonds	2		2		5		7
Redeemable preferred stock	—		—		—		—
Total fixed maturities	7		3		14		10
Equity securities
Common stock	5		—		6		2
Non-redeemable preferred stock	—		1		—		1
Total equity securities	5		1		6		3
Other investments	—		2		—		7
Total	$	12	$	6	$	20	$	20

The following tables present a roll-forward of the credit component of other-than-temporary impairments (OTTI) on fixed maturities recognized in the consolidated statement of income for which a portion of the OTTI was recognized in accumulated other changes in equity from nonowner sources:

	2011
(for the three months ended September 30, in millions)	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	51	$	—	$	4	$	—	$	—	$	55
All other corporate bonds	92		—		1		—		2		95
Total fixed maturities	$	143	$	—	$	5	$	—	$	2	$	150

(for the nine months ended September 30, in millions)
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	47	$	—	$	8	$	—		$	—	$	55
All other corporate bonds	88		2		2		(1		)	4		95
Total fixed maturities	$	135	$	2	$	10	$	(1	)	$	4	$	150

	2010
(for the three months ended September 30, in millions)	Cumulative OTTI Credit Losses Recognized for Securities Held, Beginning of Period		Additions for OTTI Securities Where No Credit Losses Were Previously Recognized		Additions for OTTI Securities Where Credit Losses Have Been Previously Recognized		Reductions Due to Sales/Defaults of Credit- Impaired Securities		Adjustments to Book Value of Credit- Impaired Securities due to Changes in Cash Flows		Cumulative OTTI Credit Losses Recognized for Securities Still Held, End of Period
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	45	$	—	$	1	$	—	$	—	$	46
All other corporate bonds	85		—		1		—		1		87
Total fixed maturities	$	130	$	—	$	2	$	—	$	1	$	133

(for the nine months ended September 30, in millions)
Fixed maturities
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	$	46	$	—	$	3	$	(3	)	$	—	$	46
All other corporate bonds	93		—		3		(11		)	2		87
Total fixed maturities	$	139	$	—	$	6	$	(14	)	$	2	$	133