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Investments (Tables)
 3 Months Ended
Mar. 31, 2015
Investments [Abstract]  
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value
The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows:
($ in millions)
Amortized cost
 
Gross unrealized
 
Fair
value
 
 
Gains
 
Losses
 
March 31, 2015
 

 
 

 
 

 
 

U.S. government and agencies
$
3,972

 
$
137

 
$
(3
)
 
$
4,106

Municipal
8,043

 
691

 
(21
)
 
8,713

Corporate
40,255

 
2,294

 
(174
)
 
42,375

Foreign government
1,290

 
85

 
—

 
1,375

Asset-backed securities (“ABS”)
3,047

 
34

 
(26
)
 
3,055

Residential mortgage-backed securities (“RMBS”)
1,049

 
117

 
(12
)
 
1,154

Commercial mortgage-backed securities (“CMBS”)
558

 
43

 
(1
)
 
600

Redeemable preferred stock
21

 
4

 
—

 
25

Total fixed income securities
$
58,235

 
$
3,405

 
$
(237
)
 
$
61,403

 
 
 
 
 
 
 
 
December 31, 2014
 

 
 

 
 

 
 

U.S. government and agencies
$
4,192

 
$
139

 
$
(3
)
 
$
4,328

Municipal
7,877

 
645

 
(25
)
 
8,497

Corporate
40,386

 
1,998

 
(240
)
 
42,144

Foreign government
1,543

 
102

 
—

 
1,645

ABS
3,971

 
38

 
(31
)
 
3,978

RMBS
1,108

 
112

 
(13
)
 
1,207

CMBS
573

 
44

 
(2
)
 
615

Redeemable preferred stock
22

 
4

 
—

 
26

Total fixed income securities
$
59,672

 
$
3,082

 
$
(314
)
 
$
62,440
Schedule for fixed income securities based on contractual maturities
The scheduled maturities for fixed income securities are as follows as of March 31, 2015:
($ in millions)
Amortized
cost
 
Fair
value
Due in one year or less
$
4,044

 
$
4,092

Due after one year through five years
25,110

 
25,883

Due after five years through ten years
16,379

 
17,180

Due after ten years
8,048

 
9,439

 
53,581

 
56,594

ABS, RMBS and CMBS
4,654

 
4,809

Total
$
58,235

 
$
61,403
Schedule of net investment income
Net investment income is as follows:
($ in millions)
Three months ended March 31,
 
2015
 
2014
Fixed income securities
$
568

 
$
705

Equity securities
23

 
28

Mortgage loans
55

 
81

Limited partnership interests
198

 
142

Short-term investments
1

 
1

Other
45

 
42

Investment income, before expense
890

 
999

Investment expense
(40
)
 
(40
)
Net investment income
$
850

 
$
959
Schedule of realized capital gains and losses by asset type
Realized capital gains and losses by asset type are as follows:
($ in millions)
Three months ended March 31,
 
2015
 
2014
Fixed income securities
$
80

 
$
36

Equity securities
78

 
22

Mortgage loans
—

 
3

Limited partnership interests
6

 
2

Derivatives
(25
)
 
(12
)
Other
—

 
3

Realized capital gains and losses
$
139

 
$
54
Schedule of realized capital gains and losses by transaction type
Realized capital gains and losses by transaction type are as follows:
($ in millions)
Three months ended March 31,
 
2015
 
2014
Impairment write-downs
$
(19
)
 
$
(16
)
Change in intent write-downs
(30
)
 
(65
)
Net other-than-temporary impairment losses recognized in earnings
(49
)
 
(81
)
Sales
216

 
147

Valuation and settlements of derivative instruments
(28
)
 
(12
)
Realized capital gains and losses
$
139

 
$
54
Schedule of other-than-temporary impairment losses by asset type
Other-than-temporary impairment losses by asset type are as follows:
($ in millions)
Three months ended March 31, 2015
 
Three months ended March 31, 2014
 
Gross
 
Included
 in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
(4
)
 
$
4

 
$
—

 
$
(5
)
 
$
—

 
$
(5
)
Corporate
(5
)
 
—

 
(5
)
 
—

 
—

 
—

ABS
(1
)
 
1

 
—

 
(1
)
 
—

 
(1
)
RMBS
1

 
(1
)
 
—

 
—

 
(1
)
 
(1
)
Total fixed income securities
(9
)
 
4

 
(5
)
 
(6
)
 
(1
)
 
(7
)
Equity securities
(39
)
 
—

 
(39
)
 
(65
)
 
—

 
(65
)
Mortgage loans
—

 
—

 
—

 
4

 
—

 
4

Limited partnership interests
(5
)
 
—

 
(5
)
 
(13
)
 
—

 
(13
)
Other-than-temporary impairment losses
$
(53
)
 
$
4

 
$
(49
)
 
$
(80
)
 
$
(1
)
 
$
(81
)
Schedule of other-than-temporary impairment losses on fixed income securities included in Accumulated Other Comprehensive Income
The amounts exclude $234 million and $233 million as of March 31, 2015 and December 31, 2014, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions)
March 31, 2015
 
December 31, 2014
Municipal
$
(12
)
 
$
(8
)
ABS
(2
)
 
(2
)
RMBS
(105
)
 
(108
)
CMBS
(6
)
 
(5
)
Total
$
(125
)
 
$
(123
)
Schedule of credit losses on fixed income securities recognized in earnings
Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of the end of the period are as follows:
($ in millions)
Three months ended March 31,
 
2015
 
2014
Beginning balance
$
(380
)
 
$
(513
)
Additional credit loss for securities previously other-than-temporarily impaired
(1
)
 
(5
)
Additional credit loss for securities not previously other-than-temporarily impaired
(4
)
 
(1
)
Reduction in credit loss for securities disposed or collected
6

 
26

Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell
—

 
—

Change in credit loss due to accretion of increase in cash flows
1

 
—

Ending balance
$
(378
)
 
$
(493
)
Schedule of unrealized net capital gains and losses
Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows:
($ in millions)
Fair
value
 
Gross unrealized
 
Unrealized net
gains (losses)
March 31, 2015
 
Gains
 
Losses
 
Fixed income securities
$
61,403

 
$
3,405

 
$
(237
)
 
$
3,168

Equity securities
4,166

 
468

 
(54
)
 
414

Short-term investments
2,497

 
—

 
—

 
—

Derivative instruments (1)
7

 
8

 
(5
)
 
3

Equity method (“EMA”) limited partnerships (2)
 

 
 

 
 

 
(4
)
Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
3,581

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves (3)
 

 
 

 
 

 
(79
)
DAC and DSI (4)
 

 
 

 
 

 
(212
)
Amounts recognized
 

 
 

 
 

 
(291
)
Deferred income taxes
 

 
 

 
 

 
(1,153
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
2,137

_______________
(1) 
Included in the fair value of derivative instruments are $7 million classified as assets and $0 million classified as liabilities.
(2) 
Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable.
(3) 
The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.
(4) 
The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.
($ in millions)
Fair
value
 
Gross unrealized
 
Unrealized net
gains (losses)
December 31, 2014
 
Gains
 
Losses
 
Fixed income securities
$
62,440

 
$
3,082

 
$
(314
)
 
$
2,768

Equity securities
4,104

 
467

 
(55
)
 
412

Short-term investments
2,540

 
—

 
—

 
—

Derivative instruments (1)
2

 
3

 
(5
)
 
(2
)
EMA limited partnerships
 

 
 

 
 

 
(5
)
Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
3,173

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves
 

 
 

 
 

 
(28
)
DAC and DSI
 

 
 

 
 

 
(179
)
Amounts recognized
 

 
 

 
 

 
(207
)
Deferred income taxes
 

 
 

 
 

 
(1,040
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
1,926

_______________
(i) 
Included in the fair value of derivative instruments are $3 million classified as assets and $1 million classified as liabilities.
Schedule of change in unrealized net capital gains and losses
The change in unrealized net capital gains and losses for the three months ended March 31, 2015 is as follows:
($ in millions)
 
Fixed income securities
$
400

Equity securities
2

Derivative instruments
5

EMA limited partnerships
1

Total
408

Amounts recognized for:
 

Insurance reserves
(51
)
DAC and DSI
(33
)
Amounts recognized
(84
)
Deferred income taxes
(113
)
Increase in unrealized net capital gains and losses, after-tax
$
211
Schedule of gross unrealized losses and fair value of available for sale securities by length of time
The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position.
($ in millions)
Less than 12 months
 
12 months or more
 
Total
unrealized
losses
 
Number
of issues
 
Fair
value
 
Unrealized
losses
 
Number
of issues
 
Fair
value
 
Unrealized
losses
 
March 31, 2015
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
7

 
$
657

 
$
(3
)
 
—

 
$
—

 
$
—

 
$
(3
)
Municipal
216

 
701

 
(8
)
 
9

 
61

 
(13
)
 
(21
)
Corporate
342

 
3,596

 
(99
)
 
69

 
675

 
(75
)
 
(174
)
Foreign government
4

 
28

 
—

 
—

 
—

 
—

 
—

ABS
47

 
753

 
(7
)
 
24

 
301

 
(19
)
 
(26
)
RMBS
77

 
18

 
(1
)
 
179

 
154

 
(11
)
 
(12
)
CMBS
4

 
11

 
—

 
2

 
13

 
(1
)
 
(1
)
Total fixed income securities
697

 
5,764

 
(118
)
 
283

 
1,204

 
(119
)
 
(237
)
Equity securities
210

 
787

 
(52
)
 
1

 
11

 
(2
)
 
(54
)
Total fixed income and equity securities
907

 
$
6,551

 
$
(170
)
 
284

 
$
1,215

 
$
(121
)
 
$
(291
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade fixed income securities
500

 
$
4,171

 
$
(42
)
 
216

 
$
837

 
$
(68
)
 
$
(110
)
Below investment grade fixed income securities
197

 
1,593

 
(76
)
 
67

 
367

 
(51
)
 
(127
)
Total fixed income securities
697

 
$
5,764

 
$
(118
)
 
283

 
$
1,204

 
$
(119
)
 
$
(237
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
21

 
$
1,501

 
$
(3
)
 
—

 
$
—

 
$
—

 
$
(3
)
Municipal
252

 
1,008

 
(9
)
 
19

 
116

 
(16
)
 
(25
)
Corporate
576

 
7,545

 
(147
)
 
119

 
1,214

 
(93
)
 
(240
)
Foreign government
2

 
13

 
—

 
1

 
19

 
—

 
—

ABS
81

 
1,738

 
(11
)
 
26

 
315

 
(20
)
 
(31
)
RMBS
75

 
70

 
(1
)
 
188

 
156

 
(12
)
 
(13
)
CMBS
8

 
33

 
—

 
3

 
32

 
(2
)
 
(2
)
Total fixed income securities
1,015

 
11,908

 
(171
)
 
356

 
1,852

 
(143
)
 
(314
)
Equity securities
258

 
866

 
(53
)
 
1

 
11

 
(2
)
 
(55
)
Total fixed income and equity securities
1,273

 
$
12,774

 
$
(224
)
 
357

 
$
1,863

 
$
(145
)
 
$
(369
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade fixed income securities
754

 
$
9,951

 
$
(71
)
 
281

 
$
1,444

 
$
(87
)
 
$
(158
)
Below investment grade fixed income securities
261

 
1,957

 
(100
)
 
75

 
408

 
(56
)
 
(156
)
Total fixed income securities
1,015

 
$
11,908

 
$
(171
)
 
356

 
$
1,852

 
$
(143
)
 
$
(314
)
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution
The following table reflects the carrying value of non-impaired fixed rate and variable rate mortgage loans summarized by debt service coverage ratio distribution.
($ in millions)
March 31, 2015
 
December 31, 2014
 
Debt service coverage
ratio distribution
Fixed rate
mortgage
loans
 
Variable rate
mortgage
loans
 
Total
 
Fixed rate
mortgage
loans
 
Variable rate
mortgage
loans
 
Total
Below 1.0
$
93

 
$
—

 
$
93

 
$
110

 
$
—

 
$
110

1.0 - 1.25
433

 
—

 
433

 
424

 
—

 
424

1.26 - 1.50
1,194

 
1

 
1,195

 
1,167

 
1

 
1,168

Above 1.50
2,519

 
20

 
2,539

 
2,450

 
20

 
2,470

Total non-impaired mortgage loans
$
4,239

 
$
21

 
$
4,260

 
$
4,151

 
$
21

 
$
4,172
Net carrying value of impaired mortgage loans
The net carrying value of impaired mortgage loans is as follows:
($ in millions)
March 31, 2015
 
December 31, 2014
Impaired mortgage loans with a valuation allowance
$
16

 
$
16

Impaired mortgage loans without a valuation allowance
—

 
—

Total impaired mortgage loans
$
16

 
$
16

Valuation allowance on impaired mortgage loans
$
8

 
$
8
Valuation allowance on impaired mortgage loans
The rollforward of the valuation allowance on impaired mortgage loans is as follows:
($ in millions)
Three months ended March 31,
 
2015
 
2014
Beginning balance
$
8

 
$
21

Net decrease in valuation allowance
—

 
(4
)
Charge offs
—

 
(8
)
Ending balance
$
8

 
$
9
Schedule of mortgage loans, past due
The carrying value of past due mortgage loans is as follows:
($ in millions)
March 31, 2015
 
December 31, 2014
Less than 90 days past due
$
6

 
$
—

90 days or greater past due
—

 
—

   Total past due
6

 
—

   Current loans
4,270

 
4,188

      Total mortgage loans
$
4,276

 
$
4,188