Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 06, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | ALLSTATE LIFE INSURANCE CO | |
Entity Central Index Key | 352,736 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,800 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues | ||||
Net investment income | $ 419 | $ 473 | $ 826 | $ 877 |
Realized capital gains and losses: | ||||
Total other-than-temporary impairment (“OTTI”) losses | (2) | (13) | (2) | (41) |
OTTI losses reclassified to (from) other comprehensive income | 0 | 0 | 1 | (4) |
Net OTTI losses recognized in earnings | (2) | (13) | (3) | (37) |
Sales and valuation changes on equity investments and derivatives | 10 | 9 | (21) | 32 |
Total realized capital gains and losses | 8 | (4) | (24) | (5) |
Total revenues | 783 | 826 | 1,519 | 1,588 |
Costs and expenses | ||||
Contract benefits | 357 | 364 | 727 | 718 |
Interest credited to contractholder funds | 152 | 161 | 300 | 322 |
Amortization of deferred policy acquisition costs | 39 | 43 | 78 | 84 |
Operating costs and expenses | 68 | 78 | 136 | 158 |
Restructuring and related charges | 2 | 0 | 2 | 0 |
Interest expense | 1 | 2 | 2 | 3 |
Total costs and expenses | 619 | 648 | 1,245 | 1,285 |
Gain on disposition of operations | 2 | 2 | 3 | 4 |
Income from operations before income tax expense | 166 | 180 | 277 | 307 |
Income tax expense | 32 | 60 | 53 | 101 |
Net income | 134 | 120 | 224 | 206 |
Other comprehensive (loss) income, after-tax | ||||
Change in unrealized net capital gains and losses | (61) | 118 | (236) | 183 |
Change in unrealized foreign currency translation adjustments | 5 | 0 | 9 | (3) |
Other comprehensive (loss) income, after-tax | (56) | 118 | (227) | 180 |
Comprehensive income (loss) | 78 | 238 | (3) | 386 |
Premiums | ||||
Revenues | ||||
Revenues | 175 | 170 | 352 | 339 |
Contract charges | ||||
Revenues | ||||
Revenues | 173 | 177 | 349 | 356 |
Other revenue | ||||
Revenues | ||||
Revenues | $ 8 | $ 10 | $ 16 | $ 21 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Fixed income securities, at fair value (amortized cost $21,041 and $22,004) | $ 21,567 | $ 23,261 |
Mortgage loans | 3,839 | 3,876 |
Equity securities, at fair value (cost $1,439 and $1,306) | 1,705 | 1,614 |
Limited partnership interests | 3,452 | 3,147 |
Short-term, at fair value (amortized cost $1,066 and $725) | 1,066 | 725 |
Policy loans | 557 | 561 |
Other | 1,322 | 1,254 |
Total investments | 33,508 | 34,438 |
Cash | 61 | 145 |
Deferred policy acquisition costs | 1,231 | 1,156 |
Accrued investment income | 265 | 263 |
Other assets | 516 | 501 |
Separate Accounts | 3,247 | 3,422 |
Total assets | 41,458 | 42,605 |
Liabilities | ||
Contractholder funds | 18,016 | 18,592 |
Reserve for life-contingent contract benefits | 11,267 | 11,625 |
Unearned premiums | 4 | 4 |
Payable to affiliates, net | 41 | 55 |
Other liabilities and accrued expenses | 1,003 | 1,076 |
Deferred income taxes | 812 | 836 |
Notes due to related parties | 140 | 140 |
Separate Accounts | 3,247 | 3,422 |
Total liabilities | 34,530 | 35,750 |
Commitments and Contingent Liabilities (Note 7) | ||
Shareholder’s equity | ||
Common stock, $227 par value, 23,800 shares authorized and outstanding | 5 | 5 |
Additional capital paid-in | 2,024 | 2,024 |
Retained income | 4,519 | 3,981 |
Unrealized net capital gains and losses: | ||
Unrealized net capital gains and losses on fixed income securities with OTTI | 48 | 47 |
Other unrealized net capital gains and losses | 368 | 1,186 |
Unrealized adjustment to DAC, DSI and insurance reserves | (55) | (398) |
Total unrealized net capital gains and losses | 361 | 835 |
Unrealized foreign currency translation adjustments | 19 | 10 |
Total accumulated other comprehensive income (“AOCI”) | 380 | 845 |
Total shareholder’s equity | 6,928 | 6,855 |
Total liabilities and shareholder’s equity | 41,458 | 42,605 |
Series A | ||
Shareholder’s equity | ||
Redeemable preferred stock | 0 | 0 |
Series B | ||
Shareholder’s equity | ||
Redeemable preferred stock | 0 | 0 |
Affiliate | ||
Investments | ||
Reinsurance recoverables | 428 | 437 |
Non-affiliate | ||
Investments | ||
Reinsurance recoverables | $ 2,202 | $ 2,243 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fixed income securities, at fair value, amortized cost (in dollars) | $ 21,041 | $ 22,004 |
Equity securities, at fair value, cost (in dollars) | 1,439 | 1,306 |
Short-term, at fair value, amortized cost (in dollars) | $ 1,066 | $ 725 |
Common stock, par value (in dollars per share) | $ 227 | $ 227 |
Common stock, shares authorized (in shares) | 23,800 | 23,800 |
Common stock, shares outstanding (in shares) | 23,800 | 23,800 |
Series A | ||
Redeemable preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Redeemable preferred stock, shares authorized (in shares) | 1,500,000 | 1,500,000 |
Redeemable preferred stock, shares issued (in shares) | 0 | 0 |
Series B | ||
Redeemable preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Redeemable preferred stock, shares authorized (in shares) | 1,500,000 | 1,500,000 |
Redeemable preferred stock, shares issued (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY - USD ($) $ in Millions | Total | Common stock | Additional capital paid-in | Retained income | Accumulated other comprehensive income |
Increase (decrease) in equity | |||||
Cumulative effect of change in accounting principle | $ 0 | $ 0 | |||
Balance, beginning of period at Dec. 31, 2016 | $ 1,990 | 3,736 | 678 | ||
Increase (decrease) in equity | |||||
Gain on reinsurance with an affiliate | 34 | ||||
Net income | $ 206 | 206 | |||
Dividends | (500) | ||||
Change in unrealized net capital gains and losses | 183 | 183 | |||
Change in unrealized foreign currency translation adjustments | (3) | (3) | |||
Balance, end of period at Jun. 30, 2017 | 6,329 | $ 5 | 2,024 | 3,442 | 858 |
Increase (decrease) in equity | |||||
Cumulative effect of change in accounting principle | 314 | (238) | |||
Balance, beginning of period at Dec. 31, 2017 | 6,855 | 2,024 | 3,981 | 845 | |
Increase (decrease) in equity | |||||
Gain on reinsurance with an affiliate | 0 | ||||
Net income | 224 | 224 | |||
Dividends | 0 | ||||
Change in unrealized net capital gains and losses | (236) | (236) | |||
Change in unrealized foreign currency translation adjustments | 9 | 9 | |||
Balance, end of period at Jun. 30, 2018 | $ 6,928 | $ 5 | $ 2,024 | $ 4,519 | $ 380 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 224 | $ 206 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization and other non-cash items | (30) | (30) |
Realized capital gains and losses | 24 | 5 |
Gain on disposition of operations | (3) | (4) |
Interest credited to contractholder funds | 300 | 322 |
Changes in: | ||
Policy benefits and other insurance reserves | (319) | (278) |
Deferred policy acquisition costs | 34 | 24 |
Reinsurance recoverables, net | 24 | 18 |
Income taxes | (8) | 85 |
Other operating assets and liabilities | (36) | (133) |
Net cash provided by operating activities | 210 | 215 |
Proceeds from sales | ||
Fixed income securities | 3,087 | 2,564 |
Equity securities | 663 | 828 |
Limited partnership interests | 86 | 240 |
Other investments | 10 | 6 |
Investment collections | ||
Fixed income securities | 687 | 860 |
Mortgage loans | 308 | 281 |
Other investments | 78 | 89 |
Investment purchases | ||
Fixed income securities | (2,887) | (2,683) |
Equity securities | (757) | (815) |
Limited partnership interests | (271) | (275) |
Mortgage loans | (269) | (129) |
Other investments | (156) | (116) |
Change in short-term investments, net | (302) | 56 |
Change in policy loans and other investments, net | (25) | (13) |
Net cash provided by investing activities | 252 | 893 |
Cash flows from financing activities | ||
Contractholder fund deposits | 386 | 408 |
Contractholder fund withdrawals | (960) | (925) |
Dividends paid | 0 | (500) |
Other | 28 | (21) |
Net cash used in financing activities | (546) | (1,038) |
Net (decrease) increase in cash | (84) | 70 |
Cash at beginning of period | 145 | 138 |
Cash at end of period | $ 61 | $ 208 |
General
General | 6 Months Ended |
Jun. 30, 2018 | |
General | |
General | General Basis of presentation The accompanying condensed consolidated financial statements include the accounts of Allstate Life Insurance Company (“ALIC”) and its wholly owned subsidiaries (collectively referred to as the “Company”). ALIC is wholly owned by Allstate Insurance Company (“AIC”), which is wholly owned by Allstate Insurance Holdings, LLC, a wholly owned subsidiary of The Allstate Corporation (the “Corporation”). These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements and notes as of June 30, 2018 and for the three month and six month periods ended June 30, 2018 and 2017 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017 . The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated. Reinsurance transaction Effective January 1, 2017, ALIC entered into a coinsurance reinsurance agreement with Allstate Assurance Company to assume certain term life insurance policies. The agreement covered policies issued from January 1, 2015 through December 31, 2017. In connection with the agreement, the Company recorded cash of $20 million , deferred policy acquisition costs (“DAC”) of $45 million , other assets of $11 million , reserve for life-contingent contract benefits of $24 million and deferred tax liabilities of $18 million . The $34 million gain on the transaction was recorded as an increase to additional capital paid-in since the transaction was between entities under common control. Premiums and contract charges The following table summarizes premiums and contract charges by product. ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Premiums Traditional life insurance $ 145 $ 143 $ 292 $ 286 Accident and health insurance 30 27 60 53 Total premiums 175 170 352 339 Contract charges Interest-sensitive life insurance 170 174 343 350 Fixed annuities 3 3 6 6 Total contract charges 173 177 349 356 Total premiums and contract charges $ 348 $ 347 $ 701 $ 695 Adopted accounting standard Recognition and Measurement of Financial Assets and Financial Liabilities Effective January 1, 2018, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance requiring equity investments, including equity securities and limited partnership interests not accounted for under the equity method of accounting or that do not result in consolidation to be measured at fair value with changes in fair value recognized in net income. The guidance clarifies that an entity should evaluate the realizability of deferred tax assets related to available-for-sale fixed income securities in combination with the entity’s other deferred tax assets. The Company’s adoption of the new FASB guidance included adoption of the relevant elements of Technical Corrections and Improvements to Financial Instruments, issued in February 2018. Upon adoption of the new guidance on January 1, 2018, $308 million of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. The after-tax change in accounting for equity securities did not affect the Company’s total shareholder’s equity and the unrealized net capital gains of $238 million reclassified to retained income will never be recognized in net income. Upon adoption of the new guidance on January 1, 2018, the carrying value of cost method limited partnership interests increased $95 million , pre-tax, to fair value. The after-tax cumulative-effect increase in retained income of $76 million increased the Company’s shareholder’s equity but will never be recognized in net income. Changes to significant accounting policies Investments Changes were made to the Company’s Significant Accounting Policies upon adoption of new FASB guidance related to the recognition and measurement of financial assets. Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Equity securities are carried at fair value. The periodic change in fair value of equity securities is recognized within realized capital gains and losses on the Condensed Consolidated Statements of Operations and Comprehensive Income. Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. Where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies, investments in limited partnership interests purchased prior to January 1, 2018 are accounted for at fair value primarily utilizing the net asset value as a practical expedient (“NAV”) to determine fair value. All other investments in limited partnership interests, including those purchased subsequent to January 1, 2018, are accounted for in accordance with the equity method of accounting (“EMA”). Investment income from limited partnership interests carried at fair value is recognized based upon the changes in fair value of the investee’s equity primarily determined using NAV. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ earnings. Income for EMA limited partnership interests is generally recognized on a three month delay due to the availability of the related financial statements. Tax Reform On December 22, 2017, Public Law 115-97, known as the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”) became effective, permanently reducing the U.S. corporate income tax rate from 35% to 21% beginning January 1, 2018. As a result, the corporate tax rate is not comparable between periods. During 2017, the Company revalued deferred tax assets and liabilities and recorded liabilities related to the transition to the modified territorial system for international taxation. The impact of the Tax Legislation may differ from the Company’s preliminary estimates due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued and actions the Company may take as a result of the Tax Legislation. During the period ended June 30, 2018, the Company has not recorded any material adjustments to these provisional amounts. The Company continues to refine the analysis and calculations, which could impact the provisional estimates previously recorded. Accordingly, as of June 30, 2018, the Company has not fully completed the accounting for the Tax Legislation. Pending accounting standards Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for the reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. The reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance and not as a direct write-down. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained income. The Company is in the process of evaluating the impact of adoption. Accounting for Hedging Activities In August 2017, the FASB issued amendments intended to better align hedge accounting with an organization’s risk management activities. The amendments expand hedge accounting for nonfinancial and financial risk components and revise the measurement methodologies to better align with an organization’s risk management activities. Separate presentation of hedge ineffectiveness is eliminated to provide greater transparency of the full impact of hedging by requiring presentation of the results of the hedged item and hedging instrument in a single financial statement line item. In addition, the amendments reduce complexity by simplifying the manner in which assessments of hedge effectiveness may be performed. The guidance is effective for reporting periods beginning after December 15, 2018. The presentation and disclosure guidance is effective on a prospective basis. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. Other revenue presentation The Company revised the presentation of total revenue to include other revenue. Previously, components of other revenue were presented within operating costs and expenses and primarily represent gross dealer concessions received in connection with Allstate exclusive agencies and exclusive financial specialists sales of non-proprietary products. Other revenue is recognized when performance obligations are fulfilled. Prior periods have been reclassified to conform to current separate presentation of other revenue. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Non-cash investing activities include $13 million and $4 million related to mergers and exchanges completed with equity securities, fixed income securities and limited partnerships, and modifications of certain mortgage loans for the six months ended June 30, 2018 and 2017 , respectively. Liabilities for collateral received in conjunction with the Company’s securities lending program and over-the-counter (“OTC”) and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows: ($ in millions) Six months ended June 30, 2018 2017 Net change in proceeds managed Net change in fixed income securities $ 68 $ 9 Net change in short-term investments (37 ) 12 Operating cash flow provided $ 31 $ 21 Net change in liabilities Liabilities for collateral, beginning of period $ (542 ) $ (550 ) Liabilities for collateral, end of period (511 ) (529 ) Operating cash flow used $ (31 ) $ (21 ) |
Investments
Investments | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Investments | Investments Fair values The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows: ($ in millions) Amortized Gross unrealized Fair cost Gains Losses value June 30, 2018 U.S. government and agencies $ 376 $ 27 $ — $ 403 Municipal 2,036 218 (4 ) 2,250 Corporate 17,731 527 (306 ) 17,952 Foreign government 271 12 — 283 Asset-backed securities (“ABS”) 382 4 (4 ) 382 Residential mortgage-backed securities (“RMBS”) 178 48 (1 ) 225 Commercial mortgage-backed securities (“CMBS”) 53 6 (2 ) 57 Redeemable preferred stock 14 1 — 15 Total fixed income securities $ 21,041 $ 843 $ (317 ) $ 21,567 December 31, 2017 U.S. government and agencies $ 768 $ 38 $ (2 ) $ 804 Municipal 2,001 275 (3 ) 2,273 Corporate 18,262 960 (86 ) 19,136 Foreign government 279 20 — 299 ABS 383 6 (4 ) 385 RMBS 205 49 (1 ) 253 CMBS 93 6 (2 ) 97 Redeemable preferred stock 13 1 — 14 Total fixed income securities $ 22,004 $ 1,355 $ (98 ) $ 23,261 Scheduled maturities The scheduled maturities for fixed income securities are as follows as of June 30, 2018 : ($ in millions) Amortized cost Fair value Due in one year or less $ 1,170 $ 1,177 Due after one year through five years 8,135 8,264 Due after five years through ten years 7,149 7,092 Due after ten years 3,974 4,370 20,428 20,903 ABS, RMBS and CMBS 613 664 Total $ 21,041 $ 21,567 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS, RMBS and CMBS are shown separately because of the potential for prepayment of principal prior to contractual maturity dates. Net investment income Net investment income is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ 247 $ 269 $ 498 $ 537 Mortgage loans 53 45 97 94 Equity securities 16 14 23 29 Limited partnership interests (1) (2) 92 135 188 200 Short-term investments 5 2 9 3 Policy loans 8 7 15 15 Other 23 21 45 40 Investment income, before expense 444 493 875 918 Investment expense (25 ) (20 ) (49 ) (41 ) Net investment income $ 419 $ 473 $ 826 $ 877 _______________ (1) Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income . (2) Includes net investment income of $82 million and $140 million for EMA limited partnership interests and $10 million and $48 million for limited partnership interests carried at fair value for the three months and six months ended June 30, 2018 , respectively. Realized capital gains and losses Realized capital gains and losses by asset type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ (12 ) $ (6 ) $ (18 ) $ (13 ) Mortgage loans 2 — 2 — Equity securities 20 (4 ) (6 ) (4 ) Limited partnership interests (11 ) 10 (8 ) 23 Derivatives 10 (4 ) 7 (9 ) Other (1 ) — (1 ) (2 ) Realized capital gains and losses $ 8 $ (4 ) $ (24 ) $ (5 ) Realized capital gains and losses by transaction type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Impairment write-downs (1) $ (2 ) $ (12 ) $ (3 ) $ (33 ) Change in intent write-downs (1) — (1 ) — (4 ) Net OTTI losses recognized in earnings (2 ) (13 ) (3 ) (37 ) Sales (1) (7 ) 13 (12 ) 41 Valuation of equity investments (1) 10 — (13 ) — Valuation and settlements of derivative instruments 7 (4 ) 4 (9 ) Realized capital gains and losses $ 8 $ (4 ) $ (24 ) $ (5 ) _______________ (1) Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales. Gross gains of $13 million and $22 million and gross losses of $24 million and $23 million were realized on sales of fixed income securities during the three months ended June 30, 2018 and 2017 , respectively. Gross gains of $20 million and $55 million and gross losses of $36 million and $44 million were realized on sales of fixed income and equity securities during the six months ended June 30, 2018 and 2017 , respectively. Valuation changes included in net income for investments still held as of June 30, 2018 are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2018 Equity securities (1) $ 20 $ 14 Limited partnership interests carried at fair value (1) 11 49 Total valuation changes $ 31 $ 63 _______________ (1) Investments held at the end of a prior quarter that were sold in the current quarter are not included in the year-to-date amounts shown in the table above; therefore, the sum of the quarterly amounts may not equal the year-to-date amount. OTTI losses by asset type are as follows: ($ in millions) Three months ended June 30, 2018 Three months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ — $ (1 ) RMBS (1 ) — (1 ) — — — CMBS — — — (3 ) — (3 ) Total fixed income securities (1 ) — (1 ) (4 ) — (4 ) Equity securities (1) — — — (5 ) — (5 ) Limited partnership interests (1) — — — (4 ) — (4 ) Other (1 ) — (1 ) — — — OTTI losses $ (2 ) $ — $ (2 ) $ (13 ) $ — $ (13 ) Six months ended June 30, 2018 Six months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ — $ (1 ) Corporate — — — (7 ) 3 (4 ) RMBS (1 ) — (1 ) — (2 ) (2 ) CMBS — (1 ) (1 ) (9 ) 3 (6 ) Total fixed income securities (1 ) (1 ) (2 ) (17 ) 4 (13 ) Equity securities (1) — — — (15 ) — (15 ) Limited partnership interests (1) — — — (7 ) — (7 ) Other (1 ) — (1 ) (2 ) — (2 ) Other-than-temporary impairment losses $ (2 ) $ (1 ) $ (3 ) $ (41 ) $ 4 $ (37 ) _______________ (1) Due to the adoption of the recognition and measurement accounting standard, equity securities and limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net income and are no longer included in the table above. The total amount of OTTI losses included in AOCI at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $109 million and $113 million as of June 30, 2018 and December 31, 2017 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. ($ in millions) June 30, 2018 December 31, 2017 Municipal $ (4 ) $ (4 ) ABS (6 ) (8 ) RMBS (34 ) (37 ) CMBS (4 ) (4 ) Total $ (48 ) $ (53 ) 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 June 30, Six months ended June 30, 2018 2017 2018 2017 Beginning balance $ (128 ) $ (167 ) $ (138 ) $ (176 ) Additional credit loss for securities previously other-than-temporarily impaired (1 ) (3 ) (2 ) (6 ) Additional credit loss for securities not previously other-than-temporarily impaired — (1 ) — (7 ) Reduction in credit loss for securities disposed or collected 5 11 16 29 Ending balance $ (124 ) $ (160 ) $ (124 ) $ (160 ) The Company uses its best estimate of future cash flows expected to be collected from the fixed income security, discounted at the security’s original or current effective rate, as appropriate, to calculate a recovery value and determine whether a credit loss exists. The determination of cash flow estimates is inherently subjective and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and forecasts, are considered when developing the estimate of cash flows expected to be collected. That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, foreign exchange rates, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, vintage, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third party guarantees and other credit enhancements. Other information, such as industry analyst reports and forecasts, sector credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement. If the estimated recovery value is less than the amortized cost of the security, a credit loss exists and an OTTI for the difference between the estimated recovery value and amortized cost is recorded in earnings. The portion of the unrealized loss related to factors other than credit remains classified in AOCI. If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings. Unrealized net capital gains and losses Unrealized net capital gains and losses included in AOCI are as follows: ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2018 Gains Losses Fixed income securities $ 21,567 $ 843 $ (317 ) $ 526 Short-term investments 1,066 — — — EMA limited partnerships (1) 1 Unrealized net capital gains and losses, pre-tax 527 Amounts recognized for: Insurance reserves (2) — DAC and DSI (3) (70 ) Amounts recognized (70 ) Deferred income taxes (96 ) Unrealized net capital gains and losses, after-tax $ 361 _______________ (1) 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. (2) 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 lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). (3) 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, 2017 Gains Losses Fixed income securities $ 23,261 $ 1,355 $ (98 ) $ 1,257 Equity securities 1,614 311 (3 ) 308 Short-term investments 725 — — — Derivative instruments (1) 2 2 — 2 EMA limited partnerships 1 Unrealized net capital gains and losses, pre-tax 1,568 Amounts recognized for: Insurance reserves (315 ) DAC and DSI (189 ) Amounts recognized (504 ) Deferred income taxes (229 ) Unrealized net capital gains and losses, after-tax $ 835 _______________ (1) Included in the fair value of derivative instruments is $2 million classified as liabilities. Change in unrealized net capital gains and losses The change in unrealized net capital gains and losses for the six months ended June 30, 2018 is as follows: ($ in millions) Fixed income securities $ (731 ) Equity securities (1) — Derivative instruments (2 ) Total (733 ) Amounts recognized for: Insurance reserves 315 DAC and DSI 119 Amounts recognized 434 Deferred income taxes 63 Decrease in unrealized net capital gains and losses, after-tax $ (236 ) ______________ (1) Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $308 million of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. See Note 1 of the condensed consolidated financial statements. Portfolio monitoring The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security whose carrying value may be other-than-temporarily impaired . For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, the security’s decline in fair value is considered other than temporary and is recorded in earnings. If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, and compares this to the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income. For fixed income securities managed by third parties, either the Company has contractually retained its decision making authority as it pertains to selling securities that are in an unrealized loss position or it recognizes any unrealized loss at the end of the period through a charge to earnings. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below established thresholds. The process also includes the monitoring of other impairment indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential OTTI using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of OTTI for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value is other than temporary are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the length of time and extent to which the fair value has been less than amortized cost. The following table summarizes the gross unrealized losses and fair value of 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 Fair Unrealized June 30, 2018 Fixed income securities U.S. government and agencies 7 $ 77 $ — 1 $ 5 $ — $ — Municipal 54 117 (2 ) 1 12 (2 ) (4 ) Corporate 1,290 7,670 (216 ) 135 1,127 (90 ) (306 ) Foreign government 2 15 — — — — — ABS 41 194 (1 ) 6 9 (3 ) (4 ) RMBS 90 4 — 56 16 (1 ) (1 ) CMBS 2 11 (1 ) 5 10 (1 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 1,487 $ 8,088 $ (220 ) 204 $ 1,179 $ (97 ) $ (317 ) Investment grade fixed income securities 1,102 $ 6,719 $ (176 ) 171 $ 1,086 $ (86 ) $ (262 ) Below investment grade fixed income securities 385 1,369 (44 ) 33 93 (11 ) (55 ) Total fixed income securities 1,487 $ 8,088 $ (220 ) 204 $ 1,179 $ (97 ) $ (317 ) December 31, 2017 Fixed income securities U.S. government and agencies 17 $ 443 $ (2 ) 2 $ 25 $ — $ (2 ) Municipal 4 14 — 1 11 (3 ) (3 ) Corporate 456 2,899 (28 ) 144 1,324 (58 ) (86 ) ABS 33 170 (1 ) 8 24 (3 ) (4 ) RMBS 70 3 — 56 18 (1 ) (1 ) CMBS 2 1 — 6 23 (2 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 583 3,530 (31 ) 217 1,425 (67 ) (98 ) Equity securities 87 66 (3 ) 1 — — (3 ) Total fixed income and equity securities 670 $ 3,596 $ (34 ) 218 $ 1,425 $ (67 ) $ (101 ) Investment grade fixed income securities 472 $ 3,192 $ (22 ) 181 $ 1,320 $ (52 ) $ (74 ) Below investment grade fixed income securities 111 338 (9 ) 36 105 (15 ) (24 ) Total fixed income securities 583 $ 3,530 $ (31 ) 217 $ 1,425 $ (67 ) $ (98 ) As of June 30, 2018 , $303 million of the $317 million unrealized losses are related to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired. Of the $303 million , $251 million are related to unrealized losses on investment grade fixed income securities. Of the remaining $52 million , $44 million have been in an unrealized loss position for less than 12 months. Investment grade is defined as a security having a rating of Aaa, Aa, A or Baa from Moody’s, a rating of AAA, AA, A or BBB from S&P Global Ratings (“S&P”), a comparable rating from another nationally recognized rating agency, or a comparable internal rating if an externally provided rating is not available. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third party rating. Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates and/or wider credit spreads since the time of initial purchase. The unrealized losses are expected to reverse as the securities approach maturity. As of June 30, 2018 , the remaining $14 million of unrealized losses are related to securities in unrealized loss positions greater than or equal to 20% of amortized cost. Investment grade fixed income securities comprising $11 million of these unrealized losses were evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. Of the $14 million , $3 million are related to below investment grade fixed income securities that had been in an unrealized loss position greater than or equal to 20% of amortized cost for a period of twelve or more consecutive months as of June 30, 2018 . ABS, RMBS and CMBS in an unrealized loss position were evaluated based on actual and projected collateral losses relative to the securities’ positions in the respective securitization trusts, security specific expectations of cash flows, and credit ratings. This evaluation also takes into consideration credit enhancement, measured in terms of (i) subordination from other classes of securities in the trust that are contractually obligated to absorb losses before the class of security the Company owns, and (ii) the expected impact of other structural features embedded in the securitization trust beneficial to the class of securities the Company owns, such as overcollateralization and excess spread. Municipal bonds in an unrealized loss position were evaluated based on the underlying credit quality of the primary obligor, obligation type and quality of the underlying assets. As of June 30, 2018 , the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis. Limited partnerships Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. As of June 30, 2018 and December 31, 2017 , the carrying value of EMA limited partnerships totaled $2.71 billion and $2.54 billion , respectively, and limited partnerships carried at fair value as of June 30, 2018 , while at cost method as of December 31, 2017 , totaled $740 million and $611 million , respectively. Mortgage loans Mortgage loans are evaluated for impairment on a specific loan basis through a quarterly credit monitoring process and review of key credit quality indicators. Mortgage loans are considered impaired when it is probable that the Company will not collect the contractual principal and interest. Valuation allowances are established for impaired loans to reduce the carrying value to the fair value of the collateral less costs to sell or the present value of the loan’s expected future repayment cash flows discounted at the loan’s original effective interest rate. Impaired mortgage loans may not have a valuation allowance when the fair value of the collateral less costs to sell is higher than the carrying value. Valuation allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell or present value of the loan’s expected future repayment cash flows. Mortgage loans are charged off against their corresponding valuation allowances when there is no reasonable expectation of recovery. The impairment evaluation is non-statistical in respect to the aggregate portfolio but considers facts and circumstances attributable to each loan. It is not considered probable that additional impairment losses, beyond those identified on a specific loan basis, have been incurred as of June 30, 2018 . Accrual of income is suspended for mortgage loans that are in default or when full and timely collection of principal and interest payments is not probable. Cash receipts on mortgage loans on nonaccrual status are generally recorded as a reduction of carrying value. Debt service coverage ratio is considered a key credit quality indicator when mortgage loans are evaluated for impairment. Debt service coverage ratio represents the amount of estimated cash flows from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. The following table reflects the carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution. ($ in millions) June 30, 2018 December 31, 2017 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 $ 3 $ 15 $ 18 $ 3 $ — $ 3 1.0 - 1.25 293 — 293 326 — 326 1.26 - 1.50 1,058 — 1,058 1,033 15 1,048 Above 1.50 2,424 42 2,466 2,482 13 2,495 Total non-impaired mortgage loans $ 3,778 $ 57 $ 3,835 $ 3,844 $ 28 $ 3,872 Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to instances where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered temporary, or there are other risk mitigating circumstances such as additional collateral, escrow balances or borrower guarantees. The net carrying value of impaired mortgage loans is as follows: ($ in millions) June 30, 2018 December 31, 2017 Impaired mortgage loans with a valuation allowance $ 4 $ 4 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 4 $ 4 Valuation allowance on impaired mortgage loans $ 3 $ 3 The valuation allowance on impaired mortgage loans had no activity for the three months and six months ended June 30, 2018 and 2017 . The average balance of impaired loans was $4 million and $5 million for the six months ended June 30, 2018 and 2017 , respectively. Payments on all mortgage loans were current as of June 30, 2018 and December 31, 2017 . Short-term investments Short-term investments, including commercial paper, U.S. Treasury bills, money market funds and other short-term investments, are carried at fair value. As of June 30, 2018 and December 31, 2017, the fair value of short-term investments totaled $1.07 billion and $725 million , respectively. Policy loans Policy loans are carried at unpaid principal balances. As of June 30, 2018 and December 31, 2017 , the carrying value of policy loans totaled $557 million and $561 million , respectively. Other investments Other investments primarily consist of agent loans, bank loans, real estate and derivatives. Agent loans are loans issued to exclusive Allstate agents and are carried at unpaid principal balances, net of valuation allowances and unamortized deferred fees or costs. Bank loans are primarily senior secured corporate loans and are carried at amortized cost. Real estate is carried at cost less accumulated depreciation. Derivatives are carried at fair value. The following table summarizes other investments. ($ in millions) June 30, 2018 December 31, 2017 Agent loans $ 570 $ 538 Bank loans 447 437 Real estate 212 157 Derivatives and other 93 122 Total $ 1,322 $ 1,254 |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy. The first is where specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. The second situation where the Company classifies securities in Level 3 is where quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans, bank loans, agent loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to remeasurement at fair value after initial recognition and the resulting remeasurement is reflected in the condensed consolidated financial statements. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Level 1 measurements • Fixed income securities: Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Equity securities: Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Short-term: Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. • Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers. Level 2 measurements • Fixed income securities: U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - public: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. ABS - collateralized debt obligations (“CDO”) and ABS - consumer and other: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. Certain ABS - CDO and ABS - consumer and other are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Redeemable preferred stock: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. OTC derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows. Corporate - public and Corporate - privately placed: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. ABS - CDO, ABS - consumer and other: Valued based on non-binding broker quotes received from brokers who are familiar with the investments and where the inputs have not been corroborated to be market observable. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. Assets and liabilities measured at fair value on a non-recurring basis Mortgage loans written-down to fair value in connection with recognizing impairments are valued based on the fair value of the underlying collateral less costs to sell. EMA limited partnership interests written-down to fair value in connection with recognizing OTTI losses are generally valued using net asset values. Investments excluded from the fair value hierarchy Limited partnerships carried at fair value, which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold without approval of the general partner. We receive distributions of income and from liquidation of the underlying assets of the investees over the life of these investments, typically 10 - 12 years. As of June 30, 2018 , the Company has commitments to invest $352 million in these limited partnership interests. The following table summarizes the Company’s assets and liabilities measured at fair value as of June 30, 2018 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of June 30, 2018 Assets Fixed income securities: U.S. government and agencies $ 126 $ 277 $ — $ 403 Municipal — 2,192 58 2,250 Corporate - public — 12,381 47 12,428 Corporate - privately placed — 5,337 187 5,524 Foreign government — 283 — 283 ABS - CDO — 29 9 38 ABS - consumer and other — 297 47 344 RMBS — 225 — 225 CMBS — 57 — 57 Redeemable preferred stock — 15 — 15 Total fixed income securities 126 21,093 348 21,567 Equity securities 1,577 15 113 1,705 Short-term investments 395 671 — 1,066 Other investments: Free-standing derivatives — 88 1 $ (3 ) 86 Separate account assets 3,247 — — 3,247 Total recurring assets at fair value $ 5,345 $ 21,867 $ 462 $ (3 ) $ 27,671 % of total assets at fair value 19.3 % 79.0 % 1.7 % — % 100 % Investments reported at NAV 740 Total $ 28,411 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (257 ) $ (257 ) Other liabilities: Free-standing derivatives — (30 ) — $ (3 ) (33 ) Total liabilities at fair value $ — $ (30 ) $ (257 ) $ (3 ) $ (290 ) % of total liabilities at fair value — % 10.4 % 88.6 % 1.0 % 100 % The following table summarizes the Company’s assets and liabilities measured at fair value as of December 31, 2017 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of December 31, 2017 Assets Fixed income securities: U.S. government and agencies $ 488 $ 316 $ — $ 804 Municipal — 2,216 57 2,273 Corporate - public — 13,168 49 13,217 Corporate - privately placed — 5,699 220 5,919 Foreign government — 299 — 299 ABS - CDO — 38 10 48 ABS - consumer and other — 297 40 337 RMBS — 253 — 253 CMBS — 97 — 97 Redeemable preferred stock — 14 — 14 Total fixed income securities 488 22,397 376 23,261 Equity securities 1,508 16 90 1,614 Short-term investments 110 615 — 725 Other investments: Free-standing derivatives — 117 1 $ (3 ) 115 Separate account assets 3,422 — — 3,422 Total recurring assets at fair value $ 5,528 $ 23,145 $ 467 $ (3 ) $ 29,137 % of total assets at fair value 19.0 % 79.4 % 1.6 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (284 ) $ (284 ) Other liabilities: Free-standing derivatives — (62 ) — $ 1 (61 ) Total liabilities at fair value $ — $ (62 ) $ (284 ) $ 1 $ (345 ) % of total liabilities at fair value — % 18.0 % 82.3 % (0.3 )% 100 % The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average June 30, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (228 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74 % December 31, 2017 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (250 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74 % The embedded derivatives are equity-indexed and forward starting options in certain life and annuity products that provide customers with interest crediting rates based on the performance of the S&P 500. If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value. As of June 30, 2018 and December 31, 2017 , Level 3 fair value measurements of fixed income securities total $348 million and $376 million , respectively, and include $204 million and $237 million , respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. The Company does not develop the unobservable inputs used in measuring fair value; therefore, these are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2018 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2018 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 56 $ — $ — $ — $ — Corporate - public 47 — — — — Corporate - privately placed 215 (2 ) 1 10 (10 ) ABS - CDO 10 — — — — ABS - consumer and other 41 — — 3 (2 ) Total fixed income securities 369 (2 ) 1 13 (12 ) Equity securities 99 6 — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 469 $ 4 $ 1 $ 13 $ (12 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (260 ) $ 2 $ — $ — $ — Total recurring Level 3 liabilities $ (260 ) $ 2 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 2 $ — $ — $ — $ 58 Corporate - public — — — — 47 Corporate - privately placed — — — (27 ) 187 ABS - CDO — — — (1 ) 9 ABS - consumer and other 10 (4 ) — (1 ) 47 Total fixed income securities 12 (4 ) — (29 ) 348 Equity securities 15 (7 ) — — 113 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 27 $ (11 ) $ — $ (29 ) $ 462 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (257 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (257 ) ____________ (1) The effect to net income totals $6 million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $4 million in realized capital gains and losses, $1 million in interest credited to contractholder funds and $1 million in contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2018 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2017 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 57 $ — $ (1 ) $ — $ — Corporate - public 49 — (1 ) 3 — Corporate - privately placed 220 (2 ) (1 ) 10 (23 ) ABS - CDO 10 — — — — ABS - consumer and other 40 — — 6 (2 ) Total fixed income securities 376 (2 ) (3 ) 19 (25 ) Equity securities 90 7 — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 467 $ 5 $ (3 ) $ 19 $ (25 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (284 ) $ 25 $ — $ — $ — Total recurring Level 3 liabilities $ (284 ) $ 25 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 2 $ — $ — $ — $ 58 Corporate - public — (1 ) — (3 ) 47 Corporate - privately placed 11 — — (28 ) 187 ABS - CDO — — — (1 ) 9 ABS - consumer and other 13 (8 ) — (2 ) 47 Total fixed income securities 26 (9 ) — (34 ) 348 Equity securities 23 (7 ) — — 113 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 49 $ (16 ) $ — $ (34 ) $ 462 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (257 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (257 ) ____________ (1) The effect to net income totals $30 million and is reported in the Condensed Consolidated Statements of Operations as follows: $5 million in realized capital gains and losses, $20 million in interest credited to contractholder funds and $5 million in contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2017 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 60 $ — $ — $ — $ — Corporate - public 36 — — — — Corporate - privately placed 268 5 (7 ) 11 — ABS - CDO 32 1 — 1 (9 ) ABS - consumer and other 47 — — — (3 ) Total fixed income securities 443 6 (7 ) 12 (12 ) Equity securities 80 1 2 — — Free-standing derivatives, net (1 ) 2 — — — Total recurring Level 3 assets $ 522 $ 9 $ (5 ) $ 12 $ (12 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (285 ) $ — $ — $ — $ — Total recurring Level 3 liabilities $ (285 ) $ — $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ — $ — $ — $ — $ 60 Corporate - public — — — — 36 Corporate - privately placed 3 (29 ) — (1 ) 250 ABS - CDO — — — (1 ) 24 ABS - consumer and other 21 — — (2 ) 63 Total fixed income securities 24 (29 ) — (4 ) 433 Equity securities — (8 ) — — 75 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 24 $ (37 ) $ — $ (4 ) $ 509 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (284 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (284 ) __________ (1) The effect to net income totals $9 million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $7 million in realized capital gains and losses, $2 million in net investment income, $(1) million in interest credited to contractholder funds and $1 million in contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2016 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 59 $ — $ 1 $ — $ — Corporate - public 47 1 — — (10 ) Corporate - privately placed 264 5 (2 ) 11 — ABS - CDO 27 — 2 4 (9 ) ABS - consumer and other 42 — — — (5 ) Total fixed income securities 439 6 1 15 (24 ) Equity securities 76 6 2 — — Free-standing derivatives, net (2 ) 3 — — — Other assets 1 (1 ) — — — Total recurring Level 3 assets $ 514 $ 14 $ 3 $ 15 $ (24 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (289 ) $ 3 $ — $ — $ — Total recurring Level 3 liabilities $ (289 ) $ 3 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ — $ — $ — $ — $ 60 Corporate - public — — — (2 ) 36 Corporate - privately placed 3 (29 ) — (2 ) 250 ABS - CDO 5 — — (5 ) 24 ABS - consumer and other 29 — — (3 ) 63 Total fixed income securities 37 (29 ) — (12 ) 433 Equity securities — (9 ) — — 75 Free-standing derivatives, net — — — — 1 (2) Other assets — — — — — Total recurring Level 3 assets $ 37 $ (38 ) $ — $ (12 ) $ 509 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (284 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (284 ) __________ (1) The effect to net income totals $17 million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $8 million in realized capital gains and losses, $7 million in net investment income, $(6) million in interest credited to contractholder funds and $8 million in contract benefits. (2) Comprises $1 million of assets. Transfers between level categorizations may occur due to changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask spreads. Transfers between level categorizations may also occur due to changes in the valuation source. Transfers in and out of level categorizations are reported as having occurred at the beginning of the quarter in which the transfer occurred. Therefore, for all transfers into Level 3, all realized and changes in unrealized gains and losses in the quarter of transfer are reflected in the Level 3 rollforward table. There were no transfers between Level 1 and Level 2 during the three months and six months ended June 30, 2018 or 2017 . Transfers into Level 3 during the three months and six months ended June 30, 2018 and 2017 included situations where a fair value quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers out of Level 3 during the three months and six months ended June 30, 2018 and 2017 included situations where a broker quote was used in the prior period and a fair value quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant. The following table provides valuation changes included in net income for Level 3 assets and liabilities held as of June 30 . ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Assets Equity securities $ 6 $ 2 $ 7 $ 7 Free-standing derivatives, net — 2 — 3 Other assets — — — (1 ) Total recurring Level 3 assets $ 6 $ 4 $ 7 $ 9 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ 2 $ — $ 25 $ 3 Total recurring Level 3 liabilities $ 2 $ — $ 25 $ 3 The amounts in the table above represent gains and losses related to valuation changes included in net income for the period of time that the asset or liability was held and determined to be in Level 3. These gains and losses total $8 million for the three months ended June 30, 2018 and are reported as follows: $6 million in realized capital gains and losses, $1 million in interest credited to contractholder funds and $1 million in contract benefits. These gains and losses total $4 million for the three months ended June 30, 2017 and are reported as follows: $2 million in realized capital gains and losses, $2 million in net investment income, $(1) million in interest credited to contractholder funds and $1 million in contract benefits. These gains and losses total $32 million for the six months ended June 30, 2018 and are reported as follows: $7 million in realized capital gains and losses, $20 million in interest credited to contractholder funds and $5 million in contract benefits. These gains and losses total $12 million for the six months ended June 30, 2017 and are reported as follows: $3 million in realized capital gains and losses, $7 million in net investment income, $(6) million in interest credited to contractholder funds and $8 million in contract benefits. Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. Financial assets ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Mortgage loans $ 3,839 $ 3,879 $ 3,876 $ 4,052 Agent loans 570 562 538 536 Bank loans 447 449 437 437 The fair value measurements for mortgage loans, bank loans and agent loans are categorized as Level 3. Financial liabilities ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts $ 9,771 $ 10,203 $ 10,331 $ 11,036 Liability for collateral 511 511 542 542 Notes due to related parties 140 138 140 141 The fair value measurement is Level 3 for contractholder funds on investment contracts and notes due to related parties and Level 2 for liability for collateral. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company uses derivatives for risk reduction and to increase investment portfolio returns through asset replication. Risk reduction activity is focused on managing the risks with certain assets and liabilities arising from the potential adverse impacts from changes in risk-free interest rates, changes in equity market valuations, increases in credit spreads and foreign currency fluctuations. Asset replication refers to the “synthetic” creation of assets through the use of derivatives. The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities. The Company replicates equity securities using futures, index total return swaps, and options to increase equity exposure. The Company utilizes several derivative strategies to manage risk. Asset-liability management is a risk management strategy that is principally employed to balance the respective interest-rate sensitivities of the Company’s assets and liabilities. Depending upon the attributes of the assets acquired and liabilities issued, derivative instruments such as interest rate swaps, caps, swaptions and futures are utilized to change the interest rate characteristics of existing assets and liabilities to ensure the relationship is maintained within specified ranges and to reduce exposure to rising or falling interest rates. Fixed income index total return swaps are used to offset valuation losses in the fixed income portfolio during periods of declining fixed income market values. Credit default swaps are typically used to mitigate the credit risk within the Company’s fixed income portfolio. Futures and options are used for hedging the equity exposure contained in the Company’s equity indexed life and annuity product contracts that offer equity returns to contractholders. In addition, the Company uses equity index total return swaps, options and futures to offset valuation losses in the equity portfolio during periods of declining equity market values. Foreign currency swaps and forwards are primarily used by the Company to reduce the foreign currency risk associated with holding foreign currency denominated investments. The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income. The Company’s primary embedded derivatives are equity options in life and annuity product contracts, which provide returns linked to equity indices to contractholders. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. The Company designates certain investment risk transfer reinsurance agreements as fair value hedges when the hedging instrument is highly effective in offsetting the risk of changes in the fair value of the hedged item. The Company designates certain of its foreign currency swap contracts as cash flow hedges when the hedging instrument is highly effective in offsetting the exposure of variations in cash flows for the hedged risk that could affect net income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged item affects net income. The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Condensed Consolidated Statements of Financial Position. For those derivatives which qualify for fair value hedge accounting, net income includes the changes in the fair value of both the derivative instrument and the hedged risk, and therefore reflects any hedging ineffectiveness. For cash flow hedges, gains and losses are amortized from AOCI and are reported in net income in the same period the forecasted transactions being hedged impact net income. Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Condensed Consolidated Statement of Financial Position as of June 30, 2018 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 13 n/a $ — $ — $ — Financial options Other investments — 18 — — — Equity and index contracts Options Other investments — 32,622 85 85 — Financial futures Other assets — 51 — — — Total return index contracts Total return swap agreements - fixed income Other assets 19 n/a — — — Foreign currency contracts Foreign currency forwards Other investments 9 n/a — — — Credit default contracts Credit default swaps – buying protection Other investments 15 n/a (1 ) — (1 ) Credit default swaps – selling protection Other investments 30 n/a 1 1 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 89 32,691 $ 85 $ 86 $ (1 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 28 n/a $ 1 $ 1 $ — Financial options Other liabilities & accrued expenses — 574 — — — Equity and index contracts Options Other liabilities & accrued expenses — 32,524 (28 ) — (28 ) Total return index contracts Total return swap agreements - fixed income Other liabilities & accrued expenses 3 n/a — — — Total return swap agreements - equity Other liabilities & accrued expenses 21 n/a — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 186 n/a 1 2 (1 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 205 n/a (19 ) — (19 ) Guaranteed withdrawal benefits Contractholder funds 252 n/a (10 ) — (10 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,718 n/a (228 ) — (228 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 12 n/a — — — Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 2,426 33,098 (283 ) $ 3 $ (286 ) Total derivatives $ 2,515 65,789 $ (198 ) ___________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2017 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 15 n/a $ — $ — $ — Equity and index contracts Options Other investments — 4,485 114 114 — Credit default contracts Credit default swaps – buying protection Other investments 3 n/a — — — Credit default swaps – selling protection Other investments 80 n/a 1 1 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 101 4,485 $ 115 $ 115 $ — Liability derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other liabilities & accrued expenses $ 19 n/a $ 2 $ 2 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses 30 n/a 1 1 — Equity and index contracts Options and futures Other liabilities & accrued expenses — 4,464 (53 ) — (53 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 207 n/a (8 ) — (8 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 225 n/a (22 ) — (22 ) Guaranteed withdrawal benefits Contractholder funds 274 n/a (12 ) — (12 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,735 n/a (250 ) — (250 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 34 n/a (1 ) — (1 ) Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Subtotal 2,506 4,464 (345 ) 1 (346 ) Total liability derivatives 2,525 4,464 (343 ) $ 3 $ (346 ) Total derivatives $ 2,626 8,949 $ (228 ) ____________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross amount Counter- party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount June 30, 2018 Asset derivatives $ 4 $ (4 ) $ 1 $ 1 $ — $ 1 Liability derivatives (2 ) 4 (7 ) (5 ) — (5 ) December 31, 2017 Asset derivatives $ 4 $ (3 ) $ — $ 1 $ — $ 1 Liability derivatives (10 ) 3 (2 ) (9 ) 3 (6 ) The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships. There was no hedge ineffectiveness reported in realized gains and losses for the three months and six months ended June 30, 2018 or 2017 . As of June 30, 2018, the Company had no derivatives used in cash flow hedging relationships. ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Gain (loss) recognized in OCI on derivatives during the period $ 1 $ — $ 1 $ (2 ) Gain recognized in OCI on derivatives during the term of the hedging relationship — 3 — 3 Gain reclassified from AOCI into income (realized capital gains and losses) 3 — 3 — The following tables present gains and losses from valuation and settlements reported on derivatives not designated as accounting hedging instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income. For the three months and six months ended June 30, 2018 and 2017 , the Company had no derivatives used in fair value hedging relationships. ($ in millions) Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total gain (loss) recognized in net income on derivatives Three months ended June 30, 2018 Equity and index contracts $ — $ — $ 10 $ 10 Embedded derivative financial instruments — 1 2 3 Foreign currency contracts 7 — — 7 Total $ 7 $ 1 $ 12 $ 20 Six months ended June 30, 2018 Equity and index contracts $ — $ — $ 6 $ 6 Embedded derivative financial instruments — 5 22 27 Foreign currency contracts 4 — — 4 Total $ 4 $ 5 $ 28 $ 37 Three months ended June 30, 2017 Equity and index contracts $ — $ — $ 9 $ 9 Embedded derivative financial instruments — 1 — 1 Foreign currency contracts (5 ) — — (5 ) Credit default contracts 1 — — 1 Total $ (4 ) $ 1 $ 9 $ 6 Six months ended June 30, 2017 Equity and index contracts $ (2 ) $ — $ 22 $ 20 Embedded derivative financial instruments — 8 (4 ) 4 Foreign currency contracts (9 ) — — (9 ) Credit default contracts 2 — — 2 Total $ (9 ) $ 8 $ 18 $ 17 The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate. The Company uses MNAs for OTC derivative transactions that permit either party to net payments due for transactions and collateral is either pledged or obtained when certain predetermined exposure limits are exceeded. As of June 30, 2018 , counterparties pledged $7 million in collateral to the Company, and the Company pledged $1 million in collateral to counterparties posted under MNAs for contracts without credit-risk-contingent features. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. The following table summarizes the counterparty credit exposure by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) June 30, 2018 December 31, 2017 Rating (1) Number of counter-parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ — $ — $ — $ — 2 $ 59 $ 3 $ — A- 2 33 1 — — — — — BBB+ 1 231 1 — — — — — BBB 1 2 — — — — — — Total 4 $ 266 $ 2 $ — 2 $ 59 $ 3 $ — __________ (1) Rating is the lower of S&P or Moody’s ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of June 30, 2018 , counterparties pledged $1 million in collateral to the Company and the Company pledged $3 million in the form of margin deposits. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions. Certain of the Company’s derivative instruments contain credit-risk-contingent termination events, cross-default provisions and credit support annex agreements. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s, ALIC’s or Allstate Life Insurance Company of New York’s (“ALNY”) financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. Credit-risk-contingent credit support annex agreements specify the amount of collateral the Company must post to counterparties based on AIC’s, ALIC’s or ALNY’s financial strength credit ratings by Moody’s or S&P, or in the event AIC, ALIC or ALNY are no longer rated by either Moody’s or S&P. The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) June 30, 2018 December 31, 2017 Gross liability fair value of contracts containing credit-risk-contingent features $ 2 $ 12 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (2 ) (5 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features — (3 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 4 Credit derivatives - selling protection A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative. CDS typically have a five -year term. The following table shows the CDS notional amounts by credit rating and fair value of protection sold. ($ in millions) Notional amount AA A BBB BB and lower Total Fair value June 30, 2018 Single name Corporate debt $ — $ — $ — $ 1 $ 1 $ — Index Corporate debt 1 5 21 3 30 1 Total $ 1 $ 5 $ 21 $ 4 $ 31 $ 1 December 31, 2017 Single name Corporate debt $ — $ — $ — $ 1 $ 1 $ — Index Corporate debt 1 19 45 15 80 1 Total $ 1 $ 19 $ 45 $ 16 $ 81 $ 1 In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement. With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed. With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names. CDX is utilized to take a position on multiple (generally 125 ) reference entities. Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities. If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement. In a physical settlement, a reference asset is delivered by the buyer of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset. When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset. The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance The effects of reinsurance on premiums and contract charges are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Direct $ 184 $ 183 $ 369 $ 363 Assumed Affiliate 61 55 121 108 Non-affiliate 185 193 374 391 Ceded Affiliate (12 ) (13 ) (25 ) (26 ) Non-affiliate (70 ) (71 ) (138 ) (141 ) Premiums and contract charges, net of reinsurance $ 348 $ 347 $ 701 $ 695 The effects of reinsurance on contract benefits are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Direct $ 266 $ 257 $ 523 $ 516 Assumed Affiliate 34 34 68 63 Non-affiliate 123 147 257 263 Ceded Affiliate (8 ) (8 ) (20 ) (16 ) Non-affiliate (58 ) (66 ) (101 ) (108 ) Contract benefits, net of reinsurance $ 357 $ 364 $ 727 $ 718 The effects of reinsurance on interest credited to contractholder funds are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Direct $ 129 $ 140 $ 259 $ 276 Assumed Affiliate 2 2 4 4 Non-affiliate 33 31 58 64 Ceded Affiliate (5 ) (6 ) (10 ) (11 ) Non-affiliate (7 ) (6 ) (11 ) (11 ) Interest credited to contractholder funds, net of reinsurance $ 152 $ 161 $ 300 $ 322 |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Guarantees [Abstract] | |
Guarantees and Contingent Liabilities | Guarantees and Contingent Liabilities In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous transactions, including acquisitions and divestitures. The types of indemnifications typically provided include indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations. Related to the sale of Lincoln Benefit Life Company (“LBL”) on April 1, 2014, the Company agreed to indemnify Resolution Life Holdings, Inc. in connection with certain representations, warranties and covenants of the Company, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding the Company’s maximum obligation. Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company. Related to the disposal through reinsurance of substantially all of the Company’s variable annuity business to Prudential in 2006, the Company and the Corporation have agreed to indemnify Prudential for certain pre-closing contingent liabilities (including extra-contractual liabilities of the Company and liabilities specifically excluded from the transaction) that the Company has agreed to retain. In addition, the Company and the Corporation will each indemnify Prudential for certain post-closing liabilities that may arise from the acts of the Company and its agents, including certain liabilities arising from the Company’s provision of transition services. The reinsurance agreements contain no limitations or indemnifications with regard to insurance risk transfer, and transferred all of the future risks and responsibilities for performance on the underlying variable annuity contracts to Prudential, including those related to benefit guarantees. Management does not believe this agreement will have a material effect on results of operations, cash flows or financial position of the Company. The aggregate liability balance related to all guarantees was not material as of June 30, 2018 . Regulation and Compliance The Company is subject to extensive laws, regulations and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to impose additional regulations regarding agent and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the U.S. Department of Justice. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain. |
Other Comprehensive Income
Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income The components of other comprehensive (loss) income on a pre-tax and after-tax basis are as follows: ($ in millions) Three months ended June 30, 2018 2017 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (94 ) $ 20 $ (74 ) $ 178 $ (62 ) $ 116 Less: reclassification adjustment of realized capital gains and losses (17 ) 4 (13 ) (3 ) 1 (2 ) Unrealized net capital gains and losses (77 ) 16 (61 ) 181 (63 ) 118 Unrealized foreign currency translation adjustments 6 (1 ) 5 — — — Other comprehensive (loss) income $ (71 ) $ 15 $ (56 ) $ 181 $ (63 ) $ 118 Six months ended June 30, 2018 2017 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (320 ) $ 67 $ (253 ) $ 281 $ (99 ) $ 182 Less: reclassification adjustment of realized capital gains and losses (21 ) 4 (17 ) (1 ) — (1 ) Unrealized net capital gains and losses (299 ) 63 (236 ) 282 (99 ) 183 Unrealized foreign currency translation adjustments 11 (2 ) 9 (5 ) 2 (3 ) Other comprehensive (loss) income $ (288 ) $ 61 $ (227 ) $ 277 $ (97 ) $ 180 |
General (Tables)
General (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
General | |
Summary of premiums and contract charges by product | The following table summarizes premiums and contract charges by product. ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Premiums Traditional life insurance $ 145 $ 143 $ 292 $ 286 Accident and health insurance 30 27 60 53 Total premiums 175 170 352 339 Contract charges Interest-sensitive life insurance 170 174 343 350 Fixed annuities 3 3 6 6 Total contract charges 173 177 349 356 Total premiums and contract charges $ 348 $ 347 $ 701 $ 695 |
Supplemental Cash Flow Inform16
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information from collateralized securities received | The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows: ($ in millions) Six months ended June 30, 2018 2017 Net change in proceeds managed Net change in fixed income securities $ 68 $ 9 Net change in short-term investments (37 ) 12 Operating cash flow provided $ 31 $ 21 Net change in liabilities Liabilities for collateral, beginning of period $ (542 ) $ (550 ) Liabilities for collateral, end of period (511 ) (529 ) Operating cash flow used $ (31 ) $ (21 ) |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 Gross unrealized Fair cost Gains Losses value June 30, 2018 U.S. government and agencies $ 376 $ 27 $ — $ 403 Municipal 2,036 218 (4 ) 2,250 Corporate 17,731 527 (306 ) 17,952 Foreign government 271 12 — 283 Asset-backed securities (“ABS”) 382 4 (4 ) 382 Residential mortgage-backed securities (“RMBS”) 178 48 (1 ) 225 Commercial mortgage-backed securities (“CMBS”) 53 6 (2 ) 57 Redeemable preferred stock 14 1 — 15 Total fixed income securities $ 21,041 $ 843 $ (317 ) $ 21,567 December 31, 2017 U.S. government and agencies $ 768 $ 38 $ (2 ) $ 804 Municipal 2,001 275 (3 ) 2,273 Corporate 18,262 960 (86 ) 19,136 Foreign government 279 20 — 299 ABS 383 6 (4 ) 385 RMBS 205 49 (1 ) 253 CMBS 93 6 (2 ) 97 Redeemable preferred stock 13 1 — 14 Total fixed income securities $ 22,004 $ 1,355 $ (98 ) $ 23,261 |
Schedule for fixed income securities based on contractual maturities | The scheduled maturities for fixed income securities are as follows as of June 30, 2018 : ($ in millions) Amortized cost Fair value Due in one year or less $ 1,170 $ 1,177 Due after one year through five years 8,135 8,264 Due after five years through ten years 7,149 7,092 Due after ten years 3,974 4,370 20,428 20,903 ABS, RMBS and CMBS 613 664 Total $ 21,041 $ 21,567 |
Schedule of net investment income | Net investment income is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ 247 $ 269 $ 498 $ 537 Mortgage loans 53 45 97 94 Equity securities 16 14 23 29 Limited partnership interests (1) (2) 92 135 188 200 Short-term investments 5 2 9 3 Policy loans 8 7 15 15 Other 23 21 45 40 Investment income, before expense 444 493 875 918 Investment expense (25 ) (20 ) (49 ) (41 ) Net investment income $ 419 $ 473 $ 826 $ 877 _______________ (1) Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income . (2) Includes net investment income of $82 million and $140 million for EMA limited partnership interests and $10 million and $48 million for limited partnership interests carried at fair value for the three months and six months ended June 30, 2018 , respectively. |
Schedule of realized capital gains and losses by asset type | Realized capital gains and losses by asset type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ (12 ) $ (6 ) $ (18 ) $ (13 ) Mortgage loans 2 — 2 — Equity securities 20 (4 ) (6 ) (4 ) Limited partnership interests (11 ) 10 (8 ) 23 Derivatives 10 (4 ) 7 (9 ) Other (1 ) — (1 ) (2 ) Realized capital gains and losses $ 8 $ (4 ) $ (24 ) $ (5 ) |
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 June 30, Six months ended June 30, 2018 2017 2018 2017 Impairment write-downs (1) $ (2 ) $ (12 ) $ (3 ) $ (33 ) Change in intent write-downs (1) — (1 ) — (4 ) Net OTTI losses recognized in earnings (2 ) (13 ) (3 ) (37 ) Sales (1) (7 ) 13 (12 ) 41 Valuation of equity investments (1) 10 — (13 ) — Valuation and settlements of derivative instruments 7 (4 ) 4 (9 ) Realized capital gains and losses $ 8 $ (4 ) $ (24 ) $ (5 ) _______________ (1) Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales. |
Realized gain (loss) on investments | Valuation changes included in net income for investments still held as of June 30, 2018 are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2018 Equity securities (1) $ 20 $ 14 Limited partnership interests carried at fair value (1) 11 49 Total valuation changes $ 31 $ 63 _______________ (1) Investments held at the end of a prior quarter that were sold in the current quarter are not included in the year-to-date amounts shown in the table above; therefore, the sum of the quarterly amounts may not equal the year-to-date amount. |
Schedule of other-than-temporary impairment losses by asset type | OTTI losses by asset type are as follows: ($ in millions) Three months ended June 30, 2018 Three months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ — $ (1 ) RMBS (1 ) — (1 ) — — — CMBS — — — (3 ) — (3 ) Total fixed income securities (1 ) — (1 ) (4 ) — (4 ) Equity securities (1) — — — (5 ) — (5 ) Limited partnership interests (1) — — — (4 ) — (4 ) Other (1 ) — (1 ) — — — OTTI losses $ (2 ) $ — $ (2 ) $ (13 ) $ — $ (13 ) Six months ended June 30, 2018 Six months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ — $ (1 ) Corporate — — — (7 ) 3 (4 ) RMBS (1 ) — (1 ) — (2 ) (2 ) CMBS — (1 ) (1 ) (9 ) 3 (6 ) Total fixed income securities (1 ) (1 ) (2 ) (17 ) 4 (13 ) Equity securities (1) — — — (15 ) — (15 ) Limited partnership interests (1) — — — (7 ) — (7 ) Other (1 ) — (1 ) (2 ) — (2 ) Other-than-temporary impairment losses $ (2 ) $ (1 ) $ (3 ) $ (41 ) $ 4 $ (37 ) _______________ (1) Due to the adoption of the recognition and measurement accounting standard, equity securities and limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net income and are no longer included in the table above. |
Schedule of other-than-temporary impairment losses on fixed income securities included in accumulated other comprehensive income | The total amount of OTTI losses included in AOCI at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $109 million and $113 million as of June 30, 2018 and December 31, 2017 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. ($ in millions) June 30, 2018 December 31, 2017 Municipal $ (4 ) $ (4 ) ABS (6 ) (8 ) RMBS (34 ) (37 ) CMBS (4 ) (4 ) Total $ (48 ) $ (53 ) |
Schedule of rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held | 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 June 30, Six months ended June 30, 2018 2017 2018 2017 Beginning balance $ (128 ) $ (167 ) $ (138 ) $ (176 ) Additional credit loss for securities previously other-than-temporarily impaired (1 ) (3 ) (2 ) (6 ) Additional credit loss for securities not previously other-than-temporarily impaired — (1 ) — (7 ) Reduction in credit loss for securities disposed or collected 5 11 16 29 Ending balance $ (124 ) $ (160 ) $ (124 ) $ (160 ) |
Schedule of unrealized net capital gains and losses included in accumulated other comprehensive income | Unrealized net capital gains and losses included in AOCI are as follows: ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2018 Gains Losses Fixed income securities $ 21,567 $ 843 $ (317 ) $ 526 Short-term investments 1,066 — — — EMA limited partnerships (1) 1 Unrealized net capital gains and losses, pre-tax 527 Amounts recognized for: Insurance reserves (2) — DAC and DSI (3) (70 ) Amounts recognized (70 ) Deferred income taxes (96 ) Unrealized net capital gains and losses, after-tax $ 361 _______________ (1) 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. (2) 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 lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). (3) 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, 2017 Gains Losses Fixed income securities $ 23,261 $ 1,355 $ (98 ) $ 1,257 Equity securities 1,614 311 (3 ) 308 Short-term investments 725 — — — Derivative instruments (1) 2 2 — 2 EMA limited partnerships 1 Unrealized net capital gains and losses, pre-tax 1,568 Amounts recognized for: Insurance reserves (315 ) DAC and DSI (189 ) Amounts recognized (504 ) Deferred income taxes (229 ) Unrealized net capital gains and losses, after-tax $ 835 _______________ (1) Included in the fair value of derivative instruments is $2 million classified as liabilities. |
Schedule of change in unrealized net capital gains and losses | The change in unrealized net capital gains and losses for the six months ended June 30, 2018 is as follows: ($ in millions) Fixed income securities $ (731 ) Equity securities (1) — Derivative instruments (2 ) Total (733 ) Amounts recognized for: Insurance reserves 315 DAC and DSI 119 Amounts recognized 434 Deferred income taxes 63 Decrease in unrealized net capital gains and losses, after-tax $ (236 ) ______________ (1) Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $308 million of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. See Note 1 of the condensed consolidated financial statements. |
Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time | The following table summarizes the gross unrealized losses and fair value of securities by the length of time that individual securities have been in a continuous unrealized loss position. ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number of issues Fair value Unrealized losses Number Fair Unrealized June 30, 2018 Fixed income securities U.S. government and agencies 7 $ 77 $ — 1 $ 5 $ — $ — Municipal 54 117 (2 ) 1 12 (2 ) (4 ) Corporate 1,290 7,670 (216 ) 135 1,127 (90 ) (306 ) Foreign government 2 15 — — — — — ABS 41 194 (1 ) 6 9 (3 ) (4 ) RMBS 90 4 — 56 16 (1 ) (1 ) CMBS 2 11 (1 ) 5 10 (1 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 1,487 $ 8,088 $ (220 ) 204 $ 1,179 $ (97 ) $ (317 ) Investment grade fixed income securities 1,102 $ 6,719 $ (176 ) 171 $ 1,086 $ (86 ) $ (262 ) Below investment grade fixed income securities 385 1,369 (44 ) 33 93 (11 ) (55 ) Total fixed income securities 1,487 $ 8,088 $ (220 ) 204 $ 1,179 $ (97 ) $ (317 ) December 31, 2017 Fixed income securities U.S. government and agencies 17 $ 443 $ (2 ) 2 $ 25 $ — $ (2 ) Municipal 4 14 — 1 11 (3 ) (3 ) Corporate 456 2,899 (28 ) 144 1,324 (58 ) (86 ) ABS 33 170 (1 ) 8 24 (3 ) (4 ) RMBS 70 3 — 56 18 (1 ) (1 ) CMBS 2 1 — 6 23 (2 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 583 3,530 (31 ) 217 1,425 (67 ) (98 ) Equity securities 87 66 (3 ) 1 — — (3 ) Total fixed income and equity securities 670 $ 3,596 $ (34 ) 218 $ 1,425 $ (67 ) $ (101 ) Investment grade fixed income securities 472 $ 3,192 $ (22 ) 181 $ 1,320 $ (52 ) $ (74 ) Below investment grade fixed income securities 111 338 (9 ) 36 105 (15 ) (24 ) Total fixed income securities 583 $ 3,530 $ (31 ) 217 $ 1,425 $ (67 ) $ (98 ) |
Summary of 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 mortgage loans summarized by debt service coverage ratio distribution. ($ in millions) June 30, 2018 December 31, 2017 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 $ 3 $ 15 $ 18 $ 3 $ — $ 3 1.0 - 1.25 293 — 293 326 — 326 1.26 - 1.50 1,058 — 1,058 1,033 15 1,048 Above 1.50 2,424 42 2,466 2,482 13 2,495 Total non-impaired mortgage loans $ 3,778 $ 57 $ 3,835 $ 3,844 $ 28 $ 3,872 |
Schedule of rollforward of the valuation allowance on impaired mortgage loans | The net carrying value of impaired mortgage loans is as follows: ($ in millions) June 30, 2018 December 31, 2017 Impaired mortgage loans with a valuation allowance $ 4 $ 4 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 4 $ 4 Valuation allowance on impaired mortgage loans $ 3 $ 3 |
Schedule of other investments, by type | The following table summarizes other investments. ($ in millions) June 30, 2018 December 31, 2017 Agent loans $ 570 $ 538 Bank loans 447 437 Real estate 212 157 Derivatives and other 93 122 Total $ 1,322 $ 1,254 |
Fair Value of Assets and Liab18
Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of assets and liabilities measured at fair value on a recurring and non-recurring basis | The following table summarizes the Company’s assets and liabilities measured at fair value as of June 30, 2018 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of June 30, 2018 Assets Fixed income securities: U.S. government and agencies $ 126 $ 277 $ — $ 403 Municipal — 2,192 58 2,250 Corporate - public — 12,381 47 12,428 Corporate - privately placed — 5,337 187 5,524 Foreign government — 283 — 283 ABS - CDO — 29 9 38 ABS - consumer and other — 297 47 344 RMBS — 225 — 225 CMBS — 57 — 57 Redeemable preferred stock — 15 — 15 Total fixed income securities 126 21,093 348 21,567 Equity securities 1,577 15 113 1,705 Short-term investments 395 671 — 1,066 Other investments: Free-standing derivatives — 88 1 $ (3 ) 86 Separate account assets 3,247 — — 3,247 Total recurring assets at fair value $ 5,345 $ 21,867 $ 462 $ (3 ) $ 27,671 % of total assets at fair value 19.3 % 79.0 % 1.7 % — % 100 % Investments reported at NAV 740 Total $ 28,411 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (257 ) $ (257 ) Other liabilities: Free-standing derivatives — (30 ) — $ (3 ) (33 ) Total liabilities at fair value $ — $ (30 ) $ (257 ) $ (3 ) $ (290 ) % of total liabilities at fair value — % 10.4 % 88.6 % 1.0 % 100 % The following table summarizes the Company’s assets and liabilities measured at fair value as of December 31, 2017 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of December 31, 2017 Assets Fixed income securities: U.S. government and agencies $ 488 $ 316 $ — $ 804 Municipal — 2,216 57 2,273 Corporate - public — 13,168 49 13,217 Corporate - privately placed — 5,699 220 5,919 Foreign government — 299 — 299 ABS - CDO — 38 10 48 ABS - consumer and other — 297 40 337 RMBS — 253 — 253 CMBS — 97 — 97 Redeemable preferred stock — 14 — 14 Total fixed income securities 488 22,397 376 23,261 Equity securities 1,508 16 90 1,614 Short-term investments 110 615 — 725 Other investments: Free-standing derivatives — 117 1 $ (3 ) 115 Separate account assets 3,422 — — 3,422 Total recurring assets at fair value $ 5,528 $ 23,145 $ 467 $ (3 ) $ 29,137 % of total assets at fair value 19.0 % 79.4 % 1.6 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (284 ) $ (284 ) Other liabilities: Free-standing derivatives — (62 ) — $ 1 (61 ) Total liabilities at fair value $ — $ (62 ) $ (284 ) $ 1 $ (345 ) % of total liabilities at fair value — % 18.0 % 82.3 % (0.3 )% 100 % |
Summary of quantitative information about the significant unobservable inputs used in Level 3 fair value measurements | The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average June 30, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (228 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74 % December 31, 2017 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (250 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74 % |
Schedule of rollforward of Level 3 assets and liabilities held at fair value on a recurring basis | The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2018 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2018 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 56 $ — $ — $ — $ — Corporate - public 47 — — — — Corporate - privately placed 215 (2 ) 1 10 (10 ) ABS - CDO 10 — — — — ABS - consumer and other 41 — — 3 (2 ) Total fixed income securities 369 (2 ) 1 13 (12 ) Equity securities 99 6 — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 469 $ 4 $ 1 $ 13 $ (12 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (260 ) $ 2 $ — $ — $ — Total recurring Level 3 liabilities $ (260 ) $ 2 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 2 $ — $ — $ — $ 58 Corporate - public — — — — 47 Corporate - privately placed — — — (27 ) 187 ABS - CDO — — — (1 ) 9 ABS - consumer and other 10 (4 ) — (1 ) 47 Total fixed income securities 12 (4 ) — (29 ) 348 Equity securities 15 (7 ) — — 113 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 27 $ (11 ) $ — $ (29 ) $ 462 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (257 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (257 ) ____________ (1) The effect to net income totals $6 million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $4 million in realized capital gains and losses, $1 million in interest credited to contractholder funds and $1 million in contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2018 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2017 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 57 $ — $ (1 ) $ — $ — Corporate - public 49 — (1 ) 3 — Corporate - privately placed 220 (2 ) (1 ) 10 (23 ) ABS - CDO 10 — — — — ABS - consumer and other 40 — — 6 (2 ) Total fixed income securities 376 (2 ) (3 ) 19 (25 ) Equity securities 90 7 — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 467 $ 5 $ (3 ) $ 19 $ (25 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (284 ) $ 25 $ — $ — $ — Total recurring Level 3 liabilities $ (284 ) $ 25 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 2 $ — $ — $ — $ 58 Corporate - public — (1 ) — (3 ) 47 Corporate - privately placed 11 — — (28 ) 187 ABS - CDO — — — (1 ) 9 ABS - consumer and other 13 (8 ) — (2 ) 47 Total fixed income securities 26 (9 ) — (34 ) 348 Equity securities 23 (7 ) — — 113 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 49 $ (16 ) $ — $ (34 ) $ 462 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (257 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (257 ) ____________ (1) The effect to net income totals $30 million and is reported in the Condensed Consolidated Statements of Operations as follows: $5 million in realized capital gains and losses, $20 million in interest credited to contractholder funds and $5 million in contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2017 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 60 $ — $ — $ — $ — Corporate - public 36 — — — — Corporate - privately placed 268 5 (7 ) 11 — ABS - CDO 32 1 — 1 (9 ) ABS - consumer and other 47 — — — (3 ) Total fixed income securities 443 6 (7 ) 12 (12 ) Equity securities 80 1 2 — — Free-standing derivatives, net (1 ) 2 — — — Total recurring Level 3 assets $ 522 $ 9 $ (5 ) $ 12 $ (12 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (285 ) $ — $ — $ — $ — Total recurring Level 3 liabilities $ (285 ) $ — $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ — $ — $ — $ — $ 60 Corporate - public — — — — 36 Corporate - privately placed 3 (29 ) — (1 ) 250 ABS - CDO — — — (1 ) 24 ABS - consumer and other 21 — — (2 ) 63 Total fixed income securities 24 (29 ) — (4 ) 433 Equity securities — (8 ) — — 75 Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 24 $ (37 ) $ — $ (4 ) $ 509 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (284 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (284 ) __________ (1) The effect to net income totals $9 million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $7 million in realized capital gains and losses, $2 million in net investment income, $(1) million in interest credited to contractholder funds and $1 million in contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2016 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 59 $ — $ 1 $ — $ — Corporate - public 47 1 — — (10 ) Corporate - privately placed 264 5 (2 ) 11 — ABS - CDO 27 — 2 4 (9 ) ABS - consumer and other 42 — — — (5 ) Total fixed income securities 439 6 1 15 (24 ) Equity securities 76 6 2 — — Free-standing derivatives, net (2 ) 3 — — — Other assets 1 (1 ) — — — Total recurring Level 3 assets $ 514 $ 14 $ 3 $ 15 $ (24 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (289 ) $ 3 $ — $ — $ — Total recurring Level 3 liabilities $ (289 ) $ 3 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ — $ — $ — $ — $ 60 Corporate - public — — — (2 ) 36 Corporate - privately placed 3 (29 ) — (2 ) 250 ABS - CDO 5 — — (5 ) 24 ABS - consumer and other 29 — — (3 ) 63 Total fixed income securities 37 (29 ) — (12 ) 433 Equity securities — (9 ) — — 75 Free-standing derivatives, net — — — — 1 (2) Other assets — — — — — Total recurring Level 3 assets $ 37 $ (38 ) $ — $ (12 ) $ 509 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (284 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (284 ) __________ (1) The effect to net income totals $17 million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $8 million in realized capital gains and losses, $7 million in net investment income, $(6) million in interest credited to contractholder funds and $8 million in contract benefits. (2) Comprises $1 million of assets. |
Schedule of change in unrealized gains and losses included in net income for Level 3 assets and liabilities held | The following table provides valuation changes included in net income for Level 3 assets and liabilities held as of June 30 . ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Assets Equity securities $ 6 $ 2 $ 7 $ 7 Free-standing derivatives, net — 2 — 3 Other assets — — — (1 ) Total recurring Level 3 assets $ 6 $ 4 $ 7 $ 9 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ 2 $ — $ 25 $ 3 Total recurring Level 3 liabilities $ 2 $ — $ 25 $ 3 |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Financial liabilities ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts $ 9,771 $ 10,203 $ 10,331 $ 11,036 Liability for collateral 511 511 542 542 Notes due to related parties 140 138 140 141 Financial assets ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Mortgage loans $ 3,839 $ 3,879 $ 3,876 $ 4,052 Agent loans 570 562 538 536 Bank loans 447 449 437 437 |
Derivative Financial Instrume19
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of volume and fair value positions of derivative instruments and reporting location in the Condensed Consolidated Statement of Financial Position | The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Condensed Consolidated Statement of Financial Position as of June 30, 2018 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 13 n/a $ — $ — $ — Financial options Other investments — 18 — — — Equity and index contracts Options Other investments — 32,622 85 85 — Financial futures Other assets — 51 — — — Total return index contracts Total return swap agreements - fixed income Other assets 19 n/a — — — Foreign currency contracts Foreign currency forwards Other investments 9 n/a — — — Credit default contracts Credit default swaps – buying protection Other investments 15 n/a (1 ) — (1 ) Credit default swaps – selling protection Other investments 30 n/a 1 1 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 89 32,691 $ 85 $ 86 $ (1 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 28 n/a $ 1 $ 1 $ — Financial options Other liabilities & accrued expenses — 574 — — — Equity and index contracts Options Other liabilities & accrued expenses — 32,524 (28 ) — (28 ) Total return index contracts Total return swap agreements - fixed income Other liabilities & accrued expenses 3 n/a — — — Total return swap agreements - equity Other liabilities & accrued expenses 21 n/a — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 186 n/a 1 2 (1 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 205 n/a (19 ) — (19 ) Guaranteed withdrawal benefits Contractholder funds 252 n/a (10 ) — (10 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,718 n/a (228 ) — (228 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 12 n/a — — — Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 2,426 33,098 (283 ) $ 3 $ (286 ) Total derivatives $ 2,515 65,789 $ (198 ) ___________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2017 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 15 n/a $ — $ — $ — Equity and index contracts Options Other investments — 4,485 114 114 — Credit default contracts Credit default swaps – buying protection Other investments 3 n/a — — — Credit default swaps – selling protection Other investments 80 n/a 1 1 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 101 4,485 $ 115 $ 115 $ — Liability derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other liabilities & accrued expenses $ 19 n/a $ 2 $ 2 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses 30 n/a 1 1 — Equity and index contracts Options and futures Other liabilities & accrued expenses — 4,464 (53 ) — (53 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 207 n/a (8 ) — (8 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 225 n/a (22 ) — (22 ) Guaranteed withdrawal benefits Contractholder funds 274 n/a (12 ) — (12 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,735 n/a (250 ) — (250 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 34 n/a (1 ) — (1 ) Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Subtotal 2,506 4,464 (345 ) 1 (346 ) Total liability derivatives 2,525 4,464 (343 ) $ 3 $ (346 ) Total derivatives $ 2,626 8,949 $ (228 ) ____________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) |
Schedule of gross and net amounts about the Company's OTC derivatives subject to enforceable master netting arrangements, assets | The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross amount Counter- party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount June 30, 2018 Asset derivatives $ 4 $ (4 ) $ 1 $ 1 $ — $ 1 Liability derivatives (2 ) 4 (7 ) (5 ) — (5 ) December 31, 2017 Asset derivatives $ 4 $ (3 ) $ — $ 1 $ — $ 1 Liability derivatives (10 ) 3 (2 ) (9 ) 3 (6 ) |
Schedule of gross and net amounts about the Company's OTC derivatives subject to enforceable master netting arrangements, liabilities | The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross amount Counter- party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount June 30, 2018 Asset derivatives $ 4 $ (4 ) $ 1 $ 1 $ — $ 1 Liability derivatives (2 ) 4 (7 ) (5 ) — (5 ) December 31, 2017 Asset derivatives $ 4 $ (3 ) $ — $ 1 $ — $ 1 Liability derivatives (10 ) 3 (2 ) (9 ) 3 (6 ) |
Summary of impacts on operations and AOCI from foreign currency contracts, cash flow hedges | The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships. There was no hedge ineffectiveness reported in realized gains and losses for the three months and six months ended June 30, 2018 or 2017 . As of June 30, 2018, the Company had no derivatives used in cash flow hedging relationships. ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Gain (loss) recognized in OCI on derivatives during the period $ 1 $ — $ 1 $ (2 ) Gain recognized in OCI on derivatives during the term of the hedging relationship — 3 — 3 Gain reclassified from AOCI into income (realized capital gains and losses) 3 — 3 — |
Schedule of gains and losses from valuation, settlements, and hedge ineffectiveness, fair value hedges and derivatives not designated as hedges | The following tables present gains and losses from valuation and settlements reported on derivatives not designated as accounting hedging instruments in the Condensed Consolidated Statements of Operations and Comprehensive Income. For the three months and six months ended June 30, 2018 and 2017 , the Company had no derivatives used in fair value hedging relationships. ($ in millions) Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total gain (loss) recognized in net income on derivatives Three months ended June 30, 2018 Equity and index contracts $ — $ — $ 10 $ 10 Embedded derivative financial instruments — 1 2 3 Foreign currency contracts 7 — — 7 Total $ 7 $ 1 $ 12 $ 20 Six months ended June 30, 2018 Equity and index contracts $ — $ — $ 6 $ 6 Embedded derivative financial instruments — 5 22 27 Foreign currency contracts 4 — — 4 Total $ 4 $ 5 $ 28 $ 37 Three months ended June 30, 2017 Equity and index contracts $ — $ — $ 9 $ 9 Embedded derivative financial instruments — 1 — 1 Foreign currency contracts (5 ) — — (5 ) Credit default contracts 1 — — 1 Total $ (4 ) $ 1 $ 9 $ 6 Six months ended June 30, 2017 Equity and index contracts $ (2 ) $ — $ 22 $ 20 Embedded derivative financial instruments — 8 (4 ) 4 Foreign currency contracts (9 ) — — (9 ) Credit default contracts 2 — — 2 Total $ (9 ) $ 8 $ 18 $ 17 |
Summary of counterparty credit exposure by counterparty credit rating | The following table summarizes the counterparty credit exposure by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) June 30, 2018 December 31, 2017 Rating (1) Number of counter-parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ — $ — $ — $ — 2 $ 59 $ 3 $ — A- 2 33 1 — — — — — BBB+ 1 231 1 — — — — — BBB 1 2 — — — — — — Total 4 $ 266 $ 2 $ — 2 $ 59 $ 3 $ — __________ (1) Rating is the lower of S&P or Moody’s ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. |
Summary of derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability | The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) June 30, 2018 December 31, 2017 Gross liability fair value of contracts containing credit-risk-contingent features $ 2 $ 12 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (2 ) (5 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features — (3 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 4 |
Schedule of CDS notional amounts by credit rating and fair value of protection sold | The following table shows the CDS notional amounts by credit rating and fair value of protection sold. ($ in millions) Notional amount AA A BBB BB and lower Total Fair value June 30, 2018 Single name Corporate debt $ — $ — $ — $ 1 $ 1 $ — Index Corporate debt 1 5 21 3 30 1 Total $ 1 $ 5 $ 21 $ 4 $ 31 $ 1 December 31, 2017 Single name Corporate debt $ — $ — $ — $ 1 $ 1 $ — Index Corporate debt 1 19 45 15 80 1 Total $ 1 $ 19 $ 45 $ 16 $ 81 $ 1 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Effects of reinsurance on premiums and contract charges | The effects of reinsurance on premiums and contract charges are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Direct $ 184 $ 183 $ 369 $ 363 Assumed Affiliate 61 55 121 108 Non-affiliate 185 193 374 391 Ceded Affiliate (12 ) (13 ) (25 ) (26 ) Non-affiliate (70 ) (71 ) (138 ) (141 ) Premiums and contract charges, net of reinsurance $ 348 $ 347 $ 701 $ 695 |
Effects of reinsurance on contract benefits | The effects of reinsurance on contract benefits are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Direct $ 266 $ 257 $ 523 $ 516 Assumed Affiliate 34 34 68 63 Non-affiliate 123 147 257 263 Ceded Affiliate (8 ) (8 ) (20 ) (16 ) Non-affiliate (58 ) (66 ) (101 ) (108 ) Contract benefits, net of reinsurance $ 357 $ 364 $ 727 $ 718 |
Effects of reinsurance on interest credited to contractholder funds | The effects of reinsurance on interest credited to contractholder funds are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Direct $ 129 $ 140 $ 259 $ 276 Assumed Affiliate 2 2 4 4 Non-affiliate 33 31 58 64 Ceded Affiliate (5 ) (6 ) (10 ) (11 ) Non-affiliate (7 ) (6 ) (11 ) (11 ) Interest credited to contractholder funds, net of reinsurance $ 152 $ 161 $ 300 $ 322 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of components of other comprehensive income on a pre-tax and after-tax basis | The components of other comprehensive (loss) income on a pre-tax and after-tax basis are as follows: ($ in millions) Three months ended June 30, 2018 2017 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (94 ) $ 20 $ (74 ) $ 178 $ (62 ) $ 116 Less: reclassification adjustment of realized capital gains and losses (17 ) 4 (13 ) (3 ) 1 (2 ) Unrealized net capital gains and losses (77 ) 16 (61 ) 181 (63 ) 118 Unrealized foreign currency translation adjustments 6 (1 ) 5 — — — Other comprehensive (loss) income $ (71 ) $ 15 $ (56 ) $ 181 $ (63 ) $ 118 Six months ended June 30, 2018 2017 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (320 ) $ 67 $ (253 ) $ 281 $ (99 ) $ 182 Less: reclassification adjustment of realized capital gains and losses (21 ) 4 (17 ) (1 ) — (1 ) Unrealized net capital gains and losses (299 ) 63 (236 ) 282 (99 ) 183 Unrealized foreign currency translation adjustments 11 (2 ) 9 (5 ) 2 (3 ) Other comprehensive (loss) income $ (288 ) $ 61 $ (227 ) $ 277 $ (97 ) $ 180 |
General - Narrative (Details)
General - Narrative (Details) - USD ($) $ in Millions | Jan. 01, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting transactions | |||||
Equity securities | $ 308 | ||||
Limited partnership interests | $ 3,452 | 3,147 | |||
Accounting Standards Update 2016-01 | |||||
Accounting transactions | |||||
Equity securities | 308 | ||||
Equity method limited partnerships | |||||
Accounting transactions | |||||
Limited partnership interests | 2,710 | 2,540 | |||
Equity method limited partnerships | Accounting Standards Update 2016-01 | |||||
Accounting transactions | |||||
Limited partnership interests | 95 | ||||
Additional capital paid-in | |||||
Accounting transactions | |||||
Gain on reinsurance transaction with an affiliate | $ 0 | $ 34 | |||
Accumulated other comprehensive income | |||||
Accounting transactions | |||||
Cumulative effect of change in accounting principle | 238 | $ 0 | |||
Retained income | |||||
Accounting transactions | |||||
Cumulative effect of change in accounting principle | (314) | $ 0 | |||
Retained income | Accounting Standards Update 2016-01 | |||||
Accounting transactions | |||||
Cumulative effect of change in accounting principle | $ (76) | ||||
AAC | Affiliate | |||||
Accounting transactions | |||||
Proceeds from reinsurance | $ 20 | ||||
Deferred policy acquisition costs, additions | 45 | ||||
Additions to other assets, amount | 11 | ||||
Reinsurance, reserve for life-contingent contract benefits | 24 | ||||
Deferred tax liabilities | 18 | ||||
AAC | Additional capital paid-in | Affiliate | |||||
Accounting transactions | |||||
Gain on reinsurance transaction with an affiliate | $ 34 |
General - Premiums and Contract
General - Premiums and Contract Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Premiums and contract charges by product | ||||
Premiums | $ 175 | $ 170 | $ 352 | $ 339 |
Contract charges | 173 | 177 | 349 | 356 |
Premiums and contract charges, net of reinsurance | 348 | 347 | 701 | 695 |
Traditional life insurance | ||||
Premiums and contract charges by product | ||||
Premiums | 145 | 143 | 292 | 286 |
Accident and health insurance | ||||
Premiums and contract charges by product | ||||
Premiums | 30 | 27 | 60 | 53 |
Interest-sensitive life insurance | ||||
Premiums and contract charges by product | ||||
Contract charges | 170 | 174 | 343 | 350 |
Fixed annuities | ||||
Premiums and contract charges by product | ||||
Contract charges | $ 3 | $ 3 | $ 6 | $ 6 |
Supplemental Cash Flow Inform24
Supplemental Cash Flow Information Supplemental Cash Flow Information - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | ||
Transfer from Investments | $ 13 | $ 4 |
Supplemental Cash Flow Inform25
Supplemental Cash Flow Information - Net change (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Net change in proceeds managed | ||
Net change in fixed income securities | $ 68 | $ 9 |
Net change in short-term investments | (37) | 12 |
Operating cash flow provided | 31 | 21 |
Net change in liabilities | ||
Liabilities for collateral, beginning of period | (542) | (550) |
Liabilities for collateral, end of period | (511) | (529) |
Operating cash flow used | $ (31) | $ (21) |
Investments - Fair Values (Deta
Investments - Fair Values (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | $ 21,041 | $ 22,004 |
Gross unrealized, gains | 843 | 1,355 |
Gross unrealized, loss | (317) | (98) |
Fair value | 21,567 | 23,261 |
U.S. government and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 376 | 768 |
Gross unrealized, gains | 27 | 38 |
Gross unrealized, loss | 0 | (2) |
Fair value | 403 | 804 |
Municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 2,036 | 2,001 |
Gross unrealized, gains | 218 | 275 |
Gross unrealized, loss | (4) | (3) |
Fair value | 2,250 | 2,273 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 17,731 | 18,262 |
Gross unrealized, gains | 527 | 960 |
Gross unrealized, loss | (306) | (86) |
Fair value | 17,952 | 19,136 |
Foreign government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 271 | 279 |
Gross unrealized, gains | 12 | 20 |
Gross unrealized, loss | 0 | 0 |
Fair value | 283 | 299 |
ABS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 382 | 383 |
Gross unrealized, gains | 4 | 6 |
Gross unrealized, loss | (4) | (4) |
Fair value | 382 | 385 |
RMBS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 178 | 205 |
Gross unrealized, gains | 48 | 49 |
Gross unrealized, loss | (1) | (1) |
Fair value | 225 | 253 |
CMBS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 53 | 93 |
Gross unrealized, gains | 6 | 6 |
Gross unrealized, loss | (2) | (2) |
Fair value | 57 | 97 |
Redeemable preferred stock | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 14 | 13 |
Gross unrealized, gains | 1 | 1 |
Gross unrealized, loss | 0 | 0 |
Fair value | $ 15 | $ 14 |
Investments - Scheduled Maturit
Investments - Scheduled Maturities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Amortized cost | ||
Due in one year or less | $ 1,170 | |
Due after one year through five years | 8,135 | |
Due after five years through ten years | 7,149 | |
Due after ten years | 3,974 | |
Subtotal | 20,428 | |
ABS, RMBS and CMBS | 613 | |
Amortized cost | 21,041 | $ 22,004 |
Fair value | ||
Due in one year or less | 1,177 | |
Due after one year through five years | 8,264 | |
Due after five years through ten years | 7,092 | |
Due after ten years | 4,370 | |
Subtotal | 20,903 | |
ABS, RMBS and CMBS | 664 | |
Fair value | $ 21,567 | $ 23,261 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net investment income | ||||
Investment income, before expense | $ 444 | $ 493 | $ 875 | $ 918 |
Investment expense | (25) | (20) | (49) | (41) |
Net investment income | 419 | 473 | 826 | 877 |
Fixed income securities | ||||
Net investment income | ||||
Investment income, before expense | 247 | 269 | 498 | 537 |
Mortgage loans | ||||
Net investment income | ||||
Investment income, before expense | 53 | 45 | 97 | 94 |
Equity securities | ||||
Net investment income | ||||
Investment income, before expense | 16 | 14 | 23 | 29 |
Limited partnership interests | ||||
Net investment income | ||||
Investment income, before expense | 92 | 135 | 188 | 200 |
Net investment income | 10 | 48 | ||
Short-term investments | ||||
Net investment income | ||||
Investment income, before expense | 5 | 2 | 9 | 3 |
Policy loans | ||||
Net investment income | ||||
Investment income, before expense | 8 | 7 | 15 | 15 |
Other | ||||
Net investment income | ||||
Investment income, before expense | 23 | $ 21 | 45 | $ 40 |
Equity method limited partnerships | Limited partnership interests | ||||
Net investment income | ||||
Net investment income | $ 82 | $ 140 |
Investments - Realized Capital
Investments - Realized Capital Gains and Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ 8 | $ (4) | $ (24) | $ (5) |
Fixed income securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | (12) | (6) | (18) | (13) |
Mortgage loans | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 2 | 0 | 2 | 0 |
Equity securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 20 | (4) | (6) | (4) |
Limited partnership interests | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | (11) | 10 | (8) | 23 |
Derivatives | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 10 | (4) | 7 | (9) |
Other | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ (1) | $ 0 | $ (1) | $ (2) |
Investments - Realized Capita30
Investments - Realized Capital Gains and Losses by Transaction Type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Investments [Abstract] | ||||
Impairment write-downs | $ (2) | $ (12) | $ (3) | $ (33) |
Change in intent write-downs | 0 | (1) | 0 | (4) |
Net OTTI losses recognized in earnings | (2) | (13) | (3) | (37) |
Sales | (7) | 13 | (12) | 41 |
Valuation of equity investments | 10 | 0 | (13) | 0 |
Valuation and settlements of derivative instruments | 7 | (4) | 4 | (9) |
Total realized capital gains and losses | $ 8 | $ (4) | $ (24) | $ (5) |
Investments Investments - Valua
Investments Investments - Valuation Changes Included in Net Income for Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Debt Securities, Available-for-sale [Line Items] | ||
Total valuation changes | $ 31 | $ 63 |
Equity securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total valuation changes | 20 | 14 |
Limited partnership interests | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total valuation changes | $ 11 | $ 49 |
Investments - Other-than-tempor
Investments - Other-than-temporary impairment losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | $ (2) | $ (13) | $ (2) | $ (41) |
Included in OCI | 0 | 0 | (1) | 4 |
Net OTTI losses recognized in earnings | (2) | (13) | (3) | (37) |
Municipal | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | 0 | (1) | 0 | (1) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | 0 | (1) | 0 | (1) |
Corporate | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | 0 | (7) | ||
Included in OCI | 0 | 3 | ||
Net OTTI losses recognized in earnings | 0 | (4) | ||
RMBS | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (1) | 0 |
Included in OCI | 0 | 0 | 0 | (2) |
Net OTTI losses recognized in earnings | (1) | 0 | (1) | (2) |
CMBS | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | 0 | (3) | 0 | (9) |
Included in OCI | 0 | 0 | (1) | 3 |
Net OTTI losses recognized in earnings | 0 | (3) | (1) | (6) |
Fixed income securities | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | (4) | (1) | (17) |
Included in OCI | 0 | 0 | (1) | 4 |
Net OTTI losses recognized in earnings | (1) | (4) | (2) | (13) |
Equity securities | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | 0 | (5) | 0 | (15) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | 0 | (5) | 0 | (15) |
Limited partnership interests | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | 0 | (4) | 0 | (7) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | 0 | (4) | 0 | (7) |
Other | ||||
Other-than-temporary impairment losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (1) | (2) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | $ (1) | $ 0 | $ (1) | $ (2) |
Investments Investments - Narra
Investments Investments - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Gross gains on sales of fixed income securities, debt | $ 13,000,000 | $ 20,000,000 | |||
Gross gains on sales of fixed income securities | $ 22,000,000 | $ 55,000,000 | |||
Gross losses on sales of fixed income securities, debt | 24,000,000 | 36,000,000 | |||
Gross losses on sales of fixed income securities | $ 23,000,000 | 44,000,000 | |||
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | 109,000,000 | 109,000,000 | $ 113,000,000 | ||
Unrealized losses related to securities with unrealized loss position less than 20% of amortized cost or cost | 303,000,000 | 303,000,000 | |||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost | 14,000,000 | 14,000,000 | |||
Limited partnership interests | 3,452,000,000 | 3,452,000,000 | 3,147,000,000 | ||
Short-term investments | 1,066,000,000 | 1,066,000,000 | 725,000,000 | ||
Other | 1,322,000,000 | 1,322,000,000 | 1,254,000,000 | ||
Fixed income securities | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Total unrealized losses | 317,000,000 | 317,000,000 | 98,000,000 | ||
Fixed income and equity securities | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Total unrealized losses | 317,000,000 | 317,000,000 | |||
Investment grade fixed income securities | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Unrealized losses related to securities with unrealized loss position less than 20% of amortized cost or cost | 251,000,000 | 251,000,000 | |||
Total unrealized losses | 262,000,000 | 262,000,000 | 74,000,000 | ||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost | 11,000,000 | 11,000,000 | |||
Below investment grade equity securities | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost | 3,000,000 | 3,000,000 | |||
Below investment grade fixed income securities | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Unrealized losses related to securities with unrealized loss position less than 20% of amortized cost or cost | 52,000,000 | 52,000,000 | |||
Total unrealized losses | 55,000,000 | 55,000,000 | 24,000,000 | ||
Available for sale securities, unrealized losses having loss of less than twenty percent, less than 12 months | 44,000,000 | 44,000,000 | |||
Equity method limited partnerships | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Limited partnership interests | 2,710,000,000 | 2,710,000,000 | 2,540,000,000 | ||
Carrying value | Cost method limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Limited partnership interests | 740,000,000 | 740,000,000 | 611,000,000 | ||
Non-impaired mortgage loans | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Allowance for credit losses, period increase (decrease) | 0 | 0 | |||
Mortgage loans | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Average balance impaired mortgage loans | 4,000,000 | $ 5,000,000 | |||
Policy loans | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Other | $ 557,000,000 | $ 557,000,000 | $ 561,000,000 |
Investments - Other-than-temp34
Investments - Other-than-temporary Losses Included in AOCI (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Other-than-temporary impairment losses included in accumulated other comprehensive income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | $ (48) | $ (53) |
Municipal | ||
Other-than-temporary impairment losses included in accumulated other comprehensive income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (4) | (4) |
ABS | ||
Other-than-temporary impairment losses included in accumulated other comprehensive income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (6) | (8) |
RMBS | ||
Other-than-temporary impairment losses included in accumulated other comprehensive income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (34) | (37) |
CMBS | ||
Other-than-temporary impairment losses included in accumulated other comprehensive income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | $ (4) | $ (4) |
Investments - Rollforward of Cu
Investments - Rollforward of Cumulative Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Credit Losses on Fixed Income Securities | ||||
Beginning balance | $ (128) | $ (167) | $ (138) | $ (176) |
Additional credit loss for securities previously other-than-temporarily impaired | (1) | (3) | (2) | (6) |
Additional credit loss for securities not previously other-than-temporarily impaired | 0 | (1) | 0 | (7) |
Reduction in credit loss for securities disposed or collected | 5 | 11 | 16 | 29 |
Ending balance | $ (124) | $ (160) | $ (124) | $ (160) |
Investments - Unrealized Net Ca
Investments - Unrealized Net Capital Gains and Losses (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair value | ||
Fixed income securities | $ 21,567 | $ 23,261 |
Equity securities | 1,705 | 1,614 |
Short-term investments | 1,066 | 725 |
Derivative instruments | 2 | |
Gross unrealized Gains | ||
Fixed income securities | 843 | 1,355 |
Equity securities | 311 | |
Short-term investments | 0 | 0 |
Derivative instruments | 2 | |
Gross unrealized Losses | ||
Fixed income securities | (317) | (98) |
Equity securities | (3) | |
Short-term investments | 0 | 0 |
Derivative instruments | 0 | |
Unrealized net gains (losses) | ||
Fixed income securities | 526 | 1,257 |
Equity securities | 308 | |
Short-term investments | 0 | 0 |
Derivative instruments | 2 | |
EMA limited partnerships | 1 | 1 |
Unrealized net capital gains and losses, pre-tax | 527 | 1,568 |
Amount recognized for: | ||
Insurance reserves | 0 | (315) |
DAC and DSI | (70) | (189) |
Amounts recognized | (70) | (504) |
Deferred income taxes | (96) | (229) |
Total unrealized net capital gains and losses | $ 361 | 835 |
Fair value of derivative securities classified as liabilities, with unrealized net gains (losses) in AOCI | $ 2 |
Investments - Change in Unreali
Investments - Change in Unrealized Net Capital Gains and Losses (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ||
Change in unrealized net capital gains and losses | $ (733) | |
Amount recognized for: | ||
Insurance reserves | 315 | |
DAC and DSI | 119 | |
Amounts recognized | 434 | |
Deferred income taxes | 63 | |
Decrease in unrealized net capital gains and losses, after-tax | (236) | |
Cumulative effect of change in accounting principle | $ 308 | |
Fixed income securities | ||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ||
Change in unrealized net capital gains and losses | (731) | |
Equity securities | ||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ||
Change in unrealized net capital gains and losses | 0 | |
Derivatives | ||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ||
Change in unrealized net capital gains and losses | $ (2) | |
Accounting Standards Update 2016-01 | ||
Amount recognized for: | ||
Cumulative effect of change in accounting principle | $ 308 |
Investments - Portfolio Monitor
Investments - Portfolio Monitoring (Details) $ in Millions | Jun. 30, 2018USD ($)security | Dec. 31, 2017USD ($)security |
Fixed income and equity securities | ||
Less than 12 months | ||
Number of issues | security | 670 | |
Fair value | $ 3,596 | |
Unrealized losses | $ (34) | |
12 months or more | ||
Number of issues | security | 218 | |
Fair value | $ 1,425 | |
Unrealized losses | (67) | |
Total unrealized losses | ||
Total unrealized losses | $ (317) | |
Total unrealized losses | $ (101) | |
Fixed income securities | ||
Less than 12 months | ||
Number of issues | security | 1,487 | 583 |
Fair value | $ 8,088 | $ 3,530 |
Unrealized losses | $ (220) | $ (31) |
12 months or more | ||
Number of issues | security | 204 | 217 |
Fair value | $ 1,179 | $ 1,425 |
Unrealized losses | (97) | (67) |
Total unrealized losses | ||
Total unrealized losses | $ (317) | $ (98) |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues | security | 7 | 17 |
Fair value | $ 77 | $ 443 |
Unrealized losses | $ 0 | $ (2) |
12 months or more | ||
Number of issues | security | 1 | 2 |
Fair value | $ 5 | $ 25 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ (2) |
Municipal | ||
Less than 12 months | ||
Number of issues | security | 54 | 4 |
Fair value | $ 117 | $ 14 |
Unrealized losses | $ (2) | $ 0 |
12 months or more | ||
Number of issues | security | 1 | 1 |
Fair value | $ 12 | $ 11 |
Unrealized losses | (2) | (3) |
Total unrealized losses | ||
Total unrealized losses | $ (4) | $ (3) |
Corporate | ||
Less than 12 months | ||
Number of issues | security | 1,290 | 456 |
Fair value | $ 7,670 | $ 2,899 |
Unrealized losses | $ (216) | $ (28) |
12 months or more | ||
Number of issues | security | 135 | 144 |
Fair value | $ 1,127 | $ 1,324 |
Unrealized losses | (90) | (58) |
Total unrealized losses | ||
Total unrealized losses | $ (306) | $ (86) |
Foreign government | ||
Less than 12 months | ||
Number of issues | security | 2 | |
Fair value | $ 15 | |
Unrealized losses | $ 0 | |
12 months or more | ||
Number of issues | security | 0 | |
Fair value | $ 0 | |
Unrealized losses | 0 | |
Total unrealized losses | ||
Total unrealized losses | $ 0 | |
ABS | ||
Less than 12 months | ||
Number of issues | security | 41 | 33 |
Fair value | $ 194 | $ 170 |
Unrealized losses | $ (1) | $ (1) |
12 months or more | ||
Number of issues | security | 6 | 8 |
Fair value | $ 9 | $ 24 |
Unrealized losses | (3) | (3) |
Total unrealized losses | ||
Total unrealized losses | $ (4) | $ (4) |
RMBS | ||
Less than 12 months | ||
Number of issues | security | 90 | 70 |
Fair value | $ 4 | $ 3 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | security | 56 | 56 |
Fair value | $ 16 | $ 18 |
Unrealized losses | (1) | (1) |
Total unrealized losses | ||
Total unrealized losses | $ (1) | $ (1) |
CMBS | ||
Less than 12 months | ||
Number of issues | security | 2 | 2 |
Fair value | $ 11 | $ 1 |
Unrealized losses | $ (1) | $ 0 |
12 months or more | ||
Number of issues | security | 5 | 6 |
Fair value | $ 10 | $ 23 |
Unrealized losses | (1) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (2) | $ (2) |
Redeemable preferred stock | ||
Less than 12 months | ||
Number of issues | security | 1 | 1 |
Fair value | $ 0 | $ 0 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | security | 0 | 0 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ 0 |
Equity securities | ||
Less than 12 months | ||
Number of issues | security | 87 | |
Fair value | $ 66 | |
Unrealized losses | $ (3) | |
12 months or more | ||
Number of issues | security | 1 | |
Fair value | $ 0 | |
Unrealized losses | 0 | |
Total unrealized losses | ||
Total unrealized losses | $ (3) | |
Investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | security | 1,102 | 472 |
Fair value | $ 6,719 | $ 3,192 |
Unrealized losses | $ (176) | $ (22) |
12 months or more | ||
Number of issues | security | 171 | 181 |
Fair value | $ 1,086 | $ 1,320 |
Unrealized losses | (86) | (52) |
Total unrealized losses | ||
Total unrealized losses | $ (262) | $ (74) |
Below investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | security | 385 | 111 |
Fair value | $ 1,369 | $ 338 |
Unrealized losses | $ (44) | $ (9) |
12 months or more | ||
Number of issues | security | 33 | 36 |
Fair value | $ 93 | $ 105 |
Unrealized losses | (11) | (15) |
Total unrealized losses | ||
Total unrealized losses | $ (55) | $ (24) |
Investments - Carrying Value of
Investments - Carrying Value of Non-impaired Fixed Rate and Variable Rate Mortgage Loans (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Total | $ 3,839 | $ 3,876 |
Net carrying value of impaired mortgage loans | ||
Impaired mortgage loans with a valuation allowance | 4 | 4 |
Impaired mortgage loans without a valuation allowance | 0 | 0 |
Total impaired mortgage loans | 4 | 4 |
Valuation allowance on impaired mortgage loans | 3 | 3 |
Non-impaired mortgage loans | ||
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Fixed rate mortgage loans | 3,778 | 3,844 |
Variable rate mortgage loans | 57 | 28 |
Total | 3,835 | 3,872 |
Non-impaired mortgage loans | Below 1.0 | ||
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Fixed rate mortgage loans | 3 | 3 |
Variable rate mortgage loans | 15 | 0 |
Total | 18 | 3 |
Non-impaired mortgage loans | 1.0 - 1.25 | ||
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Fixed rate mortgage loans | 293 | 326 |
Variable rate mortgage loans | 0 | 0 |
Total | 293 | 326 |
Non-impaired mortgage loans | 1.26 - 1.50 | ||
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Fixed rate mortgage loans | 1,058 | 1,033 |
Variable rate mortgage loans | 0 | 15 |
Total | 1,058 | 1,048 |
Non-impaired mortgage loans | Above 1.50 | ||
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Fixed rate mortgage loans | 2,424 | 2,482 |
Variable rate mortgage loans | 42 | 13 |
Total | $ 2,466 | $ 2,495 |
Investments Investments - Other
Investments Investments - Other investments by type (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Investment Holdings [Line Items] | ||
Other | $ 1,322 | $ 1,254 |
Agent loans | ||
Investment Holdings [Line Items] | ||
Other | 570 | 538 |
Bank loans | ||
Investment Holdings [Line Items] | ||
Other | 447 | 437 |
Real estate | ||
Investment Holdings [Line Items] | ||
Other | 212 | 157 |
Derivatives and other | ||
Investment Holdings [Line Items] | ||
Other | $ 93 | $ 122 |
Fair Value of Assets and Liab41
Fair Value of Assets and Liabilities Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fair value, assets and liabilities gain (loss) included in earnings | $ 6 | $ 9 | $ 30 | $ 17 | |
Fixed income securities | 21,567 | 21,567 | $ 23,261 | ||
Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Assets, fair value disclosure | 462 | 462 | 467 | ||
Recurring basis | Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fixed income securities | 348 | 348 | 376 | ||
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Assets, fair value disclosure | 204 | 204 | $ 237 | ||
Gain (loss) on investments | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fair value, assets and liabilities gain (loss) included in earnings | 8 | 4 | 32 | 12 | |
Realized capital gains and losses | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 6 | 2 | 7 | 3 | |
Interest credited to contractholder funds | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 1 | (1) | 20 | (6) | |
Contract benefits | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 1 | 1 | 5 | 8 | |
(Loss) gain reclassified from AOCI into income (net investment income) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | $ 2 | $ 7 | |||
Limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Commitments to invest in limited partnership interests | $ 352 | $ 352 | |||
Minimum | Limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Investment assets, useful life | 10 years | ||||
Maximum | Limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Investment assets, useful life | 12 years |
Fair Value of Assets and Liab42
Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Assets | |||
Fixed income securities | $ 21,567 | $ 23,261 | |
Equity securities | 1,705 | 1,614 | |
Short-term investments | 1,066 | 725 | |
Other investments: Free-standing derivatives | 1 | $ 1 | |
Separate account assets | 3,247 | 3,422 | |
Derivative asset, fair value, gross liability and obligation to return cash, offset | $ (3) | $ (3) | |
% of total assets at fair value | 0.00% | 0.00% | |
Total | $ 28,411 | ||
Liabilities | |||
Free standing derivative liabilities derivative liability, fair value, gross asset and right to reclaim cash, offset | $ (3) | $ 1 | |
% of total liabilities at fair value | 1.00% | (0.30%) | |
U.S. government and agencies | |||
Assets | |||
Fixed income securities | $ 403 | $ 804 | |
Municipal | |||
Assets | |||
Fixed income securities | 2,250 | 2,273 | |
Foreign government | |||
Assets | |||
Fixed income securities | 283 | 299 | |
RMBS | |||
Assets | |||
Fixed income securities | 225 | 253 | |
CMBS | |||
Assets | |||
Fixed income securities | 57 | 97 | |
Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 15 | 14 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | $ 5,345 | $ 5,528 | |
% of total assets at fair value | 19.30% | 19.00% | |
Liabilities | |||
Total liabilities at fair value | $ 0 | $ 0 | |
% of total liabilities at fair value | 0.00% | 0.00% | |
Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | $ 21,867 | $ 23,145 | |
% of total assets at fair value | 79.00% | 79.40% | |
Liabilities | |||
Total liabilities at fair value | $ (30) | $ (62) | |
% of total liabilities at fair value | 10.40% | 18.00% | |
Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | $ 462 | $ 467 | |
% of total assets at fair value | 1.70% | 1.60% | |
Liabilities | |||
Total liabilities at fair value | $ (257) | $ (284) | |
% of total liabilities at fair value | 88.60% | 82.30% | |
Investments reported at NAV | |||
Assets | |||
Investments reported at NAV | $ 740 | ||
Recurring basis | |||
Assets | |||
Other investments: Free-standing derivatives, gross liability and obligation to return cash, offset | (3) | $ (3) | |
Liabilities | |||
Free standing derivative liabilities derivative liability, fair value, gross asset and right to reclaim cash, offset | (3) | 1 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Fixed income securities | 126 | 488 | |
Equity securities | 1,577 | 1,508 | |
Short-term investments | 395 | 110 | |
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 3,247 | 3,422 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | |||
Assets | |||
Fixed income securities | 126 | 488 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Municipal | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Corporate - public | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Foreign government | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | ABS - CDO | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | RMBS | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | CMBS | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Significant other observable inputs (Level 2) | |||
Assets | |||
Fixed income securities | 21,093 | 22,397 | |
Equity securities | 15 | 16 | |
Short-term investments | 671 | 615 | |
Other investments: Free-standing derivatives | 88 | 117 | |
Separate account assets | 0 | 0 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (30) | (62) | |
Recurring basis | Significant other observable inputs (Level 2) | U.S. government and agencies | |||
Assets | |||
Fixed income securities | 277 | 316 | |
Recurring basis | Significant other observable inputs (Level 2) | Municipal | |||
Assets | |||
Fixed income securities | 2,192 | 2,216 | |
Recurring basis | Significant other observable inputs (Level 2) | Corporate - public | |||
Assets | |||
Fixed income securities | 12,381 | 13,168 | |
Recurring basis | Significant other observable inputs (Level 2) | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 5,337 | 5,699 | |
Recurring basis | Significant other observable inputs (Level 2) | Foreign government | |||
Assets | |||
Fixed income securities | 283 | 299 | |
Recurring basis | Significant other observable inputs (Level 2) | ABS - CDO | |||
Assets | |||
Fixed income securities | 29 | 38 | |
Recurring basis | Significant other observable inputs (Level 2) | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 297 | 297 | |
Recurring basis | Significant other observable inputs (Level 2) | RMBS | |||
Assets | |||
Fixed income securities | 225 | 253 | |
Recurring basis | Significant other observable inputs (Level 2) | CMBS | |||
Assets | |||
Fixed income securities | 57 | 97 | |
Recurring basis | Significant other observable inputs (Level 2) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 15 | 14 | |
Recurring basis | Significant unobservable inputs (Level 3) | |||
Assets | |||
Fixed income securities | 348 | 376 | |
Equity securities | 113 | 90 | |
Short-term investments | 0 | 0 | |
Other investments: Free-standing derivatives | 1 | 1 | |
Separate account assets | 0 | 0 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | 0 | 0 | |
Recurring basis | Significant unobservable inputs (Level 3) | U.S. government and agencies | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Significant unobservable inputs (Level 3) | Municipal | |||
Assets | |||
Fixed income securities | 58 | 57 | |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate - public | |||
Assets | |||
Fixed income securities | 47 | 49 | |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 187 | 220 | |
Recurring basis | Significant unobservable inputs (Level 3) | Foreign government | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Significant unobservable inputs (Level 3) | ABS - CDO | |||
Assets | |||
Fixed income securities | 9 | 10 | |
Recurring basis | Significant unobservable inputs (Level 3) | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 47 | 40 | |
Recurring basis | Significant unobservable inputs (Level 3) | RMBS | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Significant unobservable inputs (Level 3) | CMBS | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Recurring basis | Significant unobservable inputs (Level 3) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Contractholder funds: Derivatives embedded in life and annuity contracts | Recurring basis | Quoted prices in active markets for identical assets (Level 1) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | 0 | 0 | |
Contractholder funds: Derivatives embedded in life and annuity contracts | Recurring basis | Significant other observable inputs (Level 2) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | 0 | 0 | |
Contractholder funds: Derivatives embedded in life and annuity contracts | Recurring basis | Significant unobservable inputs (Level 3) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | (257) | (284) | |
Fair value | |||
Assets | |||
Total assets at fair value | $ 27,671 | $ 29,137 | |
% of total assets at fair value | 100.00% | 100.00% | |
Liabilities | |||
Total liabilities at fair value | $ (290) | $ (345) | |
% of total liabilities at fair value | 100.00% | 100.00% | |
Fair value | Recurring basis | |||
Assets | |||
Fixed income securities | $ 21,567 | $ 23,261 | |
Equity securities | 1,705 | 1,614 | |
Short-term investments | 1,066 | 725 | |
Other investments: Free-standing derivatives | 86 | 115 | |
Separate account assets | 3,247 | 3,422 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (33) | (61) | |
Fair value | Recurring basis | U.S. government and agencies | |||
Assets | |||
Fixed income securities | 403 | 804 | |
Fair value | Recurring basis | Municipal | |||
Assets | |||
Fixed income securities | 2,250 | 2,273 | |
Fair value | Recurring basis | Corporate - public | |||
Assets | |||
Fixed income securities | 12,428 | 13,217 | |
Fair value | Recurring basis | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 5,524 | 5,919 | |
Fair value | Recurring basis | Foreign government | |||
Assets | |||
Fixed income securities | 283 | 299 | |
Fair value | Recurring basis | ABS - CDO | |||
Assets | |||
Fixed income securities | 38 | 48 | |
Fair value | Recurring basis | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 344 | 337 | |
Fair value | Recurring basis | RMBS | |||
Assets | |||
Fixed income securities | 225 | 253 | |
Fair value | Recurring basis | CMBS | |||
Assets | |||
Fixed income securities | 57 | 97 | |
Fair value | Recurring basis | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 15 | 14 | |
Fair value | Contractholder funds: Derivatives embedded in life and annuity contracts | Recurring basis | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ (257) | $ (284) |
Fair Value of Assets and Liab43
Fair Value of Assets and Liabilities - Level 3 Fair Value Measurement (Details) - Equity-indexed and forward starting options in life and annuity product contracts - Significant unobservable inputs (Level 3) $ in Millions | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Quantitative information about the significant unobservable inputs | ||
Fair value | $ (228) | $ (250) |
Projected option cost | Minimum | ||
Quantitative information about the significant unobservable inputs | ||
Embedded derivative liability, measurement input | 0.010 | 0.010 |
Projected option cost | Maximum | ||
Quantitative information about the significant unobservable inputs | ||
Embedded derivative liability, measurement input | 0.022 | 0.022 |
Projected option cost | Weighted average | ||
Quantitative information about the significant unobservable inputs | ||
Embedded derivative liability, measurement input | 0.0174 | 0.0174 |
Fair Value of Assets and Liab44
Fair Value of Assets and Liabilities - Level 3 Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Assets | ||||
Balance at beginning of period | $ 469 | $ 522 | $ 467 | $ 514 |
Total gains (losses) included in: Net income | 4 | 9 | 5 | 14 |
Total gains (losses) included in: OCI | 1 | (5) | (3) | 3 |
Transfers into Level 3 | 13 | 12 | 19 | 15 |
Transfers out of Level 3 | (12) | (12) | (25) | (24) |
Purchases | 27 | 24 | 49 | 37 |
Sales | (11) | (37) | (16) | (38) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (29) | (4) | (34) | (12) |
Balance at end of period | 462 | 509 | 462 | 509 |
Liabilities | ||||
Balance at beginning of period | (260) | (285) | (284) | (289) |
Total gains (losses) included in: net income | 2 | 0 | 25 | 3 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | (1) | (1) |
Settlements | 1 | 1 | 3 | 3 |
Balance at end of period | (257) | (284) | (257) | (284) |
Fair value, assets and liabilities gain (loss) included in earnings | 6 | 9 | 30 | 17 |
Other investments: Free-standing derivatives | 1 | 1 | 1 | 1 |
Municipal | ||||
Assets | ||||
Balance at beginning of period | 56 | 60 | 57 | 59 |
Total gains (losses) included in: Net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | (1) | 1 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 2 | 0 | 2 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 58 | 60 | 58 | 60 |
Corporate - public | ||||
Assets | ||||
Balance at beginning of period | 47 | 36 | 49 | 47 |
Total gains (losses) included in: Net income | 0 | 0 | 0 | 1 |
Total gains (losses) included in: OCI | 0 | 0 | (1) | 0 |
Transfers into Level 3 | 0 | 0 | 3 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | (10) |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | (1) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (3) | (2) |
Balance at end of period | 47 | 36 | 47 | 36 |
Corporate - privately placed | ||||
Assets | ||||
Balance at beginning of period | 215 | 268 | 220 | 264 |
Total gains (losses) included in: Net income | (2) | 5 | (2) | 5 |
Total gains (losses) included in: OCI | 1 | (7) | (1) | (2) |
Transfers into Level 3 | 10 | 11 | 10 | 11 |
Transfers out of Level 3 | (10) | 0 | (23) | 0 |
Purchases | 0 | 3 | 11 | 3 |
Sales | 0 | (29) | 0 | (29) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (27) | (1) | (28) | (2) |
Balance at end of period | 187 | 250 | 187 | 250 |
ABS - CDO | ||||
Assets | ||||
Balance at beginning of period | 10 | 32 | 10 | 27 |
Total gains (losses) included in: Net income | 0 | 1 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 2 |
Transfers into Level 3 | 0 | 1 | 0 | 4 |
Transfers out of Level 3 | 0 | (9) | 0 | (9) |
Purchases | 0 | 0 | 0 | 5 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (1) | (1) | (5) |
Balance at end of period | 9 | 24 | 9 | 24 |
ABS - consumer and other | ||||
Assets | ||||
Balance at beginning of period | 41 | 47 | 40 | 42 |
Total gains (losses) included in: Net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 3 | 0 | 6 | 0 |
Transfers out of Level 3 | (2) | (3) | (2) | (5) |
Purchases | 10 | 21 | 13 | 29 |
Sales | (4) | 0 | (8) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (2) | (2) | (3) |
Balance at end of period | 47 | 63 | 47 | 63 |
Fixed income securities | ||||
Assets | ||||
Balance at beginning of period | 369 | 443 | 376 | 439 |
Total gains (losses) included in: Net income | (2) | 6 | (2) | 6 |
Total gains (losses) included in: OCI | 1 | (7) | (3) | 1 |
Transfers into Level 3 | 13 | 12 | 19 | 15 |
Transfers out of Level 3 | (12) | (12) | (25) | (24) |
Purchases | 12 | 24 | 26 | 37 |
Sales | (4) | (29) | (9) | (29) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (29) | (4) | (34) | (12) |
Balance at end of period | 348 | 433 | 348 | 433 |
Equity securities | ||||
Assets | ||||
Balance at beginning of period | 99 | 80 | 90 | 76 |
Total gains (losses) included in: Net income | 6 | 1 | 7 | 6 |
Total gains (losses) included in: OCI | 0 | 2 | 0 | 2 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 15 | 0 | 23 | 0 |
Sales | (7) | (8) | (7) | (9) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 113 | 75 | 113 | 75 |
Free-standing derivatives, net | ||||
Assets | ||||
Balance at beginning of period | 1 | (1) | 1 | (2) |
Total gains (losses) included in: Net income | 0 | 2 | 0 | 3 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 1 | 1 | 1 | 1 |
Other assets | ||||
Assets | ||||
Balance at beginning of period | 1 | |||
Total gains (losses) included in: Net income | (1) | |||
Total gains (losses) included in: OCI | 0 | |||
Transfers into Level 3 | 0 | |||
Transfers out of Level 3 | 0 | |||
Purchases | 0 | |||
Sales | 0 | |||
Issues | 0 | |||
Settlements | 0 | |||
Balance at end of period | 0 | 0 | ||
Contractholder funds: Derivatives embedded in life and annuity contracts | ||||
Liabilities | ||||
Balance at beginning of period | (260) | (285) | (284) | (289) |
Total gains (losses) included in: net income | 2 | 0 | 25 | 3 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | (1) | (1) |
Settlements | 1 | 1 | 3 | 3 |
Balance at end of period | (257) | (284) | (257) | (284) |
Realized capital gains and losses | ||||
Assets | ||||
Total gains (losses) included in: Net income | 4 | 7 | 5 | 8 |
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 6 | 2 | 7 | 3 |
(Loss) gain reclassified from AOCI into income (net investment income) | ||||
Assets | ||||
Total gains (losses) included in: Net income | 2 | 7 | ||
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 2 | 7 | ||
Interest credited to contractholder funds | ||||
Assets | ||||
Total gains (losses) included in: Net income | 1 | (1) | 20 | (6) |
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 1 | (1) | 20 | (6) |
Contract benefits | ||||
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | $ 1 | $ 1 | $ 5 | $ 8 |
Fair Value of Assets and Liab45
Fair Value of Assets and Liabilities - Change In Unrealized Gains and Losses included in Net Income for Level 3 (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | $ 6 | $ 4 | $ 7 | $ 9 |
Total recurring Level 3 liabilities | 2 | 0 | 25 | 3 |
Contractholder funds: Derivatives embedded in life and annuity contracts | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 liabilities | 2 | 0 | 25 | 3 |
Equity securities | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | 6 | 2 | 7 | 7 |
Free-standing derivatives, net | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | 0 | 2 | 0 | 3 |
Other assets | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | $ 0 | $ 0 | $ 0 | $ (1) |
Fair Value of Assets and Liab46
Fair Value of Assets and Liabilities - Carrying Values and Fair Value Estimates of Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Financial assets | ||||
Mortgage loans | $ 3,839 | $ 3,876 | ||
Financial liabilities | ||||
Liability for collateral | 511 | 542 | $ 529 | $ 550 |
Notes due to related parties | 140 | 140 | ||
Carrying value | ||||
Financial assets | ||||
Mortgage loans | 3,839 | 3,876 | ||
Agent loans | 570 | 538 | ||
Bank loans | 447 | 437 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 9,771 | 10,331 | ||
Liability for collateral | 511 | 542 | ||
Notes due to related parties | 140 | 140 | ||
Fair value | ||||
Financial assets | ||||
Mortgage loans | 3,879 | 4,052 | ||
Agent loans | 562 | 536 | ||
Bank loans | 449 | 437 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 10,203 | 11,036 | ||
Liability for collateral | 511 | 542 | ||
Notes due to related parties | $ 138 | $ 141 |
Derivative Financial Instrume47
Derivative Financial Instruments Derivative Financial Instruments - Narrative (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)entity | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)entity | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Derivative [Line Items] | |||||
Potential recoveries under credit risk derivatives | $ 0 | ||||
Gain (loss) on fair value hedge ineffectiveness, net | $ 0 | $ 0 | 0 | $ 0 | |
Cash and securities pledged as collateral by counterparties | 7,000,000 | 7,000,000 | |||
Securities pledged as collateral to counterparties | 1,000,000 | 1,000,000 | |||
Collateral already posted, aggregate fair value | 0 | 0 | $ 3,000,000 | ||
Securities pledged in the form of margin deposits | $ 3,000,000 | $ 3,000,000 | |||
The number of reference entities generally included in a CDX index | entity | 125 | 125 | |||
Individually Immaterial Counterparties | |||||
Derivative [Line Items] | |||||
Collateral already posted, aggregate fair value | $ 1,000,000 | $ 1,000,000 |
Derivative Financial Instrume48
Derivative Financial Instruments - Volume and Fair Value Positions of Derivative Instruments (Details) | Jun. 30, 2018USD ($)contract | Dec. 31, 2017USD ($)contract |
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | $ 89,000,000 | $ 101,000,000 |
Total liability derivatives, Notional amount | 2,426,000,000 | 2,525,000,000 |
Total derivatives, Notional amount | $ 2,515,000,000 | $ 2,626,000,000 |
Total asset derivatives, Number of contracts | contract | 32,691 | 4,485 |
Total liability derivatives, Number of contracts | contract | 33,098 | 4,464 |
Total derivatives, Number of contracts | contract | 65,789 | 8,949 |
Total asset derivatives | $ 85,000,000 | $ 115,000,000 |
Total liability derivatives | (283,000,000) | (343,000,000) |
Total derivatives, Fair value, net | (198,000,000) | (228,000,000) |
Asset derivatives, Gross asset | 86,000,000 | 115,000,000 |
Asset derivatives, Gross liability | (1,000,000) | 0 |
Liability derivatives, Gross asset | 3,000,000 | 3,000,000 |
Liability derivatives, Gross liability | (286,000,000) | (346,000,000) |
Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | $ 2,506,000,000 | |
Total liability derivatives, Number of contracts | contract | 4,464 | |
Total liability derivatives | $ (345,000,000) | |
Liability derivatives, Gross asset | 1,000,000 | |
Liability derivatives, Gross liability | (346,000,000) | |
Foreign currency swap agreements | Derivatives designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 19,000,000 | |
Total liability derivatives | 2,000,000 | |
Liability derivatives, Gross asset | 2,000,000 | |
Liability derivatives, Gross liability | 0 | |
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 13,000,000 | 15,000,000 |
Total asset derivatives | 0 | 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, Gross liability | 0 | 0 |
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 28,000,000 | 30,000,000 |
Total liability derivatives | 1,000,000 | 1,000,000 |
Liability derivatives, Gross asset | 1,000,000 | 1,000,000 |
Liability derivatives, Gross liability | 0 | 0 |
Financial options | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | $ 0 | |
Total asset derivatives, Number of contracts | contract | 18 | |
Total asset derivatives | $ 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, Gross liability | 0 | |
Financial options | Derivatives not designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | $ 0 | |
Total liability derivatives, Number of contracts | contract | 574 | |
Total liability derivatives | $ 0 | |
Liability derivatives, Gross asset | 0 | |
Liability derivatives, Gross liability | 0 | |
Options | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | $ 0 | $ 0 |
Total asset derivatives, Number of contracts | contract | 32,622 | 4,485 |
Total asset derivatives | $ 85,000,000 | $ 114,000,000 |
Asset derivatives, Gross asset | 85,000,000 | 114,000,000 |
Asset derivatives, Gross liability | 0 | 0 |
Financial futures | Derivatives not designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | $ 0 | |
Total asset derivatives, Number of contracts | contract | 51 | |
Total asset derivatives | $ 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, Gross liability | 0 | |
Foreign currency forwards | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 9,000,000 | |
Total asset derivatives | 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, Gross liability | 0 | |
Foreign currency forwards | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 186,000,000 | 207,000,000 |
Total liability derivatives | 1,000,000 | (8,000,000) |
Liability derivatives, Gross asset | 2,000,000 | 0 |
Liability derivatives, Gross liability | (1,000,000) | (8,000,000) |
Credit default swaps – buying protection | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 15,000,000 | 3,000,000 |
Total asset derivatives | (1,000,000) | 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, Gross liability | (1,000,000) | 0 |
Credit default swaps – buying protection | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 12,000,000 | 34,000,000 |
Total liability derivatives | 0 | (1,000,000) |
Liability derivatives, Gross asset | 0 | 0 |
Liability derivatives, Gross liability | 0 | (1,000,000) |
Credit default swaps – selling protection | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 30,000,000 | 80,000,000 |
Total asset derivatives | 1,000,000 | 1,000,000 |
Asset derivatives, Gross asset | 1,000,000 | 1,000,000 |
Asset derivatives, Gross liability | 0 | 0 |
Credit default swaps – selling protection | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 1,000,000 | 1,000,000 |
Total liability derivatives | 0 | 0 |
Liability derivatives, Gross asset | 0 | 0 |
Liability derivatives, Gross liability | 0 | 0 |
Other | Derivatives not designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 3,000,000 | 3,000,000 |
Total asset derivatives | 0 | 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, Gross liability | 0 | 0 |
Options | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | $ 0 | $ 0 |
Total liability derivatives, Number of contracts | contract | 32,524 | 4,464 |
Total liability derivatives | $ (28,000,000) | $ (53,000,000) |
Liability derivatives, Gross asset | 0 | 0 |
Liability derivatives, Gross liability | (28,000,000) | (53,000,000) |
Total return swap agreements - fixed income | Derivatives not designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 19,000,000 | |
Total asset derivatives | 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, Gross liability | 0 | |
Total return swap agreements - equity | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 21,000,000 | |
Total liability derivatives | 0 | |
Liability derivatives, Gross asset | 0 | |
Liability derivatives, Gross liability | 0 | |
Guaranteed accumulation benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 205,000,000 | 225,000,000 |
Total liability derivatives | (19,000,000) | (22,000,000) |
Liability derivatives, Gross asset | 0 | 0 |
Liability derivatives, Gross liability | (19,000,000) | (22,000,000) |
Guaranteed withdrawal benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 252,000,000 | 274,000,000 |
Total liability derivatives | (10,000,000) | (12,000,000) |
Liability derivatives, Gross asset | 0 | 0 |
Liability derivatives, Gross liability | (10,000,000) | (12,000,000) |
Equity-indexed and forward starting options in life and annuity product contracts | Derivatives not designated as accounting hedging instruments | Contractholder funds | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 1,718,000,000 | 1,735,000,000 |
Total liability derivatives | (228,000,000) | (250,000,000) |
Liability derivatives, Gross asset | 0 | 0 |
Liability derivatives, Gross liability | $ (228,000,000) | $ (250,000,000) |
Derivative Financial Instrume49
Derivative Financial Instruments - Gross and Net Amounts Derivatives (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Asset derivatives | ||
Gross amount | $ 86 | $ 115 |
Counter- party netting | (1) | 0 |
Total asset derivatives | 85 | 115 |
Liability derivatives | ||
Gross amount | (286) | (346) |
Counter- party netting | 3 | 3 |
Total liability derivatives | (283) | (343) |
OTC derivatives | ||
Asset derivatives | ||
Gross amount | 4 | 4 |
Counter- party netting | (4) | (3) |
Cash collateral (received) pledged | 1 | 0 |
Total asset derivatives | 1 | 1 |
Securities collateral (received) pledged | 0 | 0 |
Net amount | 1 | 1 |
Liability derivatives | ||
Gross amount | (2) | (10) |
Counter- party netting | 4 | 3 |
Cash collateral (received) pledged | (7) | (2) |
Total liability derivatives | (5) | (9) |
Securities collateral (received) pledged | 0 | 3 |
Net amount | $ (5) | $ (6) |
Derivative Financial Instrume50
Derivative Financial Instruments - Impacts on Operations and AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative Instruments, Gain (Loss) | ||||
Gain (loss) recognized in OCI on derivatives during the period | $ 1 | $ 0 | $ 1 | $ (2) |
Gain recognized in OCI on derivatives during the term of the hedging relationship | 0 | 3 | 0 | 3 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 20 | 6 | 37 | 17 |
Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 7 | (4) | 4 | (9) |
Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | 5 | 8 |
Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 12 | 9 | 28 | 18 |
Equity and index contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 10 | 9 | 6 | 20 |
Equity and index contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | (2) |
Equity and index contracts | Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Equity and index contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 10 | 9 | 6 | 22 |
Embedded derivative financial instruments | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 3 | 1 | 27 | 4 |
Embedded derivative financial instruments | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Embedded derivative financial instruments | Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | 5 | 8 |
Embedded derivative financial instruments | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 2 | 0 | 22 | (4) |
Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 7 | (5) | 4 | (9) |
Foreign currency contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 7 | (5) | 4 | (9) |
Foreign currency contracts | Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Foreign currency contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Credit default contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 2 | ||
Credit default contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 2 | ||
Credit default contracts | Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Credit default contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain reclassified from AOCI into income (realized capital gains and losses) | $ 3 | $ 0 | $ 3 | $ 0 |
Derivative Financial Instrume51
Derivative Financial Instruments - Derivative Netting (Details) $ in Millions | Jun. 30, 2018USD ($)party | Dec. 31, 2017USD ($)party |
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 4 | 2 |
Notional amount | $ 266 | $ 59 |
Credit exposure | 2 | 3 |
Exposure, net of collateral | $ 0 | $ 0 |
A plus | ||
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 0 | 2 |
Notional amount | $ 0 | $ 59 |
Credit exposure | 0 | 3 |
Exposure, net of collateral | $ 0 | $ 0 |
A- | ||
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 2 | 0 |
Notional amount | $ 33 | $ 0 |
Credit exposure | 1 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
BBB plus | ||
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 1 | 0 |
Notional amount | $ 231 | $ 0 |
Credit exposure | 1 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
BBB | ||
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 1 | 0 |
Notional amount | $ 2 | $ 0 |
Credit exposure | 0 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
Derivative Financial Instrume52
Derivative Financial Instruments Derivative Financial Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross liability fair value of contracts containing credit-risk-contingent features | $ 2 | $ 12 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (2) | (5) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | 0 | (3) |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 0 | $ 4 |
Derivative Financial Instrume53
Derivative Financial Instruments - CDS Notional Amounts by Credit Rating (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Term of credit default swaps (in years) | 5 years | |
Credit Derivatives | ||
Notional amount | $ 2,515 | $ 2,626 |
Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 31 | 81 |
Fair value | 1 | 1 |
Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 1 | 1 |
Fair value | 0 | 0 |
Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 30 | 80 |
Fair value | 1 | 1 |
AA | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 1 | 1 |
AA | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
AA | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 1 | 1 |
A | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 5 | 19 |
A | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
A | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 5 | 19 |
BBB | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 21 | 45 |
BBB | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BBB | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 21 | 45 |
BB and lower | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 4 | 16 |
BB and lower | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 1 | 1 |
BB and lower | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | $ 3 | $ 15 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Effects of reinsurance on revenue | ||||
Direct | $ 184 | $ 183 | $ 369 | $ 363 |
Premiums and contract charges, net of reinsurance | 348 | 347 | 701 | 695 |
Effects of reinsurance on cost and expenses | ||||
Direct | 266 | 257 | 523 | 516 |
Contract benefits, net of reinsurance | 357 | 364 | 727 | 718 |
Effects of reinsurance on interest credited to contractholder funds [Abstract] | ||||
Direct | 129 | 140 | 259 | 276 |
Interest credited to contractholder funds, net of reinsurance | 152 | 161 | 300 | 322 |
Affiliate | ||||
Effects of reinsurance on revenue | ||||
Assumed | 61 | 55 | 121 | 108 |
Ceded | (12) | (13) | (25) | (26) |
Effects of reinsurance on cost and expenses | ||||
Assumed | 34 | 34 | 68 | 63 |
Ceded | (8) | (8) | (20) | (16) |
Effects of reinsurance on interest credited to contractholder funds [Abstract] | ||||
Assumed | 2 | 2 | 4 | 4 |
Ceded | (5) | (6) | (10) | (11) |
Non-affiliate | ||||
Effects of reinsurance on revenue | ||||
Assumed | 185 | 193 | 374 | 391 |
Ceded | (70) | (71) | (138) | (141) |
Effects of reinsurance on cost and expenses | ||||
Assumed | 123 | 147 | 257 | 263 |
Ceded | (58) | (66) | (101) | (108) |
Effects of reinsurance on interest credited to contractholder funds [Abstract] | ||||
Assumed | 33 | 31 | 58 | 64 |
Ceded | $ (7) | $ (6) | $ (11) | $ (11) |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Pre- tax | ||||
Other comprehensive (loss) income | $ (71) | $ 181 | $ (288) | $ 277 |
Tax | ||||
Other comprehensive (loss) income | 15 | (63) | 61 | (97) |
After- tax | ||||
Other comprehensive (loss) income, after-tax | (56) | 118 | (227) | 180 |
Accumulated Net Investment Gain (Loss) | ||||
Pre- tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | (94) | 178 | (320) | 281 |
Less: reclassification adjustment of realized capital gains and losses | (17) | (3) | (21) | (1) |
Other comprehensive (loss) income | (77) | 181 | (299) | 282 |
Tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | 20 | (62) | 67 | (99) |
Less: reclassification adjustment of realized capital gains and losses | 4 | 1 | 4 | 0 |
Other comprehensive (loss) income | 16 | (63) | 63 | (99) |
After- tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | (74) | 116 | (253) | 182 |
Less: reclassification adjustment of realized capital gains and losses | (13) | (2) | (17) | (1) |
Other comprehensive (loss) income, after-tax | (61) | 118 | (236) | 183 |
Accumulated Foreign Currency Adjustment | ||||
Pre- tax | ||||
Other comprehensive (loss) income | 6 | 0 | 11 | (5) |
Tax | ||||
Other comprehensive (loss) income | (1) | 0 | (2) | 2 |
After- tax | ||||
Other comprehensive (loss) income, after-tax | $ 5 | $ 0 | $ 9 | $ (3) |