Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 07, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-31248 | |
Entity Registrant Name | ALLSTATE LIFE INSURANCE CO | |
Entity Incorporation, State or Country Code | IL | |
Entity Tax Identification Number | 36-2554642 | |
Entity Address, Address Line One | 3075 Sanders Road | |
Entity Address, City or Town | Northbrook | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60062 | |
City Area Code | 847 | |
Local Phone Number | 402-5000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,800 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000352736 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Net investment income | $ 417 | $ 419 | $ 728 | $ 826 |
Realized capital gains and losses: | ||||
Total other-than-temporary impairment (“OTTI”) losses | (6) | (2) | (13) | (2) |
OTTI losses reclassified from other comprehensive income (“OCI”) | 1 | 0 | 1 | (1) |
Net OTTI losses recognized in earnings | (5) | (2) | (12) | (3) |
Sales and valuation changes on equity investments and derivatives | 51 | 10 | 206 | (21) |
Total realized capital gains and losses | 46 | 8 | 194 | (24) |
Total revenues | 814 | 783 | 1,630 | 1,519 |
Costs and expenses | ||||
Contract benefits | 375 | 357 | 738 | 727 |
Interest credited to contractholder funds | 143 | 152 | 291 | 300 |
Amortization of deferred policy acquisition costs | 33 | 39 | 65 | 78 |
Operating costs and expenses | 66 | 68 | 135 | 136 |
Restructuring and related charges | 0 | 2 | 0 | 2 |
Interest expense | 1 | 1 | 2 | 2 |
Total costs and expenses | 618 | 619 | 1,231 | 1,245 |
Gain on disposition of operations | 2 | 2 | 3 | 3 |
Income from operations before income tax expense | 198 | 166 | 402 | 277 |
Income tax expense | 41 | 32 | 81 | 53 |
Net income | 157 | 134 | 321 | 224 |
Other comprehensive income (loss), after-tax | ||||
Change in unrealized net capital gains and losses | 170 | (61) | 516 | (236) |
Change in unrealized foreign currency translation adjustments | (2) | 5 | (5) | 9 |
Other comprehensive income (loss), after-tax | 168 | (56) | 511 | (227) |
Comprehensive income (loss) | 325 | 78 | 832 | (3) |
Premiums | ||||
Revenues | ||||
Revenues | 170 | 175 | 341 | 352 |
Contract charges | ||||
Revenues | ||||
Revenues | 170 | 173 | 346 | 349 |
Other revenue | ||||
Revenues | ||||
Revenues | $ 11 | $ 8 | $ 21 | $ 16 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (unaudited) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Investments | ||
Fixed income securities, at fair value (amortized cost $20,512 and $21,057) | $ 21,843 | $ 21,400 |
Mortgage loans | 4,043 | 3,995 |
Equity securities, at fair value (cost $1,091 and $1,197) | 1,393 | 1,325 |
Limited partnership interests | 3,275 | 3,292 |
Short-term, at fair value (amortized cost $1,217 and $810) | 1,217 | 810 |
Policy loans | 548 | 561 |
Other | 1,352 | 1,300 |
Total investments | 33,671 | 32,683 |
Cash | 80 | 52 |
Deferred policy acquisition costs | 1,054 | 1,232 |
Reinsurance recoverables | 2,480 | |
Accrued investment income | 261 | 253 |
Other assets | 566 | 534 |
Separate Accounts | 3,029 | 2,783 |
Total assets | 41,144 | 40,142 |
Liabilities | ||
Contractholder funds | 17,024 | 17,470 |
Reserve for life-contingent contract benefits | 11,351 | 11,239 |
Unearned premiums | 4 | 4 |
Payable to affiliates, net | 36 | 50 |
Other liabilities and accrued expenses | 1,288 | 1,101 |
Deferred income taxes | 823 | 663 |
Notes due to related parties | 140 | 140 |
Separate Accounts | 3,029 | 2,783 |
Total liabilities | 33,695 | 33,450 |
Commitments and Contingent Liabilities | ||
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 | 4,656 | 4,410 |
Unrealized net capital gains and losses: | ||
Unrealized net capital gains and losses on fixed income securities with OTTI | 49 | 45 |
Other unrealized net capital gains and losses | 1,002 | 225 |
Unrealized adjustment to DAC, DSI and insurance reserves | (292) | (27) |
Total unrealized net capital gains and losses | 759 | 243 |
Unrealized foreign currency translation adjustments | 5 | 10 |
Total accumulated other comprehensive income (“AOCI”) | 764 | 253 |
Total shareholder’s equity | 7,449 | 6,692 |
Total liabilities and shareholder’s equity | 41,144 | 40,142 |
Series A | ||
Shareholder’s equity | ||
Redeemable preferred stock | 0 | 0 |
Series B | ||
Shareholder’s equity | ||
Redeemable preferred stock | 0 | 0 |
Affiliate | ||
Investments | ||
Reinsurance recoverables | 413 | 420 |
Non-affiliate | ||
Investments | ||
Reinsurance recoverables | $ 2,070 | $ 2,185 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (unaudited) (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fixed income securities, at fair value, amortized cost (in dollars) | $ 20,512 | $ 21,057 |
Equity securities, at fair value, cost (in dollars) | 1,091 | 1,197 |
Short-term, at fair value, amortized cost (in dollars) | $ 1,217 | $ 810 |
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 STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (unaudited) - USD ($) $ in Millions | Total | Common stock | Additional capital paid-in | Retained income | Accumulated other comprehensive income |
Balance, beginning of period at Dec. 31, 2017 | $ 3,981 | $ 845 | |||
Increase (decrease) in equity | |||||
Net income | $ 224 | 224 | |||
Change in unrealized net capital gains and losses | (236) | (236) | |||
Change in unrealized foreign currency translation adjustments | 9 | 9 | |||
Dividends | 0 | ||||
Balance, end of period at Jun. 30, 2018 | 6,928 | $ 5 | $ 2,024 | 4,519 | 380 |
Balance, beginning of period at Mar. 31, 2018 | 4,385 | 436 | |||
Increase (decrease) in equity | |||||
Net income | 134 | 134 | |||
Change in unrealized net capital gains and losses | (61) | (61) | |||
Change in unrealized foreign currency translation adjustments | 5 | 5 | |||
Dividends | 0 | ||||
Balance, end of period at Jun. 30, 2018 | 6,928 | 5 | 2,024 | 4,519 | 380 |
Balance, beginning of period at Dec. 31, 2018 | 6,692 | 4,410 | 253 | ||
Increase (decrease) in equity | |||||
Net income | 321 | 321 | |||
Change in unrealized net capital gains and losses | 516 | 516 | |||
Change in unrealized foreign currency translation adjustments | (5) | (5) | |||
Dividends | (75) | ||||
Balance, end of period at Jun. 30, 2019 | 7,449 | 5 | 2,024 | 4,656 | 764 |
Balance, beginning of period at Mar. 31, 2019 | 4,574 | 596 | |||
Increase (decrease) in equity | |||||
Net income | 157 | 157 | |||
Change in unrealized net capital gains and losses | 170 | 170 | |||
Change in unrealized foreign currency translation adjustments | (2) | (2) | |||
Dividends | (75) | (75) | |||
Balance, end of period at Jun. 30, 2019 | $ 7,449 | $ 5 | $ 2,024 | $ 4,656 | $ 764 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 321 | $ 224 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization and other non-cash items | (33) | (30) |
Realized capital gains and losses | (194) | 24 |
Gain on disposition of operations | (3) | (3) |
Interest credited to contractholder funds | 291 | 300 |
Changes in: | ||
Policy benefits and other insurance reserves | (342) | (319) |
Deferred policy acquisition costs | 35 | 34 |
Reinsurance recoverables, net | 73 | 24 |
Income taxes | (15) | (8) |
Other operating assets and liabilities | 36 | (36) |
Net cash provided by operating activities | 169 | 210 |
Proceeds from sales | ||
Fixed income securities | 2,080 | 3,087 |
Equity securities | 387 | 663 |
Limited partnership interests | 195 | 86 |
Other investments | 47 | 10 |
Investment collections | ||
Fixed income securities | 630 | 687 |
Mortgage loans | 231 | 308 |
Other investments | 44 | 78 |
Investment purchases | ||
Fixed income securities | (2,122) | (2,887) |
Equity securities | (257) | (757) |
Limited partnership interests | (215) | (271) |
Mortgage loans | (280) | (269) |
Other investments | (74) | (156) |
Change in short-term investments, net | (262) | (302) |
Change in policy loans and other investments, net | (7) | (25) |
Net cash provided by investing activities | 397 | 252 |
Cash flows from financing activities | ||
Contractholder fund deposits | 378 | 386 |
Contractholder fund withdrawals | (841) | (960) |
Dividends paid | (75) | 0 |
Other | 0 | 28 |
Net cash used in financing activities | (538) | (546) |
Net increase (decrease) in cash | 28 | (84) |
Cash at beginning of period | 52 | 145 |
Cash at end of period | $ 80 | $ 61 |
General
General | 6 Months Ended |
Jun. 30, 2019 | |
General [Abstract] | |
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, 2019 and for the three and six month periods ended June 30, 2019 and 2018 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, 2018 . 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. 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, 2019 2018 2019 2018 Premiums Traditional life insurance $ 140 $ 145 $ 281 $ 292 Accident and health insurance 30 30 60 60 Total premiums 170 175 341 352 Contract charges Interest-sensitive life insurance 167 170 340 343 Fixed annuities 3 3 6 6 Total contract charges 170 173 346 349 Total premiums and contract charges $ 340 $ 348 $ 687 $ 701 Adopted accounting standard Accounting for Hedging Activities Effective January 1, 2019, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance intended to better align hedge accounting with an organization’s risk management activities. The new guidance expands hedge accounting to nonfinancial and financial risk components and revises the measurement methodologies to better align with an organization’s risk management activities. Separate presentation of hedge ineffectiveness is eliminated with the intention to provide greater transparency to 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 were designed to reduce complexity by simplifying hedge effectiveness testing. The adoption had no impact on the Company’s results of operations or financial position. 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 and includes 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 a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value 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 which may change over time but once recorded cannot subsequently be reduced to an amount below zero. 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’s implementation activities, which remain in process, include review and validation of models, methodologies, data inputs and assumptions to be used to estimate expected credit losses. The implementation impacts relate primarily to the Company’s mortgage loans, bank loans and reinsurance recoverables and will depend on economic conditions and judgments at the date of adoption as well as the size and composition of the loan portfolios and reinsurance balances. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued guidance revising the accounting for certain long-duration insurance contracts. The new guidance introduces material changes to the measurement of the Company’s reserves for traditional life, life-contingent immediate annuities and certain voluntary accident and health insurance products. Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed and updated at least annually. The effect of updating measurement assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income. In addition, cash flows under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield required to be updated through OCI at each reporting date. Current GAAP requires reserves to utilize assumptions set at policy issuance unless updated current assumptions would result in reserves that are deficient compared to the reserves recorded. The new guidance requires deferred policy acquisition costs (“DAC”) and other capitalized balances currently amortized in proportion to premiums or gross profits to be amortized on a constant level basis over the expected term for all long-duration insurance contracts. DAC will not be subject to loss recognition testing but will be reduced when actual experience exceeds expected experience. The new guidance will no longer require adjustments to DAC and deferred sales inducement costs (“DSI”) related to unrealized gains and losses on investment securities supporting the related business. Market risk benefit product features are required to be measured at fair value with changes in fair value recorded in net income with the exception of changes in the fair value attributable to changes in the reporting entity’s own credit risk, which are required to be recognized in OCI. Substantially all of the Company’s market risk benefits are reinsured and therefore these impacts are not expected to be material to the Company. The new guidance is to be included in the comparable financial statements issued in reporting periods beginning after December 15, 2020, thereby requiring restatement of prior periods presented. Early adoption is permitted. The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented or retrospectively using actual historical experience as of contract inception. The new guidance for market risk benefits is required to be adopted retrospectively. In July 2019, the FASB voted to expose a proposal for a thirty-day comment period to delay the effective date of the new guidance for public business entities that are SEC filers to reporting periods beginning after December 15, 2021. If adopted, the proposal would extend the effective date of the new guidance for public business entities that are SEC filers by one year. The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI. The requirements of the new guidance represent a material change from existing GAAP, however, the underlying economics of the business and related cash flows are unchanged. The Company is evaluating the specific impacts of adopting the new guidance and anticipates the financial statement impact of adopting the new guidance to be material, largely attributed to the impact of transitioning to a discount rate based on an upper-medium grade fixed income investment yield and updates to mortality assumptions. The Company expects the most significant impacts will occur in the run-off annuity business. The revised accounting for DAC will be applied prospectively using the new model and any DAC effects existing in AOCI as a result of applying existing GAAP at the date of adoption will be reversed. Dividends The Company paid cash dividends of $75 million |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Non-cash investing activities include $62 million and $13 million related to mergers and exchanges completed with equity securities, fixed income securities and limited partnerships, and modifications of certain mortgage loans and other investments for the six months ended June 30, 2019 and 2018 , respectively. Liabilities for collateral received in conjunction with the Company’s securities lending program and over-the-counter (“OTC”) and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows: ($ in millions) Six months ended June 30, 2019 2018 Net change in proceeds managed Net change in fixed income securities $ 28 $ 68 Net change in short-term investments (142 ) (37 ) Operating cash flow (used) provided $ (114 ) $ 31 Net change in liabilities Liabilities for collateral, beginning of period $ (524 ) $ (542 ) Liabilities for collateral, end of period (638 ) (511 ) Operating cash flow provided (used) $ 114 $ (31 ) |
Investments
Investments | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 U.S. government and agencies $ 558 $ 39 $ — $ 597 Municipal 1,757 275 (3 ) 2,029 Corporate 17,520 1,001 (46 ) 18,475 Foreign government 155 9 — 164 Asset-backed securities (“ABS”) 347 7 (3 ) 351 Residential mortgage-backed securities (“RMBS”) 133 47 — 180 Commercial mortgage-backed securities (“CMBS”) 29 7 (3 ) 33 Redeemable preferred stock 13 1 — 14 Total fixed income securities $ 20,512 $ 1,386 $ (55 ) $ 21,843 December 31, 2018 U.S. government and agencies $ 740 $ 33 $ — $ 773 Municipal 1,997 202 (4 ) 2,195 Corporate 17,521 433 (381 ) 17,573 Foreign government 170 9 — 179 ABS 429 3 (3 ) 429 RMBS 154 44 (1 ) 197 CMBS 33 7 — 40 Redeemable preferred stock 13 1 — 14 Total fixed income securities $ 21,057 $ 732 $ (389 ) $ 21,400 Scheduled maturities The scheduled maturities for fixed income securities are as follows: ($ in millions) As of June 30, 2019 Amortized cost Fair value Due in one year or less $ 1,251 $ 1,267 Due after one year through five years 7,969 8,265 Due after five years through ten years 7,113 7,499 Due after ten years 3,670 4,248 20,003 21,279 ABS, RMBS and CMBS 509 564 Total $ 20,512 $ 21,843 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, 2019 2018 2019 2018 Fixed income securities $ 241 $ 247 $ 486 $ 498 Mortgage loans 46 53 92 97 Equity securities 14 16 20 23 Limited partnership interests 102 92 105 188 Short-term investments 8 5 16 9 Policy loans 8 8 16 15 Other 24 23 46 45 Investment income, before expense 443 444 781 875 Investment expense (26 ) (25 ) (53 ) (49 ) Net investment income $ 417 $ 419 $ 728 $ 826 Realized capital gains and losses Realized capital gains (losses) by asset type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Fixed income securities $ 4 $ (12 ) $ (2 ) $ (18 ) Mortgage loans — 2 — 2 Equity securities 39 20 185 (6 ) Limited partnership interests — (11 ) 10 (8 ) Derivatives 4 10 8 7 Other (1 ) (1 ) (7 ) (1 ) Realized capital gains (losses) $ 46 $ 8 $ 194 $ (24 ) Realized capital gains (losses) by transaction type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Impairment write-downs $ (5 ) $ (2 ) $ (12 ) $ (3 ) Sales 6 (7 ) — (12 ) Valuation of equity investments (1) 41 10 198 (13 ) Valuation and settlements of derivative instruments 4 7 8 4 Realized capital gains (losses) $ 46 $ 8 $ 194 $ (24 ) _______________ (1) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. Sales of fixed income securities resulted in gross gains of $13 million and $13 million and gross losses of $6 million and $24 million during the three months ended June 30, 2019 and 2018 , respectively. Sales of fixed income securities resulted in gross gains of $26 million and $20 million and gross losses of $25 million and $36 million during the six months ended June 30, 2019 and 2018 , respectively. The following table presents the net pre-tax appreciation (decline) during 2019 and 2018 of equity securities and limited partnership interests carried at fair value still held as of June 30, 2019 and June 30, 2018 recognized in net income. ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Equity securities $ 46 $ 20 $ 163 $ 14 Limited partnership interests carried at fair value 38 11 19 49 Total $ 84 $ 31 $ 182 $ 63 OTTI losses by asset type are as follows: Three months ended Three months ended ($ in millions) June 30, 2019 June 30, 2018 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Corporate $ (1 ) $ (1 ) $ (2 ) $ — $ — $ — ABS (1 ) — (1 ) — — — RMBS — — — (1 ) — (1 ) CMBS (2 ) 2 — — — — Total fixed income securities (4 ) 1 (3 ) (1 ) — (1 ) Limited partnership interests (1 ) — (1 ) — — — Other (1 ) — (1 ) (1 ) — (1 ) OTTI losses $ (6 ) $ 1 $ (5 ) $ (2 ) $ — $ (2 ) Six months ended Six months ended June 30, 2019 June 30, 2018 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Corporate $ (1 ) $ (1 ) $ (2 ) $ — $ — $ — ABS (1 ) — (1 ) — — — RMBS — — — (1 ) — (1 ) CMBS (2 ) 2 — — (1 ) (1 ) Total fixed income securities (4 ) 1 (3 ) (1 ) (1 ) (2 ) Limited partnership interests (2 ) — (2 ) — — — Other (7 ) — (7 ) (1 ) — (1 ) OTTI losses $ (13 ) $ 1 $ (12 ) $ (2 ) $ (1 ) $ (3 ) 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 $103 million and $101 million as of June 30, 2019 and December 31, 2018 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. ($ in millions) June 30, 2019 December 31, 2018 Municipal $ (4 ) $ (4 ) Corporate — (1 ) ABS (5 ) (5 ) RMBS (29 ) (32 ) CMBS (4 ) (2 ) Total $ (42 ) $ (44 ) 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, 2019 2018 2019 2018 Beginning balance $ (121 ) $ (128 ) $ (123 ) $ (138 ) Additional credit loss for securities previously other-than-temporarily impaired (3 ) (1 ) (3 ) (2 ) Reduction in credit loss for securities disposed or collected 2 5 4 16 Ending balance $ (122 ) $ (124 ) $ (122 ) $ (124 ) 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, 2019 Gains Losses Fixed income securities $ 21,843 $ 1,386 $ (55 ) $ 1,331 Short-term investments 1,217 — — — Equity method of accounting (“EMA”) limited partnerships (1) (1 ) Unrealized net capital gains and losses, pre-tax 1,330 Amounts recognized for: Insurance reserves (2) (178 ) DAC and DSI (3) (191 ) Amounts recognized (369 ) Deferred income taxes (202 ) Unrealized net capital gains and losses, after-tax $ 759 ___ ____________ (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. 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, 2018 Gains Losses Fixed income securities $ 21,400 $ 732 $ (389 ) $ 343 Short-term investments 810 — — — EMA limited partnerships — Unrealized net capital gains and losses, pre-tax 343 Amounts recognized for: Insurance reserves — DAC and DSI (35 ) Amounts recognized (35 ) Deferred income taxes (65 ) Unrealized net capital gains and losses, after-tax $ 243 Change in unrealized net capital gains and losses The change in unrealized net capital gains and losses for the six months ended June 30, 2019 is as follows: ($ in millions) Fixed income securities $ 988 EMA limited partnerships (1 ) Total 987 Amounts recognized for: Insurance reserves (178 ) DAC and DSI (156 ) Amounts recognized (334 ) Deferred income taxes (137 ) Increase in unrealized net capital gains and losses, after-tax $ 516 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 OCI. 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, 2019 Fixed income securities U.S. government and agencies — $ — $ — — $ — $ — $ — Municipal — — — 1 13 (3 ) (3 ) Corporate 101 329 (7 ) 175 1,278 (39 ) (46 ) ABS 7 28 (1 ) 4 8 (2 ) (3 ) RMBS 31 5 — 31 4 — — CMBS 2 8 (3 ) 1 — — (3 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 142 $ 370 $ (11 ) 212 $ 1,303 $ (44 ) $ (55 ) Investment grade fixed income securities 63 $ 133 $ (1 ) 162 $ 1,108 $ (31 ) $ (32 ) Below investment grade fixed income securities 79 237 (10 ) 50 195 (13 ) (23 ) Total fixed income securities 142 $ 370 $ (11 ) 212 $ 1,303 $ (44 ) $ (55 ) December 31, 2018 Fixed income securities U.S. government and agencies 2 $ 6 $ — 1 $ 1 $ — $ — Municipal 38 98 (1 ) 5 26 (3 ) (4 ) Corporate 1,260 6,799 (218 ) 370 2,633 (163 ) (381 ) ABS 30 167 (1 ) 11 31 (2 ) (3 ) RMBS 124 11 — 47 10 (1 ) (1 ) CMBS 3 7 — 2 — — — Redeemable preferred stock 1 — — — — — — Total fixed income securities 1,458 $ 7,088 $ (220 ) 436 $ 2,701 $ (169 ) $ (389 ) Investment grade fixed income securities 948 $ 5,255 $ (121 ) 388 $ 2,551 $ (147 ) $ (268 ) Below investment grade fixed income securities 510 1,833 (99 ) 48 150 (22 ) (121 ) Total fixed income securities 1,458 $ 7,088 $ (220 ) 436 $ 2,701 $ (169 ) $ (389 ) The following table summarizes gross unrealized losses by unrealized loss position and credit quality as of June 30, 2019 . ($ in millions) Investment grade Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost (1) (2) $ (20 ) $ (19 ) $ (39 ) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost (3) (4) (12 ) (4 ) (16 ) Total unrealized losses $ (32 ) $ (23 ) $ (55 ) _______________ (1) Below investment grade fixed income securities include $7 million that have been in an unrealized loss position for less than twelve months. (2) 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. (3) Below investment grade fixed income securities include $1 million that have been in an unrealized loss position for a period of twelve or more consecutive months. (4) 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. 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. 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, 2019 , 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, 2019 and December 31, 2018 , the carrying value of EMA limited partnerships totaled $2.50 billion and $2.51 billion , respectively, and limited partnerships carried at fair value totaled $773 million and $787 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, 2019 . 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 non-accrual 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, 2019 December 31, 2018 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 $ 2 $ 15 $ 17 $ 6 $ 15 $ 21 1.0 - 1.25 187 — 187 221 — 221 1.26 - 1.50 1,193 — 1,193 1,048 — 1,048 Above 1.50 2,599 43 2,642 2,659 42 2,701 Total non-impaired mortgage loans $ 3,981 $ 58 $ 4,039 $ 3,934 $ 57 $ 3,991 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, 2019 December 31, 2018 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, 2019 and 2018 . The average balance of impaired loans was $4 million for both the six months ended June 30, 2019 and 2018 . Payments on all mortgage loans were current as of June 30, 2019 and December 31, 2018 . Short-term investments Short-term investments, including commercial paper, money market funds, U.S. Treasury bills and other short-term investments, are carried at fair value. As of June 30, 2019 and December 31, 2018 , the fair value of short-term investments totaled $1.22 billion and $810 million , respectively. Policy loans Policy loans are carried at unpaid principal balances. As of June 30, 2019 and December 31, 2018 , the carrying value of policy loans totaled $548 million and $561 million , respectively. Other investments Other investments primarily consist of agent loans, bank loans, real estate and derivatives. Agent loans are loans issued to exclusive Allstate agents and are carried at unpaid principal balances, net of valuation allowances and unamortized deferred fees or costs. Bank loans are primarily senior secured corporate loans and are carried at amortized cost. Real estate is carried at cost less accumulated depreciation. Derivatives are carried at fair value. The following table summarizes other investments by asset type. ($ in millions) June 30, 2019 December 31, 2018 Agent loans $ 654 $ 620 Bank loans 370 422 Real estate 242 228 Derivatives and other 86 30 Total $ 1,352 $ 1,300 |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
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. • 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, and CMBS: 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. Bank loans written-down to fair value are valued based on broker quotes from brokers familiar with the loans and current market conditions or based on internal valuation models. 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. The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4 - 9 of the typical contractual life of 10 - 12 years. As of June 30, 2019 , the Company has commitments to invest $241 million in these limited partnership interests. The following table summarizes the Company’s assets and liabilities measured at fair value as of June 30, 2019 . ($ 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, 2019 Assets Fixed income securities: U.S. government and agencies $ 307 $ 290 $ — $ 597 Municipal — 1,989 40 2,029 Corporate - public — 12,603 32 12,635 Corporate - privately placed — 5,744 96 5,840 Foreign government — 164 — 164 ABS - CDO — 21 6 27 ABS - consumer and other — 296 28 324 RMBS — 180 — 180 CMBS — 31 2 33 Redeemable preferred stock — 14 — 14 Total fixed income securities 307 21,332 204 21,843 Equity securities 1,261 13 119 1,393 Short-term investments 758 459 — 1,217 Other investments: Free-standing derivatives — 94 — $ (9 ) 85 Separate account assets 3,029 — — 3,029 Total recurring basis assets 5,355 21,898 323 (9 ) 27,567 Non-recurring basis (1) — — 5 5 Total assets at fair value $ 5,355 $ 21,898 $ 328 $ (9 ) $ 27,572 % of total assets at fair value 19.4 % 79.4 % 1.2 % — % 100.0 % Investments reported at NAV 773 Total $ 28,345 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (411 ) $ (411 ) Other liabilities: Free-standing derivatives — (30 ) — $ 1 (29 ) Total recurring basis liabilities at fair value $ — $ (30 ) $ (411 ) $ 1 $ (440 ) % of total liabilities at fair value — % 6.8 % 93.4 % (0.2 )% 100.0 % __________ (1) Includes $5 million of bank loans written-down to fair value in connection with recognizing OTTI impairments. The following table summarizes the Company’s assets and liabilities measured at fair value as of December 31, 2018 . ($ 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 December 31, 2018 Assets Fixed income securities: U.S. government and agencies $ 493 $ 280 $ — $ 773 Municipal — 2,156 39 2,195 Corporate - public — 11,891 33 11,924 Corporate - privately placed — 5,552 97 5,649 Foreign government — 179 — 179 ABS - CDO — 26 6 32 ABS - consumer and other — 381 16 397 RMBS — 197 — 197 CMBS — 40 — 40 Redeemable preferred stock — 14 — 14 Total fixed income securities 493 20,716 191 21,400 Equity securities 1,182 14 129 1,325 Short-term investments 443 367 — 810 Other investments: Free-standing derivatives — 30 1 $ (8 ) 23 Separate account assets 2,783 — — 2,783 Total recurring basis assets at fair value $ 4,901 $ 21,127 $ 321 $ (8 ) $ 26,341 % of total assets at fair value 18.6 % 80.2 % 1.2 % — % 100.0 % Investments reported at NAV 787 Total $ 27,128 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (223 ) $ (223 ) Other liabilities: Free-standing derivatives — (7 ) — $ 2 (5 ) Total recurring basis liabilities at fair value $ — $ (7 ) $ (223 ) $ 2 $ (228 ) % of total liabilities at fair value — % 3.1 % 97.8 % (0.9 )% 100.0 % 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, 2019 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (375 ) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.53 % December 31, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (184 ) 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, 2019 and December 31, 2018 , Level 3 fair value measurements of fixed income securities total $204 million and $191 million , respectively, and include $54 million and $80 million , respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. The Company does not develop the unobservable inputs used in measuring fair value; therefore, these are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2019 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2019 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 40 $ — $ 1 $ — $ — Corporate - public 35 — — — (2 ) Corporate - privately placed 97 — — — (1 ) ABS - CDO 6 — — — — ABS - consumer and other 25 — — — (12 ) CMBS 2 — — — — Total fixed income securities 205 — 1 — (15 ) Equity securities 106 5 — — — Free-standing derivatives, net 1 (1 ) — — — Total recurring Level 3 assets $ 312 $ 4 $ 1 $ — $ (15 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (247 ) $ (11 ) $ — $ (154 ) $ — Total recurring Level 3 liabilities $ (247 ) $ (11 ) $ — $ (154 ) $ — Purchases Sales Issues Settlements Balance as of June 30, 2019 Assets Fixed income securities: Municipal $ — $ (1 ) $ — $ — $ 40 Corporate - public — (1 ) — — 32 Corporate - privately placed 1 — — (1 ) 96 ABS - CDO — — — — 6 ABS - consumer and other 22 (6 ) — (1 ) 28 CMBS — — — — 2 Total fixed income securities 23 (8 ) — (2 ) 204 Equity securities 8 — — — 119 Free-standing derivatives, net — — — — — Total recurring Level 3 assets $ 31 $ (8 ) $ — $ (2 ) $ 323 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (411 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (411 ) ____________ (1) The effect to net income totals $(7) million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $2 million in realized capital gains and losses, $2 million in net investment income, $(6) million in interest credited to contractholder funds and $(5) million in contract benefits. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2019 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2018 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 39 $ — $ 2 $ — $ — Corporate - public 33 — — — (2 ) Corporate - privately placed 97 (2 ) 2 15 (1 ) ABS - CDO 6 — — — — ABS - consumer and other 16 — — — (12 ) CMBS — — — 2 — Total fixed income securities 191 (2 ) 4 17 (15 ) Equity securities 129 20 — — — Free-standing derivatives, net 1 (1 ) — — — Total recurring Level 3 assets $ 321 $ 17 $ 4 $ 17 $ (15 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (223 ) $ (36 ) $ — $ (154 ) $ — Total recurring Level 3 liabilities $ (223 ) $ (36 ) $ — $ (154 ) $ — Purchases Sales Issues Settlements Balance as of June 30, 2019 Assets Fixed income securities: Municipal $ — $ (1 ) $ — $ — $ 40 Corporate - public 3 (1 ) — (1 ) 32 Corporate - privately placed 1 (13 ) — (3 ) 96 ABS - CDO — — — — 6 ABS - consumer and other 34 (6 ) — (4 ) 28 CMBS — — — — 2 Total fixed income securities 38 (21 ) — (8 ) 204 Equity securities 8 (38 ) — — 119 Free-standing derivatives, net — — — — — Total recurring Level 3 assets $ 46 $ (59 ) $ — $ (8 ) $ 323 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 2 $ (411 ) Total recurring Level 3 liabilities $ — $ — $ — $ 2 $ (411 ) ____________ (1) The effect to net income totals $(19) million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $15 million in realized capital gains and losses, $2 million in net investment income, $(39) million in interest credited to contractholder funds and $3 million in contract benefits. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2018 . ($ 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 and Comprehensive Income 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. 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, including situations where a fair value quote is not provided by the Company’s independent third-party valuation service provider resulting in the price becoming stale or replaced with a broker quote whose inputs have not been corroborated to be market observable. This situation will result in the transfer of a security into Level 3. 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, 2019 or 2018 . Transfers into Level 3 during the three months and six months ended June 30, 2019 and 2018 included situations where a 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 into Level 3 during 2019 also included derivatives embedded in equity-indexed universal life contracts due to refinements in the valuation modeling resulting in an increase in significance of non-market observable inputs. Transfers out of Level 3 during the three months and six months ended June 30, 2019 and 2018 included situations where a broker quote was used in the prior period and a 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, 2019 2018 2019 2018 Assets Equity securities $ 5 $ 6 $ 7 $ 7 Free-standing derivatives, net (1 ) — (1 ) — Total recurring Level 3 assets $ 4 $ 6 $ 6 $ 7 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (11 ) $ 2 $ (36 ) $ 25 Total recurring Level 3 liabilities $ (11 ) $ 2 $ (36 ) $ 25 The amounts in the table above represent the change in unrealized gains and losses 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 result in $(7) million of net income for the three months ended June 30, 2019 and are reported as follows: $2 million in realized capital gains and losses, $2 million in net investment income, $(6) million in interest credited to contractholder funds and $(5) million in contract benefits. These gains and losses result in $8 million of net income 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 result in $(30) million of net income for the six months ended June 30, 2019 and are reported as follows: $4 million in realized capital gains and losses, $2 million in net investment income $(39) million in interest credited to contractholder funds and $3 million in contract benefits. These gains and losses result in $32 million of net income 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 $5 million in contract benefits. Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. Financial assets ($ in millions) June 30, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Mortgage loans Level 3 $ 4,043 $ 4,175 $ 3,995 $ 4,028 Bank loans Level 3 371 365 422 408 Agent loans Level 3 654 656 620 617 Financial liabilities ($ in millions) June 30, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts Level 3 $ 8,784 $ 9,530 $ 9,213 $ 9,629 Liability for collateral Level 2 638 638 525 525 Notes due to related parties Level 3 140 143 140 138 |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
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 portfolio during periods of declining 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 fair value of hedged liability is reported in contractholder funds in the Condensed Consolidated Statements of Financial Position. The impact from results of the fair value hedge is reported in interest credited to contractholder funds in the Condensed Consolidated Statements of Operations and Comprehensive 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. 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 Company had one derivative used in fair value hedging relationships for the three and six months ended June 30, 2019 and 2018 . The Company had no derivatives used in cash flow hedging relationships for the three and six months ended June 30, 2019 and had one foreign currency contract designated as a cash flow hedge during the three and six months ended June 30, 2018 . 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, 2019 . ($ 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 designated as fair value accounting hedging instruments Other Other assets $ 2 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other assets — 260 — — — Equity and index contracts Options Other investments — 3,153 84 84 — Futures Other assets — 107 — — — Total return index contracts Total return swap agreements - fixed income Other investments 3 n/a — — — Total return swap agreements - equity index Other investments 12 n/a 1 1 — Credit default contracts Credit default swaps – buying protection Other investments 1 n/a — — — Total asset derivatives $ 18 3,520 $ 85 $ 85 $ — Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 35 n/a $ — $ — $ — Equity and index contracts Options Other liabilities & accrued expenses — 3,009 (28 ) — (28 ) Futures Other liabilities & accrued expenses — 1 — — — Total return index contracts Total return swap agreements - fixed income Other liabilities & accrued expenses 13 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 194 n/a 8 8 — Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 172 n/a (22 ) — (22 ) Guaranteed withdrawal benefits Contractholder funds 209 n/a (14 ) — (14 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,690 n/a (375 ) — (375 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 32 n/a (2 ) — (2 ) Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — — Total liability derivatives 2,350 3,010 (432 ) $ 9 $ (441 ) Total derivatives $ 2,368 6,530 $ (347 ) ___________ (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, 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 $ 6 n/a $ — $ — $ — Futures Other assets — 330 — — — Equity and index contracts Options Other investments — 3,440 21 21 — Futures Other assets — 26 — — — Total return index contracts Total return swap agreements - fixed income Other investments 7 n/a — — — Total return swap agreements - equity index Other investments 10 n/a (1 ) — (1 ) Foreign currency contracts Foreign currency forwards Other investments 240 n/a 8 8 — Credit default contracts Credit default swaps – buying protection Other investments 27 n/a — 1 (1 ) Other contracts Other Other assets 2 n/a — — — Total asset derivatives $ 292 3,796 $ 28 $ 30 $ (2 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 31 n/a $ 1 $ 1 $ — Equity and index contracts Options Other liabilities & accrued expenses — 3,266 (5 ) — (5 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 169 n/a (25 ) — (25 ) Guaranteed withdrawal benefits Contractholder funds 210 n/a (14 ) — (14 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,696 n/a (184 ) — (184 ) Credit default contracts Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 2,107 3,266 (227 ) $ 1 $ (228 ) Total derivatives $ 2,399 7,062 $ (199 ) ____________ (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, 2019 Asset derivatives $ 10 $ (9 ) $ — $ 1 $ — $ 1 Liability derivatives (2 ) 9 (8 ) (1 ) — (1 ) December 31, 2018 Asset derivatives $ 10 $ (3 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (2 ) 3 (1 ) — — — 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, 2019 and 2018 . As of June 30, 2019 , the Company had no derivatives used in cash flow hedging relationships. ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Gain (loss) recognized in OCI on derivatives during the period $ — $ 1 $ — $ 1 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. ($ 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, 2019 Equity and index contracts $ — $ — $ 11 $ 11 Embedded derivative financial instruments — (5 ) (5 ) (10 ) Foreign currency contracts 2 — — 2 Total return swaps - fixed income 1 — — 1 Total return swaps - equity index 1 — — 1 Total $ 4 $ (5 ) $ 6 $ 5 Six months ended June 30, 2019 Equity and index contracts $ 2 $ — $ 40 $ 42 Embedded derivative financial instruments — 3 (37 ) (34 ) Foreign currency contracts 3 — — 3 Total return swaps - fixed income 1 — — 1 Total return swaps - equity index 2 — — 2 Total $ 8 $ 3 $ 3 $ 14 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 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, 2019 , counterparties pledged $8 million in collateral to the Company, and the Company pledged zero in collateral to counterparties. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. The following table summarizes the counterparty credit exposure by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) June 30, 2019 December 31, 2018 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+ 5 $ 262 $ 7 $ — 3 $ 283 $ 9 $ 1 A 1 28 1 — 1 23 — — Total 6 $ 290 $ 8 $ — 4 $ 306 $ 9 $ 1 __________ (1) Allstate uses the lower of S&P’s or Moody’s long-term debt issuer 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, 2019 , the Company pledged $6 million in the form of margin deposits. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions. Certain of the Company’s derivative instruments contain credit-risk-contingent termination events, cross-default provisions and credit support annex agreements. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s, ALIC’s or Allstate Life Insurance Company of New York’s (“ALNY”) financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. Credit-risk-contingent credit support annex agreements specify the amount of collateral the Company must post to counterparties based on AIC’s, ALIC’s or ALNY’s financial strength credit ratings by Moody’s or S&P, or in the event AIC, ALIC or ALNY are no longer rated by either Moody’s or S&P. The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) As of June 30, 2019 As of December 31, 2018 Gross liability fair value of contracts containing credit-risk-contingent features $ 2 $ 2 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (2 ) (2 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features — — Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ — 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, 2019 Single name Corporate debt $ — $ — $ — $ 5 $ 5 $ — Total $ — $ — $ — $ 5 $ 5 $ — December 31, 2018 Single name Corporate debt $ — $ — $ — $ 1 $ 1 $ — Total $ — $ — $ — $ 1 $ 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. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 2018 2019 2018 Direct $ 185 $ 184 $ 368 $ 369 Assumed Affiliate 58 61 116 121 Non-affiliate 175 185 352 374 Ceded Affiliate (13 ) (12 ) (25 ) (25 ) Non-affiliate (65 ) (70 ) (124 ) (138 ) Premiums and contract charges, net of reinsurance $ 340 $ 348 $ 687 $ 701 The effects of reinsurance on contract benefits are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Direct $ 211 $ 266 $ 461 $ 523 Assumed Affiliate 30 34 62 68 Non-affiliate 134 123 250 257 Ceded Affiliate (10 ) (8 ) (19 ) (20 ) Non-affiliate 10 (58 ) (16 ) (101 ) Contract benefits, net of reinsurance $ 375 $ 357 $ 738 $ 727 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, 2019 2018 2019 2018 Direct $ 117 $ 129 $ 230 $ 259 Assumed Affiliate 2 2 4 4 Non-affiliate 34 33 75 58 Ceded Affiliate (5 ) (5 ) (10 ) (10 ) Non-affiliate (5 ) (7 ) (8 ) (11 ) Interest credited to contractholder funds, net of reinsurance $ 143 $ 152 $ 291 $ 300 Reinsurance Recoverables As of June 30, 2019 , the Company had $2.48 billion of reinsurance recoverables. Of the $2.48 billion , the Company had $64 million of reinsurance recoverables, net of an allowance for estimated uncollectible amounts, related to Scottish Re (U.S.), Inc. On December 14, 2018, the Delaware Insurance Commissioner placed Scottish Re (U.S.), Inc. under regulatory supervision. On March 6, 2019, the Chancery Court of the State of Delaware entered a Rehabilitation and Injunction Order (the “Rehabilitation Order”) in response to a petition filed by the Insurance Commissioner (the “Petition”). Pursuant to the Petition, it is expected that Scottish Re (U.S.), Inc. will submit a Plan of Rehabilitation and will not make payments relating to the claims or losses of ceding insurers. The Company joined in a joint motion filed on behalf of several affected parties asking the court to allow a specified amount of offsetting claim payments and losses against premiums remitted to Scottish Re (U.S.), Inc. The Company also filed a separate motion related to the reimbursement of claim payments where Scottish Re (U.S.), Inc. is also acting as administrator. The Court has not yet ruled on either of these motions. The Company continues to monitor Scottish Re (U.S.), Inc. for future developments and will reevaluate its allowance for uncollectible amounts as new information becomes available. |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Guarantees [Abstract] | |
Guarantees and Contingent Liabilities | Guarantees and Contingent Liabilities Guarantees Related to the sale of Lincoln Benefit Life Company 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. 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. The aggregate liability balance related to all guarantees was not material as of June 30, 2019 . 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, 2019 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income The components of other comprehensive income (loss) on a pre-tax and after-tax basis are as follows: ($ in millions) Three months ended June 30, 2019 2018 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 216 $ (45 ) $ 171 $ (94 ) $ 20 $ (74 ) Less: reclassification adjustment of realized capital gains and losses 1 — 1 (17 ) 4 (13 ) Unrealized net capital gains and losses 215 (45 ) 170 (77 ) 16 (61 ) Unrealized foreign currency translation adjustments (2 ) — (2 ) 6 (1 ) 5 Other comprehensive income (loss) $ 213 $ (45 ) $ 168 $ (71 ) $ 15 $ (56 ) Six months ended June 30, 2019 2018 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 647 $ (136 ) $ 511 $ (320 ) $ 67 $ (253 ) Less: reclassification adjustment of realized capital gains and losses (6 ) 1 (5 ) (21 ) 4 (17 ) Unrealized net capital gains and losses 653 (137 ) 516 (299 ) 63 (236 ) Unrealized foreign currency translation adjustments (6 ) 1 (5 ) 11 (2 ) 9 Other comprehensive income (loss) $ 647 $ (136 ) $ 511 $ (288 ) $ 61 $ (227 ) |
General (Tables)
General (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
General [Abstract] | |
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, 2019 2018 2019 2018 Premiums Traditional life insurance $ 140 $ 145 $ 281 $ 292 Accident and health insurance 30 30 60 60 Total premiums 170 175 341 352 Contract charges Interest-sensitive life insurance 167 170 340 343 Fixed annuities 3 3 6 6 Total contract charges 170 173 346 349 Total premiums and contract charges $ 340 $ 348 $ 687 $ 701 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 2018 Net change in proceeds managed Net change in fixed income securities $ 28 $ 68 Net change in short-term investments (142 ) (37 ) Operating cash flow (used) provided $ (114 ) $ 31 Net change in liabilities Liabilities for collateral, beginning of period $ (524 ) $ (542 ) Liabilities for collateral, end of period (638 ) (511 ) Operating cash flow provided (used) $ 114 $ (31 ) |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 U.S. government and agencies $ 558 $ 39 $ — $ 597 Municipal 1,757 275 (3 ) 2,029 Corporate 17,520 1,001 (46 ) 18,475 Foreign government 155 9 — 164 Asset-backed securities (“ABS”) 347 7 (3 ) 351 Residential mortgage-backed securities (“RMBS”) 133 47 — 180 Commercial mortgage-backed securities (“CMBS”) 29 7 (3 ) 33 Redeemable preferred stock 13 1 — 14 Total fixed income securities $ 20,512 $ 1,386 $ (55 ) $ 21,843 December 31, 2018 U.S. government and agencies $ 740 $ 33 $ — $ 773 Municipal 1,997 202 (4 ) 2,195 Corporate 17,521 433 (381 ) 17,573 Foreign government 170 9 — 179 ABS 429 3 (3 ) 429 RMBS 154 44 (1 ) 197 CMBS 33 7 — 40 Redeemable preferred stock 13 1 — 14 Total fixed income securities $ 21,057 $ 732 $ (389 ) $ 21,400 |
Schedule for fixed income securities based on contractual maturities | The scheduled maturities for fixed income securities are as follows: ($ in millions) As of June 30, 2019 Amortized cost Fair value Due in one year or less $ 1,251 $ 1,267 Due after one year through five years 7,969 8,265 Due after five years through ten years 7,113 7,499 Due after ten years 3,670 4,248 20,003 21,279 ABS, RMBS and CMBS 509 564 Total $ 20,512 $ 21,843 |
Schedule of net investment income | Net investment income is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Fixed income securities $ 241 $ 247 $ 486 $ 498 Mortgage loans 46 53 92 97 Equity securities 14 16 20 23 Limited partnership interests 102 92 105 188 Short-term investments 8 5 16 9 Policy loans 8 8 16 15 Other 24 23 46 45 Investment income, before expense 443 444 781 875 Investment expense (26 ) (25 ) (53 ) (49 ) Net investment income $ 417 $ 419 $ 728 $ 826 |
Schedule of realized capital gains and losses by asset type | Realized capital gains (losses) by asset type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Fixed income securities $ 4 $ (12 ) $ (2 ) $ (18 ) Mortgage loans — 2 — 2 Equity securities 39 20 185 (6 ) Limited partnership interests — (11 ) 10 (8 ) Derivatives 4 10 8 7 Other (1 ) (1 ) (7 ) (1 ) Realized capital gains (losses) $ 46 $ 8 $ 194 $ (24 ) |
Schedule of realized capital gains and losses by transaction type | Realized capital gains (losses) by transaction type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Impairment write-downs $ (5 ) $ (2 ) $ (12 ) $ (3 ) Sales 6 (7 ) — (12 ) Valuation of equity investments (1) 41 10 198 (13 ) Valuation and settlements of derivative instruments 4 7 8 4 Realized capital gains (losses) $ 46 $ 8 $ 194 $ (24 ) _______________ (1) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. |
Realized gain (loss) on investments | The following table presents the net pre-tax appreciation (decline) during 2019 and 2018 of equity securities and limited partnership interests carried at fair value still held as of June 30, 2019 and June 30, 2018 recognized in net income. ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Equity securities $ 46 $ 20 $ 163 $ 14 Limited partnership interests carried at fair value 38 11 19 49 Total $ 84 $ 31 $ 182 $ 63 |
Schedule of other-than-temporary impairment losses by asset type | OTTI losses by asset type are as follows: Three months ended Three months ended ($ in millions) June 30, 2019 June 30, 2018 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Corporate $ (1 ) $ (1 ) $ (2 ) $ — $ — $ — ABS (1 ) — (1 ) — — — RMBS — — — (1 ) — (1 ) CMBS (2 ) 2 — — — — Total fixed income securities (4 ) 1 (3 ) (1 ) — (1 ) Limited partnership interests (1 ) — (1 ) — — — Other (1 ) — (1 ) (1 ) — (1 ) OTTI losses $ (6 ) $ 1 $ (5 ) $ (2 ) $ — $ (2 ) Six months ended Six months ended June 30, 2019 June 30, 2018 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Corporate $ (1 ) $ (1 ) $ (2 ) $ — $ — $ — ABS (1 ) — (1 ) — — — RMBS — — — (1 ) — (1 ) CMBS (2 ) 2 — — (1 ) (1 ) Total fixed income securities (4 ) 1 (3 ) (1 ) (1 ) (2 ) Limited partnership interests (2 ) — (2 ) — — — Other (7 ) — (7 ) (1 ) — (1 ) OTTI losses $ (13 ) $ 1 $ (12 ) $ (2 ) $ (1 ) $ (3 ) |
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 $103 million and $101 million as of June 30, 2019 and December 31, 2018 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. ($ in millions) June 30, 2019 December 31, 2018 Municipal $ (4 ) $ (4 ) Corporate — (1 ) ABS (5 ) (5 ) RMBS (29 ) (32 ) CMBS (4 ) (2 ) Total $ (42 ) $ (44 ) |
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, 2019 2018 2019 2018 Beginning balance $ (121 ) $ (128 ) $ (123 ) $ (138 ) Additional credit loss for securities previously other-than-temporarily impaired (3 ) (1 ) (3 ) (2 ) Reduction in credit loss for securities disposed or collected 2 5 4 16 Ending balance $ (122 ) $ (124 ) $ (122 ) $ (124 ) |
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, 2019 Gains Losses Fixed income securities $ 21,843 $ 1,386 $ (55 ) $ 1,331 Short-term investments 1,217 — — — Equity method of accounting (“EMA”) limited partnerships (1) (1 ) Unrealized net capital gains and losses, pre-tax 1,330 Amounts recognized for: Insurance reserves (2) (178 ) DAC and DSI (3) (191 ) Amounts recognized (369 ) Deferred income taxes (202 ) Unrealized net capital gains and losses, after-tax $ 759 ___ ____________ (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. 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, 2018 Gains Losses Fixed income securities $ 21,400 $ 732 $ (389 ) $ 343 Short-term investments 810 — — — EMA limited partnerships — Unrealized net capital gains and losses, pre-tax 343 Amounts recognized for: Insurance reserves — DAC and DSI (35 ) Amounts recognized (35 ) Deferred income taxes (65 ) Unrealized net capital gains and losses, after-tax $ 243 |
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, 2019 is as follows: ($ in millions) Fixed income securities $ 988 EMA limited partnerships (1 ) Total 987 Amounts recognized for: Insurance reserves (178 ) DAC and DSI (156 ) Amounts recognized (334 ) Deferred income taxes (137 ) Increase in unrealized net capital gains and losses, after-tax $ 516 |
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, 2019 Fixed income securities U.S. government and agencies — $ — $ — — $ — $ — $ — Municipal — — — 1 13 (3 ) (3 ) Corporate 101 329 (7 ) 175 1,278 (39 ) (46 ) ABS 7 28 (1 ) 4 8 (2 ) (3 ) RMBS 31 5 — 31 4 — — CMBS 2 8 (3 ) 1 — — (3 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 142 $ 370 $ (11 ) 212 $ 1,303 $ (44 ) $ (55 ) Investment grade fixed income securities 63 $ 133 $ (1 ) 162 $ 1,108 $ (31 ) $ (32 ) Below investment grade fixed income securities 79 237 (10 ) 50 195 (13 ) (23 ) Total fixed income securities 142 $ 370 $ (11 ) 212 $ 1,303 $ (44 ) $ (55 ) December 31, 2018 Fixed income securities U.S. government and agencies 2 $ 6 $ — 1 $ 1 $ — $ — Municipal 38 98 (1 ) 5 26 (3 ) (4 ) Corporate 1,260 6,799 (218 ) 370 2,633 (163 ) (381 ) ABS 30 167 (1 ) 11 31 (2 ) (3 ) RMBS 124 11 — 47 10 (1 ) (1 ) CMBS 3 7 — 2 — — — Redeemable preferred stock 1 — — — — — — Total fixed income securities 1,458 $ 7,088 $ (220 ) 436 $ 2,701 $ (169 ) $ (389 ) Investment grade fixed income securities 948 $ 5,255 $ (121 ) 388 $ 2,551 $ (147 ) $ (268 ) Below investment grade fixed income securities 510 1,833 (99 ) 48 150 (22 ) (121 ) Total fixed income securities 1,458 $ 7,088 $ (220 ) 436 $ 2,701 $ (169 ) $ (389 ) |
Gross unrealized losses by unrealized loss position and credit quality | The following table summarizes gross unrealized losses by unrealized loss position and credit quality as of June 30, 2019 . ($ in millions) Investment grade Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost (1) (2) $ (20 ) $ (19 ) $ (39 ) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost (3) (4) (12 ) (4 ) (16 ) Total unrealized losses $ (32 ) $ (23 ) $ (55 ) _______________ (1) Below investment grade fixed income securities include $7 million that have been in an unrealized loss position for less than twelve months. (2) 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. (3) Below investment grade fixed income securities include $1 million that have been in an unrealized loss position for a period of twelve or more consecutive months. (4) Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. |
Summary of carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | The following table reflects the carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution. ($ in millions) June 30, 2019 December 31, 2018 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 $ 2 $ 15 $ 17 $ 6 $ 15 $ 21 1.0 - 1.25 187 — 187 221 — 221 1.26 - 1.50 1,193 — 1,193 1,048 — 1,048 Above 1.50 2,599 43 2,642 2,659 42 2,701 Total non-impaired mortgage loans $ 3,981 $ 58 $ 4,039 $ 3,934 $ 57 $ 3,991 |
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, 2019 December 31, 2018 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 by asset type. ($ in millions) June 30, 2019 December 31, 2018 Agent loans $ 654 $ 620 Bank loans 370 422 Real estate 242 228 Derivatives and other 86 30 Total $ 1,352 $ 1,300 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 . ($ 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, 2019 Assets Fixed income securities: U.S. government and agencies $ 307 $ 290 $ — $ 597 Municipal — 1,989 40 2,029 Corporate - public — 12,603 32 12,635 Corporate - privately placed — 5,744 96 5,840 Foreign government — 164 — 164 ABS - CDO — 21 6 27 ABS - consumer and other — 296 28 324 RMBS — 180 — 180 CMBS — 31 2 33 Redeemable preferred stock — 14 — 14 Total fixed income securities 307 21,332 204 21,843 Equity securities 1,261 13 119 1,393 Short-term investments 758 459 — 1,217 Other investments: Free-standing derivatives — 94 — $ (9 ) 85 Separate account assets 3,029 — — 3,029 Total recurring basis assets 5,355 21,898 323 (9 ) 27,567 Non-recurring basis (1) — — 5 5 Total assets at fair value $ 5,355 $ 21,898 $ 328 $ (9 ) $ 27,572 % of total assets at fair value 19.4 % 79.4 % 1.2 % — % 100.0 % Investments reported at NAV 773 Total $ 28,345 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (411 ) $ (411 ) Other liabilities: Free-standing derivatives — (30 ) — $ 1 (29 ) Total recurring basis liabilities at fair value $ — $ (30 ) $ (411 ) $ 1 $ (440 ) % of total liabilities at fair value — % 6.8 % 93.4 % (0.2 )% 100.0 % __________ (1) Includes $5 million of bank loans written-down to fair value in connection with recognizing OTTI impairments. The following table summarizes the Company’s assets and liabilities measured at fair value as of December 31, 2018 . ($ 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 December 31, 2018 Assets Fixed income securities: U.S. government and agencies $ 493 $ 280 $ — $ 773 Municipal — 2,156 39 2,195 Corporate - public — 11,891 33 11,924 Corporate - privately placed — 5,552 97 5,649 Foreign government — 179 — 179 ABS - CDO — 26 6 32 ABS - consumer and other — 381 16 397 RMBS — 197 — 197 CMBS — 40 — 40 Redeemable preferred stock — 14 — 14 Total fixed income securities 493 20,716 191 21,400 Equity securities 1,182 14 129 1,325 Short-term investments 443 367 — 810 Other investments: Free-standing derivatives — 30 1 $ (8 ) 23 Separate account assets 2,783 — — 2,783 Total recurring basis assets at fair value $ 4,901 $ 21,127 $ 321 $ (8 ) $ 26,341 % of total assets at fair value 18.6 % 80.2 % 1.2 % — % 100.0 % Investments reported at NAV 787 Total $ 27,128 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (223 ) $ (223 ) Other liabilities: Free-standing derivatives — (7 ) — $ 2 (5 ) Total recurring basis liabilities at fair value $ — $ (7 ) $ (223 ) $ 2 $ (228 ) % of total liabilities at fair value — % 3.1 % 97.8 % (0.9 )% 100.0 % |
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, 2019 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (375 ) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.53 % December 31, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (184 ) 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, 2019 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2019 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 40 $ — $ 1 $ — $ — Corporate - public 35 — — — (2 ) Corporate - privately placed 97 — — — (1 ) ABS - CDO 6 — — — — ABS - consumer and other 25 — — — (12 ) CMBS 2 — — — — Total fixed income securities 205 — 1 — (15 ) Equity securities 106 5 — — — Free-standing derivatives, net 1 (1 ) — — — Total recurring Level 3 assets $ 312 $ 4 $ 1 $ — $ (15 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (247 ) $ (11 ) $ — $ (154 ) $ — Total recurring Level 3 liabilities $ (247 ) $ (11 ) $ — $ (154 ) $ — Purchases Sales Issues Settlements Balance as of June 30, 2019 Assets Fixed income securities: Municipal $ — $ (1 ) $ — $ — $ 40 Corporate - public — (1 ) — — 32 Corporate - privately placed 1 — — (1 ) 96 ABS - CDO — — — — 6 ABS - consumer and other 22 (6 ) — (1 ) 28 CMBS — — — — 2 Total fixed income securities 23 (8 ) — (2 ) 204 Equity securities 8 — — — 119 Free-standing derivatives, net — — — — — Total recurring Level 3 assets $ 31 $ (8 ) $ — $ (2 ) $ 323 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (411 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (411 ) ____________ (1) The effect to net income totals $(7) million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $2 million in realized capital gains and losses, $2 million in net investment income, $(6) million in interest credited to contractholder funds and $(5) million in contract benefits. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2019 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2018 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 39 $ — $ 2 $ — $ — Corporate - public 33 — — — (2 ) Corporate - privately placed 97 (2 ) 2 15 (1 ) ABS - CDO 6 — — — — ABS - consumer and other 16 — — — (12 ) CMBS — — — 2 — Total fixed income securities 191 (2 ) 4 17 (15 ) Equity securities 129 20 — — — Free-standing derivatives, net 1 (1 ) — — — Total recurring Level 3 assets $ 321 $ 17 $ 4 $ 17 $ (15 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (223 ) $ (36 ) $ — $ (154 ) $ — Total recurring Level 3 liabilities $ (223 ) $ (36 ) $ — $ (154 ) $ — Purchases Sales Issues Settlements Balance as of June 30, 2019 Assets Fixed income securities: Municipal $ — $ (1 ) $ — $ — $ 40 Corporate - public 3 (1 ) — (1 ) 32 Corporate - privately placed 1 (13 ) — (3 ) 96 ABS - CDO — — — — 6 ABS - consumer and other 34 (6 ) — (4 ) 28 CMBS — — — — 2 Total fixed income securities 38 (21 ) — (8 ) 204 Equity securities 8 (38 ) — — 119 Free-standing derivatives, net — — — — — Total recurring Level 3 assets $ 46 $ (59 ) $ — $ (8 ) $ 323 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 2 $ (411 ) Total recurring Level 3 liabilities $ — $ — $ — $ 2 $ (411 ) ____________ (1) The effect to net income totals $(19) million and is reported in the Condensed Consolidated Statements of Operations and Comprehensive Income as follows: $15 million in realized capital gains and losses, $2 million in net investment income, $(39) million in interest credited to contractholder funds and $3 million in contract benefits. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2018 . ($ 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 and Comprehensive Income 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 $1 million |
Schedule of change in unrealized gains and losses included in net income for Level 3 assets and liabilities held | The following table provides valuation changes included in net income for Level 3 assets and liabilities held as of June 30 . ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Assets Equity securities $ 5 $ 6 $ 7 $ 7 Free-standing derivatives, net (1 ) — (1 ) — Total recurring Level 3 assets $ 4 $ 6 $ 6 $ 7 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (11 ) $ 2 $ (36 ) $ 25 Total recurring Level 3 liabilities $ (11 ) $ 2 $ (36 ) $ 25 |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Financial liabilities ($ in millions) June 30, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts Level 3 $ 8,784 $ 9,530 $ 9,213 $ 9,629 Liability for collateral Level 2 638 638 525 525 Notes due to related parties Level 3 140 143 140 138 Financial assets ($ in millions) June 30, 2019 December 31, 2018 Fair value level Carrying value Fair value Carrying value Fair value Mortgage loans Level 3 $ 4,043 $ 4,175 $ 3,995 $ 4,028 Bank loans Level 3 371 365 422 408 Agent loans Level 3 654 656 620 617 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 . ($ 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 designated as fair value accounting hedging instruments Other Other assets $ 2 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other assets — 260 — — — Equity and index contracts Options Other investments — 3,153 84 84 — Futures Other assets — 107 — — — Total return index contracts Total return swap agreements - fixed income Other investments 3 n/a — — — Total return swap agreements - equity index Other investments 12 n/a 1 1 — Credit default contracts Credit default swaps – buying protection Other investments 1 n/a — — — Total asset derivatives $ 18 3,520 $ 85 $ 85 $ — Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 35 n/a $ — $ — $ — Equity and index contracts Options Other liabilities & accrued expenses — 3,009 (28 ) — (28 ) Futures Other liabilities & accrued expenses — 1 — — — Total return index contracts Total return swap agreements - fixed income Other liabilities & accrued expenses 13 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 194 n/a 8 8 — Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 172 n/a (22 ) — (22 ) Guaranteed withdrawal benefits Contractholder funds 209 n/a (14 ) — (14 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,690 n/a (375 ) — (375 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 32 n/a (2 ) — (2 ) Credit default swaps – selling protection Other liabilities & accrued expenses 5 n/a — — — Total liability derivatives 2,350 3,010 (432 ) $ 9 $ (441 ) Total derivatives $ 2,368 6,530 $ (347 ) ___________ (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, 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 $ 6 n/a $ — $ — $ — Futures Other assets — 330 — — — Equity and index contracts Options Other investments — 3,440 21 21 — Futures Other assets — 26 — — — Total return index contracts Total return swap agreements - fixed income Other investments 7 n/a — — — Total return swap agreements - equity index Other investments 10 n/a (1 ) — (1 ) Foreign currency contracts Foreign currency forwards Other investments 240 n/a 8 8 — Credit default contracts Credit default swaps – buying protection Other investments 27 n/a — 1 (1 ) Other contracts Other Other assets 2 n/a — — — Total asset derivatives $ 292 3,796 $ 28 $ 30 $ (2 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 31 n/a $ 1 $ 1 $ — Equity and index contracts Options Other liabilities & accrued expenses — 3,266 (5 ) — (5 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 169 n/a (25 ) — (25 ) Guaranteed withdrawal benefits Contractholder funds 210 n/a (14 ) — (14 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,696 n/a (184 ) — (184 ) Credit default contracts Credit default swaps – selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 2,107 3,266 (227 ) $ 1 $ (228 ) Total derivatives $ 2,399 7,062 $ (199 ) ____________ (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, 2019 Asset derivatives $ 10 $ (9 ) $ — $ 1 $ — $ 1 Liability derivatives (2 ) 9 (8 ) (1 ) — (1 ) December 31, 2018 Asset derivatives $ 10 $ (3 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (2 ) 3 (1 ) — — — |
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, 2019 Asset derivatives $ 10 $ (9 ) $ — $ 1 $ — $ 1 Liability derivatives (2 ) 9 (8 ) (1 ) — (1 ) December 31, 2018 Asset derivatives $ 10 $ (3 ) $ (5 ) $ 2 $ — $ 2 Liability derivatives (2 ) 3 (1 ) — — — |
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, 2019 and 2018 . As of June 30, 2019 , the Company had no derivatives used in cash flow hedging relationships. ($ in millions) Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Gain (loss) recognized in OCI on derivatives during the period $ — $ 1 $ — $ 1 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. ($ 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, 2019 Equity and index contracts $ — $ — $ 11 $ 11 Embedded derivative financial instruments — (5 ) (5 ) (10 ) Foreign currency contracts 2 — — 2 Total return swaps - fixed income 1 — — 1 Total return swaps - equity index 1 — — 1 Total $ 4 $ (5 ) $ 6 $ 5 Six months ended June 30, 2019 Equity and index contracts $ 2 $ — $ 40 $ 42 Embedded derivative financial instruments — 3 (37 ) (34 ) Foreign currency contracts 3 — — 3 Total return swaps - fixed income 1 — — 1 Total return swaps - equity index 2 — — 2 Total $ 8 $ 3 $ 3 $ 14 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 |
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, 2019 December 31, 2018 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+ 5 $ 262 $ 7 $ — 3 $ 283 $ 9 $ 1 A 1 28 1 — 1 23 — — Total 6 $ 290 $ 8 $ — 4 $ 306 $ 9 $ 1 __________ (1) Allstate uses the lower of S&P’s or Moody’s long-term debt issuer 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) As of June 30, 2019 As of December 31, 2018 Gross liability fair value of contracts containing credit-risk-contingent features $ 2 $ 2 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (2 ) (2 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features — — Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ — |
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, 2019 Single name Corporate debt $ — $ — $ — $ 5 $ 5 $ — Total $ — $ — $ — $ 5 $ 5 $ — December 31, 2018 Single name Corporate debt $ — $ — $ — $ 1 $ 1 $ — Total $ — $ — $ — $ 1 $ 1 $ — |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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, 2019 2018 2019 2018 Direct $ 185 $ 184 $ 368 $ 369 Assumed Affiliate 58 61 116 121 Non-affiliate 175 185 352 374 Ceded Affiliate (13 ) (12 ) (25 ) (25 ) Non-affiliate (65 ) (70 ) (124 ) (138 ) Premiums and contract charges, net of reinsurance $ 340 $ 348 $ 687 $ 701 |
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, 2019 2018 2019 2018 Direct $ 211 $ 266 $ 461 $ 523 Assumed Affiliate 30 34 62 68 Non-affiliate 134 123 250 257 Ceded Affiliate (10 ) (8 ) (19 ) (20 ) Non-affiliate 10 (58 ) (16 ) (101 ) Contract benefits, net of reinsurance $ 375 $ 357 $ 738 $ 727 |
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, 2019 2018 2019 2018 Direct $ 117 $ 129 $ 230 $ 259 Assumed Affiliate 2 2 4 4 Non-affiliate 34 33 75 58 Ceded Affiliate (5 ) (5 ) (10 ) (10 ) Non-affiliate (5 ) (7 ) (8 ) (11 ) Interest credited to contractholder funds, net of reinsurance $ 143 $ 152 $ 291 $ 300 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
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 income (loss) on a pre-tax and after-tax basis are as follows: ($ in millions) Three months ended June 30, 2019 2018 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 216 $ (45 ) $ 171 $ (94 ) $ 20 $ (74 ) Less: reclassification adjustment of realized capital gains and losses 1 — 1 (17 ) 4 (13 ) Unrealized net capital gains and losses 215 (45 ) 170 (77 ) 16 (61 ) Unrealized foreign currency translation adjustments (2 ) — (2 ) 6 (1 ) 5 Other comprehensive income (loss) $ 213 $ (45 ) $ 168 $ (71 ) $ 15 $ (56 ) Six months ended June 30, 2019 2018 Pre- tax Tax After- tax Pre- tax Tax After- tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 647 $ (136 ) $ 511 $ (320 ) $ 67 $ (253 ) Less: reclassification adjustment of realized capital gains and losses (6 ) 1 (5 ) (21 ) 4 (17 ) Unrealized net capital gains and losses 653 (137 ) 516 (299 ) 63 (236 ) Unrealized foreign currency translation adjustments (6 ) 1 (5 ) 11 (2 ) 9 Other comprehensive income (loss) $ 647 $ (136 ) $ 511 $ (288 ) $ 61 $ (227 ) |
General (Details)
General (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Premiums and contract charges by product | ||||
Premiums | $ 170 | $ 175 | $ 341 | $ 352 |
Contract charges | 170 | 173 | 346 | 349 |
Premiums and contract charges, net of reinsurance | 340 | 348 | 687 | 701 |
Dividends | 75 | |||
Traditional life insurance | ||||
Premiums and contract charges by product | ||||
Premiums | 140 | 145 | 281 | 292 |
Accident and health insurance | ||||
Premiums and contract charges by product | ||||
Premiums | 30 | 30 | 60 | 60 |
Interest-sensitive life insurance | ||||
Premiums and contract charges by product | ||||
Contract charges | 167 | 170 | 340 | 343 |
Fixed annuities | ||||
Premiums and contract charges by product | ||||
Contract charges | $ 3 | $ 3 | $ 6 | $ 6 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information Supplemental Cash Flow Information - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Supplemental Cash Flow Information [Abstract] | ||
Transfer from Investments | $ 62 | $ 13 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Net change (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Net change in proceeds managed | ||
Net change in fixed income securities | $ 28 | $ 68 |
Net change in short-term investments | (142) | (37) |
Operating cash flow (used) provided | (114) | 31 |
Net change in liabilities | ||
Liabilities for collateral, beginning of period | (524) | (542) |
Liabilities for collateral, end of period | (638) | (511) |
Operating cash flow provided (used) | $ 114 | $ (31) |
Investments - Fair Values (Deta
Investments - Fair Values (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | $ 20,512 | $ 21,057 |
Gross unrealized, gains | 1,386 | 732 |
Gross unrealized, loss | (55) | (389) |
Fair value | 21,843 | 21,400 |
U.S. government and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 558 | 740 |
Gross unrealized, gains | 39 | 33 |
Gross unrealized, loss | 0 | 0 |
Fair value | 597 | 773 |
Municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 1,757 | 1,997 |
Gross unrealized, gains | 275 | 202 |
Gross unrealized, loss | (3) | (4) |
Fair value | 2,029 | 2,195 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 17,520 | 17,521 |
Gross unrealized, gains | 1,001 | 433 |
Gross unrealized, loss | (46) | (381) |
Fair value | 18,475 | 17,573 |
Foreign government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 155 | 170 |
Gross unrealized, gains | 9 | 9 |
Gross unrealized, loss | 0 | 0 |
Fair value | 164 | 179 |
ABS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 347 | 429 |
Gross unrealized, gains | 7 | 3 |
Gross unrealized, loss | (3) | (3) |
Fair value | 351 | 429 |
RMBS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 133 | 154 |
Gross unrealized, gains | 47 | 44 |
Gross unrealized, loss | 0 | (1) |
Fair value | 180 | 197 |
CMBS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 29 | 33 |
Gross unrealized, gains | 7 | 7 |
Gross unrealized, loss | (3) | 0 |
Fair value | 33 | 40 |
Redeemable preferred stock | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost | 13 | 13 |
Gross unrealized, gains | 1 | 1 |
Gross unrealized, loss | 0 | 0 |
Fair value | $ 14 | $ 14 |
Investments - Scheduled Maturit
Investments - Scheduled Maturities (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Amortized cost | ||
Due in one year or less | $ 1,251 | |
Due after one year through five years | 7,969 | |
Due after five years through ten years | 7,113 | |
Due after ten years | 3,670 | |
Subtotal | 20,003 | |
ABS, RMBS and CMBS | 509 | |
Amortized cost | 20,512 | $ 21,057 |
Fair value | ||
Due in one year or less | 1,267 | |
Due after one year through five years | 8,265 | |
Due after five years through ten years | 7,499 | |
Due after ten years | 4,248 | |
Subtotal | 21,279 | |
ABS, RMBS and CMBS | 564 | |
Fair value | $ 21,843 | $ 21,400 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net investment income | ||||
Investment income, before expense | $ 443 | $ 444 | $ 781 | $ 875 |
Investment expense | (26) | (25) | (53) | (49) |
Net investment income | 417 | 419 | 728 | 826 |
Fixed income securities | ||||
Net investment income | ||||
Investment income, before expense | 241 | 247 | 486 | 498 |
Mortgage loans | ||||
Net investment income | ||||
Investment income, before expense | 46 | 53 | 92 | 97 |
Equity securities | ||||
Net investment income | ||||
Investment income, before expense | 14 | 16 | 20 | 23 |
Limited partnership interests | ||||
Net investment income | ||||
Investment income, before expense | 102 | 92 | 105 | 188 |
Short-term investments | ||||
Net investment income | ||||
Investment income, before expense | 8 | 5 | 16 | 9 |
Policy loans | ||||
Net investment income | ||||
Investment income, before expense | 8 | 8 | 16 | 15 |
Other | ||||
Net investment income | ||||
Investment income, before expense | $ 24 | $ 23 | $ 46 | $ 45 |
Investments - Realized Capital
Investments - Realized Capital Gains and Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ 46 | $ 8 | $ 194 | $ (24) |
Fixed income securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 4 | (12) | (2) | (18) |
Mortgage loans | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 0 | 2 | 0 | 2 |
Equity securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 39 | 20 | 185 | (6) |
Limited partnership interests | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 0 | (11) | 10 | (8) |
Derivatives | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 4 | 10 | 8 | 7 |
Other | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ (1) | $ (1) | $ (7) | $ (1) |
Investments - Realized Capita_2
Investments - Realized Capital Gains and Losses by Transaction Type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Investments [Abstract] | ||||
Impairment write-downs | $ (5) | $ (2) | $ (12) | $ (3) |
Sales | 6 | (7) | 0 | (12) |
Valuation of equity investments | 41 | 10 | 198 | (13) |
Valuation and settlements of derivative instruments | 4 | 7 | 8 | 4 |
Total realized capital gains and losses | $ 46 | $ 8 | $ 194 | $ (24) |
Investments Investments - Narra
Investments Investments - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
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 | $ 13,000,000 | $ 26,000,000 | $ 20,000,000 | |
Gross losses on sales of fixed income securities, debt | (6,000,000) | 24,000,000 | (25,000,000) | 36,000,000 | |
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | 103,000,000 | 103,000,000 | $ 101,000,000 | ||
Limited partnership interests | 3,275,000,000 | 3,275,000,000 | 3,292,000,000 | ||
Short-term investments | 1,217,000,000 | 1,217,000,000 | 810,000,000 | ||
Policy loans | 548,000,000 | 548,000,000 | 561,000,000 | ||
Other | 1,352,000,000 | 1,352,000,000 | 1,300,000,000 | ||
Equity method limited partnerships | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Limited partnership interests | 2,500,000,000 | 2,500,000,000 | 2,510,000,000 | ||
Carrying value | Cost method limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Limited partnership interests | 773,000,000 | 773,000,000 | $ 787,000,000 | ||
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 | 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 | $ 4,000,000 |
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Debt Securities, Available-for-sale [Line Items] | ||||
Total | $ 84 | $ 31 | $ 182 | $ 63 |
Equity securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Total | 46 | 20 | 163 | 14 |
Limited partnership interests | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Total | $ 38 | $ 11 | $ 19 | $ 49 |
Investments - Other-than-tempor
Investments - Other-than-temporary impairment losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | $ (6) | $ (2) | $ (13) | $ (2) |
Included in OCI | 1 | 0 | 1 | (1) |
Net OTTI losses recognized in earnings | (5) | (2) | (12) | (3) |
Corporate | ||||
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (1) | 0 |
Included in OCI | (1) | 0 | (1) | 0 |
Net OTTI losses recognized in earnings | (2) | 0 | (2) | 0 |
ABS | ||||
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (1) | 0 |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | (1) | 0 | (1) | 0 |
RMBS | ||||
OTTI 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) |
CMBS | ||||
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (2) | 0 | (2) | 0 |
Included in OCI | 2 | 0 | 2 | (1) |
Net OTTI losses recognized in earnings | 0 | 0 | 0 | (1) |
Fixed income securities | ||||
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (4) | (1) | (4) | (1) |
Included in OCI | 1 | 0 | 1 | (1) |
Net OTTI losses recognized in earnings | (3) | (1) | (3) | (2) |
Limited partnership interests | ||||
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (2) | 0 |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | (1) | 0 | (2) | 0 |
Other | ||||
OTTI losses | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | (1) | (7) | (1) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | $ (1) | $ (1) | $ (7) | $ (1) |
Investments - Other-than-temp_2
Investments - Other-than-temporary Losses Included in AOCI (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
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 | $ (42) | $ (44) |
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) |
Corporate | ||
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 | 0 | (1) |
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 | (5) | (5) |
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 | (29) | (32) |
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) | $ (2) |
Investments - Rollforward of Cu
Investments - Rollforward of Cumulative Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Credit Losses on Fixed Income Securities | ||||
Beginning balance | $ (121) | $ (128) | $ (123) | $ (138) |
Additional credit loss for securities previously other-than-temporarily impaired | (3) | (1) | (3) | (2) |
Reduction in credit loss for securities disposed or collected | 2 | 5 | 4 | 16 |
Ending balance | $ (122) | $ (124) | $ (122) | $ (124) |
Investments - Unrealized Net Ca
Investments - Unrealized Net Capital Gains and Losses (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Fair value | ||
Fixed income securities | $ 21,843 | $ 21,400 |
Short-term investments | 1,217 | 810 |
Gross unrealized Gains | ||
Fixed income securities | 1,386 | 732 |
Short-term investments | 0 | 0 |
Gross unrealized Losses | ||
Fixed income securities | (55) | (389) |
Short-term investments | 0 | 0 |
Unrealized net gains (losses) | ||
Fixed income securities | 1,331 | 343 |
Short-term investments | 0 | 0 |
EMA limited partnerships | (1) | 0 |
Unrealized net capital gains and losses, pre-tax | 1,330 | 343 |
Amount recognized for: | ||
Insurance reserves | (178) | 0 |
DAC and DSI | (191) | (35) |
Amounts recognized | (369) | (35) |
Deferred income taxes | (202) | (65) |
Total unrealized net capital gains and losses | $ 759 | $ 243 |
Investments - Change in Unreali
Investments - Change in Unrealized Net Capital Gains and Losses (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ 987 |
Amount recognized for: | |
Insurance reserves | (178) |
DAC and DSI | (156) |
Amounts recognized | (334) |
Deferred income taxes | (137) |
Increase in unrealized net capital gains and losses, after-tax | 516 |
Fixed income securities | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 988 |
Limited partnership interests | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ (1) |
Investments - Portfolio Monitor
Investments - Portfolio Monitoring (Details) $ in Millions | Jun. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Fixed income securities | ||
Gross Unrealized Loss | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost | $ 39 | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost | $ 16 | |
Less than 12 months | ||
Number of issues | security | 142 | 1,458 |
Fair value | $ 370 | $ 7,088 |
Unrealized losses | $ (11) | $ (220) |
12 months or more | ||
Number of issues | security | 212 | 436 |
Fair value | $ 1,303 | $ 2,701 |
Unrealized losses | (44) | (169) |
Total unrealized losses | ||
Total unrealized losses | $ (55) | $ (389) |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues | security | 0 | 2 |
Fair value | $ 0 | $ 6 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | security | 0 | 1 |
Fair value | $ 0 | $ 1 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ 0 |
Municipal | ||
Less than 12 months | ||
Number of issues | security | 0 | 38 |
Fair value | $ 0 | $ 98 |
Unrealized losses | $ 0 | $ (1) |
12 months or more | ||
Number of issues | security | 1 | 5 |
Fair value | $ 13 | $ 26 |
Unrealized losses | (3) | (3) |
Total unrealized losses | ||
Total unrealized losses | $ (3) | $ (4) |
Corporate | ||
Less than 12 months | ||
Number of issues | security | 101 | 1,260 |
Fair value | $ 329 | $ 6,799 |
Unrealized losses | $ (7) | $ (218) |
12 months or more | ||
Number of issues | security | 175 | 370 |
Fair value | $ 1,278 | $ 2,633 |
Unrealized losses | (39) | (163) |
Total unrealized losses | ||
Total unrealized losses | $ (46) | $ (381) |
ABS | ||
Less than 12 months | ||
Number of issues | security | 7 | 30 |
Fair value | $ 28 | $ 167 |
Unrealized losses | $ (1) | $ (1) |
12 months or more | ||
Number of issues | security | 4 | 11 |
Fair value | $ 8 | $ 31 |
Unrealized losses | (2) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (3) | $ (3) |
RMBS | ||
Less than 12 months | ||
Number of issues | security | 31 | 124 |
Fair value | $ 5 | $ 11 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | security | 31 | 47 |
Fair value | $ 4 | $ 10 |
Unrealized losses | 0 | (1) |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ (1) |
CMBS | ||
Less than 12 months | ||
Number of issues | security | 2 | 3 |
Fair value | $ 8 | $ 7 |
Unrealized losses | $ (3) | $ 0 |
12 months or more | ||
Number of issues | security | 1 | 2 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (3) | $ 0 |
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 |
Investment grade fixed income securities | ||
Gross Unrealized Loss | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost | 20 | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost | $ 12 | |
Less than 12 months | ||
Number of issues | security | 63 | 948 |
Fair value | $ 133 | $ 5,255 |
Unrealized losses | $ (1) | $ (121) |
12 months or more | ||
Number of issues | security | 162 | 388 |
Fair value | $ 1,108 | $ 2,551 |
Unrealized losses | (31) | (147) |
Total unrealized losses | ||
Total unrealized losses | (32) | $ (268) |
Below investment grade fixed income securities | ||
Gross Unrealized Loss | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost | 19 | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost | $ 4 | |
Less than 12 months | ||
Number of issues | security | 79 | 510 |
Fair value | $ 237 | $ 1,833 |
Unrealized losses | $ (10) | $ (99) |
12 months or more | ||
Number of issues | security | 50 | 48 |
Fair value | $ 195 | $ 150 |
Unrealized losses | (13) | (22) |
Total unrealized losses | ||
Total unrealized losses | $ (23) | $ (121) |
Investments Investments - Gross
Investments Investments - Gross Unrealized Losses by Unrealized Loss Position and Credit Quality (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost, greater than 12 months | $ 1 | |
Investment grade fixed income securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost | (20) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost | (12) | |
Total unrealized losses | (32) | $ (268) |
Below investment grade fixed income securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost | (19) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost | (4) | |
Total unrealized losses | (23) | (121) |
Available for sale securities, unrealized losses having loss of less than twenty percent, less than 12 months | 7 | |
Fixed income securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost | (39) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost | (16) | |
Total unrealized losses | $ (55) | $ (389) |
Investments - Carrying Value of
Investments - Carrying Value of Non-impaired Fixed Rate and Variable Rate Mortgage Loans (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ||
Total | $ 4,043 | $ 3,995 |
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 | 3,981 | 3,934 |
Variable rate mortgage loans | 58 | 57 |
Total | 4,039 | 3,991 |
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 | 2 | 6 |
Variable rate mortgage loans | 15 | 15 |
Total | 17 | 21 |
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 | 187 | 221 |
Variable rate mortgage loans | 0 | 0 |
Total | 187 | 221 |
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 | 1,193 | 1,048 |
Variable rate mortgage loans | 0 | 0 |
Total | 1,193 | 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 | 2,599 | 2,659 |
Variable rate mortgage loans | 43 | 42 |
Total | $ 2,642 | $ 2,701 |
Investments Investments - Other
Investments Investments - Other investments by type (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Investment Holdings [Line Items] | ||
Policy loans | $ 548 | $ 561 |
Other | 1,352 | 1,300 |
Agent loans | ||
Investment Holdings [Line Items] | ||
Other | 654 | 620 |
Bank loans | ||
Investment Holdings [Line Items] | ||
Other | 370 | 422 |
Real estate | ||
Investment Holdings [Line Items] | ||
Other | 242 | 228 |
Derivatives and other | ||
Investment Holdings [Line Items] | ||
Other | $ 86 | $ 30 |
Fair Value of Assets and Liab_3
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fixed income securities | $ 21,843 | $ 21,843 | $ 21,400 | ||
Fair value, assets and liabilities gain (loss) included in earnings | (7) | $ 6 | (19) | $ 30 | |
Total gains (losses) included in: Net income | 4 | 4 | 17 | 5 | |
Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Assets, fair value disclosure | 328 | 328 | 321 | ||
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 | 54 | 54 | 80 | ||
Recurring basis | Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fixed income securities | 204 | 204 | $ 191 | ||
Assets, fair value disclosure | 323 | 323 | |||
Realized capital gains and losses | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Total gains (losses) included in: Net income | 2 | 4 | 15 | 5 | |
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 2 | 6 | 4 | 7 | |
Net Investment Income | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Total gains (losses) included in: Net income | 2 | 2 | |||
Interest credited to contractholder funds | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Total gains (losses) included in: Net income | (6) | 1 | (39) | 20 | |
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (6) | 1 | (39) | 20 | |
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 | (5) | 1 | 3 | 5 | |
Total | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fair value, assets and liabilities gain (loss) included in earnings | (7) | $ 8 | (30) | $ 32 | |
Limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Commitments to invest in limited partnership interests | $ 241 | $ 241 | |||
Minimum | Limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Investment assets, contract liquidation period | 4 years | ||||
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, contract liquidation period | 9 years | ||||
Investment assets, useful life | 12 years |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Assets | |||
Fixed income securities | $ 21,843 | $ 21,400 | |
Short-term investments | 1,217 | 810 | |
Other investments: Free-standing derivatives | $ 1 | ||
Separate account assets | 3,029 | 2,783 | |
Derivative asset, fair value, gross liability and obligation to return cash, offset | $ (9) | $ (8) | |
% of total assets at fair value | 0.00% | 0.00% | |
Total | $ 28,345 | $ 27,128 | |
Liabilities | |||
Free standing derivative liabilities derivative liability, fair value, gross asset and right to reclaim cash, offset | $ 1 | $ 2 | |
% of total liabilities at fair value | (0.20%) | (0.90%) | |
U.S. government and agencies | |||
Assets | |||
Fixed income securities | $ 597 | $ 773 | |
Municipal | |||
Assets | |||
Fixed income securities | 2,029 | 2,195 | |
Foreign government | |||
Assets | |||
Fixed income securities | 164 | 179 | |
RMBS | |||
Assets | |||
Fixed income securities | 180 | 197 | |
CMBS | |||
Assets | |||
Fixed income securities | 33 | 40 | |
Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 14 | 14 | |
Bank loans | |||
Assets | |||
Total assets at fair value | 5 | ||
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | $ 5,355 | $ 4,901 | |
% of total assets at fair value | 19.40% | 18.60% | |
Liabilities | |||
Total recurring basis 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 | $ 21,898 | $ 21,127 | |
% of total assets at fair value | 79.40% | 80.20% | |
Liabilities | |||
Total recurring basis liabilities at fair value | $ (30) | $ (7) | |
% of total liabilities at fair value | 6.80% | 3.10% | |
Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | $ 328 | $ 321 | |
% of total assets at fair value | 1.20% | 1.20% | |
Liabilities | |||
Total recurring basis liabilities at fair value | $ (411) | $ (223) | |
% of total liabilities at fair value | 93.40% | 97.80% | |
Investments reported at NAV | |||
Assets | |||
Investments reported at NAV | $ 773 | $ 787 | |
Recurring basis | |||
Assets | |||
Other investments: Free-standing derivatives, gross liability and obligation to return cash, offset | (9) | (8) | |
Derivative asset, fair value, gross liability and obligation to return cash, offset | (9) | ||
Liabilities | |||
Free standing derivative liabilities derivative liability, fair value, gross asset and right to reclaim cash, offset | 1 | 2 | |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Fixed income securities | 307 | 493 | |
Equity securities | 1,261 | 1,182 | |
Short-term investments | 758 | 443 | |
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 3,029 | 2,783 | |
Total assets at fair value | 5,355 | ||
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 | 307 | 493 | |
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 | 21,332 | 20,716 | |
Equity securities | 13 | 14 | |
Short-term investments | 459 | 367 | |
Other investments: Free-standing derivatives | 94 | 30 | |
Separate account assets | 0 | 0 | |
Total assets at fair value | 21,898 | ||
Liabilities | |||
Other liabilities: Free-standing derivatives | (30) | (7) | |
Recurring basis | Significant other observable inputs (Level 2) | U.S. government and agencies | |||
Assets | |||
Fixed income securities | 290 | 280 | |
Recurring basis | Significant other observable inputs (Level 2) | Municipal | |||
Assets | |||
Fixed income securities | 1,989 | 2,156 | |
Recurring basis | Significant other observable inputs (Level 2) | Corporate - public | |||
Assets | |||
Fixed income securities | 12,603 | 11,891 | |
Recurring basis | Significant other observable inputs (Level 2) | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 5,744 | 5,552 | |
Recurring basis | Significant other observable inputs (Level 2) | Foreign government | |||
Assets | |||
Fixed income securities | 164 | 179 | |
Recurring basis | Significant other observable inputs (Level 2) | ABS - CDO | |||
Assets | |||
Fixed income securities | 21 | 26 | |
Recurring basis | Significant other observable inputs (Level 2) | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 296 | 381 | |
Recurring basis | Significant other observable inputs (Level 2) | RMBS | |||
Assets | |||
Fixed income securities | 180 | 197 | |
Recurring basis | Significant other observable inputs (Level 2) | CMBS | |||
Assets | |||
Fixed income securities | 31 | 40 | |
Recurring basis | Significant other observable inputs (Level 2) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 14 | 14 | |
Recurring basis | Significant unobservable inputs (Level 3) | |||
Assets | |||
Fixed income securities | 204 | 191 | |
Equity securities | 119 | 129 | |
Short-term investments | 0 | 0 | |
Other investments: Free-standing derivatives | 0 | 1 | |
Separate account assets | 0 | 0 | |
Total assets at fair value | 323 | ||
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 | 40 | 39 | |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate - public | |||
Assets | |||
Fixed income securities | 32 | 33 | |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 96 | 97 | |
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 | 6 | 6 | |
Recurring basis | Significant unobservable inputs (Level 3) | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 28 | 16 | |
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 | 2 | 0 | |
Recurring basis | Significant unobservable inputs (Level 3) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 0 | 0 | |
Non-recurring basis | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | 0 | ||
Non-recurring basis | Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | 0 | ||
Non-recurring basis | Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | 5 | ||
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 | (411) | (223) | |
Fair value | |||
Assets | |||
Total assets at fair value | $ 27,572 | $ 26,341 | |
% of total assets at fair value | 100.00% | 100.00% | |
Liabilities | |||
Total recurring basis liabilities at fair value | $ (440) | $ (228) | |
% of total liabilities at fair value | 100.00% | 100.00% | |
Fair value | Recurring basis | |||
Assets | |||
Fixed income securities | $ 21,843 | $ 21,400 | |
Equity securities | 1,393 | 1,325 | |
Short-term investments | 1,217 | 810 | |
Other investments: Free-standing derivatives | 85 | 23 | |
Separate account assets | 3,029 | 2,783 | |
Total assets at fair value | 27,567 | ||
Liabilities | |||
Other liabilities: Free-standing derivatives | (29) | (5) | |
Fair value | Recurring basis | U.S. government and agencies | |||
Assets | |||
Fixed income securities | 597 | 773 | |
Fair value | Recurring basis | Municipal | |||
Assets | |||
Fixed income securities | 2,029 | 2,195 | |
Fair value | Recurring basis | Corporate - public | |||
Assets | |||
Fixed income securities | 12,635 | 11,924 | |
Fair value | Recurring basis | Corporate - privately placed | |||
Assets | |||
Fixed income securities | 5,840 | 5,649 | |
Fair value | Recurring basis | Foreign government | |||
Assets | |||
Fixed income securities | 164 | 179 | |
Fair value | Recurring basis | ABS - CDO | |||
Assets | |||
Fixed income securities | 27 | 32 | |
Fair value | Recurring basis | ABS - consumer and other | |||
Assets | |||
Fixed income securities | 324 | 397 | |
Fair value | Recurring basis | RMBS | |||
Assets | |||
Fixed income securities | 180 | 197 | |
Fair value | Recurring basis | CMBS | |||
Assets | |||
Fixed income securities | 33 | 40 | |
Fair value | Recurring basis | Redeemable preferred stock | |||
Assets | |||
Fixed income securities | 14 | 14 | |
Fair value | Non-recurring basis | |||
Assets | |||
Total assets at fair value | 5 | ||
Fair value | Contractholder funds: Derivatives embedded in life and annuity contracts | Recurring basis | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ (411) | $ (223) |
Fair Value of Assets and Liab_5
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, 2019USD ($) | Dec. 31, 2018USD ($) |
Quantitative information about the significant unobservable inputs | ||
Fair value | $ (375) | $ (184) |
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 | 0.042 | 0.022 |
Projected option cost | Weighted average | ||
Quantitative information about the significant unobservable inputs | ||
Embedded derivative liability, measurement input | 0.0253 | 0.0174 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Level 3 Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Assets | ||||
Balance at beginning of period | $ 312 | $ 469 | $ 321 | $ 467 |
Total gains (losses) included in: Net income | 4 | 4 | 17 | 5 |
Total gains (losses) included in: OCI | 1 | 1 | 4 | (3) |
Transfers into Level 3 | 0 | 13 | 17 | 19 |
Transfers out of Level 3 | (15) | (12) | (15) | (25) |
Purchases | 31 | 27 | 46 | 49 |
Sales | (8) | (11) | (59) | (16) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (2) | (29) | (8) | (34) |
Balance at end of period | 323 | 462 | 323 | 462 |
Liabilities | ||||
Balance at beginning of period | (247) | (260) | (223) | (284) |
Total gains (losses) included in: net income | (11) | 2 | (36) | 25 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | (154) | 0 | (154) | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | (1) |
Settlements | 1 | 1 | 2 | 3 |
Balance at end of period | (411) | (257) | (411) | (257) |
Fair value, assets and liabilities gain (loss) included in earnings | (7) | 6 | (19) | 30 |
Other investments: Free-standing derivatives | 1 | 1 | ||
Municipal | ||||
Assets | ||||
Balance at beginning of period | 40 | 56 | 39 | 57 |
Total gains (losses) included in: Net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 1 | 0 | 2 | (1) |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 2 | 0 | 2 |
Sales | (1) | 0 | (1) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 40 | 58 | 40 | 58 |
Corporate - public | ||||
Assets | ||||
Balance at beginning of period | 35 | 47 | 33 | 49 |
Total gains (losses) included in: Net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | (1) |
Transfers into Level 3 | 0 | 0 | 0 | 3 |
Transfers out of Level 3 | (2) | 0 | (2) | 0 |
Purchases | 0 | 0 | 3 | 0 |
Sales | (1) | 0 | (1) | (1) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (1) | (3) |
Balance at end of period | 32 | 47 | 32 | 47 |
Corporate - privately placed | ||||
Assets | ||||
Balance at beginning of period | 97 | 215 | 97 | 220 |
Total gains (losses) included in: Net income | 0 | (2) | (2) | (2) |
Total gains (losses) included in: OCI | 0 | 1 | 2 | (1) |
Transfers into Level 3 | 0 | 10 | 15 | 10 |
Transfers out of Level 3 | (1) | (10) | (1) | (23) |
Purchases | 1 | 0 | 1 | 11 |
Sales | 0 | 0 | (13) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (27) | (3) | (28) |
Balance at end of period | 96 | 187 | 96 | 187 |
ABS - CDO | ||||
Assets | ||||
Balance at beginning of period | 6 | 10 | 6 | 10 |
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 | 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 | (1) | 0 | (1) |
Balance at end of period | 6 | 9 | 6 | 9 |
ABS - consumer and other | ||||
Assets | ||||
Balance at beginning of period | 25 | 41 | 16 | 40 |
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 | 0 | 3 | 0 | 6 |
Transfers out of Level 3 | (12) | (2) | (12) | (2) |
Purchases | 22 | 10 | 34 | 13 |
Sales | (6) | (4) | (6) | (8) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (1) | (4) | (2) |
Balance at end of period | 28 | 47 | 28 | 47 |
CMBS | ||||
Assets | ||||
Balance at beginning of period | 2 | 0 | ||
Total gains (losses) included in: Net income | 0 | 0 | ||
Total gains (losses) included in: OCI | 0 | 0 | ||
Transfers into Level 3 | 0 | 2 | ||
Transfers out of Level 3 | 0 | |||
Purchases | 0 | 0 | ||
Sales | 0 | 0 | ||
Issues | 0 | 0 | ||
Settlements | 0 | 0 | ||
Balance at end of period | 2 | 2 | ||
Fixed income securities | ||||
Assets | ||||
Balance at beginning of period | 205 | 369 | 191 | 376 |
Total gains (losses) included in: Net income | 0 | (2) | (2) | (2) |
Total gains (losses) included in: OCI | 1 | 1 | 4 | (3) |
Transfers into Level 3 | 0 | 13 | 17 | 19 |
Transfers out of Level 3 | (15) | (12) | (15) | (25) |
Purchases | 23 | 12 | 38 | 26 |
Sales | (8) | (4) | (21) | (9) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (2) | (29) | (8) | (34) |
Balance at end of period | 204 | 348 | 204 | 348 |
Equity securities | ||||
Assets | ||||
Balance at beginning of period | 106 | 99 | 129 | 90 |
Total gains (losses) included in: Net income | 5 | 6 | 20 | 7 |
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 | 8 | 15 | 8 | 23 |
Sales | 0 | (7) | (38) | (7) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 119 | 113 | 119 | 113 |
Free-standing derivatives, net | ||||
Assets | ||||
Balance at beginning of period | 1 | 1 | 1 | 1 |
Total gains (losses) included in: Net income | (1) | 0 | (1) | 0 |
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 | 0 | 1 | 0 | 1 |
Contractholder funds: Derivatives embedded in life and annuity contracts | ||||
Liabilities | ||||
Balance at beginning of period | (247) | (260) | (223) | (284) |
Total gains (losses) included in: net income | (11) | 2 | (36) | 25 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | (154) | 0 | (154) | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | (1) |
Settlements | 1 | 1 | 2 | 3 |
Balance at end of period | (411) | (257) | (411) | (257) |
Realized capital gains and losses | ||||
Assets | ||||
Total gains (losses) included in: Net income | 2 | 4 | 15 | 5 |
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 2 | 6 | 4 | 7 |
Net Investment Income | ||||
Assets | ||||
Total gains (losses) included in: Net income | 2 | 2 | ||
Interest credited to contractholder funds | ||||
Assets | ||||
Total gains (losses) included in: Net income | (6) | 1 | (39) | 20 |
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (6) | 1 | (39) | 20 |
Contract benefits | ||||
Liabilities | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | $ (5) | $ 1 | $ 3 | $ 5 |
Fair Value of Assets and Liab_7
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, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | $ 4 | $ 6 | $ 6 | $ 7 |
Total recurring Level 3 liabilities | (11) | 2 | (36) | 25 |
Total | (7) | 6 | (19) | 30 |
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 | (11) | 2 | (36) | 25 |
Equity securities | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | 5 | 6 | 7 | 7 |
Free-standing derivatives, net | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total recurring Level 3 assets | (1) | 0 | (1) | 0 |
Realized capital gains and losses | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 2 | 6 | 4 | 7 |
Interest credited to contractholder funds | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (6) | 1 | (39) | 20 |
Contract benefits | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (5) | 1 | 3 | 5 |
Total | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total | $ (7) | $ 8 | $ (30) | $ 32 |
Fair Value of Assets and Liab_8
Fair Value of Assets and Liabilities - Carrying Values and Fair Value Estimates of Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Financial assets | ||||
Mortgage loans | $ 4,043 | $ 3,995 | ||
Financial liabilities | ||||
Liability for collateral | 638 | 524 | $ 511 | $ 542 |
Notes due to related parties | 140 | 140 | ||
Significant unobservable inputs (Level 3) | Carrying value | ||||
Financial assets | ||||
Mortgage loans | 4,043 | 3,995 | ||
Bank loans | 371 | 422 | ||
Agent loans | 654 | 620 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 8,784 | 9,213 | ||
Notes due to related parties | 140 | 140 | ||
Significant unobservable inputs (Level 3) | Fair value | ||||
Financial assets | ||||
Mortgage loans | 4,175 | 4,028 | ||
Bank loans | 365 | 408 | ||
Agent loans | 656 | 617 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 9,530 | 9,629 | ||
Notes due to related parties | 143 | 138 | ||
Significant other observable inputs (Level 2) | Carrying value | ||||
Financial liabilities | ||||
Liability for collateral | 638 | 525 | ||
Significant other observable inputs (Level 2) | Fair value | ||||
Financial liabilities | ||||
Liability for collateral | $ 638 | $ 525 |
Derivative Financial Instrume_3
Derivative Financial Instruments Derivative Financial Instruments - Narrative (Details) | 6 Months Ended | ||
Jun. 30, 2019USD ($)entitycontract | Dec. 31, 2018USD ($)contract | Jun. 30, 2018contract | |
Derivative [Line Items] | |||
Number of contracts | contract | 6,530 | 7,062 | |
Term of credit default swaps (in years) | 5 years | ||
Potential recoveries under credit risk derivatives | $ 0 | ||
Cash and securities pledged as collateral by counterparties | 8,000,000 | ||
Cash and securities pledged as collateral to counterparties | 0 | ||
Collateral already posted, aggregate fair value | 0 | $ 0 | |
Securities pledged in the form of margin deposits | $ 6,000,000 | ||
The number of reference entities generally included in a CDX index | entity | 125 | ||
Derivatives designated as fair value accounting hedging instruments | |||
Derivative [Line Items] | |||
Number of contracts | contract | 1 | 1 | |
Number of foreign currency derivatives held | contract | 0 | 1 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Volume and Fair Value Positions of Derivative Instruments (Details) $ in Millions | Jun. 30, 2019USD ($)contract | Dec. 31, 2018USD ($)contract | Jun. 30, 2018contract |
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | $ 18 | $ 292 | |
Total liability derivatives, Notional amount | 2,350 | 2,107 | |
Total derivatives, Notional amount | $ 2,368 | $ 2,399 | |
Total asset derivatives, Number of contracts | contract | 3,520 | 3,796 | |
Total liability derivatives, Number of contracts | contract | 3,010 | 3,266 | |
Total derivatives, Number of contracts | contract | 6,530 | 7,062 | |
Total asset derivatives, Fair value, net | $ 85 | $ 28 | |
Total liability derivatives, Fair value, net | (432) | (227) | |
Total derivatives, Fair value, net | (347) | (199) | |
Asset derivatives, Gross asset | 85 | 30 | |
Asset derivatives, Gross liability | 0 | (2) | |
Liability derivatives, Gross asset | 9 | 1 | |
Liability derivatives, Gross liability | $ (441) | (228) | |
Derivatives designated as fair value accounting hedging instruments | |||
Derivatives, Fair Value | |||
Total derivatives, Number of contracts | contract | 1 | 1 | |
Other | Derivatives designated as fair value accounting hedging instruments | Other assets | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | $ 2 | ||
Total asset derivatives, Fair value, net | 0 | ||
Asset derivatives, Gross asset | 0 | ||
Asset derivatives, Gross liability | 0 | ||
Other | Derivatives not designated as accounting hedging instruments | Other assets | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | 2 | ||
Total asset derivatives, Fair value, net | 0 | ||
Asset derivatives, Gross asset | 0 | ||
Asset 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 | 6 | ||
Total asset derivatives, Fair value, net | 0 | ||
Asset derivatives, Gross asset | 0 | ||
Asset derivatives, Gross liability | 0 | ||
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | 35 | 31 | |
Total liability derivatives, Fair value, net | 0 | 1 | |
Liability derivatives, Gross asset | 0 | 1 | |
Liability derivatives, Gross liability | 0 | 0 | |
Futures | Derivatives not designated as accounting hedging instruments | Other assets | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | $ 0 | $ 0 | |
Total asset derivatives, Number of contracts | contract | 260 | 330 | |
Total asset derivatives, Fair value, net | $ 0 | $ 0 | |
Asset derivatives, Gross asset | 0 | 0 | |
Asset derivatives, Gross liability | 0 | 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 | 3,153 | 3,440 | |
Total asset derivatives, Fair value, net | $ 84 | $ 21 | |
Asset derivatives, Gross asset | 84 | 21 | |
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 | 3,009 | 3,266 | |
Total liability derivatives, Fair value, net | $ (28) | $ (5) | |
Liability derivatives, Gross asset | 0 | 0 | |
Liability derivatives, Gross liability | (28) | (5) | |
Futures | Derivatives not designated as accounting hedging instruments | Other assets | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | $ 0 | $ 0 | |
Total asset derivatives, Number of contracts | contract | 107 | 26 | |
Total asset derivatives, Fair value, net | $ 0 | $ 0 | |
Asset derivatives, Gross asset | 0 | 0 | |
Asset derivatives, Gross liability | 0 | 0 | |
Futures | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | $ 0 | ||
Total liability derivatives, Number of contracts | contract | 1 | ||
Total liability derivatives, Fair value, net | $ 0 | ||
Liability derivatives, Gross asset | 0 | ||
Liability derivatives, Gross liability | 0 | ||
Total return swap agreements - fixed income | Derivatives not designated as accounting hedging instruments | Other investments | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | 3 | 7 | |
Total asset derivatives, Fair value, net | 0 | 0 | |
Asset derivatives, Gross asset | 0 | 0 | |
Asset derivatives, Gross liability | 0 | 0 | |
Total return swap agreements - fixed income | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | 13 | ||
Total liability derivatives, Fair value, net | 1 | ||
Liability derivatives, Gross asset | 1 | ||
Liability derivatives, Gross liability | 0 | ||
Total return swap agreements - equity index | Derivatives not designated as accounting hedging instruments | Other investments | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | 12 | 10 | |
Total asset derivatives, Fair value, net | 1 | (1) | |
Asset derivatives, Gross asset | 1 | 0 | |
Asset derivatives, Gross liability | 0 | (1) | |
Foreign currency forwards | Derivatives not designated as accounting hedging instruments | Other investments | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | 240 | ||
Total asset derivatives, Fair value, net | 8 | ||
Asset derivatives, Gross asset | 8 | ||
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 | 194 | ||
Total liability derivatives, Fair value, net | 8 | ||
Liability derivatives, Gross asset | 8 | ||
Liability derivatives, Gross liability | 0 | ||
Credit default swaps – buying protection | Derivatives not designated as accounting hedging instruments | Other investments | |||
Derivatives, Fair Value | |||
Total asset derivatives, Notional amount | 1 | 27 | |
Total asset derivatives, Fair value, net | 0 | 0 | |
Asset derivatives, Gross asset | 0 | 1 | |
Asset derivatives, Gross liability | 0 | (1) | |
Credit default swaps – buying protection | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | 32 | ||
Total liability derivatives, Fair value, net | (2) | ||
Liability derivatives, Gross asset | 0 | ||
Liability derivatives, Gross liability | (2) | ||
Guaranteed accumulation benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | 172 | 169 | |
Total liability derivatives, Fair value, net | (22) | (25) | |
Liability derivatives, Gross asset | 0 | 0 | |
Liability derivatives, Gross liability | (22) | (25) | |
Credit default swaps – selling protection | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | 5 | 1 | |
Total liability derivatives, Fair value, net | 0 | 0 | |
Liability derivatives, Gross asset | 0 | 0 | |
Liability derivatives, Gross liability | 0 | 0 | |
Guaranteed withdrawal benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | |||
Derivatives, Fair Value | |||
Total liability derivatives, Notional amount | 209 | 210 | |
Total liability derivatives, Fair value, net | (14) | (14) | |
Liability derivatives, Gross asset | 0 | 0 | |
Liability derivatives, Gross liability | (14) | (14) | |
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 | 1,690 | 1,696 | |
Total liability derivatives, Fair value, net | (375) | (184) | |
Liability derivatives, Gross asset | 0 | 0 | |
Liability derivatives, Gross liability | $ (375) | $ (184) |
Derivative Financial Instrume_5
Derivative Financial Instruments - Gross and Net Amounts Derivatives (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Asset derivatives | ||
Gross amount | $ 85 | $ 30 |
Counter- party netting | 0 | (2) |
Net amount on balance sheet | 85 | 28 |
Liability derivatives | ||
Gross amount | (441) | (228) |
Counter- party netting | 9 | 1 |
Net amount on balance sheet | (432) | (227) |
OTC derivatives | ||
Asset derivatives | ||
Gross amount | 10 | 10 |
Counter- party netting | (9) | (3) |
Cash collateral (received) pledged | 0 | (5) |
Net amount on balance sheet | 1 | 2 |
Securities collateral (received) pledged | 0 | 0 |
Net amount | 1 | 2 |
Liability derivatives | ||
Gross amount | (2) | (2) |
Counter- party netting | 9 | 3 |
Cash collateral (received) pledged | (8) | (1) |
Net amount on balance sheet | (1) | 0 |
Securities collateral (received) pledged | 0 | 0 |
Net amount | $ (1) | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments Derivative Financial Instruments - Foreign Currency Contracts in Cash Flow Hedging Relationships (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Gain (loss) recognized in OCI on derivatives during the period | $ 0 | $ 1 | $ 0 | $ 1 |
Gain reclassified from AOCI into income (realized capital gains and losses) | $ 0 | $ 3 | $ 0 | $ 3 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Impacts on Operations and AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | $ 5 | $ 20 | $ 14 | $ 37 |
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 | 4 | 7 | 8 | 4 |
Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (5) | 1 | 3 | 5 |
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 | 6 | 12 | 3 | 28 |
Equity and index contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 11 | 10 | 42 | 6 |
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 | 2 | 0 |
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 | 11 | 10 | 40 | 6 |
Embedded derivative financial instruments | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (10) | 3 | (34) | 27 |
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 | (5) | 1 | 3 | 5 |
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 | (5) | 2 | (37) | 22 |
Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 2 | 7 | 3 | 4 |
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 | 2 | 7 | 3 | 4 |
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 |
Total return swaps - fixed income | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | ||
Total return swaps - fixed income | 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 | 1 | ||
Total return swaps - fixed income | Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Total return swaps - fixed income | 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 | ||
Total return swaps - equity index | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 2 | ||
Total return swaps - equity index | 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 | ||
Total return swaps - equity index | Contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Total return swaps - equity index | 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 |
Derivative Financial Instrume_8
Derivative Financial Instruments - Derivative Netting (Details) $ in Millions | Jun. 30, 2019USD ($)party | Dec. 31, 2018USD ($)party |
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 6 | 4 |
Notional amount | $ 290 | $ 306 |
Credit exposure | 8 | 9 |
Exposure, net of collateral | $ 0 | $ 1 |
A plus | ||
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 5 | 3 |
Notional amount | $ 262 | $ 283 |
Credit exposure | 7 | 9 |
Exposure, net of collateral | $ 0 | $ 1 |
A | ||
Credit Derivatives | ||
Number of counter-parties (in Party) | party | 1 | 1 |
Notional amount | $ 28 | $ 23 |
Credit exposure | 1 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
Derivative Financial Instrume_9
Derivative Financial Instruments Derivative Financial Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross liability fair value of contracts containing credit-risk-contingent features | $ 2 | $ 2 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (2) | (2) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | 0 | 0 |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 0 | $ 0 |
Derivative Financial Instrum_10
Derivative Financial Instruments - CDS Notional Amounts by Credit Rating (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Credit Derivatives | ||
Notional amount | $ 2,368 | $ 2,399 |
Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 5 | 1 |
Fair value | 0 | 0 |
Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 5 | 1 |
Fair value | 0 | 0 |
AA | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
AA | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
A | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
A | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BBB | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BBB | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BB and lower | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 5 | 1 |
BB and lower | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | $ 5 | $ 1 |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Effects of reinsurance on revenue | ||||
Direct | $ 185 | $ 184 | $ 368 | $ 369 |
Premiums and contract charges, net of reinsurance | 340 | 348 | 687 | 701 |
Effects of reinsurance on cost and expenses | ||||
Direct | 211 | 266 | 461 | 523 |
Contract benefits, net of reinsurance | 375 | 357 | 738 | 727 |
Effects of reinsurance on interest credited to contractholder funds [Abstract] | ||||
Direct | 117 | 129 | 230 | 259 |
Interest credited to contractholder funds, net of reinsurance | 143 | 152 | 291 | 300 |
Non-affiliate | ||||
Effects of reinsurance on revenue | ||||
Assumed | 175 | 185 | 352 | 374 |
Ceded | (65) | (70) | (124) | (138) |
Effects of reinsurance on cost and expenses | ||||
Assumed | 134 | 123 | 250 | 257 |
Ceded | 10 | (58) | (16) | (101) |
Effects of reinsurance on interest credited to contractholder funds [Abstract] | ||||
Assumed | 34 | 33 | 75 | 58 |
Ceded | (5) | (7) | (8) | (11) |
Affiliate | ||||
Effects of reinsurance on revenue | ||||
Assumed | 58 | 61 | 116 | 121 |
Ceded | (13) | (12) | (25) | (25) |
Effects of reinsurance on cost and expenses | ||||
Assumed | 30 | 34 | 62 | 68 |
Ceded | (10) | (8) | (19) | (20) |
Effects of reinsurance on interest credited to contractholder funds [Abstract] | ||||
Assumed | 2 | 2 | 4 | 4 |
Ceded | $ (5) | $ (5) | $ (10) | $ (10) |
Reinsurance Reinsurance - Narra
Reinsurance Reinsurance - Narrative (Details) $ in Millions | Jun. 30, 2019USD ($) |
Reinsurance | |
Reinsurance recoverables | $ 2,480 |
Scottish Re | |
Reinsurance | |
Reinsurance recoverables | $ 64 |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Pre- tax | ||||
Other comprehensive income (loss) | $ 213 | $ (71) | $ 647 | $ (288) |
Tax | ||||
Other comprehensive income (loss) | (45) | 15 | (136) | 61 |
After- tax | ||||
Other comprehensive income (loss), after-tax | 168 | (56) | 511 | (227) |
Accumulated Net Investment Gain (Loss) | ||||
Pre- tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | 216 | (94) | 647 | (320) |
Less: reclassification adjustment of realized capital gains and losses | 1 | (17) | (6) | (21) |
Other comprehensive income (loss) | 215 | (77) | 653 | (299) |
Tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | (45) | 20 | (136) | 67 |
Less: reclassification adjustment of realized capital gains and losses | 0 | 4 | 1 | 4 |
Other comprehensive income (loss) | (45) | 16 | (137) | 63 |
After- tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | 171 | (74) | 511 | (253) |
Less: reclassification adjustment of realized capital gains and losses | 1 | (13) | (5) | (17) |
Other comprehensive income (loss), after-tax | 170 | (61) | 516 | (236) |
Accumulated Foreign Currency Adjustment | ||||
Pre- tax | ||||
Other comprehensive income (loss) | (2) | 6 | (6) | 11 |
Tax | ||||
Other comprehensive income (loss) | 0 | (1) | 1 | (2) |
After- tax | ||||
Other comprehensive income (loss), after-tax | $ (2) | $ 5 | $ (5) | $ 9 |
Uncategorized Items - allstatel
Label | Element | Value |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (238,000,000) |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 314,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |