Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Mar. 05, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'ALLSTATE LIFE INSURANCE CO | ' |
Entity Central Index Key | '0000352736 | ' |
Document Type | '10-K | ' |
Document Period End Date | 31-Dec-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Public Float | $0 | ' |
Entity Common Stock, Shares Outstanding | ' | 23,800 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'FY | ' |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenues | ' | ' | ' |
Premiums (net of reinsurance ceded of $367, $402 and $447) | $613 | $593 | $624 |
Contract charges (net of reinsurance ceded of $251, $252 and $283) | 1,054 | 1,029 | 1,008 |
Net investment income | 2,485 | 2,597 | 2,637 |
Realized capital gains and losses: | ' | ' | ' |
Total other-than-temporary impairment losses | -49 | -60 | -279 |
Portion of loss recognized in other comprehensive income | -3 | -8 | -14 |
Net other-than-temporary impairment losses recognized in earnings | -52 | -68 | -293 |
Sales and other realized capital gains and losses | 128 | 52 | 683 |
Total realized capital gains and losses | 76 | -16 | 390 |
Total revenues | 4,228 | 4,203 | 4,659 |
Costs and expenses | ' | ' | ' |
Contract benefits (net of reinsurance ceded of $331, $644 and $631) | 1,606 | 1,521 | 1,502 |
Interest credited to contractholder funds (net of reinsurance ceded of $27, $28 and $27) | 1,251 | 1,289 | 1,608 |
Amortization of deferred policy acquisition costs | 240 | 324 | 430 |
Operating costs and expenses | 434 | 437 | 394 |
Restructuring and related charges | 6 | ' | 1 |
Interest expense | 23 | 45 | 45 |
Total costs and expenses | 3,560 | 3,616 | 3,980 |
(Loss) gain on disposition of operations | -687 | 18 | 15 |
(Loss) income from operations before income tax expense | -19 | 605 | 694 |
Income tax expense | 19 | 179 | 225 |
Net (loss) income | -38 | 426 | 469 |
Other comprehensive (loss) income, after-tax | ' | ' | ' |
Change in unrealized net capital gains and losses | -707 | 821 | 275 |
Change in unrealized foreign currency translation adjustments | 2 | ' | -1 |
Other comprehensive (loss) income, after-tax | -705 | 821 | 274 |
Comprehensive (loss) income | ($743) | $1,247 | $743 |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ' | ' | ' |
Premiums, reinsurance ceded | $367 | $402 | $447 |
Contract charges, reinsurance ceded | 251 | 252 | 283 |
Contract benefits, reinsurance ceded | 331 | 644 | 631 |
Interest credited to contractholder funds, reinsurance ceded | $27 | $28 | $27 |
CONSOLIDATED_STATEMENTS_OF_FIN
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Investments | ' | ' |
Fixed income securities, at fair value (amortized cost $27,427 and $41,194) | $28,756 | $44,876 |
Mortgage loans | 4,173 | 5,943 |
Equity securities, at fair value (cost $565 and $310) | 650 | 345 |
Limited partnership interests | 2,064 | 1,924 |
Short-term, at fair value (amortized cost $590 and $875) | 590 | 875 |
Policy loans | 623 | 836 |
Other | 1,088 | 1,067 |
Total investments | 37,944 | 55,866 |
Cash | 93 | 341 |
Deferred policy acquisition costs | 1,331 | 1,834 |
Reinsurance recoverables | 2,754 | 4,570 |
Accrued investment income | 358 | 489 |
Other assets | 256 | 401 |
Separate Accounts | 5,039 | 6,610 |
Assets held for sale | 15,593 | ' |
Total assets | 63,368 | 70,111 |
Liabilities | ' | ' |
Contractholder funds | 23,604 | 38,634 |
Reserve for life-contingent contract benefits | 11,589 | 14,117 |
Unearned premiums | 6 | 20 |
Payable to affiliates, net | 100 | 111 |
Other liabilities and accrued expenses | 838 | 1,286 |
Deferred income taxes | 941 | 1,524 |
Notes due to related parties | 282 | 496 |
Separate Accounts | 5,039 | 6,610 |
Liabilities held for sale | 14,899 | ' |
Total liabilities | 57,298 | 62,798 |
Commitments and Contingent Liabilities (Notes 8 and 12) | ' | ' |
Shareholder's Equity | ' | ' |
Common stock, $227 par value, 23,800 shares authorized and outstanding | 5 | 5 |
Additional capital paid-in | 2,690 | 3,190 |
Retained income | 2,447 | 2,485 |
Unrealized net capital gains and losses: | ' | ' |
Unrealized net capital gains and losses on fixed income securities with OTTI | 31 | -5 |
Other unrealized net capital gains and losses | 997 | 2,405 |
Unrealized adjustment to DAC, DSI and insurance reserves | -101 | -766 |
Total unrealized net capital gains and losses | 927 | 1,634 |
Unrealized foreign currency translation adjustments | 1 | -1 |
Total accumulated other comprehensive income | 928 | 1,633 |
Total shareholder's equity | 6,070 | 7,313 |
Total liabilities and shareholder's equity | 63,368 | 70,111 |
Series A | ' | ' |
Shareholder's Equity | ' | ' |
Redeemable preferred stock | ' | ' |
Series B | ' | ' |
Shareholder's Equity | ' | ' |
Redeemable preferred stock | ' | ' |
CONSOLIDATED_STATEMENTS_OF_FIN1
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, except Share data, unless otherwise specified | ||
Fixed income securities, at fair value, amortized cost (in dollars) | $27,427 | $41,194 |
Equity securities, at fair value, cost (in dollars) | 565 | 310 |
Short-term, at fair value, amortized cost (in dollars) | $590 | $875 |
Common stock, par value (in dollars per share) | $227 | $227 |
Common stock, shares authorized | 23,800 | 23,800 |
Common stock, shares outstanding | 23,800 | 23,800 |
Series A | ' | ' |
Redeemable preferred stock, par value (in dollars per share) | $100 | $100 |
Redeemable preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Redeemable preferred stock, shares issued | 0 | 0 |
Series B | ' | ' |
Redeemable preferred stock, par value (in dollars per share) | $100 | $100 |
Redeemable preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Redeemable preferred stock, shares issued | 0 | 0 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (USD $) | Total | Common stock | Additional capital paid-in | Retained income | Accumulated other comprehensive income |
In Millions, unless otherwise specified | |||||
Balance at Dec. 31, 2010 | ' | ' | $3,189 | $1,587 | $538 |
Increase (decrease) in equity | ' | ' | ' | ' | ' |
Gain on purchase of investments from affiliate | ' | ' | 1 | ' | ' |
Net (loss) income | 469 | ' | ' | 469 | ' |
Forgiveness of payable due to parent | ' | ' | ' | 4 | ' |
Change in unrealized net capital gains and losses | 275 | ' | ' | ' | 275 |
Change in unrealized foreign currency translation adjustments | -1 | ' | ' | ' | -1 |
Balance at Dec. 31, 2011 | 6,067 | 5 | 3,190 | 2,060 | 812 |
Increase (decrease) in equity | ' | ' | ' | ' | ' |
Net (loss) income | 426 | ' | ' | 426 | ' |
Loss on reinsurance agreement with an affiliate | ' | ' | ' | -1 | ' |
Change in unrealized net capital gains and losses | 821 | ' | ' | ' | 821 |
Balance at Dec. 31, 2012 | 7,313 | 5 | 3,190 | 2,485 | 1,633 |
Increase (decrease) in equity | ' | ' | ' | ' | ' |
Return of capital | ' | ' | -500 | ' | ' |
Net (loss) income | -38 | ' | ' | -38 | ' |
Change in unrealized net capital gains and losses | -707 | ' | ' | ' | -707 |
Change in unrealized foreign currency translation adjustments | 2 | ' | ' | ' | 2 |
Balance at Dec. 31, 2013 | $6,070 | $5 | $2,690 | $2,447 | $928 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities | ' | ' | ' |
Net (loss) income | ($38) | $426 | $469 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ' | ' | ' |
Amortization and other non-cash items | -73 | -25 | -61 |
Realized capital gains and losses | -76 | 16 | -390 |
Loss (gain) on disposition of operations | 687 | -18 | -15 |
Interest credited to contractholder funds | 1,251 | 1,289 | 1,608 |
Changes in: | ' | ' | ' |
Policy benefits and other insurance reserves | -634 | -656 | -568 |
Unearned premiums | -2 | -3 | -4 |
Deferred policy acquisition costs | -14 | 62 | 189 |
Reinsurance recoverables, net | -54 | -157 | -259 |
Income taxes | 33 | 248 | 164 |
Other operating assets and liabilities | -65 | -35 | -46 |
Net cash provided by operating activities | 1,015 | 1,147 | 1,087 |
Proceeds from sales | ' | ' | ' |
Fixed income securities | 4,046 | 6,674 | 11,490 |
Equity securities | 265 | 22 | 70 |
Limited partnership interests | 387 | 201 | 175 |
Mortgage loans | 24 | 15 | 97 |
Other investments | 38 | 111 | 153 |
Investment collections | ' | ' | ' |
Fixed income securities | 4,168 | 3,077 | 3,072 |
Mortgage loans | 926 | 1,022 | 692 |
Other investments | 88 | 84 | 93 |
Investment purchases | ' | ' | ' |
Fixed income securities | -4,348 | -7,458 | -10,002 |
Equity securities | -453 | -201 | -14 |
Limited partnership interests | -597 | -507 | -397 |
Mortgage loans | -522 | -449 | -820 |
Other investments | -81 | -159 | -340 |
Change in short-term investments, net | -108 | 16 | 463 |
Change in policy loans and other investments, net | 76 | 56 | -280 |
Disposition of operations | ' | 13 | ' |
Net cash provided by investing activities | 3,909 | 2,517 | 4,452 |
Cash flows from financing activities | ' | ' | ' |
Contractholder fund deposits | 2,062 | 2,061 | 1,871 |
Contractholder fund withdrawals | -6,520 | -5,490 | -7,218 |
Return of capital | -500 | ' | ' |
Repayment of notes due to related parties | -214 | -204 | ' |
Net cash used in financing activities | -5,172 | -3,633 | -5,347 |
Net (decrease) increase in cash | -248 | 31 | 192 |
Cash at beginning of year | 341 | 310 | 118 |
Cash at end of year | $93 | $341 | $310 |
General
General | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
General | ' | ||||||
General | ' | ||||||
1. General | |||||||
Basis of presentation | |||||||
The accompanying consolidated financial statements include the accounts of Allstate Life Insurance Company (“ALIC”) and its wholly owned subsidiaries (collectively referred to as the “Company”). ALIC is wholly owned by Allstate Insurance Company (“AIC”), which is wholly owned by Allstate Insurance Holdings, LLC, a wholly owned subsidiary of The Allstate Corporation (the “Corporation”). These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated. | |||||||
To conform to the current year presentation, certain amounts in the prior year notes to consolidated financial statements have been reclassified. | |||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. | |||||||
Nature of operations | |||||||
The Company sells life insurance and voluntary accident and health insurance products. The principal products are interest-sensitive, traditional and variable life insurance. Effective January 1, 2014, the Company no longer offers fixed annuities such as deferred and immediate annuities. Institutional products consisting of funding agreements sold to unaffiliated trusts that use them to back medium-term notes were offered prior to 2009. The following table summarizes premiums and contract charges by product. | |||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Premiums | |||||||
Traditional life insurance | $ | 471 | $ | 449 | $ | 420 | |
Immediate annuities with life contingencies | 37 | 45 | 106 | ||||
Accident and health insurance | 105 | 99 | 98 | ||||
Total premiums | 613 | 593 | 624 | ||||
Contract charges | |||||||
Interest-sensitive life insurance | 1,036 | 1,011 | 975 | ||||
Fixed annuities | 18 | 18 | 33 | ||||
Total contract charges | 1,054 | 1,029 | 1,008 | ||||
Total premiums and contract charges | $ | 1,667 | $ | 1,622 | $ | 1,632 | |
The Company, through several subsidiaries, is authorized to sell life insurance and retirement products in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam. For 2013, the top geographic locations for statutory premiums and annuity considerations were California, Texas, Florida and New York. No other jurisdiction accounted for more than 5% of statutory premiums and annuity considerations. The Company distributes its products through Allstate exclusive agencies and exclusive financial specialists, and workplace enrolling independent agents in New York. | |||||||
The Company has exposure to market risk as a result of its investment portfolio. Market risk is the risk that the Company will incur realized and unrealized net capital losses due to adverse changes in interest rates, credit spreads, equity prices or currency exchange rates. The Company’s primary market risk exposures are to changes in interest rates, credit spreads and equity prices. Interest rate risk is the risk that the Company will incur a loss due to adverse changes in interest rates relative to the interest rate characteristics of its interest bearing assets and liabilities. This risk arises from many of the Company’s primary activities, as it invests substantial funds in interest-sensitive assets and issues interest-sensitive liabilities. Interest rate risk includes risks related to changes in U.S. Treasury yields and other key risk-free reference yields. Credit spread risk is the risk that the Company will incur a loss due to adverse changes in credit spreads. This risk arises from many of the Company’s primary activities, as the Company invests substantial funds in spread-sensitive fixed income assets. Equity price risk is the risk that the Company will incur losses due to adverse changes in the general levels of the equity markets. | |||||||
The Company monitors economic and regulatory developments that have the potential to impact its business. Federal and state laws and regulations affect the taxation of insurance companies and life insurance and annuity products. Congress and various state legislatures from time to time consider legislation that would reduce or eliminate the favorable policyholder tax treatment currently applicable to life insurance and annuities. Congress and various state legislatures also consider proposals to reduce the taxation of certain products or investments that may compete with life insurance or annuities. Legislation that increases the taxation on insurance products or reduces the taxation on competing products could lessen the advantage or create a disadvantage for certain of the Company’s products making them less competitive. Such proposals, if adopted, could have an adverse effect on the Company’s financial position or ability to sell such products and could result in the surrender of some existing contracts and policies. In addition, changes in the federal estate tax laws could negatively affect the demand for the types of life insurance used in estate planning. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Summary of Significant Accounting Policies | ' |
Summary of Significant Accounting Policies | ' |
2. Summary of Significant Accounting Policies | |
Investments | |
Fixed income securities include bonds, asset-backed securities (“ABS”), residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and redeemable preferred stocks. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available for sale and are carried at fair value. The difference between amortized cost and fair value, net of deferred income taxes, certain deferred policy acquisition costs (“DAC”), certain deferred sales inducement costs (“DSI”) and certain reserves for life-contingent contract benefits, is reflected as a component of accumulated other comprehensive income. Cash received from calls, principal payments and make-whole payments is reflected as a component of proceeds from sales and cash received from maturities and pay-downs, including prepayments, is reflected as a component of investment collections within the Consolidated Statements of Cash Flows. | |
Mortgage loans are carried at unpaid principal balances, net of unamortized premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. | |
Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Equity securities are designated as available for sale and are carried at fair value. The difference between cost and fair value, net of deferred income taxes, is reflected as a component of accumulated other comprehensive income. | |
Investments in limited partnership interests, including interests in private equity/debt funds, real estate funds, hedge funds and tax credit funds, where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies are accounted for in accordance with the cost method of accounting; all other investments in limited partnership interests are accounted for in accordance with the equity method of accounting (“EMA”). | |
Short-term investments, including money market funds, commercial paper and other short-term investments, are carried at fair value. Policy loans are carried at unpaid principal balances. Other investments primarily consist of agent loans, bank loans, notes due from related party 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. Notes due from related party are carried at outstanding principal balances. Derivatives are carried at fair value. | |
Investment income primarily consists of interest, dividends, income from certain derivative transactions, income from cost method limited partnership interests, and, in 2013 and 2012, income from EMA limited partnership interests. Interest is recognized on an accrual basis using the effective yield method and dividends are recorded at the ex-dividend date. Interest income for ABS, RMBS and CMBS is determined considering estimated pay-downs, including prepayments, obtained from third party data sources and internal estimates. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For ABS, RMBS and CMBS of high credit quality with fixed interest rates, the effective yield is recalculated on a retrospective basis. For all others, the effective yield is recalculated on a prospective basis. Accrual of income is suspended for other-than-temporarily impaired fixed income securities when the timing and amount of cash flows expected to be received is not reasonably estimable. Accrual of income is suspended for mortgage loans, bank loans and agent loans that are in default or when full and timely collection of principal and interest payments is not probable. Cash receipts on investments on nonaccrual status are generally recorded as a reduction of carrying value. Income from cost method limited partnership interests is recognized upon receipt of amounts distributed by the partnerships. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ net income, including unrealized gains and losses, and is recognized on a delay due to the availability of the related financial statements. Income recognition on private equity/debt funds, real estate funds and tax credit funds is generally on a three month delay and income recognition on other funds is generally on a one month delay. | |
Realized capital gains and losses include gains and losses on investment sales, write-downs in value due to other-than-temporary declines in fair value, adjustments to valuation allowances on mortgage loans and agent loans, periodic changes in fair value and settlements of certain derivatives including hedge ineffectiveness, and, in 2011, income from EMA limited partnership interests. Realized capital gains and losses on investment sales, including principal payments, are determined on a specific identification basis. | |
Derivative and embedded derivative financial instruments | |
Derivative financial instruments include interest rate swaps, credit default swaps, futures (interest rate and equity), options (including swaptions), interest rate caps, warrants, foreign currency swaps, foreign currency forwards and certain investment risk transfer reinsurance agreements. Derivatives required to be separated from the host instrument and accounted for as derivative financial instruments (“subject to bifurcation”) are embedded in certain fixed income securities, equity-indexed life and annuity contracts, reinsured variable annuity contracts and certain funding agreements. | |
All derivatives are accounted for on a fair value basis and reported as other investments, other assets, other liabilities and accrued expenses or contractholder funds. Embedded derivative instruments subject to bifurcation are also accounted for on a fair value basis and are reported together with the host contract. The change in fair value of derivatives embedded in certain fixed income securities and subject to bifurcation is reported in realized capital gains and losses. The change in fair value of derivatives embedded in life and annuity product contracts and subject to bifurcation is reported in contract benefits or interest credited to contractholder funds. Cash flows from embedded derivatives subject to bifurcation and derivatives receiving hedge accounting are reported consistently with the host contracts and hedged risks, respectively, within the Consolidated Statements of Cash Flows. Cash flows from other derivatives are reported in cash flows from investing activities within the Consolidated Statements of Cash Flows. | |
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 hedged item may be either all or a specific portion of a recognized asset, liability or an unrecognized firm commitment attributable to a particular risk for fair value hedges. At the inception of the hedge, the Company formally documents the hedging relationship and risk management objective and strategy. The documentation identifies the hedging instrument, the hedged item, the nature of the risk being hedged and the methodology used to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk. For a cash flow hedge, this documentation includes the exposure to changes in the variability in cash flows attributable to the hedged risk. The Company does not exclude any component of the change in fair value of the hedging instrument from the effectiveness assessment. At each reporting date, the Company confirms that the hedging instrument continues to be highly effective in offsetting the hedged risk. Ineffectiveness in fair value hedges and cash flow hedges, if any, is reported in realized capital gains and losses. | |
Fair value hedges The change in fair value of hedging instruments used in fair value hedges of investment assets or a portion thereof is reported in net investment income, together with the change in fair value of the hedged items. The change in fair value of hedging instruments used in fair value hedges of contractholder funds liabilities or a portion thereof is reported in interest credited to contractholder funds, together with the change in fair value of the hedged items. Accrued periodic settlements on swaps are reported together with the changes in fair value of the swaps in net investment income or interest credited to contractholder funds. The amortized cost for fixed income securities, the carrying value for mortgage loans or the carrying value of the hedged liability is adjusted for the change in fair value of the hedged risk. | |
Cash flow hedges For hedging instruments used in cash flow hedges, the changes in fair value of the derivatives representing the effective portion of the hedge are reported in accumulated other comprehensive income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged or forecasted transaction affects income. Accrued periodic settlements on derivatives used in cash flow hedges are reported in net investment income. The amount reported in accumulated other comprehensive income for a hedged transaction is limited to the lesser of the cumulative gain or loss on the derivative less the amount reclassified to income, or the cumulative gain or loss on the derivative needed to offset the cumulative change in the expected future cash flows on the hedged transaction from inception of the hedge less the derivative gain or loss previously reclassified from accumulated other comprehensive income to income. If the Company expects at any time that the loss reported in accumulated other comprehensive income would lead to a net loss on the combination of the hedging instrument and the hedged transaction which may not be recoverable, a loss is recognized immediately in realized capital gains and losses. If an impairment loss is recognized on an asset or an additional obligation is incurred on a liability involved in a hedge transaction, any offsetting gain in accumulated other comprehensive income is reclassified and reported together with the impairment loss or recognition of the obligation. | |
Termination of hedge accounting If, subsequent to entering into a hedge transaction, the derivative becomes ineffective (including if the hedged item is sold or otherwise extinguished, the occurrence of a hedged forecasted transaction is no longer probable or the hedged asset becomes other-than-temporarily impaired), the Company may terminate the derivative position. The Company may also terminate derivative instruments or redesignate them as non-hedge as a result of other events or circumstances. If the derivative instrument is not terminated when a fair value hedge is no longer effective, the future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a fair value hedge is no longer effective, is redesignated as non-hedge or when the derivative has been terminated, the fair value gain or loss on the hedged asset, liability or portion thereof which has already been recognized in income while the hedge was in place and used to adjust the amortized cost for fixed income securities, the carrying value for mortgage loans or the carrying value of the hedged liability, is amortized over the remaining life of the hedged asset, liability or portion thereof, and reflected in net investment income or interest credited to contractholder funds beginning in the period that hedge accounting is no longer applied. If the hedged item in a fair value hedge is an asset that has become other-than-temporarily impaired, the adjustment made to the amortized cost for fixed income securities or the carrying value for mortgage loans is subject to the accounting policies applied to other-than-temporarily impaired assets. | |
When a derivative instrument used in a cash flow hedge of an existing asset or liability is no longer effective or is terminated, the gain or loss recognized on the derivative is reclassified from accumulated other comprehensive income to income as the hedged risk impacts income. If the derivative instrument is not terminated when a cash flow hedge is no longer effective, the future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a derivative instrument used in a cash flow hedge of a forecasted transaction is terminated because it is probable the forecasted transaction will not occur, the gain or loss recognized on the derivative is immediately reclassified from accumulated other comprehensive income to realized capital gains and losses in the period that hedge accounting is no longer applied. | |
Non-hedge derivative financial instruments For derivatives for which hedge accounting is not applied, the income statement effects, including fair value gains and losses and accrued periodic settlements, are reported either in realized capital gains and losses or in a single line item together with the results of the associated asset or liability for which risks are being managed. | |
Securities loaned | |
The Company’s business activities include securities lending transactions, which are used primarily to generate net investment income. The proceeds received in conjunction with securities lending transactions are reinvested in short-term investments. These transactions are short-term in nature, usually 30 days or less. | |
The Company receives cash collateral for securities loaned in an amount generally equal to 102% of the fair value of securities and records the related obligations to return the collateral in other liabilities and accrued expenses. The carrying value of these obligations approximates fair value because of their relatively short-term nature. The Company monitors the market value of securities loaned on a daily basis and obtains additional collateral as necessary under the terms of the agreements to mitigate counterparty credit risk. The Company maintains the right and ability to repossess the securities loaned on short notice. | |
Recognition of premium revenues and contract charges, and related benefits and interest credited | |
Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Voluntary accident and health insurance products are expected to remain in force for an extended period. Premiums from these products are recognized as revenue when due from policyholders. Benefits are reflected in contract benefits and recognized in relation to premiums, so that profits are recognized over the life of the policy. | |
Immediate annuities with life contingencies, including certain structured settlement annuities, provide insurance protection over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits and expenses are recognized in relation to premiums. Profits from these policies come from investment income, which is recognized over the life of the contract. | |
Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and contract charges assessed against the contractholder account balance. Premiums from these contracts are reported as contractholder fund deposits. Contract charges consist of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the contract prior to contractually specified dates. These contract charges are recognized as revenue when assessed against the contractholder account balance. Contract benefits include life-contingent benefit payments in excess of the contractholder account balance. | |
Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, and funding agreements (primarily backing medium-term notes) are considered investment contracts. Consideration received for such contracts is reported as contractholder fund deposits. Contract charges for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the contractholder account balance. | |
Interest credited to contractholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities and indexed funding agreements are generally based on a specified interest rate index or an equity index, such as the Standard & Poor’s (“S&P”) 500 Index. Interest credited also includes amortization of DSI expenses. DSI is amortized into interest credited using the same method used to amortize DAC. | |
Contract charges for variable life and variable annuity products consist of fees assessed against the contractholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Contract benefits incurred for variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits. Substantially all of the Company’s variable annuity business is ceded through reinsurance agreements and the contract charges and contract benefits related thereto are reported net of reinsurance ceded. | |
Deferred policy acquisition and sales inducement costs | |
Costs that are related directly to the successful acquisition of new or renewal life insurance and investment contracts are deferred and recorded as DAC. These costs are principally agents’ and brokers’ remuneration and certain underwriting expenses. DSI costs, which are deferred and recorded as other assets, relate to sales inducements offered on sales to new customers, principally on annuity and interest-sensitive life contracts. These sales inducements are primarily in the form of additional credits to the customer’s account balance or enhancements to interest credited for a specified period which are in excess of the rates currently being credited to similar contracts without sales inducements. All other acquisition costs are expensed as incurred and included in operating costs and expenses. Amortization of DAC is included in amortization of deferred policy acquisition costs and is described in more detail below. DSI is amortized into income using the same methodology and assumptions as DAC and is included in interest credited to contractholder funds. DAC and DSI are periodically reviewed for recoverability and adjusted if necessary. | |
For traditional life insurance, DAC is amortized over the premium paying period of the related policies in proportion to the estimated revenues on such business. Assumptions used in the amortization of DAC and reserve calculations are established at the time the policy is issued and are generally not revised during the life of the policy. Any deviations from projected business in force resulting from actual policy terminations differing from expected levels and any estimated premium deficiencies may result in a change to the rate of amortization in the period such events occur. Generally, the amortization periods for these policies approximates the estimated lives of the policies. | |
For interest-sensitive life, fixed annuities and other investment contracts, DAC and DSI are amortized in proportion to the incidence of the total present value of gross profits, which includes both actual historical gross profits (“AGP”) and estimated future gross profits (“EGP”) expected to be earned over the estimated lives of the contracts. The amortization is net of interest on the prior period DAC balance using rates established at the inception of the contracts. Actual amortization periods generally range from 15-30 years; however, incorporating estimates of the rate of customer surrenders, partial withdrawals and deaths generally results in the majority of the DAC being amortized during the surrender charge period, which is typically 10-20 years for interest-sensitive life and 5-10 years for fixed annuities. The cumulative DAC and DSI amortization is reestimated and adjusted by a cumulative charge or credit to income when there is a difference between the incidence of actual versus expected gross profits in a reporting period or when there is a change in total EGP. When DAC or DSI amortization or a component of gross profits for a quarterly period is potentially negative (which would result in an increase of the DAC or DSI balance) as a result of negative AGP, the specific facts and circumstances surrounding the potential negative amortization are considered to determine whether it is appropriate for recognition in the consolidated financial statements. Negative amortization is only recorded when the increased DAC or DSI balance is determined to be recoverable based on facts and circumstances. Recapitalization of DAC and DSI is limited to the originally deferred costs plus interest. | |
AGP and EGP primarily consist of the following components: contract charges for the cost of insurance less mortality costs and other benefits; investment income and realized capital gains and losses less interest credited; and surrender and other contract charges less maintenance expenses. The principal assumptions for determining the amount of EGP are persistency, mortality, expenses, investment returns, including capital gains and losses on assets supporting contract liabilities, interest crediting rates to contractholders, and the effects of any hedges. For products whose supporting investments are exposed to capital losses in excess of the Company’s expectations which may cause periodic AGP to become temporarily negative, EGP and AGP utilized in DAC and DSI amortization may be modified to exclude the excess capital losses. | |
The Company performs quarterly reviews of DAC and DSI recoverability for interest-sensitive life, fixed annuities and other investment contracts in the aggregate using current assumptions. If a change in the amount of EGP is significant, it could result in the unamortized DAC or DSI not being recoverable, resulting in a charge which is included as a component of amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. | |
The DAC and DSI balances presented include adjustments to reflect the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized capital gains or losses in the respective product investment portfolios were actually realized. The adjustments are recorded net of tax in accumulated other comprehensive income. DAC, DSI and deferred income taxes determined on unrealized capital gains and losses and reported in accumulated other comprehensive income recognize the impact on shareholder’s equity consistently with the amounts that would be recognized in the income statement on realized capital gains and losses. | |
Customers of the Company may exchange one insurance policy or investment contract for another offered by the Company, or make modifications to an existing investment or life contract issued by the Company. These transactions are identified as internal replacements for accounting purposes. Internal replacement transactions determined to result in replacement contracts that are substantially unchanged from the replaced contracts are accounted for as continuations of the replaced contracts. Unamortized DAC and DSI related to the replaced contracts continue to be deferred and amortized in connection with the replacement contracts. For interest-sensitive life and investment contracts, the EGP of the replacement contracts are treated as a revision to the EGP of the replaced contracts in the determination of amortization of DAC and DSI. For traditional life insurance policies, any changes to unamortized DAC that result from replacement contracts are treated as prospective revisions. Any costs associated with the issuance of replacement contracts are characterized as maintenance costs and expensed as incurred. Internal replacement transactions determined to result in a substantial change to the replaced contracts are accounted for as an extinguishment of the replaced contracts, and any unamortized DAC and DSI related to the replaced contracts are eliminated with a corresponding charge to amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. | |
The costs assigned to the right to receive future cash flows from certain business purchased from other insurers are also classified as DAC in the Consolidated Statements of Financial Position. The costs capitalized represent the present value of future profits expected to be earned over the lives of the contracts acquired. These costs are amortized as profits emerge over the lives of the acquired business and are periodically evaluated for recoverability. The present value of future profits was $8 million and $10 million as of December 31, 2013 and 2012, respectively. Amortization expense of the present value of future profits was $2 million, $3 million and $2 million in 2013, 2012 and 2011, respectively. | |
Reinsurance | |
In the normal course of business, the Company seeks to limit aggregate and single exposure to losses on large risks by purchasing reinsurance. The Company has also used reinsurance to effect the acquisition or disposition of certain blocks of business. The amounts reported as reinsurance recoverables include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities and contractholder funds that have not yet been paid. Reinsurance recoverables on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverables. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers and establishes allowances for uncollectible reinsurance as appropriate. | |
Goodwill | |
Goodwill represents the excess of amounts paid for acquiring businesses over the fair value of the net assets acquired. The goodwill balance was $5 million as of both December 31, 2013 and 2012. Goodwill is not amortized but is tested for impairment at least annually. The Company performs its annual goodwill impairment testing during the fourth quarter of each year based upon data as of the close of the third quarter. The Company also reviews goodwill for impairment whenever events or changes in circumstances, such as deteriorating or adverse market conditions, indicate that it is more likely than not that the carrying amount of goodwill may exceed its implied fair value. Goodwill impairment evaluations indicated no impairment as of December 31, 2013 or 2012. | |
Income taxes | |
The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are unrealized capital gains and losses, DAC, insurance reserves and differences in tax bases of invested assets. A deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. | |
Reserve for life-contingent contract benefits | |
The reserve for life-contingent contract benefits payable under insurance policies, including traditional life insurance, life-contingent immediate annuities and voluntary accident and health insurance products, is computed on the basis of long-term actuarial assumptions of future investment yields, mortality, morbidity, policy terminations and expenses. These assumptions, which for traditional life insurance are applied using the net level premium method, include provisions for adverse deviation and generally vary by characteristics such as type of coverage, year of issue and policy duration. To the extent that unrealized gains on fixed income securities would result in a premium deficiency if those gains were realized, the related increase in reserves for certain immediate annuities with life contingencies is recorded net of tax as a reduction of unrealized net capital gains included in accumulated other comprehensive income. | |
Contractholder funds | |
Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance, fixed annuities and funding agreements. Contractholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals, maturities and contract charges for mortality or administrative expenses. Contractholder funds also include reserves for secondary guarantees on interest-sensitive life insurance and certain fixed annuity contracts and reserves for certain guarantees on reinsured variable annuity contracts. | |
Held for sale classification | |
Business is classified as held for sale when management has approved or received approval to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other specified criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized. Assets and liabilities related to a business classified as held for sale are segregated in the Consolidated Statement of Position in the period in which the business is classified as held for sale. | |
Separate accounts | |
Separate accounts assets are carried at fair value. The assets of the separate accounts are legally segregated and available only to settle separate account contract obligations. Separate accounts liabilities represent the contractholders’ claims to the related assets and are carried at an amount equal to the separate accounts assets. Investment income and realized capital gains and losses of the separate accounts accrue directly to the contractholders and therefore are not included in the Company’s Consolidated Statements of Operations and Comprehensive Income. Deposits to and surrenders and withdrawals from the separate accounts are reflected in separate accounts liabilities and are not included in consolidated cash flows. | |
Absent any contract provision wherein the Company provides a guarantee, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. Substantially all of the Company’s variable annuity business was reinsured beginning in 2006. | |
Off-balance sheet financial instruments | |
Commitments to invest, commitments to purchase private placement securities, commitments to extend loans, financial guarantees and credit guarantees have off-balance sheet risk because their contractual amounts are not recorded in the Company’s Consolidated Statements of Financial Position (see Note 8 and Note 12). | |
Adopted accounting standards | |
Disclosures about Offsetting Assets and Liabilities | |
In December 2011 and January 2013, the Financial Accounting Standards Board (“FASB”) issued guidance requiring expanded disclosures, including both gross and net information, for derivatives, repurchase and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in the reporting entity’s financial statements or those that are subject to an enforceable master netting arrangement or similar agreement. The Company adopted the new guidance in the first quarter of 2013. The new guidance affects disclosures only and therefore had no impact on the Company’s results of operations or financial position. | |
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income | |
In February 2013, the FASB issued guidance requiring expanded disclosures about the amounts reclassified out of accumulated other comprehensive income by component. The guidance requires the presentation of significant amounts reclassified out of accumulated other comprehensive income by income statement line item but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, cross-reference to other disclosures that provide additional detail about those amounts is required. The Company adopted the new guidance in the first quarter of 2013. The new guidance affects disclosures only and therefore had no impact on the Company’s results of operations or financial position. | |
Pending accounting standard | |
Accounting for Investments in Qualified Affordable Housing Projects | |
In January 2014, the FASB issued guidance which allows entities that invest in certain qualified affordable housing projects through limited liability entities the option to account for these investments using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense or benefit. The guidance is effective for reporting periods beginning after December 15, 2014 and is to be applied retrospectively. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations and financial position. |
Held_for_Sale_Transaction
Held for Sale Transaction | 12 Months Ended | ||
Dec. 31, 2013 | |||
Held for Sale Transaction | ' | ||
Held for Sale Transaction | ' | ||
3. Held for Sale Transaction | |||
On July 17, 2013, the Company entered into a definitive agreement with Resolution Life Holdings, Inc. to sell Lincoln Benefit Life Company (“LBL”), LBL’s life insurance business generated through independent master brokerage agencies, and all of LBL’s deferred fixed annuity and long-term care insurance business for $600 million subject to certain adjustments as of the closing date. The transaction is subject to regulatory approvals and other customary closing conditions. The Company expects the closing to occur in April 2014. The estimated loss on disposition of $521 million, after-tax, was recorded in 2013, excluding any impact of unrealized net capital gains and losses. This transaction met the criteria for held for sale accounting. As a result, the related assets and liabilities are included as single line items in the asset and liability sections of the Consolidated Statement of Financial Position as of December 31, 2013. The following table summarizes the assets and liabilities held for sale as of December 31, 2013. | |||
($ in millions) | |||
Assets | |||
Investments | |||
Fixed income securities | $ | 10,167 | |
Mortgage loans | 1,367 | ||
Short-term investments | 160 | ||
Policy loans | 198 | ||
Other investments | 91 | ||
Total investments | 11,983 | ||
Deferred policy acquisition costs | 743 | ||
Reinsurance recoverables, net | 1,660 | ||
Accrued investment income | 109 | ||
Other assets | 79 | ||
Separate Accounts | 1,701 | ||
Assets held for sale | 16,275 | ||
Less: Loss accrual | -682 | ||
Total assets held for sale | $ | 15,593 | |
Liabilities | |||
Reserve for life-contingent contract benefits | $ | 1,894 | |
Contractholder funds | 10,945 | ||
Unearned premiums | 12 | ||
Deferred income taxes | 151 | ||
Other liabilities and accrued expenses | 196 | ||
Separate Accounts | 1,701 | ||
Total liabilities held for sale | $ | 14,899 | |
Included in shareholder’s equity is $85 million of accumulated other comprehensive income related to assets held for sale. |
Supplemental_Cash_Flow_Informa
Supplemental Cash Flow Information | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Supplemental Cash Flow Information | ' | ||||||
Supplemental Cash Flow Information | ' | ||||||
4. Supplemental Cash Flow Information | |||||||
Non-cash modifications of certain mortgage loans, fixed income securities, limited partnership interests and other investments, as well as mergers completed with equity securities, totaled $306 million, $231 million and $486 million in 2013, 2012 and 2011, respectively. | |||||||
Liabilities for collateral received in conjunction with the Company’s securities lending program were $322 million, $543 million and $220 million as of December 31, 2013, 2012 and 2011, respectively, and are reported in other liabilities and accrued expenses. Obligations to return cash collateral for over-the-counter (“OTC”) and cleared derivatives were $6 million, $18 million and $43 million as of December 31, 2013, 2012 and 2011, respectively, and are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which for the years ended December 31 are as follows: | |||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Net change in proceeds managed | |||||||
Net change in short-term investments | $ | 235 | $ | -298 | $ | 202 | |
Operating cash flow provided (used) | 235 | -298 | 202 | ||||
Net change in cash | -2 | -- | -- | ||||
Net change in proceeds managed | $ | 233 | $ | -298 | $ | 202 | |
Net change in liabilities | |||||||
Liabilities for collateral, beginning of year | $ | -561 | $ | -263 | $ | -465 | |
Liabilities for collateral, end of year | -328 | -561 | -263 | ||||
Operating cash flow (used) provided | $ | -233 | $ | 298 | $ | -202 | |
In 2011, a payable associated with the pension benefit obligations due to AIC totaling $4 million was forgiven. The forgiveness of the payable reflects a non-cash financing activity. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Related Party Transactions | ' | |||||
Related Party Transactions | ' | |||||
5. Related Party Transactions | ||||||
Business operations | ||||||
The Company uses services performed by its affiliates, AIC and Allstate Investments LLC, and business facilities owned or leased and operated by AIC in conducting its business activities. In addition, the Company shares the services of employees with AIC. The Company reimburses its affiliates for the operating expenses incurred on behalf of the Company. The Company is charged for the cost of these operating expenses based on the level of services provided. Operating expenses, including compensation, retirement and other benefit programs (see Note 16), allocated to the Company were $456 million, $451 million and $399 million in 2013, 2012 and 2011, respectively. A portion of these expenses relate to the acquisition of business, which are deferred and amortized into income as described in Note 2. | ||||||
Structured settlement annuities | ||||||
The Company issued $7 million, $35 million and $56 million of structured settlement annuities, a type of immediate annuity, in 2013, 2012 and 2011, respectively, at prices determined using interest rates in effect at the time of purchase, to fund structured settlements in matters involving AIC. Of these amounts, $4 million, $3 million and $11 million relate to structured settlement annuities with life contingencies and are included in premium revenue for 2013, 2012 and 2011, respectively. Effective March 22, 2013, the Company no longer offers structured settlement annuities. | ||||||
In most cases, these annuities were issued under a “qualified assignment” whereby Allstate Assignment Corporation (“AAC”) and prior to July 1, 2001 Allstate Settlement Corporation (“ASC”), both wholly owned subsidiaries of ALIC, purchased annuities from ALIC and assumed AIC’s obligation to make future payments. | ||||||
AIC issued surety bonds to guarantee the payment of structured settlement benefits assumed by ASC (from both AIC and non-related parties) and funded by certain annuity contracts issued by the Company through June 30, 2001. ASC entered into a General Indemnity Agreement pursuant to which it indemnified AIC for any liabilities associated with the surety bonds and gave AIC certain collateral security rights with respect to the annuities and certain other rights in the event of any defaults covered by the surety bonds. For contracts written on or after July 1, 2001, AIC no longer issues surety bonds to guarantee the payment of structured settlement benefits. Alternatively, ALIC guarantees the payment of structured settlement benefits on all contracts issued on or after July 1, 2001. Reserves recorded by the Company for annuities that are guaranteed by the surety bonds of AIC were $4.72 billion and $4.77 billion as of December 31, 2013 and 2012, respectively. | ||||||
Broker-Dealer agreement | ||||||
The Company receives distribution services from Allstate Financial Services, LLC, an affiliated broker-dealer company, for certain annuity and variable life insurance contracts sold by Allstate exclusive agencies. For these services, the Company incurred commission and other distribution expenses of $13 million, $11 million and $15 million in 2013, 2012 and 2011, respectively. | ||||||
Reinsurance | ||||||
The Company has coinsurance reinsurance agreements with its unconsolidated affiliate American Heritage Life Insurance Company (“AHL”) whereby the Company assumes certain interest-sensitive life insurance, fixed annuity contracts and accident and health insurance policies. The amounts assumed are disclosed in Note 10. | ||||||
In September 2012, Lincoln Benefit Life Company, a consolidated subsidiary of ALIC, entered into a coinsurance reinsurance agreement with Lincoln Benefit Reinsurance Company (“LB Re”), an unconsolidated affiliate of the Company, to cede certain interest-sensitive life insurance policies to LB Re. In connection with the agreement, the Company recorded reinsurance recoverables of $2 million and paid $3 million in cash. The $1 million loss on the transaction was recorded as a decrease to retained income since the transaction was between affiliates under common control. | ||||||
ALIC enters into certain intercompany reinsurance transactions with its wholly owned subsidiaries. ALIC enters into these transactions in order to maintain underwriting control and spread risk among various legal entities. These reinsurance agreements have been approved by the appropriate regulatory authorities. All significant intercompany transactions have been eliminated in consolidation. | ||||||
Income taxes | ||||||
The Company is a party to a federal income tax allocation agreement with the Corporation (see Note 13). | ||||||
Notes due to related parties | ||||||
Notes due to related parties outstanding as of December 31 consisted of the following: | ||||||
($ in millions) | 2013 | 2012 | ||||
6.35% Note, due 2018, to AIC | $ | 7 | $ | 7 | ||
5.75% Note, due 2018, to AIC | -- | 4 | ||||
5.75% Note, due 2018, to AIC | -- | 10 | ||||
7.00% Surplus Note, due 2028, to AIC (1) | -- | 200 | ||||
6.74% Surplus Note, due 2029, to Kennett (1) | 25 | 25 | ||||
5.06% Surplus Note, due 2035, to Kennett (1) | 100 | 100 | ||||
6.18% Surplus Note, due 2036, to Kennett (1) | 100 | 100 | ||||
5.93% Surplus Note, due 2038, to Kennett (1) | 50 | 50 | ||||
Total notes due to related parties | $ | 282 | $ | 496 | ||
(1) No payment of principal or interest is permitted on the surplus notes without the written approval from the proper regulatory authority. The regulatory authority could prohibit the payment of interest and principal on the surplus notes if certain statutory capital requirements are not met. Permission to pay interest on the surplus notes was granted in both 2013 and 2012. | ||||||
On August 1, 2005, ALIC entered into an agreement with Kennett Capital Inc. (“Kennett”), an unconsolidated affiliate of ALIC, whereby ALIC sold to Kennett a $100 million 5.06% surplus note due July 1, 2035 issued by ALIC Reinsurance Company (“ALIC Re”), a wholly owned subsidiary of ALIC. As payment, Kennett issued a full recourse 4.86% note due July 1, 2035 to ALIC for the same amount. As security for the performance of Kennett’s obligations under the agreement and note, Kennett granted ALIC a pledge of and security interest in Kennett’s right, title and interest in the surplus notes and their proceeds. Under the terms of the agreement, ALIC may sell and Kennett may choose to buy additional surplus notes, if and when additional surplus notes are issued. | ||||||
On June 30, 2006, ALIC sold Kennett a $100 million redeemable surplus note issued by ALIC Re. The surplus note is due June 1, 2036 with an initial rate of 6.18% that will reset every ten years to the then current ten year Constant Maturity Treasury yield (“CMT”), plus 1.14%. As payment, Kennett issued a full recourse note due June 1, 2036 to ALIC for the same amount with an initial interest rate of 5.98% that will reset every ten years to the then current ten year CMT, plus 0.94%. | ||||||
On June 30, 2008, ALIC sold Kennett a $50 million redeemable surplus note issued by ALIC Re. The surplus note is due June 1, 2038 with an initial rate of 5.93% that will reset every ten years to the then current ten year CMT, plus 2.09%. As payment, Kennett issued a full recourse note due June 1, 2038 to ALIC for the same amount with an initial interest rate of 5.73% that will reset every ten years to the then current ten year CMT, plus 1.89%. | ||||||
On December 18, 2009, ALIC sold Kennett a $25 million redeemable surplus note issued by ALIC Re. The surplus note is due December 1, 2029 with an initial rate of 6.74% that will reset every ten years to the then current ten year CMT, plus 3.25%. As payment, Kennett issued a full recourse note due December 1, 2029 to ALIC for the same amount with an initial interest rate of 5.19% that will reset every ten years to the then current ten year CMT, plus 1.70%. | ||||||
The notes due from Kennett are classified as other investments. In each of 2013, 2012 and 2011, the Company recorded net investment income on these notes of $15 million. In each of 2013, 2012 and 2011, the Company incurred $16 million of interest expense related to the surplus notes due to Kennett. | ||||||
On November 17, 2008, the Company issued a $400 million 7.00% surplus note due November 17, 2028 to AIC in exchange for cash. In both 2013 and 2012, the Company repaid $200 million of principal on this surplus note. In 2013, 2012 and 2011, the Company incurred interest expense on this surplus note of $7 million, $27 million and $28 million, respectively. | ||||||
In March 2011, in accordance with an asset purchase agreement between Road Bay Investments, LLC (“RBI”), a consolidated subsidiary of ALIC, and AIC, RBI purchased from AIC real estate with a fair value of $10 million on the date of sale and issued a 5.75% note due March 24, 2018 to AIC for the same amount. In 2013, RBI repaid the entire principal of this note. In April 2011, RBI purchased from AIC mortgage loans with a fair value of $4 million on the date of sale and issued a 5.75% note due April 19, 2018 to AIC for the same amount. In 2013, RBI repaid the entire principal of this note. In August 2011, RBI purchased from AIC fixed income securities with a fair value of $7 million on the date of sale and issued a 6.35% note due August 23, 2018 to AIC for the same amount. Since the transactions were between affiliates under common control, the purchased investments were recorded by RBI at AIC’s carrying value on the date of sale. The investments that were purchased were impaired; therefore, the carrying value on the date of sale equaled fair value. In 2013, 2012 and 2011, the Company incurred interest expense on these notes of $1 million, $1 million and $745 thousand respectively. | ||||||
Liquidity and intercompany loan agreements | ||||||
The Company, AIC and the Corporation are party to the Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) which allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. The Company and AIC each serve as a lender and borrower and the Corporation serves only as a lender. The maximum amount of advances each party may make or receive is limited to $1 billion. Netting or offsetting of advances made and received is not permitted. Advances between the parties are required to have specified due dates less than or equal to 364 days from the date of the advance and be payable upon demand by written request from the lender at least ten business days prior to the demand date. The borrower may make prepayments of the outstanding principal balance of an advance without penalty. Advances will bear interest equal to or greater than the rate applicable to 30-day commercial paper issued by the Corporation on the date the advance is made with an adjustment on the first day of each month thereafter. The Company had no amounts outstanding under the Liquidity Agreement as of December 31, 2013 or 2012. | ||||||
In addition to the Liquidity Agreement, the Company has an intercompany loan agreement with the Corporation. The amount of intercompany loans available to the Company is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings. The Company had no amounts outstanding under the intercompany loan agreement as of December 31, 2013 or 2012. | ||||||
RBI, a consolidated subsidiary of ALIC, has a Revolving Loan Credit Agreement (“Credit Agreement”) with AHL, according to which AHL agreed to extend revolving credit loans to RBI. As security for its obligations under the Credit Agreement, RBI entered into a Pledge and Security Agreement with AHL, according to which RBI agreed to grant a pledge of and security interest in RBI’s right, title, and interest in certain assets of RBI. The Company had no amounts outstanding under the Credit Agreement as of December 31, 2013 or 2012. | ||||||
Capital support agreement | ||||||
The Company has a Capital Support Agreement with AIC. Under the terms of this agreement, AIC agrees to provide capital to maintain the amount of statutory capital and surplus necessary to maintain a company action level risk-based capital (“RBC”) ratio of at least 150%. AIC’s obligation to provide capital to the Company under the agreement is limited to an aggregate amount of $1 billion. In exchange for providing this capital, the Company will pay AIC an annual commitment fee of 1% of the amount of the Capital and Surplus maximum that remains available on January 1 of such year. The Company or AIC have the right to terminate this agreement when: 1) the Company qualifies for a financial strength rating from S&P’s, Moody’s or A.M. Best, without giving weight to the existence of this agreement, that is the same or better than its rating with such support; 2) the Company’s RBC ratio is at least 300%; or 3) AIC no longer directly or indirectly owns at least 50% of the voting stock of the Company. As of December 31, 2013 and 2012, no capital had been provided by AIC under this agreement. | ||||||
Investment purchases and sales | ||||||
In November 2011, Allstate Finance Company, LLC (“AFC”), a consolidated subsidiary of ALIC, paid $176 million in cash to purchase loans issued to exclusive Allstate agents (“agent loans”) with a fair value of $175 million on the date of sale and $1 million of accrued investment income from Allstate Bank, an unconsolidated affiliate of ALIC. Since the transaction was between affiliates under common control, the agent loans were recorded by AFC at Allstate Bank’s carrying value on the date of sale, which was the outstanding unpaid principal balance, net of valuation allowance and deferred fees, of $176 million and $1 million of accrued investment income. The $1 million difference between the fair value of assets received and Allstate Bank’s carrying value was recorded as an increase to additional capital paid-in. | ||||||
Pension benefit plans | ||||||
Effective November 30, 2011, the Corporation became the sponsor of the defined benefit pension plans that cover most full-time employees, certain part-time employees and employee-agents. Prior to November 30, 2011, AIC was the sponsor of these plans. In connection with the change in sponsorship, amounts payable by the Company to the previous plan sponsor, AIC, totaling $4 million were forgiven which was recorded as an increase to retained income. | ||||||
Return of capital | ||||||
In December 2013, the Company paid a return of capital of $500 million to AIC, which was recorded as a reduction of additional capital paid-in on the Consolidated Statements of Financial Position. |
Investments
Investments | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Investments | ' | |||||||||||||||||||
Investments | ' | |||||||||||||||||||
6. Investments | ||||||||||||||||||||
Fair values | ||||||||||||||||||||
The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows: | ||||||||||||||||||||
($ in millions) | Amortized | Gross unrealized | Fair | |||||||||||||||||
cost | Gains | Losses | value | |||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
U.S. government and agencies | $ | 678 | $ | 90 | $ | -2 | $ | 766 | ||||||||||||
Municipal | 3,135 | 231 | -62 | 3,304 | ||||||||||||||||
Corporate | 20,397 | 1,214 | -295 | 21,316 | ||||||||||||||||
Foreign government | 715 | 83 | -6 | 792 | ||||||||||||||||
ABS | 1,011 | 30 | -34 | 1,007 | ||||||||||||||||
RMBS | 752 | 50 | -12 | 790 | ||||||||||||||||
CMBS | 724 | 47 | -7 | 764 | ||||||||||||||||
Redeemable preferred stock | 15 | 2 | -- | 17 | ||||||||||||||||
Total fixed income securities | $ | 27,427 | $ | 1,747 | $ | -418 | $ | 28,756 | ||||||||||||
December 31, 2012 | ||||||||||||||||||||
U.S. government and agencies | $ | 2,137 | $ | 242 | $ | -- | $ | 2,379 | ||||||||||||
Municipal | 4,153 | 612 | -61 | 4,704 | ||||||||||||||||
Corporate | 28,748 | 2,896 | -113 | 31,531 | ||||||||||||||||
Foreign government | 1,017 | 164 | -1 | 1,180 | ||||||||||||||||
ABS | 1,921 | 49 | -105 | 1,865 | ||||||||||||||||
RMBS | 1,778 | 82 | -69 | 1,791 | ||||||||||||||||
CMBS | 1,425 | 60 | -77 | 1,408 | ||||||||||||||||
Redeemable preferred stock | 15 | 3 | -- | 18 | ||||||||||||||||
Total fixed income securities | $ | 41,194 | $ | 4,108 | $ | -426 | $ | 44,876 | ||||||||||||
Scheduled maturities | ||||||||||||||||||||
The scheduled maturities for fixed income securities are as follows as of December 31, 2013: | ||||||||||||||||||||
($ in millions) | Amortized | Fair | ||||||||||||||||||
cost | value | |||||||||||||||||||
Due in one year or less | $ | 1,106 | $ | 1,132 | ||||||||||||||||
Due after one year through five years | 5,060 | 5,457 | ||||||||||||||||||
Due after five years through ten years | 10,955 | 11,316 | ||||||||||||||||||
Due after ten years | 7,819 | 8,290 | ||||||||||||||||||
24,940 | 26,195 | |||||||||||||||||||
ABS, RMBS and CMBS | 2,487 | 2,561 | ||||||||||||||||||
Total | $ | 27,427 | $ | 28,756 | ||||||||||||||||
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 for the years ended December 31 is as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Fixed income securities | $ | 1,947 | $ | 2,084 | $ | 2,264 | ||||||||||||||
Mortgage loans | 345 | 345 | 345 | |||||||||||||||||
Equity securities | 12 | 9 | 7 | |||||||||||||||||
Limited partnership interests (1) | 175 | 159 | 49 | |||||||||||||||||
Short-term investments | 2 | 2 | 3 | |||||||||||||||||
Policy loans | 49 | 51 | 53 | |||||||||||||||||
Other | 63 | 61 | 18 | |||||||||||||||||
Investment income, before expense | 2,593 | 2,711 | 2,739 | |||||||||||||||||
Investment expense | -108 | -114 | -102 | |||||||||||||||||
Net investment income | $ | 2,485 | $ | 2,597 | $ | 2,637 | ||||||||||||||
(1) Income from EMA limited partnerships is reported in net investment income in 2013 and 2012 and realized capital gains and losses in 2011. | ||||||||||||||||||||
Realized capital gains and losses | ||||||||||||||||||||
Realized capital gains and losses by asset type for the years ended December 31 are as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Fixed income securities | $ | 3 | $ | -62 | $ | 539 | ||||||||||||||
Mortgage loans | 20 | 8 | -23 | |||||||||||||||||
Equity securities | 45 | -- | 14 | |||||||||||||||||
Limited partnership interests (1) | -6 | -- | 62 | |||||||||||||||||
Derivatives | 14 | 34 | -203 | |||||||||||||||||
Other | -- | 4 | 1 | |||||||||||||||||
Realized capital gains and losses | $ | 76 | $ | -16 | $ | 390 | ||||||||||||||
(1) Income from EMA limited partnerships is reported in net investment income in 2013 and 2012 and realized capital gains and losses in 2011. | ||||||||||||||||||||
Realized capital gains and losses by transaction type for the years ended December 31 are as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Impairment write-downs | $ | -33 | $ | -51 | $ | -242 | ||||||||||||||
Change in intent write-downs | -19 | -17 | -51 | |||||||||||||||||
Net other-than-temporary impairment losses recognized in earnings | -52 | -68 | -293 | |||||||||||||||||
Sales | 114 | 17 | 823 | |||||||||||||||||
Valuation of derivative instruments | -3 | -16 | -224 | |||||||||||||||||
Settlements of derivative instruments | 17 | 51 | 22 | |||||||||||||||||
EMA limited partnership income | -- | -- | 62 | |||||||||||||||||
Realized capital gains and losses | $ | 76 | $ | -16 | $ | 390 | ||||||||||||||
Gross gains of $94 million, $225 million and $835 million and gross losses of $46 million, $222 million and $124 million were realized on sales of fixed income securities during 2013, 2012 and 2011, respectively. | ||||||||||||||||||||
Other-than-temporary impairment losses by asset type for the years ended December 31 are as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Included | Included | Included | ||||||||||||||||||
Gross | in OCI | Net | Gross | in OCI | Net | Gross | in OCI | Net | ||||||||||||
Fixed income securities: | ||||||||||||||||||||
Municipal | $ | -8 | $ | -- | $ | -8 | $ | -- | $ | -- | $ | -- | $ | -14 | $ | -3 | $ | -17 | ||
Corporate | -- | -- | -- | -16 | -2 | -18 | -28 | 6 | -22 | |||||||||||
ABS | -- | -2 | -2 | -- | -- | -- | -8 | 2 | -6 | |||||||||||
RMBS | -2 | 2 | -- | -23 | -9 | -32 | -111 | -20 | -131 | |||||||||||
CMBS | -32 | -3 | -35 | -22 | 3 | -19 | -66 | 1 | -65 | |||||||||||
Total fixed income securities | -42 | -3 | -45 | -61 | -8 | -69 | -227 | -14 | -241 | |||||||||||
Mortgage loans | 11 | -- | 11 | 5 | -- | 5 | -33 | -- | -33 | |||||||||||
Equity securities | -6 | -- | -6 | -1 | -- | -1 | -5 | -- | -5 | |||||||||||
Limited partnership interests | -9 | -- | -9 | -3 | -- | -3 | -3 | -- | -3 | |||||||||||
Other | -3 | -- | -3 | -- | -- | -- | -11 | -- | -11 | |||||||||||
Other-than-temporary impairment losses | $ | -49 | $ | -3 | $ | -52 | $ | -60 | $ | -8 | $ | -68 | $ | -279 | $ | -14 | $ | -293 | ||
The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amount excludes $164 million and $134 million as of December 31, 2013 and 2012, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. | ||||||||||||||||||||
($ in millions) | December 31, | December 31, | ||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Municipal | $ | -5 | $ | -5 | ||||||||||||||||
Corporate | -- | -1 | ||||||||||||||||||
ABS | -10 | -14 | ||||||||||||||||||
RMBS | -90 | -103 | ||||||||||||||||||
CMBS | -12 | -19 | ||||||||||||||||||
Total | $ | -117 | $ | -142 | ||||||||||||||||
Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of December 31 are as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Beginning balance | $ | -345 | $ | -581 | $ | -701 | ||||||||||||||
Additional credit loss for securities previously other-than-temporarily impaired | -13 | -33 | -76 | |||||||||||||||||
Additional credit loss for securities not previously other-than-temporarily impaired | -19 | -20 | -114 | |||||||||||||||||
Reduction in credit loss for securities disposed or collected | 75 | 288 | 288 | |||||||||||||||||
Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell | 2 | -- | 13 | |||||||||||||||||
Change in credit loss due to accretion of increase in cash flows | 1 | 1 | 9 | |||||||||||||||||
Ending balance (1) | $ | -299 | $ | -345 | $ | -581 | ||||||||||||||
(1) The December 31, 2013 ending balance includes $60 million of cumulative credit losses recognized in earnings for fixed income securities that are classified as held for sale. | ||||||||||||||||||||
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, 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 other-than-temporary impairment 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 accumulated other comprehensive income. 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 accumulated other comprehensive income are as follows: | ||||||||||||||||||||
($ in millions) | Fair | Gross unrealized | Unrealized net | |||||||||||||||||
December 31, 2013 | value | Gains | Losses | gains (losses) | ||||||||||||||||
Fixed income securities | $ | 28,756 | $ | 1,747 | $ | -418 | $ | 1,329 | ||||||||||||
Equity securities | 650 | 90 | -5 | 85 | ||||||||||||||||
Short-term investments | 590 | -- | -- | -- | ||||||||||||||||
Derivative instruments (1) | -13 | 1 | -14 | -13 | ||||||||||||||||
EMA limited partnerships (2) | -2 | |||||||||||||||||||
Investments classified as held for sale | 190 | |||||||||||||||||||
Unrealized net capital gains and losses, pre-tax | 1,589 | |||||||||||||||||||
Amounts recognized for: | ||||||||||||||||||||
Insurance reserves (3) | -- | |||||||||||||||||||
DAC and DSI (4) | -156 | |||||||||||||||||||
Amounts recognized | -156 | |||||||||||||||||||
Deferred income taxes | -506 | |||||||||||||||||||
Unrealized net capital gains and losses, after-tax | $ | 927 | ||||||||||||||||||
(1) Included in the fair value of derivative instruments are $1 million classified as assets and $14 million classified as liabilities. | ||||||||||||||||||||
(2) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross gains and losses are not applicable. | ||||||||||||||||||||
(3) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies. | ||||||||||||||||||||
(4) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. | ||||||||||||||||||||
($ in millions) | Fair | Gross unrealized | Unrealized net | |||||||||||||||||
December 31, 2012 | value | Gains | Losses | gains (losses) | ||||||||||||||||
Fixed income securities | $ | 44,876 | $ | 4,108 | $ | -426 | $ | 3,682 | ||||||||||||
Equity securities | 345 | 36 | -1 | 35 | ||||||||||||||||
Short-term investments | 875 | -- | -- | -- | ||||||||||||||||
Derivative instruments (1) | -17 | 2 | -19 | -17 | ||||||||||||||||
EMA limited partnerships | 1 | |||||||||||||||||||
Unrealized net capital gains and losses, pre-tax | 3,701 | |||||||||||||||||||
Amounts recognized for: | ||||||||||||||||||||
Insurance reserves | -771 | |||||||||||||||||||
DAC and DSI | -408 | |||||||||||||||||||
Amounts recognized | -1,179 | |||||||||||||||||||
Deferred income taxes | -888 | |||||||||||||||||||
Unrealized net capital gains and losses, after-tax | $ | 1,634 | ||||||||||||||||||
(1) Included in the fair value of derivative instruments are $2 million classified as assets and $19 million classified as liabilities. | ||||||||||||||||||||
Change in unrealized net capital gains and losses | ||||||||||||||||||||
The change in unrealized net capital gains and losses for the years ended December 31 is as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Fixed income securities | $ | -2,353 | $ | 1,735 | $ | 1,219 | ||||||||||||||
Equity securities | 50 | -1 | -11 | |||||||||||||||||
Derivative instruments | 4 | -5 | 5 | |||||||||||||||||
EMA limited partnerships | -3 | -- | 1 | |||||||||||||||||
Investments classified as held for sale | 190 | -- | -- | |||||||||||||||||
Total | -2,112 | 1,729 | 1,214 | |||||||||||||||||
Amounts recognized for: | ||||||||||||||||||||
Insurance reserves | 771 | -177 | -585 | |||||||||||||||||
DAC and DSI | 252 | -288 | -207 | |||||||||||||||||
Amounts recognized | 1,023 | -465 | -792 | |||||||||||||||||
Deferred income taxes | 382 | -443 | -147 | |||||||||||||||||
(Decrease) increase in unrealized net capital gains and losses, after-tax | $ | -707 | $ | 821 | $ | 275 | ||||||||||||||
Portfolio monitoring | ||||||||||||||||||||
The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income and equity security whose carrying value may be other-than-temporarily impaired. | ||||||||||||||||||||
For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, the security’s decline in fair value is considered other than temporary and is recorded in earnings. | ||||||||||||||||||||
If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, and compares this to the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income. | ||||||||||||||||||||
For equity securities, the Company considers various factors, including whether it has the intent and ability to hold the equity security for a period of time sufficient to recover its cost basis. Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the equity security’s decline in fair value is considered other than temporary and is recorded in earnings. | ||||||||||||||||||||
For fixed income and equity securities managed by third parties, either the Company has contractually retained its decision making authority as it pertains to selling securities that are in an unrealized loss position or it recognizes any unrealized loss at the end of the period through a charge to earnings. | ||||||||||||||||||||
The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost (for fixed income securities) or cost (for equity securities) 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 other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed income and equity 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 or cost. | ||||||||||||||||||||
The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position. | ||||||||||||||||||||
($ in millions) | Less than 12 months | 12 months or more | Total | |||||||||||||||||
Number | Fair | Unrealized | Number | Fair | Unrealized | unrealized | ||||||||||||||
of issues | value | losses | of issues | value | losses | losses | ||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
U.S. government and agencies | 4 | $ | 76 | $ | -2 | -- | $ | -- | $ | -- | $ | -2 | ||||||||
Municipal | 63 | 347 | -24 | 21 | 99 | -38 | -62 | |||||||||||||
Corporate | 530 | 5,191 | -224 | 48 | 467 | -71 | -295 | |||||||||||||
Foreign government | 7 | 76 | -4 | 1 | 13 | -2 | -6 | |||||||||||||
ABS | 17 | 162 | -1 | 42 | 400 | -33 | -34 | |||||||||||||
RMBS | 35 | 42 | -2 | 47 | 129 | -10 | -12 | |||||||||||||
CMBS | 5 | 14 | -- | 6 | 52 | -7 | -7 | |||||||||||||
Redeemable preferred stock | -- | -- | -- | -- | -- | -- | -- | |||||||||||||
Total fixed income securities | 661 | 5,908 | -257 | 165 | 1,160 | -161 | -418 | |||||||||||||
Equity securities | 25 | 80 | -5 | -- | -- | -- | -5 | |||||||||||||
Total fixed income and equity securities | 686 | $ | 5,988 | $ | -262 | 165 | $ | 1,160 | $ | -161 | $ | -423 | ||||||||
Investment grade fixed income securities | 526 | $ | 5,272 | $ | -236 | 110 | $ | 834 | $ | -112 | $ | -348 | ||||||||
Below investment grade fixed income securities | 135 | 636 | -21 | 55 | 326 | -49 | -70 | |||||||||||||
Total fixed income securities | 661 | $ | 5,908 | $ | -257 | 165 | $ | 1,160 | $ | -161 | $ | -418 | ||||||||
December 31, 2012 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
U.S. government and agencies | 1 | $ | 15 | $ | -- | -- | $ | -- | $ | -- | $ | -- | ||||||||
Municipal | 11 | 101 | -7 | 50 | 395 | -54 | -61 | |||||||||||||
Corporate | 79 | 1,086 | -27 | 66 | 829 | -86 | -113 | |||||||||||||
Foreign government | 2 | 121 | -1 | -- | -- | -- | -1 | |||||||||||||
ABS | 5 | 38 | -- | 76 | 763 | -105 | -105 | |||||||||||||
RMBS | 49 | 30 | -- | 164 | 442 | -69 | -69 | |||||||||||||
CMBS | 10 | 65 | -- | 43 | 358 | -77 | -77 | |||||||||||||
Redeemable preferred stock | -- | -- | -- | 1 | -- | -- | -- | |||||||||||||
Total fixed income securities | 157 | 1,456 | -35 | 400 | 2,787 | -391 | -426 | |||||||||||||
Equity securities | 3 | 57 | -1 | 1 | -- | -- | -1 | |||||||||||||
Total fixed income and equity securities | 160 | $ | 1,513 | $ | -36 | 401 | $ | 2,787 | $ | -391 | $ | -427 | ||||||||
Investment grade fixed income securities | 132 | $ | 1,244 | $ | -29 | 262 | $ | 1,919 | $ | -195 | $ | -224 | ||||||||
Below investment grade fixed income securities | 25 | 212 | -6 | 138 | 868 | -196 | -202 | |||||||||||||
Total fixed income securities | 157 | $ | 1,456 | $ | -35 | 400 | $ | 2,787 | $ | -391 | $ | -426 | ||||||||
As of December 31, 2013, $331 million of unrealized losses are related to securities with an unrealized loss position less than 20% of amortized cost or cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired. Of the $331 million, $276 million are related to unrealized losses on investment grade fixed income securities. 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, Fitch, Dominion, Kroll or Realpoint, a rating of aaa, aa, a or bbb from A.M. Best, or a comparable internal rating if an externally provided rating is not available. Unrealized losses on investment grade securities are principally related to increasing risk-free interest rates or widening credit spreads since the time of initial purchase. | ||||||||||||||||||||
As of December 31, 2013, the remaining $92 million of unrealized losses are related to securities in unrealized loss positions greater than or equal to 20% of amortized cost. Investment grade fixed income securities comprising $72 million of these unrealized losses were evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. Of the $92 million, $20 million are related to below investment grade fixed income securities. Of these amounts, $15 million are related to below investment grade fixed income securities that had been in an unrealized loss position greater than or equal to 20% of amortized cost for a period of twelve or more consecutive months as of December 31, 2013. | ||||||||||||||||||||
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, (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, and (iii) for ABS and RMBS in an unrealized loss position, credit enhancements from reliable bond insurers, where applicable. Municipal bonds in an unrealized loss position were evaluated based on the quality of the underlying securities. Unrealized losses on equity securities are primarily related to temporary equity market fluctuations of securities that are expected to recover. | ||||||||||||||||||||
As of December 31, 2013, 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. As of December 31, 2013, the Company had the intent and ability to hold equity securities with unrealized losses for a period of time sufficient for them to recover. | ||||||||||||||||||||
Limited partnerships | ||||||||||||||||||||
As of December 31, 2013 and 2012, the carrying value of equity method limited partnerships totaled $1.46 billion and $1.31 billion, respectively. The Company recognizes an impairment loss for equity method limited partnerships when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. The Company had no write-downs related to equity method limited partnerships in 2013 or 2012. In 2011, the Company had write-downs related to equity method limited partnerships of $1 million. | ||||||||||||||||||||
As of December 31, 2013 and 2012, the carrying value for cost method limited partnerships was $605 million and $617 million, respectively. To determine if an other-than-temporary impairment has occurred, the Company evaluates whether an impairment indicator has occurred in the period that may have a significant adverse effect on the carrying value of the investment. Impairment indicators may include: significantly reduced valuations of the investments held by the limited partnerships; actual recent cash flows received being significantly less than expected cash flows; reduced valuations based on financing completed at a lower value; completed sale of a material underlying investment at a price significantly lower than expected; or any other adverse events since the last financial statements received that might affect the fair value of the investee’s capital. Additionally, the Company’s portfolio monitoring process includes a quarterly review of all cost method limited partnerships to identify instances where the net asset value is below established thresholds for certain periods of time, as well as investments that are performing below expectations, for further impairment consideration. If a cost method limited partnership is other-than-temporarily impaired, the carrying value is written down to fair value, generally estimated to be equivalent to the reported net asset value of the underlying funds. In 2013, 2012 and 2011, the Company had write-downs related to cost method limited partnerships of $9 million, $3 million and $2 million, respectively. | ||||||||||||||||||||
Mortgage loans | ||||||||||||||||||||
The Company’s mortgage loans are commercial mortgage loans collateralized by a variety of commercial real estate property types located throughout the United States and totaled, net of valuation allowance, $4.17 billion and $5.94 billion as of December 31, 2013 and 2012, respectively. Substantially all of the commercial mortgage loans are non-recourse to the borrower. The following table shows the principal geographic distribution of commercial real estate represented in the Company’s mortgage loan portfolio. No other state represented more than 5% of the portfolio as of December 31. | ||||||||||||||||||||
(% of mortgage loan portfolio carrying value) | 2013 | 2012 | ||||||||||||||||||
California | 24 | % | 24.2 | % | ||||||||||||||||
Illinois | 9.7 | 7.8 | ||||||||||||||||||
New Jersey | 7.2 | 6.5 | ||||||||||||||||||
Texas | 6.3 | 6 | ||||||||||||||||||
New York | 6.2 | 6.6 | ||||||||||||||||||
District of Columbia | 5.4 | 3.8 | ||||||||||||||||||
Florida | 5.2 | 4.3 | ||||||||||||||||||
Pennsylvania | 3.9 | 5.1 | ||||||||||||||||||
The types of properties collateralizing the mortgage loans as of December 31 are as follows: | ||||||||||||||||||||
(% of mortgage loan portfolio carrying value) | 2013 | 2012 | ||||||||||||||||||
Office buildings | 28.3 | % | 28 | % | ||||||||||||||||
Retail | 22.9 | 24 | ||||||||||||||||||
Apartment complex | 19.2 | 17.4 | ||||||||||||||||||
Warehouse | 18.6 | 20.4 | ||||||||||||||||||
Other | 11 | 10.2 | ||||||||||||||||||
Total | 100 | % | 100 | % | ||||||||||||||||
The contractual maturities of the mortgage loan portfolio as of December 31, 2013 are as follows: | ||||||||||||||||||||
($ in millions) | Number | Carrying | Percent | |||||||||||||||||
of loans | value | |||||||||||||||||||
2014 | 23 | $ | 325 | 7.8 | % | |||||||||||||||
2015 | 38 | 616 | 14.8 | |||||||||||||||||
2016 | 34 | 334 | 8 | |||||||||||||||||
2017 | 40 | 449 | 10.8 | |||||||||||||||||
Thereafter | 193 | 2,449 | 58.6 | |||||||||||||||||
Total | 328 | $ | 4,173 | 100 | % | |||||||||||||||
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. 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 December 31, 2013. | ||||||||||||||||||||
Accrual of income is suspended for mortgage loans that are in default or when full and timely collection of principal and interest payments is not probable. Cash receipts on mortgage loans on nonaccrual status are generally recorded as a reduction of carrying value. | ||||||||||||||||||||
Debt service coverage ratio is considered a key credit quality indicator when mortgage loans are evaluated for impairment. Debt service coverage ratio represents the amount of estimated cash flows from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. | ||||||||||||||||||||
The following table reflects the carrying value of non-impaired fixed rate and variable rate mortgage loans summarized by debt service coverage ratio distribution as of December 31. | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||
Debt service coverage | Fixed rate | Variable rate | Total | Fixed rate | Variable rate | Total | ||||||||||||||
ratio distribution | mortgage | mortgage | mortgage | mortgage | ||||||||||||||||
loans | loans | loans | loans | |||||||||||||||||
Below 1.0 | $ | 153 | $ | -- | $ | 153 | $ | 266 | $ | -- | $ | 266 | ||||||||
1.0 - 1.25 | 560 | -- | 560 | 1,158 | -- | 1,158 | ||||||||||||||
1.26 - 1.50 | 1,167 | 2 | 1,169 | 1,364 | 17 | 1,381 | ||||||||||||||
Above 1.50 | 2,176 | 38 | 2,214 | 2,854 | 129 | 2,983 | ||||||||||||||
Total non-impaired mortgage loans | $ | 4,056 | $ | 40 | $ | 4,096 | $ | 5,642 | $ | 146 | $ | 5,788 | ||||||||
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 as of December 31 is as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||
Impaired mortgage loans with a valuation allowance | $ | 77 | $ | 147 | ||||||||||||||||
Impaired mortgage loans without a valuation allowance | -- | 8 | ||||||||||||||||||
Total impaired mortgage loans | $ | 77 | $ | 155 | ||||||||||||||||
Valuation allowance on impaired mortgage loans | $ | 21 | $ | 42 | ||||||||||||||||
The average balance of impaired loans was $86 million, $202 million and $207 million during 2013, 2012 and 2011, respectively. | ||||||||||||||||||||
The rollforward of the valuation allowance on impaired mortgage loans for the years ended December 31 is as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Beginning balance | $ | 42 | $ | 63 | $ | 84 | ||||||||||||||
Net (decrease) increase in valuation allowance | -11 | -5 | 33 | |||||||||||||||||
Charge offs | -8 | -16 | -54 | |||||||||||||||||
Mortgage loans classified as held for sale | -2 | -- | -- | |||||||||||||||||
Ending balance | $ | 21 | $ | 42 | $ | 63 | ||||||||||||||
The carrying value of past due mortgage loans as of December 31 is as follows: | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||
Less than 90 days past due | $ | -- | $ | 20 | ||||||||||||||||
90 days or greater past due | -- | 4 | ||||||||||||||||||
Total past due | -- | 24 | ||||||||||||||||||
Current loans | 4,173 | 5,919 | ||||||||||||||||||
Total mortgage loans | $ | 4,173 | $ | 5,943 | ||||||||||||||||
Municipal bonds | ||||||||||||||||||||
The Company maintains a diversified portfolio of municipal bonds. The following table shows the principal geographic distribution of municipal bond issuers represented in the Company’s portfolio as of December 31. No other state represents more than 5% of the portfolio. | ||||||||||||||||||||
(% of municipal bond portfolio carrying value) | 2013 | 2012 | ||||||||||||||||||
California | 15.9 | % | 14.1 | % | ||||||||||||||||
Texas | 13.5 | 11.8 | ||||||||||||||||||
Oregon | 5.4 | 4.7 | ||||||||||||||||||
New Jersey | 5.2 | 4.5 | ||||||||||||||||||
New York | 5.2 | 7.1 | ||||||||||||||||||
Illinois | 5.1 | 4.3 | ||||||||||||||||||
Concentration of credit risk | ||||||||||||||||||||
As of December 31, 2013, the Company is not exposed to any credit concentration risk of a single issuer and its affiliates greater than 10% of the Company’s shareholder’s equity. | ||||||||||||||||||||
Securities loaned | ||||||||||||||||||||
The Company’s business activities include securities lending programs with third parties, mostly large banks. As of December 31, 2013 and 2012, fixed income securities with a carrying value of $312 million and $525 million, respectively, were on loan under these agreements. Interest income on collateral, net of fees, was $1 million in each of 2013, 2012 and 2011. | ||||||||||||||||||||
Other investment information | ||||||||||||||||||||
Included in fixed income securities are below investment grade assets totaling $2.89 billion and $3.35 billion as of December 31, 2013 and 2012, respectively. | ||||||||||||||||||||
As of December 31, 2013, fixed income securities and short-term investments with a carrying value of $53 million were on deposit with regulatory authorities as required by law. | ||||||||||||||||||||
As of December 31, 2013, the carrying value of fixed income securities that were non-income producing was $11 million. |
Fair_Value_of_Assets_and_Liabi
Fair Value of Assets and Liabilities | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Fair Value of Assets and Liabilities | ' | ||||||||||||||||||||
Fair Value of Assets and Liabilities | ' | ||||||||||||||||||||
7. 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 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 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. | |||||||||||||||||||||
The second situation where the Company classifies securities in Level 3 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. | |||||||||||||||||||||
Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans, limited partnership interests, bank 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 consolidated financial statements. In addition, derivatives embedded in fixed income securities are not disclosed in the hierarchy as free-standing derivatives since they are presented with the host contracts in fixed income securities. | |||||||||||||||||||||
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. Treasuries. 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 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 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. | |||||||||||||||||||||
· Assets held for sale: Comprise U.S. Treasury fixed income securities, short-term investments and separate account assets. The valuation is based on the respective asset type as described above. | |||||||||||||||||||||
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, including privately placed: 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. Also included are privately placed securities 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 and 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. Certain ABS are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. | |||||||||||||||||||||
CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. | |||||||||||||||||||||
Redeemable preferred stock: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. | |||||||||||||||||||||
· Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. | |||||||||||||||||||||
· Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value. | |||||||||||||||||||||
· Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. | |||||||||||||||||||||
OTC derivatives, including interest rate swaps, foreign currency swaps, 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, currency rates, and counterparty 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. | |||||||||||||||||||||
· Assets held for sale: Comprise U.S. government and agencies, municipal, corporate, foreign government, ABS, RMBS and CMBS fixed income securities, and short-term investments. The valuation is based on the respective asset type as described above. | |||||||||||||||||||||
Level 3 measurements | |||||||||||||||||||||
· Fixed income securities: | |||||||||||||||||||||
Municipal: Municipal bonds that are not rated by third party credit rating agencies but are rated by the National Association of Insurance Commissioners (“NAIC”). 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 includes auction rate securities (“ARS”) primarily backed by student loans that have become illiquid due to failures in the auction market are valued using a discounted cash flow model that is widely accepted in the financial services industry and uses significant non-market observable inputs, including the anticipated date liquidity will return to the market. | |||||||||||||||||||||
Corporate, including privately placed: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Also included are equity-indexed notes which are valued using a discounted cash flow model that is widely accepted in the financial services industry and uses significant non-market observable inputs, such as volatility. 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, RMBS 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. | |||||||||||||||||||||
· Assets held for sale: Comprise municipal, corporate, ABS and CMBS fixed income securities. The valuation is based on the respective asset type as described above. | |||||||||||||||||||||
· 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. | |||||||||||||||||||||
· Liabilities held for sale: Comprise derivatives embedded in life and annuity contracts. The valuation is the same as described above for contractholder funds. | |||||||||||||||||||||
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. Limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments are valued using net asset values. The carrying value of the LBL business was written-down to fair value in connection with being classified as held for sale. | |||||||||||||||||||||
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2013. | |||||||||||||||||||||
($ in millions) | Quoted prices | Significant | Significant | Counterparty | Balance as of | ||||||||||||||||
in active | other | unobservable | and cash | December 31, | |||||||||||||||||
markets for | observable | inputs | collateral | 2013 | |||||||||||||||||
identical assets | inputs | (Level 3) | netting | ||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
U.S. government and agencies | $ | 145 | $ | 621 | $ | -- | $ | 766 | |||||||||||||
Municipal | -- | 3,185 | 119 | 3,304 | |||||||||||||||||
Corporate | -- | 20,308 | 1,008 | 21,316 | |||||||||||||||||
Foreign government | -- | 792 | -- | 792 | |||||||||||||||||
ABS | -- | 895 | 112 | 1,007 | |||||||||||||||||
RMBS | -- | 790 | -- | 790 | |||||||||||||||||
CMBS | -- | 763 | 1 | 764 | |||||||||||||||||
Redeemable preferred stock | -- | 16 | 1 | 17 | |||||||||||||||||
Total fixed income securities | 145 | 27,370 | 1,241 | 28,756 | |||||||||||||||||
Equity securities | 593 | 51 | 6 | 650 | |||||||||||||||||
Short-term investments | 129 | 461 | -- | 590 | |||||||||||||||||
Other investments: Free-standing derivatives | -- | 268 | 9 | $ | -11 | 266 | |||||||||||||||
Separate account assets | 5,039 | -- | -- | 5,039 | |||||||||||||||||
Assets held for sale | 1,854 | 9,812 | 362 | 12,028 | |||||||||||||||||
Total recurring basis assets | 7,760 | 37,962 | 1,618 | -11 | 47,329 | ||||||||||||||||
Non-recurring basis (1) | -- | -- | 17 | 17 | |||||||||||||||||
Total assets at fair value | $ | 7,760 | $ | 37,962 | $ | 1,635 | $ | -11 | $ | 47,346 | |||||||||||
% of total assets at fair value | 16.40% | 80.20% | 3.40% | -- % | 100.00% | ||||||||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded | $ | -- | $ | -- | $ | -307 | $ | -307 | |||||||||||||
in life and annuity contracts | |||||||||||||||||||||
Other liabilities: Free-standing derivatives | -- | -185 | -14 | $ | 7 | -192 | |||||||||||||||
Liabilities held for sale | -- | -- | -246 | -246 | |||||||||||||||||
Total recurring basis liabilities | -- | -185 | -567 | 7 | -745 | ||||||||||||||||
Non-recurring basis (2) | -- | -- | -11,088 | -11,088 | |||||||||||||||||
Total liabilities at fair value | $ | -- | $ | -185 | $ | -11,655 | $ | 7 | $ | -11,833 | |||||||||||
% of total liabilities at fair value | -- % | 1.60% | 98.50% | -0.10% | 100.00% | ||||||||||||||||
(1) Includes $8 million of mortgage loans and $9 million of limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments. | |||||||||||||||||||||
(2) Relates to LBL business held for sale (see Note 3). The total fair value measurement includes $15,593 million of assets held for sale and $(14,899) million of liabilities held for sale, less $12,028 million of assets and $(246) million of liabilities measured at fair value on a recurring basis. | |||||||||||||||||||||
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2012. | |||||||||||||||||||||
($ in millions) | Quoted prices | Significant | Significant | Counterparty | Balance as of | ||||||||||||||||
in active | other | unobservable | and cash | December 31, | |||||||||||||||||
markets for | observable | inputs | collateral | 2012 | |||||||||||||||||
identical assets | inputs | (Level 3) | netting | ||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
U.S. government and agencies | $ | 1,074 | $ | 1,305 | $ | -- | $ | 2,379 | |||||||||||||
Municipal | -- | 4,366 | 338 | 4,704 | |||||||||||||||||
Corporate | -- | 30,030 | 1,501 | 31,531 | |||||||||||||||||
Foreign government | -- | 1,180 | -- | 1,180 | |||||||||||||||||
ABS | -- | 1,666 | 199 | 1,865 | |||||||||||||||||
RMBS | -- | 1,791 | -- | 1,791 | |||||||||||||||||
CMBS | -- | 1,387 | 21 | 1,408 | |||||||||||||||||
Redeemable preferred stock | -- | 17 | 1 | 18 | |||||||||||||||||
Total fixed income securities | 1,074 | 41,742 | 2,060 | 44,876 | |||||||||||||||||
Equity securities | 338 | -- | 7 | 345 | |||||||||||||||||
Short-term investments | 220 | 655 | -- | 875 | |||||||||||||||||
Other investments: Free-standing derivatives | -- | 173 | 3 | $ | -47 | 129 | |||||||||||||||
Separate account assets | 6,610 | -- | -- | 6,610 | |||||||||||||||||
Other assets | 2 | -- | 1 | 3 | |||||||||||||||||
Total recurring basis assets | 8,244 | 42,570 | 2,071 | -47 | 52,838 | ||||||||||||||||
Non-recurring basis (1) | -- | -- | 6 | 6 | |||||||||||||||||
Total assets at fair value | $ | 8,244 | $ | 42,570 | $ | 2,077 | $ | -47 | $ | 52,844 | |||||||||||
% of total assets at fair value | 15.60% | 80.60% | 3.90% | -0.10% | 100.00% | ||||||||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -- | $ | -- | $ | -553 | $ | -553 | |||||||||||||
Other liabilities: Free-standing derivatives | -- | -91 | -30 | $ | 29 | -92 | |||||||||||||||
Total liabilities at fair value | $ | -- | $ | -91 | $ | -583 | $ | 29 | $ | -645 | |||||||||||
% of total liabilities at fair value | -- % | 14.10% | 90.40% | -4.50% | 100.00% | ||||||||||||||||
(1) Includes $4 million of mortgage loans, $1 million of limited partnership interests and $1 million of other investments written-down to fair value in connection with recognizing other-than-temporary impairments. | |||||||||||||||||||||
The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. | |||||||||||||||||||||
($ in millions) | Fair value | Valuation | Unobservable | Range | Weighted | ||||||||||||||||
technique | input | average | |||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options | $ | -247 | Stochastic cash flow model | Projected option cost | 1.0 - 2.0 % | 1.75% | |||||||||||||||
Liabilities held for sale – Equity-indexed and forward starting options | $ | -246 | Stochastic cash flow model | Projected option cost | 1.0 - 2.0 % | 1.91% | |||||||||||||||
December 31, 2012 | |||||||||||||||||||||
ARS backed by student loans | $ | 202 | Discounted cash flow model | Anticipated date liquidity will return to the market | 18 - 60 months | 32 - 44 months | |||||||||||||||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options | $ | -419 | Stochastic cash flow model | Projected option cost | 1.0 - 2.0 % | 1.92% | |||||||||||||||
If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value. If the anticipated date liquidity will return to the market is sooner (later), it would result in a higher (lower) fair value. | |||||||||||||||||||||
As of December 31, 2013 and 2012, Level 3 fair value measurements include $1.15 billion and $1.72 billion, respectively, of fixed income securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. As of December 31, 2013, Level 3 fair value measurements for assets held for sale include $319 million of fixed income securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. The Company does not develop the unobservable inputs used in measuring fair value; therefore, these are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value. | |||||||||||||||||||||
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2013. | |||||||||||||||||||||
($ in millions) | Total gains (losses) | ||||||||||||||||||||
included in: | |||||||||||||||||||||
Balance as of | Net | OCI | Transfers | Transfers | |||||||||||||||||
December 31, | income (1) | into | out of | ||||||||||||||||||
2012 | Level 3 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 338 | $ | (12 | ) | $ | 19 | $ | -- | $ | -- | ||||||||||
Corporate | 1,501 | 32 | (32 | ) | 84 | (172 | ) | ||||||||||||||
ABS | 199 | (2 | ) | 30 | 17 | (16 | ) | ||||||||||||||
RMBS | -- | -- | -- | -- | -- | ||||||||||||||||
CMBS | 21 | (1 | ) | 3 | -- | -- | |||||||||||||||
Redeemable preferred stock | 1 | -- | -- | -- | -- | ||||||||||||||||
Total fixed income securities | 2,060 | 17 | 20 | 101 | (188 | ) | |||||||||||||||
Equity securities | 7 | -- | -- | -- | -- | ||||||||||||||||
Free-standing derivatives, net | (27 | ) | 19 | -- | -- | -- | |||||||||||||||
Other assets | 1 | (1 | ) | -- | -- | -- | |||||||||||||||
Assets held for sale | -- | (2 | ) | (6 | ) | 13 | (13 | ) | |||||||||||||
Total recurring Level 3 assets | $ | 2,041 | $ | 33 | $ | 14 | $ | 114 | $ | (201 | ) | ||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | (553 | ) | $ | 89 | $ | -- | $ | -- | $ | -- | ||||||||||
Liabilities held for sale | -- | 20 | -- | -- | -- | ||||||||||||||||
Total recurring Level 3 liabilities | $ | (553 | ) | $ | 109 | $ | -- | $ | -- | $ | -- | ||||||||||
Transfer to | Purchases/ | Sales | Settlements | Balance as of | |||||||||||||||||
held for sale | Issues (2) | December 31, | |||||||||||||||||||
2013 | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | (51 | ) | $ | -- | $ | (173 | ) | $ | (2 | ) | $ | 119 | ||||||||
Corporate | (244 | ) | 145 | (173 | ) | (133 | ) | 1,008 | |||||||||||||
ABS | (85 | ) | -- | (8 | ) | (23 | ) | 112 | |||||||||||||
RMBS | -- | -- | -- | -- | -- | ||||||||||||||||
CMBS | (5 | ) | -- | (17 | ) | -- | 1 | ||||||||||||||
Redeemable preferred stock | -- | -- | -- | -- | 1 | ||||||||||||||||
Total fixed income securities | (385 | ) | 145 | (371 | ) | (158 | ) | 1,241 | |||||||||||||
Equity securities | -- | -- | (1 | ) | -- | 6 | |||||||||||||||
Free-standing derivatives, net | -- | 9 | -- | (6 | ) | (5 | ) (3) | ||||||||||||||
Other assets | -- | -- | -- | -- | -- | ||||||||||||||||
Assets held for sale | 385 | -- | (10 | ) | (5 | ) | 362 | ||||||||||||||
Total recurring Level 3 assets | $ | -- | $ | 154 | $ | (382 | ) | $ | (169 | ) | $ | 1,604 | |||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | 265 | $ | (111 | ) | $ | -- | $ | 3 | $ | (307 | ) | |||||||||
Liabilities held for sale | (265 | ) | (6 | ) | -- | 5 | (246 | ) | |||||||||||||
Total recurring Level 3 liabilities | $ | -- | $ | (117 | ) | $ | -- | $ | 8 | $ | (553 | ) | |||||||||
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2012. | |||||||||||||||||||||
($ in millions) | Total gains (losses) | ||||||||||||||||||||
included in: | |||||||||||||||||||||
Balance as of | Net | OCI | Transfers | Transfers | |||||||||||||||||
December 31, | income (1) | into | out of | ||||||||||||||||||
2011 | Level 3 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 387 | $ | -5 | $ | 22 | $ | 53 | $ | -10 | |||||||||||
Corporate | 1,319 | 20 | 63 | 381 | -64 | ||||||||||||||||
ABS | 254 | 24 | 59 | 42 | -7 | ||||||||||||||||
RMBS | 47 | -- | -- | -- | -47 | ||||||||||||||||
CMBS | 30 | -4 | 10 | -- | -- | ||||||||||||||||
Redeemable preferred stock | 1 | -- | -- | -- | -- | ||||||||||||||||
Total fixed income securities | 2,038 | 35 | 154 | 476 | -128 | ||||||||||||||||
Equity securities | 14 | -- | -- | -- | -- | ||||||||||||||||
Free-standing derivatives, net | -88 | 25 | -- | -- | -- | ||||||||||||||||
Other assets | 1 | -- | -- | -- | -- | ||||||||||||||||
Total recurring Level 3 assets | $ | 1,965 | $ | 60 | $ | 154 | $ | 476 | $ | -128 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -723 | $ | 168 | $ | -- | $ | -- | $ | -- | |||||||||||
Total recurring Level 3 liabilities | $ | -723 | $ | 168 | $ | -- | $ | -- | $ | -- | |||||||||||
Purchases | Sales | Issues | Settlements | Balance as of | |||||||||||||||||
December 31, | |||||||||||||||||||||
2012 | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | -- | $ | -107 | $ | -- | $ | -2 | $ | 338 | |||||||||||
Corporate | 125 | -223 | -- | -120 | 1,501 | ||||||||||||||||
ABS | 11 | -165 | -- | -19 | 199 | ||||||||||||||||
RMBS | -- | -- | -- | -- | -- | ||||||||||||||||
CMBS | -- | -- | -- | -15 | 21 | ||||||||||||||||
Redeemable preferred stock | 1 | -1 | -- | -- | 1 | ||||||||||||||||
Total fixed income securities | 137 | -496 | -- | -156 | 2,060 | ||||||||||||||||
Equity securities | 5 | -12 | -- | -- | 7 | ||||||||||||||||
Free-standing derivatives, net | 27 | -- | -- | 9 | -27 | -2 | |||||||||||||||
Other assets | -- | -- | -- | -- | 1 | ||||||||||||||||
Total recurring Level 3 assets | $ | 169 | $ | -508 | $ | -- | $ | -147 | $ | 2,041 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -- | $ | -- | $ | -79 | $ | 81 | $ | -553 | |||||||||||
Total recurring Level 3 liabilities | $ | -- | $ | -- | $ | -79 | $ | 81 | $ | -553 | |||||||||||
(1) The effect to net income totals $228 million and is reported in the Consolidated Statements of Operations and Comprehensive Income as follows: $38 million in realized capital gains and losses, $22 million in net investment income, $132 million in interest credited to contractholder funds and $36 million in contract benefits. | |||||||||||||||||||||
(2) Comprises $3 million of assets and $30 million of liabilities. | |||||||||||||||||||||
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2011. | |||||||||||||||||||||
($ in millions) | Total gains (losses) | ||||||||||||||||||||
included in: | |||||||||||||||||||||
Balance as of | Net | OCI | Transfers | Transfers | |||||||||||||||||
December 31, | income (1) | into | out of | ||||||||||||||||||
2010 | Level 3 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 601 | $ | -2 | $ | 7 | $ | 48 | $ | -34 | |||||||||||
Corporate | 1,760 | 52 | -35 | 237 | -410 | ||||||||||||||||
ABS | 1,974 | 21 | -65 | -- | -1,470 | ||||||||||||||||
RMBS | 1,189 | -57 | 77 | -- | -853 | ||||||||||||||||
CMBS | 844 | -43 | 111 | 65 | -878 | ||||||||||||||||
Redeemable preferred stock | 1 | -- | -- | -- | -- | ||||||||||||||||
Total fixed income securities | 6,369 | -29 | 95 | 350 | -3,645 | ||||||||||||||||
Equity securities | 29 | -5 | -- | -- | -10 | ||||||||||||||||
Free-standing derivatives, net | -77 | -37 | -- | -- | -- | ||||||||||||||||
Other assets | 1 | -- | -- | -- | -- | ||||||||||||||||
Total recurring Level 3 assets | $ | 6,322 | $ | -71 | $ | 95 | $ | 350 | $ | -3,655 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -653 | $ | -134 | $ | -- | $ | -- | $ | -- | |||||||||||
Total recurring Level 3 liabilities | $ | -653 | $ | -134 | $ | -- | $ | -- | $ | -- | |||||||||||
Purchases | Sales | Issues | Settlements | Balance as of | |||||||||||||||||
December 31, | |||||||||||||||||||||
2011 | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 10 | $ | -241 | $ | -- | $ | -2 | $ | 387 | |||||||||||
Corporate | 266 | -473 | -- | -78 | 1,319 | ||||||||||||||||
ABS | 146 | -136 | -- | -216 | 254 | ||||||||||||||||
RMBS | -- | -222 | -- | -87 | 47 | ||||||||||||||||
CMBS | -- | -66 | -- | -3 | 30 | ||||||||||||||||
Redeemable preferred stock | -- | -- | -- | -- | 1 | ||||||||||||||||
Total fixed income securities | 422 | -1,138 | -- | -386 | 2,038 | ||||||||||||||||
Equity securities | 1 | -1 | -- | -- | 14 | ||||||||||||||||
Free-standing derivatives, net | 18 | -- | -- | 8 | -88 | -2 | |||||||||||||||
Other assets | -- | -- | -- | -- | 1 | ||||||||||||||||
Total recurring Level 3 assets | $ | 441 | $ | -1,139 | $ | -- | $ | -378 | $ | 1,965 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -- | $ | -- | $ | -100 | $ | 164 | $ | -723 | |||||||||||
Total recurring Level 3 liabilities | $ | -- | $ | -- | $ | -100 | $ | 164 | $ | -723 | |||||||||||
(1) The effect to net income totals $(205) million and is reported in the Consolidated Statements of Operations and Comprehensive Income as follows: $(101) million in realized capital gains and losses, $34 million in net investment income, $(106) million in interest credited to contractholder funds and $(32) million in contract benefits. | |||||||||||||||||||||
(2) Comprises $1 million of assets and $89 million of liabilities. | |||||||||||||||||||||
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. For example, in situations where a fair value quote is not provided by the Company’s independent third-party valuation service provider and as a result the price is stale or has been replaced with a broker quote whose inputs have not been corroborated to be market observable, the security is transferred 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 2013 or 2011. During 2012, certain U.S. government securities were transferred into Level 1 from Level 2 as a result of increased liquidity in the market and a sustained increase in the market activity for these assets. | |||||||||||||||||||||
During 2011, certain ABS, RMBS and CMBS were transferred into Level 2 from Level 3 as a result of increased liquidity in the market and a sustained increase in the market activity for these assets. Additionally, in 2011 certain ABS that were valued based on non-binding broker quotes were transferred into Level 2 from Level 3 since the inputs were corroborated to be market observable. | |||||||||||||||||||||
Transfers into Level 3 during 2013, 2012 and 2011 included situations where a fair value quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers out of Level 3 during 2013, 2012 and 2011 included situations where a broker quote was used in the prior period and a fair value quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant. | |||||||||||||||||||||
The following table provides the change in unrealized gains and losses included in net income for Level 3 assets and liabilities held as of December 31. | |||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | -4 | $ | -- | $ | -2 | |||||||||||||||
Corporate | 13 | 15 | 19 | ||||||||||||||||||
ABS | -2 | -- | -35 | ||||||||||||||||||
CMBS | -2 | -3 | -12 | ||||||||||||||||||
Total fixed income securities | 5 | 12 | -30 | ||||||||||||||||||
Equity securities | -- | -- | -4 | ||||||||||||||||||
Free-standing derivatives, net | 10 | 6 | -29 | ||||||||||||||||||
Other assets | -1 | -- | -- | ||||||||||||||||||
Assets held for sale | -2 | -- | -- | ||||||||||||||||||
Total recurring Level 3 assets | $ | 12 | $ | 18 | $ | -63 | |||||||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | 89 | $ | 168 | $ | -134 | |||||||||||||||
Liabilities held for sale | 20 | -- | -- | ||||||||||||||||||
Total recurring Level 3 liabilities | $ | 109 | $ | 168 | $ | -134 | |||||||||||||||
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 determined to be in Level 3. These gains and losses total $121 million in 2013 and are reported as follows: $9 million in realized capital gains and losses, $9 million in net investment income, $35 million in interest credited to contractholder funds, $74 million in contract benefits and $(6) million in loss on disposition of operations. These gains and losses total $186 million in 2012 and are reported as follows: $19 million in net investment income, $131 million in interest credited to contractholder funds and $36 million in contract benefits. These gains and losses total $(197) million in 2011 and are reported as follows: $(105) million in realized capital gains and losses, $42 million in net investment income, $(102) million in interest credited to contractholder funds and $(32) million in contract benefits. | |||||||||||||||||||||
Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. | |||||||||||||||||||||
Financial assets | |||||||||||||||||||||
($ in millions) | December 31, 2013 | December 31, 2012 | |||||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||||||
value | value | value | value | ||||||||||||||||||
Mortgage loans | $ | 4,173 | $ | 4,300 | $ | 5,943 | $ | 6,223 | |||||||||||||
Cost method limited partnerships | 605 | 799 | 617 | 778 | |||||||||||||||||
Agent loans | 341 | 325 | 319 | 314 | |||||||||||||||||
Bank loans | 160 | 161 | 282 | 282 | |||||||||||||||||
Notes due from related party | 275 | 275 | 275 | 275 | |||||||||||||||||
Assets held for sale | 1,458 | 1,532 | -- | -- | |||||||||||||||||
The fair value of mortgage loans, including those classified as assets held for sale, is based on discounted contractual cash flows or, if the loans are impaired due to credit reasons, the fair value of collateral less costs to sell. Risk adjusted discount rates are selected using current rates at which similar loans would be made to borrowers with similar characteristics, using similar types of properties as collateral. The fair value of cost method limited partnerships is determined using reported net asset values of the underlying funds. The fair value of agent loans, which are reported in other investments, is based on discounted cash flow calculations that use discount rates with a spread over U.S. Treasury rates. Assumptions used in developing estimated cash flows and discount rates consider the loan’s credit and liquidity risks. The fair value of bank loans, which are reported in other investments or assets held for sale, is based on broker quotes from brokers familiar with the loans and current market conditions. The fair value of notes due from related party, which are reported in other investments, is based on discounted cash flow calculations using current interest rates for instruments with comparable terms. The fair value measurements for mortgage loans, cost method limited partnerships, agent loans, bank loans and notes due from related party and assets held for sale are categorized as Level 3. | |||||||||||||||||||||
Financial liabilities | |||||||||||||||||||||
($ in millions) | December 31, 2013 | December 31, 2012 | |||||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||||||
value | value | value | value | ||||||||||||||||||
Contractholder funds on investment contracts | $ | 15,542 | $ | 16,198 | $ | 26,984 | $ | 27,989 | |||||||||||||
Notes due to related parties | 282 | 282 | 496 | 496 | |||||||||||||||||
Liability for collateral | 328 | 328 | 561 | 561 | |||||||||||||||||
Liabilities held for sale | 7,417 | 7,298 | -- | -- | |||||||||||||||||
The fair value of contractholder funds on investment contracts, including those classified as liabilities held for sale, is based on the terms of the underlying contracts utilizing prevailing market rates for similar contracts adjusted for the Company’s own credit risk. Deferred annuities included in contractholder funds are valued using discounted cash flow models which incorporate market value margins, which are based on the cost of holding economic capital, and the Company’s own credit risk. Immediate annuities without life contingencies and fixed rate funding agreements are valued at the present value of future benefits using market implied interest rates which include the Company’s own credit risk. The fair value measurements for contractholder funds on investment contracts and liabilities held for sale are categorized as Level 3. | |||||||||||||||||||||
The fair value of notes due to related parties is based on discounted cash flow calculations using current interest rates for instruments with comparable terms and considers the Company’s own credit risk. The liability for collateral is valued at carrying value due to its short-term nature. The fair value measurements for liability for collateral are categorized as Level 2. The fair value measurements for notes due to related parties are categorized as Level 3. |
Derivative_Financial_Instrumen
Derivative Financial Instruments and Off-balance sheet Financial Instruments | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | |||||||||||||||||||||||
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | |||||||||||||||||||||||
8. Derivative Financial Instruments and Off-balance sheet Financial Instruments | ||||||||||||||||||||||||
The Company uses derivatives to manage 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, and for asset replication. The Company does not use derivatives for speculative purposes. | ||||||||||||||||||||||||
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. The Company uses financial futures and interest rate swaps to hedge anticipated asset purchases and liability issuances and futures and options for hedging the equity exposure contained in its equity indexed life and annuity product contracts that offer equity returns to contractholders. In addition, the Company uses interest rate swaps to hedge interest rate risk inherent in funding agreements. The Company uses foreign currency swaps and forwards primarily to reduce the foreign currency risk associated with issuing foreign currency denominated funding agreements and holding foreign currency denominated investments. Credit default swaps are typically used to mitigate the credit risk within the Company’s fixed income portfolio. | ||||||||||||||||||||||||
The Company may also use derivatives to manage the risk associated with corporate actions, including the sale of a business. During December 2013, swaptions were utilized to hedge the expected proceeds from the pending disposition of LBL. | ||||||||||||||||||||||||
Asset replication refers to the “synthetic” creation of assets through the use of derivatives and primarily investment grade host bonds to replicate securities that are either unavailable in the cash markets or more economical to acquire in synthetic form. The Company replicates fixed income securities using a combination of a credit default swap and one or more highly rated fixed income securities to synthetically replicate the economic characteristics of one or more cash market securities. | ||||||||||||||||||||||||
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 equity returns to contractholders; equity-indexed notes containing equity call options, which provide a coupon payout that is determined using one or more equity-based indices; credit default swaps in synthetic collateralized debt obligations, which provide enhanced coupon rates as a result of selling credit protection; and conversion options in fixed income securities, which provide the Company with the right to convert the instrument into a predetermined number of shares of common stock. | ||||||||||||||||||||||||
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 of its interest rate and foreign currency swap contracts and certain investment risk transfer reinsurance agreements as fair value hedges when the hedging instrument is highly effective in offsetting the risk of changes in the fair value of the hedged item. The Company designates certain of its foreign currency swap contracts as cash flow hedges when the hedging instrument is highly effective in offsetting the exposure of variations in cash flows for the hedged risk that could affect net income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged item affects net income. | ||||||||||||||||||||||||
The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. | ||||||||||||||||||||||||
Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Consolidated Statements of Financial Position. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of December 31, 2013, the Company pledged $4 million of cash and securities in the form of margin deposits. | ||||||||||||||||||||||||
For those derivatives which qualify for fair value hedge accounting, net income includes the changes in the fair value of both the derivative instrument and the hedged risk, and therefore reflects any hedging ineffectiveness. For cash flow hedges, gains and losses are amortized from accumulated other comprehensive income and are reported in net income in the same period the forecasted transactions being hedged impact net income. | ||||||||||||||||||||||||
Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. | ||||||||||||||||||||||||
The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2013. | ||||||||||||||||||||||||
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||||||
Balance sheet location | Notional | Number | Fair | Gross | Gross | |||||||||||||||||||
amount | of | value, | asset | liability | ||||||||||||||||||||
contracts | net | |||||||||||||||||||||||
Asset derivatives | ||||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other investments | $ | 16 | n/a | $ | 1 | $ | 1 | $ | -- | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swaption agreements | Other investments | 1,420 | n/a | -- | -- | -- | ||||||||||||||||||
Interest rate cap agreements | Other investments | 61 | n/a | 2 | 2 | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options and warrants (2) | Other investments | 3 | 10,035 | 261 | 261 | -- | ||||||||||||||||||
Financial futures contracts | Other assets | -- | 627 | -- | -- | -- | ||||||||||||||||||
Foreign currency contracts | ||||||||||||||||||||||||
Foreign currency forwards | Other investments | 47 | n/a | -- | -- | -- | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Credit default swaps | Fixed income securities | 12 | n/a | -12 | -- | -12 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other investments | 1 | n/a | -- | -- | -- | ||||||||||||||||||
Credit default swaps – selling protection | Other investments | 85 | n/a | 2 | 2 | -- | ||||||||||||||||||
Other contracts | ||||||||||||||||||||||||
Other contracts | Other assets | 4 | n/a | -- | -- | -- | ||||||||||||||||||
Subtotal | 1,633 | 10,662 | 253 | 265 | -12 | |||||||||||||||||||
Total asset derivatives | $ | 1,649 | 10,662 | $ | 254 | $ | 266 | $ | -12 | |||||||||||||||
Liability derivatives | ||||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other liabilities & accrued expenses | $ | 132 | n/a | $ | -15 | $ | -- | $ | -15 | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swap agreements | Other liabilities & accrued expenses | 85 | n/a | 4 | 4 | -- | ||||||||||||||||||
Interest rate swaption agreements | Other liabilities & accrued expenses | 4,570 | n/a | 1 | 1 | -- | ||||||||||||||||||
Interest rate cap agreements | Other liabilities & accrued expenses | 262 | n/a | 4 | 4 | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options | Other liabilities & accrued expenses | 55 | 10,035 | -165 | 2 | -167 | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Guaranteed accumulation benefits | Contractholder funds | 738 | n/a | -43 | -- | -43 | ||||||||||||||||||
Guaranteed withdrawal benefits | Contractholder funds | 506 | n/a | -13 | -- | -13 | ||||||||||||||||||
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | 1,693 | n/a | -247 | -- | -247 | ||||||||||||||||||
Liabilities held for sale | 2,363 | n/a | -246 | -- | -246 | |||||||||||||||||||
Other embedded derivative financial instruments | Contractholder funds | 85 | n/a | -4 | -- | -4 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other liabilities & accrued expenses | 171 | n/a | -2 | -- | -2 | ||||||||||||||||||
Credit default swaps – selling protection | Other liabilities & accrued expenses | 100 | n/a | -15 | -- | -15 | ||||||||||||||||||
Subtotal | 10,628 | 10,035 | -726 | 11 | -737 | |||||||||||||||||||
Total liability derivatives | 10,760 | 10,035 | -741 | $ | 11 | $ | -752 | |||||||||||||||||
Total derivatives | $ | 12,409 | 20,697 | $ | -487 | |||||||||||||||||||
(1) Volume for OTC 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 =ot applicable) | ||||||||||||||||||||||||
(2) In addition to the number of contracts presented in the table, the Company held 837,100 stock warrants. Stock warrants can be converted to cash upon sale of those instruments or exercised for shares of common stock. | ||||||||||||||||||||||||
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, 2012. | ||||||||||||||||||||||||
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||||||
Asset derivatives | Balance sheet location | Notional | Number | Fair | Gross | Gross | ||||||||||||||||||
amount | of | value, | asset | liability | ||||||||||||||||||||
contracts | net | |||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other investments | $ | 16 | n/a | $ | 2 | $ | 2 | $ | -- | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swap agreements | Other investments | 5,541 | n/a | 19 | 28 | -9 | ||||||||||||||||||
Interest rate cap agreements | Other investments | 372 | n/a | 1 | 1 | -- | ||||||||||||||||||
Financial futures contracts | Other assets | n/a | 2 | -- | -- | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options and warrants (2) | Other investments | 146 | 12,400 | 125 | 125 | -- | ||||||||||||||||||
Financial futures contracts | Other assets | n/a | 249 | 2 | 2 | -- | ||||||||||||||||||
Foreign currency contracts | ||||||||||||||||||||||||
Foreign currency forwards | Other investments | 44 | n/a | -- | -- | -- | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Conversion options | Fixed income securities | 5 | n/a | -- | -- | -- | ||||||||||||||||||
Equity-indexed call options | Fixed income securities | 90 | n/a | 9 | 9 | -- | ||||||||||||||||||
Credit default swaps | Fixed income securities | 12 | n/a | -12 | -- | -12 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other investments | 32 | n/a | -1 | -- | -1 | ||||||||||||||||||
Credit default swaps – selling protection | Other investments | 100 | n/a | 1 | 1 | -- | ||||||||||||||||||
Other contracts | ||||||||||||||||||||||||
Other contracts | Other assets | 4 | n/a | 1 | 1 | -- | ||||||||||||||||||
Subtotal | 6,346 | 12,651 | 145 | 167 | -22 | |||||||||||||||||||
Total asset derivatives | $ | 6,362 | 12,651 | $ | 147 | $ | 169 | $ | -22 | |||||||||||||||
Liability derivatives | ||||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other liabilities & accrued expenses | $ | 135 | n/a | $ | -19 | $ | -- | $ | -19 | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swap agreements | Other liabilities & accrued expenses | 1,185 | n/a | 16 | 18 | -2 | ||||||||||||||||||
Interest rate swaption agreements | Other liabilities & accrued expenses | 250 | n/a | -- | -- | -- | ||||||||||||||||||
Interest rate cap agreements | Other liabilities & accrued expenses | 429 | n/a | 1 | 1 | -- | ||||||||||||||||||
Financial futures contracts | Other liabilities & accrued expenses | -- | 357 | -- | -- | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options and futures | Other liabilities & accrued expenses | -- | 12,262 | -58 | -- | -58 | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Guaranteed accumulation benefits | Contractholder funds | 820 | n/a | -86 | -- | -86 | ||||||||||||||||||
Guaranteed withdrawal benefits | Contractholder funds | 554 | n/a | -39 | -- | -39 | ||||||||||||||||||
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | 3,916 | n/a | -419 | -- | -419 | ||||||||||||||||||
Other embedded derivative financial instruments | Contractholder funds | 85 | n/a | -9 | -- | -9 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other liabilities & accrued expenses | 193 | n/a | -2 | -- | -2 | ||||||||||||||||||
Credit default swaps – selling protection | Other liabilities & accrued expenses | 130 | n/a | -30 | -- | -30 | ||||||||||||||||||
Subtotal | 7,562 | 12,619 | -626 | 19 | -645 | |||||||||||||||||||
Total liability derivatives | 7,697 | 12,619 | -645 | $ | 19 | $ | -664 | |||||||||||||||||
Total derivatives | $ | 14,059 | 25,270 | $ | -498 | |||||||||||||||||||
(1) Volume for OTC 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 =ot applicable) | ||||||||||||||||||||||||
(2) In addition to the number of contracts presented in the table, the Company held 837,100 stock warrants. Stock warrants can be converted to cash upon sale of those instruments or exercised for shares of common stock. | ||||||||||||||||||||||||
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 | Counter- | Cash | Net | Securities | Net | |||||||||||||||||||
amount | party | collateral | amount on | collateral | amount | |||||||||||||||||||
netting | (received) | balance | (received) | |||||||||||||||||||||
pledged | sheet | pledged | ||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||
Asset derivatives | $ | 14 | $ | -11 | $ | -- | $ | 3 | $ | -3 | $ | -- | ||||||||||||
Liability derivatives | -33 | 11 | -4 | -26 | 22 | -4 | ||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||
Asset derivatives | $ | 52 | $ | -29 | $ | -18 | $ | 5 | $ | -5 | $ | -- | ||||||||||||
Liability derivatives | -63 | 29 | -- | -34 | 25 | -9 | ||||||||||||||||||
The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships for the years ended December 31. | ||||||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||||||
Gain (loss) recognized in OCI on derivatives during the period | $ | 3 | $ | -6 | $ | 4 | ||||||||||||||||||
Loss recognized in OCI on derivatives during the term of the hedging relationship | -13 | -17 | -12 | |||||||||||||||||||||
Loss reclassified from AOCI into income (net investment income) | -1 | -- | -- | |||||||||||||||||||||
Loss reclassified from AOCI into income (realized capital gains and losses) | -- | -1 | -1 | |||||||||||||||||||||
Amortization of net losses from accumulated other comprehensive income related to cash flow hedges is expected to be $2 million during the next twelve months. There was no hedge ineffectiveness reported in realized gains and losses in 2013, 2012 or 2011. | ||||||||||||||||||||||||
The following tables present gains and losses from valuation, settlements and hedge ineffectiveness reported on derivatives used in fair value hedging relationships and derivatives not designated as accounting hedging instruments in the Consolidated Statements of Operations and Comprehensive Income for the years ended December 31. In 2013, the Company had no derivatives used in fair value hedging relationships. | ||||||||||||||||||||||||
($ in millions) | 2013 | |||||||||||||||||||||||
Realized | Contract | Interest | Loss on | Total gain | ||||||||||||||||||||
capital | benefits | credited to | disposition | (loss) | ||||||||||||||||||||
gains and | contractholder | of | recognized in | |||||||||||||||||||||
losses | funds | operations | net income on | |||||||||||||||||||||
derivatives | ||||||||||||||||||||||||
Interest rate contracts | $ | 3 | $ | -- | $ | -- | $ | -6 | $ | -3 | ||||||||||||||
Equity and index contracts | -- | -- | 94 | -- | 94 | |||||||||||||||||||
Embedded derivative financial instruments | -1 | 74 | -75 | -- | -2 | |||||||||||||||||||
Foreign currency contracts | -2 | -- | -- | -- | -2 | |||||||||||||||||||
Credit default contracts | 14 | -- | -- | -- | 14 | |||||||||||||||||||
Other contracts | -- | -- | -3 | -- | -3 | |||||||||||||||||||
Total | $ | 14 | $ | 74 | $ | 16 | $ | -6 | $ | 98 | ||||||||||||||
2012 | ||||||||||||||||||||||||
Net | Realized | Contract | Interest | Total gain | ||||||||||||||||||||
investment | capital | benefits | credited to | (loss) | ||||||||||||||||||||
income | gains and | contractholder | recognized in | |||||||||||||||||||||
losses | funds | net income on | ||||||||||||||||||||||
derivatives | ||||||||||||||||||||||||
Derivatives in fair value accounting hedging relationships | ||||||||||||||||||||||||
Interest rate contracts | $ | -1 | $ | -- | $ | -- | $ | -- | $ | (1 | ) | |||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | -- | 2 | -- | -- | 2 | |||||||||||||||||||
Equity and index contracts | -- | -- | -- | 56 | 56 | |||||||||||||||||||
Embedded derivative financial instruments | -- | 20 | 36 | 134 | 190 | |||||||||||||||||||
Foreign currency contracts | -- | -2 | -- | -- | (2 | ) | ||||||||||||||||||
Credit default contracts | -- | 15 | -- | -- | 15 | |||||||||||||||||||
Other contracts | -- | -- | -- | 3 | 3 | |||||||||||||||||||
Subtotal | -- | 35 | 36 | 193 | 264 | |||||||||||||||||||
Total | $ | -1 | $ | 35 | $ | 36 | $ | 193 | $ | 263 | ||||||||||||||
2011 | ||||||||||||||||||||||||
Net | Realized | Contract | Interest | Total gain | ||||||||||||||||||||
investment | capital | benefits | credited to | (loss) | ||||||||||||||||||||
income | gains and | contractholder | recognized in | |||||||||||||||||||||
losses | funds | net income on | ||||||||||||||||||||||
derivatives | ||||||||||||||||||||||||
Derivatives in fair value accounting hedging relationships | ||||||||||||||||||||||||
Interest rate contracts | $ | -2 | $ | -8 | $ | -- | $ | -5 | $ | (15 | ) | |||||||||||||
Foreign currency and interest rate contracts | -- | -- | -- | -32 | (32 | ) | ||||||||||||||||||
Subtotal | -2 | -8 | -- | -37 | (47 | ) | ||||||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | -- | -151 | -- | -- | (151 | ) | ||||||||||||||||||
Equity and index contracts | -- | -- | -- | -2 | (2 | ) | ||||||||||||||||||
Embedded derivative financial instruments | -- | -45 | -32 | -38 | (115 | ) | ||||||||||||||||||
Credit default contracts | -- | 2 | -- | -- | 2 | |||||||||||||||||||
Other contracts | -- | -- | -- | 7 | 7 | |||||||||||||||||||
Subtotal | -- | -194 | -32 | -33 | (259 | ) | ||||||||||||||||||
Total | $ | -2 | $ | -202 | $ | -32 | $ | -70 | $ | (306 | ) | |||||||||||||
The following table provides a summary of the changes in fair value of the Company’s fair value hedging relationships in the Consolidated Statements of Operations and Comprehensive Income for the years ended December 31. | ||||||||||||||||||||||||
($ in millions) | Gain (loss) on derivatives | Gain (loss) on hedged risk | ||||||||||||||||||||||
Location of gain or (loss) recognized | Interest | Foreign | Contractholder | Investments | ||||||||||||||||||||
in net income on derivatives | rate | currency & | funds | |||||||||||||||||||||
contracts | interest rate | |||||||||||||||||||||||
contracts | ||||||||||||||||||||||||
2012 | ||||||||||||||||||||||||
Net investment income | $ | 3 | $ | -- | $ | -- | $ | (3 | ) | |||||||||||||||
Total | $ | 3 | $ | -- | $ | -- | $ | (3 | ) | |||||||||||||||
2011 | ||||||||||||||||||||||||
Interest credited to contractholder funds | $ | -7 | $ | -34 | $ | 41 | $ | -- | ||||||||||||||||
Net investment income | 26 | -- | -- | (26 | ) | |||||||||||||||||||
Realized capital gains and losses | -8 | -- | -- | -- | ||||||||||||||||||||
Total | $ | 11 | $ | -34 | $ | 41 | $ | (26 | ) | |||||||||||||||
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 December 31, 2013, counterparties pledged $8 million in cash and securities to the Company, and the Company pledged $23 million in securities to counterparties which includes $14 million of collateral posted under MNAs for contracts containing credit-risk-contingent provisions that are in a liability position and $9 million of collateral posted under MNAs for contracts without credit-risk-contingent liabilities. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. | ||||||||||||||||||||||||
Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. | ||||||||||||||||||||||||
The following table summarizes the counterparty credit exposure as of December 31 by counterparty credit rating as it relates to the Company’s OTC derivatives. | ||||||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||||||
Rating (1) | Number | Notional | Credit | Exposure, | Number | Notional | Credit | Exposure, | ||||||||||||||||
of counter- | amount (2) | exposure (2) | net of | of counter- | amount (2) | exposure (2) | net of | |||||||||||||||||
parties | collateral (2) | parties | collateral (2) | |||||||||||||||||||||
A+ | 1 | $ | 22 | $ | 1 | $ | 1 | 1 | $ | 19 | $ | -- | $ | -- | ||||||||||
A | 4 | 1,523 | 2 | -- | 3 | 2,252 | 12 | -- | ||||||||||||||||
A- | 1 | 24 | 1 | -- | 2 | 311 | 1 | 1 | ||||||||||||||||
BBB+ | 1 | 3 | -- | -- | 1 | 3,617 | 11 | -- | ||||||||||||||||
BBB | 1 | 76 | 1 | -- | -- | -- | -- | -- | ||||||||||||||||
Total | 8 | $ | 1,648 | $ | 5 | $ | 1 | 7 | $ | 6,199 | $ | 24 | $ | 1 | ||||||||||
-1 | Rating is the lower of S&P or Moody’s ratings. | |||||||||||||||||||||||
-2 | Only OTC derivatives with a net positive fair value are included for each counterparty. | |||||||||||||||||||||||
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 on certain dates if 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 or in the event ALIC or ALNY are no longer rated by either Moody’s or S&P. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative instruments 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 ALIC’s or ALNY’s financial strength credit ratings by Moody’s or S&P, or in the event 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 of December 31, 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) | 2013 | 2012 | ||||||||||||||||||||||
Gross liability fair value of contracts containing credit-risk-contingent features | $ | 25 | $ | 62 | ||||||||||||||||||||
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | -9 | -28 | ||||||||||||||||||||||
Collateral posted under MNAs for contracts containing credit-risk-contingent features | -14 | -25 | ||||||||||||||||||||||
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ | 2 | $ | 9 | ||||||||||||||||||||
Credit derivatives - selling protection | ||||||||||||||||||||||||
Free-standing credit default swaps (“CDS”) are utilized for selling credit protection against a specified credit event. A credit default swap 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 | Total | Fair | |||||||||||||||||||
lower | value | |||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||
Single name | ||||||||||||||||||||||||
Investment grade corporate debt (1) | $ | -- | $ | 5 | $ | -- | $ | -- | $ | 5 | $ | -- | ||||||||||||
Baskets | ||||||||||||||||||||||||
First-to-default | ||||||||||||||||||||||||
Municipal | -- | 100 | -- | -- | 100 | -15 | ||||||||||||||||||
Index | ||||||||||||||||||||||||
Investment grade corporate debt (1) | 1 | 20 | 55 | 4 | 80 | 2 | ||||||||||||||||||
Total | $ | 1 | $ | 125 | $ | 55 | $ | 4 | $ | 185 | $ | -13 | ||||||||||||
December 31, 2012 | ||||||||||||||||||||||||
Single name | ||||||||||||||||||||||||
Investment grade corporate debt (1) | $ | -- | $ | 5 | $ | -- | $ | -- | $ | 5 | $ | -- | ||||||||||||
Municipal | 25 | -- | -- | -- | 25 | -3 | ||||||||||||||||||
Subtotal | 25 | 5 | -- | -- | 30 | -3 | ||||||||||||||||||
Baskets | ||||||||||||||||||||||||
First-to-default | ||||||||||||||||||||||||
Municipal | -- | 100 | -- | -- | 100 | -26 | ||||||||||||||||||
Index | ||||||||||||||||||||||||
Investment grade corporate debt (1) | 1 | 26 | 68 | 5 | 100 | -- | ||||||||||||||||||
Total | $ | 26 | $ | 131 | $ | 68 | $ | 5 | $ | 230 | $ | -29 | ||||||||||||
(1) Investment grade corporate debt categorization is based on the rating of the underlying name(s) at initial purchase. | ||||||||||||||||||||||||
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 a specific tranche of a basket, 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 or a tranche of a 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. When a credit event occurs in a tranche of a basket, there is no immediate impact to the Company until cumulative losses in the basket exceed the contractual subordination. To date, realized losses have not exceeded the subordination. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset. | ||||||||||||||||||||||||
The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored. | ||||||||||||||||||||||||
In addition to the CDS described above, the Company’s synthetic collateralized debt obligations contain embedded credit default swaps which sell protection on a basket of reference entities. The synthetic collateralized debt obligations are fully funded; therefore, the Company is not obligated to contribute additional funds when credit events occur related to the reference entities named in the embedded credit default swaps. The Company’s maximum amount at risk equals the amount of its aggregate initial investment in the synthetic collateralized debt obligations. | ||||||||||||||||||||||||
Off-balance sheet financial instruments | ||||||||||||||||||||||||
The contractual amounts of off-balance sheet financial instruments as of December 31 are as follows: | ||||||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||||||
Commitments to invest in limited partnership interests | $ | 1,366 | $ | 947 | ||||||||||||||||||||
Commitments to extend mortgage loans | 1 | 67 | ||||||||||||||||||||||
Private placement commitments | 5 | 6 | ||||||||||||||||||||||
Other loan commitments | 26 | 7 | ||||||||||||||||||||||
In the preceding table, the contractual amounts represent the amount at risk if the contract is fully drawn upon, the counterparty defaults and the value of any underlying security becomes worthless. Unless noted otherwise, the Company does not require collateral or other security to support off-balance-sheet financial instruments with credit risk. | ||||||||||||||||||||||||
Commitments to invest in limited partnership interests represent agreements to acquire new or additional participation in certain limited partnership investments. The Company enters into these agreements in the normal course of business. Because the investments in limited partnerships are not actively traded, it is not practical to estimate the fair value of these commitments. | ||||||||||||||||||||||||
Commitments to extend mortgage loans are agreements to lend to a borrower provided there is no violation of any condition established in the contract. The Company enters into these agreements to commit to future loan fundings at a predetermined interest rate. Commitments generally have fixed expiration dates or other termination clauses. The fair value of commitments to extend mortgage loans, which are secured by the underlying properties, is zero as of December 31, 2013, and is valued based on estimates of fees charged by other institutions to make similar commitments to similar borrowers. | ||||||||||||||||||||||||
Private placement commitments represent conditional commitments to purchase private placement debt and equity securities at a specified future date. The Company enters into these agreements in the normal course of business. The fair value of these commitments generally cannot be estimated on the date the commitment is made as the terms and conditions of the underlying private placement securities are not yet final. | ||||||||||||||||||||||||
Other loan commitments are agreements to lend to a borrower provided there is no violation of any condition established in the contract. The Company enters into these agreements to commit to future loan fundings at predetermined interest rates. Commitments generally have varying expiration dates or other termination clauses. The fair value of these commitments is insignificant. |
Reserve_for_LifeContingent_Con
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | ' | ||||||||||||||
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | ' | ||||||||||||||
9. Reserve for Life-Contingent Contract Benefits and Contractholder Funds | |||||||||||||||
As of December 31, the reserve for life-contingent contract benefits consists of the following: | |||||||||||||||
($ in millions) | 2013 | 2012 | |||||||||||||
Immediate fixed annuities: | |||||||||||||||
Structured settlement annuities | $ | 6,645 | $ | 7,274 | |||||||||||
Other immediate fixed annuities | 2,279 | 2,382 | |||||||||||||
Traditional life insurance | 2,329 | 2,899 | |||||||||||||
Accident and health insurance | 236 | 1,448 | |||||||||||||
Other | 100 | 114 | |||||||||||||
Total reserve for life-contingent contract benefits | $ | 11,589 | $ | 14,117 | |||||||||||
The following table highlights the key assumptions generally used in calculating the reserve for life-contingent contract benefits. | |||||||||||||||
Product | Mortality | Interest rate | Estimation method | ||||||||||||
Structured settlement annuities | U.S. population with projected calendar year improvements; mortality rates adjusted for each impaired life based on reduction in life expectancy | Interest rate assumptions range from 0% to 9.0% | Present value of contractually specified future benefits | ||||||||||||
Other immediate fixed annuities | 1983 group annuity mortality table with internal modifications; 1983 individual annuity mortality table; Annuity 2000 mortality table with internal modifications; Annuity 2000 mortality table; 1983 individual annuity mortality table with internal modifications | Interest rate assumptions range from 0% to 11.5% | Present value of expected future benefits based on historical experience | ||||||||||||
Traditional life insurance | Actual company experience plus loading | Interest rate assumptions range from 2.5% to 11.3% | Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims | ||||||||||||
Accident and health insurance | Actual company experience plus loading | Interest rate assumptions range from 3.0% to 6.0% | Unearned premium; additional contract reserves for mortality risk and unpaid claims | ||||||||||||
Other: | Annuity 2000 mortality table with internal modifications | Interest rate assumptions range from 4.0% to 5.8% | Projected benefit ratio applied to cumulative assessments | ||||||||||||
Variable annuity guaranteed minimum death benefits (1) | |||||||||||||||
(1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”). | |||||||||||||||
To the extent that unrealized gains on fixed income securities would result in a premium deficiency had those gains actually been realized, a premium deficiency reserve is recorded for certain immediate annuities with life contingencies. A liability of $771 million is included in the reserve for life-contingent contract benefits with respect to this deficiency as of December 31, 2012. The offset to this liability is recorded as a reduction of the unrealized net capital gains included in accumulated other comprehensive income. The liability is zero as of December 31, 2013. | |||||||||||||||
As of December 31, contractholder funds consist of the following: | |||||||||||||||
($ in millions) | 2013 | 2012 | |||||||||||||
Interest-sensitive life insurance | $ | 7,104 | $ | 10,356 | |||||||||||
Investment contracts: | |||||||||||||||
Fixed annuities | 16,172 | 25,851 | |||||||||||||
Funding agreements backing medium-term notes | 89 | 1,867 | |||||||||||||
Other investment contracts | 239 | 560 | |||||||||||||
Total contractholder funds | $ | 23,604 | $ | 38,634 | |||||||||||
The following table highlights the key contract provisions relating to contractholder funds. | |||||||||||||||
Product | Interest rate | Withdrawal/surrender charges | |||||||||||||
Interest-sensitive life insurance | Interest rates credited range from 0% to 10.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products | Either a percentage of account balance or dollar amount grading off generally over 20 years | |||||||||||||
Fixed annuities | Interest rates credited range from 0% to 9.8% for immediate annuities; (8.0)% to 13.5% for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 6.0% for all other products | Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 25.8% of fixed annuities are subject to market value adjustment for discretionary withdrawals | |||||||||||||
Funding agreements backing | Interest rates credited range from 1.8% to 5.4% | Not applicable | |||||||||||||
medium-term notes | |||||||||||||||
Other investment contracts: | Interest rates used in establishing reserves range from 1.7% to 10.3% | Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract | |||||||||||||
Guaranteed minimum income, accumulation and withdrawal benefits on variable (1) and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities | |||||||||||||||
(1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. | |||||||||||||||
Contractholder funds include funding agreements held by VIEs issuing medium-term notes. The VIEs are Allstate Life Funding, LLC, Allstate Financial Global Funding, LLC and Allstate Life Global Funding, and their primary assets are funding agreements used exclusively to back medium-term note programs. | |||||||||||||||
Contractholder funds activity for the years ended December 31 is as follows: | |||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||||||
Balance, beginning of year | $ | 38,634 | $ | 41,669 | $ | 46,458 | |||||||||
Deposits | 2,338 | 2,180 | 1,869 | ||||||||||||
Interest credited | 1,268 | 1,296 | 1,592 | ||||||||||||
Benefits | (1,521 | ) | (1,454 | ) | (1,454 | ) | |||||||||
Surrenders and partial withdrawals | (3,279 | ) | (3,969 | ) | (4,908 | ) | |||||||||
Maturities of and interest payments on institutional products | (1,799 | ) | (138 | ) | (867 | ) | |||||||||
Contract charges | (1,032 | ) | (995 | ) | (962 | ) | |||||||||
Net transfers from separate accounts | 12 | 11 | 12 | ||||||||||||
Fair value hedge adjustments for institutional products | -- | -- | (34 | ) | |||||||||||
Other adjustments | (72 | ) | 34 | (37 | ) | ||||||||||
Classified as held for sale | (10,945 | ) | -- | -- | |||||||||||
Balance, end of year | $ | 23,604 | $ | 38,634 | $ | 41,669 | |||||||||
The Company offered various guarantees to variable annuity contractholders. Liabilities for variable contract guarantees related to death benefits are included in the reserve for life-contingent contract benefits and the liabilities related to the income, withdrawal and accumulation benefits are included in contractholder funds. All liabilities for variable contract guarantees are reported on a gross basis on the balance sheet with a corresponding reinsurance recoverable asset for those contracts subject to reinsurance. In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. | |||||||||||||||
Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death, a specified contract anniversary date, partial withdrawal or annuitization, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. The account balances of variable annuities contracts’ separate accounts with guarantees included $5.20 billion and $5.23 billion of equity, fixed income and balanced mutual funds and $748 million and $721 million of money market mutual funds as of December 31, 2013 and 2012, respectively. | |||||||||||||||
The table below presents information regarding the Company’s variable annuity contracts with guarantees. The Company’s variable annuity contracts may offer more than one type of guarantee in each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts’ separate accounts with guarantees. | |||||||||||||||
($ in millions) | December 31, | ||||||||||||||
2013 | 2012 | ||||||||||||||
In the event of death | |||||||||||||||
Separate account value | $ | 5,951 | $ | 5,947 | |||||||||||
Net amount at risk (1) | $ | 636 | $ | 1,044 | |||||||||||
Average attained age of contractholders | 68 years | 67 years | |||||||||||||
At annuitization (includes income benefit guarantees) | |||||||||||||||
Separate account value | $ | 1,463 | $ | 1,416 | |||||||||||
Net amount at risk (2) | $ | 252 | $ | 418 | |||||||||||
Weighted average waiting period until annuitization options available | None | None | |||||||||||||
For cumulative periodic withdrawals | |||||||||||||||
Separate account value | $ | 488 | $ | 532 | |||||||||||
Net amount at risk (3) | $ | 9 | $ | 16 | |||||||||||
Accumulation at specified dates | |||||||||||||||
Separate account value | $ | 732 | $ | 811 | |||||||||||
Net amount at risk (4) | $ | 27 | $ | 50 | |||||||||||
Weighted average waiting period until guarantee date | 5 years | 6 years | |||||||||||||
(1) Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date. | |||||||||||||||
(2) Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance. | |||||||||||||||
(3) Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date. | |||||||||||||||
(4) Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance. | |||||||||||||||
The liability for death and income benefit guarantees is equal to a benefit ratio multiplied by the cumulative contract charges earned, plus accrued interest less contract excess guarantee benefit payments. The benefit ratio is calculated as the estimated present value of all expected contract excess guarantee benefits divided by the present value of all expected contract charges. The establishment of reserves for these guarantees requires the projection of future fund values, mortality, persistency and customer benefit utilization rates. These assumptions are periodically reviewed and updated. For guarantees related to death benefits, benefits represent the projected excess guaranteed minimum death benefit payments. For guarantees related to income benefits, benefits represent the present value of the minimum guaranteed annuitization benefits in excess of the projected account balance at the time of annuitization. | |||||||||||||||
Projected benefits and contract charges used in determining the liability for certain guarantees are developed using models and stochastic scenarios that are also used in the development of estimated expected gross profits. Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based on factors such as the extent of benefit to the potential annuitant, eligibility conditions and the annuitant’s attained age. The liability for guarantees is re-evaluated periodically, and adjustments are made to the liability balance through a charge or credit to contract benefits. | |||||||||||||||
Guarantees related to the majority of withdrawal and accumulation benefits are considered to be derivative financial instruments; therefore, the liability for these benefits is established based on its fair value. | |||||||||||||||
The following table summarizes the liabilities for guarantees. | |||||||||||||||
($ in millions) | Liability for | Liability for | Liability for | Total | |||||||||||
guarantees related to | guarantees | guarantees related | |||||||||||||
death benefits and | related to | to accumulation | |||||||||||||
interest-sensitive life | income | and withdrawal | |||||||||||||
products | benefits | benefits | |||||||||||||
Balance, December 31, 2012 (1) | $ | 309 | $ | 235 | $ | 129 | $ | 673 | |||||||
Less reinsurance recoverables | 113 | 220 | 125 | 458 | |||||||||||
Net balance as of December 31, 2012 | 196 | 15 | 4 | 215 | |||||||||||
Incurred guarantee benefits | 83 | (1 | ) | 5 | 87 | ||||||||||
Paid guarantee benefits | (2 | ) | -- | -- | (2 | ) | |||||||||
Net change | 81 | (1 | ) | 5 | 85 | ||||||||||
Net balance as of December 31, 2013 | 277 | 14 | 9 | 300 | |||||||||||
Plus reinsurance recoverables | 100 | 99 | 56 | 255 | |||||||||||
Balance, December 31, 2013 (2) | $ | 377 | $ | 113 | $ | 65 | $ | 555 | |||||||
Balance, December 31, 2011 (3) | $ | 289 | $ | 191 | $ | 164 | $ | 644 | |||||||
Less reinsurance recoverables | 116 | 175 | 162 | 453 | |||||||||||
Net balance as of December 31, 2011 | 173 | 16 | 2 | 191 | |||||||||||
Incurred guarantee benefits | 25 | (1 | ) | 2 | 26 | ||||||||||
Paid guarantee benefits | (2 | ) | -- | -- | (2 | ) | |||||||||
Net change | 23 | (1 | ) | 2 | 24 | ||||||||||
Net balance as of December 31, 2012 | 196 | 15 | 4 | 215 | |||||||||||
Plus reinsurance recoverables | 113 | 220 | 125 | 458 | |||||||||||
Balance, December 31, 2012 (1) | $ | 309 | $ | 235 | $ | 129 | $ | 673 | |||||||
(1) Included in the total liability balance as of December 31, 2012 are reserves for variable annuity death benefits of $112 million, variable annuity income benefits of $221 million, variable annuity accumulation benefits of $86 million, variable annuity withdrawal benefits of $39 million and other guarantees of $215 million. | |||||||||||||||
(2) Included in the total liability balance as of December 31, 2013 are reserves for variable annuity death benefits of $98 million, variable annuity income benefits of $99 million, variable annuity accumulation benefits of $43 million, variable annuity withdrawal benefits of $13 million and other guarantees of $302 million. | |||||||||||||||
(3) Included in the total liability balance as of December 31, 2011 are reserves for variable annuity death benefits of $116 million, variable annuity income benefits of $175 million, variable annuity accumulation benefits of $105 million, variable annuity withdrawal benefits of $57 million and other guarantees of $191 million. |
Reinsurance
Reinsurance | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Reinsurance | ' | ||||||||||
Reinsurance | ' | ||||||||||
10. Reinsurance | |||||||||||
The Company reinsures certain of its risks to other insurers primarily under yearly renewable term, coinsurance and modified coinsurance agreements. These agreements result in a passing of the agreed-upon percentage of risk to the reinsurer in exchange for negotiated reinsurance premium payments. Modified coinsurance is similar to coinsurance, except that the cash and investments that support the liability for contract benefits are not transferred to the assuming company and settlements are made on a net basis between the companies. | |||||||||||
For certain term life insurance policies issued prior to October 2009, the Company ceded up to 90% of the mortality risk depending on the year of policy issuance under coinsurance agreements to a pool of fourteen unaffiliated reinsurers. Effective October 2009, mortality risk on term business is ceded under yearly renewable term agreements under which the Company cedes mortality in excess of its retention, which is consistent with how the Company generally reinsures its permanent life insurance business. The following table summarizes those retention limits by period of policy issuance. | |||||||||||
Period | Retention limits | ||||||||||
April 2011 through current | Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria | ||||||||||
July 2007 through March 2011 | $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria | ||||||||||
September 1998 through June 2007 | $2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met | ||||||||||
August 1998 and prior | Up to $1 million per life | ||||||||||
In addition, the Company has used reinsurance to effect the acquisition or disposition of certain blocks of business. The Company had reinsurance recoverables of $1.51 billion and $1.69 billion as of December 31, 2013 and 2012, respectively, due from Prudential related to the disposal of substantially all of its variable annuity business that was effected through reinsurance agreements. In 2013, premiums and contract charges of $120 million, contract benefits of $139 million, interest credited to contractholder funds of $22 million, and operating costs and expenses of $23 million were ceded to Prudential. In 2012, premiums and contract charges of $128 million, contract benefits of $91 million, interest credited to contractholder funds of $23 million, and operating costs and expenses of $25 million were ceded to Prudential. In 2011, premiums and contract charges of $152 million, contract benefits of $121 million, interest credited to contractholder funds of $20 million, and operating costs and expenses of $27 million were ceded to Prudential. In addition, as of December 31, 2013 and 2012 the Company had reinsurance recoverables of $156 million and $160 million, respectively, due from subsidiaries of Citigroup (Triton Insurance and American Health and Life Insurance) and Scottish Re (U.S.) Inc. in connection with the disposition of substantially all of the direct response distribution business in 2003. | |||||||||||
As of December 31, 2013, the gross life insurance in force was $540.16 billion of which $195.41 billion was ceded to the unaffiliated reinsurers. | |||||||||||
The effects of reinsurance on premiums and contract charges for the years ended December 31 are as follows: | |||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||
Direct | $ | 2,093 | $ | 2,121 | $ | 2,229 | |||||
Assumed | |||||||||||
Affiliate | 124 | 115 | 113 | ||||||||
Non-affiliate | 68 | 40 | 20 | ||||||||
Ceded-non-affiliate | (618 | ) | (654 | ) | (730 | ) | |||||
Premiums and contract charges, net of reinsurance | $ | 1,667 | $ | 1,622 | $ | 1,632 | |||||
The effects of reinsurance on contract benefits for the years ended December 31 are as follows: | |||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||
Direct | $ | 1,805 | $ | 2,051 | $ | 2,036 | |||||
Assumed | |||||||||||
Affiliate | 82 | 80 | 78 | ||||||||
Non-affiliate | 50 | 34 | 19 | ||||||||
Ceded-non-affiliate | -331 | -644 | -631 | ||||||||
Contract benefits, net of reinsurance | $ | 1,606 | $ | 1,521 | $ | 1,502 | |||||
The effects of reinsurance on interest credited to contractholder funds for the years ended December 31 are as follows: | |||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||
Direct | $ | 1,240 | $ | 1,288 | $ | 1,614 | |||||
Assumed | |||||||||||
Affiliate | 9 | 10 | 10 | ||||||||
Non-affiliate | 29 | 19 | 11 | ||||||||
Ceded-non-affiliate | -27 | -28 | -27 | ||||||||
Interest credited to contractholder funds, net of reinsurance | $ | 1,251 | $ | 1,289 | $ | 1,608 | |||||
Reinsurance recoverables on paid and unpaid benefits as of December 31 are summarized in the following table. | |||||||||||
($ in millions) | 2013 | 2012 | |||||||||
Annuities | $ | 1,648 | $ | 1,831 | |||||||
Life insurance | 1,025 | 1,606 | |||||||||
Long-term care insurance | 78 | 1,049 | |||||||||
Other | 3 | 84 | |||||||||
Total | $ | 2,754 | $ | 4,570 | |||||||
As of December 31, 2013 and 2012, approximately 92% and 95%, respectively, of the Company’s reinsurance recoverables are due from companies rated A- or better by S&P. |
Deferred_Policy_Acquisition_an
Deferred Policy Acquisition and Sales Inducement Costs | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Deferred Policy Acquisition and Sales Inducement Costs | ' | ||||||
Deferred Policy Acquisition and Sales Inducement Costs | ' | ||||||
11. Deferred Policy Acquisition and Sales Inducement Costs | |||||||
Deferred policy acquisition costs for the years ended December 31 are as follows: | |||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Balance, beginning of year | $ | 1,834 | $ | 2,165 | $ | 2,526 | |
Acquisition costs deferred | 254 | 262 | 241 | ||||
Amortization charged to income | -240 | -324 | -430 | ||||
Effect of unrealized gains and losses | 226 | -269 | -172 | ||||
Classified as held for sale | -743 | -- | -- | ||||
Balance, end of year | $ | 1,331 | $ | 1,834 | $ | 2,165 | |
DSI activity, which primarily relates to fixed annuities and interest-sensitive life contracts, for the years ended December 31 was as follows: | |||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Balance, beginning of year | $ | 41 | $ | 41 | $ | 86 | |
Sales inducements deferred | 24 | 22 | 7 | ||||
Amortization charged to income | -7 | -14 | -23 | ||||
Effect of unrealized gains and losses | 12 | -8 | -29 | ||||
Classified as held for sale | -28 | -- | -- | ||||
Balance, end of year | $ | 42 | $ | 41 | $ | 41 |
Guarantees_and_Contingent_Liab
Guarantees and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2013 | |
Guarantees and Contingent Liabilities | ' |
Guarantees and Contingent Liabilities | ' |
12. Guarantees and Contingent Liabilities | |
Guaranty funds | |
Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. Amounts assessed to each company are typically related to its proportion of business written in each state. The Company’s policy is to accrue assessments when the entity for which the insolvency relates has met its state of domicile’s statutory definition of insolvency and the amount of the loss is reasonably estimable. In most states, the definition is met with a declaration of financial insolvency by a court of competent jurisdiction. In certain states there must also be a final order of liquidation. As of December 31, 2013 and 2012, the liability balance included in other liabilities and accrued expenses was $27 million and $40 million, respectively. The related premium tax offsets included in other assets were $31 million and $32 million as of December 31, 2013 and 2012, respectively. | |
Guarantees | |
The Company owns certain fixed income securities that obligate the Company to exchange credit risk or to forfeit principal due, depending on the nature or occurrence of specified credit events for the reference entities. In the event all such specified credit events were to occur, the Company’s maximum amount at risk on these fixed income securities, as measured by the amount of the aggregate initial investment, was $4 million as of December 31, 2013. The obligations associated with these fixed income securities expire at various dates on or before March 11, 2018. | |
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 in connection with 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 December 31, 2013. | |
Regulation and Compliance | |
The Company is subject to changing social, economic and regulatory conditions. 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, and otherwise expand overall regulation of insurance products and the insurance industry. 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. | |
The Company is currently being examined by certain states for compliance with unclaimed property laws. It is possible that this examination may result in additional payments of abandoned funds to states and to changes in the Company’s practices and procedures for the identification of escheatable funds, which could impact benefit payments and reserves, among other consequences; however, it is not likely to have a material effect on the consolidated financial statements of the Company. |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Income Taxes | ' | |||||||||
Income Taxes | ' | |||||||||
13. Income Taxes | ||||||||||
ALIC and its subsidiaries (the “Allstate Life Group”) join with the Corporation (the “Allstate Group”) in the filing of a consolidated federal income tax return and are party to a federal income tax allocation agreement (the “Allstate Tax Sharing Agreement”). Under the Allstate Tax Sharing Agreement, the Allstate Life Group pays to or receives from the Corporation the amount, if any, by which the Allstate Group’s federal income tax liability is affected by virtue of inclusion of the Allstate Life Group in the consolidated federal income tax return. Effectively, this results in the Allstate Life Group’s annual income tax provision being computed, with adjustments, as if the Allstate Life Group filed a separate return. | ||||||||||
The Internal Revenue Service (“IRS”) is currently examining the Allstate Group’s 2011 and 2012 federal income tax returns. The IRS has completed its examination of the Allstate Group’s 2009 and 2010 federal income tax returns and issued a Revenue Agent’s Report on April 15, 2013. The Allstate Group protested certain of the adjustments contained in the report and the case was forwarded to Appeals on June 13, 2013. The IRS has also completed its examinations of the Allstate Group’s federal income tax returns for the years 2005-2008 and a final settlement for those years has been approved by the Joint Committee on Taxation. The Allstate Group’s tax years prior to 2005 have been examined by the IRS and the statute of limitations has expired on those years. Any adjustments that may result from IRS examinations of tax returns are not expected to have a material effect on the results of operations, cash flows or financial position of the Company. | ||||||||||
The Company had no liability for unrecognized tax benefits as of December 31, 2013, 2012 or 2011, and believes it is reasonably possible that the liability balance will not significantly increase within the next twelve months. No amounts have been accrued for interest or penalties. | ||||||||||
The components of the deferred income tax assets and liabilities as of December 31 are as follows: | ||||||||||
($ in millions) | 2013 | 2012 | ||||||||
Deferred assets | ||||||||||
Sale of subsidiary | $ | 196 | $ | 27 | ||||||
Difference in tax bases of investments | 44 | 53 | ||||||||
Other assets | 6 | 1 | ||||||||
Total deferred assets | 246 | 81 | ||||||||
Deferred liabilities | ||||||||||
Unrealized net capital gains | -501 | -883 | ||||||||
DAC | -470 | -444 | ||||||||
Life and annuity reserves | -273 | -193 | ||||||||
Other liabilities | -94 | -85 | ||||||||
Total deferred liabilities | -1,338 | -1,605 | ||||||||
Net deferred liability before classification as held for sale | -1,092 | -1,524 | ||||||||
Deferred taxes classified as held for sale | -151 | -- | ||||||||
Net deferred liability | $ | -941 | $ | -1,524 | ||||||
Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized based on the Company’s assessment that the deductions ultimately recognized for tax purposes will be fully utilized. | ||||||||||
The components of income tax expense for the years ended December 31 are as follows: | ||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||
Current | $ | 71 | $ | -82 | $ | 29 | ||||
Deferred | -52 | 261 | 196 | |||||||
Total income tax expense | $ | 19 | $ | 179 | $ | 225 | ||||
The Company received refunds of $11 million and $58 million in 2013 and 2012, respectively, and paid income taxes of $72 million in 2011. The Company had current income tax payable of $5 million as of December 31, 2013 and current income tax receivable of $77 million as of December 31, 2012. | ||||||||||
A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the years ended December 31 is as follows: | ||||||||||
2013 | 2012 | 2011 | ||||||||
Statutory federal income tax rate - (benefit) expense | -35 | % | 35 | % | 35 | % | ||||
Tax credits | -181.8 | -3.8 | -1.4 | |||||||
Dividends received deduction | -46.1 | -1.4 | -1.2 | |||||||
Adjustments to prior year tax liabilities | -14.1 | -0.3 | -0.2 | |||||||
Sale of subsidiary | 351.3 | -- | -- | |||||||
State income taxes | 15.3 | -- | 0.3 | |||||||
Non-deductible expenses | 6.8 | 0.1 | -- | |||||||
Other | 0.1 | -- | -- | |||||||
Effective income tax rate - expense | 96.5 | % | 29.6 | % | 32.5 | % |
Capital_Structure
Capital Structure | 12 Months Ended |
Dec. 31, 2013 | |
Capital Structure | ' |
Capital Structure | ' |
14. Capital Structure | |
Debt outstanding | |
All of the Company’s outstanding debt as of December 31, 2013 and 2012 relates to intercompany obligations. These obligations reflect notes due to related parties and are discussed in Note 5. The Company paid $27 million, $48 million and $97 million of interest on debt in 2013, 2012 and 2011, respectively. |
Statutory_Financial_Informatio
Statutory Financial Information and Dividend Limitations | 12 Months Ended |
Dec. 31, 2013 | |
Statutory Financial Information and Dividend Limitations | ' |
Statutory Financial Information and Dividend Limitations | ' |
15. Statutory Financial Information and Dividend Limitations | |
ALIC and its insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the NAIC, as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. | |
All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis. | |
Statutory net income (loss) of ALIC and its insurance subsidiaries was $447 million, $382 million and $(83) million in 2013, 2012 and 2011, respectively. Statutory capital and surplus was $2.88 billion and $3.38 billion as of December 31, 2013 and 2012, respectively. | |
Dividend Limitations | |
The ability of ALIC to pay dividends is dependent on business conditions, income, cash requirements and other relevant factors. The payment of shareholder dividends by ALIC to AIC without the prior approval of the Illinois Department of Insurance (“IL DOI”) is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. Based on the formula and absent the limitation discussed as follows, the maximum amount of dividends ALIC would be able to pay without prior IL DOI approval at a given point in time during 2014 is $258 million. However, any dividend must be paid out of unassigned surplus excluding unrealized appreciation from investments, which for ALIC totaled a deficit position of $504 million as of December 31, 2013. Therefore, ALIC is not able to pay dividends without prior IL DOI approval as of December 31, 2013. ALIC will be able to pay dividends without prior IL DOI approval when its unassigned surplus excluding unrealized appreciation from investments becomes positive. | |
Under state insurance laws, insurance companies are required to maintain paid up capital of not less than the minimum capital requirement applicable to the types of insurance they are authorized to write. Insurance companies are also subject to risk-based capital (“RBC”) requirements adopted by state insurance regulators. A company’s “authorized control level RBC” is calculated using various factors applied to certain financial balances and activity. Companies that do not maintain statutory capital and surplus at a level in excess of the company action level RBC, which is two times authorized control level RBC, are required to take specified actions. Company action level RBC is significantly in excess of the minimum capital requirements. Total statutory capital and surplus and authorized control level RBC of ALIC were $2.88 billion and $554 million, respectively, as of December 31, 2013. ALIC’s insurance subsidiaries are included as a component of ALIC’s total statutory capital and surplus. | |
Intercompany transactions | |
Notification and approval of intercompany lending activities is also required by the IL DOI when ALIC does not have unassigned surplus and for transactions that exceed a level that is based on a formula using statutory admitted assets and statutory surplus. |
Benefit_Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2013 | |
Benefit Plans | ' |
Benefit Plans | ' |
16. Benefit Plans | |
Pension and other postretirement plans | |
Defined benefit pension plans, sponsored by the Corporation, cover most full-time employees, certain part-time employees and employee-agents. Benefits under the pension plans are based upon the employee’s length of service and eligible annual compensation. The cost allocated to the Company for the pension plans was $51 million, $36 million and $22 million in 2013, 2012 and 2011, respectively. | |
The Corporation has reserved the right to modify or terminate its benefit plans at any time and for any reason. | |
Allstate 401(k) Savings Plan | |
Employees of AIC are eligible to become members of the Allstate 401(k) Savings Plan (“Allstate Plan”). The Corporation’s contributions are based on the Corporation’s matching obligation and certain performance measures. The cost allocated to the Company for the Allstate Plan was $6 million, $6 million and $5 million in 2013, 2012 and 2011, respectively. |
Other_Comprehensive_Income
Other Comprehensive Income | 12 Months Ended | |||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||
Other Comprehensive Income | ' | |||||||||||||||||||||||||||
Other Comprehensive Income | ' | |||||||||||||||||||||||||||
17. Other Comprehensive Income | ||||||||||||||||||||||||||||
The components of other comprehensive (loss) income on a pre-tax and after-tax basis for the years ended December 31 are as follows: | ||||||||||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Pre- | Tax | After- | Pre- | Tax | After- | Pre- | Tax | After- | ||||||||||||||||||||
tax | tax | tax | tax | tax | tax | |||||||||||||||||||||||
Unrealized net holding gains and losses arising during the period, net of related offsets | $ | (1,047 | ) | $ | 367 | $ | (680 | ) | $ | 1,180 | $ | (414 | ) | $ | 766 | $ | 1,001 | $ | (350 | ) | $ | 651 | ||||||
Less: reclassification adjustment of realized capital gains and losses | 42 | (15 | ) | 27 | (84 | ) | 29 | (55 | ) | 579 | (203 | ) | 376 | |||||||||||||||
Unrealized net capital gains and losses | (1,089 | ) | 382 | (707 | ) | 1,264 | (443 | ) | 821 | 422 | (147 | ) | 275 | |||||||||||||||
Unrealized foreign currency translation adjustments | 3 | (1 | ) | 2 | -- | -- | -- | (2 | ) | 1 | (1 | ) | ||||||||||||||||
Other comprehensive (loss) income | $ | (1,086 | ) | $ | 381 | $ | (705 | ) | $ | 1,264 | $ | (443 | ) | $ | 821 | $ | 420 | $ | (146 | ) | $ | 274 |
Quarterly_Results_unaudited
Quarterly Results (unaudited) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Quarterly Results (unaudited) | ' | |||||||||||||||||
Quarterly Results (unaudited) | ' | |||||||||||||||||
18. Quarterly Results (unaudited) | ||||||||||||||||||
($ in millions) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues | $ | 1,049 | $ | 1,052 | $ | 1,087 | $ | 1,065 | $ | 1,016 | $ | 970 | $ | 1,076 | $ | 1,116 | ||
Net income (loss) | 109 | 83 | 150 | 98 | -394 | 103 | 97 | 142 |
SCHEDULE_I_SUMMARY_OF_INVESTME
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES | ' | |||||||
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES | ' | |||||||
SCHEDULE I - SUMMARY OF INVESTMENTS | ||||||||
OTHER THAN INVESTMENTS IN RELATED PARTIES | ||||||||
31-Dec-13 | ||||||||
($ in millions) | Cost/ | Fair | Amount at | |||||
amortized | value | which shown | ||||||
cost | in the | |||||||
Balance Sheet | ||||||||
Type of investment | ||||||||
Fixed maturities: | ||||||||
Bonds: | ||||||||
United States government, government agencies and authorities | $ | 678 | $ | 766 | $ | 766 | ||
States, municipalities and political subdivisions | 3,135 | 3,304 | 3,304 | |||||
Foreign governments | 715 | 792 | 792 | |||||
Public utilities | 4,810 | 5,143 | 5,143 | |||||
Convertibles and bonds with warrants attached | 139 | 106 | 106 | |||||
All other corporate bonds | 15,448 | 16,067 | 16,067 | |||||
Asset-backed securities | 1,011 | 1,007 | 1,007 | |||||
Residential mortgage-backed securities | 752 | 790 | 790 | |||||
Commercial mortgage-backed securities | 724 | 764 | 764 | |||||
Redeemable preferred stocks | 15 | 17 | 17 | |||||
Total fixed maturities | 27,427 | $ | 28,756 | 28,756 | ||||
Equity securities: | ||||||||
Common stocks: | ||||||||
Public utilities | 34 | $ | 34 | 34 | ||||
Banks, trusts and insurance companies | 19 | 20 | 20 | |||||
Industrial, miscellaneous and all other | 511 | 595 | 595 | |||||
Nonredeemable preferred stocks | 1 | 1 | 1 | |||||
Total equity securities | 565 | $ | 650 | 650 | ||||
Mortgage loans on real estate | 4,173 | $ | 4,300 | 4,173 | ||||
Real estate (includes $19 acquired in satisfaction of debt) | 46 | 46 | ||||||
Policy loans | 623 | 623 | ||||||
Derivative instruments | 265 | $ | 266 | 266 | ||||
Limited partnership interests | 2,064 | 2,064 | ||||||
Other long-term investments | 776 | 776 | ||||||
Short-term investments | 590 | $ | 590 | 590 | ||||
Total investments | $ | 36,529 | $ | 37,944 |
SCHEDULE_IV_REINSURANCE
SCHEDULE IV - REINSURANCE | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
SCHEDULE IV - REINSURANCE | ' | |||||||||||
SCHEDULE IV - REINSURANCE | ' | |||||||||||
SCHEDULE IV - REINSURANCE | ||||||||||||
($ in millions) | Gross | Ceded to | Assumed | Net | Percentage | |||||||
amount | other | from other | amount | of amount | ||||||||
companies (1) | companies | assumed | ||||||||||
to net | ||||||||||||
Year ended December 31, 2013 | ||||||||||||
Life insurance in force | $ | 512,105 | $ | 195,414 | $ | 28,060 | $ | 344,751 | 8.10% | |||
Premiums and contract charges: | ||||||||||||
Life insurance | $ | 1,969 | $ | 532 | $ | 125 | $ | 1,562 | 8.00% | |||
Accident and health insurance | 124 | 86 | 67 | 105 | 63.80% | |||||||
Total premiums and contract charges | $ | 2,093 | $ | 618 | $ | 192 | $ | 1,667 | 11.50% | |||
Year ended December 31, 2012 | ||||||||||||
Life insurance in force | $ | 505,436 | $ | 208,967 | $ | 28,211 | $ | 324,680 | 8.70% | |||
Premiums and contract charges: | ||||||||||||
Life insurance | $ | 1,978 | $ | 550 | $ | 95 | $ | 1,523 | 6.20% | |||
Accident and health insurance | 143 | 104 | 60 | 99 | 60.60% | |||||||
Total premiums and contract charges | $ | 2,121 | $ | 654 | $ | 155 | $ | 1,622 | 9.60% | |||
Year ended December 31, 2011 | ||||||||||||
Life insurance in force | $ | 504,176 | $ | 221,372 | $ | 22,108 | $ | 304,912 | 7.30% | |||
Premiums and contract charges: | ||||||||||||
Life insurance | $ | 2,072 | $ | 610 | $ | 72 | $ | 1,534 | 4.70% | |||
Accident and health insurance | 157 | 120 | 61 | 98 | 62.20% | |||||||
Total premiums and contract charges | $ | 2,229 | $ | 730 | $ | 133 | $ | 1,632 | 8.10% | |||
(1) No reinsurance or coinsurance income was netted against premium ceded in 2013, 2012 or 2011. |
SCHEDULE_V_VALUATION_ALLOWANCE
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS | ' | |||||||||||
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS | ' | |||||||||||
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS | ||||||||||||
($ in millions) | Additions | |||||||||||
Description | Balance | Charged | Other | Deductions | Balance | |||||||
as of | to costs | additions | as of | |||||||||
beginning | and | end of | ||||||||||
of period | expenses | period | ||||||||||
Year ended December 31, 2013 | ||||||||||||
Allowance for estimated losses on mortgage loans | $ | 42 | $ | -11 | $ | -- | $ | 10 | $ | 21 | ||
Year ended December 31, 2012 | ||||||||||||
Allowance for estimated losses on mortgage loans | $ | 63 | $ | -5 | $ | -- | $ | 16 | $ | 42 | ||
Year ended December 31, 2011 | ||||||||||||
Allowance for estimated losses on mortgage loans | $ | 84 | $ | 33 | $ | -- | $ | 54 | $ | 63 |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Summary of Significant Accounting Policies | ' |
Investments | ' |
Investments | |
Fixed income securities include bonds, asset-backed securities (“ABS”), residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and redeemable preferred stocks. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available for sale and are carried at fair value. The difference between amortized cost and fair value, net of deferred income taxes, certain deferred policy acquisition costs (“DAC”), certain deferred sales inducement costs (“DSI”) and certain reserves for life-contingent contract benefits, is reflected as a component of accumulated other comprehensive income. Cash received from calls, principal payments and make-whole payments is reflected as a component of proceeds from sales and cash received from maturities and pay-downs, including prepayments, is reflected as a component of investment collections within the Consolidated Statements of Cash Flows. | |
Mortgage loans are carried at unpaid principal balances, net of unamortized premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. | |
Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Equity securities are designated as available for sale and are carried at fair value. The difference between cost and fair value, net of deferred income taxes, is reflected as a component of accumulated other comprehensive income. | |
Investments in limited partnership interests, including interests in private equity/debt funds, real estate funds, hedge funds and tax credit funds, where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies are accounted for in accordance with the cost method of accounting; all other investments in limited partnership interests are accounted for in accordance with the equity method of accounting (“EMA”). | |
Short-term investments, including money market funds, commercial paper and other short-term investments, are carried at fair value. Policy loans are carried at unpaid principal balances. Other investments primarily consist of agent loans, bank loans, notes due from related party 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. Notes due from related party are carried at outstanding principal balances. Derivatives are carried at fair value. | |
Investment income primarily consists of interest, dividends, income from certain derivative transactions, income from cost method limited partnership interests, and, in 2013 and 2012, income from EMA limited partnership interests. Interest is recognized on an accrual basis using the effective yield method and dividends are recorded at the ex-dividend date. Interest income for ABS, RMBS and CMBS is determined considering estimated pay-downs, including prepayments, obtained from third party data sources and internal estimates. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For ABS, RMBS and CMBS of high credit quality with fixed interest rates, the effective yield is recalculated on a retrospective basis. For all others, the effective yield is recalculated on a prospective basis. Accrual of income is suspended for other-than-temporarily impaired fixed income securities when the timing and amount of cash flows expected to be received is not reasonably estimable. Accrual of income is suspended for mortgage loans, bank loans and agent loans that are in default or when full and timely collection of principal and interest payments is not probable. Cash receipts on investments on nonaccrual status are generally recorded as a reduction of carrying value. Income from cost method limited partnership interests is recognized upon receipt of amounts distributed by the partnerships. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ net income, including unrealized gains and losses, and is recognized on a delay due to the availability of the related financial statements. Income recognition on private equity/debt funds, real estate funds and tax credit funds is generally on a three month delay and income recognition on other funds is generally on a one month delay. | |
Realized capital gains and losses include gains and losses on investment sales, write-downs in value due to other-than-temporary declines in fair value, adjustments to valuation allowances on mortgage loans and agent loans, periodic changes in fair value and settlements of certain derivatives including hedge ineffectiveness, and, in 2011, income from EMA limited partnership interests. Realized capital gains and losses on investment sales, including principal payments, are determined on a specific identification basis. | |
Derivative and embedded derivative financial instruments | ' |
Derivative and embedded derivative financial instruments | |
Derivative financial instruments include interest rate swaps, credit default swaps, futures (interest rate and equity), options (including swaptions), interest rate caps, warrants, foreign currency swaps, foreign currency forwards and certain investment risk transfer reinsurance agreements. Derivatives required to be separated from the host instrument and accounted for as derivative financial instruments (“subject to bifurcation”) are embedded in certain fixed income securities, equity-indexed life and annuity contracts, reinsured variable annuity contracts and certain funding agreements. | |
All derivatives are accounted for on a fair value basis and reported as other investments, other assets, other liabilities and accrued expenses or contractholder funds. Embedded derivative instruments subject to bifurcation are also accounted for on a fair value basis and are reported together with the host contract. The change in fair value of derivatives embedded in certain fixed income securities and subject to bifurcation is reported in realized capital gains and losses. The change in fair value of derivatives embedded in life and annuity product contracts and subject to bifurcation is reported in contract benefits or interest credited to contractholder funds. Cash flows from embedded derivatives subject to bifurcation and derivatives receiving hedge accounting are reported consistently with the host contracts and hedged risks, respectively, within the Consolidated Statements of Cash Flows. Cash flows from other derivatives are reported in cash flows from investing activities within the Consolidated Statements of Cash Flows. | |
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 hedged item may be either all or a specific portion of a recognized asset, liability or an unrecognized firm commitment attributable to a particular risk for fair value hedges. At the inception of the hedge, the Company formally documents the hedging relationship and risk management objective and strategy. The documentation identifies the hedging instrument, the hedged item, the nature of the risk being hedged and the methodology used to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk. For a cash flow hedge, this documentation includes the exposure to changes in the variability in cash flows attributable to the hedged risk. The Company does not exclude any component of the change in fair value of the hedging instrument from the effectiveness assessment. At each reporting date, the Company confirms that the hedging instrument continues to be highly effective in offsetting the hedged risk. Ineffectiveness in fair value hedges and cash flow hedges, if any, is reported in realized capital gains and losses. | |
Fair value hedges The change in fair value of hedging instruments used in fair value hedges of investment assets or a portion thereof is reported in net investment income, together with the change in fair value of the hedged items. The change in fair value of hedging instruments used in fair value hedges of contractholder funds liabilities or a portion thereof is reported in interest credited to contractholder funds, together with the change in fair value of the hedged items. Accrued periodic settlements on swaps are reported together with the changes in fair value of the swaps in net investment income or interest credited to contractholder funds. The amortized cost for fixed income securities, the carrying value for mortgage loans or the carrying value of the hedged liability is adjusted for the change in fair value of the hedged risk. | |
Cash flow hedges For hedging instruments used in cash flow hedges, the changes in fair value of the derivatives representing the effective portion of the hedge are reported in accumulated other comprehensive income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged or forecasted transaction affects income. Accrued periodic settlements on derivatives used in cash flow hedges are reported in net investment income. The amount reported in accumulated other comprehensive income for a hedged transaction is limited to the lesser of the cumulative gain or loss on the derivative less the amount reclassified to income, or the cumulative gain or loss on the derivative needed to offset the cumulative change in the expected future cash flows on the hedged transaction from inception of the hedge less the derivative gain or loss previously reclassified from accumulated other comprehensive income to income. If the Company expects at any time that the loss reported in accumulated other comprehensive income would lead to a net loss on the combination of the hedging instrument and the hedged transaction which may not be recoverable, a loss is recognized immediately in realized capital gains and losses. If an impairment loss is recognized on an asset or an additional obligation is incurred on a liability involved in a hedge transaction, any offsetting gain in accumulated other comprehensive income is reclassified and reported together with the impairment loss or recognition of the obligation. | |
Termination of hedge accounting If, subsequent to entering into a hedge transaction, the derivative becomes ineffective (including if the hedged item is sold or otherwise extinguished, the occurrence of a hedged forecasted transaction is no longer probable or the hedged asset becomes other-than-temporarily impaired), the Company may terminate the derivative position. The Company may also terminate derivative instruments or redesignate them as non-hedge as a result of other events or circumstances. If the derivative instrument is not terminated when a fair value hedge is no longer effective, the future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a fair value hedge is no longer effective, is redesignated as non-hedge or when the derivative has been terminated, the fair value gain or loss on the hedged asset, liability or portion thereof which has already been recognized in income while the hedge was in place and used to adjust the amortized cost for fixed income securities, the carrying value for mortgage loans or the carrying value of the hedged liability, is amortized over the remaining life of the hedged asset, liability or portion thereof, and reflected in net investment income or interest credited to contractholder funds beginning in the period that hedge accounting is no longer applied. If the hedged item in a fair value hedge is an asset that has become other-than-temporarily impaired, the adjustment made to the amortized cost for fixed income securities or the carrying value for mortgage loans is subject to the accounting policies applied to other-than-temporarily impaired assets. | |
When a derivative instrument used in a cash flow hedge of an existing asset or liability is no longer effective or is terminated, the gain or loss recognized on the derivative is reclassified from accumulated other comprehensive income to income as the hedged risk impacts income. If the derivative instrument is not terminated when a cash flow hedge is no longer effective, the future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a derivative instrument used in a cash flow hedge of a forecasted transaction is terminated because it is probable the forecasted transaction will not occur, the gain or loss recognized on the derivative is immediately reclassified from accumulated other comprehensive income to realized capital gains and losses in the period that hedge accounting is no longer applied. | |
Non-hedge derivative financial instruments For derivatives for which hedge accounting is not applied, the income statement effects, including fair value gains and losses and accrued periodic settlements, are reported either in realized capital gains and losses or in a single line item together with the results of the associated asset or liability for which risks are being managed. | |
Securities loaned | ' |
Securities loaned | |
The Company’s business activities include securities lending transactions, which are used primarily to generate net investment income. The proceeds received in conjunction with securities lending transactions are reinvested in short-term investments. These transactions are short-term in nature, usually 30 days or less. | |
The Company receives cash collateral for securities loaned in an amount generally equal to 102% of the fair value of securities and records the related obligations to return the collateral in other liabilities and accrued expenses. The carrying value of these obligations approximates fair value because of their relatively short-term nature. The Company monitors the market value of securities loaned on a daily basis and obtains additional collateral as necessary under the terms of the agreements to mitigate counterparty credit risk. The Company maintains the right and ability to repossess the securities loaned on short notice. | |
Recognition of premium revenues and contract charges, and related benefits and interest credited | ' |
Recognition of premium revenues and contract charges, and related benefits and interest credited | |
Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Voluntary accident and health insurance products are expected to remain in force for an extended period. Premiums from these products are recognized as revenue when due from policyholders. Benefits are reflected in contract benefits and recognized in relation to premiums, so that profits are recognized over the life of the policy. | |
Immediate annuities with life contingencies, including certain structured settlement annuities, provide insurance protection over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits and expenses are recognized in relation to premiums. Profits from these policies come from investment income, which is recognized over the life of the contract. | |
Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and contract charges assessed against the contractholder account balance. Premiums from these contracts are reported as contractholder fund deposits. Contract charges consist of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the contract prior to contractually specified dates. These contract charges are recognized as revenue when assessed against the contractholder account balance. Contract benefits include life-contingent benefit payments in excess of the contractholder account balance. | |
Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, and funding agreements (primarily backing medium-term notes) are considered investment contracts. Consideration received for such contracts is reported as contractholder fund deposits. Contract charges for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the contractholder account balance. | |
Interest credited to contractholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities and indexed funding agreements are generally based on a specified interest rate index or an equity index, such as the Standard & Poor’s (“S&P”) 500 Index. Interest credited also includes amortization of DSI expenses. DSI is amortized into interest credited using the same method used to amortize DAC. | |
Contract charges for variable life and variable annuity products consist of fees assessed against the contractholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Contract benefits incurred for variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits. Substantially all of the Company’s variable annuity business is ceded through reinsurance agreements and the contract charges and contract benefits related thereto are reported net of reinsurance ceded. | |
Deferred policy acquisition and sales inducement costs | ' |
Deferred policy acquisition and sales inducement costs | |
Costs that are related directly to the successful acquisition of new or renewal life insurance and investment contracts are deferred and recorded as DAC. These costs are principally agents’ and brokers’ remuneration and certain underwriting expenses. DSI costs, which are deferred and recorded as other assets, relate to sales inducements offered on sales to new customers, principally on annuity and interest-sensitive life contracts. These sales inducements are primarily in the form of additional credits to the customer’s account balance or enhancements to interest credited for a specified period which are in excess of the rates currently being credited to similar contracts without sales inducements. All other acquisition costs are expensed as incurred and included in operating costs and expenses. Amortization of DAC is included in amortization of deferred policy acquisition costs and is described in more detail below. DSI is amortized into income using the same methodology and assumptions as DAC and is included in interest credited to contractholder funds. DAC and DSI are periodically reviewed for recoverability and adjusted if necessary. | |
For traditional life insurance, DAC is amortized over the premium paying period of the related policies in proportion to the estimated revenues on such business. Assumptions used in the amortization of DAC and reserve calculations are established at the time the policy is issued and are generally not revised during the life of the policy. Any deviations from projected business in force resulting from actual policy terminations differing from expected levels and any estimated premium deficiencies may result in a change to the rate of amortization in the period such events occur. Generally, the amortization periods for these policies approximates the estimated lives of the policies. | |
For interest-sensitive life, fixed annuities and other investment contracts, DAC and DSI are amortized in proportion to the incidence of the total present value of gross profits, which includes both actual historical gross profits (“AGP”) and estimated future gross profits (“EGP”) expected to be earned over the estimated lives of the contracts. The amortization is net of interest on the prior period DAC balance using rates established at the inception of the contracts. Actual amortization periods generally range from 15-30 years; however, incorporating estimates of the rate of customer surrenders, partial withdrawals and deaths generally results in the majority of the DAC being amortized during the surrender charge period, which is typically 10-20 years for interest-sensitive life and 5-10 years for fixed annuities. The cumulative DAC and DSI amortization is reestimated and adjusted by a cumulative charge or credit to income when there is a difference between the incidence of actual versus expected gross profits in a reporting period or when there is a change in total EGP. When DAC or DSI amortization or a component of gross profits for a quarterly period is potentially negative (which would result in an increase of the DAC or DSI balance) as a result of negative AGP, the specific facts and circumstances surrounding the potential negative amortization are considered to determine whether it is appropriate for recognition in the consolidated financial statements. Negative amortization is only recorded when the increased DAC or DSI balance is determined to be recoverable based on facts and circumstances. Recapitalization of DAC and DSI is limited to the originally deferred costs plus interest. | |
AGP and EGP primarily consist of the following components: contract charges for the cost of insurance less mortality costs and other benefits; investment income and realized capital gains and losses less interest credited; and surrender and other contract charges less maintenance expenses. The principal assumptions for determining the amount of EGP are persistency, mortality, expenses, investment returns, including capital gains and losses on assets supporting contract liabilities, interest crediting rates to contractholders, and the effects of any hedges. For products whose supporting investments are exposed to capital losses in excess of the Company’s expectations which may cause periodic AGP to become temporarily negative, EGP and AGP utilized in DAC and DSI amortization may be modified to exclude the excess capital losses. | |
The Company performs quarterly reviews of DAC and DSI recoverability for interest-sensitive life, fixed annuities and other investment contracts in the aggregate using current assumptions. If a change in the amount of EGP is significant, it could result in the unamortized DAC or DSI not being recoverable, resulting in a charge which is included as a component of amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. | |
The DAC and DSI balances presented include adjustments to reflect the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized capital gains or losses in the respective product investment portfolios were actually realized. The adjustments are recorded net of tax in accumulated other comprehensive income. DAC, DSI and deferred income taxes determined on unrealized capital gains and losses and reported in accumulated other comprehensive income recognize the impact on shareholder’s equity consistently with the amounts that would be recognized in the income statement on realized capital gains and losses. | |
Customers of the Company may exchange one insurance policy or investment contract for another offered by the Company, or make modifications to an existing investment or life contract issued by the Company. These transactions are identified as internal replacements for accounting purposes. Internal replacement transactions determined to result in replacement contracts that are substantially unchanged from the replaced contracts are accounted for as continuations of the replaced contracts. Unamortized DAC and DSI related to the replaced contracts continue to be deferred and amortized in connection with the replacement contracts. For interest-sensitive life and investment contracts, the EGP of the replacement contracts are treated as a revision to the EGP of the replaced contracts in the determination of amortization of DAC and DSI. For traditional life insurance policies, any changes to unamortized DAC that result from replacement contracts are treated as prospective revisions. Any costs associated with the issuance of replacement contracts are characterized as maintenance costs and expensed as incurred. Internal replacement transactions determined to result in a substantial change to the replaced contracts are accounted for as an extinguishment of the replaced contracts, and any unamortized DAC and DSI related to the replaced contracts are eliminated with a corresponding charge to amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. | |
The costs assigned to the right to receive future cash flows from certain business purchased from other insurers are also classified as DAC in the Consolidated Statements of Financial Position. The costs capitalized represent the present value of future profits expected to be earned over the lives of the contracts acquired. These costs are amortized as profits emerge over the lives of the acquired business and are periodically evaluated for recoverability. The present value of future profits was $8 million and $10 million as of December 31, 2013 and 2012, respectively. Amortization expense of the present value of future profits was $2 million, $3 million and $2 million in 2013, 2012 and 2011, respectively. | |
Reinsurance | ' |
Reinsurance | |
In the normal course of business, the Company seeks to limit aggregate and single exposure to losses on large risks by purchasing reinsurance. The Company has also used reinsurance to effect the acquisition or disposition of certain blocks of business. The amounts reported as reinsurance recoverables include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities and contractholder funds that have not yet been paid. Reinsurance recoverables on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverables. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers and establishes allowances for uncollectible reinsurance as appropriate. | |
Goodwill | ' |
Goodwill | |
Goodwill represents the excess of amounts paid for acquiring businesses over the fair value of the net assets acquired. The goodwill balance was $5 million as of both December 31, 2013 and 2012. Goodwill is not amortized but is tested for impairment at least annually. The Company performs its annual goodwill impairment testing during the fourth quarter of each year based upon data as of the close of the third quarter. The Company also reviews goodwill for impairment whenever events or changes in circumstances, such as deteriorating or adverse market conditions, indicate that it is more likely than not that the carrying amount of goodwill may exceed its implied fair value. Goodwill impairment evaluations indicated no impairment as of December 31, 2013 or 2012. | |
Income taxes | ' |
Income taxes | |
The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are unrealized capital gains and losses, DAC, insurance reserves and differences in tax bases of invested assets. A deferred tax asset valuation allowance is established when there is uncertainty that such assets will be realized. | |
Reserve for life-contingent contract benefits | ' |
Reserve for life-contingent contract benefits | |
The reserve for life-contingent contract benefits payable under insurance policies, including traditional life insurance, life-contingent immediate annuities and voluntary accident and health insurance products, is computed on the basis of long-term actuarial assumptions of future investment yields, mortality, morbidity, policy terminations and expenses. These assumptions, which for traditional life insurance are applied using the net level premium method, include provisions for adverse deviation and generally vary by characteristics such as type of coverage, year of issue and policy duration. To the extent that unrealized gains on fixed income securities would result in a premium deficiency if those gains were realized, the related increase in reserves for certain immediate annuities with life contingencies is recorded net of tax as a reduction of unrealized net capital gains included in accumulated other comprehensive income. | |
Contractholder funds | ' |
Contractholder funds | |
Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance, fixed annuities and funding agreements. Contractholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals, maturities and contract charges for mortality or administrative expenses. Contractholder funds also include reserves for secondary guarantees on interest-sensitive life insurance and certain fixed annuity contracts and reserves for certain guarantees on reinsured variable annuity contracts. | |
Held for sale classification | ' |
Held for sale classification | |
Business is classified as held for sale when management has approved or received approval to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other specified criteria are met. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized. Assets and liabilities related to a business classified as held for sale are segregated in the Consolidated Statement of Position in the period in which the business is classified as held for sale. | |
Separate accounts | ' |
Separate accounts | |
Separate accounts assets are carried at fair value. The assets of the separate accounts are legally segregated and available only to settle separate account contract obligations. Separate accounts liabilities represent the contractholders’ claims to the related assets and are carried at an amount equal to the separate accounts assets. Investment income and realized capital gains and losses of the separate accounts accrue directly to the contractholders and therefore are not included in the Company’s Consolidated Statements of Operations and Comprehensive Income. Deposits to and surrenders and withdrawals from the separate accounts are reflected in separate accounts liabilities and are not included in consolidated cash flows. | |
Absent any contract provision wherein the Company provides a guarantee, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. Substantially all of the Company’s variable annuity business was reinsured beginning in 2006. | |
Off-balance sheet financial instruments | ' |
Off-balance sheet financial instruments | |
Commitments to invest, commitments to purchase private placement securities, commitments to extend loans, financial guarantees and credit guarantees have off-balance sheet risk because their contractual amounts are not recorded in the Company’s Consolidated Statements of Financial Position (see Note 8 and Note 12). | |
Adopted accounting standards/Pending accounting standard | ' |
Adopted accounting standards | |
Disclosures about Offsetting Assets and Liabilities | |
In December 2011 and January 2013, the Financial Accounting Standards Board (“FASB”) issued guidance requiring expanded disclosures, including both gross and net information, for derivatives, repurchase and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in the reporting entity’s financial statements or those that are subject to an enforceable master netting arrangement or similar agreement. The Company adopted the new guidance in the first quarter of 2013. The new guidance affects disclosures only and therefore had no impact on the Company’s results of operations or financial position. | |
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income | |
In February 2013, the FASB issued guidance requiring expanded disclosures about the amounts reclassified out of accumulated other comprehensive income by component. The guidance requires the presentation of significant amounts reclassified out of accumulated other comprehensive income by income statement line item but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, cross-reference to other disclosures that provide additional detail about those amounts is required. The Company adopted the new guidance in the first quarter of 2013. The new guidance affects disclosures only and therefore had no impact on the Company’s results of operations or financial position. | |
Pending accounting standard | |
Accounting for Investments in Qualified Affordable Housing Projects | |
In January 2014, the FASB issued guidance which allows entities that invest in certain qualified affordable housing projects through limited liability entities the option to account for these investments using the proportional amortization method if certain conditions are met. Under the proportional amortization method, the entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense or benefit. The guidance is effective for reporting periods beginning after December 15, 2014 and is to be applied retrospectively. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations and financial position. |
General_Tables
General (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
General | ' | ||||||
Summary of premiums and contract charges by product | ' | ||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Premiums | |||||||
Traditional life insurance | $ | 471 | $ | 449 | $ | 420 | |
Immediate annuities with life contingencies | 37 | 45 | 106 | ||||
Accident and health insurance | 105 | 99 | 98 | ||||
Total premiums | 613 | 593 | 624 | ||||
Contract charges | |||||||
Interest-sensitive life insurance | 1,036 | 1,011 | 975 | ||||
Fixed annuities | 18 | 18 | 33 | ||||
Total contract charges | 1,054 | 1,029 | 1,008 | ||||
Total premiums and contract charges | $ | 1,667 | $ | 1,622 | $ | 1,632 |
Held_for_Sale_Transaction_Tabl
Held for Sale Transaction (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Held for Sale Transaction | ' | ||
Summary of assets and liabilities held for sale | ' | ||
The following table summarizes the assets and liabilities held for sale as of December 31, 2013. | |||
($ in millions) | |||
Assets | |||
Investments | |||
Fixed income securities | $ | 10,167 | |
Mortgage loans | 1,367 | ||
Short-term investments | 160 | ||
Policy loans | 198 | ||
Other investments | 91 | ||
Total investments | 11,983 | ||
Deferred policy acquisition costs | 743 | ||
Reinsurance recoverables, net | 1,660 | ||
Accrued investment income | 109 | ||
Other assets | 79 | ||
Separate Accounts | 1,701 | ||
Assets held for sale | 16,275 | ||
Less: Loss accrual | -682 | ||
Total assets held for sale | $ | 15,593 | |
Liabilities | |||
Reserve for life-contingent contract benefits | $ | 1,894 | |
Contractholder funds | 10,945 | ||
Unearned premiums | 12 | ||
Deferred income taxes | 151 | ||
Other liabilities and accrued expenses | 196 | ||
Separate Accounts | 1,701 | ||
Total liabilities held for sale | $ | 14,899 |
Supplemental_Cash_Flow_Informa1
Supplemental Cash Flow Information (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Supplemental Cash Flow Information | ' | ||||||
Schedule of supplemental cash flow information from collateralized securities received | ' | ||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Net change in proceeds managed | |||||||
Net change in short-term investments | $ | 235 | $ | -298 | $ | 202 | |
Operating cash flow provided (used) | 235 | -298 | 202 | ||||
Net change in cash | -2 | -- | -- | ||||
Net change in proceeds managed | $ | 233 | $ | -298 | $ | 202 | |
Net change in liabilities | |||||||
Liabilities for collateral, beginning of year | $ | -561 | $ | -263 | $ | -465 | |
Liabilities for collateral, end of year | -328 | -561 | -263 | ||||
Operating cash flow (used) provided | $ | -233 | $ | 298 | $ | -202 |
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Related Party Transactions | ' | |||||
Schedule of notes due to related parties | ' | |||||
($ in millions) | 2013 | 2012 | ||||
6.35% Note, due 2018, to AIC | $ | 7 | $ | 7 | ||
5.75% Note, due 2018, to AIC | -- | 4 | ||||
5.75% Note, due 2018, to AIC | -- | 10 | ||||
7.00% Surplus Note, due 2028, to AIC (1) | -- | 200 | ||||
6.74% Surplus Note, due 2029, to Kennett (1) | 25 | 25 | ||||
5.06% Surplus Note, due 2035, to Kennett (1) | 100 | 100 | ||||
6.18% Surplus Note, due 2036, to Kennett (1) | 100 | 100 | ||||
5.93% Surplus Note, due 2038, to Kennett (1) | 50 | 50 | ||||
Total notes due to related parties | $ | 282 | $ | 496 | ||
(1) No payment of principal or interest is permitted on the surplus notes without the written approval from the proper regulatory authority. The regulatory authority could prohibit the payment of interest and principal on the surplus notes if certain statutory capital requirements are not met. Permission to pay interest on the surplus notes was granted in both 2013 and 2012. |
Investments_Tables
Investments (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
Investments | ' | |||||||||||||||||||
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value | ' | |||||||||||||||||||
($ in millions) | Amortized | Gross unrealized | Fair | |||||||||||||||||
cost | Gains | Losses | value | |||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
U.S. government and agencies | $ | 678 | $ | 90 | $ | -2 | $ | 766 | ||||||||||||
Municipal | 3,135 | 231 | -62 | 3,304 | ||||||||||||||||
Corporate | 20,397 | 1,214 | -295 | 21,316 | ||||||||||||||||
Foreign government | 715 | 83 | -6 | 792 | ||||||||||||||||
ABS | 1,011 | 30 | -34 | 1,007 | ||||||||||||||||
RMBS | 752 | 50 | -12 | 790 | ||||||||||||||||
CMBS | 724 | 47 | -7 | 764 | ||||||||||||||||
Redeemable preferred stock | 15 | 2 | -- | 17 | ||||||||||||||||
Total fixed income securities | $ | 27,427 | $ | 1,747 | $ | -418 | $ | 28,756 | ||||||||||||
December 31, 2012 | ||||||||||||||||||||
U.S. government and agencies | $ | 2,137 | $ | 242 | $ | -- | $ | 2,379 | ||||||||||||
Municipal | 4,153 | 612 | -61 | 4,704 | ||||||||||||||||
Corporate | 28,748 | 2,896 | -113 | 31,531 | ||||||||||||||||
Foreign government | 1,017 | 164 | -1 | 1,180 | ||||||||||||||||
ABS | 1,921 | 49 | -105 | 1,865 | ||||||||||||||||
RMBS | 1,778 | 82 | -69 | 1,791 | ||||||||||||||||
CMBS | 1,425 | 60 | -77 | 1,408 | ||||||||||||||||
Redeemable preferred stock | 15 | 3 | -- | 18 | ||||||||||||||||
Total fixed income securities | $ | 41,194 | $ | 4,108 | $ | -426 | $ | 44,876 | ||||||||||||
Schedule for fixed income securities based on contractual maturities | ' | |||||||||||||||||||
The scheduled maturities for fixed income securities are as follows as of December 31, 2013: | ||||||||||||||||||||
($ in millions) | Amortized | Fair | ||||||||||||||||||
cost | value | |||||||||||||||||||
Due in one year or less | $ | 1,106 | $ | 1,132 | ||||||||||||||||
Due after one year through five years | 5,060 | 5,457 | ||||||||||||||||||
Due after five years through ten years | 10,955 | 11,316 | ||||||||||||||||||
Due after ten years | 7,819 | 8,290 | ||||||||||||||||||
24,940 | 26,195 | |||||||||||||||||||
ABS, RMBS and CMBS | 2,487 | 2,561 | ||||||||||||||||||
Total | $ | 27,427 | $ | 28,756 | ||||||||||||||||
Schedule of net investment income | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Fixed income securities | $ | 1,947 | $ | 2,084 | $ | 2,264 | ||||||||||||||
Mortgage loans | 345 | 345 | 345 | |||||||||||||||||
Equity securities | 12 | 9 | 7 | |||||||||||||||||
Limited partnership interests (1) | 175 | 159 | 49 | |||||||||||||||||
Short-term investments | 2 | 2 | 3 | |||||||||||||||||
Policy loans | 49 | 51 | 53 | |||||||||||||||||
Other | 63 | 61 | 18 | |||||||||||||||||
Investment income, before expense | 2,593 | 2,711 | 2,739 | |||||||||||||||||
Investment expense | -108 | -114 | -102 | |||||||||||||||||
Net investment income | $ | 2,485 | $ | 2,597 | $ | 2,637 | ||||||||||||||
(1) Income from EMA limited partnerships is reported in net investment income in 2013 and 2012 and realized capital gains and losses in 2011. | ||||||||||||||||||||
Schedule of realized capital gains and losses by asset type | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Fixed income securities | $ | 3 | $ | -62 | $ | 539 | ||||||||||||||
Mortgage loans | 20 | 8 | -23 | |||||||||||||||||
Equity securities | 45 | -- | 14 | |||||||||||||||||
Limited partnership interests (1) | -6 | -- | 62 | |||||||||||||||||
Derivatives | 14 | 34 | -203 | |||||||||||||||||
Other | -- | 4 | 1 | |||||||||||||||||
Realized capital gains and losses | $ | 76 | $ | -16 | $ | 390 | ||||||||||||||
(1) Income from EMA limited partnerships is reported in net investment income in 2013 and 2012 and realized capital gains and losses in 2011. | ||||||||||||||||||||
Schedule of realized capital gains and losses by transaction type | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Impairment write-downs | $ | -33 | $ | -51 | $ | -242 | ||||||||||||||
Change in intent write-downs | -19 | -17 | -51 | |||||||||||||||||
Net other-than-temporary impairment losses recognized in earnings | -52 | -68 | -293 | |||||||||||||||||
Sales | 114 | 17 | 823 | |||||||||||||||||
Valuation of derivative instruments | -3 | -16 | -224 | |||||||||||||||||
Settlements of derivative instruments | 17 | 51 | 22 | |||||||||||||||||
EMA limited partnership income | -- | -- | 62 | |||||||||||||||||
Realized capital gains and losses | $ | 76 | $ | -16 | $ | 390 | ||||||||||||||
Schedule of other-than-temporary impairment losses by asset type | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Included | Included | Included | ||||||||||||||||||
Gross | in OCI | Net | Gross | in OCI | Net | Gross | in OCI | Net | ||||||||||||
Fixed income securities: | ||||||||||||||||||||
Municipal | $ | -8 | $ | -- | $ | -8 | $ | -- | $ | -- | $ | -- | $ | -14 | $ | -3 | $ | -17 | ||
Corporate | -- | -- | -- | -16 | -2 | -18 | -28 | 6 | -22 | |||||||||||
ABS | -- | -2 | -2 | -- | -- | -- | -8 | 2 | -6 | |||||||||||
RMBS | -2 | 2 | -- | -23 | -9 | -32 | -111 | -20 | -131 | |||||||||||
CMBS | -32 | -3 | -35 | -22 | 3 | -19 | -66 | 1 | -65 | |||||||||||
Total fixed income securities | -42 | -3 | -45 | -61 | -8 | -69 | -227 | -14 | -241 | |||||||||||
Mortgage loans | 11 | -- | 11 | 5 | -- | 5 | -33 | -- | -33 | |||||||||||
Equity securities | -6 | -- | -6 | -1 | -- | -1 | -5 | -- | -5 | |||||||||||
Limited partnership interests | -9 | -- | -9 | -3 | -- | -3 | -3 | -- | -3 | |||||||||||
Other | -3 | -- | -3 | -- | -- | -- | -11 | -- | -11 | |||||||||||
Other-than-temporary impairment losses | $ | -49 | $ | -3 | $ | -52 | $ | -60 | $ | -8 | $ | -68 | $ | -279 | $ | -14 | $ | -293 | ||
Schedule of other-than-temporary impairment losses on fixed income securities included in accumulated other comprehensive income | ' | |||||||||||||||||||
($ in millions) | December 31, | December 31, | ||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Municipal | $ | -5 | $ | -5 | ||||||||||||||||
Corporate | -- | -1 | ||||||||||||||||||
ABS | -10 | -14 | ||||||||||||||||||
RMBS | -90 | -103 | ||||||||||||||||||
CMBS | -12 | -19 | ||||||||||||||||||
Total | $ | -117 | $ | -142 | ||||||||||||||||
Schedule of rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Beginning balance | $ | -345 | $ | -581 | $ | -701 | ||||||||||||||
Additional credit loss for securities previously other-than-temporarily impaired | -13 | -33 | -76 | |||||||||||||||||
Additional credit loss for securities not previously other-than-temporarily impaired | -19 | -20 | -114 | |||||||||||||||||
Reduction in credit loss for securities disposed or collected | 75 | 288 | 288 | |||||||||||||||||
Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell | 2 | -- | 13 | |||||||||||||||||
Change in credit loss due to accretion of increase in cash flows | 1 | 1 | 9 | |||||||||||||||||
Ending balance (1) | $ | -299 | $ | -345 | $ | -581 | ||||||||||||||
(1) The December 31, 2013 ending balance includes $60 million of cumulative credit losses recognized in earnings for fixed income securities that are classified as held for sale. | ||||||||||||||||||||
Schedule of unrealized net capital gains and losses included in accumulated other comprehensive income | ' | |||||||||||||||||||
($ in millions) | Fair | Gross unrealized | Unrealized net | |||||||||||||||||
December 31, 2013 | value | Gains | Losses | gains (losses) | ||||||||||||||||
Fixed income securities | $ | 28,756 | $ | 1,747 | $ | -418 | $ | 1,329 | ||||||||||||
Equity securities | 650 | 90 | -5 | 85 | ||||||||||||||||
Short-term investments | 590 | -- | -- | -- | ||||||||||||||||
Derivative instruments (1) | -13 | 1 | -14 | -13 | ||||||||||||||||
EMA limited partnerships (2) | -2 | |||||||||||||||||||
Investments classified as held for sale | 190 | |||||||||||||||||||
Unrealized net capital gains and losses, pre-tax | 1,589 | |||||||||||||||||||
Amounts recognized for: | ||||||||||||||||||||
Insurance reserves (3) | -- | |||||||||||||||||||
DAC and DSI (4) | -156 | |||||||||||||||||||
Amounts recognized | -156 | |||||||||||||||||||
Deferred income taxes | -506 | |||||||||||||||||||
Unrealized net capital gains and losses, after-tax | $ | 927 | ||||||||||||||||||
(1) Included in the fair value of derivative instruments are $1 million classified as assets and $14 million classified as liabilities. | ||||||||||||||||||||
(2) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross gains and losses are not applicable. | ||||||||||||||||||||
(3) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies. | ||||||||||||||||||||
(4) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. | ||||||||||||||||||||
($ in millions) | Fair | Gross unrealized | Unrealized net | |||||||||||||||||
December 31, 2012 | value | Gains | Losses | gains (losses) | ||||||||||||||||
Fixed income securities | $ | 44,876 | $ | 4,108 | $ | -426 | $ | 3,682 | ||||||||||||
Equity securities | 345 | 36 | -1 | 35 | ||||||||||||||||
Short-term investments | 875 | -- | -- | -- | ||||||||||||||||
Derivative instruments (1) | -17 | 2 | -19 | -17 | ||||||||||||||||
EMA limited partnerships | 1 | |||||||||||||||||||
Unrealized net capital gains and losses, pre-tax | 3,701 | |||||||||||||||||||
Amounts recognized for: | ||||||||||||||||||||
Insurance reserves | -771 | |||||||||||||||||||
DAC and DSI | -408 | |||||||||||||||||||
Amounts recognized | -1,179 | |||||||||||||||||||
Deferred income taxes | -888 | |||||||||||||||||||
Unrealized net capital gains and losses, after-tax | $ | 1,634 | ||||||||||||||||||
(1) Included in the fair value of derivative instruments are $2 million classified as assets and $19 million classified as liabilities. | ||||||||||||||||||||
Schedule of change in unrealized net capital gains and losses | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Fixed income securities | $ | -2,353 | $ | 1,735 | $ | 1,219 | ||||||||||||||
Equity securities | 50 | -1 | -11 | |||||||||||||||||
Derivative instruments | 4 | -5 | 5 | |||||||||||||||||
EMA limited partnerships | -3 | -- | 1 | |||||||||||||||||
Investments classified as held for sale | 190 | -- | -- | |||||||||||||||||
Total | -2,112 | 1,729 | 1,214 | |||||||||||||||||
Amounts recognized for: | ||||||||||||||||||||
Insurance reserves | 771 | -177 | -585 | |||||||||||||||||
DAC and DSI | 252 | -288 | -207 | |||||||||||||||||
Amounts recognized | 1,023 | -465 | -792 | |||||||||||||||||
Deferred income taxes | 382 | -443 | -147 | |||||||||||||||||
(Decrease) increase in unrealized net capital gains and losses, after-tax | $ | -707 | $ | 821 | $ | 275 | ||||||||||||||
Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time | ' | |||||||||||||||||||
($ in millions) | Less than 12 months | 12 months or more | Total | |||||||||||||||||
Number | Fair | Unrealized | Number | Fair | Unrealized | unrealized | ||||||||||||||
of issues | value | losses | of issues | value | losses | losses | ||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
U.S. government and agencies | 4 | $ | 76 | $ | -2 | -- | $ | -- | $ | -- | $ | -2 | ||||||||
Municipal | 63 | 347 | -24 | 21 | 99 | -38 | -62 | |||||||||||||
Corporate | 530 | 5,191 | -224 | 48 | 467 | -71 | -295 | |||||||||||||
Foreign government | 7 | 76 | -4 | 1 | 13 | -2 | -6 | |||||||||||||
ABS | 17 | 162 | -1 | 42 | 400 | -33 | -34 | |||||||||||||
RMBS | 35 | 42 | -2 | 47 | 129 | -10 | -12 | |||||||||||||
CMBS | 5 | 14 | -- | 6 | 52 | -7 | -7 | |||||||||||||
Redeemable preferred stock | -- | -- | -- | -- | -- | -- | -- | |||||||||||||
Total fixed income securities | 661 | 5,908 | -257 | 165 | 1,160 | -161 | -418 | |||||||||||||
Equity securities | 25 | 80 | -5 | -- | -- | -- | -5 | |||||||||||||
Total fixed income and equity securities | 686 | $ | 5,988 | $ | -262 | 165 | $ | 1,160 | $ | -161 | $ | -423 | ||||||||
Investment grade fixed income securities | 526 | $ | 5,272 | $ | -236 | 110 | $ | 834 | $ | -112 | $ | -348 | ||||||||
Below investment grade fixed income securities | 135 | 636 | -21 | 55 | 326 | -49 | -70 | |||||||||||||
Total fixed income securities | 661 | $ | 5,908 | $ | -257 | 165 | $ | 1,160 | $ | -161 | $ | -418 | ||||||||
December 31, 2012 | ||||||||||||||||||||
Fixed income securities | ||||||||||||||||||||
U.S. government and agencies | 1 | $ | 15 | $ | -- | -- | $ | -- | $ | -- | $ | -- | ||||||||
Municipal | 11 | 101 | -7 | 50 | 395 | -54 | -61 | |||||||||||||
Corporate | 79 | 1,086 | -27 | 66 | 829 | -86 | -113 | |||||||||||||
Foreign government | 2 | 121 | -1 | -- | -- | -- | -1 | |||||||||||||
ABS | 5 | 38 | -- | 76 | 763 | -105 | -105 | |||||||||||||
RMBS | 49 | 30 | -- | 164 | 442 | -69 | -69 | |||||||||||||
CMBS | 10 | 65 | -- | 43 | 358 | -77 | -77 | |||||||||||||
Redeemable preferred stock | -- | -- | -- | 1 | -- | -- | -- | |||||||||||||
Total fixed income securities | 157 | 1,456 | -35 | 400 | 2,787 | -391 | -426 | |||||||||||||
Equity securities | 3 | 57 | -1 | 1 | -- | -- | -1 | |||||||||||||
Total fixed income and equity securities | 160 | $ | 1,513 | $ | -36 | 401 | $ | 2,787 | $ | -391 | $ | -427 | ||||||||
Investment grade fixed income securities | 132 | $ | 1,244 | $ | -29 | 262 | $ | 1,919 | $ | -195 | $ | -224 | ||||||||
Below investment grade fixed income securities | 25 | 212 | -6 | 138 | 868 | -196 | -202 | |||||||||||||
Total fixed income securities | 157 | $ | 1,456 | $ | -35 | 400 | $ | 2,787 | $ | -391 | $ | -426 | ||||||||
Principal geographic distribution of commercial real estate represented in the mortgage portfolio | ' | |||||||||||||||||||
(% of mortgage loan portfolio carrying value) | 2013 | 2012 | ||||||||||||||||||
California | 24 | % | 24.2 | % | ||||||||||||||||
Illinois | 9.7 | 7.8 | ||||||||||||||||||
New Jersey | 7.2 | 6.5 | ||||||||||||||||||
Texas | 6.3 | 6 | ||||||||||||||||||
New York | 6.2 | 6.6 | ||||||||||||||||||
District of Columbia | 5.4 | 3.8 | ||||||||||||||||||
Florida | 5.2 | 4.3 | ||||||||||||||||||
Pennsylvania | 3.9 | 5.1 | ||||||||||||||||||
Types of property collateralizing the mortgage loans | ' | |||||||||||||||||||
(% of mortgage loan portfolio carrying value) | 2013 | 2012 | ||||||||||||||||||
Office buildings | 28.3 | % | 28 | % | ||||||||||||||||
Retail | 22.9 | 24 | ||||||||||||||||||
Apartment complex | 19.2 | 17.4 | ||||||||||||||||||
Warehouse | 18.6 | 20.4 | ||||||||||||||||||
Other | 11 | 10.2 | ||||||||||||||||||
Total | 100 | % | 100 | % | ||||||||||||||||
Contractual maturities of the commercial mortgage loan portfolio | ' | |||||||||||||||||||
($ in millions) | Number | Carrying | Percent | |||||||||||||||||
of loans | value | |||||||||||||||||||
2014 | 23 | $ | 325 | 7.8 | % | |||||||||||||||
2015 | 38 | 616 | 14.8 | |||||||||||||||||
2016 | 34 | 334 | 8 | |||||||||||||||||
2017 | 40 | 449 | 10.8 | |||||||||||||||||
Thereafter | 193 | 2,449 | 58.6 | |||||||||||||||||
Total | 328 | $ | 4,173 | 100 | % | |||||||||||||||
Summary of carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||
Debt service coverage | Fixed rate | Variable rate | Total | Fixed rate | Variable rate | Total | ||||||||||||||
ratio distribution | mortgage | mortgage | mortgage | mortgage | ||||||||||||||||
loans | loans | loans | loans | |||||||||||||||||
Below 1.0 | $ | 153 | $ | -- | $ | 153 | $ | 266 | $ | -- | $ | 266 | ||||||||
1.0 - 1.25 | 560 | -- | 560 | 1,158 | -- | 1,158 | ||||||||||||||
1.26 - 1.50 | 1,167 | 2 | 1,169 | 1,364 | 17 | 1,381 | ||||||||||||||
Above 1.50 | 2,176 | 38 | 2,214 | 2,854 | 129 | 2,983 | ||||||||||||||
Total non-impaired mortgage loans | $ | 4,056 | $ | 40 | $ | 4,096 | $ | 5,642 | $ | 146 | $ | 5,788 | ||||||||
Schedule of net carrying value of impaired mortgage loans | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||
Impaired mortgage loans with a valuation allowance | $ | 77 | $ | 147 | ||||||||||||||||
Impaired mortgage loans without a valuation allowance | -- | 8 | ||||||||||||||||||
Total impaired mortgage loans | $ | 77 | $ | 155 | ||||||||||||||||
Valuation allowance on impaired mortgage loans | $ | 21 | $ | 42 | ||||||||||||||||
Schedule of rollforward of the valuation allowance on impaired mortgage loans | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||
Beginning balance | $ | 42 | $ | 63 | $ | 84 | ||||||||||||||
Net (decrease) increase in valuation allowance | -11 | -5 | 33 | |||||||||||||||||
Charge offs | -8 | -16 | -54 | |||||||||||||||||
Mortgage loans classified as held for sale | -2 | -- | -- | |||||||||||||||||
Ending balance | $ | 21 | $ | 42 | $ | 63 | ||||||||||||||
Schedule of carrying value of past due mortgage loans | ' | |||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||
Less than 90 days past due | $ | -- | $ | 20 | ||||||||||||||||
90 days or greater past due | -- | 4 | ||||||||||||||||||
Total past due | -- | 24 | ||||||||||||||||||
Current loans | 4,173 | 5,919 | ||||||||||||||||||
Total mortgage loans | $ | 4,173 | $ | 5,943 | ||||||||||||||||
Principal geographic distribution of municipal bond | ' | |||||||||||||||||||
(% of municipal bond portfolio carrying value) | 2013 | 2012 | ||||||||||||||||||
California | 15.9 | % | 14.1 | % | ||||||||||||||||
Texas | 13.5 | 11.8 | ||||||||||||||||||
Oregon | 5.4 | 4.7 | ||||||||||||||||||
New Jersey | 5.2 | 4.5 | ||||||||||||||||||
New York | 5.2 | 7.1 | ||||||||||||||||||
Illinois | 5.1 | 4.3 |
Fair_Value_of_Assets_and_Liabi1
Fair Value of Assets and Liabilities (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Fair Value of Assets and Liabilities | ' | ||||||||||||||||||||
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 on a recurring and non-recurring basis as of December 31, 2013. | |||||||||||||||||||||
($ in millions) | Quoted prices | Significant | Significant | Counterparty | Balance as of | ||||||||||||||||
in active | other | unobservable | and cash | December 31, | |||||||||||||||||
markets for | observable | inputs | collateral | 2013 | |||||||||||||||||
identical assets | inputs | (Level 3) | netting | ||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
U.S. government and agencies | $ | 145 | $ | 621 | $ | -- | $ | 766 | |||||||||||||
Municipal | -- | 3,185 | 119 | 3,304 | |||||||||||||||||
Corporate | -- | 20,308 | 1,008 | 21,316 | |||||||||||||||||
Foreign government | -- | 792 | -- | 792 | |||||||||||||||||
ABS | -- | 895 | 112 | 1,007 | |||||||||||||||||
RMBS | -- | 790 | -- | 790 | |||||||||||||||||
CMBS | -- | 763 | 1 | 764 | |||||||||||||||||
Redeemable preferred stock | -- | 16 | 1 | 17 | |||||||||||||||||
Total fixed income securities | 145 | 27,370 | 1,241 | 28,756 | |||||||||||||||||
Equity securities | 593 | 51 | 6 | 650 | |||||||||||||||||
Short-term investments | 129 | 461 | -- | 590 | |||||||||||||||||
Other investments: Free-standing derivatives | -- | 268 | 9 | $ | -11 | 266 | |||||||||||||||
Separate account assets | 5,039 | -- | -- | 5,039 | |||||||||||||||||
Assets held for sale | 1,854 | 9,812 | 362 | 12,028 | |||||||||||||||||
Total recurring basis assets | 7,760 | 37,962 | 1,618 | -11 | 47,329 | ||||||||||||||||
Non-recurring basis (1) | -- | -- | 17 | 17 | |||||||||||||||||
Total assets at fair value | $ | 7,760 | $ | 37,962 | $ | 1,635 | $ | -11 | $ | 47,346 | |||||||||||
% of total assets at fair value | 16.40% | 80.20% | 3.40% | -- % | 100.00% | ||||||||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded | $ | -- | $ | -- | $ | -307 | $ | -307 | |||||||||||||
in life and annuity contracts | |||||||||||||||||||||
Other liabilities: Free-standing derivatives | -- | -185 | -14 | $ | 7 | -192 | |||||||||||||||
Liabilities held for sale | -- | -- | -246 | -246 | |||||||||||||||||
Total recurring basis liabilities | -- | -185 | -567 | 7 | -745 | ||||||||||||||||
Non-recurring basis (2) | -- | -- | -11,088 | -11,088 | |||||||||||||||||
Total liabilities at fair value | $ | -- | $ | -185 | $ | -11,655 | $ | 7 | $ | -11,833 | |||||||||||
% of total liabilities at fair value | -- % | 1.60% | 98.50% | -0.10% | 100.00% | ||||||||||||||||
(1) Includes $8 million of mortgage loans and $9 million of limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments. | |||||||||||||||||||||
(2) Relates to LBL business held for sale (see Note 3). The total fair value measurement includes $15,593 million of assets held for sale and $(14,899) million of liabilities held for sale, less $12,028 million of assets and $(246) million of liabilities measured at fair value on a recurring basis. | |||||||||||||||||||||
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2012. | |||||||||||||||||||||
($ in millions) | Quoted prices | Significant | Significant | Counterparty | Balance as of | ||||||||||||||||
in active | other | unobservable | and cash | December 31, | |||||||||||||||||
markets for | observable | inputs | collateral | 2012 | |||||||||||||||||
identical assets | inputs | (Level 3) | netting | ||||||||||||||||||
(Level 1) | (Level 2) | ||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
U.S. government and agencies | $ | 1,074 | $ | 1,305 | $ | -- | $ | 2,379 | |||||||||||||
Municipal | -- | 4,366 | 338 | 4,704 | |||||||||||||||||
Corporate | -- | 30,030 | 1,501 | 31,531 | |||||||||||||||||
Foreign government | -- | 1,180 | -- | 1,180 | |||||||||||||||||
ABS | -- | 1,666 | 199 | 1,865 | |||||||||||||||||
RMBS | -- | 1,791 | -- | 1,791 | |||||||||||||||||
CMBS | -- | 1,387 | 21 | 1,408 | |||||||||||||||||
Redeemable preferred stock | -- | 17 | 1 | 18 | |||||||||||||||||
Total fixed income securities | 1,074 | 41,742 | 2,060 | 44,876 | |||||||||||||||||
Equity securities | 338 | -- | 7 | 345 | |||||||||||||||||
Short-term investments | 220 | 655 | -- | 875 | |||||||||||||||||
Other investments: Free-standing derivatives | -- | 173 | 3 | $ | -47 | 129 | |||||||||||||||
Separate account assets | 6,610 | -- | -- | 6,610 | |||||||||||||||||
Other assets | 2 | -- | 1 | 3 | |||||||||||||||||
Total recurring basis assets | 8,244 | 42,570 | 2,071 | -47 | 52,838 | ||||||||||||||||
Non-recurring basis (1) | -- | -- | 6 | 6 | |||||||||||||||||
Total assets at fair value | $ | 8,244 | $ | 42,570 | $ | 2,077 | $ | -47 | $ | 52,844 | |||||||||||
% of total assets at fair value | 15.60% | 80.60% | 3.90% | -0.10% | 100.00% | ||||||||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -- | $ | -- | $ | -553 | $ | -553 | |||||||||||||
Other liabilities: Free-standing derivatives | -- | -91 | -30 | $ | 29 | -92 | |||||||||||||||
Total liabilities at fair value | $ | -- | $ | -91 | $ | -583 | $ | 29 | $ | -645 | |||||||||||
% of total liabilities at fair value | -- % | 14.10% | 90.40% | -4.50% | 100.00% | ||||||||||||||||
(1) Includes $4 million of mortgage loans, $1 million of limited partnership interests and $1 million of other investments written-down to fair value in connection with recognizing other-than-temporary impairments. | |||||||||||||||||||||
Summary of quantitative information about the significant unobservable inputs used in Level 3 fair value measurements | ' | ||||||||||||||||||||
($ in millions) | Fair value | Valuation | Unobservable | Range | Weighted | ||||||||||||||||
technique | input | average | |||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options | $ | -247 | Stochastic cash flow model | Projected option cost | 1.0 - 2.0 % | 1.75% | |||||||||||||||
Liabilities held for sale – Equity-indexed and forward starting options | $ | -246 | Stochastic cash flow model | Projected option cost | 1.0 - 2.0 % | 1.91% | |||||||||||||||
December 31, 2012 | |||||||||||||||||||||
ARS backed by student loans | $ | 202 | Discounted cash flow model | Anticipated date liquidity will return to the market | 18 - 60 months | 32 - 44 months | |||||||||||||||
Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options | $ | -419 | Stochastic cash flow model | Projected option cost | 1.0 - 2.0 % | 1.92% | |||||||||||||||
Schedule of rollforward of Level 3 assets and liabilities held at fair value on a recurring basis | ' | ||||||||||||||||||||
($ in millions) | Total gains (losses) | ||||||||||||||||||||
included in: | |||||||||||||||||||||
Balance as of | Net | OCI | Transfers | Transfers | |||||||||||||||||
December 31, | income (1) | into | out of | ||||||||||||||||||
2012 | Level 3 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 338 | $ | (12 | ) | $ | 19 | $ | -- | $ | -- | ||||||||||
Corporate | 1,501 | 32 | (32 | ) | 84 | (172 | ) | ||||||||||||||
ABS | 199 | (2 | ) | 30 | 17 | (16 | ) | ||||||||||||||
RMBS | -- | -- | -- | -- | -- | ||||||||||||||||
CMBS | 21 | (1 | ) | 3 | -- | -- | |||||||||||||||
Redeemable preferred stock | 1 | -- | -- | -- | -- | ||||||||||||||||
Total fixed income securities | 2,060 | 17 | 20 | 101 | (188 | ) | |||||||||||||||
Equity securities | 7 | -- | -- | -- | -- | ||||||||||||||||
Free-standing derivatives, net | (27 | ) | 19 | -- | -- | -- | |||||||||||||||
Other assets | 1 | (1 | ) | -- | -- | -- | |||||||||||||||
Assets held for sale | -- | (2 | ) | (6 | ) | 13 | (13 | ) | |||||||||||||
Total recurring Level 3 assets | $ | 2,041 | $ | 33 | $ | 14 | $ | 114 | $ | (201 | ) | ||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | (553 | ) | $ | 89 | $ | -- | $ | -- | $ | -- | ||||||||||
Liabilities held for sale | -- | 20 | -- | -- | -- | ||||||||||||||||
Total recurring Level 3 liabilities | $ | (553 | ) | $ | 109 | $ | -- | $ | -- | $ | -- | ||||||||||
Transfer to | Purchases/ | Sales | Settlements | Balance as of | |||||||||||||||||
held for sale | Issues (2) | December 31, | |||||||||||||||||||
2013 | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | (51 | ) | $ | -- | $ | (173 | ) | $ | (2 | ) | $ | 119 | ||||||||
Corporate | (244 | ) | 145 | (173 | ) | (133 | ) | 1,008 | |||||||||||||
ABS | (85 | ) | -- | (8 | ) | (23 | ) | 112 | |||||||||||||
RMBS | -- | -- | -- | -- | -- | ||||||||||||||||
CMBS | (5 | ) | -- | (17 | ) | -- | 1 | ||||||||||||||
Redeemable preferred stock | -- | -- | -- | -- | 1 | ||||||||||||||||
Total fixed income securities | (385 | ) | 145 | (371 | ) | (158 | ) | 1,241 | |||||||||||||
Equity securities | -- | -- | (1 | ) | -- | 6 | |||||||||||||||
Free-standing derivatives, net | -- | 9 | -- | (6 | ) | (5 | ) (3) | ||||||||||||||
Other assets | -- | -- | -- | -- | -- | ||||||||||||||||
Assets held for sale | 385 | -- | (10 | ) | (5 | ) | 362 | ||||||||||||||
Total recurring Level 3 assets | $ | -- | $ | 154 | $ | (382 | ) | $ | (169 | ) | $ | 1,604 | |||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | 265 | $ | (111 | ) | $ | -- | $ | 3 | $ | (307 | ) | |||||||||
Liabilities held for sale | (265 | ) | (6 | ) | -- | 5 | (246 | ) | |||||||||||||
Total recurring Level 3 liabilities | $ | -- | $ | (117 | ) | $ | -- | $ | 8 | $ | (553 | ) | |||||||||
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2012. | |||||||||||||||||||||
($ in millions) | Total gains (losses) | ||||||||||||||||||||
included in: | |||||||||||||||||||||
Balance as of | Net | OCI | Transfers | Transfers | |||||||||||||||||
December 31, | income (1) | into | out of | ||||||||||||||||||
2011 | Level 3 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 387 | $ | -5 | $ | 22 | $ | 53 | $ | -10 | |||||||||||
Corporate | 1,319 | 20 | 63 | 381 | -64 | ||||||||||||||||
ABS | 254 | 24 | 59 | 42 | -7 | ||||||||||||||||
RMBS | 47 | -- | -- | -- | -47 | ||||||||||||||||
CMBS | 30 | -4 | 10 | -- | -- | ||||||||||||||||
Redeemable preferred stock | 1 | -- | -- | -- | -- | ||||||||||||||||
Total fixed income securities | 2,038 | 35 | 154 | 476 | -128 | ||||||||||||||||
Equity securities | 14 | -- | -- | -- | -- | ||||||||||||||||
Free-standing derivatives, net | -88 | 25 | -- | -- | -- | ||||||||||||||||
Other assets | 1 | -- | -- | -- | -- | ||||||||||||||||
Total recurring Level 3 assets | $ | 1,965 | $ | 60 | $ | 154 | $ | 476 | $ | -128 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -723 | $ | 168 | $ | -- | $ | -- | $ | -- | |||||||||||
Total recurring Level 3 liabilities | $ | -723 | $ | 168 | $ | -- | $ | -- | $ | -- | |||||||||||
Purchases | Sales | Issues | Settlements | Balance as of | |||||||||||||||||
December 31, | |||||||||||||||||||||
2012 | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | -- | $ | -107 | $ | -- | $ | -2 | $ | 338 | |||||||||||
Corporate | 125 | -223 | -- | -120 | 1,501 | ||||||||||||||||
ABS | 11 | -165 | -- | -19 | 199 | ||||||||||||||||
RMBS | -- | -- | -- | -- | -- | ||||||||||||||||
CMBS | -- | -- | -- | -15 | 21 | ||||||||||||||||
Redeemable preferred stock | 1 | -1 | -- | -- | 1 | ||||||||||||||||
Total fixed income securities | 137 | -496 | -- | -156 | 2,060 | ||||||||||||||||
Equity securities | 5 | -12 | -- | -- | 7 | ||||||||||||||||
Free-standing derivatives, net | 27 | -- | -- | 9 | -27 | -2 | |||||||||||||||
Other assets | -- | -- | -- | -- | 1 | ||||||||||||||||
Total recurring Level 3 assets | $ | 169 | $ | -508 | $ | -- | $ | -147 | $ | 2,041 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -- | $ | -- | $ | -79 | $ | 81 | $ | -553 | |||||||||||
Total recurring Level 3 liabilities | $ | -- | $ | -- | $ | -79 | $ | 81 | $ | -553 | |||||||||||
(1) The effect to net income totals $228 million and is reported in the Consolidated Statements of Operations and Comprehensive Income as follows: $38 million in realized capital gains and losses, $22 million in net investment income, $132 million in interest credited to contractholder funds and $36 million in contract benefits. | |||||||||||||||||||||
(2) Comprises $3 million of assets and $30 million of liabilities. | |||||||||||||||||||||
The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2011. | |||||||||||||||||||||
($ in millions) | Total gains (losses) | ||||||||||||||||||||
included in: | |||||||||||||||||||||
Balance as of | Net | OCI | Transfers | Transfers | |||||||||||||||||
December 31, | income (1) | into | out of | ||||||||||||||||||
2010 | Level 3 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 601 | $ | -2 | $ | 7 | $ | 48 | $ | -34 | |||||||||||
Corporate | 1,760 | 52 | -35 | 237 | -410 | ||||||||||||||||
ABS | 1,974 | 21 | -65 | -- | -1,470 | ||||||||||||||||
RMBS | 1,189 | -57 | 77 | -- | -853 | ||||||||||||||||
CMBS | 844 | -43 | 111 | 65 | -878 | ||||||||||||||||
Redeemable preferred stock | 1 | -- | -- | -- | -- | ||||||||||||||||
Total fixed income securities | 6,369 | -29 | 95 | 350 | -3,645 | ||||||||||||||||
Equity securities | 29 | -5 | -- | -- | -10 | ||||||||||||||||
Free-standing derivatives, net | -77 | -37 | -- | -- | -- | ||||||||||||||||
Other assets | 1 | -- | -- | -- | -- | ||||||||||||||||
Total recurring Level 3 assets | $ | 6,322 | $ | -71 | $ | 95 | $ | 350 | $ | -3,655 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -653 | $ | -134 | $ | -- | $ | -- | $ | -- | |||||||||||
Total recurring Level 3 liabilities | $ | -653 | $ | -134 | $ | -- | $ | -- | $ | -- | |||||||||||
Purchases | Sales | Issues | Settlements | Balance as of | |||||||||||||||||
December 31, | |||||||||||||||||||||
2011 | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | 10 | $ | -241 | $ | -- | $ | -2 | $ | 387 | |||||||||||
Corporate | 266 | -473 | -- | -78 | 1,319 | ||||||||||||||||
ABS | 146 | -136 | -- | -216 | 254 | ||||||||||||||||
RMBS | -- | -222 | -- | -87 | 47 | ||||||||||||||||
CMBS | -- | -66 | -- | -3 | 30 | ||||||||||||||||
Redeemable preferred stock | -- | -- | -- | -- | 1 | ||||||||||||||||
Total fixed income securities | 422 | -1,138 | -- | -386 | 2,038 | ||||||||||||||||
Equity securities | 1 | -1 | -- | -- | 14 | ||||||||||||||||
Free-standing derivatives, net | 18 | -- | -- | 8 | -88 | -2 | |||||||||||||||
Other assets | -- | -- | -- | -- | 1 | ||||||||||||||||
Total recurring Level 3 assets | $ | 441 | $ | -1,139 | $ | -- | $ | -378 | $ | 1,965 | |||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | -- | $ | -- | $ | -100 | $ | 164 | $ | -723 | |||||||||||
Total recurring Level 3 liabilities | $ | -- | $ | -- | $ | -100 | $ | 164 | $ | -723 | |||||||||||
(1) The effect to net income totals $(205) million and is reported in the Consolidated Statements of Operations and Comprehensive Income as follows: $(101) million in realized capital gains and losses, $34 million in net investment income, $(106) million in interest credited to contractholder funds and $(32) million in contract benefits. | |||||||||||||||||||||
(2) Comprises $1 million of assets and $89 million of liabilities. | |||||||||||||||||||||
Schedule of change in unrealized gains and losses included in net income for Level 3 assets and liabilities held | ' | ||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||||||||||||
Assets | |||||||||||||||||||||
Fixed income securities: | |||||||||||||||||||||
Municipal | $ | -4 | $ | -- | $ | -2 | |||||||||||||||
Corporate | 13 | 15 | 19 | ||||||||||||||||||
ABS | -2 | -- | -35 | ||||||||||||||||||
CMBS | -2 | -3 | -12 | ||||||||||||||||||
Total fixed income securities | 5 | 12 | -30 | ||||||||||||||||||
Equity securities | -- | -- | -4 | ||||||||||||||||||
Free-standing derivatives, net | 10 | 6 | -29 | ||||||||||||||||||
Other assets | -1 | -- | -- | ||||||||||||||||||
Assets held for sale | -2 | -- | -- | ||||||||||||||||||
Total recurring Level 3 assets | $ | 12 | $ | 18 | $ | -63 | |||||||||||||||
Liabilities | |||||||||||||||||||||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ | 89 | $ | 168 | $ | -134 | |||||||||||||||
Liabilities held for sale | 20 | -- | -- | ||||||||||||||||||
Total recurring Level 3 liabilities | $ | 109 | $ | 168 | $ | -134 | |||||||||||||||
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | ' | ||||||||||||||||||||
Financial assets | |||||||||||||||||||||
($ in millions) | December 31, 2013 | December 31, 2012 | |||||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||||||
value | value | value | value | ||||||||||||||||||
Mortgage loans | $ | 4,173 | $ | 4,300 | $ | 5,943 | $ | 6,223 | |||||||||||||
Cost method limited partnerships | 605 | 799 | 617 | 778 | |||||||||||||||||
Agent loans | 341 | 325 | 319 | 314 | |||||||||||||||||
Bank loans | 160 | 161 | 282 | 282 | |||||||||||||||||
Notes due from related party | 275 | 275 | 275 | 275 | |||||||||||||||||
Assets held for sale | 1,458 | 1,532 | -- | -- | |||||||||||||||||
Financial liabilities | |||||||||||||||||||||
($ in millions) | December 31, 2013 | December 31, 2012 | |||||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||||||
value | value | value | value | ||||||||||||||||||
Contractholder funds on investment contracts | $ | 15,542 | $ | 16,198 | $ | 26,984 | $ | 27,989 | |||||||||||||
Notes due to related parties | 282 | 282 | 496 | 496 | |||||||||||||||||
Liability for collateral | 328 | 328 | 561 | 561 | |||||||||||||||||
Liabilities held for sale | 7,417 | 7,298 | -- | -- |
Derivative_Financial_Instrumen1
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Tables) | 12 Months Ended | |||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | |||||||||||||||||||||||
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 Consolidated Statement of Financial Position as of December 31, 2013. | ||||||||||||||||||||||||
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||||||
Balance sheet location | Notional | Number | Fair | Gross | Gross | |||||||||||||||||||
amount | of | value, | asset | liability | ||||||||||||||||||||
contracts | net | |||||||||||||||||||||||
Asset derivatives | ||||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other investments | $ | 16 | n/a | $ | 1 | $ | 1 | $ | -- | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swaption agreements | Other investments | 1,420 | n/a | -- | -- | -- | ||||||||||||||||||
Interest rate cap agreements | Other investments | 61 | n/a | 2 | 2 | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options and warrants (2) | Other investments | 3 | 10,035 | 261 | 261 | -- | ||||||||||||||||||
Financial futures contracts | Other assets | -- | 627 | -- | -- | -- | ||||||||||||||||||
Foreign currency contracts | ||||||||||||||||||||||||
Foreign currency forwards | Other investments | 47 | n/a | -- | -- | -- | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Credit default swaps | Fixed income securities | 12 | n/a | -12 | -- | -12 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other investments | 1 | n/a | -- | -- | -- | ||||||||||||||||||
Credit default swaps – selling protection | Other investments | 85 | n/a | 2 | 2 | -- | ||||||||||||||||||
Other contracts | ||||||||||||||||||||||||
Other contracts | Other assets | 4 | n/a | -- | -- | -- | ||||||||||||||||||
Subtotal | 1,633 | 10,662 | 253 | 265 | -12 | |||||||||||||||||||
Total asset derivatives | $ | 1,649 | 10,662 | $ | 254 | $ | 266 | $ | -12 | |||||||||||||||
Liability derivatives | ||||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other liabilities & accrued expenses | $ | 132 | n/a | $ | -15 | $ | -- | $ | -15 | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swap agreements | Other liabilities & accrued expenses | 85 | n/a | 4 | 4 | -- | ||||||||||||||||||
Interest rate swaption agreements | Other liabilities & accrued expenses | 4,570 | n/a | 1 | 1 | -- | ||||||||||||||||||
Interest rate cap agreements | Other liabilities & accrued expenses | 262 | n/a | 4 | 4 | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options | Other liabilities & accrued expenses | 55 | 10,035 | -165 | 2 | -167 | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Guaranteed accumulation benefits | Contractholder funds | 738 | n/a | -43 | -- | -43 | ||||||||||||||||||
Guaranteed withdrawal benefits | Contractholder funds | 506 | n/a | -13 | -- | -13 | ||||||||||||||||||
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | 1,693 | n/a | -247 | -- | -247 | ||||||||||||||||||
Liabilities held for sale | 2,363 | n/a | -246 | -- | -246 | |||||||||||||||||||
Other embedded derivative financial instruments | Contractholder funds | 85 | n/a | -4 | -- | -4 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other liabilities & accrued expenses | 171 | n/a | -2 | -- | -2 | ||||||||||||||||||
Credit default swaps – selling protection | Other liabilities & accrued expenses | 100 | n/a | -15 | -- | -15 | ||||||||||||||||||
Subtotal | 10,628 | 10,035 | -726 | 11 | -737 | |||||||||||||||||||
Total liability derivatives | 10,760 | 10,035 | -741 | $ | 11 | $ | -752 | |||||||||||||||||
Total derivatives | $ | 12,409 | 20,697 | $ | -487 | |||||||||||||||||||
(1) Volume for OTC 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 =ot applicable) | ||||||||||||||||||||||||
(2) In addition to the number of contracts presented in the table, the Company held 837,100 stock warrants. Stock warrants can be converted to cash upon sale of those instruments or exercised for shares of common stock. | ||||||||||||||||||||||||
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, 2012. | ||||||||||||||||||||||||
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||||||
Asset derivatives | Balance sheet location | Notional | Number | Fair | Gross | Gross | ||||||||||||||||||
amount | of | value, | asset | liability | ||||||||||||||||||||
contracts | net | |||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other investments | $ | 16 | n/a | $ | 2 | $ | 2 | $ | -- | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swap agreements | Other investments | 5,541 | n/a | 19 | 28 | -9 | ||||||||||||||||||
Interest rate cap agreements | Other investments | 372 | n/a | 1 | 1 | -- | ||||||||||||||||||
Financial futures contracts | Other assets | n/a | 2 | -- | -- | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options and warrants (2) | Other investments | 146 | 12,400 | 125 | 125 | -- | ||||||||||||||||||
Financial futures contracts | Other assets | n/a | 249 | 2 | 2 | -- | ||||||||||||||||||
Foreign currency contracts | ||||||||||||||||||||||||
Foreign currency forwards | Other investments | 44 | n/a | -- | -- | -- | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Conversion options | Fixed income securities | 5 | n/a | -- | -- | -- | ||||||||||||||||||
Equity-indexed call options | Fixed income securities | 90 | n/a | 9 | 9 | -- | ||||||||||||||||||
Credit default swaps | Fixed income securities | 12 | n/a | -12 | -- | -12 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other investments | 32 | n/a | -1 | -- | -1 | ||||||||||||||||||
Credit default swaps – selling protection | Other investments | 100 | n/a | 1 | 1 | -- | ||||||||||||||||||
Other contracts | ||||||||||||||||||||||||
Other contracts | Other assets | 4 | n/a | 1 | 1 | -- | ||||||||||||||||||
Subtotal | 6,346 | 12,651 | 145 | 167 | -22 | |||||||||||||||||||
Total asset derivatives | $ | 6,362 | 12,651 | $ | 147 | $ | 169 | $ | -22 | |||||||||||||||
Liability derivatives | ||||||||||||||||||||||||
Derivatives designated as accounting hedging instruments | ||||||||||||||||||||||||
Foreign currency swap agreements | Other liabilities & accrued expenses | $ | 135 | n/a | $ | -19 | $ | -- | $ | -19 | ||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Interest rate swap agreements | Other liabilities & accrued expenses | 1,185 | n/a | 16 | 18 | -2 | ||||||||||||||||||
Interest rate swaption agreements | Other liabilities & accrued expenses | 250 | n/a | -- | -- | -- | ||||||||||||||||||
Interest rate cap agreements | Other liabilities & accrued expenses | 429 | n/a | 1 | 1 | -- | ||||||||||||||||||
Financial futures contracts | Other liabilities & accrued expenses | -- | 357 | -- | -- | -- | ||||||||||||||||||
Equity and index contracts | ||||||||||||||||||||||||
Options and futures | Other liabilities & accrued expenses | -- | 12,262 | -58 | -- | -58 | ||||||||||||||||||
Embedded derivative financial instruments | ||||||||||||||||||||||||
Guaranteed accumulation benefits | Contractholder funds | 820 | n/a | -86 | -- | -86 | ||||||||||||||||||
Guaranteed withdrawal benefits | Contractholder funds | 554 | n/a | -39 | -- | -39 | ||||||||||||||||||
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | 3,916 | n/a | -419 | -- | -419 | ||||||||||||||||||
Other embedded derivative financial instruments | Contractholder funds | 85 | n/a | -9 | -- | -9 | ||||||||||||||||||
Credit default contracts | ||||||||||||||||||||||||
Credit default swaps – buying protection | Other liabilities & accrued expenses | 193 | n/a | -2 | -- | -2 | ||||||||||||||||||
Credit default swaps – selling protection | Other liabilities & accrued expenses | 130 | n/a | -30 | -- | -30 | ||||||||||||||||||
Subtotal | 7,562 | 12,619 | -626 | 19 | -645 | |||||||||||||||||||
Total liability derivatives | 7,697 | 12,619 | -645 | $ | 19 | $ | -664 | |||||||||||||||||
Total derivatives | $ | 14,059 | 25,270 | $ | -498 | |||||||||||||||||||
(1) Volume for OTC 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 =ot applicable) | ||||||||||||||||||||||||
(2) In addition to the number of contracts presented in the table, the Company held 837,100 stock warrants. Stock warrants can be converted to cash upon sale of those instruments or exercised for shares of common stock. | ||||||||||||||||||||||||
Schedule of gross and net amounts about the Company's OTC derivatives subject to enforceable master netting arrangements | ' | |||||||||||||||||||||||
($ in millions) | Offsets | |||||||||||||||||||||||
Gross | Counter- | Cash | Net | Securities | Net | |||||||||||||||||||
amount | party | collateral | amount on | collateral | amount | |||||||||||||||||||
netting | (received) | balance | (received) | |||||||||||||||||||||
pledged | sheet | pledged | ||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||
Asset derivatives | $ | 14 | $ | -11 | $ | -- | $ | 3 | $ | -3 | $ | -- | ||||||||||||
Liability derivatives | -33 | 11 | -4 | -26 | 22 | -4 | ||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||
Asset derivatives | $ | 52 | $ | -29 | $ | -18 | $ | 5 | $ | -5 | $ | -- | ||||||||||||
Liability derivatives | -63 | 29 | -- | -34 | 25 | -9 | ||||||||||||||||||
Summary of impacts on operations and AOCI from foreign currency contracts, cash flow hedges | ' | |||||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||||||
Gain (loss) recognized in OCI on derivatives during the period | $ | 3 | $ | -6 | $ | 4 | ||||||||||||||||||
Loss recognized in OCI on derivatives during the term of the hedging relationship | -13 | -17 | -12 | |||||||||||||||||||||
Loss reclassified from AOCI into income (net investment income) | -1 | -- | -- | |||||||||||||||||||||
Loss reclassified from AOCI into income (realized capital gains and losses) | -- | -1 | -1 | |||||||||||||||||||||
Schedule of gains and losses from valuation, settlements, and hedge ineffectiveness, fair value hedges and derivatives not designated as hedges | ' | |||||||||||||||||||||||
($ in millions) | 2013 | |||||||||||||||||||||||
Realized | Contract | Interest | Loss on | Total gain | ||||||||||||||||||||
capital | benefits | credited to | disposition | (loss) | ||||||||||||||||||||
gains and | contractholder | of | recognized in | |||||||||||||||||||||
losses | funds | operations | net income on | |||||||||||||||||||||
derivatives | ||||||||||||||||||||||||
Interest rate contracts | $ | 3 | $ | -- | $ | -- | $ | -6 | $ | -3 | ||||||||||||||
Equity and index contracts | -- | -- | 94 | -- | 94 | |||||||||||||||||||
Embedded derivative financial instruments | -1 | 74 | -75 | -- | -2 | |||||||||||||||||||
Foreign currency contracts | -2 | -- | -- | -- | -2 | |||||||||||||||||||
Credit default contracts | 14 | -- | -- | -- | 14 | |||||||||||||||||||
Other contracts | -- | -- | -3 | -- | -3 | |||||||||||||||||||
Total | $ | 14 | $ | 74 | $ | 16 | $ | -6 | $ | 98 | ||||||||||||||
2012 | ||||||||||||||||||||||||
Net | Realized | Contract | Interest | Total gain | ||||||||||||||||||||
investment | capital | benefits | credited to | (loss) | ||||||||||||||||||||
income | gains and | contractholder | recognized in | |||||||||||||||||||||
losses | funds | net income on | ||||||||||||||||||||||
derivatives | ||||||||||||||||||||||||
Derivatives in fair value accounting hedging relationships | ||||||||||||||||||||||||
Interest rate contracts | $ | -1 | $ | -- | $ | -- | $ | -- | $ | (1 | ) | |||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | -- | 2 | -- | -- | 2 | |||||||||||||||||||
Equity and index contracts | -- | -- | -- | 56 | 56 | |||||||||||||||||||
Embedded derivative financial instruments | -- | 20 | 36 | 134 | 190 | |||||||||||||||||||
Foreign currency contracts | -- | -2 | -- | -- | (2 | ) | ||||||||||||||||||
Credit default contracts | -- | 15 | -- | -- | 15 | |||||||||||||||||||
Other contracts | -- | -- | -- | 3 | 3 | |||||||||||||||||||
Subtotal | -- | 35 | 36 | 193 | 264 | |||||||||||||||||||
Total | $ | -1 | $ | 35 | $ | 36 | $ | 193 | $ | 263 | ||||||||||||||
2011 | ||||||||||||||||||||||||
Net | Realized | Contract | Interest | Total gain | ||||||||||||||||||||
investment | capital | benefits | credited to | (loss) | ||||||||||||||||||||
income | gains and | contractholder | recognized in | |||||||||||||||||||||
losses | funds | net income on | ||||||||||||||||||||||
derivatives | ||||||||||||||||||||||||
Derivatives in fair value accounting hedging relationships | ||||||||||||||||||||||||
Interest rate contracts | $ | -2 | $ | -8 | $ | -- | $ | -5 | $ | (15 | ) | |||||||||||||
Foreign currency and interest rate contracts | -- | -- | -- | -32 | (32 | ) | ||||||||||||||||||
Subtotal | -2 | -8 | -- | -37 | (47 | ) | ||||||||||||||||||
Derivatives not designated as accounting hedging instruments | ||||||||||||||||||||||||
Interest rate contracts | -- | -151 | -- | -- | (151 | ) | ||||||||||||||||||
Equity and index contracts | -- | -- | -- | -2 | (2 | ) | ||||||||||||||||||
Embedded derivative financial instruments | -- | -45 | -32 | -38 | (115 | ) | ||||||||||||||||||
Credit default contracts | -- | 2 | -- | -- | 2 | |||||||||||||||||||
Other contracts | -- | -- | -- | 7 | 7 | |||||||||||||||||||
Subtotal | -- | -194 | -32 | -33 | (259 | ) | ||||||||||||||||||
Total | $ | -2 | $ | -202 | $ | -32 | $ | -70 | $ | (306 | ) | |||||||||||||
Summary of the changes in fair value of fair value hedging relationships | ' | |||||||||||||||||||||||
($ in millions) | Gain (loss) on derivatives | Gain (loss) on hedged risk | ||||||||||||||||||||||
Location of gain or (loss) recognized | Interest | Foreign | Contractholder | Investments | ||||||||||||||||||||
in net income on derivatives | rate | currency & | funds | |||||||||||||||||||||
contracts | interest rate | |||||||||||||||||||||||
contracts | ||||||||||||||||||||||||
2012 | ||||||||||||||||||||||||
Net investment income | $ | 3 | $ | -- | $ | -- | $ | (3 | ) | |||||||||||||||
Total | $ | 3 | $ | -- | $ | -- | $ | (3 | ) | |||||||||||||||
2011 | ||||||||||||||||||||||||
Interest credited to contractholder funds | $ | -7 | $ | -34 | $ | 41 | $ | -- | ||||||||||||||||
Net investment income | 26 | -- | -- | (26 | ) | |||||||||||||||||||
Realized capital gains and losses | -8 | -- | -- | -- | ||||||||||||||||||||
Total | $ | 11 | $ | -34 | $ | 41 | $ | (26 | ) | |||||||||||||||
Summary of counterparty credit exposure by counterparty credit rating | ' | |||||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||||||
Rating (1) | Number | Notional | Credit | Exposure, | Number | Notional | Credit | Exposure, | ||||||||||||||||
of counter- | amount (2) | exposure (2) | net of | of counter- | amount (2) | exposure (2) | net of | |||||||||||||||||
parties | collateral (2) | parties | collateral (2) | |||||||||||||||||||||
A+ | 1 | $ | 22 | $ | 1 | $ | 1 | 1 | $ | 19 | $ | -- | $ | -- | ||||||||||
A | 4 | 1,523 | 2 | -- | 3 | 2,252 | 12 | -- | ||||||||||||||||
A- | 1 | 24 | 1 | -- | 2 | 311 | 1 | 1 | ||||||||||||||||
BBB+ | 1 | 3 | -- | -- | 1 | 3,617 | 11 | -- | ||||||||||||||||
BBB | 1 | 76 | 1 | -- | -- | -- | -- | -- | ||||||||||||||||
Total | 8 | $ | 1,648 | $ | 5 | $ | 1 | 7 | $ | 6,199 | $ | 24 | $ | 1 | ||||||||||
-1 | Rating is the lower of S&P or Moody’s ratings. | |||||||||||||||||||||||
-2 | Only OTC derivatives with a net positive fair value are included for each counterparty. | |||||||||||||||||||||||
Summary of derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability | ' | |||||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||||||
Gross liability fair value of contracts containing credit-risk-contingent features | $ | 25 | $ | 62 | ||||||||||||||||||||
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | -9 | -28 | ||||||||||||||||||||||
Collateral posted under MNAs for contracts containing credit-risk-contingent features | -14 | -25 | ||||||||||||||||||||||
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ | 2 | $ | 9 | ||||||||||||||||||||
Schedule of CDS notional amounts by credit rating and fair value of protection sold | ' | |||||||||||||||||||||||
($ in millions) | Notional amount | |||||||||||||||||||||||
AA | A | BBB | BB and | Total | Fair | |||||||||||||||||||
lower | value | |||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||
Single name | ||||||||||||||||||||||||
Investment grade corporate debt (1) | $ | -- | $ | 5 | $ | -- | $ | -- | $ | 5 | $ | -- | ||||||||||||
Baskets | ||||||||||||||||||||||||
First-to-default | ||||||||||||||||||||||||
Municipal | -- | 100 | -- | -- | 100 | -15 | ||||||||||||||||||
Index | ||||||||||||||||||||||||
Investment grade corporate debt (1) | 1 | 20 | 55 | 4 | 80 | 2 | ||||||||||||||||||
Total | $ | 1 | $ | 125 | $ | 55 | $ | 4 | $ | 185 | $ | -13 | ||||||||||||
December 31, 2012 | ||||||||||||||||||||||||
Single name | ||||||||||||||||||||||||
Investment grade corporate debt (1) | $ | -- | $ | 5 | $ | -- | $ | -- | $ | 5 | $ | -- | ||||||||||||
Municipal | 25 | -- | -- | -- | 25 | -3 | ||||||||||||||||||
Subtotal | 25 | 5 | -- | -- | 30 | -3 | ||||||||||||||||||
Baskets | ||||||||||||||||||||||||
First-to-default | ||||||||||||||||||||||||
Municipal | -- | 100 | -- | -- | 100 | -26 | ||||||||||||||||||
Index | ||||||||||||||||||||||||
Investment grade corporate debt (1) | 1 | 26 | 68 | 5 | 100 | -- | ||||||||||||||||||
Total | $ | 26 | $ | 131 | $ | 68 | $ | 5 | $ | 230 | $ | -29 | ||||||||||||
(1) Investment grade corporate debt categorization is based on the rating of the underlying name(s) at initial purchase. | ||||||||||||||||||||||||
Contractual amounts of off-balance-sheet financial instruments | ' | |||||||||||||||||||||||
($ in millions) | 2013 | 2012 | ||||||||||||||||||||||
Commitments to invest in limited partnership interests | $ | 1,366 | $ | 947 | ||||||||||||||||||||
Commitments to extend mortgage loans | 1 | 67 | ||||||||||||||||||||||
Private placement commitments | 5 | 6 | ||||||||||||||||||||||
Other loan commitments | 26 | 7 |
Reserve_for_LifeContingent_Con1
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | ' | ||||||||||||||
Reserve for life-contingent contract benefits | ' | ||||||||||||||
($ in millions) | 2013 | 2012 | |||||||||||||
Immediate fixed annuities: | |||||||||||||||
Structured settlement annuities | $ | 6,645 | $ | 7,274 | |||||||||||
Other immediate fixed annuities | 2,279 | 2,382 | |||||||||||||
Traditional life insurance | 2,329 | 2,899 | |||||||||||||
Accident and health insurance | 236 | 1,448 | |||||||||||||
Other | 100 | 114 | |||||||||||||
Total reserve for life-contingent contract benefits | $ | 11,589 | $ | 14,117 | |||||||||||
Key assumptions generally used in calculating the reserve for life-contingent contract benefits | ' | ||||||||||||||
Product | Mortality | Interest rate | Estimation method | ||||||||||||
Structured settlement annuities | U.S. population with projected calendar year improvements; mortality rates adjusted for each impaired life based on reduction in life expectancy | Interest rate assumptions range from 0% to 9.0% | Present value of contractually specified future benefits | ||||||||||||
Other immediate fixed annuities | 1983 group annuity mortality table with internal modifications; 1983 individual annuity mortality table; Annuity 2000 mortality table with internal modifications; Annuity 2000 mortality table; 1983 individual annuity mortality table with internal modifications | Interest rate assumptions range from 0% to 11.5% | Present value of expected future benefits based on historical experience | ||||||||||||
Traditional life insurance | Actual company experience plus loading | Interest rate assumptions range from 2.5% to 11.3% | Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims | ||||||||||||
Accident and health insurance | Actual company experience plus loading | Interest rate assumptions range from 3.0% to 6.0% | Unearned premium; additional contract reserves for mortality risk and unpaid claims | ||||||||||||
Other: | Annuity 2000 mortality table with internal modifications | Interest rate assumptions range from 4.0% to 5.8% | Projected benefit ratio applied to cumulative assessments | ||||||||||||
Variable annuity guaranteed minimum death benefits (1) | |||||||||||||||
(1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”). | |||||||||||||||
Contractholder funds | ' | ||||||||||||||
($ in millions) | 2013 | 2012 | |||||||||||||
Interest-sensitive life insurance | $ | 7,104 | $ | 10,356 | |||||||||||
Investment contracts: | |||||||||||||||
Fixed annuities | 16,172 | 25,851 | |||||||||||||
Funding agreements backing medium-term notes | 89 | 1,867 | |||||||||||||
Other investment contracts | 239 | 560 | |||||||||||||
Total contractholder funds | $ | 23,604 | $ | 38,634 | |||||||||||
Key contract provisions relating to contractholder funds | ' | ||||||||||||||
Product | Interest rate | Withdrawal/surrender charges | |||||||||||||
Interest-sensitive life insurance | Interest rates credited range from 0% to 10.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products | Either a percentage of account balance or dollar amount grading off generally over 20 years | |||||||||||||
Fixed annuities | Interest rates credited range from 0% to 9.8% for immediate annuities; (8.0)% to 13.5% for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 6.0% for all other products | Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 25.8% of fixed annuities are subject to market value adjustment for discretionary withdrawals | |||||||||||||
Funding agreements backing | Interest rates credited range from 1.8% to 5.4% | Not applicable | |||||||||||||
medium-term notes | |||||||||||||||
Other investment contracts: | Interest rates used in establishing reserves range from 1.7% to 10.3% | Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract | |||||||||||||
Guaranteed minimum income, accumulation and withdrawal benefits on variable (1) and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities | |||||||||||||||
(1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. | |||||||||||||||
Contractholder funds activity | ' | ||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||||||
Balance, beginning of year | $ | 38,634 | $ | 41,669 | $ | 46,458 | |||||||||
Deposits | 2,338 | 2,180 | 1,869 | ||||||||||||
Interest credited | 1,268 | 1,296 | 1,592 | ||||||||||||
Benefits | (1,521 | ) | (1,454 | ) | (1,454 | ) | |||||||||
Surrenders and partial withdrawals | (3,279 | ) | (3,969 | ) | (4,908 | ) | |||||||||
Maturities of and interest payments on institutional products | (1,799 | ) | (138 | ) | (867 | ) | |||||||||
Contract charges | (1,032 | ) | (995 | ) | (962 | ) | |||||||||
Net transfers from separate accounts | 12 | 11 | 12 | ||||||||||||
Fair value hedge adjustments for institutional products | -- | -- | (34 | ) | |||||||||||
Other adjustments | (72 | ) | 34 | (37 | ) | ||||||||||
Classified as held for sale | (10,945 | ) | -- | -- | |||||||||||
Balance, end of year | $ | 23,604 | $ | 38,634 | $ | 41,669 | |||||||||
Variable annuity contracts with guarantees | ' | ||||||||||||||
($ in millions) | December 31, | ||||||||||||||
2013 | 2012 | ||||||||||||||
In the event of death | |||||||||||||||
Separate account value | $ | 5,951 | $ | 5,947 | |||||||||||
Net amount at risk (1) | $ | 636 | $ | 1,044 | |||||||||||
Average attained age of contractholders | 68 years | 67 years | |||||||||||||
At annuitization (includes income benefit guarantees) | |||||||||||||||
Separate account value | $ | 1,463 | $ | 1,416 | |||||||||||
Net amount at risk (2) | $ | 252 | $ | 418 | |||||||||||
Weighted average waiting period until annuitization options available | None | None | |||||||||||||
For cumulative periodic withdrawals | |||||||||||||||
Separate account value | $ | 488 | $ | 532 | |||||||||||
Net amount at risk (3) | $ | 9 | $ | 16 | |||||||||||
Accumulation at specified dates | |||||||||||||||
Separate account value | $ | 732 | $ | 811 | |||||||||||
Net amount at risk (4) | $ | 27 | $ | 50 | |||||||||||
Weighted average waiting period until guarantee date | 5 years | 6 years | |||||||||||||
(1) Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date. | |||||||||||||||
(2) Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance. | |||||||||||||||
(3) Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date. | |||||||||||||||
(4) Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance. | |||||||||||||||
Liabilities for guarantees | ' | ||||||||||||||
($ in millions) | Liability for | Liability for | Liability for | Total | |||||||||||
guarantees related to | guarantees | guarantees related | |||||||||||||
death benefits and | related to | to accumulation | |||||||||||||
interest-sensitive life | income | and withdrawal | |||||||||||||
products | benefits | benefits | |||||||||||||
Balance, December 31, 2012 (1) | $ | 309 | $ | 235 | $ | 129 | $ | 673 | |||||||
Less reinsurance recoverables | 113 | 220 | 125 | 458 | |||||||||||
Net balance as of December 31, 2012 | 196 | 15 | 4 | 215 | |||||||||||
Incurred guarantee benefits | 83 | (1 | ) | 5 | 87 | ||||||||||
Paid guarantee benefits | (2 | ) | -- | -- | (2 | ) | |||||||||
Net change | 81 | (1 | ) | 5 | 85 | ||||||||||
Net balance as of December 31, 2013 | 277 | 14 | 9 | 300 | |||||||||||
Plus reinsurance recoverables | 100 | 99 | 56 | 255 | |||||||||||
Balance, December 31, 2013 (2) | $ | 377 | $ | 113 | $ | 65 | $ | 555 | |||||||
Balance, December 31, 2011 (3) | $ | 289 | $ | 191 | $ | 164 | $ | 644 | |||||||
Less reinsurance recoverables | 116 | 175 | 162 | 453 | |||||||||||
Net balance as of December 31, 2011 | 173 | 16 | 2 | 191 | |||||||||||
Incurred guarantee benefits | 25 | (1 | ) | 2 | 26 | ||||||||||
Paid guarantee benefits | (2 | ) | -- | -- | (2 | ) | |||||||||
Net change | 23 | (1 | ) | 2 | 24 | ||||||||||
Net balance as of December 31, 2012 | 196 | 15 | 4 | 215 | |||||||||||
Plus reinsurance recoverables | 113 | 220 | 125 | 458 | |||||||||||
Balance, December 31, 2012 (1) | $ | 309 | $ | 235 | $ | 129 | $ | 673 | |||||||
(1) Included in the total liability balance as of December 31, 2012 are reserves for variable annuity death benefits of $112 million, variable annuity income benefits of $221 million, variable annuity accumulation benefits of $86 million, variable annuity withdrawal benefits of $39 million and other guarantees of $215 million. | |||||||||||||||
(2) Included in the total liability balance as of December 31, 2013 are reserves for variable annuity death benefits of $98 million, variable annuity income benefits of $99 million, variable annuity accumulation benefits of $43 million, variable annuity withdrawal benefits of $13 million and other guarantees of $302 million. | |||||||||||||||
(3) Included in the total liability balance as of December 31, 2011 are reserves for variable annuity death benefits of $116 million, variable annuity income benefits of $175 million, variable annuity accumulation benefits of $105 million, variable annuity withdrawal benefits of $57 million and other guarantees of $191 million. |
Reinsurance_Tables
Reinsurance (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Reinsurance | ' | ||||||||||
Summary of retention limits by period of policy issuance | ' | ||||||||||
Period | Retention limits | ||||||||||
April 2011 through current | Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria | ||||||||||
July 2007 through March 2011 | $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria | ||||||||||
September 1998 through June 2007 | $2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met | ||||||||||
August 1998 and prior | Up to $1 million per life | ||||||||||
Effects of reinsurance on premiums and contract charges | ' | ||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||
Direct | $ | 2,093 | $ | 2,121 | $ | 2,229 | |||||
Assumed | |||||||||||
Affiliate | 124 | 115 | 113 | ||||||||
Non-affiliate | 68 | 40 | 20 | ||||||||
Ceded-non-affiliate | (618 | ) | (654 | ) | (730 | ) | |||||
Premiums and contract charges, net of reinsurance | $ | 1,667 | $ | 1,622 | $ | 1,632 | |||||
Effects of reinsurance on contract benefits | ' | ||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||
Direct | $ | 1,805 | $ | 2,051 | $ | 2,036 | |||||
Assumed | |||||||||||
Affiliate | 82 | 80 | 78 | ||||||||
Non-affiliate | 50 | 34 | 19 | ||||||||
Ceded-non-affiliate | -331 | -644 | -631 | ||||||||
Contract benefits, net of reinsurance | $ | 1,606 | $ | 1,521 | $ | 1,502 | |||||
Effects of reinsurance on interest credited to contractholder funds | ' | ||||||||||
($ in millions) | 2013 | 2012 | 2011 | ||||||||
Direct | $ | 1,240 | $ | 1,288 | $ | 1,614 | |||||
Assumed | |||||||||||
Affiliate | 9 | 10 | 10 | ||||||||
Non-affiliate | 29 | 19 | 11 | ||||||||
Ceded-non-affiliate | -27 | -28 | -27 | ||||||||
Interest credited to contractholder funds, net of reinsurance | $ | 1,251 | $ | 1,289 | $ | 1,608 | |||||
Summary of reinsurance recoverables on paid and unpaid benefits | ' | ||||||||||
($ in millions) | 2013 | 2012 | |||||||||
Annuities | $ | 1,648 | $ | 1,831 | |||||||
Life insurance | 1,025 | 1,606 | |||||||||
Long-term care insurance | 78 | 1,049 | |||||||||
Other | 3 | 84 | |||||||||
Total | $ | 2,754 | $ | 4,570 | |||||||
Deferred_Policy_Acquisition_an1
Deferred Policy Acquisition and Sales Inducement Costs (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Deferred Policy Acquisition and Sales Inducement Costs | ' | ||||||
Schedule of deferred policy acquisition costs | ' | ||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Balance, beginning of year | $ | 1,834 | $ | 2,165 | $ | 2,526 | |
Acquisition costs deferred | 254 | 262 | 241 | ||||
Amortization charged to income | -240 | -324 | -430 | ||||
Effect of unrealized gains and losses | 226 | -269 | -172 | ||||
Classified as held for sale | -743 | -- | -- | ||||
Balance, end of year | $ | 1,331 | $ | 1,834 | $ | 2,165 | |
Schedule of DSI activity for Allstate Financial | ' | ||||||
($ in millions) | 2013 | 2012 | 2011 | ||||
Balance, beginning of year | $ | 41 | $ | 41 | $ | 86 | |
Sales inducements deferred | 24 | 22 | 7 | ||||
Amortization charged to income | -7 | -14 | -23 | ||||
Effect of unrealized gains and losses | 12 | -8 | -29 | ||||
Classified as held for sale | -28 | -- | -- | ||||
Balance, end of year | $ | 42 | $ | 41 | $ | 41 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2013 | ||||||||||
Income Taxes | ' | |||||||||
Components of the deferred income tax assets and liabilities | ' | |||||||||
($ in millions) | 2013 | 2012 | ||||||||
Deferred assets | ||||||||||
Sale of subsidiary | $ | 196 | $ | 27 | ||||||
Difference in tax bases of investments | 44 | 53 | ||||||||
Other assets | 6 | 1 | ||||||||
Total deferred assets | 246 | 81 | ||||||||
Deferred liabilities | ||||||||||
Unrealized net capital gains | -501 | -883 | ||||||||
DAC | -470 | -444 | ||||||||
Life and annuity reserves | -273 | -193 | ||||||||
Other liabilities | -94 | -85 | ||||||||
Total deferred liabilities | -1,338 | -1,605 | ||||||||
Net deferred liability before classification as held for sale | -1,092 | -1,524 | ||||||||
Deferred taxes classified as held for sale | -151 | -- | ||||||||
Net deferred liability | $ | -941 | $ | -1,524 | ||||||
Components of income tax expense | ' | |||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||
Current | $ | 71 | $ | -82 | $ | 29 | ||||
Deferred | -52 | 261 | 196 | |||||||
Total income tax expense | $ | 19 | $ | 179 | $ | 225 | ||||
Reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations | ' | |||||||||
2013 | 2012 | 2011 | ||||||||
Statutory federal income tax rate - (benefit) expense | -35 | % | 35 | % | 35 | % | ||||
Tax credits | -181.8 | -3.8 | -1.4 | |||||||
Dividends received deduction | -46.1 | -1.4 | -1.2 | |||||||
Adjustments to prior year tax liabilities | -14.1 | -0.3 | -0.2 | |||||||
Sale of subsidiary | 351.3 | -- | -- | |||||||
State income taxes | 15.3 | -- | 0.3 | |||||||
Non-deductible expenses | 6.8 | 0.1 | -- | |||||||
Other | 0.1 | -- | -- | |||||||
Effective income tax rate - expense | 96.5 | % | 29.6 | % | 32.5 | % |
Other_Comprehensive_Income_Tab
Other Comprehensive Income (Tables) | 12 Months Ended | |||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||
Other Comprehensive Income | ' | |||||||||||||||||||||||||||
Schedule of components of other comprehensive (loss) income on a pre-tax and after-tax basis | ' | |||||||||||||||||||||||||||
($ in millions) | 2013 | 2012 | 2011 | |||||||||||||||||||||||||
Pre- | Tax | After- | Pre- | Tax | After- | Pre- | Tax | After- | ||||||||||||||||||||
tax | tax | tax | tax | tax | tax | |||||||||||||||||||||||
Unrealized net holding gains and losses arising during the period, net of related offsets | $ | (1,047 | ) | $ | 367 | $ | (680 | ) | $ | 1,180 | $ | (414 | ) | $ | 766 | $ | 1,001 | $ | (350 | ) | $ | 651 | ||||||
Less: reclassification adjustment of realized capital gains and losses | 42 | (15 | ) | 27 | (84 | ) | 29 | (55 | ) | 579 | (203 | ) | 376 | |||||||||||||||
Unrealized net capital gains and losses | (1,089 | ) | 382 | (707 | ) | 1,264 | (443 | ) | 821 | 422 | (147 | ) | 275 | |||||||||||||||
Unrealized foreign currency translation adjustments | 3 | (1 | ) | 2 | -- | -- | -- | (2 | ) | 1 | (1 | ) | ||||||||||||||||
Other comprehensive (loss) income | $ | (1,086 | ) | $ | 381 | $ | (705 | ) | $ | 1,264 | $ | (443 | ) | $ | 821 | $ | 420 | $ | (146 | ) | $ | 274 | ||||||
Quarterly_Results_unaudited_Ta
Quarterly Results (unaudited) (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||
Quarterly Results (unaudited) | ' | |||||||||||||||||
Schedule of quarterly results | ' | |||||||||||||||||
($ in millions) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues | $ | 1,049 | $ | 1,052 | $ | 1,087 | $ | 1,065 | $ | 1,016 | $ | 970 | $ | 1,076 | $ | 1,116 | ||
Net income (loss) | 109 | 83 | 150 | 98 | -394 | 103 | 97 | 142 |
General_Details
General (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
item | |||
Premiums and contract charges by product | ' | ' | ' |
Premiums | $613 | $593 | $624 |
Contract charges | 1,054 | 1,029 | 1,008 |
Total premiums and contract charges | 1,667 | 1,622 | 1,632 |
Number of states in which entity is authorized to operate | 50 | ' | ' |
Minimum percentage of premiums from one jurisdiction to be considered as significant | 5.00% | ' | ' |
Traditional life insurance | ' | ' | ' |
Premiums and contract charges by product | ' | ' | ' |
Premiums | 471 | 449 | 420 |
Immediate annuities with life contingencies | ' | ' | ' |
Premiums and contract charges by product | ' | ' | ' |
Premiums | 37 | 45 | 106 |
Accident and health insurance | ' | ' | ' |
Premiums and contract charges by product | ' | ' | ' |
Premiums | 105 | 99 | 98 |
Interest-sensitive life insurance | ' | ' | ' |
Premiums and contract charges by product | ' | ' | ' |
Contract charges | 1,036 | 1,011 | 975 |
Fixed annuities | ' | ' | ' |
Premiums and contract charges by product | ' | ' | ' |
Contract charges | $18 | $18 | $33 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Private equity/debt funds, real estate funds and tax credit funds | ' |
Investments | ' |
Period over which recognition of income on funds is delayed | '3 months |
Hedge funds | ' |
Investments | ' |
Period over which recognition of income on funds is delayed | '1 month |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Securities loaned | ' | ' | ' |
Cash collateral received as percentage of fair value of securities loaned | 102.00% | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Present value of future profits | $8 | $10 | ' |
Amortization expense of present value of future profits | 2 | 3 | 2 |
Goodwill | ' | ' | ' |
Goodwill | 5 | 5 | ' |
Goodwill impairment | $0 | $0 | ' |
Minimum | ' | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts | '15 years | ' | ' |
Maximum | ' | ' | ' |
Securities loaned | ' | ' | ' |
Length of securities lending transaction period | '30 days | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts | '30 years | ' | ' |
Interest-sensitive life insurance | Minimum | ' | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts | '10 years | ' | ' |
Interest-sensitive life insurance | Maximum | ' | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts | '20 years | ' | ' |
Fixed annuities | Minimum | ' | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts | '5 years | ' | ' |
Fixed annuities | Maximum | ' | ' | ' |
Deferred policy acquisition and sales inducement costs | ' | ' | ' |
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts | '10 years | ' | ' |
Held_for_Sale_Transaction_Deta
Held for Sale Transaction (Details) (USD $) | Dec. 31, 2013 | Jul. 17, 2013 |
In Millions, unless otherwise specified | ||
Liabilities | ' | ' |
Deferred income taxes | $151 | ' |
Lincoln Benefit Life Company | ' | ' |
Held for sale transaction | ' | ' |
Sale price of Lincoln Benefit Life Company and its business generated through independent master brokerage agencies | ' | 600 |
After-tax estimated loss on disposition | 521 | ' |
Assets | ' | ' |
Investments | 11,983 | ' |
Deferred policy acquisition costs | 743 | ' |
Reinsurance recoverables, net | 1,660 | ' |
Accrued investment income | 109 | ' |
Other assets | 79 | ' |
Separate Accounts | 1,701 | ' |
Assets held for sale | 16,275 | ' |
Less: Loss accrual | -682 | ' |
Total assets held for sale | 15,593 | ' |
Liabilities | ' | ' |
Reserve for life-contingent contract benefits | 1,894 | ' |
Contractholder funds | 10,945 | ' |
Unearned premiums | 12 | ' |
Deferred income taxes | 151 | ' |
Other liabilities and accrued expenses | 196 | ' |
Separate Accounts | 1,701 | ' |
Total liabilities held for sale | 14,899 | ' |
Accumulated other comprehensive income related to assets held for sale | 85 | ' |
Lincoln Benefit Life Company | Fixed income securities | ' | ' |
Assets | ' | ' |
Investments | 10,167 | ' |
Lincoln Benefit Life Company | Mortgage loans | ' | ' |
Assets | ' | ' |
Investments | 1,367 | ' |
Lincoln Benefit Life Company | Short-term investments | ' | ' |
Assets | ' | ' |
Investments | 160 | ' |
Lincoln Benefit Life Company | Policy loans | ' | ' |
Assets | ' | ' |
Investments | 198 | ' |
Lincoln Benefit Life Company | Other investments | ' | ' |
Assets | ' | ' |
Investments | $91 | ' |
Supplemental_Cash_Flow_Informa2
Supplemental Cash Flow Information (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Supplemental Cash Flow Information | ' | ' | ' |
Non-cash modifications of certain mortgage loans, fixed income securities, limited partnerships and other investments, as well as mergers completed with equity securities | $306 | $231 | $486 |
Liabilities for collateral received reported in other liabilities and accrued expenses | 322 | 543 | 220 |
Obligations to return cash collateral for over-the-counter ("OTC") derivatives reported in other liabilities and accrued expenses or other investments | 6 | 18 | 43 |
Net change in proceeds managed | ' | ' | ' |
Net change in short-term investments | 235 | -298 | 202 |
Operating cash flow provided (used) | 235 | -298 | 202 |
Net change in cash | -2 | ' | ' |
Net change in proceeds managed | 233 | -298 | 202 |
Net change in liabilities | ' | ' | ' |
Liabilities for collateral, beginning of year | -561 | -263 | -465 |
Liabilities for collateral, end of year | -328 | -561 | -263 |
Operating cash flow (used) provided | -233 | 298 | -202 |
Payable associated with the pension benefit obligations due to AIC forgiven | ' | ' | $4 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Related Party Transactions | ' | ' | ' |
Allocation of operating expenses | $456 | $451 | $399 |
Premium revenue | 613 | 593 | 624 |
Reserves recorded for annuities | 11,589 | 14,117 | ' |
Reinsurance recoverable from related parties | 2,754 | 4,570 | ' |
Structured settlement annuities with life contingencies | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Reserves recorded for annuities | 6,645 | 7,274 | ' |
Allstate Financial Services, LLC | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Commission and other distribution expenses | 13 | 11 | 15 |
AIC | Structured settlement annuities | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Annuities issued | 7 | 35 | 56 |
Reserves recorded for annuities | 4,720 | 4,770 | ' |
AIC | Structured settlement annuities with life contingencies | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Premium revenue | 4 | 3 | 11 |
Lincoln Benefit Life Company | LB Re | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Reinsurance recoverable from related parties | 2 | ' | ' |
Reinsurance payables to affiliates | 3 | ' | ' |
Loss on the transaction | ($1) | ' | ' |
Related_Party_Transactions_Det1
Related Party Transactions (Details 2) (USD $) | 12 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Aug. 01, 2005 | Jun. 30, 2006 | Jun. 30, 2008 | Dec. 18, 2009 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 18, 2009 | Aug. 01, 2005 | Jun. 30, 2006 | Jun. 30, 2008 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 31, 2011 | Dec. 31, 2012 | Apr. 30, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Nov. 17, 2008 | Apr. 30, 2011 | Mar. 31, 2011 | Aug. 31, 2011 | |
Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | Kennett | ALIC Re | ALIC Re | ALIC Re | ALIC Re | AIC | AIC | AIC | AIC | AIC | AIC | AIC | AIC | AIC | AIC | AIC | AIC | AIC | RBI | RBI | RBI | ||||
4.86% Recourse Note due July 1, 2035 | 5.98% Recourse Note due June 1, 2036 | 5.73% Recourse Note due June 1, 2038 | 5.19% Recourse Note due Dec 1, 2029 | 6.74% Surplus Note, due 2029 | 6.74% Surplus Note, due 2029 | 5.06% Surplus Note, due 2035 | 5.06% Surplus Note, due 2035 | 6.18% Surplus Note, due 2036 | 6.18% Surplus Note, due 2036 | 5.93% Surplus Note, due 2038 | 5.93% Surplus Note, due 2038 | Kennett | Kennett | Kennett | Kennett | 6.35% Note, due 2018 | 6.35% Note, due 2018 | 6.35% Note, due 2018 | 5.75% Note One, due 2018 | 5.75% Note One, due 2018 | 5.75% Note One, due 2018 | 5.75% Note One, due 2018 | 5.75% Note Two, due 2018 | 5.75% Note Two, due 2018 | 7.00% Surplus Note, due 2028 | 7.00% Surplus Note, due 2028 | 7.00% Surplus Note, due 2028 | 7.00% Surplus Note, due 2028 | Mortgage loans | Real estate | Fixed income securities | |||||||
6.74% Surplus Note, due 2029 | 5.06% Surplus Note, due 2035 | 6.18% Surplus Note, due 2036 | 5.93% Surplus Note, due 2038 | |||||||||||||||||||||||||||||||||||
Related Party Transactions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes due to related parties | $282,000,000 | $496,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | $25,000,000 | $25,000,000 | $100,000,000 | $100,000,000 | $100,000,000 | $100,000,000 | $50,000,000 | $50,000,000 | $25,000,000 | $100,000,000 | $100,000,000 | $50,000,000 | $7,000,000 | $7,000,000 | ' | ' | $10,000,000 | ' | $10,000,000 | $4,000,000 | ' | ' | $200,000,000 | ' | $400,000,000 | ' | ' | ' |
Notes payable interest rate (as a percent) | ' | ' | ' | ' | ' | ' | 4.86% | 5.98% | 5.73% | 5.19% | 6.74% | 6.74% | 5.06% | 5.06% | 6.18% | 6.18% | 5.93% | 5.93% | 6.74% | 5.06% | 6.18% | 5.93% | 6.35% | 6.35% | 6.35% | ' | 5.75% | ' | 5.75% | 5.75% | 5.75% | ' | 7.00% | ' | 7.00% | ' | ' | ' |
Notes payable interest rate reset period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | '10 years | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate for reset of notes payable interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'current ten year Constant Maturity Treasury yield | ' | 'current ten year Constant Maturity Treasury yield | 'current ten year Constant Maturity Treasury yield | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis spread over reference rate for reset of notes payable interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.25% | ' | 1.14% | 2.09% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Recourse notes receivable interest rate reset period | ' | ' | ' | ' | ' | ' | ' | '10 years | '10 years | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate for reset of notes receivable interest rate | ' | ' | ' | ' | ' | ' | ' | 'current ten year Constant Maturity Treasury yield | 'current ten year Constant Maturity Treasury yield | 'current ten year Constant Maturity Treasury yield | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basis spread over reference rate for reset of notes receivable interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | 0.94% | 1.89% | 1.70% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net investment income on recourse notes | 2,593,000,000 | 2,711,000,000 | 2,739,000,000 | 15,000,000 | 15,000,000 | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense | ' | ' | ' | 16,000,000 | 16,000,000 | 16,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | 1,000,000 | 745,000 | ' | ' | ' | 7,000,000 | 27,000,000 | 28,000,000 | ' | ' | ' | ' |
Fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,000,000 | 10,000,000 | 7,000,000 |
Repayment of principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $200,000,000 | $200,000,000 | ' | ' | ' | ' | ' |
Related_Party_Transactions_Det2
Related Party Transactions (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Nov. 30, 2011 | Nov. 30, 2011 | Nov. 30, 2011 |
Liquidity agreement | Liquidity agreement | Liquidity agreement | Liquidity agreement | Intercompany loan agreement | Intercompany loan agreement | Intercompany loan agreement | Capital support agreement | Capital support agreement | Capital support agreement | Credit Agreement | Credit Agreement | AIC | AIC | AFC | AFC | |||
Maximum | Minimum | Maximum | Maximum | Minimum | Commercial loan | Allstate Bank | ||||||||||||
Commercial loan | ||||||||||||||||||
Related Party Transactions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount available for borrowings under the agreement | ' | ' | ' | ' | $1,000,000,000 | ' | ' | ' | $1,000,000,000 | ' | $1,000,000,000 | ' | ' | ' | ' | ' | ' | ' |
Maturity period of advances | ' | ' | ' | ' | '364 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notice period for payables on demand | ' | ' | ' | ' | ' | '10 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate for advances | ' | ' | ' | ' | ' | '30-day commercial paper | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of loan outstanding under the Liquidity Agreement | ' | ' | 0 | 0 | ' | ' | 0 | 0 | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' |
Cash paid for purchases of investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 176,000,000 | ' |
Fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 175,000,000 | ' |
Accrued investment income | 358,000,000 | 489,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 |
Percentage of risk-based capital ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 150.00% | ' | ' | ' | ' | ' | ' |
Commitment fee as a percentage of the amount of the capital and surplus maximum that remains available at the beginning of the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum risk-based capital ratio at which agreement will be terminated (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300.00% | ' | ' | ' | ' | ' | ' |
Voting stock to be held as per agreement (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' |
Payable associated with the defined benefit pension plan due to AIC forgiven | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,000,000 | ' | ' |
Increase in additional capital paid-in capital on account of defined benefit obligation forgiven | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' |
Return of capital | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $500,000,000 | ' | ' | ' |
Investments_Details
Investments (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | $27,427 | $41,194 |
Gross unrealized gains | 1,747 | 4,108 |
Gross unrealized losses | -418 | -426 |
Fair value | 28,756 | 44,876 |
U.S. government and agencies | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 678 | 2,137 |
Gross unrealized gains | 90 | 242 |
Gross unrealized losses | -2 | ' |
Fair value | 766 | 2,379 |
Municipal | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 3,135 | 4,153 |
Gross unrealized gains | 231 | 612 |
Gross unrealized losses | -62 | -61 |
Fair value | 3,304 | 4,704 |
Corporate | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 20,397 | 28,748 |
Gross unrealized gains | 1,214 | 2,896 |
Gross unrealized losses | -295 | -113 |
Fair value | 21,316 | 31,531 |
Foreign government | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 715 | 1,017 |
Gross unrealized gains | 83 | 164 |
Gross unrealized losses | -6 | -1 |
Fair value | 792 | 1,180 |
ABS | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 1,011 | 1,921 |
Gross unrealized gains | 30 | 49 |
Gross unrealized losses | -34 | -105 |
Fair value | 1,007 | 1,865 |
RMBS | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 752 | 1,778 |
Gross unrealized gains | 50 | 82 |
Gross unrealized losses | -12 | -69 |
Fair value | 790 | 1,791 |
CMBS | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 724 | 1,425 |
Gross unrealized gains | 47 | 60 |
Gross unrealized losses | -7 | -77 |
Fair value | 764 | 1,408 |
Redeemable preferred stock | ' | ' |
Amortized cost, gross unrealized gains and losses and fair value for fixed income securities | ' | ' |
Amortized cost | 15 | 15 |
Gross unrealized gains | 2 | 3 |
Fair value | $17 | $18 |
Investments_Details_2
Investments (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Amortized cost | ' | ' |
Due in one year or less | $1,106 | ' |
Due after one year through five years | 5,060 | ' |
Due after five years through ten years | 10,955 | ' |
Due after ten years | 7,819 | ' |
Subtotal | 24,940 | ' |
ABS, RMBS and CMBS | 2,487 | ' |
Total | 27,427 | ' |
Fair value | ' | ' |
Due in one year or less | 1,132 | ' |
Due after one year through five years | 5,457 | ' |
Due after five years through ten years | 11,316 | ' |
Due after ten years | 8,290 | ' |
Subtotal | 26,195 | ' |
ABS, RMBS and CMBS | 2,561 | ' |
Total | $28,756 | $44,876 |
Investments_Details_3
Investments (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Net investment income | ' | ' | ' |
Investment income, before expense | $2,593 | $2,711 | $2,739 |
Investment expense | -108 | -114 | -102 |
Net investment income | 2,485 | 2,597 | 2,637 |
Fixed income securities | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | 1,947 | 2,084 | 2,264 |
Mortgage loans | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | 345 | 345 | 345 |
Equity securities | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | 12 | 9 | 7 |
Limited partnership interests | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | 175 | 159 | 49 |
Short-term investments | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | 2 | 2 | 3 |
Policy loans | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | 49 | 51 | 53 |
Other | ' | ' | ' |
Net investment income | ' | ' | ' |
Investment income, before expense | $63 | $61 | $18 |
Investments_Details_4
Investments (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | $76 | ($16) | $390 |
Fixed income securities | ' | ' | ' |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | 3 | -62 | 539 |
Mortgage loans | ' | ' | ' |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | 20 | 8 | -23 |
Equity securities | ' | ' | ' |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | 45 | ' | 14 |
Limited partnership interests | ' | ' | ' |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | -6 | ' | 62 |
Derivatives | ' | ' | ' |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | 14 | 34 | -203 |
Other | ' | ' | ' |
Realized capital gains and losses by asset type | ' | ' | ' |
Realized capital gains and losses | ' | $4 | $1 |
Investments_Details_5
Investments (Details 5) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Investments | ' | ' | ' |
Impairment write-downs | ($33) | ($51) | ($242) |
Change in intent write-downs | -19 | -17 | -51 |
Net other-than-temporary impairment losses recognized in earnings | -52 | -68 | -293 |
Sales | 114 | 17 | 823 |
Valuation of derivative instruments | -3 | -16 | -224 |
Settlements of derivative instruments | 17 | 51 | 22 |
EMA limited partnership income | ' | ' | 62 |
Total realized capital gains and losses | 76 | -16 | 390 |
Fixed income securities | ' | ' | ' |
Investments | ' | ' | ' |
Net other-than-temporary impairment losses recognized in earnings | -45 | -69 | -241 |
Total realized capital gains and losses | 3 | -62 | 539 |
Schedule of Available for Sale Securities | ' | ' | ' |
Gross gains on sales of fixed income securities | 94 | 225 | 835 |
Gross losses on sales of fixed income securities | $46 | $222 | $124 |
Investments_Details_6
Investments (Details 6) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | ($49) | ($60) | ($279) |
Portion of loss recognized in other comprehensive income | -3 | -8 | -14 |
Net other-than-temporary impairment losses recognized in earnings | -52 | -68 | -293 |
Fixed income securities | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -42 | -61 | -227 |
Portion of loss recognized in other comprehensive income | -3 | -8 | -14 |
Net other-than-temporary impairment losses recognized in earnings | -45 | -69 | -241 |
Municipal | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -8 | ' | -14 |
Portion of loss recognized in other comprehensive income | ' | ' | -3 |
Net other-than-temporary impairment losses recognized in earnings | -8 | ' | -17 |
Corporate | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | ' | -16 | -28 |
Portion of loss recognized in other comprehensive income | ' | -2 | 6 |
Net other-than-temporary impairment losses recognized in earnings | ' | -18 | -22 |
ABS | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | ' | ' | -8 |
Portion of loss recognized in other comprehensive income | -2 | ' | 2 |
Net other-than-temporary impairment losses recognized in earnings | -2 | ' | -6 |
RMBS | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -2 | -23 | -111 |
Portion of loss recognized in other comprehensive income | 2 | -9 | -20 |
Net other-than-temporary impairment losses recognized in earnings | ' | -32 | -131 |
CMBS | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -32 | -22 | -66 |
Portion of loss recognized in other comprehensive income | -3 | 3 | 1 |
Net other-than-temporary impairment losses recognized in earnings | -35 | -19 | -65 |
Mortgage loans | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | 11 | 5 | -33 |
Net other-than-temporary impairment losses recognized in earnings | 11 | 5 | -33 |
Equity securities | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -6 | -1 | -5 |
Net other-than-temporary impairment losses recognized in earnings | -6 | -1 | -5 |
Limited partnership interests | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -9 | -3 | -3 |
Net other-than-temporary impairment losses recognized in earnings | -9 | -3 | -3 |
Other | ' | ' | ' |
Other-than-temporary impairment losses by asset type | ' | ' | ' |
Total other-than-temporary impairment losses | -3 | ' | -11 |
Net other-than-temporary impairment losses recognized in earnings | ($3) | ' | ($11) |
Investments_Details_7
Investments (Details 7) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Investments | ' | ' | ' |
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | $164 | $134 | ' |
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 | -117 | -142 | ' |
Credit Losses on Fixed Income Securities | ' | ' | ' |
Beginning balance | -345 | -581 | -701 |
Additional credit loss for securities previously other-than-temporarily impaired | -13 | -33 | -76 |
Additional credit loss for securities not previously other-than-temporarily impaired | -19 | -20 | -114 |
Reduction in credit loss for securities disposed or collected | 75 | 288 | 288 |
Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell | 2 | ' | 13 |
Change in credit loss due to accretion of increase in cash flows | 1 | 1 | 9 |
Ending balance | -299 | -345 | -581 |
Cumulative credit losses recognized in earnings for securities classified as held for sale | 60 | ' | ' |
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 | -5 | -5 | ' |
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 | ' | -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 | -10 | -14 | ' |
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 | -90 | -103 | ' |
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 | ($12) | ($19) | ' |
Investments_Details_8
Investments (Details 8) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Fair value | ' | ' |
Fixed income securities | $28,756 | $44,876 |
Equity securities | 650 | 345 |
Short-term investments | 590 | 875 |
Derivative instruments | -13 | -17 |
Gross unrealized Gains | ' | ' |
Fixed income securities | 1,747 | 4,108 |
Equity securities | 90 | 36 |
Derivative instruments | 1 | 2 |
Gross unrealized Losses | ' | ' |
Fixed income securities | -418 | -426 |
Equity securities | -5 | -1 |
Derivative instruments | -14 | -19 |
Unrealized net gains (losses) | ' | ' |
Fixed income securities | 1,329 | 3,682 |
Equity securities | 85 | 35 |
Derivative instruments | -13 | -17 |
EMA limited partnerships | -2 | 1 |
Investments classified as held for sale | 190 | ' |
Unrealized net capital gains and losses, pre-tax | 1,589 | 3,701 |
Amount recognized for: | ' | ' |
Insurance reserves | ' | -771 |
DAC and DSI | -156 | -408 |
Amounts recognized | -156 | -1,179 |
Deferred income taxes | -506 | -888 |
Total unrealized net capital gains and losses | 927 | 1,634 |
Fair value of derivative securities classified as assets, with unrealized net gains (losses) in AOCI | 1 | 2 |
Fair value of derivative securities classified as liabilities, with unrealized net gains (losses) in AOCI | $14 | $19 |
Investments_Details_9
Investments (Details 9) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ' | ' | ' |
Change in unrealized net capital gains and losses | ($2,112) | $1,729 | $1,214 |
Amount recognized for: | ' | ' | ' |
Insurance reserves | 771 | -177 | -585 |
DAC and DSI | 252 | -288 | -207 |
Amounts recognized | 1,023 | -465 | -792 |
Deferred income taxes | 382 | -443 | -147 |
(Decrease) increase in unrealized net capital gains and losses | -707 | 821 | 275 |
EMA limited partnerships | ' | ' | ' |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ' | ' | ' |
Change in unrealized net capital gains and losses | -3 | ' | 1 |
Fixed income securities | ' | ' | ' |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ' | ' | ' |
Change in unrealized net capital gains and losses | -2,353 | 1,735 | 1,219 |
Equity securities | ' | ' | ' |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ' | ' | ' |
Change in unrealized net capital gains and losses | 50 | -1 | -11 |
Derivative instruments | ' | ' | ' |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ' | ' | ' |
Change in unrealized net capital gains and losses | 4 | -5 | 5 |
Investments classified as held for sale | ' | ' | ' |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | ' | ' | ' |
Change in unrealized net capital gains and losses | $190 | ' | ' |
Investments_Details_10
Investments (Details 10) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | security | security |
Fixed income and equity securities | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 686 | 160 |
Fair value, continuous unrealized loss position for less than 12 months | $5,988 | $1,513 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -262 | -36 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 165 | 401 |
Fair value, continuous unrealized loss position for 12 months or more | 1,160 | 2,787 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -161 | -391 |
Total unrealized losses | ' | ' |
Total unrealized losses | -423 | -427 |
Fixed income securities | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 661 | 157 |
Fair value, continuous unrealized loss position for less than 12 months | 5,908 | 1,456 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -257 | -35 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 165 | 400 |
Fair value, continuous unrealized loss position for 12 months or more | 1,160 | 2,787 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -161 | -391 |
Total unrealized losses | ' | ' |
Gross unrealized losses | -418 | -426 |
U.S. government and agencies | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 4 | 1 |
Fair value, continuous unrealized loss position for less than 12 months | 76 | 15 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -2 | ' |
Total unrealized losses | ' | ' |
Total unrealized losses | -2 | ' |
Municipal | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 63 | 11 |
Fair value, continuous unrealized loss position for less than 12 months | 347 | 101 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -24 | -7 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 21 | 50 |
Fair value, continuous unrealized loss position for 12 months or more | 99 | 395 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -38 | -54 |
Total unrealized losses | ' | ' |
Total unrealized losses | -62 | -61 |
Corporate | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 530 | 79 |
Fair value, continuous unrealized loss position for less than 12 months | 5,191 | 1,086 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -224 | -27 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 48 | 66 |
Fair value, continuous unrealized loss position for 12 months or more | 467 | 829 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -71 | -86 |
Total unrealized losses | ' | ' |
Total unrealized losses | -295 | -113 |
Foreign government | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 7 | 2 |
Fair value, continuous unrealized loss position for less than 12 months | 76 | 121 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -4 | -1 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 1 | ' |
Fair value, continuous unrealized loss position for 12 months or more | 13 | ' |
Unrealized losses, continuous unrealized loss position for 12 months or more | -2 | ' |
Total unrealized losses | ' | ' |
Total unrealized losses | -6 | -1 |
ABS | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 17 | 5 |
Fair value, continuous unrealized loss position for less than 12 months | 162 | 38 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -1 | ' |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 42 | 76 |
Fair value, continuous unrealized loss position for 12 months or more | 400 | 763 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -33 | -105 |
Total unrealized losses | ' | ' |
Total unrealized losses | -34 | -105 |
RMBS | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 35 | 49 |
Fair value, continuous unrealized loss position for less than 12 months | 42 | 30 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -2 | ' |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 47 | 164 |
Fair value, continuous unrealized loss position for 12 months or more | 129 | 442 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -10 | -69 |
Total unrealized losses | ' | ' |
Total unrealized losses | -12 | -69 |
CMBS | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 5 | 10 |
Fair value, continuous unrealized loss position for less than 12 months | 14 | 65 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 6 | 43 |
Fair value, continuous unrealized loss position for 12 months or more | 52 | 358 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -7 | -77 |
Total unrealized losses | ' | ' |
Total unrealized losses | -7 | -77 |
Redeemable preferred stock | ' | ' |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | ' | 1 |
Investment grade fixed income securities | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 526 | 132 |
Fair value, continuous unrealized loss position for less than 12 months | 5,272 | 1,244 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -236 | -29 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 110 | 262 |
Fair value, continuous unrealized loss position for 12 months or more | 834 | 1,919 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -112 | -195 |
Total unrealized losses | ' | ' |
Total unrealized losses | -348 | -224 |
Below investment grade fixed income securities | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 135 | 25 |
Fair value, continuous unrealized loss position for less than 12 months | 636 | 212 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -21 | -6 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | 55 | 138 |
Fair value, continuous unrealized loss position for 12 months or more | 326 | 868 |
Unrealized losses, continuous unrealized loss position for 12 months or more | -49 | -196 |
Total unrealized losses | ' | ' |
Total unrealized losses | -70 | -202 |
Equity securities | ' | ' |
Less than 12 months | ' | ' |
Number of issues, continuous unrealized loss position for less than 12 months | 25 | 3 |
Fair value, continuous unrealized loss position for less than 12 months | 80 | 57 |
Unrealized losses, continuous unrealized loss position for less than 12 months | -5 | -1 |
12 months or more | ' | ' |
Number of issues, continuous unrealized loss position for 12 months or more | ' | 1 |
Total unrealized losses | ' | ' |
Gross unrealized losses on equity securities | ($5) | ($1) |
Investments_Details_11
Investments (Details 11) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Other details of unrealized loss | ' | ' | ' |
Unrealized losses related to securities with unrealized loss position less than 20% of amortized cost or cost | $331 | ' | ' |
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost | 92 | ' | ' |
Limited partnerships | ' | ' | ' |
Limited partnership interests | 2,064 | 1,924 | ' |
Write-downs of limited partnership | 49 | 60 | 279 |
Equity method limited partnerships | ' | ' | ' |
Limited partnerships | ' | ' | ' |
Limited partnership interests | 1,460 | 1,310 | ' |
Write-downs of limited partnership | 0 | 0 | 1 |
Cost method limited partnership interests | ' | ' | ' |
Limited partnerships | ' | ' | ' |
Limited partnership interests | 605 | 617 | ' |
Write-downs of limited partnership | 9 | 3 | 2 |
Investment grade fixed income securities | ' | ' | ' |
Other details of unrealized loss | ' | ' | ' |
Unrealized losses related to securities with unrealized loss position less than 20% of amortized cost or cost | 276 | ' | ' |
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost | 72 | ' | ' |
Below investment grade fixed income securities | ' | ' | ' |
Other details of unrealized loss | ' | ' | ' |
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of amortized cost or cost | 20 | ' | ' |
Unrealized losses related to securities with unrealized loss position greater than 20% of cost or amortized cost, unrealized loss position of 12 or more consecutive months | $15 | ' | ' |
Investments_Details_12
Investments (Details 12) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | Office buildings | Office buildings | Retail | Retail | Apartment complex | Apartment complex | Warehouse | Warehouse | Other | Other | California | California | Illinois | Illinois | New Jersey | New Jersey | Texas | Texas | New York | New York | District of Columbia | District of Columbia | Florida | Florida | Pennsylvania | Pennsylvania | Mortgage loans, not in foreclosure | Mortgage loans, not in foreclosure | Mortgage loans, not in foreclosure | Mortgage loans, not in foreclosure | Mortgage loans, not in foreclosure | Mortgage loans, not in foreclosure | ||
item | 2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||||||||||||||||
item | item | item | item | item | ||||||||||||||||||||||||||||||
Investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Threshold percentage of mortgage loans to total carrying value | 5.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Mortgage Loans on Real Estate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of mortgage portfolio carrying value | 100.00% | 100.00% | 28.30% | 28.00% | 22.90% | 24.00% | 19.20% | 17.40% | 18.60% | 20.40% | 11.00% | 10.20% | 24.00% | 24.20% | 9.70% | 7.80% | 7.20% | 6.50% | 6.30% | 6.00% | 6.20% | 6.60% | 5.40% | 3.80% | 5.20% | 4.30% | 3.90% | 5.10% | 100.00% | 7.80% | 14.80% | 8.00% | 10.80% | 58.60% |
Number of mortgage loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 328 | 23 | 38 | 34 | 40 | 193 |
Mortgage loans | $4,173 | $5,943 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4,173 | $325 | $616 | $334 | $449 | $2,449 |
Investments_Details_13
Investments (Details 13) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Carrying value of non-impaired fixed rate and variable rate mortgage loans by debt service coverage ratio distribution | ' | ' | ' |
Total mortgage loans | $4,173 | $5,943 | ' |
Net carrying value of impaired mortgage loans | ' | ' | ' |
Impaired mortgage loans with a valuation allowance | 77 | 147 | ' |
Impaired mortgage loans without a valuation allowance | ' | 8 | ' |
Total impaired mortgage loans | 77 | 155 | ' |
Valuation allowance on impaired mortgage loans | 21 | 42 | 63 |
Rollforward of the valuation allowance on impaired mortgage loans | ' | ' | ' |
Beginning balance | 42 | 63 | 84 |
Net (decrease) increase in valuation allowance | -11 | -5 | 33 |
Charge offs | -8 | -16 | -54 |
Mortgage loans classified as held for sale | -2 | ' | ' |
Ending balance | 21 | 42 | 63 |
Carrying value of past due mortgage loans | ' | ' | ' |
Less than 90 days past due | ' | 20 | ' |
90 days or greater past due | ' | 4 | ' |
Total past due | ' | 24 | ' |
Current loans | 4,173 | 5,919 | ' |
Total mortgage loans | 4,173 | 5,943 | ' |
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 | 4,056 | 5,642 | ' |
Variable rate mortgage loans | 40 | 146 | ' |
Total mortgage loans | 4,096 | 5,788 | ' |
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 | 153 | 266 | ' |
Total mortgage loans | 153 | 266 | ' |
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 | 560 | 1,158 | ' |
Total mortgage loans | 560 | 1,158 | ' |
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 | 1,167 | 1,364 | ' |
Variable rate mortgage loans | 2 | 17 | ' |
Total mortgage loans | 1,169 | 1,381 | ' |
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 | 2,176 | 2,854 | ' |
Variable rate mortgage loans | 38 | 129 | ' |
Total mortgage loans | 2,214 | 2,983 | ' |
Mortgage loans | ' | ' | ' |
Average carrying value and interest income recognized on impaired mortgage loans | ' | ' | ' |
Average balance impaired mortgage loans | $86 | $202 | $207 |
Investments_Details_14
Investments (Details 14) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Municipal Bonds | ' | ' | ' |
Threshold percentage of municipal to total carrying value | 5.00% | 5.00% | ' |
Securities loaned | ' | ' | ' |
Fixed income and equity securities loaned | $312,000,000 | $525,000,000 | ' |
Interest Income on collateral, net of fees | 1,000,000 | 1,000,000 | 1,000,000 |
Other investment information | ' | ' | ' |
Below investment grade assets | 2,890,000,000 | 3,350,000,000 | ' |
Fixed income securities and short-term investments deposited with regulatory authorities | 53,000,000 | ' | ' |
Non-income producing fixed income securities and other investments | $11,000,000 | ' | ' |
Shareholders' equity | Concentration of credit risk | Minimum | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of credit concentration risk of single issuer and affiliates of shareholder's equity | 10.00% | ' | ' |
California | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of municipal bonds carrying value | 15.90% | 14.10% | ' |
Texas | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of municipal bonds carrying value | 13.50% | 11.80% | ' |
Oregon | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of municipal bonds carrying value | 5.40% | 4.70% | ' |
New Jersey | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of municipal bonds carrying value | 5.20% | 4.50% | ' |
New York | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of municipal bonds carrying value | 5.20% | 7.10% | ' |
Illinois | ' | ' | ' |
Municipal Bonds | ' | ' | ' |
Percentage of municipal bonds carrying value | 5.10% | 4.30% | ' |
Fair_Value_of_Assets_and_Liabi2
Fair Value of Assets and Liabilities (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | |||
Assets | ' | ' | ' |
Fixed income securities | $28,756 | $44,876 | ' |
Equity securities | 650 | 345 | ' |
Short-term Investments | 590 | 875 | ' |
Other investments: | ' | ' | ' |
Free-standing derivatives, assets | 9 | 3 | 1 |
Separate account assets | 5,039 | 6,610 | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | -14 | -30 | -89 |
Liabilities held for sale | -14,899 | ' | ' |
U.S. government and agencies | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 766 | 2,379 | ' |
Municipal | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 3,304 | 4,704 | ' |
Corporate | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 21,316 | 31,531 | ' |
Foreign government | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 792 | 1,180 | ' |
ABS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 1,007 | 1,865 | ' |
RMBS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 790 | 1,791 | ' |
CMBS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 764 | 1,408 | ' |
Redeemable preferred stock | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 17 | 18 | ' |
Quoted prices in active markets for identical assets (Level 1) | ' | ' | ' |
Other investments: | ' | ' | ' |
Total assets at fair value | 7,760 | 8,244 | ' |
% of total assets at fair value | 16.40% | 15.60% | ' |
Significant other observable inputs (Level 2) | ' | ' | ' |
Other investments: | ' | ' | ' |
Total assets at fair value | 37,962 | 42,570 | ' |
% of total assets at fair value | 80.20% | 80.60% | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | -185 | -91 | ' |
Total liabilities at fair value | -185 | -91 | ' |
% of total liabilities at fair value | 1.60% | 14.10% | ' |
Significant unobservable inputs (Level 3) | ' | ' | ' |
Other investments: | ' | ' | ' |
Total assets at fair value | 1,635 | 2,077 | ' |
% of total assets at fair value | 3.40% | 3.90% | ' |
Contract holder funds: | ' | ' | ' |
Derivatives embedded in life and annuity contracts | ' | -553 | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | ' | -30 | ' |
Total liabilities at fair value | -11,655 | -583 | ' |
% of total liabilities at fair value | 98.50% | 90.40% | ' |
Counterparty and cash collateral netting | ' | ' | ' |
Other investments: | ' | ' | ' |
Total assets at fair value | -11 | -47 | ' |
% of total assets at fair value | ' | -0.10% | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | 7 | 29 | ' |
Total liabilities at fair value | 7 | 29 | ' |
% of total liabilities at fair value | -0.10% | -4.50% | ' |
Fair Value | ' | ' | ' |
Other investments: | ' | ' | ' |
Assets held for sale | 15,593 | ' | ' |
Total assets at fair value | 47,346 | 52,844 | ' |
% of total assets at fair value | 100.00% | 100.00% | ' |
Mortgage loans | 8 | 4 | ' |
Other investments | ' | 1 | ' |
Limited partnership interests | 9 | 1 | ' |
Contract holder funds: | ' | ' | ' |
Derivatives embedded in life and annuity contracts | ' | -553 | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | ' | -92 | ' |
Liabilities held for sale | -246 | ' | ' |
Total liabilities at fair value | -11,833 | -645 | ' |
% of total liabilities at fair value | 100.00% | 100.00% | ' |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 145 | 1,074 | ' |
Equity securities | 593 | 338 | ' |
Short-term Investments | 129 | 220 | ' |
Other investments: | ' | ' | ' |
Separate account assets | 5,039 | 6,610 | ' |
Other assets | ' | 2 | ' |
Assets held for sale | 1,854 | ' | ' |
Total assets at fair value | 7,760 | 8,244 | ' |
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 145 | 1,074 | ' |
Recurring basis | Significant other observable inputs (Level 2) | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 27,370 | 41,742 | ' |
Equity securities | 51 | ' | ' |
Short-term Investments | 461 | 655 | ' |
Other investments: | ' | ' | ' |
Free-standing derivatives, assets | 268 | 173 | ' |
Assets held for sale | 9,812 | ' | ' |
Total assets at fair value | 37,962 | 42,570 | ' |
Other liabilities: | ' | ' | ' |
Total liabilities at fair value | -185 | ' | ' |
Recurring basis | Significant other observable inputs (Level 2) | U.S. government and agencies | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 621 | 1,305 | ' |
Recurring basis | Significant other observable inputs (Level 2) | Municipal | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 3,185 | 4,366 | ' |
Recurring basis | Significant other observable inputs (Level 2) | Corporate | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 20,308 | 30,030 | ' |
Recurring basis | Significant other observable inputs (Level 2) | Foreign government | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 792 | 1,180 | ' |
Recurring basis | Significant other observable inputs (Level 2) | ABS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 895 | 1,666 | ' |
Recurring basis | Significant other observable inputs (Level 2) | RMBS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 790 | 1,791 | ' |
Recurring basis | Significant other observable inputs (Level 2) | CMBS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 763 | 1,387 | ' |
Recurring basis | Significant other observable inputs (Level 2) | Redeemable preferred stock | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 16 | 17 | ' |
Recurring basis | Significant unobservable inputs (Level 3) | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 1,241 | 2,060 | ' |
Equity securities | 6 | 7 | ' |
Other investments: | ' | ' | ' |
Free-standing derivatives, assets | 9 | 3 | ' |
Other assets | ' | 1 | ' |
Assets held for sale | 362 | ' | ' |
Total assets at fair value | 1,618 | 2,071 | ' |
Contract holder funds: | ' | ' | ' |
Derivatives embedded in life and annuity contracts | -307 | ' | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | -14 | ' | ' |
Liabilities held for sale | -246 | ' | ' |
Total liabilities at fair value | -567 | ' | ' |
Recurring basis | Significant unobservable inputs (Level 3) | Municipal | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 119 | 338 | ' |
Recurring basis | Significant unobservable inputs (Level 3) | Corporate | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 1,008 | 1,501 | ' |
Recurring basis | Significant unobservable inputs (Level 3) | ABS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 112 | 199 | ' |
Recurring basis | Significant unobservable inputs (Level 3) | CMBS | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 1 | 21 | ' |
Recurring basis | Significant unobservable inputs (Level 3) | Redeemable preferred stock | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 1 | 1 | ' |
Recurring basis | Counterparty and cash collateral netting | ' | ' | ' |
Other investments: | ' | ' | ' |
Free-standing derivatives, assets | -11 | -47 | ' |
Total assets at fair value | -11 | -47 | ' |
Other liabilities: | ' | ' | ' |
Total liabilities at fair value | 7 | ' | ' |
Recurring basis | Fair Value | ' | ' | ' |
Assets | ' | ' | ' |
Fixed income securities | 28,756 | 44,876 | ' |
Equity securities | 650 | 345 | ' |
Short-term Investments | 590 | 875 | ' |
Other investments: | ' | ' | ' |
Free-standing derivatives, assets | 266 | 129 | ' |
Separate account assets | 5,039 | 6,610 | ' |
Other assets | ' | 3 | ' |
Assets held for sale | 12,028 | ' | ' |
Total assets at fair value | 47,329 | 52,838 | ' |
Contract holder funds: | ' | ' | ' |
Derivatives embedded in life and annuity contracts | -307 | ' | ' |
Other liabilities: | ' | ' | ' |
Free-standing derivatives, liabilities | -192 | ' | ' |
Liabilities held for sale | -246 | ' | ' |
Total liabilities at fair value | -745 | ' | ' |
Non-recurring basis | Significant unobservable inputs (Level 3) | ' | ' | ' |
Other investments: | ' | ' | ' |
Total assets at fair value | 17 | 6 | ' |
Other liabilities: | ' | ' | ' |
Total liabilities at fair value | -11,088 | ' | ' |
Non-recurring basis | Fair Value | ' | ' | ' |
Other investments: | ' | ' | ' |
Total assets at fair value | 17 | 6 | ' |
Other liabilities: | ' | ' | ' |
Total liabilities at fair value | ($11,088) | ' | ' |
Fair_Value_of_Assets_and_Liabi3
Fair Value of Assets and Liabilities (Details 2) (Significant unobservable inputs (Level 3), USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Quantitative information about the significant unobservable inputs | ' | ' |
Fair value | $1,635 | $2,077 |
ARS backed by student loans | Discounted cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Fair value | ' | 202 |
ARS backed by student loans | Maximum | Discounted cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Anticipated date liquidity will return to the market | ' | '60 months |
Weighted average anticipated date liquidity will return to the market | ' | '44 months |
ARS backed by student loans | Minimum | Discounted cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Anticipated date liquidity will return to the market | ' | '18 months |
Weighted average anticipated date liquidity will return to the market | ' | '32 months |
Derivatives embedded in life and annuity contracts - Equity-indexed and forward starting options | Stochastic cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Fair value | -247 | -419 |
Weighted average projected option cost (as a percent) | 1.75% | 1.92% |
Derivatives embedded in life and annuity contracts - Equity-indexed and forward starting options | Maximum | Stochastic cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Projected option cost (as a percent) | 2.00% | 2.00% |
Derivatives embedded in life and annuity contracts - Equity-indexed and forward starting options | Minimum | Stochastic cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Projected option cost (as a percent) | 1.00% | 1.00% |
Fixed income securities - non-binding broker quotes | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Fair value | 1,150 | 1,720 |
Fair value | 319 | ' |
Liabilities held for sale - Equity-indexed and forward starting options | Stochastic cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Fair value | ($246) | ' |
Weighted average projected option cost (as a percent) | 1.91% | ' |
Liabilities held for sale - Equity-indexed and forward starting options | Maximum | Stochastic cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Projected option cost (as a percent) | 2.00% | ' |
Liabilities held for sale - Equity-indexed and forward starting options | Minimum | Stochastic cash flow model | ' | ' |
Quantitative information about the significant unobservable inputs | ' | ' |
Projected option cost (as a percent) | 1.00% | ' |
Fair_Value_of_Assets_and_Liabi4
Fair Value of Assets and Liabilities (Details 3) (USD $) | 12 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2013 |
Realized capital gains and losses | Realized capital gains and losses | Realized capital gains and losses | Net investment income | Net investment income | Net investment income | Interest credited to contractholder funds | Interest credited to contractholder funds | Interest credited to contractholder funds | Contract benefits | Contract benefits | Contract benefits | Loss on disposition of operations | Fixed income securities | Fixed income securities | Fixed income securities | Municipal | Municipal | Municipal | Corporate | Corporate | Corporate | ABS | ABS | ABS | RMBS | RMBS | CMBS | CMBS | CMBS | Redeemable preferred stock | Redeemable preferred stock | Equity securities | Equity securities | Equity securities | Free-standing derivatives, net | Free-standing derivatives, net | Free-standing derivatives, net | Other assets | Other assets | Other assets | Assets held for sale | ||||
Rollforward of Level 3 assets held at fair value on a recurring basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at beginning of period | $2,041 | $1,965 | $6,322 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,060 | $2,038 | $6,369 | $338 | $387 | $601 | $1,501 | $1,319 | $1,760 | $199 | $254 | $1,974 | $47 | $1,189 | $21 | $30 | $844 | $1 | $1 | $7 | $14 | $29 | ($27) | ($88) | ($77) | $1 | $1 | $1 | ' |
Total gains (losses) included in: net income | 33 | 60 | -71 | 20 | 38 | -101 | 14 | 22 | 34 | 40 | 132 | -106 | 74 | 36 | -32 | -6 | 17 | 35 | -29 | -12 | -5 | -2 | 32 | 20 | 52 | -2 | 24 | 21 | ' | -57 | -1 | -4 | -43 | ' | ' | ' | ' | -5 | 19 | 25 | -37 | -1 | ' | ' | -2 |
Total gains (losses) included in: OCI | 14 | 154 | 95 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20 | 154 | 95 | 19 | 22 | 7 | -32 | 63 | -35 | 30 | 59 | -65 | ' | 77 | 3 | 10 | 111 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -6 |
Transfers into Level 3 | 114 | 476 | 350 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 101 | 476 | 350 | ' | 53 | 48 | 84 | 381 | 237 | 17 | 42 | ' | ' | ' | ' | ' | 65 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13 |
Transfers out of Level 3 | -201 | -128 | -3,655 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -188 | -128 | -3,645 | ' | -10 | -34 | -172 | -64 | -410 | -16 | -7 | -1,470 | -47 | -853 | ' | ' | -878 | ' | ' | ' | ' | -10 | ' | ' | ' | ' | ' | ' | -13 |
Transfer to held for sale | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -385 | ' | ' | -51 | ' | ' | -244 | ' | ' | -85 | ' | ' | ' | ' | -5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 385 |
Purchases | 154 | 169 | 441 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 145 | 137 | 422 | ' | ' | 10 | 145 | 125 | 266 | ' | 11 | 146 | ' | ' | ' | ' | ' | 1 | ' | ' | 5 | 1 | 9 | 27 | 18 | ' | ' | ' | ' |
Sales | -382 | -508 | -1,139 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -371 | -496 | -1,138 | -173 | -107 | -241 | -173 | -223 | -473 | -8 | -165 | -136 | ' | -222 | -17 | ' | -66 | -1 | ' | -1 | -12 | -1 | ' | ' | ' | ' | ' | ' | -10 |
Settlements | -169 | -147 | -378 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -158 | -156 | -386 | -2 | -2 | -2 | -133 | -120 | -78 | -23 | -19 | -216 | ' | -87 | ' | -15 | -3 | ' | ' | ' | ' | ' | -6 | 9 | 8 | ' | ' | ' | -5 |
Balance at end of period | 1,604 | 2,041 | 1,965 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,241 | 2,060 | 2,038 | 119 | 338 | 387 | 1,008 | 1,501 | 1,319 | 112 | 199 | 254 | ' | 47 | 1 | 21 | 30 | 1 | 1 | 6 | 7 | 14 | -5 | -27 | -88 | ' | 1 | 1 | 362 |
Effect to net income reported in the Condensed Consolidated Statements of Operations and Comprehensive Income | 33 | 60 | -71 | 20 | 38 | -101 | 14 | 22 | 34 | 40 | 132 | -106 | 74 | 36 | -32 | -6 | 17 | 35 | -29 | -12 | -5 | -2 | 32 | 20 | 52 | -2 | 24 | 21 | ' | -57 | -1 | -4 | -43 | ' | ' | ' | ' | -5 | 19 | 25 | -37 | -1 | ' | ' | -2 |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 142 | 228 | -205 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Free-standing derivatives, assets | 9 | 3 | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Free-standing derivatives, liabilities | 14 | 30 | 89 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assets transferred between Level 1 and Level 2 | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liabilities transferred between Level 1 and Level 2 | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair_Value_of_Assets_and_Liabi5
Fair Value of Assets and Liabilities (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Rollforward of Level 3 assets held at fair value on a recurring basis | ' | ' | ' |
Balance at beginning of period | ($553) | ($723) | ($653) |
Total gains (losses) included in: net income | 109 | 168 | -134 |
Issues | -117 | -79 | -100 |
Settlements | 8 | 81 | 164 |
Balance at end of period | -553 | -553 | -723 |
Derivatives embedded in life and annuity contracts | ' | ' | ' |
Rollforward of Level 3 assets held at fair value on a recurring basis | ' | ' | ' |
Balance at beginning of period | -553 | -723 | -653 |
Total gains (losses) included in: net income | 89 | 168 | -134 |
Transfer to held for sale | -265 | ' | ' |
Issues | -111 | -79 | -100 |
Settlements | 3 | 81 | 164 |
Balance at end of period | -307 | -553 | -723 |
Liabilities held for sale | ' | ' | ' |
Rollforward of Level 3 assets held at fair value on a recurring basis | ' | ' | ' |
Total gains (losses) included in: net income | 20 | ' | ' |
Transfer to held for sale | 265 | ' | ' |
Issues | -6 | ' | ' |
Settlements | 5 | ' | ' |
Balance at end of period | ($246) | ' | ' |
Fair_Value_of_Assets_and_Liabi6
Fair Value of Assets and Liabilities (Details 5) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | $12 | $18 | ($63) |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 109 | 168 | -134 |
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date, included in earnings | 121 | 186 | -197 |
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 | 9 | ' | -105 |
Net investment income | ' | ' | ' |
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 | 9 | 19 | 42 |
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 | 35 | 131 | -102 |
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 | 74 | 36 | -32 |
Loss on disposition of operations | ' | ' | ' |
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 | ' | ' |
Derivatives embedded in life and annuity contracts | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 89 | 168 | -134 |
Liabilities held for sale | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 20 | ' | ' |
Fixed income securities | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 5 | 12 | -30 |
Municipal | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | -4 | ' | -2 |
Corporate | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 13 | 15 | 19 |
ABS | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | -2 | ' | -35 |
CMBS | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | -2 | -3 | -12 |
Equity securities | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | ' | ' | -4 |
Free-standing derivatives, net | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 10 | 6 | -29 |
Other assets | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | -1 | ' | ' |
Assets held for sale | ' | ' | ' |
Gains (losses) included in net income for Level 3 assets and liabilities: | ' | ' | ' |
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | ($2) | ' | ' |
Fair_Value_of_Assets_and_Liabi7
Fair Value of Assets and Liabilities (Details 6) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
In Millions, unless otherwise specified | ||||
Financial assets | ' | ' | ' | ' |
Mortgage loans | $4,173 | $5,943 | ' | ' |
Assets held for sale | 15,593 | ' | ' | ' |
Financial liabilities | ' | ' | ' | ' |
Notes due to related parties | 282 | 496 | ' | ' |
Liability for collateral | 328 | 561 | 263 | 465 |
Liabilities held for sale | 14,899 | ' | ' | ' |
Carrying value | ' | ' | ' | ' |
Financial assets | ' | ' | ' | ' |
Mortgage loans | 4,173 | 5,943 | ' | ' |
Cost method limited partnerships | 605 | 617 | ' | ' |
Agent Loans | 341 | 319 | ' | ' |
Bank loans | 160 | 282 | ' | ' |
Notes due from related party | 275 | 275 | ' | ' |
Assets held for sale | 1,458 | ' | ' | ' |
Financial liabilities | ' | ' | ' | ' |
Contract holder funds on investment contracts | 15,542 | 26,984 | ' | ' |
Notes due to related parties | 282 | 496 | ' | ' |
Liability for collateral | 328 | 561 | ' | ' |
Liabilities held for sale | 7,417 | ' | ' | ' |
Fair Value | ' | ' | ' | ' |
Financial assets | ' | ' | ' | ' |
Mortgage loans | 4,300 | 6,223 | ' | ' |
Cost method limited partnerships | 799 | 778 | ' | ' |
Agent Loans | 325 | 314 | ' | ' |
Bank loans | 161 | 282 | ' | ' |
Notes due from related party | 275 | 275 | ' | ' |
Assets held for sale | 1,532 | ' | ' | ' |
Financial liabilities | ' | ' | ' | ' |
Contract holder funds on investment contracts | 16,198 | 27,989 | ' | ' |
Notes due to related parties | 282 | 496 | ' | ' |
Liability for collateral | 328 | 561 | ' | ' |
Liabilities held for sale | $7,298 | ' | ' | ' |
Derivative_Financial_Instrumen2
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details) (USD $) | 12 Months Ended | |
In Millions, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
item | item | |
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | ' |
Assumed recoveries under sale of credit protection | $0 | ' |
Securities pledged in the form of margin deposits | 4 | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 1,649 | 6,362 |
Total liability derivatives, Notional amount | 10,760 | 7,697 |
Total derivatives, Notional amount | 12,409 | 14,059 |
Total asset derivatives, Number of contracts | 10,662 | 12,651 |
Total liability derivatives, Number of contracts | 10,035 | 12,619 |
Total derivatives, Number of contracts | 20,697 | 25,270 |
Total asset derivatives, Fair value, net | 254 | 147 |
Asset derivatives, Gross asset | 266 | 169 |
Asset derivatives, Gross liability | -12 | -22 |
Derivative liabilities net amount on balance sheet | -741 | -645 |
Total derivatives, Fair value, net | -487 | -498 |
Liability derivatives, Gross asset | 11 | 19 |
Liability derivatives, Gross liability | -752 | -664 |
Number of stock warrants held by the company related to derivative contracts (in shares) | 837,100 | 837,100 |
Derivatives not designated as accounting hedging instruments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 1,633 | 6,346 |
Total liability derivatives, Notional amount | 10,628 | 7,562 |
Total asset derivatives, Number of contracts | 10,662 | 12,651 |
Total liability derivatives, Number of contracts | 10,035 | 12,619 |
Total asset derivatives, Fair value, net | 253 | 145 |
Asset derivatives, Gross asset | 265 | 167 |
Asset derivatives, Gross liability | -12 | -22 |
Derivative liabilities net amount on balance sheet | -726 | -626 |
Liability derivatives, Gross asset | 11 | 19 |
Liability derivatives, Gross liability | -737 | -645 |
Interest rate swap agreements | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | ' | 5,541 |
Total asset derivatives, Fair value, net | ' | 19 |
Asset derivatives, Gross asset | ' | 28 |
Asset derivatives, Gross liability | ' | -9 |
Interest rate swap agreements | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 85 | 1,185 |
Derivative liabilities net amount on balance sheet | 4 | 16 |
Liability derivatives, Gross asset | 4 | 18 |
Liability derivatives, Gross liability | ' | -2 |
Other contracts | Derivatives not designated as accounting hedging instruments | Other assets | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 4 | 4 |
Total asset derivatives, Fair value, net | ' | 1 |
Asset derivatives, Gross asset | ' | 1 |
Foreign currency swap agreements | Derivatives designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 16 | 16 |
Total asset derivatives, Fair value, net | 1 | 2 |
Asset derivatives, Gross asset | 1 | 2 |
Foreign currency swap agreements | Derivatives designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 132 | 135 |
Derivative liabilities net amount on balance sheet | -15 | -19 |
Liability derivatives, Gross liability | -15 | -19 |
Interest rate swaption agreements | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 1,420 | ' |
Interest rate swaption agreements | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 4,570 | 250 |
Derivative liabilities net amount on balance sheet | 1 | ' |
Liability derivatives, Gross asset | 1 | ' |
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 61 | 372 |
Total asset derivatives, Fair value, net | 2 | 1 |
Asset derivatives, Gross asset | 2 | 1 |
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 262 | 429 |
Derivative liabilities net amount on balance sheet | 4 | 1 |
Liability derivatives, Gross asset | 4 | 1 |
Financial futures contracts - Interest rate contracts | Derivatives not designated as accounting hedging instruments | Other assets | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Number of contracts | ' | 2 |
Financial futures contracts - Equity and index contracts | Derivatives not designated as accounting hedging instruments | Other assets | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Number of contracts | 627 | 249 |
Total asset derivatives, Fair value, net | ' | 2 |
Asset derivatives, Gross asset | ' | 2 |
Financial futures contracts - Equity and index contracts | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Number of contracts | ' | 357 |
Options and warrants | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 3 | 146 |
Total asset derivatives, Number of contracts | 10,035 | 12,400 |
Total asset derivatives, Fair value, net | 261 | 125 |
Asset derivatives, Gross asset | 261 | 125 |
Options and futures | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 55 | ' |
Total liability derivatives, Number of contracts | 10,035 | 12,262 |
Derivative liabilities net amount on balance sheet | -165 | -58 |
Liability derivatives, Gross asset | 2 | ' |
Liability derivatives, Gross liability | -167 | -58 |
Foreign currency forwards | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 47 | 44 |
Conversion options | Derivatives not designated as accounting hedging instruments | Fixed income securities | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | ' | 5 |
Equity-indexed call options | Derivatives not designated as accounting hedging instruments | Fixed income securities | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | ' | 90 |
Total asset derivatives, Fair value, net | ' | 9 |
Asset derivatives, Gross asset | ' | 9 |
Credit default swaps | Derivatives not designated as accounting hedging instruments | Fixed income securities | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 12 | 12 |
Total asset derivatives, Fair value, net | -12 | -12 |
Asset derivatives, Gross liability | -12 | -12 |
Guaranteed accumulation benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 738 | 820 |
Derivative liabilities net amount on balance sheet | -43 | -86 |
Liability derivatives, Gross liability | -43 | -86 |
Guaranteed withdrawal benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 506 | 554 |
Derivative liabilities net amount on balance sheet | -13 | -39 |
Liability derivatives, Gross liability | -13 | -39 |
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 | 1,693 | 3,916 |
Derivative liabilities net amount on balance sheet | -247 | -419 |
Liability derivatives, Gross liability | -247 | -419 |
Equity-indexed and forward starting options in life and annuity product contracts | Derivatives not designated as accounting hedging instruments | Liabilities held for sale | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 2,363 | ' |
Derivative liabilities net amount on balance sheet | -246 | ' |
Liability derivatives, Gross liability | -246 | ' |
Other embedded derivative financial instruments | Derivatives not designated as accounting hedging instruments | Contractholder funds | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 85 | 85 |
Derivative liabilities net amount on balance sheet | -4 | -9 |
Liability derivatives, Gross liability | -4 | -9 |
Credit default swaps - buying protection | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 1 | 32 |
Total asset derivatives, Fair value, net | ' | -1 |
Asset derivatives, Gross liability | ' | -1 |
Credit default swaps - buying protection | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 171 | 193 |
Derivative liabilities net amount on balance sheet | -2 | -2 |
Liability derivatives, Gross liability | -2 | -2 |
Credit default swaps - selling protection | Derivatives not designated as accounting hedging instruments | Other investments | ' | ' |
Derivatives, Fair Value | ' | ' |
Total asset derivatives, Notional amount | 85 | 100 |
Total asset derivatives, Fair value, net | 2 | 1 |
Asset derivatives, Gross asset | 2 | 1 |
Credit default swaps - selling protection | Derivatives not designated as accounting hedging instruments | Other liabilities and accrued expenses | ' | ' |
Derivatives, Fair Value | ' | ' |
Total liability derivatives, Notional amount | 100 | 130 |
Derivative liabilities net amount on balance sheet | -15 | -30 |
Liability derivatives, Gross liability | ($15) | ($30) |
Derivative_Financial_Instrumen3
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Asset derivatives | ' | ' |
Asset derivatives gross amount | $266 | $169 |
Derivative assets net amount on balance sheet | 254 | 147 |
Liability derivatives | ' | ' |
Liability derivatives gross amount | -752 | -664 |
Derivative liabilities net amount on balance sheet | -741 | -645 |
OTC derivatives | ' | ' |
Asset derivatives | ' | ' |
Asset derivatives gross amount | 14 | 52 |
Offsets of derivative assets under counterparty netting | -11 | -29 |
Derivative asset offsets under cash collateral received | ' | -18 |
Derivative assets net amount on balance sheet | 3 | 5 |
Derivative assets pledged under securities collateral | -3 | -5 |
Liability derivatives | ' | ' |
Liability derivatives gross amount | -33 | -63 |
Offsets of derivative liabilities under counterparty netting | 11 | 29 |
Derivative liability offsets under cash collateral pledged | -4 | ' |
Derivative liabilities net amount on balance sheet | -26 | -34 |
Derivative liabilities received under securities collateral | 22 | 25 |
Derivative liabilities net amount | ($4) | ($9) |
Derivative_Financial_Instrumen4
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | ' | ' |
Gain (loss) recognized in OCI on derivatives during the period | $3 | ($6) | $4 |
Loss recognized in OCI on derivatives during the term of the hedging relationship | -13 | -17 | -12 |
Cash flow hedge losses to be reclassified from AOCI during the next twelve months | 2 | ' | ' |
Hedge ineffectiveness in realized gains | 0 | 0 | 0 |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -47 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 98 | 264 | -259 |
Total gain (loss) recognized in net income on derivatives | ' | 263 | -306 |
Net investment income | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -2 |
Total gain (loss) recognized in net income on derivatives | ' | -1 | -2 |
Net investment income | Reclassification out of Accumulated Other Comprehensive Income | Cash flow hedges | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Loss reclassified from AOCI into income | -1 | ' | ' |
Realized capital gains and losses | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -8 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 14 | 35 | -194 |
Total gain (loss) recognized in net income on derivatives | ' | 35 | -202 |
Realized capital gains and losses | Reclassification out of Accumulated Other Comprehensive Income | Cash flow hedges | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Loss reclassified from AOCI into income | ' | -1 | -1 |
Contract benefits | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 74 | 36 | -32 |
Total gain (loss) recognized in net income on derivatives | ' | 36 | -32 |
Interest credited to contractholder funds | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -37 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 16 | 193 | -33 |
Total gain (loss) recognized in net income on derivatives | ' | 193 | -70 |
Loss on disposition of operations | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | -6 | ' | ' |
Interest rate contracts | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | -1 | -15 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | -3 | 2 | -151 |
Interest rate contracts | Net investment income | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | -1 | -2 |
Interest rate contracts | Realized capital gains and losses | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -8 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 3 | 2 | -151 |
Interest rate contracts | Interest credited to contractholder funds | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -5 |
Interest rate contracts | Loss on disposition of operations | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | -6 | ' | ' |
Equity and index contracts | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 94 | 56 | -2 |
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 | 94 | 56 | -2 |
Embedded derivative financial instruments | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | -2 | 190 | -115 |
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 | -1 | 20 | -45 |
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 | 74 | 36 | -32 |
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 | -75 | 134 | -38 |
Foreign currency contracts | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | -2 | -2 | ' |
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 | -2 | ' |
Credit default swaps | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 14 | 15 | 2 |
Credit default swaps | 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 | 14 | 15 | 2 |
Other contracts | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | -3 | 3 | 7 |
Other 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 | -3 | 3 | 7 |
Foreign currency and interest rate contracts | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | -32 |
Foreign currency and interest rate contracts | Interest credited to contractholder funds | ' | ' | ' |
Derivative Instruments, Gain (Loss) | ' | ' | ' |
Derivatives in fair value accounting hedging relationships, total gain (loss) recognized in net income on derivatives | ' | ' | ($32) |
Derivative_Financial_Instrumen5
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details 4) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Interest rate contracts | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on derivatives | $3 | $11 |
Interest rate contracts | Net investment income | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on derivatives | 3 | 26 |
Interest rate contracts | Interest credited to contractholder funds | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on derivatives | ' | -7 |
Interest rate contracts | Realized capital gains and losses | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on derivatives | ' | -8 |
Investments | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on hedged risk | -3 | -26 |
Investments | Net investment income | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on hedged risk | -3 | -26 |
Foreign currency and interest rate contracts | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on derivatives | ' | -34 |
Foreign currency and interest rate contracts | Interest credited to contractholder funds | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on derivatives | ' | -34 |
Contractholder funds | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on hedged risk | ' | 41 |
Contractholder funds | Interest credited to contractholder funds | ' | ' |
Derivative Instruments Change in Fair Value of Fair Value Hedges | ' | ' |
Gain (loss) on hedged risk | ' | $41 |
Derivative_Financial_Instrumen6
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details 5) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | party | party |
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | ' |
Cash and securities pledged as collateral by counterparties | $8 | ' |
Securities pledged as collateral to counterparties | 23 | ' |
Collateral posted under MNAs, credit-risk-contingent provisions in a liability position | 14 | 25 |
Collateral posted under MNAs for contracts without credit-risk-contingent liabilities | 9 | ' |
Credit Derivatives | ' | ' |
Number of counter-parties | 8 | 7 |
Notional amount | 1,648 | 6,199 |
Credit exposure | 5 | 24 |
Exposure, net of collateral | 1 | 1 |
Gross liability fair value of contracts containing credit-risk-contingent features | 25 | 62 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | -9 | -28 |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | -14 | -25 |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | 2 | 9 |
A+ | ' | ' |
Credit Derivatives | ' | ' |
Number of counter-parties | 1 | 1 |
Notional amount | 22 | 19 |
Credit exposure | 1 | ' |
Exposure, net of collateral | 1 | ' |
A | ' | ' |
Credit Derivatives | ' | ' |
Number of counter-parties | 4 | 3 |
Notional amount | 1,523 | 2,252 |
Credit exposure | 2 | 12 |
A- | ' | ' |
Credit Derivatives | ' | ' |
Number of counter-parties | 1 | 2 |
Notional amount | 24 | 311 |
Credit exposure | 1 | 1 |
Exposure, net of collateral | ' | 1 |
BBB+ | ' | ' |
Credit Derivatives | ' | ' |
Number of counter-parties | 1 | 1 |
Notional amount | 3 | 3,617 |
Credit exposure | ' | 11 |
BBB | ' | ' |
Credit Derivatives | ' | ' |
Number of counter-parties | 1 | ' |
Notional amount | 76 | ' |
Credit exposure | $1 | ' |
Derivative_Financial_Instrumen7
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details 6) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
entity | ||
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | ' |
Term of credit default swaps (in years) | '5 years | ' |
Credit Derivatives | ' | ' |
Notional amount | $12,409 | $14,059 |
The number of reference entities generally included in a CDX index | 125 | ' |
Credit default swaps | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 185 | 230 |
Fair value | -13 | -29 |
Credit default swaps | Single name | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | ' | 30 |
Fair value | ' | -3 |
Credit default swaps | Single name | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 5 | 5 |
Credit default swaps | Single name | Municipal | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | ' | 25 |
Fair value | ' | -3 |
Credit default swaps | First-to-default | Municipal | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 100 | 100 |
Fair value | -15 | -26 |
Credit default swaps | Index | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 80 | 100 |
Fair value | 2 | ' |
AA | Credit default swaps | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 1 | 26 |
AA | Credit default swaps | Single name | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | ' | 25 |
AA | Credit default swaps | Single name | Municipal | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | ' | 25 |
AA | Credit default swaps | Index | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 1 | 1 |
A | Credit default swaps | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 125 | 131 |
A | Credit default swaps | Single name | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | ' | 5 |
A | Credit default swaps | Single name | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 5 | 5 |
A | Credit default swaps | First-to-default | Municipal | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 100 | 100 |
A | Credit default swaps | Index | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 20 | 26 |
BBB | Credit default swaps | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 55 | 68 |
BBB | Credit default swaps | Index | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 55 | 68 |
BB and lower | Credit default swaps | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | 4 | 5 |
BB and lower | Credit default swaps | Index | Investment grade corporate debt | ' | ' |
Credit Derivatives | ' | ' |
Notional amount | $4 | $5 |
Derivative_Financial_Instrumen8
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Details 7) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Derivative Financial Instruments and Off-balance sheet Financial Instruments | ' | ' |
Commitments to invest in limited partnership interests | $1,366 | $947 |
Commitments to extend mortgage loans | 1 | 67 |
Private placement commitments | 5 | 6 |
Other loan commitments | 26 | 7 |
Fair value of commitments to extend mortgage loans | $0 | ' |
Reserve_for_LifeContingent_Con2
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | Structured settlement annuities | Structured settlement annuities | Structured settlement annuities | Structured settlement annuities | Other immediate fixed annuities | Other immediate fixed annuities | Other immediate fixed annuities | Other immediate fixed annuities | Traditional life insurance | Traditional life insurance | Traditional life insurance | Traditional life insurance | Accident and health insurance | Accident and health insurance | Accident and health insurance | Accident and health insurance | Other | Other | Other | Other | ||
Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | |||||||||||||
Reserve for life-contingent benefits: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total reserve for life-contingent contract benefits | $11,589 | $14,117 | $6,645 | $7,274 | ' | ' | $2,279 | $2,382 | ' | ' | $2,329 | $2,899 | ' | ' | $236 | $1,448 | ' | ' | $100 | $114 | ' | ' |
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Life contingent contract benefits, interest rate assumptions (as a percent) | ' | ' | ' | ' | 0.00% | 9.00% | ' | ' | 0.00% | 11.50% | ' | ' | 2.50% | 11.30% | ' | ' | 3.00% | 6.00% | ' | ' | 4.00% | 5.80% |
Reserve_for_LifeContingent_Con3
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | Interest-sensitive life insurance | Interest-sensitive life insurance | Equity-indexed life insurance | Equity-indexed life insurance | Other life insurance | Other life insurance | Fixed annuities | Fixed annuities | Fixed annuities | Immediate fixed annuities | Immediate fixed annuities | Equity indexed fixed annuities | Equity indexed fixed annuities | Equity indexed fixed annuities | Other fixed annuities | Other fixed annuities | Funding agreements backing medium-term notes | Funding agreements backing medium-term notes | Funding agreements backing medium-term notes | Funding agreements backing medium-term notes | Other investment contracts | Other investment contracts | Other investment contracts | Other investment contracts | ||||
Minimum | Maximum | Minimum | Maximum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | ||||||||||||||
Contractholder funds | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total contractholder funds | $23,604 | $38,634 | $41,669 | $46,458 | $7,104 | $10,356 | ' | ' | ' | ' | $16,172 | $25,851 | ' | ' | ' | ' | ' | ' | ' | ' | $89 | $1,867 | ' | ' | $239 | $560 | ' | ' |
Key contract provisions relating to contractholder funds: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contractholder funds, interest rate assumptions (as a percent) | ' | ' | ' | ' | ' | ' | 0.00% | 10.00% | 1.00% | 6.00% | ' | ' | ' | 0.00% | 9.80% | ' | -8.00% | 13.50% | 0.10% | 6.00% | ' | ' | 1.80% | 5.40% | ' | ' | 1.70% | 10.30% |
Period for withdrawal or surrender charges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years | ' | ' | '20 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percent of fixed annuities subject to market value adjustment for discretionary withdrawals | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.80% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reserve for life-contingent contract benefits with respect to deficiency | $0 | $771 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reserve_for_LifeContingent_Con4
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Contractholder funds activity | ' | ' | ' |
Balance at beginning of period | $38,634 | $41,669 | $46,458 |
Deposits | 2,338 | 2,180 | 1,869 |
Interest credited | 1,268 | 1,296 | 1,592 |
Benefits | -1,521 | -1,454 | -1,454 |
Surrenders and partial withdrawals | -3,279 | -3,969 | -4,908 |
Maturities of and interest payments on institutional products | -1,799 | -138 | -867 |
Contract charges | -1,032 | -995 | -962 |
Net transfers from separate accounts | 12 | 11 | 12 |
Fair value hedge adjustments for institutional products | ' | ' | -34 |
Other adjustments | -72 | 34 | -37 |
Classified as held for sale | -10,945 | ' | ' |
Balance at end of period | $23,604 | $38,634 | $41,669 |
Reserve_for_LifeContingent_Con5
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Details 4) (Variable annuities, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Variable annuity contracts with guarantees | ' | ' |
Account balances of separate accounts with guarantees, invested in equity, fixed income and balanced mutual funds | $5,200,000,000 | $5,230,000,000 |
Account balances of separate accounts with guarantees, invested in money market mutual funds | 748,000,000 | 721,000,000 |
In the event of death | ' | ' |
Variable annuity contracts with guarantees | ' | ' |
Separate account value in the event of death | 5,951,000,000 | 5,947,000,000 |
Net amount at risk in the event of death | 636,000,000 | 1,044,000,000 |
Average attained age of contractholders | '68 years | '67 years |
Liability for guarantees related to income benefits | ' | ' |
Variable annuity contracts with guarantees | ' | ' |
Separate account value at annuitization | 1,463,000,000 | 1,416,000,000 |
Net amount at risk at annuitization | 252,000,000 | 418,000,000 |
Weighted average waiting period until annuitization or guarantee date | '0 years | '0 years |
For cumulative periodic withdrawals | ' | ' |
Variable annuity contracts with guarantees | ' | ' |
Separate account value | 488,000,000 | 532,000,000 |
Net amount at risk | 9,000,000 | 16,000,000 |
Guaranteed accumulation benefits | ' | ' |
Variable annuity contracts with guarantees | ' | ' |
Separate account value | 732,000,000 | 811,000,000 |
Net amount at risk | $27,000,000 | $50,000,000 |
Weighted average waiting period until annuitization or guarantee date | '5 years | '6 years |
Reserve_for_LifeContingent_Con6
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Details 5) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Liabilities for guarantees: | ' | ' |
Balance at beginning of period | $673 | $644 |
Less reinsurance recoverables | 458 | 453 |
Net balance at beginning of period | 215 | 191 |
Incurred guarantee benefits | 87 | 26 |
Paid guarantee benefits | -2 | -2 |
Net change | 85 | 24 |
Net balance at end of period | 300 | 215 |
Plus reinsurance recoverables | 255 | 458 |
Balance at end of period | 555 | 673 |
Liability for guarantees related to death benefits and interest-sensitive life products | ' | ' |
Liabilities for guarantees: | ' | ' |
Balance at beginning of period | 309 | 289 |
Less reinsurance recoverables | 113 | 116 |
Net balance at beginning of period | 196 | 173 |
Incurred guarantee benefits | 83 | 25 |
Paid guarantee benefits | -2 | -2 |
Net change | 81 | 23 |
Net balance at end of period | 277 | 196 |
Plus reinsurance recoverables | 100 | 113 |
Balance at end of period | 377 | 309 |
Liability for guarantees related to income benefits | ' | ' |
Liabilities for guarantees: | ' | ' |
Balance at beginning of period | 235 | 191 |
Less reinsurance recoverables | 220 | 175 |
Net balance at beginning of period | 15 | 16 |
Incurred guarantee benefits | -1 | -1 |
Net change | -1 | -1 |
Net balance at end of period | 14 | 15 |
Plus reinsurance recoverables | 99 | 220 |
Balance at end of period | 113 | 235 |
Liability for guarantees related to accumulation and withdrawal benefits | ' | ' |
Liabilities for guarantees: | ' | ' |
Balance at beginning of period | 129 | 164 |
Less reinsurance recoverables | 125 | 162 |
Net balance at beginning of period | 4 | 2 |
Incurred guarantee benefits | 5 | 2 |
Net change | 5 | 2 |
Net balance at end of period | 9 | 4 |
Plus reinsurance recoverables | 56 | 125 |
Balance at end of period | $65 | $129 |
Reserve_for_LifeContingent_Con7
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Details 6) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Millions, unless otherwise specified | |||
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | $555 | $673 | $644 |
Liability for guarantees related to income benefits | ' | ' | ' |
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | 113 | 235 | 191 |
Variable annuities | In the event of death | ' | ' | ' |
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | 98 | 112 | 116 |
Variable annuities | Liability for guarantees related to income benefits | ' | ' | ' |
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | 99 | 221 | 175 |
Variable annuities | Guaranteed accumulation benefits | ' | ' | ' |
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | 43 | 86 | 105 |
Variable annuities | For cumulative periodic withdrawals | ' | ' | ' |
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | 13 | 39 | 57 |
Variable annuities | Other guarantees | ' | ' | ' |
Liabilities for guarantees: | ' | ' | ' |
Liability for guarantees | $302 | $215 | $191 |
Reinsurance_Details
Reinsurance (Details) (USD $) | 12 Months Ended | 45 Months Ended | 106 Months Ended | 1 Months Ended | 12 Months Ended | 33 Months Ended | ||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Mar. 31, 2011 | Jun. 30, 2007 | Aug. 31, 1998 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | |
item | Maximum | Maximum | Prudential | Prudential | Prudential | Citigroup Subsidiaries and Scottish Re | Citigroup Subsidiaries and Scottish Re | Single life | Joint life | |||||
Reinsurance recoverable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percent of morbidity risk ceded for term-life insurance policies | ' | ' | ' | ' | ' | ' | 90.00% | ' | ' | ' | ' | ' | ' | ' |
Number of unaffiliated reinsurers | 14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Retention level for most contracts | ' | ' | ' | $5,000,000 | $2,000,000 | $1,000,000 | ' | ' | ' | ' | ' | ' | $5,000,000 | $8,000,000 |
Retention level for contracts issued to individuals age 70 and over | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' |
Retention level for certain large contracts meeting specific criteria | ' | ' | ' | 10,000,000 | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | 10,000,000 | 10,000,000 |
Total amounts recoverable from reinsurers, industry pools or facilities | 2,754,000,000 | 4,570,000,000 | ' | ' | ' | ' | ' | 1,510,000,000 | 1,690,000,000 | ' | 156,000,000 | 160,000,000 | ' | ' |
Life and annuity premiums and contract charges, reinsurance ceded | ' | ' | ' | ' | ' | ' | ' | 120,000,000 | 128,000,000 | 152,000,000 | ' | ' | ' | ' |
Life and annuity contract benefits, reinsurance ceded | ' | ' | ' | ' | ' | ' | ' | 139,000,000 | 91,000,000 | 121,000,000 | ' | ' | ' | ' |
Interest credited to contractholder funds, reinsurance ceded | 27,000,000 | 28,000,000 | 27,000,000 | ' | ' | ' | ' | 22,000,000 | 23,000,000 | 20,000,000 | ' | ' | ' | ' |
Operating costs and expenses, reinsurance ceded | ' | ' | ' | ' | ' | ' | ' | 23,000,000 | 25,000,000 | 27,000,000 | ' | ' | ' | ' |
Gross life insurance in force | 540,160,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Life insurance in force ceded to unaffiliated reinsurers | $195,414,000,000 | $208,967,000,000 | $221,372,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reinsurance_Details_2
Reinsurance (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Effects of reinsurance on revenue | ' | ' | ' |
Direct premiums and contract charges | $2,093 | $2,121 | $2,229 |
Total premiums and contract charges | 1,667 | 1,622 | 1,632 |
Effects of reinsurance on cost and expenses | ' | ' | ' |
Direct contract benefits | 1,805 | 2,051 | 2,036 |
Direct interest credited to contractholder funds | 1,240 | 1,288 | 1,614 |
Ceded interest credited to contractholder funds | -27 | -28 | -27 |
Contract benefits, net of reinsurance | 1,606 | 1,521 | 1,502 |
Interest credited to contractholder funds, net of reinsurance | 1,251 | 1,289 | 1,608 |
Reinsurance recoverables | ' | ' | ' |
Total amounts recoverable from reinsurers, industry pools or facilities | 2,754 | 4,570 | ' |
Percent of reinsurance recoverables with Standard and Poor's A- rating or better | 92.00% | 95.00% | ' |
Annuities | ' | ' | ' |
Reinsurance recoverables | ' | ' | ' |
Total amounts recoverable from reinsurers, industry pools or facilities | 1,648 | 1,831 | ' |
Life insurance | ' | ' | ' |
Reinsurance recoverables | ' | ' | ' |
Total amounts recoverable from reinsurers, industry pools or facilities | 1,025 | 1,606 | ' |
Accident-health insurance | ' | ' | ' |
Reinsurance recoverables | ' | ' | ' |
Total amounts recoverable from reinsurers, industry pools or facilities | 78 | 1,049 | ' |
Other | ' | ' | ' |
Reinsurance recoverables | ' | ' | ' |
Total amounts recoverable from reinsurers, industry pools or facilities | 3 | 84 | ' |
Affiliate | ' | ' | ' |
Effects of reinsurance on revenue | ' | ' | ' |
Assumed premiums and contract charges | 124 | 115 | 113 |
Effects of reinsurance on cost and expenses | ' | ' | ' |
Assumed contract benefits | 82 | 80 | 78 |
Assumed interest credited to contractholder funds | 9 | 10 | 10 |
Non-affiliate | ' | ' | ' |
Effects of reinsurance on revenue | ' | ' | ' |
Assumed premiums and contract charges | 68 | 40 | 20 |
Ceded premiums and contract charges | -618 | -654 | -730 |
Effects of reinsurance on cost and expenses | ' | ' | ' |
Assumed contract benefits | 50 | 34 | 19 |
Assumed interest credited to contractholder funds | 29 | 19 | 11 |
Ceded contract benefits | -331 | -644 | -631 |
Ceded interest credited to contractholder funds | ($27) | ($28) | ($27) |
Deferred_Policy_Acquisition_an2
Deferred Policy Acquisition and Sales Inducement Costs (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Deferred policy acquisition costs | ' | ' | ' |
Balance at the beginning of the period | $1,834 | $2,165 | $2,526 |
Acquisition costs deferred | 254 | 262 | 241 |
Amortization charged to income | -240 | -324 | -430 |
Effect of unrealized gains and losses | 226 | -269 | -172 |
Classified as held for sale | -743 | ' | ' |
Balance at the end of the period | 1,331 | 1,834 | 2,165 |
DSI activity relates to fixed annuities and interest-sensitive life contracts | ' | ' | ' |
Balance at the beginning of the period | 41 | 41 | 86 |
Sales inducements deferred | 24 | 22 | 7 |
Amortization charged to income | -7 | -14 | -23 |
Effect of unrealized gains and losses | 12 | -8 | -29 |
Classified as held for sale | -28 | ' | ' |
Balance at the end of the period | $42 | $41 | $41 |
Guarantees_and_Contingent_Liab1
Guarantees and Contingent Liabilities (Details) (Guaranty funds, USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Guaranty funds | ' | ' |
Guarantees and Contingent Liabilities | ' | ' |
Liability for insurance assessments | $27 | $40 |
Insurance assessments, premium tax offsets | $31 | $32 |
Guarantees_and_Contingent_Liab2
Guarantees and Contingent Liabilities (Details 2) (Obligations of insolvent insurance companies, USD $) | Dec. 31, 2013 |
In Millions, unless otherwise specified | |
Obligations of insolvent insurance companies | ' |
Guarantees and Contingent Liabilities | ' |
Maximum amount at risk pursuant to a guarantee | $4 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Income Taxes | ' | ' | ' |
Unrecognized tax benefits | $0 | $0 | $0 |
Tax penalties or interest accrued | 0 | 0 | ' |
Deferred assets | ' | ' | ' |
Sale of subsidiary | 196 | 27 | ' |
Difference in tax bases of investments | 44 | 53 | ' |
Other assets | 6 | 1 | ' |
Total deferred assets | 246 | 81 | ' |
Deferred liabilities | ' | ' | ' |
Unrealized net capital gains | -501 | -883 | ' |
DAC | -470 | -444 | ' |
Life and annuity reserves | -273 | -193 | ' |
Other liabilities | -94 | -85 | ' |
Total deferred liabilities | -1,338 | -1,605 | ' |
Net deferred liability before classification as held for sale | -1,092 | -1,524 | ' |
Deferred taxes classified as held for sale | -151 | ' | ' |
Net deferred liability | -941 | -1,524 | ' |
Components of income tax expense | ' | ' | ' |
Current | 71 | -82 | 29 |
Deferred | -52 | 261 | 196 |
Total income tax expense | 19 | 179 | 225 |
Income tax refunds received | 11 | 58 | ' |
Income taxes paid | ' | ' | 72 |
Current income tax payable | 5 | ' | ' |
Current income tax receivable | ' | $77 | ' |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation | ' | ' | ' |
Statutory federal income tax rate - (benefit) expense (as a percent) | -35.00% | 35.00% | 35.00% |
Tax credits (as a percent) | -181.80% | -3.80% | -1.40% |
Dividends received deduction (as a percent) | -46.10% | -1.40% | -1.20% |
Adjustments to prior year tax liabilities (as a percent) | -14.10% | -0.30% | -0.20% |
Sale of subsidiary (as a percent) | 351.30% | ' | ' |
State income taxes (as a percent) | 15.30% | ' | 0.30% |
Non-deductible expenses (as a percent) | 6.80% | 0.10% | ' |
Other (as a percent) | 0.10% | ' | ' |
Effective income tax rate - expense (as a percent) | 96.50% | 29.60% | 32.50% |
Capital_Structure_Details
Capital Structure (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Capital Structure | ' | ' | ' |
Interest paid on debt | $27 | $48 | $97 |
Statutory_Financial_Informatio1
Statutory Financial Information and Dividend Limitations (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Statutory Financial Information and Dividend Limitations | ' | ' | ' |
Statutory net income (loss) | $447,000,000 | $382,000,000 | ($83,000,000) |
Statutory capital and surplus | 2,880,000,000 | 3,380,000,000 | ' |
Maximum amount of dividends ALIC able to pay without prior IL DOI approval | 258,000,000 | ' | ' |
Deficit position used to determine payment of dividends | 504,000,000 | ' | ' |
Multiplier of authorized control level RBC to determine action level RBC | 2 | ' | ' |
Authorized control level RBC | $554,000,000 | ' | ' |
Benefit_Plans_Details
Benefit Plans (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allstate 401(k) Savings Plan | ' | ' | ' |
Cost allocated to Allstate 401(k) Savings Plan | $6 | $6 | $5 |
Pension benefits | ' | ' | ' |
Benefit Plans | ' | ' | ' |
Allocated Cost (Credit) | $51 | $36 | $22 |
Other_Comprehensive_Income_Det
Other Comprehensive Income (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Pre-tax | ' | ' | ' |
Unrealized net holding gains and losses arising during the period, net of related offsets | ($1,047) | $1,180 | $1,001 |
Less: reclassification adjustment of realized capital gains and losses | 42 | -84 | 579 |
Unrealized net capital gains and losses | -1,089 | 1,264 | 422 |
Unrealized foreign currency translation adjustments | 3 | ' | -2 |
Other comprehensive (loss) income | -1,086 | 1,264 | 420 |
Tax | ' | ' | ' |
Unrealized net holding gains and losses arising during the period, net of related offsets | 367 | -414 | -350 |
Less: reclassification adjustment of realized capital gains and losses | -15 | 29 | -203 |
Unrealized net capital gains and losses | 382 | -443 | -147 |
Unrealized foreign currency translation adjustments | -1 | ' | 1 |
Other comprehensive (loss) income | 381 | -443 | -146 |
After-tax | ' | ' | ' |
Unrealized net holding gains and losses arising during the period, net of related offsets | -680 | 766 | 651 |
Less: reclassification adjustment of realized capital gains and losses | 27 | -55 | 376 |
Unrealized net capital gains and losses | -707 | 821 | 275 |
Unrealized foreign currency translation adjustments | 2 | ' | -1 |
Other comprehensive (loss) income, after-tax | ($705) | $821 | $274 |
Quarterly_Results_unaudited_De
Quarterly Results (unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Quarterly Results (unaudited) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenues | $1,076 | $1,016 | $1,087 | $1,049 | $1,116 | $970 | $1,065 | $1,052 | $4,228 | $4,203 | $4,659 |
Net income (loss) | $97 | ($394) | $150 | $109 | $142 | $103 | $98 | $83 | ($38) | $426 | $469 |
SCHEDULE_I_SUMMARY_OF_INVESTME1
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) (USD $) | Dec. 31, 2013 |
In Millions, unless otherwise specified | |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | $36,529 |
Amount at which shown in the Balance Sheet | 37,944 |
United States government, government agencies and authorities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 678 |
Fair value | 766 |
Amount at which shown in the Balance Sheet | 766 |
States, municipalities and political subdivisions | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 3,135 |
Fair value | 3,304 |
Amount at which shown in the Balance Sheet | 3,304 |
Foreign government | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 715 |
Fair value | 792 |
Amount at which shown in the Balance Sheet | 792 |
Public utilities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 4,810 |
Fair value | 5,143 |
Amount at which shown in the Balance Sheet | 5,143 |
Convertibles and bonds with warrants attached | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 139 |
Fair value | 106 |
Amount at which shown in the Balance Sheet | 106 |
All other corporate bonds | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 15,448 |
Fair value | 16,067 |
Amount at which shown in the Balance Sheet | 16,067 |
Asset-backed securities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 1,011 |
Fair value | 1,007 |
Amount at which shown in the Balance Sheet | 1,007 |
Residential mortgage-backed securities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 752 |
Fair value | 790 |
Amount at which shown in the Balance Sheet | 790 |
Commercial mortgage-backed securities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 724 |
Fair value | 764 |
Amount at which shown in the Balance Sheet | 764 |
Redeemable preferred stock | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 15 |
Fair value | 17 |
Amount at which shown in the Balance Sheet | 17 |
Fixed income securities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 27,427 |
Fair value | 28,756 |
Amount at which shown in the Balance Sheet | 28,756 |
Public utilities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 34 |
Fair value | 34 |
Amount at which shown in the Balance Sheet | 34 |
Banks, trusts and insurance companies | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 19 |
Fair value | 20 |
Amount at which shown in the Balance Sheet | 20 |
Industrial, miscellaneous and all other | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 511 |
Fair value | 595 |
Amount at which shown in the Balance Sheet | 595 |
Nonredeemable preferred stocks | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 1 |
Fair value | 1 |
Amount at which shown in the Balance Sheet | 1 |
Equity securities | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 565 |
Fair value | 650 |
Amount at which shown in the Balance Sheet | 650 |
Mortgage loans on real estate | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 4,173 |
Fair value | 4,300 |
Amount at which shown in the Balance Sheet | 4,173 |
Real estate investment | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 46 |
Amount at which shown in the Balance Sheet | 46 |
Real estate acquired in satisfaction of debt | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 19 |
Amount at which shown in the Balance Sheet | 19 |
Policy loans | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 623 |
Amount at which shown in the Balance Sheet | 623 |
Derivative instruments | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 265 |
Fair value | 266 |
Amount at which shown in the Balance Sheet | 266 |
Limited partnership interests | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 2,064 |
Amount at which shown in the Balance Sheet | 2,064 |
Other long-term investments | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 776 |
Amount at which shown in the Balance Sheet | 776 |
Short-term investments | ' |
Summary of Investments Other Than Investments in Related Parties | ' |
Cost/amortized cost | 590 |
Fair value | 590 |
Amount at which shown in the Balance Sheet | $590 |
SCHEDULE_IV_REINSURANCE_Detail
SCHEDULE IV - REINSURANCE (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Life insurance in force | ' | ' | ' |
Life insurance in force, Gross amount | $512,105 | $505,436 | $504,176 |
Life insurance in force, Ceded to other companies | 195,414 | 208,967 | 221,372 |
Life insurance in force, Assumed from other companies | 28,060 | 28,211 | 22,108 |
Life insurance in force, Net amount | 344,751 | 324,680 | 304,912 |
Life insurance in force, Percentage of amount assumed to net | 8.10% | 8.70% | 7.30% |
Premiums and contract charges | ' | ' | ' |
Premiums and contract charges, Goss amount | 2,093 | 2,121 | 2,229 |
Premiums and contract charges, Ceded to other companies | 618 | 654 | 730 |
Premiums and contract charges, Assumed from other companies | 192 | 155 | 133 |
Premiums and contract charges, Net amount | 1,667 | 1,622 | 1,632 |
Premiums and contract charges, Percentage of amount assumed to net | 11.50% | 9.60% | 8.10% |
Reinsurance or coinsurance income netted against premiums ceded | 0 | 0 | 0 |
Life insurance | ' | ' | ' |
Premiums and contract charges | ' | ' | ' |
Premiums and contract charges, Goss amount | 1,969 | 1,978 | 2,072 |
Premiums and contract charges, Ceded to other companies | 532 | 550 | 610 |
Premiums and contract charges, Assumed from other companies | 125 | 95 | 72 |
Premiums and contract charges, Net amount | 1,562 | 1,523 | 1,534 |
Premiums and contract charges, Percentage of amount assumed to net | 8.00% | 6.20% | 4.70% |
Accident and health insurance | ' | ' | ' |
Premiums and contract charges | ' | ' | ' |
Premiums and contract charges, Goss amount | 124 | 143 | 157 |
Premiums and contract charges, Ceded to other companies | 86 | 104 | 120 |
Premiums and contract charges, Assumed from other companies | 67 | 60 | 61 |
Premiums and contract charges, Net amount | $105 | $99 | $98 |
Premiums and contract charges, Percentage of amount assumed to net | 63.80% | 60.60% | 62.20% |
SCHEDULE_V_VALUATION_ALLOWANCE1
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS (Details) (Allowance for estimated losses on mortgage loans, USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for estimated losses on mortgage loans | ' | ' | ' |
Valuation allowances and qualifying accounts | ' | ' | ' |
Balance as of beginning of period | $42 | $63 | $84 |
Additions charged to costs and expenses | -11 | -5 | 33 |
Deductions | 10 | 16 | 54 |
Balance as of end of period | $21 | $42 | $63 |