Document and Entity Information
Document and Entity Information - $ / shares | 3 Months Ended | ||
Mar. 31, 2017 | Apr. 15, 2017 | Dec. 31, 2016 | |
Document Document And Entity Information [Abstract] | |||
Document Type | 10-Q | ||
Document Period End Date | Mar. 31, 2017 | ||
Entity Registrant Name | CIGNA Corporation | ||
Entity Central Index Key | 701,221 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Trading Symbol | CI | ||
Entity Common Stock Shares Outstanding | 256,014,619 | ||
Amendment Flag | false | ||
Entity Current Reporting Status | Yes | ||
Entity Well Known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | Q1 | ||
Common stock, par value per share | $ 0.25 | $ 0.25 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | ||
Premiums | $ 8,103 | $ 7,746 |
Fees and other revenues | 1,223 | 1,201 |
Net investment income | 303 | 272 |
Mail order pharmacy revenues | 710 | 697 |
Realized investment gains (losses): | ||
Other-than-temporary impairments on fixed maturities | (7) | (27) |
Other realized investment gains (losses), net | 53 | (5) |
Net realized investment gains (losses) | 46 | (32) |
Total revenues | 10,385 | 9,884 |
Benefits and Expenses | ||
Global Health Care medical costs | 4,985 | 4,761 |
Other benefit expenses | 1,367 | 1,368 |
Mail order pharmacy costs | 581 | 574 |
Other operating expenses | 2,530 | 2,321 |
Amortization of other acquired intangible assets, net | 32 | 41 |
Total benefits and expenses | 9,495 | 9,065 |
Income before Income Taxes | 890 | 819 |
Income taxes (benefits): | ||
Current | 286 | 294 |
Deferred | 11 | 11 |
Total income taxes | 297 | 305 |
Net Income | 593 | 514 |
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (5) | (5) |
Shareholders' Net Income | $ 598 | $ 519 |
Shareholders' Net Income Per Share: | ||
Basic | $ 2.34 | $ 2.04 |
Diluted | 2.30 | 2 |
Dividends Declared Per Share | $ 0.04 | $ 0.04 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement Of Comprehensive Income | ||
Shareholders' Net Income | $ 598 | $ 519 |
Shareholders' other comprehensive income (loss), net of tax: | ||
Net unrealized appreciation (depreciation) on securities | 7 | 173 |
Net unrealized appreciation (depreciation) on derivatives | (3) | (3) |
Net translation of foreign currencies | 112 | 81 |
Postretirement benefits liability adjustment | 14 | 11 |
Shareholders' other comprehensive income (loss), net of tax | 130 | 262 |
Shareholders' comprehensive income (loss) | $ 728 | $ 781 |
Consolidated Statements of Tota
Consolidated Statements of Total Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement Of Comprehensive Income | ||
Shareholders' comprehensive income (loss) | $ 728 | $ 781 |
Comprehensive income (loss) attributable to noncontrolling interests: | ||
Net income (loss) attributable to redeemable noncontrolling interests | (2) | (1) |
Net income (loss) attributable to other noncontrolling interests | (3) | (4) |
Other comprehensive income (loss) attributable to redeemable noncontrolling interests | (2) | 3 |
Total comprehensive (loss) attributable to noncontrolling interests | (7) | (2) |
Total comprehensive income | $ 721 | $ 779 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Investments: | ||
Fixed maturities, at fair value (amortized cost, $20,639; $19,942) | $ 21,734 | $ 20,961 |
Equity securities, at fair value (cost, $584; $583) | 574 | 583 |
Commercial Mortgage Loans | 1,752 | 1,666 |
Policy loans | 1,431 | 1,452 |
Other long-term investments | 1,465 | 1,462 |
Short-term investments | 303 | 691 |
Total investments | 27,259 | 26,815 |
Cash and cash equivalents | 4,155 | 3,185 |
Premiums, accounts and notes receivable, net | 3,154 | 3,077 |
Reinsurance recoverables | 6,386 | 6,478 |
Deferred policy acquisition costs | 1,982 | 1,818 |
Property and equipment | 1,519 | 1,536 |
Deferred tax assets, net | 263 | 304 |
Goodwill | 5,982 | 5,980 |
Other assets, including other intangibles | 2,250 | 2,227 |
Separate account assets | 8,197 | 7,940 |
Total assets | 61,147 | 59,360 |
Liabilities: | ||
Contractholder deposit funds | 8,415 | 8,458 |
Future policy benefits | 9,840 | 9,648 |
Unpaid claims and claim expenses | 5,006 | 4,917 |
Global Health Care medical costs payable | 2,770 | 2,532 |
Unearned premiums | 1,204 | 634 |
Total insurance and contractholder liabilities | 27,235 | 26,189 |
Accounts payable, accrued expenses and other liabilities | 6,667 | 6,414 |
Short-term debt | 142 | 276 |
Long-term debt | 4,621 | 4,756 |
Separate account liabilities | 8,197 | 7,940 |
Total liabilities | 46,862 | 45,575 |
Contingencies - Note 16 | ||
Redeemable noncontrolling interests | 56 | 58 |
Shareholders' Equity | ||
Common stock (par value per share, $0.25; shares issued, 296; authorized, 600) | 74 | 74 |
Additional paid-in capital | 2,912 | 2,892 |
Accumulated other comprehensive loss | (1,252) | (1,382) |
Retained earnings | 14,356 | 13,855 |
Less: treasury stock, at cost | (1,864) | (1,716) |
Total shareholders' equity | 14,226 | 13,723 |
Other noncontrolling interests | 3 | 4 |
Total equity | 14,229 | 13,727 |
Total liabilities and equity | $ 61,147 | $ 59,360 |
Shareholders' Equity Per Share | $ 55.52 | $ 53.42 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Millions, $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets | ||
Fixed maturities, at amortized cost | $ 20,639 | $ 19,942 |
Equity securities, at cost | $ 584 | $ 583 |
Common stock, par value per share | $ 0.25 | $ 0.25 |
Common stock shares issued | 296 | 296 |
Common stock shares authorized | 600 | 600 |
Statement of Changes in Total E
Statement of Changes in Total Equity - USD ($) $ in Millions | Total | Shareholders' Equity [Member] | Common Stock [Member] | Additional Paid In Capital [Member] | Accumulated Other Comprehensive Income [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Other noncontrolling interests [Member] |
Total Equity, beginning of period at Dec. 31, 2015 | $ 12,044 | $ 12,035 | $ 74 | $ 2,859 | $ (1,250) | $ 12,121 | $ (1,769) | $ 9 |
Increase (Decrease) In Stockholders Equity [Roll Forward] | ||||||||
Effect of issuing stock for employee benefit plans | (15) | (15) | 21 | (89) | 53 | |||
Other comprehensive income (loss) | 262 | 262 | 262 | |||||
Net income (loss) | 515 | 519 | 519 | (4) | ||||
Common dividends declared (per share: $0.04) | (10) | (10) | (10) | |||||
Repurchase of common stock | (110) | (110) | (110) | |||||
Other transactions impacting noncontrolling interest | (2) | (6) | (6) | 4 | ||||
Total Equity, end of period at Mar. 31, 2016 | 12,684 | 12,675 | 74 | 2,874 | (988) | 12,541 | (1,826) | 9 |
Beginning Balance at Dec. 31, 2015 | 69 | |||||||
Redeemable Noncontrolling Interests | ||||||||
Other comprehensive income (loss) | 3 | |||||||
Net income (loss) | (1) | |||||||
Other transactions impacting noncontrolling interest | 2 | |||||||
Ending Balance at Mar. 31, 2016 | 73 | |||||||
Total Equity, beginning of period at Dec. 31, 2016 | 13,727 | 13,723 | 74 | 2,892 | (1,382) | 13,855 | (1,716) | 4 |
Increase (Decrease) In Stockholders Equity [Roll Forward] | ||||||||
Effect of issuing stock for employee benefit plans | 38 | 38 | 23 | (87) | 102 | |||
Other comprehensive income (loss) | 130 | 130 | 130 | |||||
Net income (loss) | 595 | 598 | 598 | (3) | ||||
Common dividends declared (per share: $0.04) | (10) | (10) | (10) | |||||
Repurchase of common stock | (250) | (250) | (250) | |||||
Other transactions impacting noncontrolling interest | (1) | (3) | (3) | 2 | ||||
Total Equity, end of period at Mar. 31, 2017 | 14,229 | $ 14,226 | $ 74 | $ 2,912 | $ (1,252) | $ 14,356 | $ (1,864) | $ 3 |
Beginning Balance at Dec. 31, 2016 | 58 | |||||||
Redeemable Noncontrolling Interests | ||||||||
Other comprehensive income (loss) | (2) | |||||||
Net income (loss) | (2) | |||||||
Other transactions impacting noncontrolling interest | 2 | |||||||
Ending Balance at Mar. 31, 2017 | $ 56 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Cash Flows from Operating Activities | |||
Net Income | $ 593 | $ 514 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 146 | 158 | |
Realized investment (gains) losses | (46) | 32 | |
Deferred income taxes | 11 | 11 | |
Net changes in assets and liabilities, net of non-operating effects: | |||
Premiums, accounts and notes receivable | (55) | (237) | |
Reinsurance recoverables | 41 | 24 | |
Deferred policy acquisition costs | (76) | (62) | |
Other assets | (22) | (57) | |
Insurance liabilities | 868 | 507 | |
Accounts payable, accrued expenses and other liabilities | (186) | (263) | |
Current income taxes | 291 | 262 | |
Distributions from partnership investments | [1] | 45 | 27 |
Other, net | (31) | 5 | |
Net cash provided by (used in) operating activities | [1] | 1,579 | 921 |
Proceeds from investments sold: | |||
Fixed maturities and equity securities | 414 | 361 | |
Investment maturities and repayments: | |||
Fixed maturities and equity securities | 475 | 255 | |
Commercial mortgage loans | 21 | 18 | |
Other sales, maturities and repayments (primarily short-term and other long-term investments) | [1] | 667 | 75 |
Investments purchased or originated: | |||
Fixed maturities and equity securities | (1,240) | (758) | |
Commercial mortgage loans | (107) | (1) | |
Other (primarily short-term and other long-term investments) | (256) | (198) | |
Property and equipment purchases, net | (91) | (112) | |
Net cash provided by (used in) investing activities | [1] | (117) | (360) |
Cash Flows from Financing Activities | |||
Deposits and interest credited to contractholder deposit funds | 374 | 383 | |
Withdrawals and benefit payments from contractholder deposit funds | (385) | (343) | |
Net change in short-term debt | (10) | (6) | |
Repayment of long-term debt | (250) | 0 | |
Repurchase of common stock | (239) | (139) | |
Issuance of common stock | 38 | 10 | |
Other, net | (43) | (51) | |
Net cash provided by (used in) financing activities | (515) | (146) | |
Effect of foreign currency rate changes on cash and cash equivalents | 23 | 18 | |
Net increase / (decrease) in cash and cash equivalents | 970 | 433 | |
Cash and cash equivalents, January 1 | 3,185 | 1,968 | |
Cash and cash equivalents, March 31 | 4,155 | 2,401 | |
Supplemental Disclosure of Cash Information: | |||
Income taxes paid, net of refunds | (8) | 37 | |
Interest paid | $ 70 | $ 69 | |
[1] | As required in adopting Accounting Standard Update ("ASU") 2016-15, the Company retrospectively reclassified $27 million of cash distributions from partnership earnings from investing to operating activities for the first quarter of 2016. The comparable amount reported in operating activities in 2017 was $45 million. See Note 2 for further discussion. |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2017 | |
Description Of Business [Abstract] | |
Description of Business | Note 1 – Description of Business Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as “Cigna,” the “Company,” “we,” “our” or “us”) is a global health services organization dedicated to a mission of helping individuals improve their health, well-being and sense of security. To execute on our mission, Cigna's strategy is to “Go Deep”, “Go Global” and “Go Individual” with a differentiated set of medical, dental, disability, life and accident insurance and related products and services offered by our insurance and other subsidiaries. The majority of these products are offered through employers and other groups (e.g. governmental and non-governmental organizations, unions and associations). Cigna also offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals in the U.S. and selected international markets. In addition to its ongoing operations described above, Cigna also has certain run-off operations. The financial results of the Company's businesses are reported in the following segments: Global Health Care aggregates the Commercial and Government operating segments due to their similar economic characteristics, products and services and regulatory environment: The Commercial operating segment encompasses both the U.S. commercial and certain international health care businesses serving employers and their employees, other groups and individuals. Products and services include medical, dental, behavioral health, vision, and prescription drug benefit plans, health advocacy programs and other products and services to insured and self-insured customers. The Government operating segment offers Medicare Advantage and Medicare Part D plans to seniors . This segment also offers Medicaid plans in selected markets . Global Supplemental Benefits includes supplemental health, life and accident insurance products offered in selected international markets and in the U.S. Group Disability and Life provides group long-term and short-term disability, group life, accident and specialty insurance products and related services. Other Operations consist of: corporate-owned life insurance (“COLI”); run-off reinsurance business that is predominantly comprised of guaranteed minimum death benefit (“ GMDB ”) and guaranteed minimum income benefit (“ GMIB ”) business effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska (“Berkshire”) in 2013; deferred gains recognized from the 1998 sale of the individual life insurance and annuity business and the 2004 sale of the retirement benefits business; and run-off settlement annuity business. Corporate reflects amounts not allocated to operating segments, such as net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment operations), interest on uncertain tax positions, certain litigation matters, intersegment eliminations, compensation cost for stock options, excess tax benefits on stock compensation, expense associated with frozen pension plans and certain costs for corporate projects, including overhead. |
Summary of Signficant Accountin
Summary of Signficant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 2 – Significant Accounting Policies Basis of Presentation The Consolidated Financial Statements include the accounts of Cigna Corporation and its subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Amounts recorded in the Consolidated Financial Statements necessarily reflect management's estimates and assumptions about medical costs, investment valuation, interest rates and other factors. Significant estimates are discussed throughout these Notes; however, actual results could differ from those estimates. The impact of a change in estimate is generally included in earnings in the period of adjustment. Certain reclassifications may be made to prior year amounts to conform to the current presentation. These interim Consolidated Financial Statements are unaudited but include all adjustments (including normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the periods reported. The interim Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes included in the Company's 2016 Annual Report on Form 10-K (“ 2016 Form 10-K”). The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates. This and certain other factors, including the seasonal nature of portions of the health care and related benefits business as well as competitive and other market conditions, call for caution in estimating full year results based on interim results of operations. Recent Accounting Pronouncements The Company's 2016 Form 10-K includes discussion of significant recent accounting pronouncement s that either have impacted or may impact our finan cial statements in the future. The following tables provide information about recently adopted and recently issued or changed accounting guidance ( applicable to Cigna) that have occurred since the Company filed its 2016 Form 10-K. Recently Adopted Accounting Guidance Accounting Standard and Adoption Date Requirements and Effects of Adopting New Guidance Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (Accounting Standards Update (“ASU”) 2016-15) Early adopted as of December 31, 2016 Specifies how certain transactions should be classified in the statement of cash flows. While the standard addresses multiple types of transactions, only a change in the treatment of distributions from equity method investments impacted the Company. Effects of adoption: using the nature of distribution approach, the Company reported $45 million of cash receipts related to distributions from partnership earnings in operating activities for the three months ended March 31, 2017. The Company reclassified $27 million for the three months ended March 31, 2016 from investing to operating activities in the Consolidated Statements of Cash Flows. Recently Issued Accounting Guidance Not Yet Adopted Accounting Standard and Effective Date Applicable for Cigna Requirements and Expected Effects of New Guidance Not Yet Adopted Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07) Required as of January 1, 2018 Requires employers to separate the service cost component from the other components of net benefit cost. Under the new guidance, only service cost is eligible for capitalization (either deferred policy acquisition costs or capitalized software). The change in the capitalization rule is to be applied prospectively upon adoption. In addition, the income statement caption(s) where each component of net benefit cost is presented must be disclosed. Expected effects: the Company expects the effect of this new guidance to be immaterial to its results of operations. Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) Required as of January 1, 2018 Requires: • Entities to measure equity investments at fair value in net income if they are neither consolidated nor accounted for under the equity method • Cumulative effect adjustment to the beginning balance of retained earnings at adoption Expected effects: • Certain limited partnership interests carried at cost of $240 million as of March 31, 2017 will be reported at fair value at adoption • An increase to retained earnings of approximately $50 million, after-tax, if implemented as of March 31, 2017. Actual cumulative effect adjustment will depend on investments held and market conditions at adoption. Revenue from Contracts with Customers (ASU 2014-09 and related amendments) Required as of January 1, 2018, with early adoption permitted as of January 1, 2017 Requires: • Companies to estimate and allocate the expected customer contract revenues among distinct goods or services based on relative standalone selling prices • Revenues to be recognized as goods or services are delivered • Extensive new disclosures including the presentation of additional categories of revenues and information about related contract assets and liabilities • Adoption through retrospective restatement with or without using certain practical expedients or adoption with a cumulative effect adjustment Expected effects: • Applies to the Company’s non-insurance, administrative service contracts but does not apply to certain contracts within the scope of other GAAP, such as insurance contracts • The Company currently expects to adopt the new guidance as of January 1, 2018 through retrospective restatement • The Company does not currently expect the adoption of the new guidance to have a material impact to its pattern of revenue recognition or net income • The Company is continuing to evaluate the new requirements. Specifically, the Company is evaluating the combination of contract guidance for certain customers when the Company provides both insurance and non-insurance products, the deferral of revenue for services provided after the termination of certain administrative contracts and the Company’s status as principal or agent for certain performance obligations. |
Mergers and Acquisitions
Mergers and Acquisitions | 3 Months Ended |
Mar. 31, 2017 | |
Acquisitions and Dispositions [Abstract] | |
Acquisitions and Dispositions | Note 3 – Mergers and Acquisitions Proposed Merger On July 23, 2015, the Company entered into a merger agreement with Anthem, Inc. (“Anthem”) and Anthem Merger Sub Corp. (“Merger Sub”), a direct wholly-owned subsidiary of Anthem. The merger agreement provides (a) for the merger of the Company and Merger Sub, with the Company continuing as the surviving corporation and (b) if certain tax opinions are delivered, immediately following the completion of the initial merger, for the surviving corporation to be merged with and into Anthem, with Anthem continuing as the surviving corporation (collectively, the “merger”). Subject to certain terms, conditions, and customary operating covenants, each share of Cigna common stock issued and outstanding immediately prior to the effective time of the merger would be converted into the right to receive (a) $103.40 in cash, without interest, and (b) 0.5152 of a share of Anthem common stock. The closing price of Anthem common stock on May 4 , 2017 was $ 179.89 . At special shareholders' meetings held in December 2015, Cigna shareholders approved the merger and Anthem shareholders approved the issuance of shares of Anthem common stock in connection with the merger. Completing the merger remains subject to certain customary conditions, including the receipt of certain necessary governmental and regulatory approvals and the absence of a legal restraint prohibiting the merger. Completing the merger is not subject to a financing condition. On July 21, 2016, the U.S. Department of Justice (“DOJ”) and certain state attorneys general filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia (the “District Court”) seeking to block the merger and, on January 4, 2017, the parties concluded the District Court trial . On January 18, 2017, the Company received a written notice from Anthem seeking to extend the termination date of the merger agreement from January 31, 2017 to April 30, 2017. On February 8, 2017, the District Court issued an order enjoining the proposed merger. Anthem filed a notice of appeal of the District Court's order with the U.S. Court of Appeals for the District of Columbia Circuit (the “Appeals Court”) and requested an expedited appeal. On February 14, 2017, the Company delivered a notice to Anthem terminating the merger agreement and filed suit in the Delaware Court of Chancery (the “Chancery Court”) seeking, among other things, declaratory judgment that Cigna's termination of the merger agreement is lawful and that Anthem does not have the right to extend the merger agreement termination date. Later that day, Anthem filed a lawsuit in the Chancery Court against the Company seeking, among other things, a temporary restraining order to enjoin Cigna from terminating the merger agreement, specific performance and damages, and, on February 15, 2017, the Chancery Court issued an order temporarily enjoining the Company from terminating the merger agreement. This order will be subject to further review at a preliminary injunction hearing scheduled for May 8, 2017 . On February 17, 2017, the Appeals Court granted Anthem's motion for an expedited appeal . That same day, the Company filed its notice of appeal of the District Court's order enjoining the merger with the Appeals Court. O ral arguments were heard on March 24, 2017 . On April 28, 2017, the Appeals Court affirmed the decision of the District Court. On May 5, 2017, Anthem filed a petition for a writ of certiorari with the United States Supreme Court seeking appeal of the U.S. Court of Appeals decision affirming the District Court's order enjoining the merger. The merger agreement contains customary covenants, including covenants that Cigna conduct its business in the ordinary course during the period between entering into the merger agreement and closing. In addition, Cigna's ability to take certain actions prior to closing without Anthem's consent is subject to certain limitations. These limitations relate to, among other matters, the payment of dividends, capital expenditures, the payment or retirement of indebtedness or the incurrence of new indebtedness, settlement of material claims or proceedings, mergers or acquisitions, and certain employment-related matters. The Company incurred $ 63 million pre-tax ($ 49 million after-tax) for the three months ended March 31, 2017 in costs directly related to the proposed merger. Comparable merger-related costs for the three months ended March 31, 2016 were $ 40 million pre-tax ($ 36 million after-tax). Since entering into this merger agreement in 2015 , the Company has incurred pre-tax merger-related costs of approximately $ 295 million that primarily consisted of fees for legal, advisory and other professional services. If the merger is consummated, a significant portion of the se merger-related costs would not be deductible for federal income tax purposes. If the merger is not consummated, these otherwise non-deductible costs would become tax deductible for federal income tax purposes, resulting in a n incremental tax benefit of approximately $ 60 million. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 4 – E arnings P er S hare (“EPS”) Basic and diluted earnings per share were computed as follows: Three Months Ended March 31, 2017 March 31, 2016 (Shares in thousands, dollars in millions, except per share amounts) Effect of Effect of Basic Dilution Diluted Basic Dilution Diluted Shareholders' net income $ 598 $ 598 $ 519 $ 519 Shares: Weighted average 255,680 255,680 254,822 254,822 Common stock equivalents 4,094 4,094 4,625 4,625 Total shares 255,680 4,094 259,774 254,822 4,625 259,447 EPS $ 2.34 $ (0.04) $ 2.30 $ 2.04 $ (0.04) $ 2.00 The following outstand ing employee stock options were not included in the computation of diluted earnings per share for the three months ended March 31, 2017 and 2016 because their effect was anti-dilutive . Three Months Ended (In millions) March 31, 2017 March 31, 2016 Anti-dilutive options 2.5 1.3 The Company held 39,928,289 shares of common stock in Treasury as of March 31, 2017 , and 39,638,264 shares as of March 31, 2016 . |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Note 5 ― Deb t The outstanding amounts of debt and capital leases were as follo ws: March 31, December 31, (In millions) 2017 2016 Short-term: Current maturities of long-term debt $ 131 $ 250 Other, including capital leases 11 26 Total short-term debt $ 142 $ 276 Long-term: $131 million, 6.35% Notes due 2018 $ - $ 131 $250 million, 4.375% Notes due 2020 (1) 252 252 $300 million, 5.125% Notes due 2020 (1) 301 301 $78 million, 6.37% Notes due 2021 78 78 $300 million, 4.5% Notes due 2021 (1) 301 302 $750 million, 4% Notes due 2022 744 744 $100 million, 7.65% Notes due 2023 100 100 $17 million, 8.3% Notes due 2023 17 17 $900 million, 3.25% Notes due 2025 893 893 $300 million, 7.875% Debentures due 2027 299 299 $83 million, 8.3% Step Down Notes due 2033 82 82 $500 million, 6.15% Notes due 2036 498 498 $300 million, 5.875% Notes due 2041 296 296 $750 million, 5.375% Notes due 2042 743 743 Other, including capital leases 17 20 Total long-term debt $ 4,621 $ 4,756 ( 1) T he Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 11 for further information about the Company's interest rate risk management and these derivative instruments. The Company repaid $250 million of long-term notes that matured in the first quarter of 2017. T he Company has a five -year revolving credit and letter of credit agreement for $ 1.5 billion that permits up to $ 500 million to be used for letters of credit. This agreement extends through December 12, 2019 and is diversified among 16 banks, with three banks each having 12% of the commitment and the remainder spread among 13 banks in varying amounts . The credit agreement includes options subject to consent by the administrative agent and the committing banks to increase the commitment amount to $ 2 billion and to extend t he term past December 12, 2019 . The credit agreement is available for general corporate purposes, including for the issuance of letters of credit. The credit a greement contains customary covenants and restrictions, including a financial covenant that the Company may not permit its leverage ratio – which is total consolidated debt to total consolidated capitali zation (each as defined in the credit a greement) – to be greater than 0.50 . The leverage ratio calculation excludes the following items that are included in accu mulated other comprehensive loss on the Company's consolidated balance sheets: net unrealized appreciation on fixed maturities and the portion of the post-retirement benefits liability adjustment attributable to pension. In addition to the $ 4.8 billion of debt outstanding as of March 31, 2017 , the Company had $ 10.5 billion of borrowing capacity within the maximum debt coverage covenant in the credit agreement. This additional borrowing capacity includes the $ 1.5 billion available under the credit agreement . L etters of credit outstanding as of March 31, 2017 totaled $ 13 million . The Company was in compliance with its debt covenants as of March 31, 2017 . |
Global Health Care Medical Cost
Global Health Care Medical Costs Payable | 3 Months Ended |
Mar. 31, 2017 | |
Global Health Benefits Segment [Member] | |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | |
Global Health Care Medical Costs Payable | N ote 6 — Global H ealth C are M edical Costs P ayable Medical costs payable for the Global Health Care segment reflects estimates of the ultimate cost of claims that have been incurred but not reported, those that have been reported but not yet paid (reported claims in process) , and other medical care expense s and services payable that are primarily comprised of accruals for incentives and oth er amounts payable to health care professionals and facilities . See Note 7 to the Consolidated Financial Statements in the Company's 2016 Form 10-K for further information about the assumptions and estimates used to establish this liability. Components of the Global Health Care medical costs payable balances as of March 31 were as follows: March 31, March 31, (In millions) 2017 2016 Incurred but not reported $ 2,088 $ 1,960 Reported claims in process 542 506 Physician incentives and other medical care expenses and services payable 140 180 Global Health Care medical costs payable $ 2,770 $ 2,646 Activity in medical costs payable w as as follows: Three Months Ended March 31, March 31, (In millions) 2017 2016 Beginning balance $ 2,532 $ 2,355 Less: Reinsurance and other amounts recoverable 275 243 Beginning balance, net 2,257 2,112 Incurred costs related to: Current year 5,161 4,825 Prior years (176) (64) Total incurred 4,985 4,761 Paid costs related to: Current year 3,219 2,985 Prior years 1,509 1,449 Total paid 4,728 4,434 Ending balance, net 2,514 2,439 Add: Reinsurance and other amounts recoverable 256 207 Ending balance $ 2,770 $ 2,646 Reinsurance and other amounts recoverable includes amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims for certain business where the Company administers the plan benefits but the right of offset does not exist. See Note 8 for additional information on reinsurance. For the periods ended March 31, incurred costs related to prior years were attributable to the following factors : Three Months Ended (Dollars in millions) March 31, 2017 March 31, 2016 $ % (1) $ % (2) Actual completion factors $ 78 0.4 % $ 51 0.3 % Medical cost trend 98 0.5 28 0.1 Other (3) - - (15) (0.1) Total favorable (unfavorable) variance $ 176 0.9 % $ 64 0.3 % (1) Percentage of current year incurred costs as reported for the year ended December 31, 2016. (2) Percentage of current year incurred costs as reported for the year ended December 31, 2015. (3) Other amounts in 2016 related to increased medical costs in the Government segment resulting from additional provider risk sharing. Incurred costs related to prior years in the table above, although adjusted through shareholders' net income, do not directly correspond to an increase or decrease to shareholders' net income . The primary reason for this difference is that decreases to prior year incurred costs pertaining to the portion of the liability established for moderately adverse conditions are not considered as impacting shareholders' net income if they are offset by increases in the current year provision for moderately adverse conditions. The net impact of prior year development on shareholders' net income was a $ 61 million increase for the three months ended March 31, 2017 compared with a $ 14 million increase for the three months ended March 31, 2016. F avorable prior year development implies primarily lower than expected utilization of medical services . |
Liabilities for Unpaid Claims a
Liabilities for Unpaid Claims and Claims Expenses | 3 Months Ended |
Mar. 31, 2017 | |
Group Disability and Life, Global Supplemental Beneftits and Other Operations [Member] | |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | |
Liabilities for Unpaid Claims and Claims Expenses | N ote 7 ― Liabilities for Unpaid Claims and Claim Expenses The following information relates to the Company's unpaid claims and claim expense liabilities that are related to short-duration insurance contracts . See Note 8 to the Consolidated Financial Statements in the Company's 2016 Form 10-K for further information about the assumptions and estimates used to establish this liability. The liability for unpaid claims and claim expenses by segment as of March 31 is as follows: March 31, March 31, (In millions) 2017 2016 Group Disability and Life $ 4,384 $ 4,146 Global Supplemental Benefits 425 367 Other Operations 197 211 Unpaid claims and claim expenses $ 5,006 $ 4,724 Activity in the Company's Group Disability and Life and the Global Supplemental Benefits segments' liabilities for unpaid claims and claim expenses are presented in the following table. Liabilities associated with the Company's Other Operations segment are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been fully reinsured. Three Months Ended (In millions) March 31, 2017 March 31, 2016 Beginning balance $ 4,726 $ 4,359 Less: Reinsurance 121 115 Beginning balance, net 4,605 4,244 Incurred claims related to: Current year 1,148 988 Prior years: Interest accretion 43 43 All other incurred (64) 105 Total incurred 1,127 1,136 Paid claims related to: Current year 371 327 Prior years 691 660 Total paid 1,062 987 Foreign currency 16 5 Ending balance, net 4,686 4,398 Add: Reinsurance 123 115 Ending balance $ 4,809 $ 4,513 Reinsurance in the table above reflect s amounts due from reinsurers related to unpaid claims liabilities. The Company's insurance subsidiaries enter into agreements with other companies primarily to limit losses from large exposures and to permit recovery of a portion of incurred losses. See Note 8 for additional information on reinsurance. The majority of the liability for unpaid claims and claim expenses is related to disability claims with long-tailed payouts. Interest earned on assets backing these liabilities is an integral part of pricing and reserving , and is therefore the basis for determining the rate used to discount these liabilities . Accordingly , interest accreted on prior year balances is shown as a separate component of prior year incurred claims. This i nterest is calculated by applying the average discount rate used in determining the liability balance to the average liability balance over the period. The remaining prior year incurred claims amount primarily reflects updates to the Company's liability estimates and variances between actual experience during the period relative to the assumptions and expectations reflected in determining the liability. Assumptions reflect the Company's expectations over the life of the book of business and will vary from actual experience in any period, both favorably and unfavorably, with variation in resolution rates being the most significant driver for the long-term disability business. Favorable p rior year i ncurred claims reported in 2017 largely reflect improved claim resolution rates. Unfavorable p rior year i ncurred claims reported in 2016 included the impact of modifications made to our disabi lity claims management process and a period of elevated life claims. |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | N ote 8 ― R einsurance The Company's insurance subsidiaries enter into agreements with other insurance companies to assume and cede reinsurance. Reinsurance is ceded primarily to limit losses from large exposures and to permit recovery of a portion of direct or assumed losses. Reinsurance is also used in acquisition an d disposition transactions when the underwriting company is not being acquired. Reinsurance does not relieve the originating insurer of liability. The Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of its credit risk. Reinsurance Recoverables The majority of the Company's reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired. Components of the Company's reinsurance recoverables are presented below: (In millions) March 31, December 31, Collateral and Other Terms Line of Business Reinsurer(s) 2017 2016 at March 31, 2017 Ongoing operations: Global Health Care, Global Supplemental Benefits, Group Disability and Life Various $ 478 $ 478 Recoverables from approximately 80 reinsurers including the U.S. Government, used in the ordinary course of business. Current balances range from less than $1 million up to $93 million. Excluding the recoverable from the U.S. Government of $39 million, over 60% of the balance is from companies rated investment grade by Standard & Poor's, and 13% is secured by assets in trusts or letters of credit. Total recoverables related to ongoing operations 478 478 Acquisition, disposition or runoff activities: Individual Life and Annuity (sold in 1998) Lincoln National Life and Lincoln Life & Annuity of New York 3,551 3,586 Both companies' ratings are sufficient to avoid triggering a contractual obligation to fully secure the outstanding balance. GMDB Berkshire 1,052 1,085 100% secured by assets in a trust. Other 42 44 100% secured by assets in a trust or letters of credit. Retirement Benefits Business (sold in 2004) Prudential Retirement Insurance and Annuity 904 921 100% secured by assets in a trust. Supplemental Benefits Business (2012 acquisition) Great American Life 293 297 100% secured by assets in a trust. Other run-off reinsurance Various 66 67 100% secured by assets in trusts. Total recoverables related to acquisition, disposition or runoff activities 5,908 6,000 Total reinsurance recoverables $ 6,386 $ 6,478 The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Compan y. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables if recovery is not considered probable. As of March 31, 2017 , the Company's recoverables were net of a reserve of approximately $3 million . Effects of R einsurance In the Company's C onsolidated Statements of Income, premiums were reported net of amounts ceded to reinsurers and Global Health Care medical costs and other benefit expenses were reported net of reinsurance recoveries in the following amounts : Three Months Ended March 31, (In millions) 2017 2016 Ceded premiums: Individual life insurance and annuity business sold $ 39 $ 41 Other 81 95 Total ceded premiums $ 120 $ 136 Reinsurance recoveries: Individual life insurance and annuity business sold $ 70 $ 68 Other 29 96 Total reinsurance recoveries $ 99 $ 164 The decrease in reinsurance recoveries in 2017 is primarily due to the ceded GMDB business. The ceded reserves declined during the three months ended March 31, 2017 due primarily to favorable equity market conditions, while the ceded reserves increased during the three months ended March 31, 2016 due to changes in the capital market assumptions that are used to calculate the reserves. Effective Exit of GMDB and GMIB Business In 2013, the Company entered in to an agreement with Berkshire to effectively exit the GMDB and GMIB business via a reinsurance transaction. Berkshire reinsured 100 % of the Company's future claim payments in th is business , net of other reinsurance arrangements existing at that time . The Berkshire reinsurance agreement is subject to an overall limit with approximately $ 3.5 billion remaining as of March 31, 2017 . A discussion of each of these businesses follows. While GMDB is accounted for as reinsurance, GMIB assets and liabilities are reported as derivatives at fair value as discussed below. Accordingly, GMIB assets are reported in other assets, including intangibles, and GMIB liabilities are reported in accounts payable, accrued expenses and other liabilities. GMDB The Company estimates th e gross liability and reinsurance recoverable with an internal model based on the Company's experience and future expectations over an extended period, consistent with the long-term nature of this product. As a result of the reinsurance transaction, reserve increases have a corresponding increase in the recorded reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit (including the GMIB asset presented below ). The ending net retained reserve covers ongoing administrative expenses, as well as minor claim exposure retained by the Company. Because the product is premium deficient, the Company records an increase to the net retained reserve if it is inadequate based on the model. Activity in future policy benefit reserves for the GMDB business was as follows: For the period ended March 31, December 31, (In millions) 2017 2016 Balance at January 1 $ 1,224 $ 1,252 Add: Unpaid claims 16 18 Less: Reinsurance and other amounts recoverable 1,129 1,164 Balance at January 1, net 111 106 Add: Incurred benefits - 4 Less: Paid benefits (recoveries) (1) (1) Ending balance, net 112 111 Less: Unpaid claims 18 16 Add: Reinsurance and other amounts recoverable 1,094 1,129 Ending balance $ 1,188 $ 1,224 Benefits paid and incurred are net of ceded amounts. The table below presents the account value, net amount at risk and number of underlying contractholders for guarantees assumed by the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the specified date. Unless the Berkshire reinsurance limit is exceeded, the Company sh ould be reimbursed in full for these payments. (Dollars in millions, excludes impact of reinsurance ceded) March 31, 2017 December 31, 2016 Account value $ 10,755 $ 10,650 Net amount at risk $ 2,335 $ 2,458 Number of contractholders 280,000 285,000 GMIB In this business, the Company reinsured contracts with issuers of GMIB products. The Company's exposure represents the excess of a contractually guaranteed amount over the level of variable annuity account values. Payment by the Company depends on the actual account value in the underlying mutual funds and the level of interest rates when the contractholders elect to receive minimum income payments that must occur within 30 days of a policy anniversary after the appropriate waiting period. The Company has purchased retrocessional coverage (“GMIB assets”) for these contracts. The Company reports GMIB liabilities and assets as derivatives at fair value because cash flows of these liabilities and assets are affected by equity markets and interest rates, but are without significant life insurance risk and are settled in lump sum payments. As of March 31, 2017 , there were three reinsurers for GMIB as follows: (In millions) March 31, December 31, Collateral and Other Terms Line of Business Reinsurer(s) 2017 2016 at March 31, 2017 GMIB Berkshire $ 360 $ 370 100% secured by assets in a trust. Sun Life Assurance Company of Canada 220 227 Liberty Re (Bermuda) Ltd. 197 202 100% secured by assets in a trust. Total GMIB recoverables reported in other assets $ 777 $ 799 Assumptions used in fair value measurement. The Company estimates the fair value of the assets and liabilities for GMIB contracts by calculating the results for many scenarios run through a model utilizing various assumptions. The only assumption expected to impact future shareholders' net income is non-performance risk. The non-performan ce risk adjustment reflects a market participant's view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both (a) the GMIB liabilities to be paid by the Company, and (b) the GMIB assets to be paid by the reinsurers, after considering collateral. Other assumptions that affect GMIB assets and liabilities include capital market assumptions (including market returns, interest rates and market volatilities of the underlying equity and bond mutual fund investments) and future annuitant behavior (including mortality, lapse, and annuity election rates). As certain assumptions used to estimate fair values for these contracts are largely unobservable (primarily related to future annuitant behavior), the Company classifies GMIB assets and liabilities in Level 3 in the fair value hierarchy presented in Note 9 . The Company regularly evaluates each of the assumptions used in establishing these assets and liabilities. Significant decreases in assumed lapse rates or spreads used to calculate non-performance risk of the Company, or significant increases in assumed annuity election rates or spreads used to calculate the non-performance risk of the reinsurers, would result in higher fair value measurements. A change in one of these assumptions is not necessarily accompanied by a change in another assumption. GMIB guarantees. Future payments are not fixed and determinable under the terms of these contracts. Accordingly, the Company calculated exposure, without considering any reinsurance coverage, using the following hypothetical assumptions: no annuitants surrendered their accounts; all annuitants lived to elect their benefit; all annuitants elected to receive their benefit on the next available date (2017 through 2021); and all underlying mutual fund investment values remained at the March 31, 2017 value of $ 818 million with no future returns. The Company has reinsurance coverage in place that covers the exposures on these contracts. Using these hypothetical assumptions, GMIB exposure is $ 665 million , which is lower than the recorded liability for GMIB calculated using fair value assumptions. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | N ote 9 ― Fair Value Measurements The Company carries certain financial instruments at fair value in the financial statements including fixed maturities, equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value only under certain conditions, such as when impaired. Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor. The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement. For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services are based on reported trade activity and quoted market prices when available, and other market information that a market participant may use to estimate fair value. The internal pricing methods are performed by the Company's investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality, as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models. The Company is responsible for determining fair value, as well as for assigning the appropriate level within the fair value hierarchy, based on the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls executed by the Company include evaluating changes in prices and monitoring for potentially stale valuations. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. The minimal exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations. Annually, we conduct an on-site visit of the most significant pricing service to review their processes, methodologies and controls. This on-site review includes a walk-through of inputs for a sample of securities held across various asset types to validate the documented pricing process. Financial Assets and Financial Liabilities Carried at Fair Value The following tables provide information as of March 31, 2017 and December 31, 2016 about the Company's financial assets and liabilities carried at fair value. Separate account assets that are also recorded at fair value on the Company's Consolidated Balance Sheets are reported separately under the heading “ s eparate account assets” as gains and losses related to these assets generally accrue directly to policyholders. Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) (Level 1) (Level 2) (Level 3) Total March 31, 2017 Financial assets at fair value: Fixed maturities: Federal government and agency $ 372 $ 525 $ - $ 897 State and local government - 1,419 - 1,419 Foreign government - 2,273 39 2,312 Corporate - 16,144 483 16,627 Mortgage and other asset-backed - 324 155 479 Total fixed maturities (1) 372 20,685 677 21,734 Equity securities 402 122 50 574 Subtotal 774 20,807 727 22,308 Short-term investments - 303 - 303 GMIB assets - - 777 777 Other derivative assets - 4 - 4 Total financial assets at fair value, excluding separate accounts $ 774 $ 21,114 $ 1,504 $ 23,392 Financial liabilities at fair value: GMIB liabilities $ - $ - $ 761 $ 761 Other derivative liabilities - 2 - 2 Total financial liabilities at fair value $ - $ 2 $ 761 $ 763 (1) Fixed maturities includes $543 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $14 million of appreciation for securities classified in Level 3. See Note 10 for additional information. Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) (Level 1) (Level 2) (Level 3) Total December 31, 2016 Financial assets at fair value: Fixed maturities: Federal government and agency $ 374 $ 503 $ - $ 877 State and local government - 1,435 - 1,435 Foreign government - 2,066 47 2,113 Corporate - 15,552 498 16,050 Mortgage and other asset-backed - 329 157 486 Total fixed maturities (1) 374 19,885 702 20,961 Equity securities 396 113 74 583 Subtotal 770 19,998 776 21,544 Short-term investments - 691 - 691 GMIB assets - - 799 799 Other derivative assets - 10 - 10 Total financial assets at fair value, excluding separate accounts $ 770 $ 20,699 $ 1,575 $ 23,044 Financial liabilities at fair value: GMIB liabilities $ - $ - $ 780 $ 780 Other derivative liabilities - 5 - 5 Total financial liabilities at fair value $ - $ 5 $ 780 $ 785 (1) Fixed maturities includes $524 million of net appreciation required to adjust future policy benefits for run-off settlement annuity business including $14 million of appreciation for securities classified in Level 3. Level 1 Financial Assets Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets. Assets in Level 1 include actively-traded U.S. government bond s and e xchange-listed equity securities . Given the narrow definition of Level 1 and the Company's investment asset strategy to maximize investment returns, a relatively small portion of the Company's investment assets are classified in this category. Level 2 Financial Assets and Financial Liabilities Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are market observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant. Fixed maturities and equity securities. Approximately 93% of the Company's investments in fixed maturities and equity securities are classified in Level 2 including most public and private corporate debt and equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks. Because many fixed maturities do not trade daily, third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics. When recent trades are not available, pricing models are used to determine these prices. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities, based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data, and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating. Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represent s foreign bonds that are valued using a single unadjusted market-observable input derived by averaging multiple broker-dealer quotes , consistent with local market practice . Short-term investments are carried at fair value which approximates cost. On a regular basis , the Company compares market prices for these securities to recorded amounts to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2. Other derivatives classified in Level 2 represent over-the-counter instruments such as interest rate and foreign currency swap contracts. Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. However, the Company is largely protected by collateral arrangements with counterparties and determined that no adjustment for credit risk was required as of March 31, 2017 or December 31, 2016. Level 2 also inc ludes exchange-traded interest rate swap contracts. Credit risk related to the clearinghouse counterparty and the Company is considered minimal when estimating the fair values of these derivatives because of upfront margin deposits and daily settlement requirements. The nature and use of these other derivatives are described in Note 11. Level 3 Financial Assets an d Financial Liabilities Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. The Company classifies certain newly issued, privately- placed, complex or illiquid securities, as well as assets and liabilities relating to GMIB, in Level 3. A pproximately 3% of fixed maturities and equity securities are priced using significant unobservable inputs and classified in this category . Fair values of mortgage and other asset -backed securities, corporate and government fixed maturities are primarily determined using pricing models that incorporate the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics. For mortgage and other asset-backed securities, inputs and assumptions for pricing may also include collateral attributes and prepayment speeds. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research in its evaluation , as well as th e issuer's financial statements . Quantitative Information about Unobservable Inputs The following tables summarize the fair value and significant unobservable inputs used in pricing the following securities that were developed directly by the Company as of March 31, 2017 and December 31, 2016. The range and weighted average basis point amounts ( “ bps ” ) for fixed maturity spreads (adjustme nt to discount rates) and price-to- earnings multiples for equity investments reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate the se fair values. Mortgage and o ther asset-backed securities . The significant unobservable inputs used to value the following mortgage and other asset-backed securities are liquidity and weighting of credit spreads. When there is limited trading activity for the security, a n adjustment for liquidity is made as of the measurement date that considers current market conditions, issuer circumstances and com plexity of the security structure. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral's characteristics and their proportional cash flows supporting the bond obligations. The resulting wide range of unobservable adjustments in the table below is due to the varying liquidity and quality of the underlying collateral, ranging from high credit quality to below investment grade. Corporate and government fixed maturitie s. The significant unobservable input used to value the following corporate and government fixed maturities is an adjustment for liquidity. When there is limited trading activity for the security, an adjustment is needed to reflect current market conditions and issuer circumstances. Equity securities . The significant unobservable input used to value the following equity securities is a multiple of earnings before interest, taxes, depreciation and amortization ( “ EBITDA ” ). These securities are comprised of private equity investments with limited trading activity and therefore a ratio of EBITDA is used to estimate value based on company circumstances and relative risk characteristics. Unobservable Input Unobservable Adjustment Range (Weighted Average) (Fair value in millions) Fair Value As of March 31, 2017 Fixed maturities: Mortgage and other asset-backed securities $ 155 Liquidity 60 - 340 (90) bps Weighting of credit spreads 170 - 450 (230) bps Corporate and government fixed maturities 498 Liquidity 70 - 2,550 (340) bps Total fixed maturities 653 Equity securities 50 Price-to-EBITDA multiples 5.0 - 12.0 (8.3) Subtotal 703 Securities not priced by the Company (1) 24 Total Level 3 securities $ 727 As of December 31, 2016 Fixed maturities: Mortgage and other asset-backed securities $ 157 Liquidity 60 - 330 (90) bps Weighting of credit spreads 160 - 470 (230) bps Corporate and government fixed maturities 490 Liquidity 80 - 1,300 (340) bps Total fixed maturities 647 Equity securities 74 Price-to-EBITDA multiples 4.2 - 11.6 (8.5) Subtotal 721 Securities not priced by the Company (1) 55 Total Level 3 securities $ 776 (1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company. Significant increases in fixed maturity spreads would result in lower fair value measurement s while decreases in these inputs would result in higher fair value measurement s . Significant decreases in equity price - to - EBITDA multiples would result in lower fair value measurement s while increases in these inputs would result in higher fair value measurement s . Generally, the unobservable inputs are not interrelated and a change in the assumption used for one unobservable input is not accompanied by a change in the other unobservable input. G MIB c ontracts. See discussion in N ote 8 . Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value T he following table s summarize the changes in financial assets and financial liabilities classified in Level 3 for the three months ended March 31, 2017 and 2016 . Separate account asset changes are reported separately under the heading “ s eparate account assets” as the changes in fair values of these assets accrue directly to the policyholder s . Gains and losses reported in th ese table s may include net changes in fair value that are attributable to both observable and unobser vable inputs. Fixed Maturities & Equity Securities GMIB Assets GMIB Liabilities GMIB Net (In millions) For the Three Months Ended March 31, 2017 Balance at January 1, 2017 $ 776 $ 799 $ (780) $ 19 Gains (losses) included in shareholders' net income: GMIB fair value gain/(loss) - (11) 11 - Other 23 1 (4) (3) Total gains (losses) included in shareholders' net income 23 (10) 7 (3) Losses included in other comprehensive income (8) - - - Gains required to adjust future policy benefits for settlement annuities (1) - - - - Purchases, sales and settlements: Purchases 25 - - - Sales (47) - - - Settlements (27) (12) 12 - Total purchases, sales and settlements (49) (12) 12 - Transfers into/(out of) Level 3: Transfers into Level 3 40 - - - Transfers out of Level 3 (55) - - - Total transfers into/(out of) Level 3 (15) - - - Balance at March 31, 2017 $ 727 $ 777 $ (761) $ 16 Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date $ (6) $ (10) $ 7 $ (3) (1) Amounts do not accrue to shareholders. Fixed Maturities & Equity Securities GMIB Assets GMIB Liabilities GMIB Net (In millions) For the Three Months Ended March 31, 2016 Balance at January 1, 2016 $ 726 $ 907 $ (885) $ 22 Gains (losses) included in shareholders' net income: GMIB fair value gain/(loss) - 61 (61) - Other (25) (1) (5) (6) Total gains (losses) included in shareholders' net income (25) 60 (66) (6) Losses included in other comprehensive income - - - - Gains required to adjust future policy benefits for settlement annuities (1) 11 - - - Purchases, sales and settlements: Purchases 24 - - - Sales - - - - Settlements (11) (10) 10 - Total purchases, sales and settlements 13 (10) 10 - Transfers into/(out of) Level 3: Transfers into Level 3 128 - - - Transfers out of Level 3 (61) - - - Total transfers into/(out of) Level 3 67 - - - Balance at March 31, 2016 $ 792 $ 957 $ (941) $ 16 Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date $ (25) $ 60 $ (66) $ (6) (1) Amounts do not accrue to shareholders. As noted in the preceding tables, total gains and losses included in shareholders' net income are reflected in the following captions in the Consolidated Statements of Income: Realized investment gains (losses) and net investment income for amounts related to fixed maturities and equity securities and realized investment gains (losses) for the impact of changes in non-performance risk related to GMIB assets and liabilities, similar to hedge ineffectiveness; and Other operating expenses for amounts related to GMIB assets and liabilities (GMIB fair value gain/loss), except for the impact of changes in non-performance risk. In the tables above, gains and losses included in other comprehensive income are reflected in net unrealized appreciation (depreciation) on securities in the Consolidated Statements of Comprehensive Income. Reclassifications impacting Level 3 financial instruments are reported as transfers into or out of the Level 3 category as of the beginning of the quarter in which the transfer occurs. Therefore gains and losses in income only reflect activity for the period the instrument was classified in Level 3. Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. For the three months ended March 31, 2017 , transfers between Level 2 and Level 3 primarily reflect change s in liquidity and credit risk estimates for certain private placement issuers in the metals and mining, electric and capital goods sectors . For the three months ended March 31, 2016 , transfers between Level 2 and Level 3 primarily reflect changes in liquidity and credit risk estimates for certain private placement issuers in the metals and mining and energy sectors. Separate account assets Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and are excluded from the Company's revenues and expenses. See Note 10 to the Consolidated Financial Statements contained in the Company's 2016 Form 10-K for additional policy information related to separate accounts. As of March 31, 2017 and December 31, 2016, separate account assets were as follows: (In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total March 31, 2017 Guaranteed separate accounts (See Note 16) $ 245 $ 263 $ - $ 508 Non-guaranteed separate accounts (1) 1,435 5,076 330 6,841 Subtotal $ 1,680 $ 5,339 $ 330 7,349 Non-guaranteed separate accounts priced at NAV as a practical expedient (1) 848 Total separate account assets $ 8,197 December 31, 2016 Guaranteed separate accounts (See Note 16) $ 238 $ 262 $ - $ 500 Non-guaranteed separate accounts (1) 1,368 4,885 331 6,584 Subtotal $ 1,606 $ 5,147 $ 331 7,084 Non-guaranteed separate accounts priced at NAV as a practical expedient (1) 856 Total separate account assets $ 7,940 (1) N on-guaranteed separate accounts include d $3.8 billion as of March 31, 2017 and $3.7 billion as of December 31, 2016 in assets supporting the Comp any's pension pla ns, including $ 0.3 b illion classified in Level 3 for both periods and $0.8 billion as of March 31, 2017 and $0.9 billion as of December 31, 2016 priced at net asset value (“ NAV ”) as a practical expedient. Separate account assets in Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include: corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and actively-traded institutional and retail mutual fund investments and separate accounts priced using the daily net asset value that is the exit price. Separate account assets classified in Level 3 primarily support Cigna's pension plans, and include certain newly issued, privately-placed, complex, or illiquid securities that are priced using methods discussed above , as well as commercial mortgage loans that are valued according to the methodologies discussed below . The following tables summarize the changes in separate account assets reported in Level 3 for the three months ended March 31, 2017 a nd 2016 . Three Months Ended March 31, (In millions) 2017 2016 Balance, beginning of period $ 331 $ 297 Policyholder gains (losses) 27 (1) Purchases, sales and settlements: Purchases 10 4 Sales (35) (1) Settlements (1) (2) Total purchases, sales and settlements (26) 1 Transfers into/(out of) Level 3: Transfers into Level 3 - 23 Transfers out of Level 3 (2) (3) Total transfers into/(out of) Level 3 (2) 20 Balance, end of period $ 330 $ 317 Separate account i nvestments in securities partnerships, real estate, and hedge funds are generally valued based on the separate account's ownership share of the equity of the investee ( NAV as a practical expedient), including changes in the fair values of its underlying investments. Substantially all of these assets support the Cigna Pension Plans. The table below provides additional information on these investments. Fair Value as of (In millions) March 31, 2017 December 31, 2016 Unfunded Commitments Redemption Frequency (if currently eligible) (1) Redemption Notice Period (1) Security Partnerships $ 409 $ 424 $ 340 Not applicable Not applicable Real Estate Funds 234 231 - Quarterly 45-90 days Hedge Funds 205 201 - Up to Annually, varying by fund 30-90 days Total $ 848 $ 856 $ 340 The attributes noted are effectiv e as of March 31, 2017 and December 31, 2016. Assets and Liabilities M easured at F air V alue under Certain Conditions Some financial assets and liabilities are not carried at fair value each reporting period, but may be measured using fair value only under certain conditions, such as investments in real estate , partnership entities and commercial mortgage loans when they become impaired. Impaired values for these asset types classified as Level 3 representing less than 1% of total investments , were written down to their fair values , resulting in realized investment losses of $1 million after- tax for the three months ended March 31, 2017 . There were no impaired real estate entities or commercial mortgage loans written down to fair value for the three months ended March 31, 2016 . Fair Value Disclosures for Financial Instruments Not Carried at Fair Value The following table includes the Company's financial instruments not recorded at fair value that are subject to fai r value disclosure requirements at March 31, 2017 and December 31, 2016. In addition to universal life products and capital leases, f inancial instruments that are carried in the Company's Consolidated Financial Statements at amounts that approximate fair value are excluded from the following table. March 31, 2017 December 31, 2016 (In millions) Classification in the Fair Value Hierarchy Fair Value Carrying Value Fair Value Carrying Value Commercial mortgage loans Level 3 $ 1,776 $ 1,752 $ 1,682 $ 1,666 Contractholder deposit funds, excluding universal life products Level 3 $ 1,206 $ 1,203 $ 1,215 $ 1,212 Long-term debt, including current maturities, excluding capital leases Level 2 $ 5,331 $ 4,735 $ 5,460 $ 4,991 The fair values for all financial instruments presented in the table above have been estimated using market information when available. The following valuation methodologies and inputs are used by the Company to determine fair value. Commercial mortgage loans . The Company estimates the fair value of commercial mortgage loans generally by discounting the contractual cash flows at estimated market interest rates that reflect the Company's assessment of the credit quality of the loans. Market interest rates are derived by calculating the appropriate spread over comparable U.S. Treasury rates based on the property type, quality rating and average life of the loan. The quality ratings reflec t the relative risk of the loan co nsidering debt service coverage, the loan -to- value ratio and other factors . Fair values of impaired mortgage loans are based on the estimated fair value of the underlying collateral generally determined using an internal discounted cash flow model. The fair value measurements were classified in Level 3 because the cash flow models incorporate significant unobservable inputs. Contractholder deposit funds, excluding universal life products . G enerally, these funds do not have stated maturities. Approximately 70 % of these balances can be withdrawn by the customer at any time without prior notice or penalty. The fair value for these contracts is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Most of the remaining contractholder deposit funds are reinsured by the buyers of the individual life and annuity and retirement benefits businesses. The fair value for these contracts is determined using the fair value of these buyers' assets supporting these reinsured contracts. The Company had reinsurance recoverable s equal to the carrying value of these reinsured contracts . These instruments were classified in Level 3 because certain inputs are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Long-term debt , including current maturities , excluding capital leases . The fair value of long-term debt is based on quoted market prices for recent trades . W hen quoted market prices are not available, fair value is estimated using a discounted cash flow analysis and the Company's estimated current borrowing rate for debt of similar terms and remaining maturities. These measurements were classified in Level 2 because the fair values are based on quoted market prices or other inputs that are market observable or can be corroborated by market data . Fair values of off-balance sheet financial instruments were not material as of March 31, 2017 and December 31, 2016 . |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
Investments: | |
Investments | Note 10 — Investments Cigna's investment portfolio consists of a broad range of investments including fixed maturities and equity securities, commercial mortgage loans, other long-term investments and short-term investments. The sections below provide more detail regarding our investment balances, net investment income and realized investment gains and losses. See Note 9 for information about the valuation of the Company's investment portfolio. See Note 11 to the Consolidated Financial Statements contained in the Company's 2016 Form 10-K for accounting policies for each investment type. Investment Portfolio Fixed Maturities and Equity Securities The amortized cost and fair value by contractual maturity periods for fixed maturities were as follows at March 31, 2017 : Amortized Fair (In millions) Cost Value Due in one year or less $ 1,405 $ 1,416 Due after one year through five years 6,717 6,976 Due after five years through ten years 8,481 8,667 Due after ten years 3,586 4,196 Mortgage and other asset-backed securities 450 479 Total fixed maturities $ 20,639 $ 21,734 Actual maturities of these securities could differ from their contractual maturities used in the table above. This could occur because issuers may have the right to call or prepay obligations, with or without penalties . Gross unrealized appre ciation (depreciation) on fixed maturities by type of issuer is shown below. Gross Gross Unrealized Unrealized Amortized Appre- Depre- Fair Cost ciation ciation Value (In millions) March 31, 2017 Federal government and agency $ 667 $ 233 $ (3) $ 897 State and local government 1,324 100 (5) 1,419 Foreign government 2,206 122 (16) 2,312 Corporate 15,992 744 (109) 16,627 Mortgage and other asset-backed 450 32 (3) 479 Total fixed maturities $ 20,639 $ 1,231 $ (136) $ 21,734 (In millions) December 31, 2016 Federal government and agency $ 658 $ 223 $ (4) $ 877 State and local government 1,342 99 (6) 1,435 Foreign government 1,998 129 (14) 2,113 Corporate 15,483 716 (149) 16,050 Mortgage and other asset-backed 461 29 (4) 486 Total fixed maturities $ 19,942 $ 1,196 $ (177) $ 20,961 The above table includes investments with a fair value of $2.7 billion at March 31, 2017 and December 31, 2016 s upporting liabilities of the Company's run-off settlement annuity business . These investments had gross unrealized a ppreciation of $ 555 million and gross unrealized depreciation of $12 million at March 31, 2017 , compared with gross unrealized appreciation of $539 million and gross unrealized depreciation of $15 million at December 31, 2016. Review of declines in fair value . Management reviews fixed maturities with a decline in fair value from cost for impairment based on criteria that include: length of time and severity of decline; financial health and specific near term prospects of the issuer; changes in the regulatory, economic or general market environment of the issuer's industry or geographic region; and the Company's intent to sell or the likelihood of a required sale prior to expected recovery. The table below summarizes fixed maturities in an unrealized loss position at March 31, 2017 by the length of time these securities have been in an unrealized loss position . These fixed maturities were primarily corporate securities with a decline in fair value that reflects an increase in market yields since purchase. March 31, 2017 Fair Amortized Unrealized Number (Dollars in millions) Value Cost Depreciation of Issues One year or less: Investment grade $ 3,960 $ 4,067 $ (107) 870 Below investment grade $ 619 $ 630 $ (11) 532 More than one year: Investment grade $ 265 $ 276 $ (11) 47 Below investment grade $ 116 $ 123 $ (7) 21 As of March 31, 2017 , equity securities also included an investment of approximately $400 million in an exchange traded fund (“ETF”) with a gross unrealized loss of $4 million . There were no other available for sale equity securities with a significant unrealized loss reflected in accumulated other com prehensive income at March 31, 2017 . Equity securities include hybrid investments consisting of preferred stock with call features that are carried at fair value with changes in fair value reported in other realized investment gains (losses) and dividends reported in net investment income. As of March 31, 2017 and December 31, 2016, fair values of these securities were $36 million and amortized cost was $49 million. Commercial Mortgage Loans Mortgage loans held by the Company are made exclusively to commercial borrowers and are diversified by property type, location and borrower. Loans are generally issued at a fixed rate of interest and are secured by high quality, primarily completed and substantially leased operating p roperties. Credit quality . The Company regularly evaluates and monitors credit risk, beginning with the initial underwriting of a mortgage loan and continuing throughout the i nvestment holding period. Mortgage origination professionals employ an internal credit quality rating system designed to evaluate the relative risk of the transaction at origination that is then updated each year as part of the annual portfolio loan review. The Company evaluates and monitors credit quality on an ongoing basis, classifying each loan as a loan in good standing, potential problem loan or problem loan. Quality ratings are based on our evaluation of a number of key inputs related to the loan including real estate market-related factors such as rental rates and vacancies, and property-specific inputs such as growth rate assumptions and lease rollover statistics. However, the two most significant contributors to the credit quality rating are the debt service coverage and loan-to-value ratios. The debt service coverage ratio measures the amount of property cash flow available to meet annual interest and principal payments on the debt , with a ratio below 1.0 indicat ing that there is not enough cash flow to cover the required loan payments. The loan-to-value ratio, commonly expressed as a percentage, compares the amount of the loan to the fair value of the underlying property collaterali zing the loan. The following table s summarize the credit risk profile of the Company's commercial mortgage loan portfolio based on loan-to-value and debt service coverage ratios, as of March 31, 2017 and December 31, 2016: Debt Service Coverage Ratio 1.30x or 1.20x to 1.10x to 1.00x to Less than Loan-to-Value Ratios Greater 1.29x 1.19x 1.09x 1.00x Total (In millions) March 31, 2017 Below 50% $ 331 $ 15 $ - $ - $ - $ 346 50% to 59% 516 46 42 30 - 634 60% to 69% 687 14 - - - 701 70% to 79% - - 30 - 35 65 80% to 89% - - - - - - 90% to 100% - - - - 6 6 Total $ 1,534 $ 75 $ 72 $ 30 $ 41 $ 1,752 (In millions) December 31, 2016 Below 50% $ 335 $ 15 $ - $ - $ - $ 350 50% to 59% 517 46 - 30 - 593 60% to 69% 624 14 - - - 638 70% to 79% - - 29 - 35 64 80% to 89% - - - - - - 90% to 100% - - - - 21 21 Total $ 1,476 $ 75 $ 29 $ 30 $ 56 $ 1,666 The Company's annual in-depth review of its commercial mortgage loan investments is the primary mechanism for identifying emerging risks in the portfolio. The most recent review was completed by the Company's investment professionals in the second quarter of 201 6 and included an analysis of each underlying property's most recent annual financial statements, rent rolls, operating plans, budgets, a physical inspection of the property and other pertinent factors. Based on historical results, current leases, lease expirations and rental conditions in each market, the Company estimates the current year and future stabilized property income and fair value and categorizes the investments as loans in good standing, potential problem loans or problem loans. The results of the 2016 review showed improvement from the prior review in each of the key metrics and confirmed the overall strength of the portfolio. The Company will reevaluate a loan's credit quality between annual reviews if new property information is received or an event such as delinquency or a borrower's request for restructure causes management to believe that the Company's estimate of financial performance, fair value or the risk profile of the underlying property has been impacted. T he portfolio's avera ge loan-to-value ratio remained at 57 % at March 31, 2017 and the portfolio's average debt service cove rage ratio remained at 1.95 at March 31, 2017 compared with December 31, 2016 . Potential problem mortgage loans are considered current (no payment is more than 59 days past due), but they exhibit certain characteristics that increase the likelihood of future default . The characteristics management considers include , but are not limited to, the deterioration of debt service coverage below 1.0, estimated loan-to-value ratios increasing to 100% or more, downgrade in quality rating and request s from the borrower for restructuring. In addition, loans are considered potential problems if principal or interest payments are past due by more than 30 but less than 60 days. Problem mortgage loans are either in default by 60 days or more or have been restructured as to terms that could include concessions on interest rate, principal payment or maturity date. The Company monitors each problem and potential problem mortgage loan on an ongoing basis, and updates the loan categorization and quality rating when warranted. Problem and potential problem mortgage loans, net of valuation reserves, totaled $6 million at March 31, 2017 and $21 million at December 31, 2016. Impaired commercial mortgage loans. A commercial mortgage loan is considered impaired when it is probable that the Company will not collect all amounts due according to the terms of the original loan agreement. These loans are included in either problem or potential problem loans. The Company monitors credit risk and assesses the impairment of loans individually and on a consistent basis for all loans in the portfolio. Impaired loans are carried at the lower of unpaid principal balance or the fair value of the underlying real estate. Certain commercial mortgage loans without valuation reserves are considered impaired because the Company will not collect all interest due according to the terms of the original agreements; however, the Company expects to recover the unpaid principal because it is less than the fair value of the underlying real estate. T he Company recognizes interest income on impaired mortgage loans only when payment is actually received. The carrying value of the Company's impaired commercial mortgage loans and related valuation reserves were as follows: March 31, 2017 December 31, 2016 (In millions) Gross Reserves Net Gross Reserves Net Impaired commercial mortgage loans with valuation reserves $ 9 $ (3) $ 6 $ 26 $ (5) $ 21 Impaired commercial mortgage loans without valuation reserves - - - - - - Total impaired commercial mortgage loans $ 9 $ (3) $ 6 $ 26 $ (5) $ 21 For the three months ended March 31, 2017 , the average recorded investment in impaired loans decreased to $18 million in 2017 compared with $112 million for the three months ended March 31, 2016 , primarily due to the foreclosure of one impaired loan and the full payoff of another. Changes in valuation reserves for commercial mortgage loans were not material for the three months ended March 31, 2017 and 2016. Short-T erm Investments and Cash E quivalents Short-term investments and cash equivalents include d corporate securities of $2.4 b illion , federal government securities of $597 million and money market funds of $17 million as of March 31, 2017 . The Company's short-term inve stments and cash equivalents as of December 31, 2016 inclu ded corporate securities of $2.2 b illion, federal government se curities of $378 millio n and money market funds of $11 million. Realized Investment Gains and Losses The following realized gains and (losses) on investments exclude amounts required to adjust future policy benefits for the run- off settlement annuity business. Three Months Ended March 31, (In millions) 2017 2016 Fixed maturities $ 2 $ (18) Equity securities 33 (10) Other investments, including derivatives 11 (4) Realized investment gains (losses) before income taxes 46 (32) Less income taxes (benefits) 15 (11) Net realized investment gains (losses) $ 31 $ (21) Included in these realized investment gains (losses) were pre-tax asset write-downs as follows: Three Months Ended March 31, (In millions) 2017 2016 Other-than-temporary impairments on debt securities: Credit-related $ (5) $ (18) Non credit-related (1) (2) (9) Total other-than-temporary impairments on debt securities (7) (27) Other asset write-downs (2) (3) (9) Total write-downs $ (10) $ (36) (1) These write-downs pertain to other-than-temporary declines in fair values due to increases in market yields (widening of credit spreads) for certain below investment grade fixed maturities with an increased probability of sales activity prior to recovery of their amortized cost basis. (2) Other asset write-downs include other-than-temporary declines in fair values of equity securities and asset write-downs related to real estate investments. The following table presents sales information for available-for-sale fixed maturities and equity securities . Gross gains on sales and gross losses on sales exclude amounts required to adjust future policy benefits for the run-off settlement annuity business. Three Months Ended March 31, (In millions) 2017 2016 Proceeds from sales $ 414 $ 361 Gross gains on sales $ 47 $ 12 Gross losses on sales $ 2 $ 5 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 11 — Derivative Financial Instruments The Company uses derivative financial instruments to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and contractholder liabilities (such as paying claims, investment returns and withdrawals) and to hedge interest rate risk of its long- term debt . The Company has written and purchased G MIB reinsurance contracts in its r un-off r einsurance business that are accounted for as free standing derivatives and discussed in Note 8 . Derivatives in the Company's separate accounts are excluded from the following discussion because associated gains and losses generally accrue directly to separate account policyholders. Accounting policy. The Company applies hedge accounting when derivatives are designated, qualified and highly effective as hedges. Effectiveness is formally assessed and documented at inception and each period throughout the life of a hedge using various quantitative methods appropriate for each hedge, including regression analysis and dollar offset. Under hedge accounting, the changes in fair value of the derivative and the hedged risk are generally recognized together and offset each other when reported in shareholders' net income. Changes in the fair value of a derivative instrument may not always equal changes in the fair value of the hedged item. This is referred to as ''hedge ineffectiveness'' and is generally recorded in realized investment gains and losses. In the event of an early hedge termination, the changes in fair value of derivatives that qualified for hedge accounting are reported in shareholders' net income, generally as a part of realized investment gains and losses. See Note 9 for further information on our policies for determining fair value. Derivative cash flows are generally reported in operating activities. The following tables provide information on the Company's specific applications of derivative financial instruments during the periods ended March 31, 2017 and December 31, 2016 . Fair Value Hedge of Long-Term Corporate Debt Notional Value (in millions) Type of instrument. Interest rate swap contracts March 31, 2017 December 31, 2016 $ 750 $ 750 Purpose. To convert a portion of the interest rate exposure on the Company's long-term debt from fixed to variable rates. This more closely aligns the Company's interest expense with the interest income received on its cash equivalent and short-term investment balances. The variable rates are benchmarked to LIBOR. Terms of derivative instruments. The Company provides upfront margin and settles fair value changes and net interest between variable and fixed rates daily with a central clearinghouse. Accounting. Using fair value hedge accounting, the fair values of the swap contracts are reported in other assets, including other intangibles, or accounts payable, accrued expenses, and other liabilities. The critical terms of these swaps match those of the long-term debt being hedged. As a result, the carrying value of the hedged debt is adjusted to reflect changes in its fair value driven by LIBOR. The effects of those adjustments on other operating expenses are offset by the effects of corresponding changes in the swaps' fair value. The net impact from the hedge reported in other operating expenses reflects interest expense on the hedged debt at the variable interest rate. Cash Flow Hedges of Fixed Maturity Bonds Notional Value (in millions) Type of instrument. Foreign currency swap contracts March 31, 2017 December 31, 2016 $ 31 $ 55 Purpose. To hedge the foreign currency cash flows of its fixed maturity bonds to match associated insurance liabilities. Terms of derivative instruments. The Company periodically exchanges cash flows between two currencies for both principal and interest. Foreign currency swaps are Canadian dollars and Japanese yen and have terms for periods of up to four years. Accounting. Using cash flow hedge accounting, fair values are reported in other long-term investments or accounts payable, accrued expenses, and other liabilities. Changes in fair values are reported in accumulated other comprehensive income and amortized into net investment income or other realized investment gains and losses as interest or principal payments are received. Fair Value Hedges of Fixed Maturity Bonds Notional Value (in millions) Type of instrument. Foreign currency swap contracts March 31, 2017 December 31, 2016 $ 87 $ 78 Purpose. To hedge the foreign exchange related changes in fair values of the Company's fixed maturity bonds. Terms of derivative instruments. The Company periodically exchanges cash flows between two currencies for both principal and interest. Foreign currency swaps are Euros and British pounds and have terms for periods of up to nine years. Accounting. Using fair value hedge accounting, fair values are reported in other long-term investments or accounts payable, accrued expenses, and other liabilities. Changes in fair values of the swap contracts, as well as changes in the fair values of the hedged bonds attributable to the hedged risk are reported in other realized investment gains and losses. Economic Hedges of a Fixed Maturity Bond Portfolio Notional Value (in millions) Type of instrument. Foreign currency forward contracts March 31, 2017 December 31, 2016 $ 150 $ 149 Purpose. To hedge the foreign exchange related changes in fair values of a U.S. dollar-denominated fixed maturity bond portfolio to reflect the local currency for one of the Company's foreign subsidiaries. Terms of derivative instruments. The Company agrees to purchase South Korean won in exchange for U.S. dollars at a future date, generally within three months from the contracts' trade dates. Accounting. As these arrangements were not designated as accounting hedges, fair values are reported in short-term investments or accounts payable, accrued expenses, and other liabilities, and changes in fair values are reported in other realized investment gains and losses. As of March 31, 2017 and December 31, 2016, and for the three m onths ended March 31, 2017 and 2016 , the effects of these derivative instruments on the Consolidated Financial Statements , including the amounts of gains or losses reclassified from accumulated other comprehensive income into shareholders' net income, were not material. No material amounts were excluded from the assessment of hedge effectiveness and no significant gains or losses were recognized due to hedge ineffectiveness. Collateral and termination feature s. T he Company routinely monitors exposure to credit risk associated with derivatives and diversifies the portfolio among approved dealers of high credit quality to minimize this risk. As of March 31, 2017 , the Company had $13 million in cash on deposit representing the upfront margin requi red for the Company's centrally- cleared derivative instruments. Certain of the Company's over-the-counter derivative instruments contain provisions requiring either the Company or the counterparty to post collateral or demand immediate payment depending on the amount of the net liability position and predefined financial strength or credit rating thresholds. Collateral posting requirements vary by counterparty. The net asset or liability positions of these derivatives were not material as of March 31, 2017 or December 31, 2016 . |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2017 | |
Variable Interest Entities [Abstract] | |
Variable interest entities | Note 12 – Variable Interest Entities When the Company becomes involved with a variable interest entity, as well as when the re is a change in the Company's involvement with an entity, the Company evaluates the following to determine if it is the primary beneficiary and must consolidate the entity : the structure and purpose of the entity; the risks and rewards created by and shared through the entity; and the Company's ability to direct its activities, receive its benefits and absorb its losses relative to the other partie s involved with the entity including its sponsors, equity holders, guarantors, creditors and servicers. The Company owns interests in security and real estate limited partnerships defined as variable interest entities that invest in the equity or mezzanine debt of privately held companies and real estate properties. General partners unaffiliated with the Company control decisions that most significantly impact the partnership's operations and the limited partners do not have substantive kick-out or participating rights. The Company's maximum exposure to these entities of $2.2 billion across approximately 100 li mited partnerships as of March 31, 2017 includes $1.1 b illion reported in other long-term investments and commitments to contribute an additional $1.1 b illion. The Company's non-controlling interest in each of these limited partnerships is generally less than 10 % of the partnership ownership interests . In the normal course of its investing activities, the Company also makes passive investments in certain asset-backed and corporate securities that are issued by variable interest entities whose sponsors or issuers are unaffiliated with the Company . Th e Company receives fixed-rate cash flows from these investments and the maximum potential exposure to loss is limited to the carrying amount of $0.5 b illion as of March 31, 2017 , that is reported in fixed maturities. The Company's combined ownership interests are insignificant relative to the total principal amount s issued by these entities. The Company is also involved in real estate joint ventures with carrying values of $ 0.2 billion where all decisions significantly affecting the entities' economic performance are subject to unanimous approval by the equity holders. As a result, the Company determined that the power over these entities is shared equally, and there is no primary beneficiary. The Company's maximum exposure to loss was approximately equal to its carrying value that is reported in other long-term investments. To provide certain services to its Medicare Advantage customers, the Company contracts with independent physician associations (“IPAs”) that are variable interest entities. Physicians provide health care services to Medicare Advantage customers and the Company provides medical management and administrative services to the IPAs. The Company's maximum exposure to loss related to the IPA arrangements is limited to their liability for incurred but not reported medical costs for the Company's Medicare Advantage customers. These liabilities are not material and are generally secured by deposits maintained by the IPAs. The Company is not the primary beneficiary of any of the variable interest entities described above and does not consolidate these entities because either: it ha s no power to direct the activities that most significantly impact the entities' economic performance; or it ha s neither the right to receive benefits nor the obligation to absorb losses that could be significant to these variable interest entities. The Company has not provided, and does not intend to provide, financial support to these entities that it is not contractually required to provide. The Company performs ongoing qualitative analyses of its involvement with these variable interest entities to determine if consolidation is required. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 13 — Accumulated Other Comprehensive Income ( Loss ) Accumulated other comprehensive income ( loss ) excludes amounts required to adjust future policy benefits for the run-off settlement annuity business and a portion of deferred acquisition costs associated with the corporate owned life insurance business . Changes in the components of accumulated other comprehensive income ( loss ) were as follows: Tax (Expense) After- (In millions) Pre-Tax Benefit Tax Three Months Ended March 31, 2017 Net unrealized appreciation, securities, January 1, $ 542 $ (180) $ 362 Unrealized appreciation on securities arising during the period 53 (24) 29 Reclassification adjustment for (gains) included in shareholders' net income (realized investment gains) (35) 13 (22) Net unrealized appreciation, securities arising during the period 18 (11) 7 Net unrealized appreciation, securities, March 31, $ 560 $ (191) $ 369 Net unrealized appreciation, derivatives, January 1, $ 4 $ (1) $ 3 Reclassification adjustment for (gains) included in shareholders' net income (net realized investment gains) (4) 1 (3) Net unrealized appreciation, derivatives, March 31, $ - $ - $ - Net translation of foreign currencies, January 1, $ (390) $ 21 $ (369) Net translation of foreign currencies arising during the period 111 1 112 Net translation of foreign currencies, March 31, $ (279) $ 22 $ (257) Postretirement benefits liability adjustment, January 1, $ (2,120) $ 742 $ (1,378) Reclassification adjustment for amortization of net losses from past experience and prior service costs (other operating expenses) 15 (5) 10 Reclassification adjustment for settlement loss (other operating expenses) 6 (2) 4 Net postretirement benefits liability adjustment arising during the period 21 (7) 14 Postretirement benefits liability adjustment, March 31, $ (2,099) $ 735 $ (1,364) 2016 Net unrealized appreciation, securities, January 1, $ 612 $ (194) $ 418 Unrealized appreciation on securities arising during the period 227 (72) 155 Reclassification adjustment for losses included in shareholders' net income (realized investment gains) 28 (10) 18 Net unrealized appreciation, securities arising during the period 255 (82) 173 Net unrealized appreciation, securities, March 31, $ 867 $ (276) $ 591 Net unrealized appreciation, derivatives, January 1, $ 10 $ (3) $ 7 Unrealized (depreciation), derivatives arising during the period (4) 1 (3) Net unrealized appreciation, derivatives, March 31, $ 6 $ (2) $ 4 Net translation of foreign currencies, January 1, $ (295) $ 21 $ (274) Net translation of foreign currencies arising during the period 83 (2) 81 Net translation of foreign currencies, March 31, $ (212) $ 19 $ (193) Postretirement benefits liability adjustment, January 1, $ (2,155) $ 754 $ (1,401) Reclassification adjustment for amortization of net losses from past experience and prior service costs (other operating expenses) 16 (5) 11 Postretirement benefits liability adjustment, March 31, $ (2,139) $ 749 $ (1,390) |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | 3 Months Ended |
Mar. 31, 2017 | |
Pension and Other Postretirement Benefit Plans [Abstract] | |
Pension and Other Postretirement Benefit Plans | Note 14 — Pension and Other Postretirement Benefit Plans The Company and certain of its subsidiaries provide pension, health care and life insurance defined benefits to eligible retired employees, spouses and other eligible dependents through various domestic and foreign plans. The effect of its foreign pension and other postretirement benefit plans is immaterial to the Company's results of operations, liquidity and financial position. The Company froze its defined benefit postretirement medical plan in 2013 and its primary domestic pension plans in 2009. As further discussed in Note 16 , the Company and the Cigna Pension Plan are defendants in a class action lawsuit that has yet to be resolved. When the parties agree on a final plan amendment, the pension benefit obligation will be updated to reflect additional benefits resulting from this litigation. For the three months ended March 31, 2017 , the Company's unrecognized actuarial losses and prior service costs (reported in accumulated other comprehensive income) decreased by $21 million pre-tax in the aggregate ($14 million after-tax) resulting in an increase in shareholders' equity. This change was primarily the result of amortization . Pension and Other Postretirement B enefits . Components of net pension and net other postretirement benefit costs were as follows: Pension Benefits Other Postretirement Benefits Three Months Ended Three Months Ended March 31, March 31, (In millions) 2017 2016 2017 2016 Interest cost $ 48 $ 50 $ 3 $ 3 Expected long-term return on plan assets (65) (62) - - Amortization of: Net loss from past experience 16 17 - - Prior service cost - - (1) (1) Settlement loss 6 - - - Net cost $ 5 $ 5 $ 2 $ 2 The Company funds its domestic qualified pension plans at least at the minimum amount required by the Pension Protection Act of 2006. During the three months ended March 31, 2017 , the Company made a voluntary pension contribution of $ 150 million. N o additional contributions are required for the remainder of 2017 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | Note 15 ― Income Taxes A. Income Tax Expense The consolidated effective tax rate decreased to 33.4 % for the three months ended March 31, 2017 compared with 37.2 % for the three months ended 2016 due to the moratorium in 2017 on the health insurance industry tax that is not deductible fo r federal income tax purposes . The Company maintain s a capital management strategy to retain overseas a significant portion of the earnings from its foreign operations. As of March 31, 2017 , undistributed earnings were approximately $2.7 billion. These undistributed earnings are deployed outside of the U.S. predominantly in support of the liquidity and regulatory capital requirements of our foreign operations. The Company does not intend to repatriate these earnings to the U.S. and as a result, income taxes are provided using the respective foreign jurisdictions' tax rate. If the Company had intended to repatriate these foreign earnings to the U.S., the Company's C onsolidated B alance S heet s would have included an additional $ 362 million of deferred tax liabilities as of March 31, 2017 . B. Unrecognized Tax Benefits Changes in unrecognized tax benefits were immaterial for the three months ended March 31, 2017 . |
Contingencies and Other Matters
Contingencies and Other Matters | 3 Months Ended |
Mar. 31, 2017 | |
Contingencies And Other Matters [Abstract] | |
Contingencies and Other Matters | Note 16 ― Contingencies and Other Matters The Company, through its subsidiaries, is contingently liable for various guarantees provided in the ordinary course of business. Financial Guarantees: Retiree and Life Insurance Benefits Separate account assets are contractholder funds maintained in accounts with specific investment objectives. The Company records separate account liabilities equal to separate account assets. In certain cases, the Company guarantees a minimum level of benefits for retirement and insurance contracts written in separate accounts. The Company establishes an additional liability if management believes that the Company will be required to make a payment under these guarantees. The Company guarantees that separate account assets will be sufficient to pay certain life insurance or retiree benefits. The sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations. This percentage varies depending on the asset class within a sponsoring employer's portfolio (for example, a bond fund would require a lower percentage than a riskier equity fund) and thus will vary as the composition of the portfolio changes. If employers do not maintain the required levels of separate account assets, the Company or an affiliate of the buyer of the retirement benefits business ( Prudential Retirement Insurance and Annuity Company ) has the right to redirect the management of the related assets to provide for benefit payments. As of March 31, 2017 , employers maintained assets that exceeded the benefit obligations. Benefit obligations under these arrangements were $ 488 million as of March 31, 2017 and approximately 13 % of these are reinsured by an affiliate of the buyer of the retirement benefits business. The remaining guarantees are provided by the Company with minimal reinsurance from third parties. There were no additional liabilities required for these guarantees as of March 31, 2017 . Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value hierarchy. See Note 9 for further information on the fair value hierarchy. The Company does not expect that these financial guarantees will have a material effect on the Company's consolidated results of operations, liquidity or financial condition. G MIB Contracts See Note 8 for discussion. C. Certain Other Guarantees The Compa ny had financial guarantees and indemnification obligations to lenders of approximately $1 53 million as of March 31, 2017, related to borrowings by certain real estate joint ventures that the Company either records as an investment or consolidates. These borrowings, that are both recourse and nonrecourse to the Company, are secured by the joint ventures' real estate properties with fair values in excess of the loan amounts and mature at various dates beginning in 2018 through 2021. The Company's indemnification obligations would require payment to lenders for any actual damages resulting from certain acts such as unauthorized ownership transfers, misappropriation of rental payments by others or environmental damages. Based on initial and ongoing reviews of property management and operations, the Company does not expect that payments will be required under these financial guarantees or indemnification obligations. Any payments that might be required could be recovered through a refinancing or sale of the assets. In some cases, the Company also has recourse to partners for their proportionate share of amounts paid. There were no liabilities required for these financial guarantee s and indemnification obligations as of March 31, 2017. As of March 31, 2017 , the Company guaranteed that it would compensate the lessors for a shortfall of up to $32 million in the market value of certain leased equipment at the end of its lease s . Guarantees of $25 million expire in 202 2 and $7 million expire in 2026 . The Company had liabilities for these guarantees of $3 million as of March 31, 2017 . The Company does not expect that these guarantees will have a material adverse effect on the Company's consolidated results of operations, financial condition or liquidity. The Company had indemnification obligations as of March 31, 2017 in connection with acquisition and disposition transactions. These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, the filing of tax returns, compliance with law or the identification of outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable. The Company does not believe that it is possible to determine the maximum potential amount due under these obligations, because not all amounts due under these indemnification obligations are subject to limitation. There were no liabilities required for these indemnification obligations as of March 31, 2017 . Guaranty Fund Assessments The Company operates in a regulatory environment that may require its participation in assessments under state insurance guaranty association laws. The Company's exposure to assessments for certain obligations of insolvent insurance companies to policyholders and claimants is based on its share of business written in the relevant jurisdictions. O n March 1, 2017, the Commonwealth C ourt of Pennsylvania entered an order of liquidation of Penn Treaty Network America Insurance Company, together with its subsidiary American Network Insurance Company (collectively “Penn Treaty” , a long-term care insurance carrier ) , triggering guaranty fund coverage and accrual of a liability . For the three months ended March 31, 2017, t he Company recorded in operating expenses $ 129 million pre-tax ($83 million after-tax), representing its estimate of future assessment s on a discounted basis. Amounts recorded by segment were: Global Health Care, $ 106 million pre-tax ($ 68 million after-tax) and Group Disability and Life, $ 23 million pre-tax ($ 15 million after-tax). Th e s e estimate s include small reduction s for premium tax refunds for insurance contracts currently written . This assessment is expected to be updated in future periods for changes in the estimate o f the insolvency. In addition, a portion of this assessment is expected to be offset in the future by premium tax credits that will be recognized in the period received. Legal and Regulatory Matters The Company is routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal matters arising, for the most part, in the ordinary course of managing a global health services business. These actions may include benefit disputes, breach of contract claims, tort claims, provider disputes, disputes regarding reinsurance arrangements, employment and employment discrimination-related suits, employee benefit claims, wage and hour claims, privacy, claims arising from consumer protection laws, intellectual property claims and real estate-related disputes. There are currently, and may be in the future, attempts to bring class action lawsuits against the industry. The Company also is regularly engaged in Internal Revenue Service (“ IRS ”) audits and may be subject to examinations by various state and foreign taxing authorities. Disputed income tax matters arising from these examinations, including those resulting in litigation, are accounted for under GAAP guidance for uncertain tax positions. Further information on income tax matters can be found in Note 15 . The business of administering and insuring health services programs, particularly health care and group insurance programs, is heavily regulated by federal and state laws and administrative agencies, such as state departments of insurance and the U.S. Departments of Health and Human Services, Treasury, Labor and Justice, as well as the courts. Health care regulation and legislation in its various forms, including the Health Care Reform Act, other regulatory reform initiatives, such as those relating to Medicare programs, or additional changes in existing laws or regulations or their interpretations, could have a material adverse effect on the Company's business, results of operations and financial condition. In addition, there is heightened review by federal and state regulators of the health care, disability and life insurance industry business and related reporting practices. Cigna is frequently the subject of regulatory market conduct reviews and other examinations of its business and reporting practices, audits and investigations by state insurance and health and welfare departments, state attorneys general, the Centers for Medicare and Medicaid Services (“ CMS ”) and the Office of Inspector General (“OIG”). With respect to Cigna's Medicare Advantage business, CMS and OIG perform audits to determine a health plan's compliance with federal regulations and contractual obligations, including compliance with proper coding practices (sometimes referred to as Risk Adjustment Data Validation audits or RADV audits), that may result in retrospective adjustments to payments made to health plans. Regulatory actions can result in assessments, civil or criminal fines or penalties or other sanctions, including loss of licensing or exclusion from participating in government programs. In December 2016, the Company received a Civil Investigative Demand from the Civil Division of the U.S. Department of Justice relating to our Medicare Part C and D risk adjustment compliance activities and business processes, particularly as they relate to our review of medical records conducted as part of our data and payment accuracy compliance efforts. We believe that this request for information is in connection with a broader review of Medicare Risk Adjustment generally that includes a number of Medicare Advantage plans, providers and vendors. We intend to cooperate with and voluntarily respond to the information request. As a global company, Cigna is also subject to the laws, regulations and rules of the foreign jurisdictions in which it conducts business. Foreign laws and rules, and regulatory audit and investigation practices, may differ from or be more stringent than, similar requirements in the U.S. Regulation, legislation and judicial decisions have resulted in changes to industry and the Company's business practices, financial liability or other sanctions and will continue to do so in the future. When the Company (in the course of its regular review of pending litigation and legal or regulatory matters) has determined that a material loss is reasonably possible, the matter is disclosed. Such matters are described below. In accordance with GAAP, when litigation and regulatory matters present loss contingencies that are both probable and estimable, the Company accrues the estimated loss by a charge to shareholders' net income. The amount accrued represents the Company's best estimate of the probable loss at the time. If only a range of estimated losses can be determined, the Company accrues an amount within the range that, in the Company's judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, the Company accrues the minimum amount of the range. In cases when the Company has accrued an estimated loss, the accrued amount may differ materially from the ultimate amount of the loss. In many proceedings, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount or range of any loss. The Company provides disclosure in the aggregate for material pending litigation and legal or regulatory matters, including accruals, range of loss, or a statement that such information cannot be estimated. As a litigation or regulatory matter develops, the Company monitors the matter for further developments that could affect the amount previously accrued, if any, and updates such amount accrued or disclosures previously provided as appropriate. The outcome of litigation and other legal or regulatory matters is always uncertain, and unfavorable outcomes that are not justified by the evidence or existing law can occur. The Company believes that it has valid defenses to the matters pending against it and is defending itself vigorously. Except as otherwise noted, the Company believes that the legal actions, regulatory matters, proceedings and investigations currently pending against it should not have a material adverse effect on the Company's results of operations, financial condition or liquidity based upon our current knowledge and taking into consideration current accruals. The Company had pre-tax reserves as of March 31, 2017 of approximately $190 million ($125 million after-tax) for the matters discussed below under “Litigation Matters.” Due to numerous uncertain factors presented in these cases, it is not possible to estimate an aggregate range of loss (if any) for these matters at this time. In light of the uncertainties involved in these matters, there is no assurance that their ultimate resolution will not exceed the amounts currently accrued by the Company. An adverse outcome in one or more of these matters could be material to the Company's results of operations, financial condition or liquidity for any particular period. Litigation Matters Amara cash balance pension plan litigation. In December 2001, Janice Amara filed a class action lawsuit in the U.S. District Court for the District of Connecticut against Cigna Corporation and the Cigna Pension Plan (the “Plan”) on behalf of herself and other similarly situated Plan participants affected by the 1998 conversion to a cash balance formula. The plaintiffs allege various violations of the Employee Retirement Income Security Act of 1974 (“ERISA”), including that the Plan's cash balance formula discriminates against older employees; that the conversion resulted in a wear-away period (when the pre-conversion accrued benefit exceeded the post-conversion benefit); and that the Plan communications contained inaccurate or inadequate disclosures about these conditions. In 2008, the District Court (1) affirmed the Company's right to convert to a cash balance plan prospectively beginning in 1998; (2) found for plaintiffs on the disclosure claim only; and (3) required the Company to pay pre-1998 benefits under the pre-conversion traditional annuity formula and post-1997 benefits under the post-conversion cash balance formula. The Second Circuit upheld this decision. From 2008 through the present, this case has undergone a series of court proceedings that resulted in the original District Court order being largely upheld. In 2015, the Company submitted to the District Court its proposed method for calculating the additional pension benefits due to class members and plaintiffs responded in August 2015. In January 2016, the District Court ordered the method of calculating the additional pension benefits due to class members. The court order left several aspects of the calculation of additional plan benefits open to interpretation. During 2016, the Company submitted its interpretation of the Court Order and the plaintiffs filed various objections. On January 10, 2017, the District Court issued an additional ruling regarding certain aspects of the calculation of additional plan benefits. The Company's reserve for this litigation remains reasonable at March 31, 2017 based on calculations consistent with the Company's interpretation of the updated guidance from the Court. However, certain aspects of the ruling will need further clarification from the Court before final plan benefits can be determined. As a result, the timing of the resolution of this matter remains uncertain. Once resolved, the Plan will be amended to comply with the final interpretation of the District Court's order and the benefits will begin to be paid. Ingenix. In April 2004, the Company was sued in a number of putative nationwide class actions alleging that the Company improperly underpaid claims for out-of-network providers through the use of data provided by Ingenix, Inc., a subsidiary of one of the Company's competitors. These actions were consolidated into Franco v. Connecticut General Life Insurance Company, et al. , pending in the U.S. District Court for the District of New Jersey. The consolidated amended complaint, filed in 2009 on behalf of subscribers, health care providers and various medical associations, asserted claims related to benefits and disclosure under ERISA, the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, the Sherman Antitrust Act and New Jersey state law and seeks recovery for alleged underpayments from 1998 through the present. Other major health insurers have been the subject of, or have settled, similar litigation. In September 2011, the District Court (1) dismissed all claims by the health care provider and medical association plaintiffs for lack of standing; and (2) dismissed the antitrust claims, the New Jersey state law claims and the ERISA disclosure claim. In January 2013 and again in April 2014, the District Court denied separate motions by the plaintiffs to certify a nationwide class of subscriber plaintiffs. The Third Circuit denied plaintiffs' request for an immediate appeal of the January 2013 ruling. As a result, the case is proceeding on behalf of the named plaintiffs only. In June 2014, the District Court granted the Company's motion for summary judgment to terminate all claims, and denied the plaintiffs' partial motion for summary judgment. In July 2014, the plaintiffs appealed all of the District Court's decisions in favor of the Company, including the class certification decision, to the Third Circuit. On May 2, 2016, the Third Circuit affirmed the District Court's decisions denying class certification for the claims asserted by members, the granting of summary judgment on the individual plaintiffs' claims, as well as the dismissal of the antitrust claims. However, the Third Circuit also reversed the earlier dismissal of the providers' ERISA claims. The Company will continue to vigorously defend its position. Regulatory Matters CMS actions. In January 2016, CMS issued a Notice of Imposition of Immediate Intermediate Sanctions (the “Notice”) to the Company. The Notice required us to suspend certain enrollment and marketing activities for Medicare Advantage-Prescription Drug and Medicare Part D Plans. The sanctions do not impact the right of current enrollees to remain covered by our Medicare Advantage-Prescription Drug or Medicare Part D Plans. CMS imposed sanctions based on its findings of deficiencies with the Company's operations of its Parts C and D appeals and grievances, Part D formulary and benefit administration and compliance program. Management is working towards having these sanctions lifted in time to participate in the 2018 annual enrollment period. For the three months ended March 31, 2017, Medicare enrollment and consolidated revenues w ere materially impacted due to our inability to participate in 2017 annual enrollment , and management expects that trend to continue for the remainder of 2017 . However, management anticipate s that full-year 2017 shareholders' net income will not be materially affected because we expect the margin impact of the revenue loss to be offset by 2017 remediation costs that are significantly lower than the $100 million after-tax amount reported in 2016 and other operational efficiencies to improve 2017 results. On October 12, 2016, CMS announced Medicare Star Quality Ratings (“Star Ratings”) for 2017. While Star Ratings are based on a number of plan performance measures that are evaluated each year, the projected Star Ratings for our plans included certain reductions that are primarily attributable to our CMS audit discussed above. Under these revised Star Ratings, approximately 20% of our Medicare Advantage customers are expected to be in a 4 Stars or greater plan. The Company does not believe that these Star Ratings reflect the quality offerings Cigna-HealthSpring provides to beneficiaries. The Company filed a Reconsideration request with CMS, which was denied, and will work fully with CMS through their process as well as consider additional alternatives with the objective that the final Star Ratings more accurately reflect our performance under the Star Ratings measures. The Company remains committed to our partnership with CMS and to delivering quality products and services to seniors, while working to mitigate the impact these Star Ratings could have on our offerings in 2018. I f we are unsuccessful in restoring at least some of the Star Ratings, modify ing our product offerings or implement ing operational efficiencies in the Government business , the effect in 2018 could be material to shareholders' net income. There is no financial impact in 2017 because these ratings apply to plans for the 2018 payment year. Disability claims regulatory matter. During the second quarter of 2013, the Company finalized an agreement with the Departments of Insurance for Maine, Massachusetts, Pennsylvania, Connecticut and California (together, the “monitoring states”) related to the Company's long-term disability claims handling practices. The agreement requires primarily: (1) enhanced procedures related to documentation and disposition and (2) a two-year monitoring period followed by a re-examination that began in the second quarter of 2016. Management believes the Company has addressed the requirements of the agreement. If the monitoring states find material non-compliance with the agreement upon re-examination, the Company may be subject to additional costs and penalties or requests to change its business practices that could negatively impact future earnings for this business. Other Legal Matters Antitrust Litigation. On July 21, 2016, the DOJ and certain state attorneys general filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia (the “District Court”) seeking to block the merger and, on January 4, 2017, the parties concluded the District Court trial. On February 8, 2017, the District Court issued an order enjoining the proposed merger. Anthem filed a notice of appeal of the District Court's order with the U.S. Court of Appeals for the District of Columbia Circuit (the “Appeals Court”) and requested an expedited appeal. On February 17, 2017, the Appeals Court granted Anthem's motion for an expedited appeal . That same day, the Company filed its notice of appeal of the District Court's order with the Appeals Court. O ral arguments were heard on March 24, 2017. On April 28, 2017, the Appeals Court affirmed the decision of the District Court. On May 5, 2017, Anthem filed a petition for a writ of certiorari with the United States Supreme Court seeking appeal of the U.S. Court of Appeals decision affirming the District Court's order enjoining the merger. Litigation with Anthem. On February 14, 2017, the Company delivered a notice to Anthem terminating the merger agreement, and notifying Anthem that it must pay the Company the $1.85 billion reverse termination fee pursuant to the terms of the merger agreement. Also on February 14, 2017, the Company filed suit against Anthem in the Delaware Court of Chancery (the “Chancery Court”). The complaint sought declaratory judgments that the Company's termination of the merger agreement was valid and that Anthem was not permitted to extend the termination date. The complaint also sought payment of the reverse termination fee and additional damages in an amount exceeding $13 billion, which includes the lost premium value to the Company's shareholders caused by Anthem's willful breaches of the merger agreement. Also on February 14, 2017, Anthem filed a lawsuit in the Chancery Court against the Company seeking (i) a temporary restraining order to enjoin Cigna from terminating and taking any action contrary to the terms of the merger agreement, (ii) specific performance compelling Cigna to comply with the merger agreement and (iii) damages. On February 15, 2017, the Chancery Court granted Anthem's motion for a temporary restraining order and issued an order temporarily enjoining the Company from terminating the m erger a greement. This is not a decision on the merits of the case, but rather an order to ensure irrevocable actions do not take place before the Chancery Court's substantive review of the issues. The Company will continue to abide by terms of the merger agreement until the expiration or lifting of the Chancery Court's order and any further review of the case by the Chancery Court. This order will be subject to review by the Chancery Court at a preliminary injunction hearing scheduled for May 8, 2017. We believe in the merits of our claims and dispute Anthem's claims, and we intend to vigorously defend ourselves and pursue our claims. The outcomes of lawsuits are inherently unpredictable, and we may be unsuccessful in the ongoing litigation or any future claims or litigation. Shareholder Litigation. Following announcement of the Company's merger agreement with Anthem as discussed in Note 3, putative class action complaints (collectively the “complaints” or “Cigna Merger Litigation”) were filed by purported Cigna shareholders on behalf of a purported class of Cigna shareholders. Additional lawsuits arising out of or relating to the merger agreement or the merger may be filed in the future. Cigna, members of the Cigna board of directors, Anthem and Anthem Merger Sub Corp (“Merger Sub”) have been named as defendants. The plaintiffs generally assert that the members of the Cigna board of directors breached their fiduciary duties to the Cigna shareholders during merger negotiations and by entering into the merger agreement and approving the merger, and that Cigna, Anthem and Merger Sub aided and abetted such breaches of fiduciary duties. The allegations include, among other things, that (1) the merger consideration undervalues Cigna, (2) the sales process leading up to the merger was flawed due to purported conflicts of interest of members of the Cigna board of directors and (3) certain provisions of the merger agreement inappropriately favor Anthem and inhibit competing bids. Plaintiffs seek, among other things, injunctive relief enjoining the merger, rescission of the merger agreement to the extent already implemented, and costs and damages. Effective November 24, 2015, solely to avoid the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the Company, the Company's directors, Anthem and Merger Sub entered into a Memorandum of Understanding (“MOU”) to settle the Cigna Merger Litigation. Subject to approval by the Connecticut Superior Court, Judicial District of Hartford and further definitive documentation in a settlement agreement that will be subject to customary conditions, the MOU resolved the Cigna Merger Litigation and provided that the Company would make certain additional disclosures related to the merger. If the Court approves the settlement, the Cigna Merger Litigation will be dismissed with prejudice and all claims that were or could have been brought in any actions challenging any aspect of the merger, the merger agreement and any related disclosures will be released. In connection with the settlement, subject to the ultimate determination of the Court, plaintiffs' counsel may receive an award of reasonable fees. There can be no assurance that the parties will ultimately enter into a settlement agreement, or that the Court will approve the settlement even if the parties were to enter into such agreement. The MOU may terminate, if, among other reasons, the Court does not approve the settlement or the merger is not consummated for any reason. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Information [Abstract] | |
Segment Information [Text Block] | Note 17 ― Segment Information See Note 1 for a description of the Company's reporting segments. In the Company's segment disclosures, w e present “operating revenues,” defined as total revenues excluding realized investment results. The Company excludes realized investment results from this measure because its portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. As a result, gains or losses created in this process may not be indicative of the past or future underlying performance of the business. The Company uses “ adjusted income (loss) from operations ” as its principal financial measure of segment operating performance because management believes it best reflects the underlying results of business operations and permits analysis of trends in underlying revenue, expenses and profitability. Adjusted income from operations is defined as shareholders' net income (loss) excluding after-tax realized investment gains and losses, net amortization of other acquired intangible assets and special items. Income or expense amounts are excluded from adjusted income from operations for the following reasons: Realized investment results are excluded because, as noted above, the Company's portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. Net amortization of other intangible assets is excluded because it relates to costs incurred for acquisitions and, as a result, it does not relate to the core performance of the Company's business operations. Special items, if any, are excluded because management believes they are not representative of the un derlying results of operations. This is generally because the nature and size of these matters are not indicative of our ongoing business operations. Further context about these items is provided in the footnotes listed in the table below. Three Months Ended Three Months Ended March 31, 2017 March 31, 2016 (In millions) Before-tax impact After-tax impact Before-tax impact After-tax impact Long-term care guaranty fund assessment - see Note 16(D) $ 129 $ 83 $ - $ - Merger-related transaction costs - see Note 3 63 49 40 36 Total impact from special items $ 192 $ 132 $ 40 $ 36 Summarized s egment financial information was as follows: (In millions) Global Health Care Global Supplemental Benefits Group Disability and Life Other Operations Corporate Total Three Months Ended March 31, 2017 Premiums, fees and other revenues and mail order pharmacy revenues $ 8,106 $ 881 $ 1,032 $ 30 $ (13) $ 10,036 Net investment income 92 28 89 86 8 303 Operating revenues $ 8,198 $ 909 $ 1,121 $ 116 $ (5) $ 10,339 Total revenues $ 8,224 $ 922 $ 1,129 $ 115 $ (5) $ 10,385 Shareholders' net income (loss) $ 544 $ 77 $ 59 $ 20 $ (102) $ 598 After-tax adjustments to reconcile to adjusted income from operations: Net realized investment (gains) (16) (9) (6) - - (31) Amortization of other acquired intangible assets, net 14 6 - - - 20 Special Items: Long-term care guaranty fund assessment 68 - 15 - - 83 Merger-related transaction costs - - - - 49 49 Adjusted income (loss) from operations $ 610 $ 74 $ 68 $ 20 $ (53) $ 719 Three Months Ended March 31, 2016 Premiums, fees and other revenues and mail order pharmacy revenues $ 7,812 $ 780 $ 1,029 $ 27 $ (4) $ 9,644 Net investment income 72 26 80 90 4 272 Operating revenues $ 7,884 $ 806 $ 1,109 $ 117 $ - $ 9,916 Total revenues $ 7,867 $ 804 $ 1,106 $ 107 $ - $ 9,884 Shareholders' net income (loss) $ 514 $ 59 $ 13 $ 14 $ (81) $ 519 After-tax adjustments to reconcile to adjusted income from operations: Net realized investment losses 12 1 2 6 - 21 Amortization of other acquired intangible assets, net 18 7 - - - 25 Special Item: Merger-related transaction costs - - - - 36 36 Adjusted income (loss) from operations $ 544 $ 67 $ 15 $ 20 $ (45) $ 601 The Company had net receivables from CMS of $ 0.5 billion as of March 31, 2017 and $ 0.6 billion as of December 31, 2016 . These amounts were included in the Consolidated Balance Sheet s in premiums, accounts and notes receivable and reinsurance recoverables. Premiums from CMS were 18 % of consolidated revenues for the three months ended March 31, 2017 and 21 % for the three months ended March 31, 2016 . These amounts were reported in the Global Health Care segment. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Consolidated Financial Statements include the accounts of Cigna Corporation and its subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Amounts recorded in the Consolidated Financial Statements necessarily reflect management's estimates and assumptions about medical costs, investment valuation, interest rates and other factors. Significant estimates are discussed throughout these Notes; however, actual results could differ from those estimates. The impact of a change in estimate is generally included in earnings in the period of adjustment. Certain reclassifications may be made to prior year amounts to conform to the current presentation. These interim Consolidated Financial Statements are unaudited but include all adjustments (including normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the periods reported. The interim Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes included in the Company's 2016 Annual Report on Form 10-K (“ 2016 Form 10-K”). The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates. This and certain other factors, including the seasonal nature of portions of the health care and related benefits business as well as competitive and other market conditions, call for caution in estimating full year results based on interim results of operations. |
Recent Accounting Changes | Recent Accounting Pronouncements The Company's 2016 Form 10-K includes discussion of significant recent accounting pronouncement s that either have impacted or may impact our finan cial statements in the future. The following tables provide information about recently adopted and recently issued or changed accounting guidance ( applicable to Cigna) that have occurred since the Company filed its 2016 Form 10-K. Recently Adopted Accounting Guidance Accounting Standard and Adoption Date Requirements and Effects of Adopting New Guidance Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (Accounting Standards Update (“ASU”) 2016-15) Early adopted as of December 31, 2016 Specifies how certain transactions should be classified in the statement of cash flows. While the standard addresses multiple types of transactions, only a change in the treatment of distributions from equity method investments impacted the Company. Effects of adoption: using the nature of distribution approach, the Company reported $45 million of cash receipts related to distributions from partnership earnings in operating activities for the three months ended March 31, 2017. The Company reclassified $27 million for the three months ended March 31, 2016 from investing to operating activities in the Consolidated Statements of Cash Flows. Recently Issued Accounting Guidance Not Yet Adopted Accounting Standard and Effective Date Applicable for Cigna Requirements and Expected Effects of New Guidance Not Yet Adopted Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07) Required as of January 1, 2018 Requires employers to separate the service cost component from the other components of net benefit cost. Under the new guidance, only service cost is eligible for capitalization (either deferred policy acquisition costs or capitalized software). The change in the capitalization rule is to be applied prospectively upon adoption. In addition, the income statement caption(s) where each component of net benefit cost is presented must be disclosed. Expected effects: the Company expects the effect of this new guidance to be immaterial to its results of operations. Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) Required as of January 1, 2018 Requires: • Entities to measure equity investments at fair value in net income if they are neither consolidated nor accounted for under the equity method • Cumulative effect adjustment to the beginning balance of retained earnings at adoption Expected effects: • Certain limited partnership interests carried at cost of $240 million as of March 31, 2017 will be reported at fair value at adoption • An increase to retained earnings of approximately $50 million, after-tax, if implemented as of March 31, 2017. Actual cumulative effect adjustment will depend on investments held and market conditions at adoption. Revenue from Contracts with Customers (ASU 2014-09 and related amendments) Required as of January 1, 2018, with early adoption permitted as of January 1, 2017 Requires: • Companies to estimate and allocate the expected customer contract revenues among distinct goods or services based on relative standalone selling prices • Revenues to be recognized as goods or services are delivered • Extensive new disclosures including the presentation of additional categories of revenues and information about related contract assets and liabilities • Adoption through retrospective restatement with or without using certain practical expedients or adoption with a cumulative effect adjustment Expected effects: • Applies to the Company’s non-insurance, administrative service contracts but does not apply to certain contracts within the scope of other GAAP, such as insurance contracts • The Company currently expects to adopt the new guidance as of January 1, 2018 through retrospective restatement • The Company does not currently expect the adoption of the new guidance to have a material impact to its pattern of revenue recognition or net income • The Company is continuing to evaluate the new requirements. Specifically, the Company is evaluating the combination of contract guidance for certain customers when the Company provides both insurance and non-insurance products, the deferral of revenue for services provided after the termination of certain administrative contracts and the Company’s status as principal or agent for certain performance obligations. |
Reinsurance | GMDB The Company estimates th e gross liability and reinsurance recoverable with an internal model based on the Company's experience and future expectations over an extended period, consistent with the long-term nature of this product. As a result of the reinsurance transaction, reserve increases have a corresponding increase in the recorded reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit (including the GMIB asset presented below ). The ending net retained reserve covers ongoing administrative expenses, as well as minor claim exposure retained by the Company. Because the product is premium deficient, the Company records an increase to the net retained reserve if it is inadequate based on the model. |
Fair Value Measurements | Assumptions used in fair value measurement. The Company estimates the fair value of the assets and liabilities for GMIB contracts by calculating the results for many scenarios run through a model utilizing various assumptions. The only assumption expected to impact future shareholders' net income is non-performance risk. The non-performan ce risk adjustment reflects a market participant's view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both (a) the GMIB liabilities to be paid by the Company, and (b) the GMIB assets to be paid by the reinsurers, after considering collateral. Other assumptions that affect GMIB assets and liabilities include capital market assumptions (including market returns, interest rates and market volatilities of the underlying equity and bond mutual fund investments) and future annuitant behavior (including mortality, lapse, and annuity election rates). As certain assumptions used to estimate fair values for these contracts are largely unobservable (primarily related to future annuitant behavior), the Company classifies GMIB assets and liabilities in Level 3 in the fair value hierarchy presented in Note 9 . The Company regularly evaluates each of the assumptions used in establishing these assets and liabilities. Significant decreases in assumed lapse rates or spreads used to calculate non-performance risk of the Company, or significant increases in assumed annuity election rates or spreads used to calculate the non-performance risk of the reinsurers, would result in higher fair value measurements. A change in one of these assumptions is not necessarily accompanied by a change in another assumption. The Company carries certain financial instruments at fair value in the financial statements including fixed maturities, equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value only under certain conditions, such as when impaired. Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor. The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement. For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services are based on reported trade activity and quoted market prices when available, and other market information that a market participant may use to estimate fair value. The internal pricing methods are performed by the Company's investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality, as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models. The Company is responsible for determining fair value, as well as for assigning the appropriate level within the fair value hierarchy, based on the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls executed by the Company include evaluating changes in prices and monitoring for potentially stale valuations. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. The minimal exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations. Annually, we conduct an on-site visit of the most significant pricing service to review their processes, methodologies and controls. This on-site review includes a walk-through of inputs for a sample of securities held across various asset types to validate the documented pricing process. Level 1 Financial Assets Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets. Assets in Level 1 include actively-traded U.S. government bond s and e xchange-listed equity securities . Given the narrow definition of Level 1 and the Company's investment asset strategy to maximize investment returns, a relatively small portion of the Company's investment assets are classified in this category. Level 2 Financial Assets and Financial Liabilities Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are market observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant. Fixed maturities and equity securities. Approximately 93% of the Company's investments in fixed maturities and equity securities are classified in Level 2 including most public and private corporate debt and equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks. Because many fixed maturities do not trade daily, third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics. When recent trades are not available, pricing models are used to determine these prices. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities, based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data, and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating. Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represent s foreign bonds that are valued using a single unadjusted market-observable input derived by averaging multiple broker-dealer quotes , consistent with local market practice . Short-term investments are carried at fair value which approximates cost. On a regular basis , the Company compares market prices for these securities to recorded amounts to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2. Other derivatives classified in Level 2 represent over-the-counter instruments such as interest rate and foreign currency swap contracts. Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. However, the Company is largely protected by collateral arrangements with counterparties and determined that no adjustment for credit risk was required as of March 31, 2017 or December 31, 2016. Level 2 also inc ludes exchange-traded interest rate swap contracts. Credit risk related to the clearinghouse counterparty and the Company is considered minimal when estimating the fair values of these derivatives because of upfront margin deposits and daily settlement requirements. The nature and use of these other derivatives are described in Note 11. Level 3 Financial Assets an d Financial Liabilities Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. The Company classifies certain newly issued, privately- placed, complex or illiquid securities, as well as assets and liabilities relating to GMIB, in Level 3. A pproximately 3% of fixed maturities and equity securities are priced using significant unobservable inputs and classified in this category . Fair values of mortgage and other asset -backed securities, corporate and government fixed maturities are primarily determined using pricing models that incorporate the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics. For mortgage and other asset-backed securities, inputs and assumptions for pricing may also include collateral attributes and prepayment speeds. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research in its evaluation , as well as th e issuer's financial statements . The significant unobservable inputs used to value the following mortgage and other asset-backed securities are liquidity and weighting of credit spreads. When there is limited trading activity for the security, a n adjustment for liquidity is made as of the measurement date that considers current market conditions, issuer circumstances and com plexity of the security structure. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral's characteristics and their proportional cash flows supporting the bond obligations. The resulting wide range of unobservable adjustments in the table below is due to the varying liquidity and quality of the underlying collateral, ranging from high credit quality to below investment grade. The significant unobservable input used to value the following corporate and government fixed maturities is an adjustment for liquidity. When there is limited trading activity for the security, an adjustment is needed to reflect current market conditions and issuer circumstances. The significant unobservable input used to value the following equity securities is a multiple of earnings before interest, taxes, depreciation and amortization ( “ EBITDA ” ). These securities are comprised of private equity investments with limited trading activity and therefore a ratio of EBITDA is used to estimate value based on company circumstances and relative risk characteristics. Significant increases in fixed maturity spreads would result in lower fair value measurement s while decreases in these inputs would result in higher fair value measurement s . Significant decreases in equity price - to - EBITDA multiples would result in lower fair value measurement s while increases in these inputs would result in higher fair value measurement s . Generally, the unobservable inputs are not interrelated and a change in the assumption used for one unobservable input is not accompanied by a change in the other unobservable input. As noted in the preceding tables, total gains and losses included in shareholders' net income are reflected in the following captions in the Consolidated Statements of Income: Realized investment gains (losses) and net investment income for amounts related to fixed maturities and equity securities and realized investment gains (losses) for the impact of changes in non-performance risk related to GMIB assets and liabilities, similar to hedge ineffectiveness; and Other operating expenses for amounts related to GMIB assets and liabilities (GMIB fair value gain/loss), except for the impact of changes in non-performance risk. In the tables above, gains and losses included in other comprehensive income are reflected in net unrealized appreciation (depreciation) on securities in the Consolidated Statements of Comprehensive Income. Reclassifications impacting Level 3 financial instruments are reported as transfers into or out of the Level 3 category as of the beginning of the quarter in which the transfer occurs. Therefore gains and losses in income only reflect activity for the period the instrument was classified in Level 3. Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. Separate account assets in Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include: corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and actively-traded institutional and retail mutual fund investments and separate accounts priced using the daily net asset value that is the exit price. Separate account assets classified in Level 3 primarily support Cigna's pension plans, and include certain newly issued, privately-placed, complex, or illiquid securities that are priced using methods discussed above , as well as commercial mortgage loans that are valued according to the methodologies discussed below . Separate account i nvestments in securities partnerships, real estate, and hedge funds are generally valued based on the separate account's ownership share of the equity of the investee ( NAV as a practical expedient), including changes in the fair values of its underlying investments. Substantially all of these assets support the Cigna Pension Plans. Some financial assets and liabilities are not carried at fair value each reporting period, but may be measured using fair value only under certain conditions, such as investments in real estate , partnership entities and commercial mortgage loans when they become impaired. Commercial mortgage loans . The Company estimates the fair value of commercial mortgage loans generally by discounting the contractual cash flows at estimated market interest rates that reflect the Company's assessment of the credit quality of the loans. Market interest rates are derived by calculating the appropriate spread over comparable U.S. Treasury rates based on the property type, quality rating and average life of the loan. The quality ratings reflec t the relative risk of the loan co nsidering debt service coverage, the loan -to- value ratio and other factors . Fair values of impaired mortgage loans are based on the estimated fair value of the underlying collateral generally determined using an internal discounted cash flow model. The fair value measurements were classified in Level 3 because the cash flow models incorporate significant unobservable inputs. Contractholder deposit funds, excluding universal life products . G enerally, these funds do not have stated maturities. Approximately 70 % of these balances can be withdrawn by the customer at any time without prior notice or penalty. The fair value for these contracts is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Most of the remaining contractholder deposit funds are reinsured by the buyers of the individual life and annuity and retirement benefits businesses. The fair value for these contracts is determined using the fair value of these buyers' assets supporting these reinsured contracts. The Company had reinsurance recoverable s equal to the carrying value of these reinsured contracts . These instruments were classified in Level 3 because certain inputs are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Long-term debt , including current maturities , excluding capital leases . The fair value of long-term debt is based on quoted market prices for recent trades . W hen quoted market prices are not available, fair value is estimated using a discounted cash flow analysis and the Company's estimated current borrowing rate for debt of similar terms and remaining maturities. These measurements were classified in Level 2 because the fair values are based on quoted market prices or other inputs that are market observable or can be corroborated by market data . |
Separate Accounts | Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and are excluded from the Company's revenues and expenses. See Note 10 to the Consolidated Financial Statements contained in the Company's 2016 Form 10-K for additional policy information related to separate accounts. |
Investments | Review of declines in fair value . Management reviews fixed maturities with a decline in fair value from cost for impairment based on criteria that include: length of time and severity of decline; financial health and specific near term prospects of the issuer; changes in the regulatory, economic or general market environment of the issuer's industry or geographic region; and the Company's intent to sell or the likelihood of a required sale prior to expected recovery. Equity securities include hybrid investments consisting of preferred stock with call features that are carried at fair value with changes in fair value reported in other realized investment gains (losses) and dividends reported in net investment income. Potential problem mortgage loans are considered current (no payment is more than 59 days past due), but they exhibit certain characteristics that increase the likelihood of future default . The characteristics management considers include , but are not limited to, the deterioration of debt service coverage below 1.0, estimated loan-to-value ratios increasing to 100% or more, downgrade in quality rating and request s from the borrower for restructuring. In addition, loans are considered potential problems if principal or interest payments are past due by more than 30 but less than 60 days. Problem mortgage loans are either in default by 60 days or more or have been restructured as to terms that could include concessions on interest rate, principal payment or maturity date. The Company monitors each problem and potential problem mortgage loan on an ongoing basis, and updates the loan categorization and quality rating when warranted. Impaired commercial mortgage loans. A commercial mortgage loan is considered impaired when it is probable that the Company will not collect all amounts due according to the terms of the original loan agreement. These loans are included in either problem or potential problem loans. The Company monitors credit risk and assesses the impairment of loans individually and on a consistent basis for all loans in the portfolio. Impaired loans are carried at the lower of unpaid principal balance or the fair value of the underlying real estate. Certain commercial mortgage loans without valuation reserves are considered impaired because the Company will not collect all interest due according to the terms of the original agreements; however, the Company expects to recover the unpaid principal because it is less than the fair value of the underlying real estate. T he Company recognizes interest income on impaired mortgage loans only when payment is actually received. The Company's annual in-depth review of its commercial mortgage loan investments is the primary mechanism for identifying emerging risks in the portfolio. The most recent review was completed by the Company's investment professionals in the second quarter of 201 6 and included an analysis of each underlying property's most recent annual financial statements, rent rolls, operating plans, budgets, a physical inspection of the property and other pertinent factors. Based on historical results, current leases, lease expirations and rental conditions in each market, the Company estimates the current year and future stabilized property income and fair value and categorizes the investments as loans in good standing, potential problem loans or problem loans. The Company will reevaluate a loan's credit quality between annual reviews if new property information is received or an event such as delinquency or a borrower's request for restructure causes management to believe that the Company's estimate of financial performance, fair value or the risk profile of the underlying property has been impacted. |
Derivative Financial Instruments | While GMDB is accounted for as reinsurance, GMIB assets and liabilities are reported as derivatives at fair value as discussed below. Accordingly, GMIB assets are reported in other assets, including intangibles, and GMIB liabilities are reported in accounts payable, accrued expenses and other liabilities. The Company reports GMIB liabilities and assets as derivatives at fair value because cash flows of these liabilities and assets are affected by equity markets and interest rates, but are without significant life insurance risk and are settled in lump sum payments. Accounting policy. The Company applies hedge accounting when derivatives are designated, qualified and highly effective as hedges. Effectiveness is formally assessed and documented at inception and each period throughout the life of a hedge using various quantitative methods appropriate for each hedge, including regression analysis and dollar offset. Under hedge accounting, the changes in fair value of the derivative and the hedged risk are generally recognized together and offset each other when reported in shareholders' net income. Changes in the fair value of a derivative instrument may not always equal changes in the fair value of the hedged item. This is referred to as ''hedge ineffectiveness'' and is generally recorded in realized investment gains and losses. In the event of an early hedge termination, the changes in fair value of derivatives that qualified for hedge accounting are reported in shareholders' net income, generally as a part of realized investment gains and losses. See Note 9 for further information on our policies for determining fair value. Derivative cash flows are generally reported in operating activities. Accounting. Using fair value hedge accounting, the fair values of the swap contracts are reported in other assets, including other intangibles, or accounts payable, accrued expenses, and other liabilities. The critical terms of these swaps match those of the long-term debt being hedged. As a result, the carrying value of the hedged debt is adjusted to reflect changes in its fair value driven by LIBOR. The effects of those adjustments on other operating expenses are offset by the effects of corresponding changes in the swaps' fair value. The net impact from the hedge reported in other operating expenses reflects interest expense on the hedged debt at the variable interest rate. Accounting. Using cash flow hedge accounting, fair values are reported in other long-term investments or accounts payable, accrued expenses, and other liabilities. Changes in fair values are reported in accumulated other comprehensive income and amortized into net investment income or other realized investment gains and losses as interest or principal payments are received. Accounting. Using fair value hedge accounting, fair values are reported in other long-term investments or accounts payable, accrued expenses, and other liabilities. Changes in fair values of the swap contracts, as well as changes in the fair values of the hedged bonds attributable to the hedged risk are reported in other realized investment gains and losses. Accounting. As these arrangements were not designated as accounting hedges, fair values are reported in short-term investments or accounts payable, accrued expenses, and other liabilities, and changes in fair values are reported in other realized investment gains and losses. |
Variable Interest Entities | When the Company becomes involved with a variable interest entity, as well as when the re is a change in the Company's involvement with an entity, the Company evaluates the following to determine if it is the primary beneficiary and must consolidate the entity : the structure and purpose of the entity; the risks and rewards created by and shared through the entity; and the Company's ability to direct its activities, receive its benefits and absorb its losses relative to the other partie s involved with the entity including its sponsors, equity holders, guarantors, creditors and servicers. |
Accumulated Other Comprehensive Income | Accumulated other comprehensive income ( loss ) excludes amounts required to adjust future policy benefits for the run-off settlement annuity business and a portion of deferred acquisition costs associated with the corporate owned life insurance business . |
Income Taxes | The Company maintain s a capital management strategy to retain overseas a significant portion of the earnings from its foreign operations. These undistributed earnings are deployed outside of the U.S. predominantly in support of the liquidity and regulatory capital requirements of our foreign operations. The Company does not intend to repatriate these earnings to the U.S. and as a result, income taxes are provided using the respective foreign jurisdictions' tax rate. |
Commitments and Contingencies | Separate account assets are contractholder funds maintained in accounts with specific investment objectives. The Company records separate account liabilities equal to separate account assets. In certain cases, the Company guarantees a minimum level of benefits for retirement and insurance contracts written in separate accounts. The Company establishes an additional liability if management believes that the Company will be required to make a payment under these guarantees. When the Company (in the course of its regular review of pending litigation and legal or regulatory matters) has determined that a material loss is reasonably possible, the matter is disclosed. Such matters are described below. In accordance with GAAP, when litigation and regulatory matters present loss contingencies that are both probable and estimable, the Company accrues the estimated loss by a charge to shareholders' net income. The amount accrued represents the Company's best estimate of the probable loss at the time. If only a range of estimated losses can be determined, the Company accrues an amount within the range that, in the Company's judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, the Company accrues the minimum amount of the range. In cases when the Company has accrued an estimated loss, the accrued amount may differ materially from the ultimate amount of the loss. In many proceedings, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount or range of any loss. The Company provides disclosure in the aggregate for material pending litigation and legal or regulatory matters, including accruals, range of loss, or a statement that such information cannot be estimated. As a litigation or regulatory matter develops, the Company monitors the matter for further developments that could affect the amount previously accrued, if any, and updates such amount accrued or disclosures previously provided as appropriate. |
Segment Information | In the Company's segment disclosures, w e present “operating revenues,” defined as total revenues excluding realized investment results. The Company excludes realized investment results from this measure because its portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. As a result, gains or losses created in this process may not be indicative of the past or future underlying performance of the business. The Company uses “ adjusted income (loss) from operations ” as its principal financial measure of segment operating performance because management believes it best reflects the underlying results of business operations and permits analysis of trends in underlying revenue, expenses and profitability. Adjusted income from operations is defined as shareholders' net income (loss) excluding after-tax realized investment gains and losses, net amortization of other acquired intangible assets and special items. Income or expense amounts are excluded from adjusted income from operations for the following reasons: Realized investment results are excluded because, as noted above, the Company's portfolio managers may sell investments based on factors largely unrelated to the underlying business purposes of each segment. Net amortization of other intangible assets is excluded because it relates to costs incurred for acquisitions and, as a result, it does not relate to the core performance of the Company's business operations. Special items, if any, are excluded because management believes they are not representative of the un derlying results of operations. This is generally because the nature and size of these matters are not indicative of our ongoing business operations. Further context about these items is provided in the footnotes listed in the table below. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Three Months Ended March 31, 2017 March 31, 2016 (Shares in thousands, dollars in millions, except per share amounts) Effect of Effect of Basic Dilution Diluted Basic Dilution Diluted Shareholders' net income $ 598 $ 598 $ 519 $ 519 Shares: Weighted average 255,680 255,680 254,822 254,822 Common stock equivalents 4,094 4,094 4,625 4,625 Total shares 255,680 4,094 259,774 254,822 4,625 259,447 EPS $ 2.34 $ (0.04) $ 2.30 $ 2.04 $ (0.04) $ 2.00 |
Antidilutive Options Table | Three Months Ended (In millions) March 31, 2017 March 31, 2016 Anti-dilutive options 2.5 1.3 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt [Table] [Abstract] | |
Short-term and Long-term Debt | March 31, December 31, (In millions) 2017 2016 Short-term: Current maturities of long-term debt $ 131 $ 250 Other, including capital leases 11 26 Total short-term debt $ 142 $ 276 Long-term: $131 million, 6.35% Notes due 2018 $ - $ 131 $250 million, 4.375% Notes due 2020 (1) 252 252 $300 million, 5.125% Notes due 2020 (1) 301 301 $78 million, 6.37% Notes due 2021 78 78 $300 million, 4.5% Notes due 2021 (1) 301 302 $750 million, 4% Notes due 2022 744 744 $100 million, 7.65% Notes due 2023 100 100 $17 million, 8.3% Notes due 2023 17 17 $900 million, 3.25% Notes due 2025 893 893 $300 million, 7.875% Debentures due 2027 299 299 $83 million, 8.3% Step Down Notes due 2033 82 82 $500 million, 6.15% Notes due 2036 498 498 $300 million, 5.875% Notes due 2041 296 296 $750 million, 5.375% Notes due 2042 743 743 Other, including capital leases 17 20 Total long-term debt $ 4,621 $ 4,756 |
Global Health Care Medical Co29
Global Health Care Medical Costs Payable (Tables) - Global Health Benefits Segment [Member] | 3 Months Ended |
Mar. 31, 2017 | |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | |
Components of Global Health Care medical costs payable | March 31, March 31, (In millions) 2017 2016 Incurred but not reported $ 2,088 $ 1,960 Reported claims in process 542 506 Physician incentives and other medical care expenses and services payable 140 180 Global Health Care medical costs payable $ 2,770 $ 2,646 Three Months Ended (Dollars in millions) March 31, 2017 March 31, 2016 $ % (1) $ % (2) Actual completion factors $ 78 0.4 % $ 51 0.3 % Medical cost trend 98 0.5 28 0.1 Other (3) - - (15) (0.1) Total favorable (unfavorable) variance $ 176 0.9 % $ 64 0.3 % (1) Percentage of current year incurred costs as reported for the year ended December 31, 2016. (2) Percentage of current year incurred costs as reported for the year ended December 31, 2015. (3) Other amounts in 2016 related to increased medical costs in the Government segment resulting from additional provider risk sharing. |
Activity in medical costs payable | Three Months Ended March 31, March 31, (In millions) 2017 2016 Beginning balance $ 2,532 $ 2,355 Less: Reinsurance and other amounts recoverable 275 243 Beginning balance, net 2,257 2,112 Incurred costs related to: Current year 5,161 4,825 Prior years (176) (64) Total incurred 4,985 4,761 Paid costs related to: Current year 3,219 2,985 Prior years 1,509 1,449 Total paid 4,728 4,434 Ending balance, net 2,514 2,439 Add: Reinsurance and other amounts recoverable 256 207 Ending balance $ 2,770 $ 2,646 |
Liabilities for Unpaid Claims30
Liabilities for Unpaid Claims and Claims Expenses (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Group Disability and Life, Global Supplemental Beneftits and Other Operations [Member] | |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | |
Liability balance details | March 31, March 31, (In millions) 2017 2016 Group Disability and Life $ 4,384 $ 4,146 Global Supplemental Benefits 425 367 Other Operations 197 211 Unpaid claims and claim expenses $ 5,006 $ 4,724 |
Group Disability and Life and Global Supplemental Benefits [Member] | |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | |
Liability balance details | Three Months Ended (In millions) March 31, 2017 March 31, 2016 Beginning balance $ 4,726 $ 4,359 Less: Reinsurance 121 115 Beginning balance, net 4,605 4,244 Incurred claims related to: Current year 1,148 988 Prior years: Interest accretion 43 43 All other incurred (64) 105 Total incurred 1,127 1,136 Paid claims related to: Current year 371 327 Prior years 691 660 Total paid 1,062 987 Foreign currency 16 5 Ending balance, net 4,686 4,398 Add: Reinsurance 123 115 Ending balance $ 4,809 $ 4,513 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Effects Of Reinsurance [Line Items] | |
Components of reinsurance recoverables | (In millions) March 31, December 31, Collateral and Other Terms Line of Business Reinsurer(s) 2017 2016 at March 31, 2017 Ongoing operations: Global Health Care, Global Supplemental Benefits, Group Disability and Life Various $ 478 $ 478 Recoverables from approximately 80 reinsurers including the U.S. Government, used in the ordinary course of business. Current balances range from less than $1 million up to $93 million. Excluding the recoverable from the U.S. Government of $39 million, over 60% of the balance is from companies rated investment grade by Standard & Poor's, and 13% is secured by assets in trusts or letters of credit. Total recoverables related to ongoing operations 478 478 Acquisition, disposition or runoff activities: Individual Life and Annuity (sold in 1998) Lincoln National Life and Lincoln Life & Annuity of New York 3,551 3,586 Both companies' ratings are sufficient to avoid triggering a contractual obligation to fully secure the outstanding balance. GMDB Berkshire 1,052 1,085 100% secured by assets in a trust. Other 42 44 100% secured by assets in a trust or letters of credit. Retirement Benefits Business (sold in 2004) Prudential Retirement Insurance and Annuity 904 921 100% secured by assets in a trust. Supplemental Benefits Business (2012 acquisition) Great American Life 293 297 100% secured by assets in a trust. Other run-off reinsurance Various 66 67 100% secured by assets in trusts. Total recoverables related to acquisition, disposition or runoff activities 5,908 6,000 Total reinsurance recoverables $ 6,386 $ 6,478 |
Effects of Reinsurance | Three Months Ended March 31, (In millions) 2017 2016 Ceded premiums: Individual life insurance and annuity business sold $ 39 $ 41 Other 81 95 Total ceded premiums $ 120 $ 136 Reinsurance recoveries: Individual life insurance and annuity business sold $ 70 $ 68 Other 29 96 Total reinsurance recoveries $ 99 $ 164 |
Variable Annuity [Member] | Guaranteed Minimum Death Benefit [Member] | |
Effects Of Reinsurance [Line Items] | |
Future policy benefits for GMDB business | For the period ended March 31, December 31, (In millions) 2017 2016 Balance at January 1 $ 1,224 $ 1,252 Add: Unpaid claims 16 18 Less: Reinsurance and other amounts recoverable 1,129 1,164 Balance at January 1, net 111 106 Add: Incurred benefits - 4 Less: Paid benefits (recoveries) (1) (1) Ending balance, net 112 111 Less: Unpaid claims 18 16 Add: Reinsurance and other amounts recoverable 1,094 1,129 Ending balance $ 1,188 $ 1,224 |
Account value, net amount at risk, contractholder average age | (Dollars in millions, excludes impact of reinsurance ceded) March 31, 2017 December 31, 2016 Account value $ 10,755 $ 10,650 Net amount at risk $ 2,335 $ 2,458 Number of contractholders 280,000 285,000 |
Variable Annuity [Member] | Guaranteed Minimum Income Benefit [Member] | |
Effects Of Reinsurance [Line Items] | |
Components of reinsurance recoverables | (In millions) March 31, December 31, Collateral and Other Terms Line of Business Reinsurer(s) 2017 2016 at March 31, 2017 GMIB Berkshire $ 360 $ 370 100% secured by assets in a trust. Sun Life Assurance Company of Canada 220 227 Liberty Re (Bermuda) Ltd. 197 202 100% secured by assets in a trust. Total GMIB recoverables reported in other assets $ 777 $ 799 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Financial assets and liabilities carried at fair value | Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) (Level 1) (Level 2) (Level 3) Total March 31, 2017 Financial assets at fair value: Fixed maturities: Federal government and agency $ 372 $ 525 $ - $ 897 State and local government - 1,419 - 1,419 Foreign government - 2,273 39 2,312 Corporate - 16,144 483 16,627 Mortgage and other asset-backed - 324 155 479 Total fixed maturities (1) 372 20,685 677 21,734 Equity securities 402 122 50 574 Subtotal 774 20,807 727 22,308 Short-term investments - 303 - 303 GMIB assets - - 777 777 Other derivative assets - 4 - 4 Total financial assets at fair value, excluding separate accounts $ 774 $ 21,114 $ 1,504 $ 23,392 Financial liabilities at fair value: GMIB liabilities $ - $ - $ 761 $ 761 Other derivative liabilities - 2 - 2 Total financial liabilities at fair value $ - $ 2 $ 761 $ 763 (1) Fixed maturities includes $543 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $14 million of appreciation for securities classified in Level 3. See Note 10 for additional information. Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) (Level 1) (Level 2) (Level 3) Total December 31, 2016 Financial assets at fair value: Fixed maturities: Federal government and agency $ 374 $ 503 $ - $ 877 State and local government - 1,435 - 1,435 Foreign government - 2,066 47 2,113 Corporate - 15,552 498 16,050 Mortgage and other asset-backed - 329 157 486 Total fixed maturities (1) 374 19,885 702 20,961 Equity securities 396 113 74 583 Subtotal 770 19,998 776 21,544 Short-term investments - 691 - 691 GMIB assets - - 799 799 Other derivative assets - 10 - 10 Total financial assets at fair value, excluding separate accounts $ 770 $ 20,699 $ 1,575 $ 23,044 Financial liabilities at fair value: GMIB liabilities $ - $ - $ 780 $ 780 Other derivative liabilities - 5 - 5 Total financial liabilities at fair value $ - $ 5 $ 780 $ 785 (1) Fixed maturities includes $524 million of net appreciation required to adjust future policy benefits for run-off settlement annuity business including $14 million of appreciation for securities classified in Level 3. |
Level 3 fixed maturities and equity securities priced using significant unobservable inputs | Unobservable Input Unobservable Adjustment Range (Weighted Average) (Fair value in millions) Fair Value As of March 31, 2017 Fixed maturities: Mortgage and other asset-backed securities $ 155 Liquidity 60 - 340 (90) bps Weighting of credit spreads 170 - 450 (230) bps Corporate and government fixed maturities 498 Liquidity 70 - 2,550 (340) bps Total fixed maturities 653 Equity securities 50 Price-to-EBITDA multiples 5.0 - 12.0 (8.3) Subtotal 703 Securities not priced by the Company (1) 24 Total Level 3 securities $ 727 As of December 31, 2016 Fixed maturities: Mortgage and other asset-backed securities $ 157 Liquidity 60 - 330 (90) bps Weighting of credit spreads 160 - 470 (230) bps Corporate and government fixed maturities 490 Liquidity 80 - 1,300 (340) bps Total fixed maturities 647 Equity securities 74 Price-to-EBITDA multiples 4.2 - 11.6 (8.5) Subtotal 721 Securities not priced by the Company (1) 55 Total Level 3 securities $ 776 (1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company. |
Changes in level 3 financial assets and liabilities carried at fair value | Fixed Maturities & Equity Securities GMIB Assets GMIB Liabilities GMIB Net (In millions) For the Three Months Ended March 31, 2017 Balance at January 1, 2017 $ 776 $ 799 $ (780) $ 19 Gains (losses) included in shareholders' net income: GMIB fair value gain/(loss) - (11) 11 - Other 23 1 (4) (3) Total gains (losses) included in shareholders' net income 23 (10) 7 (3) Losses included in other comprehensive income (8) - - - Gains required to adjust future policy benefits for settlement annuities (1) - - - - Purchases, sales and settlements: Purchases 25 - - - Sales (47) - - - Settlements (27) (12) 12 - Total purchases, sales and settlements (49) (12) 12 - Transfers into/(out of) Level 3: Transfers into Level 3 40 - - - Transfers out of Level 3 (55) - - - Total transfers into/(out of) Level 3 (15) - - - Balance at March 31, 2017 $ 727 $ 777 $ (761) $ 16 Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date $ (6) $ (10) $ 7 $ (3) (1) Amounts do not accrue to shareholders. Fixed Maturities & Equity Securities GMIB Assets GMIB Liabilities GMIB Net (In millions) For the Three Months Ended March 31, 2016 Balance at January 1, 2016 $ 726 $ 907 $ (885) $ 22 Gains (losses) included in shareholders' net income: GMIB fair value gain/(loss) - 61 (61) - Other (25) (1) (5) (6) Total gains (losses) included in shareholders' net income (25) 60 (66) (6) Losses included in other comprehensive income - - - - Gains required to adjust future policy benefits for settlement annuities (1) 11 - - - Purchases, sales and settlements: Purchases 24 - - - Sales - - - - Settlements (11) (10) 10 - Total purchases, sales and settlements 13 (10) 10 - Transfers into/(out of) Level 3: Transfers into Level 3 128 - - - Transfers out of Level 3 (61) - - - Total transfers into/(out of) Level 3 67 - - - Balance at March 31, 2016 $ 792 $ 957 $ (941) $ 16 Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date $ (25) $ 60 $ (66) $ (6) (1) Amounts do not accrue to shareholders. |
Separate account assets schedule | (In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total March 31, 2017 Guaranteed separate accounts (See Note 16) $ 245 $ 263 $ - $ 508 Non-guaranteed separate accounts (1) 1,435 5,076 330 6,841 Subtotal $ 1,680 $ 5,339 $ 330 7,349 Non-guaranteed separate accounts priced at NAV as a practical expedient (1) 848 Total separate account assets $ 8,197 December 31, 2016 Guaranteed separate accounts (See Note 16) $ 238 $ 262 $ - $ 500 Non-guaranteed separate accounts (1) 1,368 4,885 331 6,584 Subtotal $ 1,606 $ 5,147 $ 331 7,084 Non-guaranteed separate accounts priced at NAV as a practical expedient (1) 856 Total separate account assets $ 7,940 (1) N on-guaranteed separate accounts include d $3.8 billion as of March 31, 2017 and $3.7 billion as of December 31, 2016 in assets supporting the Comp any's pension pla ns, including $ 0.3 b illion classified in Level 3 for both periods and $0.8 billion as of March 31, 2017 and $0.9 billion as of December 31, 2016 priced at net asset value (“ NAV ”) as a practical expedient. |
Changes in level 3 separate account assets | Three Months Ended March 31, (In millions) 2017 2016 Balance, beginning of period $ 331 $ 297 Policyholder gains (losses) 27 (1) Purchases, sales and settlements: Purchases 10 4 Sales (35) (1) Settlements (1) (2) Total purchases, sales and settlements (26) 1 Transfers into/(out of) Level 3: Transfers into Level 3 - 23 Transfers out of Level 3 (2) (3) Total transfers into/(out of) Level 3 (2) 20 Balance, end of period $ 330 $ 317 |
Separate account assets priced at net asset value | Fair Value as of (In millions) March 31, 2017 December 31, 2016 Unfunded Commitments Redemption Frequency (if currently eligible) (1) Redemption Notice Period (1) Security Partnerships $ 409 $ 424 $ 340 Not applicable Not applicable Real Estate Funds 234 231 - Quarterly 45-90 days Hedge Funds 205 201 - Up to Annually, varying by fund 30-90 days Total $ 848 $ 856 $ 340 The attributes noted are effectiv e as of March 31, 2017 and December 31, 2016. |
Financial instruments not carried at fair value | March 31, 2017 December 31, 2016 (In millions) Classification in the Fair Value Hierarchy Fair Value Carrying Value Fair Value Carrying Value Commercial mortgage loans Level 3 $ 1,776 $ 1,752 $ 1,682 $ 1,666 Contractholder deposit funds, excluding universal life products Level 3 $ 1,206 $ 1,203 $ 1,215 $ 1,212 Long-term debt, including current maturities, excluding capital leases Level 2 $ 5,331 $ 4,735 $ 5,460 $ 4,991 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investment [Line Items] | |
Impaired commercial mortgage loans and related valuation reserves | March 31, 2017 December 31, 2016 (In millions) Gross Reserves Net Gross Reserves Net Impaired commercial mortgage loans with valuation reserves $ 9 $ (3) $ 6 $ 26 $ (5) $ 21 Impaired commercial mortgage loans without valuation reserves - - - - - - Total impaired commercial mortgage loans $ 9 $ (3) $ 6 $ 26 $ (5) $ 21 |
Realized gains and losses on investments | Three Months Ended March 31, (In millions) 2017 2016 Fixed maturities $ 2 $ (18) Equity securities 33 (10) Other investments, including derivatives 11 (4) Realized investment gains (losses) before income taxes 46 (32) Less income taxes (benefits) 15 (11) Net realized investment gains (losses) $ 31 $ (21) |
Pre-tax asset write-downs included in realized gains (losses) on investments | Three Months Ended March 31, (In millions) 2017 2016 Other-than-temporary impairments on debt securities: Credit-related $ (5) $ (18) Non credit-related (1) (2) (9) Total other-than-temporary impairments on debt securities (7) (27) Other asset write-downs (2) (3) (9) Total write-downs $ (10) $ (36) (1) These write-downs pertain to other-than-temporary declines in fair values due to increases in market yields (widening of credit spreads) for certain below investment grade fixed maturities with an increased probability of sales activity prior to recovery of their amortized cost basis. (2) Other asset write-downs include other-than-temporary declines in fair values of equity securities and asset write-downs related to real estate investments. |
Sales information for available-for-sale fixed maturities and equity securities | Three Months Ended March 31, (In millions) 2017 2016 Proceeds from sales $ 414 $ 361 Gross gains on sales $ 47 $ 12 Gross losses on sales $ 2 $ 5 |
Fixed Maturities [Member] | |
Investment [Line Items] | |
Investment maturities | Amortized Fair (In millions) Cost Value Due in one year or less $ 1,405 $ 1,416 Due after one year through five years 6,717 6,976 Due after five years through ten years 8,481 8,667 Due after ten years 3,586 4,196 Mortgage and other asset-backed securities 450 479 Total fixed maturities $ 20,639 $ 21,734 |
Gross unrealized appreciation (depreciation) on fixed maturities | Gross Gross Unrealized Unrealized Amortized Appre- Depre- Fair Cost ciation ciation Value (In millions) March 31, 2017 Federal government and agency $ 667 $ 233 $ (3) $ 897 State and local government 1,324 100 (5) 1,419 Foreign government 2,206 122 (16) 2,312 Corporate 15,992 744 (109) 16,627 Mortgage and other asset-backed 450 32 (3) 479 Total fixed maturities $ 20,639 $ 1,231 $ (136) $ 21,734 (In millions) December 31, 2016 Federal government and agency $ 658 $ 223 $ (4) $ 877 State and local government 1,342 99 (6) 1,435 Foreign government 1,998 129 (14) 2,113 Corporate 15,483 716 (149) 16,050 Mortgage and other asset-backed 461 29 (4) 486 Total fixed maturities $ 19,942 $ 1,196 $ (177) $ 20,961 |
Fixed maturities with a decline in fair value from amortized cost | March 31, 2017 Fair Amortized Unrealized Number (Dollars in millions) Value Cost Depreciation of Issues One year or less: Investment grade $ 3,960 $ 4,067 $ (107) 870 Below investment grade $ 619 $ 630 $ (11) 532 More than one year: Investment grade $ 265 $ 276 $ (11) 47 Below investment grade $ 116 $ 123 $ (7) 21 |
Commercial Mortgage Loans [Member] | |
Investment [Line Items] | |
Credit risk profile of commercial mortgage loan portfolio | Debt Service Coverage Ratio 1.30x or 1.20x to 1.10x to 1.00x to Less than Loan-to-Value Ratios Greater 1.29x 1.19x 1.09x 1.00x Total (In millions) March 31, 2017 Below 50% $ 331 $ 15 $ - $ - $ - $ 346 50% to 59% 516 46 42 30 - 634 60% to 69% 687 14 - - - 701 70% to 79% - - 30 - 35 65 80% to 89% - - - - - - 90% to 100% - - - - 6 6 Total $ 1,534 $ 75 $ 72 $ 30 $ 41 $ 1,752 (In millions) December 31, 2016 Below 50% $ 335 $ 15 $ - $ - $ - $ 350 50% to 59% 517 46 - 30 - 593 60% to 69% 624 14 - - - 638 70% to 79% - - 29 - 35 64 80% to 89% - - - - - - 90% to 100% - - - - 21 21 Total $ 1,476 $ 75 $ 29 $ 30 $ 56 $ 1,666 |
Derivative Financial Instrume34
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign Currency Swaps [Member] | |
Derivative [Line Items] | |
Schedule of derivative instruments | Cash Flow Hedges of Fixed Maturity Bonds Notional Value (in millions) Type of instrument. Foreign currency swap contracts March 31, 2017 December 31, 2016 $ 31 $ 55 Purpose. To hedge the foreign currency cash flows of its fixed maturity bonds to match associated insurance liabilities. Terms of derivative instruments. The Company periodically exchanges cash flows between two currencies for both principal and interest. Foreign currency swaps are Canadian dollars and Japanese yen and have terms for periods of up to four years. Accounting. Using cash flow hedge accounting, fair values are reported in other long-term investments or accounts payable, accrued expenses, and other liabilities. Changes in fair values are reported in accumulated other comprehensive income and amortized into net investment income or other realized investment gains and losses as interest or principal payments are received. |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Interest Rate Swaps [Member] | |
Derivative [Line Items] | |
Schedule of derivative instruments | Fair Value Hedge of Long-Term Corporate Debt Notional Value (in millions) Type of instrument. Interest rate swap contracts March 31, 2017 December 31, 2016 $ 750 $ 750 Purpose. To convert a portion of the interest rate exposure on the Company's long-term debt from fixed to variable rates. This more closely aligns the Company's interest expense with the interest income received on its cash equivalent and short-term investment balances. The variable rates are benchmarked to LIBOR. Terms of derivative instruments. The Company provides upfront margin and settles fair value changes and net interest between variable and fixed rates daily with a central clearinghouse. Accounting. Using fair value hedge accounting, the fair values of the swap contracts are reported in other assets, including other intangibles, or accounts payable, accrued expenses, and other liabilities. The critical terms of these swaps match those of the long-term debt being hedged. As a result, the carrying value of the hedged debt is adjusted to reflect changes in its fair value driven by LIBOR. The effects of those adjustments on other operating expenses are offset by the effects of corresponding changes in the swaps' fair value. The net impact from the hedge reported in other operating expenses reflects interest expense on the hedged debt at the variable interest rate. |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Foreign Currency Swaps [Member] | |
Derivative [Line Items] | |
Schedule of derivative instruments | Fair Value Hedges of Fixed Maturity Bonds Notional Value (in millions) Type of instrument. Foreign currency swap contracts March 31, 2017 December 31, 2016 $ 87 $ 78 Purpose. To hedge the foreign exchange related changes in fair values of the Company's fixed maturity bonds. Terms of derivative instruments. The Company periodically exchanges cash flows between two currencies for both principal and interest. Foreign currency swaps are Euros and British pounds and have terms for periods of up to nine years. Accounting. Using fair value hedge accounting, fair values are reported in other long-term investments or accounts payable, accrued expenses, and other liabilities. Changes in fair values of the swap contracts, as well as changes in the fair values of the hedged bonds attributable to the hedged risk are reported in other realized investment gains and losses. |
Non designated [Member] | Forward Contracts [Member] | |
Derivative [Line Items] | |
Schedule of derivative instruments | Economic Hedges of a Fixed Maturity Bond Portfolio Notional Value (in millions) Type of instrument. Foreign currency forward contracts March 31, 2017 December 31, 2016 $ 150 $ 149 Purpose. To hedge the foreign exchange related changes in fair values of a U.S. dollar-denominated fixed maturity bond portfolio to reflect the local currency for one of the Company's foreign subsidiaries. Terms of derivative instruments. The Company agrees to purchase South Korean won in exchange for U.S. dollars at a future date, generally within three months from the contracts' trade dates. Accounting. As these arrangements were not designated as accounting hedges, fair values are reported in short-term investments or accounts payable, accrued expenses, and other liabilities, and changes in fair values are reported in other realized investment gains and losses. |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Changes in accumulated other comprehensive income (loss) | Tax (Expense) After- (In millions) Pre-Tax Benefit Tax Three Months Ended March 31, 2017 Net unrealized appreciation, securities, January 1, $ 542 $ (180) $ 362 Unrealized appreciation on securities arising during the period 53 (24) 29 Reclassification adjustment for (gains) included in shareholders' net income (realized investment gains) (35) 13 (22) Net unrealized appreciation, securities arising during the period 18 (11) 7 Net unrealized appreciation, securities, March 31, $ 560 $ (191) $ 369 Net unrealized appreciation, derivatives, January 1, $ 4 $ (1) $ 3 Reclassification adjustment for (gains) included in shareholders' net income (net realized investment gains) (4) 1 (3) Net unrealized appreciation, derivatives, March 31, $ - $ - $ - Net translation of foreign currencies, January 1, $ (390) $ 21 $ (369) Net translation of foreign currencies arising during the period 111 1 112 Net translation of foreign currencies, March 31, $ (279) $ 22 $ (257) Postretirement benefits liability adjustment, January 1, $ (2,120) $ 742 $ (1,378) Reclassification adjustment for amortization of net losses from past experience and prior service costs (other operating expenses) 15 (5) 10 Reclassification adjustment for settlement loss (other operating expenses) 6 (2) 4 Net postretirement benefits liability adjustment arising during the period 21 (7) 14 Postretirement benefits liability adjustment, March 31, $ (2,099) $ 735 $ (1,364) 2016 Net unrealized appreciation, securities, January 1, $ 612 $ (194) $ 418 Unrealized appreciation on securities arising during the period 227 (72) 155 Reclassification adjustment for losses included in shareholders' net income (realized investment gains) 28 (10) 18 Net unrealized appreciation, securities arising during the period 255 (82) 173 Net unrealized appreciation, securities, March 31, $ 867 $ (276) $ 591 Net unrealized appreciation, derivatives, January 1, $ 10 $ (3) $ 7 Unrealized (depreciation), derivatives arising during the period (4) 1 (3) Net unrealized appreciation, derivatives, March 31, $ 6 $ (2) $ 4 Net translation of foreign currencies, January 1, $ (295) $ 21 $ (274) Net translation of foreign currencies arising during the period 83 (2) 81 Net translation of foreign currencies, March 31, $ (212) $ 19 $ (193) Postretirement benefits liability adjustment, January 1, $ (2,155) $ 754 $ (1,401) Reclassification adjustment for amortization of net losses from past experience and prior service costs (other operating expenses) 16 (5) 11 Postretirement benefits liability adjustment, March 31, $ (2,139) $ 749 $ (1,390) |
Pension and Other Postretirem36
Pension and Other Postretirement Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Components of net defined benefit plan costs | Pension Benefits Other Postretirement Benefits Three Months Ended Three Months Ended March 31, March 31, (In millions) 2017 2016 2017 2016 Interest cost $ 48 $ 50 $ 3 $ 3 Expected long-term return on plan assets (65) (62) - - Amortization of: Net loss from past experience 16 17 - - Prior service cost - - (1) (1) Settlement loss 6 - - - Net cost $ 5 $ 5 $ 2 $ 2 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Information [Abstract] | |
Special item charges | Three Months Ended Three Months Ended March 31, 2017 March 31, 2016 (In millions) Before-tax impact After-tax impact Before-tax impact After-tax impact Long-term care guaranty fund assessment - see Note 16(D) $ 129 $ 83 $ - $ - Merger-related transaction costs - see Note 3 63 49 40 36 Total impact from special items $ 192 $ 132 $ 40 $ 36 |
Summarized segment financial information | (In millions) Global Health Care Global Supplemental Benefits Group Disability and Life Other Operations Corporate Total Three Months Ended March 31, 2017 Premiums, fees and other revenues and mail order pharmacy revenues $ 8,106 $ 881 $ 1,032 $ 30 $ (13) $ 10,036 Net investment income 92 28 89 86 8 303 Operating revenues $ 8,198 $ 909 $ 1,121 $ 116 $ (5) $ 10,339 Total revenues $ 8,224 $ 922 $ 1,129 $ 115 $ (5) $ 10,385 Shareholders' net income (loss) $ 544 $ 77 $ 59 $ 20 $ (102) $ 598 After-tax adjustments to reconcile to adjusted income from operations: Net realized investment (gains) (16) (9) (6) - - (31) Amortization of other acquired intangible assets, net 14 6 - - - 20 Special Items: Long-term care guaranty fund assessment 68 - 15 - - 83 Merger-related transaction costs - - - - 49 49 Adjusted income (loss) from operations $ 610 $ 74 $ 68 $ 20 $ (53) $ 719 Three Months Ended March 31, 2016 Premiums, fees and other revenues and mail order pharmacy revenues $ 7,812 $ 780 $ 1,029 $ 27 $ (4) $ 9,644 Net investment income 72 26 80 90 4 272 Operating revenues $ 7,884 $ 806 $ 1,109 $ 117 $ - $ 9,916 Total revenues $ 7,867 $ 804 $ 1,106 $ 107 $ - $ 9,884 Shareholders' net income (loss) $ 514 $ 59 $ 13 $ 14 $ (81) $ 519 After-tax adjustments to reconcile to adjusted income from operations: Net realized investment losses 12 1 2 6 - 21 Amortization of other acquired intangible assets, net 18 7 - - - 25 Special Item: Merger-related transaction costs - - - - 36 36 Adjusted income (loss) from operations $ 544 $ 67 $ 15 $ 20 $ (45) $ 601 |
Summary of Significant Accounti
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Distributions from partnership investments | [1] | $ 45 | $ 27 |
Net cash provided by (used in) investing activities | [1] | $ (117) | (360) |
Accounting Standards Update 2016-15 [Member] | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Requirements and effects of new guidance | Specifies how certain transactions should be classified in the statement of cash flows. While the standard addresses multiple types of transactions, only a change in the treatment of distributions from equity method investments impacted the Company. Effects of adoption: using the nature of distribution approach, the Company reported $45 million of cash receipts related to distributions from partnership earnings in operating activities for the three months ended March 31, 2017. The Company reclassified $27 million for the three months ended March 31, 2016 from investing to operating activities in the Consolidated Statements of Cash Flows. | ||
Distributions from partnership investments | $ 45 | ||
Accounting Standards Update 2016-15 [Member] | Restatement Adjustment [Member] | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Distributions from partnership investments | 27 | ||
Net cash provided by (used in) investing activities | $ (27) | ||
Accounting Standards Update 2017-07 [Member] | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Requirements and effects of new guidance | Requires employers to separate the service cost component from the other components of net benefit cost. Under the new guidance, only service cost is eligible for capitalization (either deferred policy acquisition costs or capitalized software). The change in the capitalization rule is to be applied prospectively upon adoption. In addition, the income statement caption(s) where each component of net benefit cost is presented must be disclosed. Expected effects: the Company expects the effect of this new guidance to be immaterial to its results of operations. | ||
Material effect on Company's financial statements | No | ||
Accounting Standards Update 2016-01 [Member] | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Requirements and effects of new guidance | Requires: • Entities to measure equity investments at fair value in net income if they are neither consolidated nor accounted for under the equity method • Cumulative effect adjustment to the beginning balance of retained earnings at adoption Expected effects: • Certain limited partnership interests carried at cost of $240 million as of March 31, 2017 will be reported at fair value at adoption • An increase to retained earnings of approximately $50 million, after-tax, if implemented as of March 31, 2017. Actual cumulative effect adjustment will depend on investments held and market conditions at adoption. | ||
Current carrying value of certain limited partnership interests to be reported at fair value upon adoption of ASU 2016-01 | $ 240 | ||
Impact of new guidance on equity if adopted at reporting date | $ 50 | ||
Accounting Standards Update 2014-09 [Member] | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Requirements and effects of new guidance | Requires: • Companies to estimate and allocate the expected customer contract revenues among distinct goods or services based on relative standalone selling prices • Revenues to be recognized as goods or services are delivered • Extensive new disclosures including the presentation of additional categories of revenues and information about related contract assets and liabilities • Adoption through retrospective restatement with or without using certain practical expedients or adoption with a cumulative effect adjustment Expected effects: • Applies to the Company’s non-insurance, administrative service contracts but does not apply to certain contracts within the scope of other GAAP, such as insurance contracts • The Company currently expects to adopt the new guidance as of January 1, 2018 through retrospective restatement • The Company does not currently expect the adoption of the new guidance to have a material impact to its pattern of revenue recognition or net income • The Company is continuing to evaluate the new requirements. Specifically, the Company is evaluating the combination of contract guidance for certain customers when the Company provides both insurance and non-insurance products, the deferral of revenue for services provided after the termination of certain administrative contracts and the Company’s status as principal or agent for certain performance obligations. | ||
Material effect on Company's financial statements | No | ||
[1] | As required in adopting Accounting Standard Update ("ASU") 2016-15, the Company retrospectively reclassified $27 million of cash distributions from partnership earnings from investing to operating activities for the first quarter of 2016. The comparable amount reported in operating activities in 2017 was $45 million. See Note 2 for further discussion. |
Mergers and Acquistions (Detail
Mergers and Acquistions (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 20 Months Ended | ||
Mar. 31, 2017USD ($)$ / shares | Mar. 31, 2016USD ($) | Mar. 31, 2017USD ($)$ / shares | May 04, 2017$ / shares | |
Acquisitions and Dispositions [Abstract] | ||||
Cash consideration for each share of Company stock | $ / shares | $ 103.40 | $ 103.40 | ||
Shares of acquirer common stock for each share of Company stock | 0.5152 | 0.5152 | ||
Closing price of Anthem common stock | $ / shares | $ 179.89 | |||
Merger-related costs, before tax | $ 63 | $ 40 | $ 295 | |
Merger-related costs, after-tax | 49 | $ 36 | ||
Merger agreement not consummated [Member] | ||||
Gain Contingencies [Line Items] | ||||
Tax benefit if merger is not consummated | $ 60 | $ 60 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Shareholders' net income | $ 598 | $ 519 |
Shares: | ||
Weighted average | 255,680,000 | 254,822,000 |
Common stock equivalents | 4,094,000 | 4,625,000 |
Total shares | 259,774,000 | 259,447,000 |
EPS, basic | $ 2.34 | $ 2.04 |
EPS, effect of dilution | (0.04) | (0.04) |
EPS, diluted | $ 2.30 | $ 2 |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Common shares held in Treasury | 39,928,289 | 39,638,264 |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive options | 2,500,000 | 1,300,000 |
Debt - Short-term and Long-term
Debt - Short-term and Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Total short-term debt | $ 142 | $ 276 | |
Long-term debt, carrying value | 4,621 | 4,756 | |
Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Current maturities of long-term debt | 131 | 250 | |
Other, including capital leases | 11 | 26 | |
Total short-term debt | 142 | 276 | |
Long-term debt, carrying value | 4,621 | 4,756 | |
$131 million, 6.35% Notes due 2018 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 131 | $ 131 | |
Long-term debt, stated interest rate | 6.35% | 6.35% | |
Long-term debt, carrying value | $ 0 | $ 131 | |
$250 million, 4.375% Notes due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 250 | $ 250 | |
Long-term debt, stated interest rate | 4.375% | 4.375% | |
Long-term debt, carrying value | [1] | $ 252 | $ 252 |
$300 million, 5.125% Notes due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 5.125% | 5.125% | |
Long-term debt, carrying value | [1] | $ 301 | $ 301 |
$78 million, 6.37% Notes due 2021 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 78 | $ 78 | |
Long-term debt, stated interest rate | 6.37% | 6.37% | |
Long-term debt, carrying value | $ 78 | $ 78 | |
$300 million, 4.5% Notes due 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 4.50% | 4.50% | |
Long-term debt, carrying value | [1] | $ 301 | $ 302 |
$750 million, 4% Notes due 2022 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 750 | $ 750 | |
Long-term debt, stated interest rate | 4.00% | 4.00% | |
Long-term debt, carrying value | $ 744 | $ 744 | |
$100 million, 7.65% Notes due 2023 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 100 | $ 100 | |
Long-term debt, stated interest rate | 7.65% | 7.65% | |
Long-term debt, carrying value | $ 100 | $ 100 | |
$17 million, 8.3% Notes due 2023 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 17 | $ 17 | |
Long-term debt, stated interest rate | 8.30% | 8.30% | |
Long-term debt, carrying value | $ 17 | $ 17 | |
$900 million, 3.25% Notes Due 2025 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 900 | $ 900 | |
Long-term debt, stated interest rate | 3.25% | 3.25% | |
Long-term debt, carrying value | $ 893 | $ 893 | |
$300 million, 7.875% Debentures due 2027 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 7.875% | 7.875% | |
Long-term debt, carrying value | $ 299 | $ 299 | |
$83 million, 8.3% Step Down Notes due 2033 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 83 | $ 83 | |
Long-term debt, stated interest rate | 8.30% | 8.30% | |
Long-term debt, carrying value | $ 82 | $ 82 | |
$500 million, 6.15% Notes due 2036 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 500 | $ 500 | |
Long-term debt, stated interest rate | 6.15% | 6.15% | |
Long-term debt, carrying value | $ 498 | $ 498 | |
$300 million, 5.875% Notes due 2041 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 5.875% | 5.875% | |
Long-term debt, carrying value | $ 296 | $ 296 | |
$750 million, 5.375% Notes due 2042 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 750 | $ 750 | |
Long-term debt, stated interest rate | 5.375% | 5.375% | |
Long-term debt, carrying value | $ 743 | $ 743 | |
Other, including capital leases [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, carrying value | $ 17 | $ 20 | |
[1] | The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 11 for further information about the Company’s interest rate risk management and these derivative instruments. |
Debt - Revolving Credit and Let
Debt - Revolving Credit and Letter of Credit (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)Banks | |
Line of Credit Facility [Line Items] | |
Covenant terms | The credit agreement includes options subject to consent by the administrative agent and the committing banks to increase the commitment amount to $2 billion and to extend the term past December 12, 2019. The credit agreement is available for general corporate purposes, including for the issuance of letters of credit. The credit agreement contains customary covenants and restrictions, including a financial covenant that the Company may not permit its leverage ratio – which is total consolidated debt to total consolidated capitalization (each as defined in the credit agreement) – to be greater than 0.50. The leverage ratio calculation excludes the following items that are included in accumulated other comprehensive loss on the Company’s consolidated balance sheets: net unrealized appreciation on fixed maturities and the portion of the post-retirement benefits liability adjustment attributable to pension. |
Debt covenant compliance | The Company was in compliance with its debt covenants as of March 31, 2017. |
Debt outstanding | $ 4,800 |
Revolving Credit And Letter Of Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit agreement term | 5 years |
Maximum borrowing capacity under credit facility | $ 1,500 |
Expiration date | Dec. 12, 2019 |
Number of participating banks | Banks | 16 |
Maximum borrowing capacity under option to increase | $ 2,000 |
Leverage ratio covenant | 50.00% |
Borrowing capacity within maximum debt coverage covenant | $ 10,500 |
Letter of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity under credit facility | 500 |
Letters of credit outstanding | $ 13 |
Primary Commitment Holders [Member] | Revolving Credit And Letter Of Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Number of participating banks | Banks | 3 |
Percent of commitment held by each primary commitment holder | 12.00% |
Minor Commitment Holders [Member] | Revolving Credit And Letter Of Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Number of participating banks | Banks | 13 |
Collective percentage held by remaining commitment holders | 64.00% |
Common and Preferred Stock (Det
Common and Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Common: Par value $.25, 600,000,000 shares authorized | |||
Treasury stock | 39,928,289 | 39,638,264 | |
Issued - December 31 | 296,000,000 | ||
Common Stock, par value and shares authorized | |||
Common stock, par value per share | $ 0.25 | $ 0.25 | |
Common stock shares authorized | 600,000,000 | 600,000,000 | |
Payments For Repurchase Of Common Stock | $ 239 | $ 139 |
Global Health Care Medical Co44
Global Health Care Medical Costs Payable (Details) - Global Health Benefits Segment [Member] - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | ||||
Incurred but not reported | $ 2,088 | $ 1,960 | ||
Reported claims in process | 542 | 506 | ||
Phyician incentives and other medical care expense and services payable | 140 | 180 | ||
Total liability for unpaid claims and claims expenses | $ 2,770 | $ 2,532 | $ 2,646 | $ 2,355 |
Global Health Care Medical Co45
Global Health Care Medical Costs Payable - Activity (Details) - Global Health Benefits Segment [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Medical Claims Payable Activity [Abstract] | ||
Beginning balance, unpaid claims, gross | $ 2,532 | $ 2,355 |
Less: Reinsurance and other amounts recoverable | 275 | 243 |
Beginning balance, unpaid claims, net | 2,257 | 2,112 |
Incurred claims related to: | ||
Current year | 5,161 | 4,825 |
Prior years | (176) | (64) |
Total incurred | 4,985 | 4,761 |
Paid claims related to: | ||
Current year | 3,219 | 2,985 |
Prior years | 1,509 | 1,449 |
Total paid | 4,728 | 4,434 |
Ending balance, unpaid claims, net | 2,514 | 2,439 |
Add: Reinsurance and other amounts recoverable | 256 | 207 |
Ending balance, unpaid claims, gross | $ 2,770 | $ 2,646 |
Global Health Care Medical Co46
Global Health Care Medical Costs Payable - Prior Year Development (Details) - Global Health Benefits Segment [Member] - USD ($) $ in Millions | 3 Months Ended | ||||
Mar. 31, 2017 | Mar. 31, 2016 | ||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||
Variance (unfavorable) in incurred costs related to prior years' claims payable | $ 176 | $ 64 | |||
Variance (unfavorable) in incurred costs related to prior years' claims payable, percentage | 0.90% | [1] | 0.30% | [2] | |
Net impact (unfavorable) of prior development on shareholders' net income | $ 61 | $ 14 | |||
Completion Factors [Member] | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||
Variance (unfavorable) in incurred costs related to prior years' claims payable | $ 78 | $ 51 | |||
Variance (unfavorable) in incurred costs related to prior years' claims payable, percentage | 0.40% | [1] | 0.30% | [2] | |
Medical Cost Trend [Member] | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||
Variance (unfavorable) in incurred costs related to prior years' claims payable | $ 98 | $ 28 | |||
Variance (unfavorable) in incurred costs related to prior years' claims payable, percentage | 0.50% | [1] | 0.10% | [2] | |
Other [Member] | |||||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Abstract] | |||||
Variance (unfavorable) in incurred costs related to prior years' claims payable | $ 0 | $ (15) | |||
Variance (unfavorable) in incurred costs related to prior years' claims payable, percentage | [3] | 0.00% | [1] | (0.10%) | [2] |
[1] | Percentage of current year incurred costs as reported for the year ended December 31, 2016. | ||||
[2] | Percentage of current year incurred costs as reported for the year ended December 31, 2015. | ||||
[3] | Other amounts in 2016 related to increased medical costs in the Government segment resulting from additional provider risk sharing. |
Global Health Care Medical Co47
Global Health Care Medical Costs Payable - Unpaid Claims Development (Details) - Global Health Benefits Segment [Member] - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Claims Development [Line Items] | ||||
Liability for unpaid claims and claims expenses, net of reinsurance | $ 2,514 | $ 2,257 | $ 2,439 | $ 2,112 |
Reinsurance recoverable on unpaid claims | 256 | 275 | 207 | 243 |
Total liability for unpaid claims and claims expenses | $ 2,770 | $ 2,532 | $ 2,646 | $ 2,355 |
Liabilities for Unpaid Claims48
Liabilities for Unpaid Claims and Claims Expenses - Liability Balance Details (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Mar. 31, 2016 |
Group Disability and Life, Global Supplemental Beneftits and Other Operations [Member] | ||
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | ||
Total liability for unpaid claims and claims expenses | $ 5,006 | $ 4,724 |
Group Disability And Life Segment [Member] | ||
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | ||
Total liability for unpaid claims and claims expenses | 4,384 | 4,146 |
Global Supplemental Benefits Segment [Member] | ||
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | ||
Total liability for unpaid claims and claims expenses | 425 | 367 |
Other Operations Segment [Member] | ||
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | ||
Total liability for unpaid claims and claims expenses | $ 197 | $ 211 |
Liabilities for Unpaid Claims49
Liabilities for Unpaid Claims and Claims Expenses - Activity in Liabilities for Unpaid Claims and Claims Expenses (Details) - Group Disability and Life and Global Supplemental Benefits [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Liability For Unpaid Claims And Claims Adjustment Expense [Line Items] | ||
Beginning balance, unpaid claims, gross | $ 4,726 | $ 4,359 |
Less: Reinsurance and other amounts recoverable | 121 | 115 |
Beginning balance, unpaid claims, net | 4,605 | 4,244 |
Incurred claims related to: | ||
Current year | 1,148 | 988 |
Interest accretion | 43 | 43 |
All other prior years | (64) | 105 |
Total incurred | 1,127 | 1,136 |
Paid claims related to: | ||
Current year | 371 | 327 |
Prior years | 691 | 660 |
Total paid | 1,062 | 987 |
Foreign currency | 16 | 5 |
Ending balance, unpaid claims, net | 4,686 | 4,398 |
Add: Reinsurance and other amounts recoverable | 123 | 115 |
Ending balance, unpaid claims, gross | $ 4,809 | $ 4,513 |
Liabilities for Unpaid Claims50
Liabilities for Unpaid Claims and Claims Expenses - Reconciliation to the Liability for Unpaid Claims and Claims Expense (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Mar. 31, 2016 |
Group Disability and Life, Global Supplemental Beneftits and Other Operations [Member] | ||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||
Total liability for unpaid claims and claims expenses | $ 5,006 | $ 4,724 |
Group Disability And Life Segment [Member] | ||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||
Total liability for unpaid claims and claims expenses | 4,384 | 4,146 |
Global Supplemental Benefits Segment [Member] | ||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||
Total liability for unpaid claims and claims expenses | 425 | 367 |
Other Operations Segment [Member] | ||
Short-duration Insurance Contracts, Reconciliation of Claims Development to Liability [Line Items] | ||
Total liability for unpaid claims and claims expenses | $ 197 | $ 211 |
Reinsurance - Reinsurance Recov
Reinsurance - Reinsurance Recoverables (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 6,386 | $ 6,478 |
Reserve netted against reinsurance recoverables | 3 | |
Acquisition, dispositionor runoff activities [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | 5,908 | 6,000 |
Berkshire [Member] | Guaranteed Minimum Death Benefits [Member] | Guaranteed Minimum Death Benefit [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 1,052 | 1,085 |
Berkshire [Member] | Guaranteed Minimum Death Benefits [Member] | Guaranteed Minimum Death Benefit [Member] | Ceded Credit Risk Secured [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 100.00% | |
The Lincoln National Life Insurance Company And Lincoln Life And Annuity Of New York [Member] | Individual Life Insurance And Annuity (sold in 1998) [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 3,551 | 3,586 |
Prudential Retirement Insurance And Annuity Company [Member] | Retirement Benefits Business (sold in 2004) [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 904 | 921 |
Prudential Retirement Insurance And Annuity Company [Member] | Retirement Benefits Business (sold in 2004) [Member] | Ceded Credit Risk Secured [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 100.00% | |
Great American Life Insurance Company [Member] | Supplemental Benefits Business (2012 acquistion) [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 293 | 297 |
Great American Life Insurance Company [Member] | Supplemental Benefits Business (2012 acquistion) [Member] | Ceded Credit Risk Secured [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 100.00% | |
Other retrocessionaires, including U.S. Government [Member] | Global Health Care, Global Supplemental Benefits, Group Disability and Life [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 478 | 478 |
Number of external reinsurers | 80 | |
U.S. Government [Member] | Global Health Care, Global Supplemental Benefits, Group Disability and Life [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 39 | |
Other Retrocessionaires [Member] | Global Health Care, Global Supplemental Benefits, Group Disability and Life [Member] | ||
Ceded Credit Risk [Line Items] | ||
Minimum reinsurance recoverable from a single reinsurer | 1 | |
Maximum reinsurance recoverable from a single reinsurer | $ 93 | |
Other Retrocessionaires [Member] | Global Health Care, Global Supplemental Benefits, Group Disability and Life [Member] | Minimum [Member] | Standard & Poor's Investment Grade [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 60.00% | |
Other Retrocessionaires [Member] | Global Health Care, Global Supplemental Benefits, Group Disability and Life [Member] | Ceded Credit Risk Secured [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 13.00% | |
Other Retrocessionaires [Member] | Guaranteed Minimum Death Benefits [Member] | Guaranteed Minimum Death Benefit [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 42 | 44 |
Other Retrocessionaires [Member] | Guaranteed Minimum Death Benefits [Member] | Guaranteed Minimum Death Benefit [Member] | Ceded Credit Risk Secured [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 100.00% | |
Other Retrocessionaires [Member] | Other run-off reinsurance [Member] | ||
Ceded Credit Risk [Line Items] | ||
Reinsurance recoverables | $ 66 | $ 67 |
Other Retrocessionaires [Member] | Other run-off reinsurance [Member] | Ceded Credit Risk Secured [Member] | Reinsurance Recoverable [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration Risk, Percentage | 100.00% |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Premiums Earned, Net [Abstract] | ||
Ceded | $ 120 | $ 136 |
Premiums Earned Net | 8,103 | 7,746 |
Reinsurance Recoveries [Abstract] | ||
Reinsurance recoveries | 99 | 164 |
Individual Life Insurance And Annuity Business Sold [Member] | ||
Premiums Earned, Net [Abstract] | ||
Ceded | 39 | 41 |
Reinsurance Recoveries [Abstract] | ||
Reinsurance recoveries | 70 | 68 |
Other Subsegments [Member] | ||
Premiums Earned, Net [Abstract] | ||
Ceded | 81 | 95 |
Reinsurance Recoveries [Abstract] | ||
Reinsurance recoveries | $ 29 | $ 96 |
Reinsurance - Effective Exit of
Reinsurance - Effective Exit of GMDB and GMIB Business (Details) - Berkshire Hathway Life Insurance Company Of Nebraska [Member] - Variable Annuity [Member] - USD ($) $ in Billions | Mar. 31, 2017 | Dec. 31, 2013 |
Ceded Credit Risk [Line Items] | ||
Percent of future claim payments reinsured | 100.00% | |
Maximum [Member] | Guaranteed Minimum Death Benefit [Member] | ||
Ceded Credit Risk [Line Items] | ||
Ceded Reinsurance Agreement, Coverage Limit, Amount Remaining | $ 3.5 |
Reinsurance - Future Policy Ben
Reinsurance - Future Policy Benefits for GMDB Business (Details) - Variable Annuity [Member] - Guaranteed Minimum Death Benefit [Member] - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Activity in future policy benefits reserves for GMDB business [Line Items] | ||
Future Policy Benefit Reserve, beginning balance, gross | $ 1,224 | $ 1,252 |
Beginning balance, unpaid claims, gross | 16 | 18 |
Less: Reinsurance and other amounts recoverable | 1,129 | 1,164 |
Future Policy Benefit Reserve, beginning balance, net | 111 | 106 |
Add: Incurred benefits | 0 | 4 |
Less: Paid benefits / (recoveries) | (1) | (1) |
Future Policy Benefit Reserve, ending balance, net | 112 | 111 |
Ending balance, unpaid claims, gross | 18 | 16 |
Add: Reinsurance and other amounts recoverable | 1,094 | 1,129 |
Future Policy Benefit Reserve, ending balance, gross | $ 1,188 | $ 1,224 |
Reinsurance - Account Value, Ne
Reinsurance - Account Value, Net Amount at Risk and Contractholders for GMDB Business (Details) - Variable Annuity [Member] - Guaranteed Minimum Death Benefit [Member] Contractholders in Millions, $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017USD ($)Contractholders | Dec. 31, 2016USD ($)Contractholders | |
Guaranteed Minimum Death Benefits Account Value, Net Amount at Risk And Average Age Table [Line Items] | ||
Account value | $ 10,755 | $ 10,650 |
Net amount at risk | $ 2,335 | $ 2,458 |
Number of contractholders | Contractholders | 280,000 | 285,000 |
Reinsurance - GMIB Reinsurers (
Reinsurance - GMIB Reinsurers (Details) - Guaranteed Minimum Income Benefit [Member] - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Ceded Credit Risk [Line Items] | ||
Annuitization election period | 30 days | |
GMIB Assets | $ 777 | $ 799 |
Berkshire [Member] | ||
Ceded Credit Risk [Line Items] | ||
GMIB Assets | $ 360 | 370 |
Berkshire [Member] | Ceded Credit Risk Secured [Member] | GMIB Assets [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration percentage | 100.00% | |
Sun Life Assurance Company Of Canada [Member] | ||
Ceded Credit Risk [Line Items] | ||
GMIB Assets | $ 220 | 227 |
Liberty Re (Bermuda) Ltd. [Member] | ||
Ceded Credit Risk [Line Items] | ||
GMIB Assets | $ 197 | $ 202 |
Liberty Re (Bermuda) Ltd. [Member] | Ceded Credit Risk Secured [Member] | GMIB Assets [Member] | ||
Ceded Credit Risk [Line Items] | ||
Concentration percentage | 100.00% |
Reinsurance - GMIB Guarantees (
Reinsurance - GMIB Guarantees (Details) - Guarantee Type, Other [Member] - Guaranteed Minimum Income Benefit [Member] - Variable Annuity [Member] $ in Millions | Mar. 31, 2017USD ($) |
Guarantee Obligations [Line Items] | |
Underlying mutual fund investment values | $ 818 |
Maximum Exposure, Undiscounted | $ 665 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Financial Liabilities Carried at Fair Value (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | |||
Financial assets at fair value: | ||||
Fixed maturities | $ 21,734 | $ 20,961 | ||
Equity securities | 574 | 583 | ||
Short-term investments | 303 | 691 | ||
Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 21,734 | [1] | 20,961 | [2] |
Equity securities | 574 | 583 | ||
Subtotal | 22,308 | 21,544 | ||
Short-term investments | 303 | 691 | ||
Total financial assets at fair value, excluding separate accounts | 23,392 | 23,044 | ||
Financial liabilities at fair value: | ||||
Total financial liabilities at fair value | 763 | 785 | ||
Run-off Settlement Annuity Business [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial liabilities at fair value: | ||||
Net appreciation required to adjust future policy benefits for run-off settlement annuity business included in fixed maturities | 543 | 524 | ||
Other derivatives [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 4 | 10 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 2 | 5 | ||
Guaranteed Minimum Income Benefit [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 777 | 799 | ||
Guaranteed Minimum Income Benefit [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 777 | 799 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 761 | 780 | ||
Federal government and agency [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 897 | 877 | ||
State and local government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 1,419 | 1,435 | ||
Foreign government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 2,312 | 2,113 | ||
Corporate [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 16,627 | 16,050 | ||
Mortgage and other asset-backed [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 479 | 486 | ||
Fair Value Inputs Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 372 | [1] | 374 | [2] |
Equity securities | 402 | 396 | ||
Subtotal | 774 | 770 | ||
Short-term investments | 0 | 0 | ||
Total financial assets at fair value, excluding separate accounts | 774 | 770 | ||
Financial liabilities at fair value: | ||||
Total financial liabilities at fair value | 0 | 0 | ||
Fair Value Inputs Level 1 [Member] | Other derivatives [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 0 | 0 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value Inputs Level 1 [Member] | Guaranteed Minimum Income Benefit [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 0 | 0 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value Inputs Level 1 [Member] | Federal government and agency [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 372 | 374 | ||
Fair Value Inputs Level 1 [Member] | State and local government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 0 | 0 | ||
Fair Value Inputs Level 1 [Member] | Foreign government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 0 | 0 | ||
Fair Value Inputs Level 1 [Member] | Corporate [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 0 | 0 | ||
Fair Value Inputs Level 1 [Member] | Mortgage and other asset-backed [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 0 | 0 | ||
Fair Value Inputs Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 20,685 | [1] | 19,885 | [2] |
Equity securities | 122 | 113 | ||
Subtotal | 20,807 | 19,998 | ||
Short-term investments | 303 | 691 | ||
Total financial assets at fair value, excluding separate accounts | 21,114 | 20,699 | ||
Financial liabilities at fair value: | ||||
Total financial liabilities at fair value | 2 | 5 | ||
Fair Value Inputs Level 2 [Member] | Other derivatives [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 4 | 10 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 2 | 5 | ||
Fair Value Inputs Level 2 [Member] | Guaranteed Minimum Income Benefit [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 0 | 0 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value Inputs Level 2 [Member] | Federal government and agency [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 525 | 503 | ||
Fair Value Inputs Level 2 [Member] | State and local government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 1,419 | 1,435 | ||
Fair Value Inputs Level 2 [Member] | Foreign government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 2,273 | 2,066 | ||
Fair Value Inputs Level 2 [Member] | Corporate [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 16,144 | 15,552 | ||
Fair Value Inputs Level 2 [Member] | Mortgage and other asset-backed [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 324 | 329 | ||
Fair Value Inputs Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 677 | [1] | 702 | [2] |
Equity securities | 50 | 74 | ||
Subtotal | 727 | 776 | ||
Short-term investments | 0 | 0 | ||
Total financial assets at fair value, excluding separate accounts | 1,504 | 1,575 | ||
Financial liabilities at fair value: | ||||
Total financial liabilities at fair value | 761 | 780 | ||
Fair Value Inputs Level 3 [Member] | Run-off Settlement Annuity Business [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial liabilities at fair value: | ||||
Net appreciation required to adjust future policy benefits for run-off settlement annuity business included in fixed maturities | 14 | 14 | ||
Fair Value Inputs Level 3 [Member] | Other derivatives [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 0 | 0 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 0 | 0 | ||
Fair Value Inputs Level 3 [Member] | Guaranteed Minimum Income Benefit [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Derivative assets | 777 | 799 | ||
Financial liabilities at fair value: | ||||
Derivative liabilities | 761 | 780 | ||
Fair Value Inputs Level 3 [Member] | Federal government and agency [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 0 | 0 | ||
Fair Value Inputs Level 3 [Member] | State and local government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 0 | 0 | ||
Fair Value Inputs Level 3 [Member] | Foreign government [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 39 | 47 | ||
Fair Value Inputs Level 3 [Member] | Corporate [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | 483 | 498 | ||
Fair Value Inputs Level 3 [Member] | Mortgage and other asset-backed [Member] | Fair Value, Measurements, Recurring [Member] | ||||
Financial assets at fair value: | ||||
Fixed maturities | $ 155 | $ 157 | ||
[1] | Fixed maturities includes $543 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $14 million of appreciation for securities classified in Level 3. See Note 10 for additional information. | |||
[2] | Fixed maturities includes $524 million of net appreciation required to adjust future policy benefits for run-off settlement annuity business including $14 million of appreciation for securities classified in Level 3. |
Fair Value Measurements - Level
Fair Value Measurements - Level 2 Financial Assets and Financial Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value Disclosures [Abstract] | ||
Percentage of investments in fixed maturities and equity securities classified as Level 2 | 93.00% | |
Maximum percentage of investments classified in Level 2 representing foreign bonds priced using unadjusted broker quotes | 1.00% | |
Other derivatives [Member] | ||
Derivative [Line Items] | ||
Adjustment for credit risk on derivatives assets | $ 0 | $ 0 |
Adjustment for credit risk on derivatives liabilities | 0 | 0 |
Other derivatives [Member] | Fair Value Inputs Level 2 [Member] | ||
Derivative [Line Items] | ||
Adjustment for credit risk on derivatives assets | 0 | 0 |
Adjustment for credit risk on derivatives liabilities | $ 0 | $ 0 |
Fair Value Measurements - Lev60
Fair Value Measurements - Level 3 Financial Assets and Liabilities (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Fair Value Disclosures [Abstract] | |||
Percentage of investments in fixed maturities and equity securities classified in Level 3 | 3.00% | ||
Fair Value, Measurements, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | $ 22,308 | $ 21,544 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | 727 | 776 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | 703 | 721 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Securities not priced by the Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | [1] | 24 | 55 |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Equity securities [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | $ 50 | $ 74 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Equity securities [Member] | Maximum [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) used to value equity securities. | 12 | 11.6 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Equity securities [Member] | Minimum [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) used to value equity securities. | 5 | 4.2 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Equity securities [Member] | Weighted Average [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) used to value equity securities. | 8.3 | 8.5 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Fixed Maturities [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | $ 653 | $ 647 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Corporate and government fixed maturities [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | $ 498 | $ 490 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Corporate and government fixed maturities [Member] | Maximum [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Liquidity adjustment to discount rates used to value fixed maturities and equity securities | 25.50% | 13.00% | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Corporate and government fixed maturities [Member] | Minimum [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Liquidity adjustment to discount rates used to value fixed maturities and equity securities | 0.70% | 0.80% | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Corporate and government fixed maturities [Member] | Weighted Average [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Liquidity adjustment to discount rates used to value fixed maturities and equity securities | 3.40% | 3.40% | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Mortgage and other asset-backed securities [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Fixed Maturities And Equity Securities | $ 155 | $ 157 | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Mortgage and other asset-backed securities [Member] | Maximum [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Liquidity adjustment to discount rates used to value fixed maturities and equity securities | 3.40% | 3.30% | |
Adjustment to discount rates used to value fixed maturities and equity securities for weighting of credit spreads | 4.50% | 4.70% | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Mortgage and other asset-backed securities [Member] | Minimum [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Liquidity adjustment to discount rates used to value fixed maturities and equity securities | 0.60% | 0.60% | |
Adjustment to discount rates used to value fixed maturities and equity securities for weighting of credit spreads | 1.70% | 1.60% | |
Fair Value, Measurements, Recurring [Member] | Fair Value Inputs Level 3 [Member] | Mortgage and other asset-backed securities [Member] | Weighted Average [Member] | Unobservable Inputs Developed By Company [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | |||
Liquidity adjustment to discount rates used to value fixed maturities and equity securities | 0.90% | 0.90% | |
Adjustment to discount rates used to value fixed maturities and equity securities for weighting of credit spreads | 2.30% | 2.30% | |
[1] | The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company. |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Level 3 Financial Assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Fixed Maturities And Equity Securities [Member] | |||
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Beginning Balance | $ 776 | $ 726 | |
Gains (losses) included in shareholders' net income: | |||
GMIB fair value gain/(loss) | 0 | 0 | |
Other | 23 | (25) | |
Total gains (losses) included in shareholders' net income | 23 | (25) | |
Gains (losses) included in other comprehensive income | (8) | 0 | |
Gains (losses) required to adjust future policy benefits for settlement annuities | [1] | 0 | 11 |
Purchases, sales, and settlements: | |||
Purchases | 25 | 24 | |
Sales | (47) | 0 | |
Settlements | (27) | (11) | |
Total purchases, sales, settlements | (49) | 13 | |
Transfers into/(out of) Level 3: | |||
Transfers into Level 3 | 40 | 128 | |
Transfers out of Level 3 | (55) | (61) | |
Total transfers into/(out of) Level 3 | (15) | 67 | |
Ending Balance | 727 | 792 | |
Total gains (losses) included in income attributable to instruments held at the reporting date | (6) | (25) | |
Derivative Financial Instruments, Assets [Member] | Guaranteed Minimum Income Benefit [Member] | |||
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Beginning Balance | 799 | 907 | |
Gains (losses) included in shareholders' net income: | |||
GMIB fair value gain/(loss) | (11) | 61 | |
Other | 1 | (1) | |
Total gains (losses) included in shareholders' net income | (10) | 60 | |
Gains (losses) included in other comprehensive income | 0 | 0 | |
Gains (losses) required to adjust future policy benefits for settlement annuities | [1] | 0 | 0 |
Purchases, sales, and settlements: | |||
Purchases | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | (12) | (10) | |
Total purchases, sales, settlements | (12) | (10) | |
Transfers into/(out of) Level 3: | |||
Transfers into Level 3 | 0 | 0 | |
Transfers out of Level 3 | 0 | 0 | |
Total transfers into/(out of) Level 3 | 0 | 0 | |
Ending Balance | 777 | 957 | |
Total gains (losses) included in income attributable to instruments held at the reporting date | $ (10) | $ 60 | |
[1] | Amounts do not accrue to shareholders. |
Fair Value Measurements - Cha62
Fair Value Measurements - Changes in Level 3 Financial Liabilities (Details) - Derivative Financial Instruments, Liabilities [Member] - Guaranteed Minimum Income Benefit [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ (780) | $ (885) | |
Gains (losses) included in shareholders' net income: | |||
GMIB fair value gain/(loss) | 11 | (61) | |
Other | (4) | (5) | |
Total gains (losses) included in shareholders' net income | 7 | (66) | |
Gains (losses) included in other comprehensive income | 0 | 0 | |
Gains (losses) required to adjust future policy benefits for settlement annuities | [1] | 0 | 0 |
Purchases, sales, settlements: | |||
Purchases | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 12 | 10 | |
Total purchases, sales, and settlements | 12 | 10 | |
Transfers into/(out of) Level 3: | |||
Transfers into Level 3 | 0 | 0 | |
Transfers out of Level 3 | 0 | 0 | |
Transfers into/(out of) Level 3 | 0 | 0 | |
Ending balance | (761) | (941) | |
Total gains (losses) included in income attributable to instruments held at the reporting date | $ 7 | $ (66) | |
[1] | Amounts do not accrue to shareholders. |
Fair Value Measurements - Cha63
Fair Value Measurements - Changes in Level 3 Net Derivative Assets (Liabilities) (Details) - Guaranteed Minimum Income Benefit [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Fair Value, Net Derivative Asset (Liability), Measured On Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||
Beginning balance | $ 19 | $ 22 | |
Gains (losses) included in shareholders' net income: | |||
GMIB fair value gain/(loss) | 0 | 0 | |
Other | (3) | (6) | |
Total gains (losses) included in shareholders' net income | (3) | (6) | |
Gains (losses) included in other comprehensive income | 0 | 0 | |
Gains (losses) required to adjust future policy benefits for settlement annuities | [1] | 0 | 0 |
Purchases, sales, settlements: | |||
Purchases | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 0 | 0 | |
Total purchases, sales, settlements | 0 | 0 | |
Transfers into/(out of) Level 3: | |||
Transfers into Level 3 | 0 | 0 | |
Transfers out of Level 3 | 0 | 0 | |
Transfers into/out of Level 3 | 0 | 0 | |
Ending balance | 16 | 16 | |
Total gains (losses) included in income attributable to instruments held at the reporting date | $ (3) | $ (6) | |
[1] | Amounts do not accrue to shareholders. |
Fair Value Measurements - Separ
Fair Value Measurements - Separate Account Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | ||
Financial assets and financial liabilities carried at fair value [Line Items] | ||||
Guaranteed separate accounts | $ 508 | $ 500 | ||
Non-guaranteed separate accounts | [1] | 6,841 | 6,584 | |
Subtotal | 7,349 | 7,084 | ||
Non-guaranteed separate accounts priced at NAV as a practical expedient | [1] | 848 | 856 | |
Total separate account assets | 8,197 | 7,940 | ||
Pension Benefits [Member] | ||||
Financial assets and financial liabilities carried at fair value [Line Items] | ||||
Non-guaranteed separate accounts priced at NAV as a practical expedient | 800 | 900 | ||
Non-guaranteed separate accounts | 3,800 | 3,700 | ||
Fair Value Inputs Level 1 [Member] | ||||
Financial assets and financial liabilities carried at fair value [Line Items] | ||||
Guaranteed separate accounts | 245 | 238 | ||
Non-guaranteed separate accounts | 1,435 | 1,368 | ||
Subtotal | 1,680 | 1,606 | ||
Fair Value Inputs Level 2 [Member] | ||||
Financial assets and financial liabilities carried at fair value [Line Items] | ||||
Guaranteed separate accounts | 263 | 262 | ||
Non-guaranteed separate accounts | 5,076 | 4,885 | ||
Subtotal | 5,339 | 5,147 | ||
Fair Value Inputs Level 3 [Member] | ||||
Financial assets and financial liabilities carried at fair value [Line Items] | ||||
Guaranteed separate accounts | 0 | 0 | ||
Non-guaranteed separate accounts | 330 | 331 | ||
Subtotal | 330 | 331 | ||
Fair Value Inputs Level 3 [Member] | Pension Benefits [Member] | ||||
Financial assets and financial liabilities carried at fair value [Line Items] | ||||
Non-guaranteed separate accounts | 300 | $ 300 | ||
Separate Account Assets [Member] | ||||
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | ||||
Beginning Balance | 331 | $ 297 | ||
Policyholder gains (losses) | 27 | (1) | ||
Purchases, sales, and settlements: | ||||
Purchases | 10 | 4 | ||
Sales | (35) | (1) | ||
Settlements | (1) | (2) | ||
Total purchases, sales, and settlements | (26) | 1 | ||
Transfers into/(out of) Level 3: | ||||
Transfers into Level 3 | 0 | 23 | ||
Transfers out of Level 3 | (2) | (3) | ||
Total transfers into/(out of) Level 3 | (2) | 20 | ||
Ending Balance | $ 330 | $ 317 | ||
[1] | Non-guaranteed separate accounts included $3.8 billion as of March 31, 2017 and $3.7 billion as of December 31, 2016 in assets supporting the Company's pension plans, including $0.3 billion classified in Level 3 for both periods and $0.8 billion as of March 31, 2017 and $0.9 billion as of December 31, 2016 priced at net asset value ("NAV") as a practical expedient. |
Fair Value Measurements - Sep65
Fair Value Measurements - Separate Account Assets Priced at NAV (Details) - Separate Account Assets [Member] - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | ||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Unfunded Commitments | $ 340 | ||
Fair Value, Measurements, Recurring [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Fair Value | 848 | $ 856 | |
Security Partnerships [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Unfunded Commitments | $ 340 | ||
Redemption Frequency | [1] | Not applicable | |
Security Partnerships [Member] | Fair Value, Measurements, Recurring [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Fair Value | $ 409 | $ 424 | |
Real Estate Funds [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Unfunded Commitments | $ 0 | ||
Redemption Frequency | [1] | Quarterly | |
Real Estate Funds [Member] | Minimum [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Redemption Notice Period | 45 days | 45 days | |
Real Estate Funds [Member] | Maximum [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Redemption Notice Period | 90 days | 90 days | |
Real Estate Funds [Member] | Fair Value, Measurements, Recurring [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Fair Value | $ 234 | $ 231 | |
Hedge Funds [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Unfunded Commitments | $ 0 | ||
Redemption Frequency | [1] | Up to Annually, varying by fund | |
Hedge Funds [Member] | Minimum [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Redemption Notice Period | 30 days | 30 days | |
Hedge Funds [Member] | Maximum [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Redemption Notice Period | 90 days | 90 days | |
Hedge Funds [Member] | Fair Value, Measurements, Recurring [Member] | |||
Fair Value Investments, Entities That Calculate Net Asset Value Per Share [Line Items] | |||
Fair Value | $ 205 | $ 201 | |
[1] | The attributes noted are effective as of March 31, 2017 and December 31, 2016. |
Fair Value Measurements - Measu
Fair Value Measurements - Measured Under Certain Conditions (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Financing Receivable, Impaired [Line Items] | ||
Impaired real estate, partnership entities, and commercial mortgage loans as a percent of total investments | 0.00% | |
Realized investment losses on impaired real estate, partnership entities, and commercial mortgage loans | $ 1 | $ 0 |
Maximum [Member] | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired real estate, partnership entities, and commercial mortgage loans as a percent of total investments | 1.00% |
Fair Value Measurements - Not C
Fair Value Measurements - Not Carried at Fair Value (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Commercial Mortgage Loans | $ 1,752 | $ 1,666 |
Percentage of contractholder deposit funds that can be withdrawn at any time | 70.00% | |
Estimate Of Fair Value Fair Value Disclosure [Member] | Fair Value Inputs Level 2 [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt, including current maturities, excluding capital leases | $ 5,331 | 5,460 |
Estimate Of Fair Value Fair Value Disclosure [Member] | Fair Value Inputs Level 3 [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Commercial Mortgage Loans | 1,776 | 1,682 |
Contractholder deposit funds, excluding universal life products | 1,206 | 1,215 |
Carrying Reported Amount Fair Value Disclosure [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Commercial Mortgage Loans | 1,752 | 1,666 |
Contractholder deposit funds, excluding universal life products | 1,203 | 1,212 |
Long-term debt, including current maturities, excluding capital leases | $ 4,735 | $ 4,991 |
Fair Value Measurements - Off-B
Fair Value Measurements - Off-Balance Sheet Financial Instruments (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value Off Balance Sheet Risks Disclosure Information [Line Items] | ||
Fair value of off-balance-sheet financial assets | ||
Fair value of off-balance-sheet financial liabilities |
Investments - Fixed Maturities
Investments - Fixed Maturities by Contractual Maturity Periods (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Amortized Cost: | ||
Due in one year or less | $ 1,405 | |
Due after one year through five years | 6,717 | |
Due after five years through ten years | 8,481 | |
Due after ten years | 3,586 | |
Mortgage and other asset-backed securities | 450 | |
Amortized Cost | 20,639 | $ 19,942 |
Fair Value: | ||
Due in one year or less | 1,416 | |
Due after one year through five years | 6,976 | |
Due after five years through ten years | 8,667 | |
Due after ten years | 4,196 | |
Mortgage and other asset-backed securities | 479 | |
Total fair value | $ 21,734 |
Investments - Gross Unrealized
Investments - Gross Unrealized Appreciation (Depreciation) on Fixed Maturities (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 20,639 | $ 19,942 |
Unrealized Appreciation | 1,231 | 1,196 |
Unrealized (Depreciation) | (136) | (177) |
Total Fair Value | 21,734 | 20,961 |
Run-off Settlement Annuity Business [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Unrealized Appreciation | 555 | 539 |
Unrealized (Depreciation) | (12) | (15) |
Total Fair Value | 2,700 | 2,700 |
Federal government and agency [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 667 | 658 |
Unrealized Appreciation | 233 | 223 |
Unrealized (Depreciation) | (3) | (4) |
Total Fair Value | 897 | 877 |
State and local government [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 1,324 | 1,342 |
Unrealized Appreciation | 100 | 99 |
Unrealized (Depreciation) | (5) | (6) |
Total Fair Value | 1,419 | 1,435 |
Foreign government [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 2,206 | 1,998 |
Unrealized Appreciation | 122 | 129 |
Unrealized (Depreciation) | (16) | (14) |
Total Fair Value | 2,312 | 2,113 |
Corporate [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 15,992 | 15,483 |
Unrealized Appreciation | 744 | 716 |
Unrealized (Depreciation) | (109) | (149) |
Total Fair Value | 16,627 | 16,050 |
Mortgage and other asset-backed [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 450 | 461 |
Unrealized Appreciation | 32 | 29 |
Unrealized (Depreciation) | (3) | (4) |
Total Fair Value | $ 479 | $ 486 |
Investments - Securities with a
Investments - Securities with a Decline in Fair Value (Details) $ in Millions | Mar. 31, 2017USD ($) |
Fixed Maturities [Member] | Investment Grade [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale Securities, Continuous Unrealized Loss Position, One Year or Less, Fair Value | $ 3,960 |
Available For Sale Securities, Continuous Unrealized Loss Position, Twelve Months Or Longer, Fair Value | 265 |
Available For Sale Securities, Continuous Unrealized Loss Position, One Year or Less, Amortized Cost | 4,067 |
Available-for-sale Securities, Continuous Unrealized Loss Position, More Than One Year, Amortized Cost | 276 |
Available-for-sale Securities, Continuous Unrealized Loss Position, One Year or Less, Accumulated Losses | (107) |
Available-for-sale Securities, Continuous Unrealized Loss Position, More Than One Year, Accumulated Losses | $ (11) |
Fixed Maturities [Member] | Investment Grade [Member] | One Year Or Less [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | 870 |
Fixed Maturities [Member] | Investment Grade [Member] | More Than One Year [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | 47 |
Fixed Maturities [Member] | Below Investment Grade [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale Securities, Continuous Unrealized Loss Position, One Year or Less, Fair Value | $ 619 |
Available For Sale Securities, Continuous Unrealized Loss Position, Twelve Months Or Longer, Fair Value | 116 |
Available For Sale Securities, Continuous Unrealized Loss Position, One Year or Less, Amortized Cost | 630 |
Available-for-sale Securities, Continuous Unrealized Loss Position, More Than One Year, Amortized Cost | 123 |
Available-for-sale Securities, Continuous Unrealized Loss Position, One Year or Less, Accumulated Losses | (11) |
Available-for-sale Securities, Continuous Unrealized Loss Position, More Than One Year, Accumulated Losses | $ (7) |
Fixed Maturities [Member] | Below Investment Grade [Member] | One Year Or Less [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | 532 |
Fixed Maturities [Member] | Below Investment Grade [Member] | More Than One Year [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | 21 |
Exchange Traded Funds [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Losses | $ (4) |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | 400 |
Other Equities [Member] | |
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | |
Securities with a significant unrealized loss reflected in accumulated other comprehensive income | $ 0 |
Investments - Hybrid Securities
Investments - Hybrid Securities (Details) - Equity securities [Member] - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Investment [Line Items] | ||
Hybrid securities | $ 36 | $ 36 |
Hybrid instruments, cost | $ 49 | $ 49 |
Investments - Commerical Mortga
Investments - Commerical Mortgage Loans by Property Type and Geographic Region (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Mortgage Loans on Real Estate [Line Items] | ||
Commercial Mortgage Loans | $ 1,752 | $ 1,666 |
Investments - Commercial Mortga
Investments - Commercial Mortgage Loan Maturities (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Investments: | ||
Commercial Mortgage Loans | $ 1,752 | $ 1,666 |
Investments - Credit Risk Profi
Investments - Credit Risk Profile, Commercial Mortgage Loans (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | $ 1,752 | $ 1,666 |
Weighted Average [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Debt service coverage ratio, commercial mortgage loans | 1.95 | 1.95 |
Loan-to-value ratio, commercial mortgage loans | 57.00% | 57.00% |
Loan To Value Ratio Below 50 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | $ 346 | $ 350 |
Loan To Value Ratio 50 Percent To 59 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 634 | 593 |
Loan To Value Ratio 60 Percent To 69 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 701 | 638 |
Loan To Value Ratio 70 Percent To 79 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 65 | 64 |
Loan To Value Ratio 80 Percent To 89 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Loan To Value Ratio 90 Percent To 100 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 6 | 21 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 1,534 | 1,476 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | Loan To Value Ratio Below 50 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 331 | 335 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | Loan To Value Ratio 50 Percent To 59 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 516 | 517 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | Loan To Value Ratio 60 Percent To 69 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 687 | 624 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | Loan To Value Ratio 70 Percent To 79 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | Loan To Value Ratio 80 Percent To 89 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.30x Or Greater [Member] | Loan To Value Ratio 90 Percent To 100 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 75 | 75 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | Loan To Value Ratio Below 50 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 15 | 15 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | Loan To Value Ratio 50 Percent To 59 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 46 | 46 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | Loan To Value Ratio 60 Percent To 69 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 14 | 14 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | Loan To Value Ratio 70 Percent To 79 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | Loan To Value Ratio 80 Percent To 89 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.20x To 1.29x [Member] | Loan To Value Ratio 90 Percent To 100 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 72 | 29 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | Loan To Value Ratio Below 50 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | Loan To Value Ratio 50 Percent To 59 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 42 | 0 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | Loan To Value Ratio 60 Percent To 69 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | Loan To Value Ratio 70 Percent To 79 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 30 | 29 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | Loan To Value Ratio 80 Percent To 89 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.10x To 1.19x [Member] | Loan To Value Ratio 90 Percent To 100 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 30 | 30 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | Loan To Value Ratio Below 50 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | Loan To Value Ratio 50 Percent To 59 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 30 | 30 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | Loan To Value Ratio 60 Percent To 69 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | Loan To Value Ratio 70 Percent To 79 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | Loan To Value Ratio 80 Percent To 89 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio 1.00x To 1.09x [Member] | Loan To Value Ratio 90 Percent To 100 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 41 | 56 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | Loan To Value Ratio Below 50 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | Loan To Value Ratio 50 Percent To 59 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | Loan To Value Ratio 60 Percent To 69 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | Loan To Value Ratio 70 Percent To 79 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 35 | 35 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | Loan To Value Ratio 80 Percent To 89 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | 0 | 0 |
Debt Service Coverage Ratio Less Than 1.00x [Member] | Loan To Value Ratio 90 Percent To 100 Percent [Member] | ||
Schedule Of Financing Receivable Recorded Investment Credit Quality Indicator [Line Items] | ||
Commercial mortgage loan | $ 6 | $ 21 |
Investments - Problem and Poten
Investments - Problem and Potential Problem Commercial Mortgage Loans (Details) - Mortgage Loans on Real Estate [Member] $ in Millions | 3 Months Ended | |
Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Financing Receivable, Modifications [Line Items] | ||
Maximum past due days that the mortgage loans are considered current | 59 days | |
Debt service coverage ratio threshold, below which mortgage loans are considered potential problems | 1 | |
Loan-to-value ratio threshold, above which mortgage loans are considered potential problems | 100.00% | |
Minimum past due days that mortgage loans are considered potential problems | 30 days | |
Maximum past due days that mortgage loans are considered potential problems | 60 days | |
Problem and potential problem mortgage loans | $ 6 | $ 21 |
Investments - Impaired Commerci
Investments - Impaired Commercial Mortgage Loans (Details) - Mortgage Loans on Real Estate [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Financing Receivable, Impaired [Line Items] | |||
Impaired commercial mortgage loans with related allowance, gross | $ 9 | $ 26 | |
Impaired commercial mortgage loans with no related allowance, gross | 0 | 0 | |
Impaired commercial mortgage loans, gross | 9 | 26 | |
Impaired commercial mortgage loans, reserves | (3) | (5) | |
Impaired commercial mortgage loans with related allowance, net | 6 | 21 | |
Impaired commercial mortgage loans, net | 6 | $ 21 | |
Average recorded investment in impaired mortgage loans | $ 18 | $ 112 |
Investments - Valuation Reserve
Investments - Valuation Reserves for Commercial Mortgage Loans (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Mortgage Loans on Real Estate [Member] | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Financing Receivable, Allowance For Credit Losses, Period Increase (Decrease) |
Investments - Real Estate and O
Investments - Real Estate and Other Long-Term Investments (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Other Long Term Investments [Line Items] | ||
Other long-term investments | $ 1,465 | $ 1,462 |
Investments - Short-Term Invest
Investments - Short-Term Investments and Cash Equivalents (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Corporate Securities [Member] | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | $ 2,400 | $ 2,200 |
Federal goverment securities | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | 597 | 378 |
Money Market Funds [Member] | ||
Short Term Investments And Cash Equivalents [Line Items] | ||
Short-term investments and cash equivalents | $ 17 | $ 11 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Schedule Of Investment Income Reported Amounts By Category [Line Items] | ||
Net investment income | $ 303 | $ 272 |
Investments - Realized Investme
Investments - Realized Investment Gains and Losses (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Realized Gains (Losses) on Investments [Line Items] | ||
Realized investment gains (losses) before income taxes | $ 46 | $ (32) |
Less income taxes (benefits) | 15 | (11) |
Net realized investment gains (losses) | 31 | (21) |
Fixed Maturities [Member] | ||
Realized Gains (Losses) on Investments [Line Items] | ||
Realized investment gains (losses) before income taxes | 2 | (18) |
Equity securities [Member] | ||
Realized Gains (Losses) on Investments [Line Items] | ||
Realized investment gains (losses) before income taxes | 33 | (10) |
Other Investments Including Derivatives [Member] | ||
Realized Gains (Losses) on Investments [Line Items] | ||
Realized investment gains (losses) before income taxes | $ 11 | $ (4) |
Investments - Write Downs and S
Investments - Write Downs and Sales (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Realized Gains (Losses) on Investments [Line Items] | |||
Total | $ (10) | $ (36) | |
Sales Information For Available For Sale Fixed Maturities Equity Securities [Abstract] | |||
Proceeds from sales | 414 | 361 | |
Gross gains on sales | 47 | 12 | |
Gross losses on sales | 2 | 5 | |
Fixed Maturities [Member] | |||
Realized Gains (Losses) on Investments [Line Items] | |||
Credit-related | (5) | (18) | |
Non-credit related | [1] | (2) | (9) |
Total | (7) | (27) | |
Other [Member] | |||
Realized Gains (Losses) on Investments [Line Items] | |||
Total | [2] | $ (3) | $ (9) |
[1] | These write-downs pertain to other-than-temporary declines in fair values due to increases in market yields (widening of credit spreads) for certain below investment grade fixed maturities with an increased probability of sales activity prior to recovery of their amortized cost basis. | ||
[2] | Other asset write-downs include other-than-temporary declines in fair values of equity securities and asset write-downs related to real estate investments. |
Derivative Financial Instrume84
Derivative Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Derivative [Line Items] | |||
Fair Value | |||
Gain (Loss) Recognized in Other Comprehensive Income | |||
Gains (losses) reclassified from other comprehensive income into income | |||
Amounts excluded from assessment of hedge effectiveness | |||
Gains (losses) recognized due to hedge ineffectiveness | |||
Cash on deposit representing upfront margin required by clearinghouse | 13 | ||
Net liability position of derivatives that contain certain credit risk-related contingent features | |||
Gain (Loss) Recognized in Income Statement | |||
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign Currency Swaps [Member] | |||
Derivative [Line Items] | |||
Notional Amount | $ 31 | 55 | |
Maximum term length, foreign currency derivatives | 4 years | ||
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Interest Rate Swaps [Member] | |||
Derivative [Line Items] | |||
Notional Amount | $ 750 | 750 | |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Foreign Currency Swaps [Member] | |||
Derivative [Line Items] | |||
Notional Amount | $ 87 | 78 | |
Maximum term length, foreign currency derivatives | 9 years | ||
Non designated [Member] | Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Notional Amount | $ 150 | $ 149 | |
Maximum term length, foreign currency derivatives | 3 months |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Billions | 3 Months Ended |
Mar. 31, 2017USD ($)LimitedPartnerships | |
Variable Interest Entity [Line Items] | |
Methodology for determining whether the Company is primary beneficiary | When the Company becomes involved with a variable interest entity, as well as when there is a change in the Company’s involvement with an entity, the Company evaluates the following to determine if it is the primary beneficiary and must consolidate the entity: the structure and purpose of the entity; the risks and rewards created by and shared through the entity; and the Company’s ability to direct its activities, receive its benefits and absorb its losses relative to the other parties involved with the entity including its sponsors, equity holders, guarantors, creditors and servicers. |
Security And Real Estate Limited Partnerships [Member] | |
Variable Interest Entity [Line Items] | |
Maximum exposure to loss related to arrangements with variable interest entity | $ 2.2 |
Number of limited partnerships defined as variable interest entities | LimitedPartnerships | 100 |
Commitments to contribute additional cash, amount | $ 1.1 |
Security And Real Estate Limited Partnerships [Member] | Maximum [Member] | |
Variable Interest Entity [Line Items] | |
Non-controlling interest percentage | 10.00% |
Security And Real Estate Limited Partnerships [Member] | Other Long Term Investments [Member] | |
Variable Interest Entity [Line Items] | |
Carrying amount of assets | $ 1.1 |
Investment Entities [Member] | |
Variable Interest Entity [Line Items] | |
Maximum exposure to loss related to arrangements with variable interest entity | $ 0.5 |
Non-controlling interest percentage | |
Real Estate Joint Ventures [Member] | |
Variable Interest Entity [Line Items] | |
Maximum exposure to loss related to arrangements with variable interest entity | $ 0.2 |
Carrying amount of assets | 0.2 |
Independent Physician Associations [Member] | |
Variable Interest Entity [Line Items] | |
Maximum exposure to loss related to arrangements with variable interest entity |
Accumulated Other Comprehensi86
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss), beginning | $ (1,382) | |
Shareholders' other comprehensive income (loss), net of tax | 130 | $ 262 |
Accumulated other comprehensive income (loss), ending | (1,252) | |
Realized investment (gains) losses | (46) | 32 |
Other operating expenses | 2,530 | 2,321 |
Net unrealized appreciation on securities [ Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss), before tax, beginning | 542 | 612 |
Other comprehensive income (loss) before reclassifications, pre-tax | 53 | 227 |
Reclassification adjustment, pre-tax | (35) | 28 |
Other comprehensive income (loss), pre-tax | 18 | 255 |
Accumulated other comprehensive income (loss), before tax, ending | 560 | 867 |
Accumulated other comprehensive income/loss tax (expense) benefit, beginning | (180) | (194) |
Other comprehensive income (loss), securities, before reclassifications, tax (expense) benefit | (24) | (72) |
Reclassification adjustment, securities, tax (expense) benefit | 13 | (10) |
Other comprehensive income (loss), tax (expense) benefit | (11) | (82) |
Accumulated other comprehensive income/loss tax (expense) benefit, ending | (191) | (276) |
Accumulated other comprehensive income (loss), beginning | 362 | 418 |
Other comprehensive income (loss) before reclassifications, after-tax | 29 | 155 |
Reclassification adjustment, after-tax | (22) | 18 |
Shareholders' other comprehensive income (loss), net of tax | 7 | 173 |
Accumulated other comprehensive income (loss), ending | 369 | 591 |
Net unrealized appreciation on securities [ Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Realized investment (gains) losses | (35) | 28 |
Net unrealized appreciation on derivatives [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss), before tax, beginning | 4 | 10 |
Other comprehensive income (loss) before reclassifications, pre-tax | (4) | |
Reclassification adjustment, pre-tax | (4) | |
Accumulated other comprehensive income (loss), before tax, ending | 0 | 6 |
Accumulated other comprehensive income/loss tax (expense) benefit, beginning | (1) | (3) |
Other comprehensive income (loss), derivatives, before reclassifications, tax (expense) benefit | 1 | |
Reclassification adjustment, derivatives, tax (expense) benefit | 1 | |
Accumulated other comprehensive income/loss tax (expense) benefit, ending | 0 | (2) |
Accumulated other comprehensive income (loss), beginning | 3 | 7 |
Other comprehensive income (loss) before reclassifications, after-tax | (3) | |
Reclassification adjustment, after-tax | (3) | |
Accumulated other comprehensive income (loss), ending | 0 | 4 |
Net unrealized appreciation on derivatives [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Realized investment (gains) losses | (4) | |
Net translation of foreign currencies [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss), before tax, beginning | (390) | (295) |
Other comprehensive income (loss), pre-tax | 111 | 83 |
Accumulated other comprehensive income (loss), before tax, ending | (279) | (212) |
Accumulated other comprehensive income/loss tax (expense) benefit, beginning | 21 | 21 |
Other comprehensive income (loss), tax (expense) benefit | 1 | (2) |
Accumulated other comprehensive income/loss tax (expense) benefit, ending | 22 | 19 |
Accumulated other comprehensive income (loss), beginning | (369) | (274) |
Shareholders' other comprehensive income (loss), net of tax | 112 | 81 |
Accumulated other comprehensive income (loss), ending | (257) | (193) |
Postretirement benefits liability adjustment [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss), before tax, beginning | (2,120) | (2,155) |
Reclassification adjustment, pre-tax | 21 | 16 |
Other comprehensive income (loss), pre-tax | 21 | |
Accumulated other comprehensive income (loss), before tax, ending | (2,099) | (2,139) |
Accumulated other comprehensive income/loss tax (expense) benefit, beginning | 742 | 754 |
Reclassification adjustment, postretirement benefits, tax (expense) benefit | (7) | (5) |
Other comprehensive income (loss), tax (expense) benefit | (7) | |
Accumulated other comprehensive income/loss tax (expense) benefit, ending | 735 | 749 |
Accumulated other comprehensive income (loss), beginning | (1,378) | (1,401) |
Reclassification adjustment, after-tax | 14 | 11 |
Shareholders' other comprehensive income (loss), net of tax | 14 | |
Accumulated other comprehensive income (loss), ending | (1,364) | (1,390) |
Postretirement benefits liability adjustment [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Other operating expenses | 21 | 16 |
Reclassification adjustment for amortization of net losses from past experience and prior service costs [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Reclassification adjustment, pre-tax | 15 | 16 |
Reclassification adjustment, postretirement benefits, tax (expense) benefit | (5) | (5) |
Reclassification adjustment, after-tax | 10 | 11 |
Reclassification adjustment for amortization of net losses from past experience and prior service costs [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Other operating expenses | 15 | $ 16 |
Reclassification adjustment for settlement losses [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Reclassification adjustment, pre-tax | 6 | |
Reclassification adjustment, postretirement benefits, tax (expense) benefit | (2) | |
Reclassification adjustment, after-tax | 4 | |
Reclassification adjustment for settlement losses [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Other operating expenses | $ 6 |
Pension and Other Postretirem87
Pension and Other Postretirement Benefits - About our Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Pension Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan cost | $ 5 | $ 5 |
Other Postretirement Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plan cost | $ 2 | $ 2 |
Pension and Other Postretirem88
Pension and Other Postretirement Benefits - Funded Status (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Pension Benefits [Member] | ||
Change in benefit obligation [Abstract] | ||
Interest cost | $ 48,000,000 | $ 50,000,000 |
Change in plan assets [Roll Forward] | ||
Contributions | 150,000,000 | |
Expected plan contributions for the remaining fiscal year | 0 | |
Other Postretirement Benefits [Member] | ||
Change in benefit obligation [Abstract] | ||
Interest cost | $ 3,000,000 | $ 3,000,000 |
Pension and Other Postretirem89
Pension and Other Postretirement Benefit Plans - Amounts included in AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Amounts included in AOCI [Abstract] | ||
Increase (decrease) in unrecognized actuarial losses and prior service costs, pre-tax | $ (21) | |
Increase (decrease) in unrecognized actuarial losses and prior service costs, after-tax | $ (14) | $ (11) |
Pension and Other Postretirem90
Pension and Other Postretirement Benefits - Cost of our Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Pension Benefits [Member] | ||
Components of net pension and other postretirement benefits cost [Abstract] | ||
Interest cost | $ 48 | $ 50 |
Expected long-term return on plan assets | (65) | (62) |
Amortization of net loss from past experience | 16 | 17 |
Amortization of prior service cost | 0 | 0 |
Settlement loss | 6 | 0 |
Defined benefit plan cost | 5 | 5 |
Other Postretirement Benefits [Member] | ||
Components of net pension and other postretirement benefits cost [Abstract] | ||
Interest cost | 3 | 3 |
Expected long-term return on plan assets | 0 | 0 |
Amortization of net loss from past experience | 0 | 0 |
Amortization of prior service cost | (1) | (1) |
Settlement loss | 0 | 0 |
Defined benefit plan cost | $ 2 | $ 2 |
Goodwill, Other Intangibles, an
Goodwill, Other Intangibles, and Property and Equipment - Goodwill Activity (Details) $ in Millions | Mar. 31, 2017USD ($) |
Goodwill [Line Items] | |
Goodwill, Beginning Balance | $ 5,980 |
Goodwill, Ending Balance | $ 5,982 |
Goodwill, Other Intangibles, 92
Goodwill, Other Intangibles, and Property and Equipment - Property and Equipment (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Net carrying value | $ 1,519 | $ 1,536 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Current taxes | ||
Total taxes, current | $ 286 | $ 294 |
Deferred taxes (benefits) | ||
Total taxes, deferred | 11 | 11 |
Total taxes | $ 297 | $ 305 |
Income Taxes - Reconciliation t
Income Taxes - Reconciliation to Nominal Tax Rate (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reconciliation of total taxes to nominal federal rate details [Abstract] | ||
Total income taxes | $ 297 | $ 305 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rates (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Taxes [Abstract] | ||
Consolidated effective tax rate | 33.40% | 37.20% |
Accumulated undistributed foreign earnings | $ 2,700 | |
Cumulative unrecognized deferred tax liabilities | $ 362 |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Deferred tax liabilities [Abstract] | ||
Net deferred income tax assets | $ 263 | $ 304 |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Reconciliation of unrecognized tax benefits details [Abstract] | |
Changes in unreognized tax benefits |
Contingencies and Other Matte98
Contingencies and Other Matters - Guarantees (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Financial Guarantee [Member] | Retiree and Life Insurance Benefits [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | $ 488 |
Liability Carrying Value | $ 0 |
Percentage of benefit obligations reinsured | 13.00% |
Financial Guarantee [Member] | Retiree and Life Insurance Benefits [Member] | Minimum [Member] | |
Guarantee Obligations [Line Items] | |
Assets maintained by employers | $ 488 |
Indemnification obligations to lenders [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | 153 |
Liability Carrying Value | $ 0 |
Indemnification obligations in connection with acquistion, disposition and reinsurance transactions [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure Inestimable | The Company does not believe that it is possible to determine the maximum potential amount due under these obligations, because not all amounts due under these indemnification obligations are subject to limitation. |
Liability Carrying Value | $ 0 |
Market Value Guarantee [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | 32 |
Liability Carrying Value | 3 |
Expiring In 2022 [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | 25 |
Expiring in 2026 [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | $ 7 |
Contingencies and Other Matte99
Contingencies and Other Matters - Legal and Regulatory Matters (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
CMS Actions [Member] | |
Loss Contingencies [Line Items] | |
Percent of Medicare Advantage customers in a 4 Star or greater plan | 20.00% |
Guaranty Fund Assessments [Member] | |
Loss Contingencies [Line Items] | |
Charges related to guaranty fund assessments | $ 129 |
Company's share of guaranty fund assessment, after-tax | 83 |
Guaranty Fund Assessments [Member] | Global Health Benefits Segment [Member] | |
Loss Contingencies [Line Items] | |
Charges related to guaranty fund assessments | 106 |
Company's share of guaranty fund assessment, after-tax | 68 |
Guaranty Fund Assessments [Member] | Group Disability And Life Segment [Member] | |
Loss Contingencies [Line Items] | |
Charges related to guaranty fund assessments | 23 |
Company's share of guaranty fund assessment, after-tax | 15 |
Pending Litigation [Member] | |
Loss Contingencies [Line Items] | |
Reserves for litigation matters, pre-tax | 190 |
Reserves for litigation matters, after-tax | $ 125 |
Contingencies and Other Matt100
Contingencies and Other Matters - Anthem Litigation (Details) $ in Millions | Mar. 31, 2017USD ($) |
Contingencies And Other Matters [Abstract] | |
Termination fee payable to Company | $ 1,850 |
Positive Outcome Of Litigation [Member] | Minimum [Member] | |
Gain Contingencies [Line Items] | |
Damages sought | $ 13,000 |
Segment Information - Special I
Segment Information - Special Items (Details) - USD ($) $ in Millions | 3 Months Ended | 20 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2017 | |
After-tax [Abstract] | |||
Long-term care guaranty fund assessment | $ 83 | $ 0 | |
Merger-related transaction costs | 49 | 36 | |
Total impact of special items, after-tax | 132 | 36 | |
Before-tax [Abstract] | |||
Long-term care guaranty fund assessment, before tax | 129 | 0 | |
Merger-related costs, before tax | 63 | 40 | $ 295 |
Total impact of special items, before-tax | $ 192 | $ 40 |
Segment Information - Summarize
Segment Information - Summarized Segment Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Premiums, fees and other revenues and mail order pharmacy revenues | $ 10,036 | $ 9,644 |
Net investment income | 303 | 272 |
Total operating revenues | 10,339 | 9,916 |
Total revenues | 10,385 | 9,884 |
Shareholders' Net Income | 598 | 519 |
After-tax adjustments to reconcile to adjusted income from operations: | ||
Realized investment (gains) losses | (31) | 21 |
Amortization of other acquired intangible assets | 20 | 25 |
Special items: | ||
Long-term care guaranty fund assessment | 83 | 0 |
Merger-related transaction costs | 49 | 36 |
Adjusted income from operations | 719 | 601 |
Operating Segments [Member] | Global Health Benefits Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Premiums, fees and other revenues and mail order pharmacy revenues | 8,106 | 7,812 |
Net investment income | 92 | 72 |
Total operating revenues | 8,198 | 7,884 |
Total revenues | 8,224 | 7,867 |
Shareholders' Net Income | 544 | 514 |
After-tax adjustments to reconcile to adjusted income from operations: | ||
Realized investment (gains) losses | (16) | 12 |
Amortization of other acquired intangible assets | 14 | 18 |
Special items: | ||
Long-term care guaranty fund assessment | 68 | |
Merger-related transaction costs | 0 | 0 |
Adjusted income from operations | 610 | 544 |
Operating Segments [Member] | Global Supplemental Benefits Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Premiums, fees and other revenues and mail order pharmacy revenues | 881 | 780 |
Net investment income | 28 | 26 |
Total operating revenues | 909 | 806 |
Total revenues | 922 | 804 |
Shareholders' Net Income | 77 | 59 |
After-tax adjustments to reconcile to adjusted income from operations: | ||
Realized investment (gains) losses | (9) | 1 |
Amortization of other acquired intangible assets | 6 | 7 |
Special items: | ||
Long-term care guaranty fund assessment | 0 | |
Merger-related transaction costs | 0 | 0 |
Adjusted income from operations | 74 | 67 |
Operating Segments [Member] | Group Disability And Life Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Premiums, fees and other revenues and mail order pharmacy revenues | 1,032 | 1,029 |
Net investment income | 89 | 80 |
Total operating revenues | 1,121 | 1,109 |
Total revenues | 1,129 | 1,106 |
Shareholders' Net Income | 59 | 13 |
After-tax adjustments to reconcile to adjusted income from operations: | ||
Realized investment (gains) losses | (6) | 2 |
Amortization of other acquired intangible assets | 0 | 0 |
Special items: | ||
Long-term care guaranty fund assessment | 15 | |
Merger-related transaction costs | 0 | 0 |
Adjusted income from operations | 68 | 15 |
Operating Segments [Member] | Other Operations Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Premiums, fees and other revenues and mail order pharmacy revenues | 30 | 27 |
Net investment income | 86 | 90 |
Total operating revenues | 116 | 117 |
Total revenues | 115 | 107 |
Shareholders' Net Income | 20 | 14 |
After-tax adjustments to reconcile to adjusted income from operations: | ||
Realized investment (gains) losses | 0 | 6 |
Amortization of other acquired intangible assets | 0 | 0 |
Special items: | ||
Long-term care guaranty fund assessment | 0 | |
Merger-related transaction costs | 0 | 0 |
Adjusted income from operations | 20 | 20 |
Corporate [Member] | ||
Segment Reporting Information [Line Items] | ||
Premiums, fees and other revenues and mail order pharmacy revenues | (13) | (4) |
Net investment income | 8 | 4 |
Total operating revenues | (5) | 0 |
Total revenues | (5) | 0 |
Shareholders' Net Income | (102) | (81) |
After-tax adjustments to reconcile to adjusted income from operations: | ||
Realized investment (gains) losses | 0 | 0 |
Amortization of other acquired intangible assets | 0 | 0 |
Special items: | ||
Long-term care guaranty fund assessment | 0 | |
Merger-related transaction costs | 49 | 36 |
Adjusted income from operations | $ (53) | $ (45) |
Segment Information - Revenues
Segment Information - Revenues by Product Type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenue from External Customer [Line Items] | ||
Premiums | $ 8,103 | $ 7,746 |
Mail order pharmacy revenues | 710 | 697 |
Revenues from external customers | $ 10,036 | $ 9,644 |
Segment Information - Foreign a
Segment Information - Foreign and U.S. Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues from external customers | $ 10,036 | $ 9,644 |
Segment Information - Concentra
Segment Information - Concentration Risk (Details) - CMS [Member] - USD ($) $ in Billions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||
Net receivables from CMS | $ 0.5 | $ 0.6 | |
Revenue Consolidated [Member] | Government Contracts Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 18.00% | 21.00% | |
Concentration Risk, Benchmark Description | consolidated revenues |
Quarterly Financial Data (Detai
Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Consolidated Results | ||
Total revenues | $ 10,385 | $ 9,884 |
Income before income taxes | 890 | 819 |
Shareholders' net income | $ 598 | $ 519 |
Shareholders' Net Income Per Share: | ||
EPS, basic | $ 2.34 | $ 2.04 |
EPS, diluted | 2.30 | 2 |
Stock and Dividend Data | ||
Dividends Declared Per Share | $ 0.04 | $ 0.04 |
Special items | ||
Merger-related transaction costs | $ 49 | $ 36 |
Schedule II - Condensed Financi
Schedule II - Condensed Financial Information, Statements of Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating expenses: | ||
Total operating expenses | $ 2,530 | $ 2,321 |
Income before Income Taxes | 890 | 819 |
Income tax expense (benefit) | 297 | 305 |
Shareholders' Net Income | 598 | 519 |
Shareholders' other comprehensive income (loss), net of tax: | ||
Net unrealized appreciation (depreciation) on securities | 7 | 173 |
Net unrealized appreciation (depreciation) on derivatives | (3) | (3) |
Net translation of foreign currencies | 112 | 81 |
Postretirement benefits liability adjustment | 14 | 11 |
Shareholders' other comprehensive income (loss) | 130 | 262 |
Shareholders' comprehensive income (loss) | $ 728 | $ 781 |
Schedule II - Condensed Fina108
Schedule II - Condensed Financial Information, Balance Sheets (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Assets | ||||
Cash and cash equivalents | $ 4,155 | $ 3,185 | $ 2,401 | $ 1,968 |
Short-term investments | 303 | 691 | ||
Other assets | 2,250 | 2,227 | ||
Total assets | 61,147 | 59,360 | ||
Liabilities: | ||||
Short-term debt | 142 | 276 | ||
Long-term debt, carrying value | 4,621 | 4,756 | ||
Total liabilities | 46,862 | 45,575 | ||
Shareholders Equity: | ||||
Common stock (shares issued, 296; authorized, 600) | 74 | 74 | ||
Additional paid-in capital | 2,912 | 2,892 | ||
Accumulated other comprehensive loss | (1,252) | (1,382) | ||
Retained earnings | 14,356 | 13,855 | ||
Less: treasury stock, at cost | (1,864) | (1,716) | ||
Total shareholders' equity | 14,226 | 13,723 | ||
Total liabilities and equity | $ 61,147 | $ 59,360 |
Schedule II - Condensed Fina109
Schedule II - Condensed Financial Information, Balance Sheets - Parentheticals (Details) - shares shares in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets | ||
Common stock shares issued | 296 | 296 |
Common stock shares authorized | 600 | 600 |
Schedule II - Condensed Fina110
Schedule II - Condensed Financial Information, Statements of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Cash Flows from Operating Activities | |||
Shareholders' net income | $ 598 | $ 519 | |
Adjustments to reconcile shareholders' net income to net cash provided by (used in) operating activities: | |||
Other liabilities | (186) | (263) | |
Other, net | (31) | 5 | |
Net cash provided by (used in) operating activities | [1] | 1,579 | 921 |
Cash Flows from Investing Activities | |||
Short term investments purchased | (256) | (198) | |
Net cash provided by (used in) investing activities | [1] | (117) | (360) |
Cash Flows from Financing Activities | |||
Net change in short-term debt | (10) | (6) | |
Repayment of long-term debt | (250) | 0 | |
Issuance of common stock | 38 | 10 | |
Repurchase of common stock | (239) | (139) | |
Net cash provided by (used in) financing activities | (515) | (146) | |
Net increase (decrease) in cash and cash equivalents | 970 | 433 | |
Cash and cash equivalents, January 1 | 3,185 | 1,968 | |
Cash and cash equivalents, March 31 | $ 4,155 | $ 2,401 | |
[1] | As required in adopting Accounting Standard Update ("ASU") 2016-15, the Company retrospectively reclassified $27 million of cash distributions from partnership earnings from investing to operating activities for the first quarter of 2016. The comparable amount reported in operating activities in 2017 was $45 million. See Note 2 for further discussion. |
Schedule II - Condensed Fina111
Schedule II - Condensed Financial Information, Short-term and Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Total short-term debt | $ 142 | $ 276 | |
Long-term debt, carrying value | 4,621 | 4,756 | |
Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Current maturities of long-term debt | 131 | 250 | |
Other, including capital leases | 11 | 26 | |
Total short-term debt | 142 | 276 | |
Long-term debt, carrying value | 4,621 | 4,756 | |
$131 million, 6.35% Notes due 2018 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 131 | $ 131 | |
Long-term debt, stated interest rate | 6.35% | 6.35% | |
Long-term debt, carrying value | $ 0 | $ 131 | |
$250 million, 4.375% Notes due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 250 | $ 250 | |
Long-term debt, stated interest rate | 4.375% | 4.375% | |
Long-term debt, carrying value | [1] | $ 252 | $ 252 |
$300 million, 5.125% Notes due 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 5.125% | 5.125% | |
Long-term debt, carrying value | [1] | $ 301 | $ 301 |
$300 million, 4.5% Notes due 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 4.50% | 4.50% | |
Long-term debt, carrying value | [1] | $ 301 | $ 302 |
$750 million, 4% Notes due 2022 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 750 | $ 750 | |
Long-term debt, stated interest rate | 4.00% | 4.00% | |
Long-term debt, carrying value | $ 744 | $ 744 | |
$100 million, 7.65% Notes due 2023 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 100 | $ 100 | |
Long-term debt, stated interest rate | 7.65% | 7.65% | |
Long-term debt, carrying value | $ 100 | $ 100 | |
$17 million, 8.3% Notes due 2023 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 17 | $ 17 | |
Long-term debt, stated interest rate | 8.30% | 8.30% | |
Long-term debt, carrying value | $ 17 | $ 17 | |
$900 million, 3.25% Notes Due 2025 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 900 | $ 900 | |
Long-term debt, stated interest rate | 3.25% | 3.25% | |
Long-term debt, carrying value | $ 893 | $ 893 | |
$300 million, 7.875% Debentures due 2027 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 7.875% | 7.875% | |
Long-term debt, carrying value | $ 299 | $ 299 | |
$83 million, 8.3% Step Down Notes due 2033 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 83 | $ 83 | |
Long-term debt, stated interest rate | 8.30% | 8.30% | |
Long-term debt, carrying value | $ 82 | $ 82 | |
$500 million, 6.15% Notes due 2036 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 500 | $ 500 | |
Long-term debt, stated interest rate | 6.15% | 6.15% | |
Long-term debt, carrying value | $ 498 | $ 498 | |
$300 million, 5.875% Notes due 2041 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 300 | $ 300 | |
Long-term debt, stated interest rate | 5.875% | 5.875% | |
Long-term debt, carrying value | $ 296 | $ 296 | |
$750 million, 5.375% Notes due 2042 [Member] | Uncollateralized Debt [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt, face value | $ 750 | $ 750 | |
Long-term debt, stated interest rate | 5.375% | 5.375% | |
Long-term debt, carrying value | $ 743 | $ 743 | |
[1] | The Company has entered into interest rate swap contracts hedging a portion of these fixed-rate debt instruments. See Note 11 for further information about the Company’s interest rate risk management and these derivative instruments. |
Schedule II - Condensed Fina112
Schedule II - Condensed Financial Information, Credit Facility (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)Banks | |
Line of Credit Facility [Line Items] | |
Covenant terms | The credit agreement includes options subject to consent by the administrative agent and the committing banks to increase the commitment amount to $2 billion and to extend the term past December 12, 2019. The credit agreement is available for general corporate purposes, including for the issuance of letters of credit. The credit agreement contains customary covenants and restrictions, including a financial covenant that the Company may not permit its leverage ratio – which is total consolidated debt to total consolidated capitalization (each as defined in the credit agreement) – to be greater than 0.50. The leverage ratio calculation excludes the following items that are included in accumulated other comprehensive loss on the Company’s consolidated balance sheets: net unrealized appreciation on fixed maturities and the portion of the post-retirement benefits liability adjustment attributable to pension. |
Debt covenant compliance | The Company was in compliance with its debt covenants as of March 31, 2017. |
Debt outstanding | $ 4,800 |
Revolving Credit And Letter Of Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Credit agreement term | 5 years |
Maximum borrowing capacity under credit facility | $ 1,500 |
Expiration date | Dec. 12, 2019 |
Number of participating banks | Banks | 16 |
Maximum borrowing capacity under option to increase | $ 2,000 |
Leverage ratio covenant | 50.00% |
Borrowing capacity within maximum debt coverage covenant | $ 10,500 |
Letter of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity under credit facility | 500 |
Letters of credit outstanding | $ 13 |
Primary Commitment Holders [Member] | Revolving Credit And Letter Of Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Number of participating banks | Banks | 3 |
Percent of commitment held by each primary commitment holder | 12.00% |
Minor Commitment Holders [Member] | Revolving Credit And Letter Of Credit Facility [Member] | |
Line of Credit Facility [Line Items] | |
Number of participating banks | Banks | 13 |
Collective percentage held by remaining commitment holders | 64.00% |
Schedule II - Condensed Fina113
Schedule II - Condensed Financial Information, Notes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Maturities Of Debt Excluding Capital Leases [Abstract] | ||
Interest paid on long-term and short-term debt | $ 70 | $ 69 |
Schedule II - Condensed Fina114
Schedule II - Condensed Financial Information, Guarantees (Details) $ in Millions | Mar. 31, 2017USD ($) |
Market Value Guarantee [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | $ 32 |
Liability Carrying Value | 3 |
Expiring In 2022 [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | 25 |
Expiring in 2026 [Member] | |
Guarantee Obligations [Line Items] | |
Maximum Exposure, Undiscounted | $ 7 |
Schedule IV - Reinsurance (Deta
Schedule IV - Reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Premiums: | ||
Ceded to other companies, premiums | $ 120 | $ 136 |
Net amount | $ 8,103 | $ 7,746 |