Investments

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

6. Investments

Fixed Maturity and Equity Securities Available-for-Sale

Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following table presents the fixed maturity and equity securities AFS by sector. Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities and non-redeemable preferred stock is reported within equity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”) and commercial mortgage-backed securities (“CMBS”) (collectively, “Structured Securities”).



	June 30, 2017											December 31, 2016
	Cost or Amortized Cost		Gross Unrealized							Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized							Estimated Fair Value
	Cost or Amortized Cost		Gains		Temporary Losses		OTTI Losses (1)			Estimated Fair Value		Cost or Amortized Cost		Gains		Temporary Losses		OTTI Losses (1)			Estimated Fair Value
	(In millions)
Fixed maturity securities:
U.S. corporate	$	94,759	$	8,426	$	586	$	—		$	102,599	$	94,558	$	7,351	$	1,056	$	—		$	100,853
U.S. government and agency	54,356		5,922		399		—			59,879		53,326		4,977		780		—			57,523
Foreign government	54,708		6,712		312		—			61,108		50,923		6,600		385		—			57,138
Foreign corporate	57,709		3,819		1,054		—			60,474		55,676		3,132		1,752		(1		)	57,057
RMBS	37,355		1,472		334		(39		)	38,532		36,293		1,244		554		(10		)	36,993
State and political subdivision	14,234		2,060		40		—			16,254		14,566		1,733		122		1			16,176
ABS	14,088		124		74		3			14,135		13,920		101		141		3			13,877
CMBS	10,821		341		60		(1		)	11,103		11,092		282		103		(1		)	11,272
Total fixed maturity securities	$	338,030	$	28,876	$	2,859	$	(37	)	$	364,084	$	330,354	$	25,420	$	4,893	$	(8	)	$	350,889
Equity securities:
Common stock	$	2,280	$	411	$	16	$	—		$	2,675	$	1,927	$	488	$	14	$	—		$	2,401
Non-redeemable preferred stock	703		52		15		—			740		817		25		49		—			793
Total equity securities	$	2,983	$	463	$	31	$	—		$	3,415	$	2,744	$	513	$	63	$	—		$	3,194

__________________


(1)	Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”

The Company held non-income producing fixed maturity securities with an estimated fair value of $1 million and $6 million, and unrealized gains (losses) of ($4) million and ($2) million, at June 30, 2017 and December 31, 2016, respectively.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at June 30, 2017:



	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	14,582	$	71,452	$	70,413	$	119,319	$	62,264	$	338,030
Estimated fair value	$	14,713	$	74,867	$	74,093	$	136,641	$	63,770	$	364,084

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

Continuous Gross Unrealized Losses for Fixed Maturity and Equity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity and equity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:



	June 30, 2017								December 31, 2016
	Less than 12 Months				Equal to or Greater than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(Dollars in millions)
Fixed maturity securities:
U.S. corporate	$	10,077	$	310	$	3,305	$	276	$	16,147	$	656	$	3,684	$	400
U.S. government and agency	20,004		378		189		21		13,500		760		141		20
Foreign government	6,448		227		1,012		85		6,228		271		924		114
Foreign corporate	7,081		234		6,741		820		11,613		639		6,127		1,112
RMBS	12,033		215		1,753		80		12,943		403		2,618		141
State and political subdivision	1,062		32		97		8		2,636		114		85		9
ABS	2,711		10		1,496		67		2,702		33		2,789		111
CMBS	1,402		22		601		37		2,570		48		735		54
Total fixed maturity securities	$	60,818	$	1,428	$	15,194	$	1,394	$	68,339	$	2,924	$	17,103	$	1,961
Equity securities:
Common stock	331		16		$	2	$	—	$	105	$	14	$	11	$	—
Non-redeemable preferred stock	28		—		134		15		196		9		165		40
Total equity securities	$	359	$	16	$	136	$	15	$	301	$	23	$	176	$	40
Total number of securities in an unrealized loss position	3,981				1,544				5,321				1,790

Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities

As described more fully in Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2016 Annual Report, the Company performs a regular evaluation of all investment classes for impairment, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy, in order to evaluate whether such investments are other-than-temporarily impaired.

Current Period Evaluation

Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company concluded that these securities were not other-than-temporarily impaired at June 30, 2017. Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings, collateral valuation, interest rates and credit spreads, as well as a change in the Company’s intention to hold or sell a security that is in an unrealized loss position. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods.

Gross unrealized losses on fixed maturity securities decreased $2.1 billion during the six months ended June 30, 2017 to $2.8 billion. The decrease in gross unrealized losses for the six months ended June 30, 2017 was primarily attributable to narrowing credit spreads and decreasing longer-term interest rates, and to a lesser extent, the impact of strengthening foreign currencies on non-functional currency denominated fixed maturity securities.

At June 30, 2017, $168 million of the total $2.8 billion of gross unrealized losses were from 56 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

The change in gross unrealized losses on equity securities was not significant during the six months ended June 30, 2017.

Investment Grade Fixed Maturity Securities

Of the $168 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $132 million, or 79%, were related to gross unrealized losses on 28 investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads since purchase and, with respect to fixed-rate fixed maturity securities, rising interest rates since purchase.

Below Investment Grade Fixed Maturity Securities

Of the $168 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $36 million, or 21%, were related to gross unrealized losses on 28 below investment grade fixed maturity securities. Unrealized losses on below investment grade fixed maturity securities are principally related to U.S. and foreign corporate securities (primarily utility and industrial securities) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over lower oil prices in the energy sector. Management evaluates U.S. and foreign corporate securities based on factors such as expected cash flows and the financial condition and near-term and long-term prospects of the issuers.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:



	June 30, 2017					December 31, 2016
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	49,549		63.9	%	$	48,035		64.4	%
Agricultural	14,877			19.2		14,456			19.4
Residential	12,764			16.4		11,696			15.7
Subtotal (1)	77,190			99.5		74,187			99.5
Valuation allowances	(356		)	(0.5	)	(344		)	(0.5	)
Subtotal mortgage loans, net	76,834			99.0		73,843			99.0
Residential — FVO	615			0.8		566			0.8
Commercial mortgage loans held by CSEs — FVO	123			0.2		136			0.2
Total mortgage loans, net	$	77,572		100.0	%	$	74,545		100.0	%

__________________


(1)	Purchases of mortgage loans were $888 million and $1.8 billion for the three months and six months ended June 30, 2017, respectively, and $1.2 billion and $1.4 billion for the three months and six months ended June 30, 2016, respectively.

See “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”).

Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on residential — FVO and commercial mortgage loans held by CSEs — FVO is presented in Note 8. The Company elects the FVO for certain mortgage loans and related long-term debt that are managed on a total return basis.

Mortgage Loans, Valuation Allowance and Impaired Loans by Portfolio Segment

Mortgage loans by portfolio segment, by method of evaluation of credit loss, impaired mortgage loans including those modified in a troubled debt restructuring, and the related valuation allowances, were as follows at:



	Evaluated Individually for Credit Losses										Evaluated Collectively for Credit Losses				Impaired Loans
	Impaired Loans with a Valuation Allowance						Impaired Loans without a Valuation Allowance
	Unpaid Principal Balance		Recorded Investment		Valuation Allowances		Unpaid Principal Balance		Recorded Investment		Recorded Investment		Valuation Allowances		Carrying Value
	(In millions)
June 30, 2017
Commercial	$	—	$	—	$	—	$	—	$	—	$	49,549	$	242	$	—
Agricultural	15		13		1		4		4		14,860		45		16
Residential	—		—		—		324		294		12,470		68		294
Total	$	15	$	13	$	1	$	328	$	298	$	76,879	$	355	$	310
December 31, 2016
Commercial	$	—	$	—	$	—	$	12	$	12	$	48,023	$	234	$	12
Agricultural	15		13		1		27		27		14,416		43		39
Residential	—		—		—		266		242		11,454		66		242
Total	$	15	$	13	$	1	$	305	$	281	$	73,893	$	343	$	293

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $6 million, $16 million and $280 million, respectively, for the three months ended June 30, 2017; and $8 million, $24 million and $268 million, respectively, for the six months ended June 30, 2017.

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $184 million, $52 million and $175 million, respectively, for the three months ended June 30, 2016; and $142 million, $57 million and $160 million, respectively, for the six months ended June 30, 2016.

Valuation Allowance Rollforward by Portfolio Segment

The changes in the valuation allowance, by portfolio segment, were as follows:



	Six Months Ended June 30,
	2017										2016
	Commercial		Agricultural		Residential			Total			Commercial		Agricultural			Residential			Total
	(In millions)
Balance, beginning of period	$	234	$	44	$	66		$	344		$	217	$	42		$	59		$	318
Provision (release)	8		2		10			20			150		1			7			158
Charge-offs, net of recoveries	—		—		(8		)	(8		)	—		(2		)	(7		)	(9		)
Balance, end of period	$	242	$	46	$	68		$	356		$	367	$	41		$	59		$	467

Credit Quality of Commercial Mortgage Loans

The credit quality of commercial mortgage loans was as follows at:



	Recorded Investment										Estimated Fair Value		% of Total
	Debt Service Coverage Ratios								% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total		% of Total
	(Dollars in millions)
June 30, 2017
Loan-to-value ratios:
Less than 65%	$	43,059	$	1,693	$	236	$	44,988	90.8	%	$	46,034	91.0	%
65% to 75%	3,658		250		210		4,118		8.3		4,113		8.2
76% to 80%	57		148		67		272		0.6		260		0.5
Greater than 80%	—		—		171		171		0.3		166		0.3
Total	$	46,774	$	2,091	$	684	$	49,549	100	%	$	50,573	100	%
December 31, 2016
Loan-to-value ratios:
Less than 65%	$	41,811	$	1,307	$	874	$	43,992	91.6	%	$	44,459	91.8	%
65% to 75%	3,335		—		221		3,556		7.4		3,488		7.2
76% to 80%	229		—		—		229		0.5		215		0.5
Greater than 80%	142		41		75		258		0.5		250		0.5
Total	$	45,517	$	1,348	$	1,170	$	48,035	100.0	%	$	48,412	100.0	%

Credit Quality of Agricultural Mortgage Loans

The credit quality of agricultural mortgage loans was as follows at:



	June 30, 2017				December 31, 2016
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	14,131	95.0	%	$	13,872	96.0	%
65% to 75%	606		4.1		479		3.3
76% to 80%	127		0.8		17		0.1
Greater than 80%	13		0.1		88		0.6
Total	$	14,877	100.0	%	$	14,456	100.0	%

The estimated fair value of agricultural mortgage loans was $15.1 billion and $14.7 billion at June 30, 2017 and December 31, 2016, respectively.

Credit Quality of Residential Mortgage Loans

The credit quality of residential mortgage loans was as follows at:



	June 30, 2017				December 31, 2016
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	12,332	96.6	%	$	11,304	96.6	%
Nonperforming	432		3.4		392		3.4
Total	$	12,764	100.0	%	$	11,696	100.0	%

The estimated fair value of residential mortgage loans was $13.2 billion and $12.1 billion at June 30, 2017 and December 31, 2016, respectively.

Past Due and Nonaccrual Mortgage Loans

The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both June 30, 2017 and December 31, 2016. The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days. The past due and nonaccrual mortgage loans at recorded investment, prior to valuation allowances, by portfolio segment, were as follows at:



	Past Due				Greater than 90 Days Past Due and Still Accruing Interest				Nonaccrual
	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016
	(In millions)
Commercial	$	—	$	3	$	—	$	3	$	—	$	—
Agricultural	118		127		110		104		10		23
Residential	432		392		26		37		407		355
Total	$	550	$	522	$	136	$	144	$	417	$	378

Mortgage Loans Modified in a Troubled Debt Restructuring

During both the three months and six months ended June 30, 2017 and 2016, the Company did not have a significant amount of mortgage loans modified in a troubled debt restructuring.

Cash Equivalents

The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $11.0 billion and $12.2 billion at June 30, 2017 and December 31, 2016, respectively.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity and equity securities AFS and the effect on DAC, VOBA, deferred sales inducements (“DSI”), future policy benefits and the policyholder dividend obligation, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

The components of net unrealized investment gains (losses), included in AOCI, were as follows:



	June 30, 2017			December 31, 2016
	(In millions)
Fixed maturity securities	$	25,818		$	20,300
Fixed maturity securities with noncredit OTTI losses included in AOCI	37			8
Total fixed maturity securities	25,855			20,308
Equity securities	522			485
Derivatives	2,468			2,923
Other	169			23
Subtotal	29,014			23,739
Amounts allocated from:
Future policy benefits	(2,046		)	(1,114		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(3		)	(3		)
DAC, VOBA and DSI	(1,750		)	(1,430		)
Policyholder dividend obligation	(2,237		)	(1,931		)
Subtotal	(6,036		)	(4,478		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(11		)	(1		)
Deferred income tax benefit (expense)	(7,923		)	(6,623		)
Net unrealized investment gains (losses)	15,044			12,637
Net unrealized investment gains (losses) attributable to noncontrolling interests	(6		)	(6		)
Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	15,038		$	12,631

The changes in net unrealized investment gains (losses) were as follows:



	Six Months Ended June 30, 2017
	(In millions)
Balance, beginning of period	$	12,631
Fixed maturity securities on which noncredit OTTI losses have been recognized	29
Unrealized investment gains (losses) during the period	5,246
Unrealized investment gains (losses) relating to:
Future policy benefits	(932		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	—
DAC, VOBA and DSI	(320		)
Policyholder dividend obligation	(306		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(10		)
Deferred income tax benefit (expense)	(1,300		)
Net unrealized investment gains (losses)	15,038
Net unrealized investment gains (losses) attributable to noncontrolling interests	—
Balance, end of period	$	15,038
Change in net unrealized investment gains (losses)	$	2,407
Change in net unrealized investment gains (losses) attributable to noncontrolling interests	—
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	2,407

Concentrations of Credit Risk

Investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, were in fixed income securities of the Japanese government and its agencies with an estimated fair value of $26.5 billion and $24.9 billion at June 30, 2017 and December 31, 2016, respectively.

Securities Lending

Elements of the securities lending program are presented below at:



	June 30, 2017		December 31, 2016
	(In millions)
Securities on loan: (1)
Amortized cost	$	23,466	$	24,692
Estimated fair value	$	25,787	$	26,308
Cash collateral received from counterparties (2)	$	26,440	$	26,755
Security collateral received from counterparties (3)	$	33	$	46
Reinvestment portfolio — estimated fair value	$	26,652	$	26,704

__________________


(1)	Included within fixed maturity securities.


(2)	Included within payables for collateral under securities loaned and other transactions.


(3)	Security collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.

The cash collateral liability by loaned security type and remaining tenor of the agreements was as follows at:



	June 30, 2017								December 31, 2016
	Remaining Tenor of Securities Lending Agreements								Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less		1 to 6 Months		Total
	(In millions)
Cash collateral liability by loaned security type:
U.S. government and agency	$	6,197	$	12,510	$	6,783	$	25,490	$	6,608	$	8,403	$	10,125	$	25,136
Foreign government	—		694		—		694		—		620		144		764
U.S. corporate	—		—		—		—		—		523		—		523
Agency RMBS	—		256		—		256		—		—		274		274
Foreign corporate	—		—		—		—		—		58		—		58
Total	$	6,197	$	13,460	$	6,783	$	26,440	$	6,608	$	9,604	$	10,543	$	26,755

__________________


(1)	The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at June 30, 2017 was $6.0 billion, all of which were U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, ABS and U.S. government and agency securities), short-term investments and cash equivalents, with 65% invested in agency RMBS, short-term investments, cash equivalents, U.S. government and agency securities or held in cash. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

Repurchase Agreements

Elements of the short-term repurchase agreements are presented below at:



	June 30, 2017		December 31, 2016
	(In millions)
Securities on loan: (1)
Amortized cost	$	1,836	$	98
Estimated fair value	$	1,982	$	113
Cash collateral received from counterparties (2)	$	1,951	$	102
Reinvestment portfolio — estimated fair value	$	1,963	$	100

__________________


(1)	Included within fixed maturity securities.


(2)	Included within payables for collateral under securities loaned and other transactions and other liabilities.

The cash collateral liability by loaned security type and remaining tenor of the agreements was as follows at:



	June 30, 2017						December 31, 2016
	Remaining Tenor of Repurchase Agreements						Remaining Tenor of Repurchase Agreements
	1 Month or Less		1 to 6 Months		Total		1 Month or Less		1 to 6 Months		Total
	(In millions)
Cash collateral liability by loaned security type:
U.S. government and agency	$	1,855	$	—	$	1,855	$	5	$	—	$	5
Foreign government and corporate	44		52		96		46		51		97
Total	$	1,899	$	52	$	1,951	$	51	$	51	$	102

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, ABS, and U.S. government and agency securities), short-term investments and cash equivalents, with 65% invested in agency RMBS, short-term investments, U.S. government and agency securities and cash equivalents, or held in cash. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans, which are presented at carrying value, at:



	June 30, 2017		December 31, 2016
	(In millions)
Invested assets on deposit (regulatory deposits)	$	9,168	$	9,573
Invested assets held in trust (collateral financing arrangements and reinsurance agreements)	6,481		11,111
Invested assets pledged as collateral	27,152		27,431
Total invested assets on deposit, held in trust and pledged as collateral	$	42,801	$	48,115

__________________

The Company has assets held in trust and pledged invested assets in connection with various agreements and transactions, including funding agreements (see Notes 4 and 12 of the Notes to the Consolidated Financial Statements included in the 2016 Annual Report), collateral financing arrangements (see Note 13 of the Notes to the Consolidated Financial Statements included in the 2016 Annual Report) and derivative transactions (see Note 7). Amounts in the table above include invested assets, and cash and cash equivalents. See Note 3 for information on the termination of the MRSC collateral financing arrangement.

See “— Securities Lending” and “— Repurchase Agreements” for information regarding securities on loan and Note 5 for information regarding investments designated to the closed block.

Variable Interest Entities

The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

Consolidated VIEs

Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.

The following table presents the total assets and total liabilities relating to investment-related VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at:



	June 30, 2017				December 31, 2016
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
MRSC (collateral financing arrangement) (1)	$	—	$	—	$	3,422	$	—
CSEs (assets (primarily loans) and liabilities (primarily debt)) (2)	136		28		146		35
Other investments (3)	49		—		50		—
Total	$	185	$	28	$	3,618	$	35

__________________

(1)

See Note 13 of the Notes to the Consolidated Financial Statements included in the 2016 Annual Report for a description of the MRSC collateral financing arrangement. This arrangement was terminated in April 2017. See Note 3 for information regarding the arrangement and disbursement of related assets. These assets historically consisted of fixed maturity securities, short-term investments and cash equivalents, but were transitioned into short-term investments and cash equivalents prior to termination of the arrangement.


(2)	The Company consolidates entities that are structured as CMBS and as collateralized debt obligations. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise.


(3)	Other investments is comprised of other invested assets and other limited partnership interests.

Unconsolidated VIEs

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:



	June 30, 2017				December 31, 2016
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured Securities (2)	$	61,218	$	61,218	$	59,773	$	59,773
U.S. and foreign corporate	2,788		2,788		2,845		2,845
Other limited partnership interests	6,344		12,136		6,208		11,282
Other invested assets	2,302		2,762		2,261		2,837
Other (3)	382		400		252		271
Total	$	73,034	$	79,304	$	71,339	$	77,008

__________________

(1)

The maximum exposure to loss relating to fixed maturity securities AFS and equity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests, mortgage loans and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $137 million and $150 million at June 30, 2017 and December 31, 2016, respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.


(2)	For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.


(3)	Other is primarily comprised of common stock and real estate joint ventures.

As described in Note 14, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during both the six months ended June 30, 2017 and 2016.

Net Investment Income

The components of net investment income were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(In millions)
Investment income:
Fixed maturity securities	$	3,431	$	3,564	$	6,851	$	7,218
Equity securities	35		33		69		70
FVO securities — FVO general account securities (1)	16		10		45		16
Mortgage loans	869		851		1,714		1,658
Policy loans	146		147		291		296
Real estate and real estate joint ventures	184		149		349		306
Other limited partnership interests	243		120		540		166
Cash, cash equivalents and short-term investments	67		43		126		83
Operating joint ventures	5		11		7		23
Other	57		51		136		92
Subtotal	5,053		4,979		10,128		9,928
Less: Investment expenses	310		285		607		581
Subtotal, net	4,743		4,694		9,521		9,347
FVO securities — FVO contractholder-directed unit-linked investments (1)	214		191		630		94
FVO CSEs — interest income — commercial mortgage loans	2		2		4		5
Subtotal	216		193		634		99
Net investment income	$	4,959	$	4,887	$	10,155	$	9,446

__________________

(1)

Changes in estimated fair value subsequent to purchase for securities still held as of the end of the respective periods included in net investment income were $119 million and $449 million for the three months and six months ended June 30, 2017, respectively, and $79 million and ($121) million for the three months and six months ended June 30, 2016, respectively. The amounts for the three months and six months ended June 30, 2016 included $7 million and $3 million, respectively, related to actively traded securities.

FVO securities are primarily comprised of securities for which the FVO has been elected. FVO securities are primarily comprised of contractholder-directed investments supporting unit-linked variable annuity type liabilities which do not qualify as separate accounts. The remainder is comprised of FVO general account securities and FVO securities held by CSEs. The Company previously maintained a trading securities portfolio, principally invested in fixed maturity securities. In June 2016, the Company commenced a reinvestment of this portfolio into other asset classes and, at June 30, 2017, the Company no longer held any actively traded securities.

See “— Variable Interest Entities” for discussion of CSEs.

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized — by sector and industry:
U.S. and foreign corporate securities — by industry:
Industrial	$	—		$	(8	)	$	—		$	(79	)
Communications	—			—			—			(3		)
Total U.S. and foreign corporate securities	—			(8		)	—			(82		)
RMBS	—			(4		)	—			(8		)
ABS	—			(2		)	—			(2		)
State and political subdivision	(3		)	—			(3		)	—
OTTI losses on fixed maturity securities recognized in earnings	(3		)	(14		)	(3		)	(92		)
Fixed maturity securities — net gains (losses) on sales and disposals	45			165			5			263
Total gains (losses) on fixed maturity securities	42			151			2			171
Total gains (losses) on equity securities:
Total OTTI losses recognized — by sector:
Common stock	(5		)	(16		)	(12		)	(67		)
Non-redeemable preferred stock	—			—			(1		)	—
OTTI losses on equity securities recognized in earnings	(5		)	(16		)	(13		)	(67		)
Equity securities — net gains (losses) on sales and disposals	7			13			50			19
Total gains (losses) on equity securities	2			(3		)	37			(48		)
Mortgage loans	(16		)	(98		)	(31		)	(162		)
Real estate and real estate joint ventures	271			45			270			47
Other limited partnership interests	(12		)	(14		)	(29		)	(41		)
Other	(69		)	(57		)	(127		)	(75		)
Subtotal	218			24			122			(108		)
FVO CSEs:
Commercial mortgage loans	—			(1		)	(1		)	—
Securities	—			—			—			1
Long-term debt — related to commercial mortgage loans	(1		)	—			—			—
Non-investment portfolio gains (losses)	(113		)	243			(9		)	388
Subtotal	(114		)	242			(10		)	389
Total net investment gains (losses)	$	104		$	266		$	112		$	281

See “— Variable Interest Entities” for discussion of CSEs.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($117) million and ($68) million for the three months and six months ended June 30, 2017, respectively, and $289 million and $368 million for the three months and six months ended June 30, 2016, respectively.

Sales or Disposals and Impairments of Fixed Maturity and Equity Securities

Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown in the table below.



	Three Months Ended June 30,
	2017			2016			2017			2016
	Fixed Maturity Securities						Equity Securities
	(In millions)
Proceeds	$	15,106		$	26,267		$	279		$	28
Gross investment gains	$	129		$	283		$	10		$	14
Gross investment losses	(84		)	(118		)	(3		)	(1		)
OTTI losses	(3		)	(14		)	(5		)	(16		)
Net investment gains (losses)	$	42		$	151		$	2		$	(3	)



	Six Months Ended June 30,
	2017			2016			2017			2016
	Fixed Maturity Securities						Equity Securities
	(In millions)
Proceeds	$	31,543		$	58,261		$	399		$	87
Gross investment gains	$	279		$	715		$	57		$	24
Gross investment losses	(274		)	(452		)	(7		)	(5		)
OTTI losses	(3		)	(92		)	(13		)	(67		)
Net investment gains (losses)	$	2		$	171		$	37		$	(48	)

Credit Loss Rollforward

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (loss) (“OCI”):



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(In millions)
Balance, beginning of period	$	179		$	270		$	215		$	277
Additions:
Additional impairments — credit loss OTTI on securities previously impaired	—			6			—			8
Reductions:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	(6		)	(18		)	(42		)	(27		)
Balance, end of period	$	173		$	258		$	173		$	258