Investments

9 Months Ended

Sep. 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”).



	September 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	$	75,221	$	6,827	$	393	$	—		$	81,655	$	73,280	$	6,027	$	764	$	—		$	78,543
Foreign government	54,618		6,486		315		—			60,789		49,864		6,485		373		—			55,976
Foreign corporate	52,185		3,705		750		—			55,140		49,333		2,901		1,572		(1		)	50,663
U.S. government and agency	43,911		4,056		303		—			47,664		41,294		3,682		543		—			44,433
RMBS	30,368		1,222		232		(40		)	31,398		28,393		1,039		410		(10		)	29,032
State and political subdivision	10,754		1,615		24		—			12,345		10,977		1,340		85		1			12,231
ABS	11,702		114		42		3			11,771		11,266		90		128		3			11,225
CMBS	7,925		251		44		—			8,132		7,294		237		71		—			7,460
Total fixed maturity securities	$	286,684	$	24,276	$	2,103	$	(37	)	$	308,894	$	271,701	$	21,801	$	3,946	$	(7	)	$	289,563
Equity securities:
Common stock	$	1,883	$	379	$	20	$	—		$	2,242	$	1,827	$	464	$	13	$	—		$	2,278
Non-redeemable preferred stock	503		36		5		—			534		637		19		40		—			616
Total equity securities	$	2,386	$	415	$	25	$	—		$	2,776	$	2,464	$	483	$	53	$	—		$	2,894

__________________


(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 $4 million and $1 million, and unrealized gains (losses) of ($3) million and ($3) million, at September 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 September 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	$	12,720	$	63,453	$	60,957	$	99,559	$	49,995	$	286,684
Estimated fair value	$	12,827	$	66,568	$	64,549	$	113,649	$	51,301	$	308,894

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:



	September 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	$	6,647	$	161	$	3,015	$	232	$	11,471	$	466	$	2,938	$	298
Foreign government	6,856		202		1,669		113		5,955		260		918		113
Foreign corporate	5,856		149		6,137		601		10,147		573		5,493		998
U.S. government and agency	19,305		275		362		28		9,104		523		141		20
RMBS	7,731		106		2,025		86		9,449		291		1,800		109
State and political subdivision	560		13		165		11		1,747		80		56		6
ABS	1,976		5		921		40		2,224		28		2,328		103
CMBS	1,555		12		337		32		998		22		564		49
Total fixed maturity securities	$	50,486	$	923	$	14,631	$	1,143	$	51,095	$	2,243	$	14,238	$	1,696
Equity securities:
Common stock	$	133	$	20	$	4	$	—	$	105	$	13	$	11	$	—
Non-redeemable preferred stock	—		—		82		5		139		7		125		33
Total equity securities	$	133	$	20	$	86	$	5	$	244	$	20	$	136	$	33
Total number of securities in an unrealized loss position	3,249				1,638				3,580				1,307

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 September 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 $1.9 billion during the nine months ended September 30, 2017 to $2.1 billion. The decrease in gross unrealized losses for the nine months ended September 30, 2017 was primarily attributable to decreasing longer-term interest rates and narrowing credit spreads, and to a lesser extent the impact of strengthening foreign currencies on non-functional currency denominated fixed maturity securities.

At September 30, 2017, $117 million of the total $2.1 billion of gross unrealized losses were from 46 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Gross unrealized losses on equity securities decreased $28 million during the nine months ended September 30, 2017 to $25 million.

Investment Grade Fixed Maturity Securities

Of the $117 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, $75 million, or 64%, were related to gross unrealized losses on 19 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 $117 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, $42 million, or 36%, were related to gross unrealized losses on 27 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 industrial and utility securities) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty 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:



	September 30, 2017					December 31, 2016
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	43,243		63.6	%	$	41,512		63.7	%
Agricultural	12,967			19.1		12,564			19.3
Residential	11,599			17.0		10,829			16.6
Subtotal (1)	67,809			99.7		64,905			99.6
Valuation allowances	(316		)	(0.5	)	(304		)	(0.5	)
Subtotal mortgage loans, net	67,493			99.2		64,601			99.1
Residential — FVO	564			0.8		566			0.9
Total mortgage loans, net	$	68,057		100.0	%	$	65,167		100.0	%

__________________


(1)	Purchases of mortgage loans, primarily residential, were $411 million and $1.9 billion for the three months and nine months ended September 30, 2017, respectively, and $733 million and $1.9 billion for the three months and nine months ended September 30, 2016, respectively.

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)
September 30, 2017
Commercial	$	—	$	—	$	—	$	—	$	—	$	43,243	$	213	$	—
Agricultural	22		21		2		28		28		12,918		39		47
Residential	—		—		—		335		304		11,295		62		304
Total	$	22	$	21	$	2	$	363	$	332	$	67,456	$	314	$	351
December 31, 2016
Commercial	$	—	$	—	$	—	$	12	$	12	$	41,500	$	202	$	12
Agricultural	11		10		1		27		27		12,527		38		36
Residential	—		—		—		265		241		10,588		63		241
Total	$	11	$	10	$	1	$	304	$	280	$	64,615	$	303	$	289

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $0, $31 million and $297 million, respectively, for the three months ended September 30, 2017; and $6 million, $28 million and $275 million, respectively, for the nine months ended September 30, 2017.

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $90 million, $49 million and $202 million, respectively, for the three months ended September 30, 2016; and $109 million, $53 million and $174 million, respectively, for the nine months ended September 30, 2016.

Valuation Allowance Rollforward by Portfolio Segment

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



	Nine Months Ended September 30,
	2017											2016
	Commercial		Agricultural			Residential			Total			Commercial			Agricultural			Residential			Total
	(In millions)
Balance, beginning of period	$	202	$	39		$	63		$	304		$	188		$	37		$	56		$	281
Provision (release) (1)	11		4			10			25			149			3			11			163
Charge-offs, net of recoveries (1)	—		(2		)	(11		)	(13		)	(143		)	(2		)	(12		)	(157		)
Balance, end of period	$	213	$	41		$	62		$	316		$	194		$	38		$	55		$	287

__________________

(1)

In connection with an acquisition in 2010, certain impaired commercial mortgage loans were acquired and, accordingly, were not originated by the Company. Such commercial mortgage loans have been accounted for as purchased credit impaired (“PCI”) commercial mortgage loans. Decreases in cash flows expected to be collected on PCI commercial mortgage loans can result in provisions for losses on mortgage loans. For the nine months ended September 30, 2016, in connection with the maturity of an acquired PCI commercial mortgage loan, an increase to the commercial mortgage loan valuation allowance of $143 million was recorded and charged-off upon maturity. The Company has recovered a substantial portion of the loss on the loan incurred through an indemnification agreement entered into in connection with the acquisition in 2010.

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)
September 30, 2017
Loan-to-value ratios:
Less than 65%	$	37,404	$	1,488	$	222	$	39,114	90.5	%	$	39,904	90.7	%
65% to 75%	3,367		168		173		3,708		8.6		3,705		8.4
76% to 80%	217		—		57		274		0.6		262		0.6
Greater than 80%	—		—		147		147		0.3		143		0.3
Total	$	40,988	$	1,656	$	599	$	43,243	100	%	$	44,014	100	%
December 31, 2016
Loan-to-value ratios:
Less than 65%	$	36,067	$	1,077	$	707	$	37,851	91.2	%	$	38,237	91.5	%
65% to 75%	3,044		—		202		3,246		7.8		3,185		7.6
76% to 80%	195		—		—		195		0.5		182		0.4
Greater than 80%	118		27		75		220		0.5		213		0.5
Total	$	39,424	$	1,104	$	984	$	41,512	100.0	%	$	41,817	100.0	%

Credit Quality of Agricultural Mortgage Loans

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



	September 30, 2017				December 31, 2016
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	12,403	95.6	%	$	12,023	95.7	%
65% to 75%	546		4.2		436		3.5
76% to 80%	9		0.1		17		0.1
Greater than 80%	9		0.1		88		0.7
Total	$	12,967	100.0	%	$	12,564	100.0	%

The estimated fair value of agricultural mortgage loans was $13.1 billion and $12.7 billion at September 30, 2017 and December 31, 2016, respectively.

Credit Quality of Residential Mortgage Loans

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



	September 30, 2017				December 31, 2016
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	11,169	96.3	%	$	10,448	96.5	%
Nonperforming	430		3.7		381		3.5
Total	$	11,599	100.0	%	$	10,829	100.0	%

The estimated fair value of residential mortgage loans was $12.1 billion and $11.2 billion at September 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 September 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
	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
	(In millions)
Commercial	$	1	$	3	$	—	$	3	$	1	$	—
Agricultural	134		127		125		104		36		23
Residential	430		381		30		37		400		344
Total	$	565	$	511	$	155	$	144	$	437	$	367

Mortgage Loans Modified in a Troubled Debt Restructuring

During both the three months and nine months ended September 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 was $7.3 billion and $7.4 billion at September 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:



	September 30, 2017			December 31, 2016
	(In millions)
Fixed maturity securities	$	21,979		$	20,300
Fixed maturity securities with noncredit OTTI losses included in AOCI	37			8
Total fixed maturity securities	22,016			20,308
Equity securities	444			485
Derivatives	1,690			2,923
Other	121			23
Subtotal	24,271			23,739
Amounts allocated from:
Future policy benefits	(63		)	(1,114		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(1		)	(3		)
DAC, VOBA and DSI	(1,647		)	(1,430		)
Policyholder dividend obligation	(2,201		)	(1,931		)
Subtotal	(3,912		)	(4,478		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(11		)	(1		)
Deferred income tax benefit (expense)	(6,997		)	(6,623		)
Net unrealized investment gains (losses)	13,351			12,637
Net unrealized investment gains (losses) attributable to noncontrolling interests	(8		)	(6		)
Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	13,343		$	12,631

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



	Nine Months Ended September 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	503
Unrealized investment gains (losses) relating to:
Future policy benefits	1,051
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	2
DAC, VOBA and DSI	(217		)
Policyholder dividend obligation	(270		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(10		)
Deferred income tax benefit (expense)	(374		)
Net unrealized investment gains (losses)	13,345
Net unrealized investment gains (losses) attributable to noncontrolling interests	(2		)
Balance, end of period	$	13,343
Change in net unrealized investment gains (losses)	$	714
Change in net unrealized investment gains (losses) attributable to noncontrolling interests	(2		)
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	712

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 $26.9 billion and $24.7 billion at September 30, 2017 and December 31, 2016, respectively, and in fixed income securities of the Korean government and its agencies with an estimated fair value of $6.1 billion at September 30, 2017. At December 31, 2016, the investments in Korean government fixed income securities were less than 10% of the Company’s equity.

Securities Lending

Elements of the securities lending program are presented below at:



	September 30, 2017		December 31, 2016
	(In millions)
Securities on loan: (1)
Amortized cost	$	18,219	$	18,798
Estimated fair value	$	19,542	$	19,753
Cash collateral received from counterparties (2)	$	19,996	$	20,114
Security collateral received from counterparties (3)	$	—	$	20
Reinvestment portfolio — estimated fair value	$	20,155	$	20,133

__________________


(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:



	September 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	$	4,362	$	7,952	$	6,694	$	19,008	$	4,480	$	6,496	$	8,383	$	19,359
Foreign government	—		507		481		988		—		569		143		712
U.S. corporate	—		—		—		—		—		43		—		43
Total	$	4,362	$	8,459	$	7,175	$	19,996	$	4,480	$	7,108	$	8,526	$	20,114

__________________


(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 September 30, 2017 was $4.3 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, U.S. government and agency securities and ABS), short-term investments and cash equivalents, with 64% invested in agency RMBS, short-term investments, U.S. government and agency securities, 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.

Repurchase Agreements

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



	September 30, 2017		December 31, 2016
	(In millions)
Securities on loan: (1)
Amortized cost	$	1,972	$	98
Estimated fair value	$	2,108	$	113
Cash collateral received from counterparties (2)	$	2,062	$	102
Reinvestment portfolio — estimated fair value	$	2,072	$	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:



	September 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	$	1,960	$	5	$	1,965	$	5	$	—	$	5
All other corporate and government	—		97		97		46		51		97
Total	$	1,960	$	102	$	2,062	$	51	$	51	$	102

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, U.S. government and agency securities and ABS), short-term investments and cash equivalents, with 67% invested in agency RMBS, U.S. government and agency securities, short-term investments, 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:



	September 30, 2017		December 31, 2016
	(In millions)
Invested assets on deposit (regulatory deposits)	$	1,944	$	1,925
Invested assets held in trust (collateral financing arrangement and reinsurance agreements)	2,655		2,057
Invested assets pledged as collateral	23,817		23,882
Total invested assets on deposit, held in trust and pledged as collateral	$	28,416	$	27,864

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), a collateral financing arrangement (see Note 13 of the Notes to the Consolidated Financial Statements included in the 2016 Annual Report) and derivative transactions (see Note 7).

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:



	September 30, 2017				December 31, 2016
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Renewable energy partnership (1)	$	114	$	—	$	—	$	—
CSEs (assets (primarily FVO securities) and liabilities (primarily debt)) (2)	7		6		9		12
Other investments (3)	34		—		50		—
Total	$	155	$	6	$	59	$	12

__________________


(1)	Assets of the renewable energy partnership, primarily consisting of other invested assets, were consolidated in earlier periods as the two investors are subsidiaries of MLIC and Brighthouse. As a result of the Separation and a reassessment in the third quarter of 2017, the renewable energy partnership was determined to be a consolidated VIE.


(2)	The Company consolidates entities that are structured 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 primarily 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:



	September 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)	$	49,663	$	49,663	$	46,773	$	46,773
U.S. and foreign corporate	1,605		1,605		1,940		1,940
Other limited partnership interests	4,657		8,417		4,714		8,990
Other invested assets	2,286		2,697		2,206		2,777
Other (3)	114		128		199		215
Total	$	58,325	$	62,510	$	55,832	$	60,695

__________________

(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 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 $123 million and $150 million at September 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 real estate joint ventures and common stock.

As described in Note 15, 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 nine months ended September 30, 2017 and 2016.

Net Investment Income

The components of net investment income were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In millions)
Investment income:
Fixed maturity securities	$	2,869	$	2,906	$	8,528	$	8,838
Equity securities	31		29		93		90
FVO securities — FVO general account securities (1)	16		25		61		41
Mortgage loans	809		710		2,303		2,165
Policy loans	130		129		386		385
Real estate and real estate joint ventures	156		199		478		490
Other limited partnership interests	214		184		648		309
Cash, cash equivalents and short-term investments	52		38		159		112
Operating joint ventures	6		5		13		28
Other	71		90		196		178
Subtotal	4,354		4,315		12,865		12,636
Less: Investment expenses	293		235		820		732
Subtotal, net	4,061		4,080		12,045		11,904
FVO securities — FVO contractholder-directed unit-linked investments (1)	234		529		864		623
Net investment income	$	4,295	$	4,609	$	12,909	$	12,527

__________________


(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 $154 million and $540 million for the three months and nine months ended September 30, 2017, respectively, and $407 million and $283 million for the three months and nine months ended September 30, 2016, respectively.

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 Brighthouse Common Stock (see Note 3), FVO general account securities and FVO securities held by consolidated securitization entities (“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 September 30, 2016 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 September 30,						Nine Months Ended September 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:
Consumer	$	(4	)	$	—		$	(4	)	$	—
Industrial	—			—			—			(63		)
Communications	—			—			—			(3		)
Total U.S. and foreign corporate securities	(4		)	—			(4		)	(66		)
RMBS	(1		)	(9		)	(1		)	(15		)
ABS	—			—			—			(2		)
State and political subdivision	—			—			(2		)	—
OTTI losses on fixed maturity securities recognized in earnings	(5		)	(9		)	(7		)	(83		)
Fixed maturity securities — net gains (losses) on sales and disposals (1)	284			129			325			455
Total gains (losses) on fixed maturity securities	279			120			318			372
Total gains (losses) on equity securities:
Total OTTI losses recognized — by sector:
Common stock	(4		)	(5		)	(16		)	(71		)
Non-redeemable preferred stock	—			—			(1		)	—
OTTI losses on equity securities recognized in earnings	(4		)	(5		)	(17		)	(71		)
Equity securities — net gains (losses) on sales and disposals	6			9			55			24
Total gains (losses) on equity securities	2			4			38			(47		)
Mortgage loans (2)	29			(41		)	3			(197		)
Real estate and real estate joint ventures	169			19			436			67
Other limited partnership interests	(33		)	(9		)	(51		)	(43		)
Other	29			(24		)	(92		)	(105		)
Subtotal	475			69			652			47
FVO CSEs:
Securities	—			1			—			2
Non-investment portfolio gains (losses) (3)(4)(5)	(1,081		)	161			(1,091		)	549
Subtotal	(1,081		)	162			(1,091		)	551
Total net investment gains (losses)	$	(606	)	$	231		$	(439	)	$	598

__________________


(1)	Fixed maturity securities net gains (losses) on sales and disposals for both the three months and nine months ended September 30, 2017 includes $276 million in previously deferred gains on prior period transfers of securities to Brighthouse, as such gains are no longer eliminated in consolidation after the Separation. See Note 3.


(2)	Mortgage loans gains (losses) for both the three months and nine months ended September 30, 2017 includes $47 million of previously deferred gains on prior period transfers of mortgage loans to Brighthouse as such gains are no longer eliminated in consolidation after the Separation. See Note 3.


(3)	Non-investment portfolio gains (losses) for both the three months and nine months ended September 30, 2017 includes a loss of $1,016 million which represents a mark-to-market loss attributable to the FVO Brighthouse Common Stock held by the Company at Separation. See Note 3.


(4)	Non-investment portfolio gains (losses) for both the three months and nine months ended September 30, 2017 includes a loss of $45 million which represents the change in estimated fair value of FVO Brighthouse Common Stock held by the Company from the date of Separation to September 30, 2017. See Note 3.


(5)	Non-investment portfolio gains (losses) for both the three months and nine months ended September 30, 2016 includes a gain of $103 million in connection with the sale to Massachusetts Mutual Life Insurance Company (“MassMutual”). See Note 3 of the Notes to the Consolidated Financial Statements included in the 2016 Annual Report.

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

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($14) million and ($77) million for the three months and nine months ended September 30, 2017, respectively, and $40 million and $398 million for the three months and nine months ended September 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 September 30,
	2017			2016			2017			2016
	Fixed Maturity Securities						Equity Securities
	(In millions)
Proceeds	$	8,586		$	16,634		$	316		$	35
Gross investment gains	$	364		$	232		$	11		$	11
Gross investment losses	(80		)	(103		)	(5		)	(2		)
OTTI losses	(5		)	(9		)	(4		)	(5		)
Net investment gains (losses)	$	279		$	120		$	2		$	4



	Nine Months Ended September 30,
	2017			2016			2017			2016
	Fixed Maturity Securities						Equity Securities
	(In millions)
Proceeds	$	35,742		$	60,006		$	702		$	109
Gross investment gains	$	623		$	921		$	66		$	34
Gross investment losses	(298		)	(466		)	(11		)	(10		)
OTTI losses	(7		)	(83		)	(17		)	(71		)
Net investment gains (losses)	$	318		$	372		$	38		$	(47	)

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 September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(In millions)
Balance, beginning of period	$	170		$	198		$	192		$	211
Addition:
Additional impairments — credit loss OTTI on securities previously impaired	—			9			—			14
Reduction:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	(5		)	(10		)	(27		)	(28		)
Balance, end of period	$	165		$	197		$	165		$	197