Investments

9 Months Ended

Sep. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Investments

6. Investments

Fixed Maturity Securities AFS

Fixed Maturity Securities AFS by Sector

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

	September 30, 2018											December 31, 2017
	Amortized Cost		Gross Unrealized							Estimated Fair Value		Amortized Cost		Gross Unrealized							Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses (1)							Gains		Temporary Losses		OTTI Losses (1)
	(In millions)
Fixed maturity securities AFS:
U.S. corporate	$	81,326	$	4,045	$	1,576	$	—		$	83,795	$	76,005	$	7,007	$	351	$	—		$	82,661
Foreign government	55,502		5,534		564		—			60,472		55,351		6,495		312		—			61,534
Foreign corporate	53,097		2,509		1,386		—			54,220		52,409		3,836		676		—			55,569
U.S. government and agency	43,830		2,506		764		—			45,572		43,446		4,227		279		—			47,394
RMBS	27,427		881		687		(37		)	27,658		27,846		1,145		233		(42		)	28,800
State and political subdivision	10,548		1,147		95		—			11,600		10,752		1,717		13		1			12,455
ABS	12,775		79		38		1			12,815		12,213		116		39		(1		)	12,291
CMBS	8,763		86		141		—			8,708		8,047		222		42		—			8,227
Total fixed maturity securities AFS	$	293,268	$	16,787	$	5,251	$	(36	)	$	304,840	$	286,069	$	24,765	$	1,945	$	(42	)	$	308,931

__________________

(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 AFS with an estimated fair value of $24 million and $6 million, and unrealized gains (losses) of ($1) million and ($4) million, at September 30, 2018 and December 31, 2017, respectively.

Maturities of Fixed Maturity Securities AFS

The amortized cost and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at September 30, 2018:

	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 AFS
	(In millions)
Amortized cost	$	14,290	$	59,495	$	61,007	$	109,511	$	48,965	$	293,268
Estimated fair value	$	14,336	$	60,995	$	62,655	$	117,673	$	49,181	$	304,840

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities AFS 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 Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity 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, 2018								December 31, 2017
	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 AFS:
U.S. corporate	$	28,316	$	1,069	$	5,217	$	507	$	5,604	$	92	$	4,115	$	259
Foreign government	9,325		305		3,054		259		4,234		83		3,251		229
Foreign corporate	16,098		784		4,998		602		4,422		99		6,802		577
U.S. government and agency	20,235		252		5,982		512		18,273		93		3,560		186
RMBS	12,322		356		4,633		294		6,359		50		4,159		141
State and political subdivision	1,900		68		334		27		182		2		346		12
ABS	5,851		23		409		16		1,695		7		729		31
CMBS	4,532		86		682		55		1,174		9		413		33
Total fixed maturity securities AFS	$	98,579	$	2,943	$	25,309	$	2,272	$	41,943	$	435	$	23,375	$	1,468
Total number of securities in an unrealized loss position	6,790				2,159				2,598				1,955

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 2017 Annual Report, the Company performs a regular evaluation of all investment classes for impairment, including fixed maturity securities AFS 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, 2018. 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. 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 AFS increased$3.3 billionduring thenine months endedSeptember 30, 2018to$5.2 billion. The increase in gross unrealized losses for thenine months endedSeptember 30, 2018was primarily attributable to increases in interest rates, widening credit spreads and, to a lesser extent, the impact of weakening foreign currencies on non-functional currency denominated fixed maturity securities AFS.

At September 30, 2018, $77 million of the total $5.2 billion of gross unrealized losses were from 35 fixed maturity securities AFS with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Investment Grade Fixed Maturity Securities AFS

Of the $77 million of gross unrealized losses on fixed maturity securities AFS with an unrealized loss of 20% or more of amortized cost for six months or greater, $15 million, or 19%, were related to gross unrealized losses on 13 investment grade fixed maturity securities AFS. Unrealized losses on investment grade fixed maturity securities AFS are principally related to widening credit spreads since purchase and, with respect to fixed-rate fixed maturity securities AFS, rising interest rates since purchase.

Below Investment Grade Fixed Maturity Securities AFS

Of the $77 million of gross unrealized losses on fixed maturity securities AFS with an unrealized loss of 20% or more of amortized cost for six months or greater, $62 million, or 81%, were related to gross unrealized losses on 22 below investment grade fixed maturity securities AFS. Unrealized losses on below investment grade fixed maturity securities AFS are principally related to U.S. and foreign corporate securities (primarily industrial and utility securities) and CMBS and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty. 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 and evaluates CMBS based on actual and projected cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, the payment terms of the underlying assets backing a particular security and the payment priority within the tranche structure of the security.

Equity Securities

Equity securities are summarized as follows at:

	September 30, 2018				December 31, 2017
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
	(Dollars in millions)
Equity securities:
Common stock	$	1,063	71.9	%	$	2,035	81.0	%
Non-redeemable preferred stock	416		28.1		478		19.0
Total equity securities	$	1,479	100.0	%	$	2,513	100.0	%

In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018, the Company has reclassified its investment in common stock in regional banks of the Federal Home Loan Bank (“FHLB”) system from equity securities to other invested assets. These investments are carried at redemption value and are considered restricted investments until redeemed by the respective FHLB regional banks. The carrying value of these investments at December 31, 2017 was $791 million.

Unit-linked and FVO Securities

Unit-linked and FVO Securities are investments for which the FVO has been elected, or are otherwise required to be carried at estimated fair value, and include:

• contractholder-directed investments supporting unit-linked variable annuity type liabilities (“Unit-linked investments”) which do not qualify for presentation and reporting as separate account summary total assets and liabilities. These investments are primarily equity securities (including mutual funds) and, to a lesser extent, fixed maturity securities, short-term investments and cash and cash equivalents. The investment returns on these investments inure to contractholders and are offset by a corresponding change in policyholder account balances through interest credited to policyholder account balances;

• fixed maturity and equity securities held-for-investment by the general account to support asset and liability management strategies for certain insurance products and investments in certain separate accounts; and

• securities held by consolidated securitization entities.

At December 31, 2017, Unit-linked and FVO Securities also included FVO Brighthouse Common Stock (see Note 3).

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	September 30, 2018					December 31, 2017
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	47,460		65.5	%	$	44,375		64.6	%
Agricultural	13,677			18.9		13,014			18.9
Residential	11,337			15.6		11,136			16.2
Subtotal (1)	72,474			100.0		68,525			99.7
Valuation allowances	(336		)	(0.5	)	(314		)	(0.5	)
Subtotal mortgage loans, net	72,138			99.5		68,211			99.2
Residential — FVO	323			0.5		520			0.8
Total mortgage loans, net	$	72,461		100.0	%	$	68,731		100.0	%

__________________

(1) Purchases of mortgage loans, primarily residential mortgage loans, were$724 millionand$1.7 billionfor thethree monthsandnine months endedSeptember 30, 2018, respectively, and$411 millionand$1.9 billionfor thethree monthsandnine months endedSeptember 30, 2017, respectively.

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

The carrying value of foreclosed mortgage loans included in real estate and real estate joint ventures was $43 million and $48 million at September 30, 2018 and December 31, 2017, 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, 2018
Commercial	$	—	$	—	$	—	$	—	$	—	$	47,460	$	232	$	—
Agricultural	13		13		2		111		110		13,554		40		121
Residential	—		—		—		420		377		10,960		62		377
Total	$	13	$	13	$	2	$	531	$	487	$	71,974	$	334	$	498
December 31, 2017
Commercial	$	—	$	—	$	—	$	—	$	—	$	44,375	$	214	$	—
Agricultural	22		21		2		27		27		12,966		39		46
Residential	—		—		—		358		324		10,812		59		324
Total	$	22	$	21	$	2	$	385	$	351	$	68,153	$	312	$	370

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was$0, $124 millionand$370 million, respectively,for thethree months endedSeptember 30, 2018; and$0,$104 millionand$350 million, respectively, for thenine months endedSeptember 30, 2018;

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was$0, $31 millionand$297 million, respectively, for thethree months endedSeptember 30, 2017; and$6 million,$28 millionand$275 million, respectively, for thenine months endedSeptember 30, 2017.

Valuation Allowance Rollforward by Portfolio Segment

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

	Nine Months Ended September 30,
	2018										2017
	Commercial		Agricultural		Residential			Total			Commercial		Agricultural			Residential			Total
	(In millions)
Balance, beginning of period	$	214	$	41	$	59		$	314		$	202	$	39		$	63		$	304
Provision (release)	18		1		9			28			11		4			10			25
Charge-offs, net of recoveries	—		—		(6		)	(6		)	—		(2		)	(11		)	(13		)
Balance, end of period	$	232	$	42	$	62		$	336		$	213	$	41		$	62		$	316

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
	(Dollars in millions)
September 30, 2018
Loan-to-value ratios:
Less than 65%	$	40,195	$	758	$	17	$	40,970	86.3	%	$	41,014	86.5	%
65% to 75%	4,732		381		69		5,182		10.9		5,152		10.9
76% to 80%	387		210		56		653		1.4		621		1.3
Greater than 80%	479		176		—		655		1.4		619		1.3
Total	$	45,793	$	1,525	$	142	$	47,460	100.0	%	$	47,406	100.0	%
December 31, 2017
Loan-to-value ratios:
Less than 65%	$	37,073	$	1,483	$	201	$	38,757	87.4	%	$	39,528	87.7	%
65% to 75%	4,183		98		119		4,400		9.9		4,408		9.8
76% to 80%	235		210		57		502		1.1		476		1.0
Greater than 80%	401		168		147		716		1.6		672		1.5
Total	$	41,892	$	1,959	$	524	$	44,375	100.0	%	$	45,084	100.0	%

Credit Quality of Agricultural Mortgage Loans

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

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	12,789	93.5	%	$	12,347	94.9	%
65% to 75%	851		6.2		618		4.7
76% to 80%	32		0.2		40		0.3
Greater than 80%	5		0.1		9		0.1
Total	$	13,677	100.0	%	$	13,014	100.0	%

The estimated fair value of agricultural mortgage loans was $13.5 billion and $13.1 billion at September 30, 2018 and December 31, 2017, respectively.

Credit Quality of Residential Mortgage Loans

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

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	10,873	95.9	%	$	10,622	95.4	%
Nonperforming	464		4.1		514		4.6
Total	$	11,337	100.0	%	$	11,136	100.0	%

The estimated fair value of residential mortgage loans was $11.6 billion at both September 30, 2018 and December 31, 2017.

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, 2018 and December 31, 2017. 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, 2018		December 31, 2017		September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
	(In millions)
Commercial	$	1	$	—	$	—	$	—	$	176	$	—
Agricultural	200		134		105		125		106		36
Residential	464		514		39		33		425		481
Total	$	665	$	648	$	144	$	158	$	707	$	517

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 $6.5 billion and $6.2 billion at September 30, 2018 and December 31, 2017, respectively.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities AFS and equity securities 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, 2018			December 31, 2017
	(In millions)
Fixed maturity securities AFS	$	11,381		$	22,645
Fixed maturity securities AFS with noncredit OTTI losses included in AOCI	36			41
Total fixed maturity securities AFS	11,417			22,686
Equity securities	—			421
Derivatives	1,256			1,453
Other	85			46
Subtotal	12,758			24,606
Amounts allocated from:
Future policy benefits	(102		)	(77		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(1		)	—
DAC, VOBA and DSI	(942		)	(1,768		)
Policyholder dividend obligation	(456		)	(2,121		)
Subtotal	(1,501		)	(3,966		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(5		)	(12		)
Deferred income tax benefit (expense)	(3,297		)	(6,958		)
Net unrealized investment gains (losses)	7,955			13,670
Net unrealized investment gains (losses) attributable to noncontrolling interests	(9		)	(8		)
Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	7,946		$	13,662

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

	Nine Months Ended September 30, 2018
	(In millions)
Balance, beginning of period	$	13,662
Cumulative effects of changes in accounting principles, net of income tax (Note 1)	1,258
Fixed maturity securities AFS on which noncredit OTTI losses have been recognized	(5		)
Unrealized investment gains (losses) during the period	(11,418		)
Unrealized investment gains (losses) relating to:
Future policy benefits	(25		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(1		)
DAC, VOBA and DSI	826
Policyholder dividend obligation	1,665
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	7
Deferred income tax benefit (expense)	1,978
Net unrealized investment gains (losses)	7,947
Net unrealized investment gains (losses) attributable to noncontrolling interests	(1		)
Balance, end of period	$	7,946
Change in net unrealized investment gains (losses)	$	(5,715	)
Change in net unrealized investment gains (losses) attributable to noncontrolling interests	(1		)
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	(5,716	)

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 $28.6 billion and $27.5 billion at September 30, 2018 and December 31, 2017, respectively, and in fixed income securities of the South Korean government and its agencies with an estimated fair value of $6.7 billion and $6.5 billion at September 30, 2018 and December 31, 2017, respectively.

Securities Lending

Elements of the Company’s securities lending program are presented below at:

	September 30, 2018		December 31, 2017
	(In millions)
Securities on loan: (1)
Amortized cost	$	18,438	$	17,801
Estimated fair value	$	18,826	$	19,028
Cash collateral received from counterparties (2)	$	19,290	$	19,417
Security collateral received from counterparties (3)	$	—	$	19
Reinvestment portfolio — estimated fair value	$	19,394	$	19,508

__________________

(1) Included within fixed maturity securities AFS and short-term investments.

(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 interim condensed consolidated financial statements.

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

	September 30, 2018								December 31, 2017
	Remaining Tenor of Securities Lending Agreements								Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		Over 1 to 6 Months		Total		Open (1)		1 Month or Less		Over 1 to 6 Months		Total
	(In millions)
Cash collateral liability by loaned security type:
U.S. government and agency	$	3,056	$	7,305	$	7,883	$	18,244	$	3,753	$	6,031	$	8,607	$	18,391
Foreign government	—		72		831		903		—		192		834		1,026
Agency RMBS	—		—		143		143		—		—		—		—
Total	$	3,056	$	7,377	$	8,857	$	19,290	$	3,753	$	6,223	$	9,441	$	19,417

__________________

(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, 2018 was $3.0 billion, 99% 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 AFS (including U.S. government and agency securities, agency RMBS, and ABS), short-term investments and cash equivalents, with 64% invested in U.S. government and agency securities, agency RMBS, 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.

Repurchase Agreements

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

	September 30, 2018		December 31, 2017
	(In millions)
Securities on loan: (1)
Amortized cost	$	2,547	$	994
Estimated fair value	$	2,597	$	1,141
Cash collateral received from counterparties (2)	$	2,543	$	1,102
Security collateral received from counterparties (3)	$	8	$	—
Reinvestment portfolio — estimated fair value	$	2,554	$	1,102

__________________

(1) Included within fixed maturity securities AFS, short-term investments and cash equivalents.

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

(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 interim condensed consolidated financial statements.

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

	September 30, 2018						December 31, 2017
	Remaining Tenor of Repurchase Agreements						Remaining Tenor of Repurchase Agreements
	1 Month or Less		Over 1 to 6 Months		Total		1 Month or Less		Over 1 to 6 Months		Total
	(In millions)
Cash collateral liability by loaned security type:
U.S. government and agency	$	2,465	$	—	$	2,465	$	1,005	$	—	$	1,005
All other corporate and government	42		36		78		44		53		97
Total	$	2,507	$	36	$	2,543	$	1,049	$	53	$	1,102

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

FHLB of Boston Advance Agreements

At September 30, 2018 and December 31, 2017, a subsidiary of the Company had pledged fixed maturity securities AFS with an estimated fair value of $1.3 billion and $564 million, respectively, as collateral and received $800 million and $300 million, respectively, in cash advances under short-term advance agreements with the FHLB of Boston. The liability to return the cash advances is included within payables for collateral under securities loaned and other transactions. The estimated fair value of the reinvestment portfolio acquired with the cash advances was $810 million and $300 million at September 30, 2018 and December 31, 2017, respectively, and consisted primarily of U.S. government and agency securities and Structured Securities. The subsidiary is permitted to withdraw any portion of the pledged collateral over the minimum collateral requirement at any time, other than in the event of a default by the subsidiary.

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

	September 30, 2018								December 31, 2017
	Remaining Tenor of Advance Agreements								Remaining Tenor of Advance Agreements
	1 Month or Less		Over 1 to 6 Months		6 Months to 1 Year		Total		1 Month or Less		Over 1 to 6 Months		6 Months to 1 Year		Total
	(In millions)
Cash advance liability by loaned security type:
State and political subdivision	$	100	$	625	$	75	$	800	$	—	$	300	$	—	$	300

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, 2018		December 31, 2017
	(In millions)
Invested assets on deposit (regulatory deposits)	$	1,811	$	1,879
Invested assets held in trust (collateral financing arrangement and reinsurance agreements)	3,058		2,490
Invested assets pledged as collateral	24,726		24,174
Total invested assets on deposit, held in trust and pledged as collateral	$	29,595	$	28,543

The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Consolidated Financial Statements included in the 2017 Annual Report) and derivative transactions (see Note 7). Amounts in the table above include invested assets and cash and cash equivalents.

See “— Securities Lending” and “— Repurchase Agreements” for information regarding securities on loan, Note 5 for information regarding investments designated to the closed block and “— Equity Securities” for information on common stock holdings in regional banks of the FHLB system, which are considered restricted investments.

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, 2018				December 31, 2017
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Renewable energy partnership	$	107	$	—	$	116	$	3
Investment fund	10		—		—		—
Other investments	31		6		32		6
Total	$	148	$	6	$	148	$	9

Assets of the renewable energy partnership, investment fund and other investments primarily consisted of other invested assets.

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, 2018				December 31, 2017
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured Securities (2)	$	47,209	$	47,209	$	47,614	$	47,614
U.S. and foreign corporate	1,236		1,236		1,560		1,560
Other limited partnership interests	5,343		9,719		4,834		8,543
Other invested assets	1,924		2,102		2,291		2,625
Other investments	86		90		82		87
Total	$	55,798	$	60,356	$	56,381	$	60,429

__________________

(1) The maximum exposure to loss relating to fixed maturity 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 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 $101 million and $117 million at September 30, 2018 and December 31, 2017, 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.

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 endedSeptember 30, 2018 and 2017.

During the three months ended September 30, 2018, the Company securitized certain residential mortgage loans and acquired an interest in the related RMBS issued. While the Company has a variable interest in the issuer of the securities, it is not the primary beneficiary of the issuer of the securities since it does not have any rights to remove the servicer or veto rights over the servicer’s actions. During the three months ended September 30, 2018, the carrying value and the estimated fair value of the mortgage loans sold were $451 million and $478 million, respectively, resulting in a gain of $27 million, which was included within net investment gains (losses). The estimated fair value of the RMBS acquired in connection with the securitization was $102 million, which was included in the carrying amount and maximum exposure to loss for Structured Securities presented above. See Note 8 for information on how the estimated fair value of mortgage loans and RMBS is determined, the valuation approaches and key inputs, their placement in the fair value hierarchy, and, for certain RMBS, quantitative information about the significant unobservable inputs and the sensitivity of their estimated fair value to changes in those inputs.

Net Investment Income

The components of net investment income were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(In millions)
Investment income:
Fixed maturity securities AFS	$	3,056	$	2,869	$	8,966	$	8,528
Equity securities	15		31		46		93
FVO Securities (1)	11		16		25		61
Mortgage loans	859		809		2,466		2,303
Policy loans	130		130		381		386
Real estate and real estate joint ventures	175		156		538		478
Other limited partnership interests	227		214		554		648
Cash, cash equivalents and short-term investments	112		52		279		159
Operating joint ventures	2		6		34		13
Other	83		71		283		196
Subtotal	4,670		4,354		13,572		12,865
Less: Investment expenses	333		293		950		820
Subtotal, net	4,337		4,061		12,622		12,045
Unit-linked investments (1)	149		234		82		864
Net investment income	$	4,486	$	4,295	$	12,704	$	12,909

__________________

(1) Changes in estimated fair value subsequent to purchase for investments still held as of the end of the respective periods included in net investment income were principally from Unit-linked investments, and were$109 millionand($59) millionfor thethree monthsand nine months endedSeptember 30, 2018, respectively, and$154 millionand$540 millionfor thethree monthsand nine months endedSeptember 30, 2017, respectively.

The Company invests in real estate joint ventures, other limited partnership interests and tax credit and renewable energy partnerships, and also does business through certain operating joint ventures, the majority of which are accounted for under the equity method. Net investment income from other limited partnership interests and operating joint ventures, accounted for under the equity method; and real estate joint ventures and tax credit and renewable energy partnerships, primarily accounted for under the equity method, totaled $180 million and $482 million for the three months and nine months endedSeptember 30, 2018, respectively, and $164 million and $448 million for the three months and nine months endedSeptember 30, 2017, respectively.

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,
	2018			2017			2018			2017
	(In millions)
Total gains (losses) on fixed maturity securities AFS:
Total OTTI losses recognized — by sector and industry:
U.S. and foreign corporate securities — by industry:
Consumer	$	(1	)	$	(4	)	$	(1	)	$	(4	)
Finance	(7		)	—			(7		)	—
Total U.S. and foreign corporate securities	(8		)	(4		)	(8		)	(4		)
Foreign government	(9		)	—			(9		)	—
RMBS	—			(1		)	—			(1		)
State and political subdivision	—			—			—			(2		)
OTTI losses on fixed maturity securities AFS recognized in earnings	(17		)	(5		)	(17		)	(7		)
Fixed maturity securities AFS — net gains (losses) on sales and disposals (1)	123			284			(18		)	325
Total gains (losses) on fixed maturity securities AFS	106			279			(35		)	318
Total gains (losses) on equity securities:
OTTI losses recognized — by security type:
Common stock	—			(4		)	—			(16		)
Non-redeemable preferred stock	—			—			—			(1		)
Total OTTI losses on equity securities recognized in earnings	—			(4		)	—			(17		)
Equity securities — net gains (losses) on sales and disposals	(58		)	6			58			55
Change in estimated fair value of equity securities (2)	76			—			(37		)	—
Total gains (losses) on equity securities	18			2			21			38
Mortgage loans (1)	4			29			(32		)	3
Real estate and real estate joint ventures	40			169			154			436
Other limited partnership interests	1			(33		)	9			(51		)
Other	12			29			(176		)	(67		)
Subtotal	181			475			(59		)	677
Change in estimated fair value of other limited partnership interests and real estate joint ventures	12			—			6			—
Non-investment portfolio gains (losses) (3)	(76		)	(1,081		)	(390		)	(1,091		)
Total net investment gains (losses)	$	117		$	(606	)	$	(443	)	$	(414	)

__________________

(1) Fixed maturity securities AFS — net gains (losses) on sales and disposals and mortgage loans for both the three months and nine months endedSeptember 30, 2017, included $276 million and $47 million, respectively, in previously deferred gains on prior period transfers of such investments to Brighthouse, as such gains are no longer eliminated in consolidation after the Separation. See Note 3.

(2) Changes in estimated fair value subsequent to purchase for equity securities still held as of the end of the period included in net investment gains (losses) were$15 millionand$12 millionfor thethree monthsandnine months endedSeptember 30, 2018, respectively. SeeNote 1.

(3) Non-investment portfolio gains (losses) for the nine months endedSeptember 30, 2018 included a loss of $327 million which represents both the change in estimated fair value of FVO Brighthouse Common Stock held by the Company through date of disposal and the loss on disposal in June 2018. Non-investment portfolio gains (losses) for both thethree monthsand nine months endedSeptember 30, 2017 included (i) a loss of $1,016 million which represents a mark-to-market loss on the Company’s retained investment in Brighthouse Financial, Inc. at Separation and (ii) 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.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were($100) millionand($82) millionfor the three months and nine months endedSeptember 30, 2018, respectively, and($14) millionand($52) millionfor thethree monthsand nine months endedSeptember 30, 2017, respectively.

Sales or Disposals and Impairments of Fixed Maturity Securities AFS

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In millions)
Proceeds	$	19,003		$	8,586		$	58,256		$	35,742
Gross investment gains	$	234		$	364		$	489		$	623
Gross investment losses	(111		)	(80		)	(507		)	(298		)
OTTI losses	(17		)	(5		)	(17		)	(7		)
Net investment gains (losses)	$	106		$	279		$	(35	)	$	318

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 AFS still held for which a portion of the OTTI loss was recognized in OCI:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In millions)
Balance, beginning of period	$	111		$	165		$	138		$	187
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	(4		)	(4		)	(30		)	(26		)
Increase in cash flows — accretion of previous credit loss OTTI	—			—			(1		)	—
Balance, end of period	$	107		$	161		$	107		$	161