Derivative Financial Instruments

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We primarily invest in the following types of derivative financial instruments: interest rate swaps, futures, forward contracts, put and call options, swaptions, embedded derivatives and warrants. We also enter into master netting agreements which reduce credit risk by permitting net settlement of transactions. At December 31, 2020 and 2019, we had received collateral of $37 and $22, respectively, related to our derivative financial instruments.

A summary of the aggregate contractual or notional amounts and estimated fair values related to derivative financial instruments at December 31, 2020 and 2019 is as follows:


	Contractual/ Notional Amount		Balance Sheet Location	Estimated Fair Value
				Asset		(Liability)
December 31, 2020
Hedging instruments
Interest rate swaps - fixed to floating	$	575	Other assets/other liabilities	$	37	$	—



Non-hedging instruments
Interest rate swaps	27		Equity securities	—		—

Futures	183		Equity securities	6		(5)
Subtotal non-hedging	210		Subtotal non-hedging	6		(5)
Total derivatives	$	785	Total derivatives	43		(5)
			Amounts netted	—		—
			Net derivatives	$	43	$	(5)

December 31, 2019
Hedging instruments
Interest rate swaps - fixed to floating	$	1,200	Other assets/other liabilities	$	22	$	(1)

Non-hedging instruments
Interest rate swaps	1		Equity securities	—		—

Futures	134		Equity securities	1		—
Subtotal non-hedging	135		Subtotal non-hedging	1		—
Total derivatives	$	1,335	Total derivatives	23		(1)
			Amounts netted	(1)		1
			Net derivatives	$	22	$	—

Fair Value Hedges

We have entered into various interest rate swap contracts to convert a portion of our interest rate exposure on our long-term debt from fixed rates to floating rates. The floating rates payable on all of our fair value hedges are benchmarked to the LIBOR. A summary of our outstanding fair value hedges at December 31, 2020 and 2019 is as follows:


Type of Fair Value Hedges	Year Entered Into	Outstanding Notional Amount				Interest Rate Received		Expiration Date
		2020		2019
Interest rate swap	2020	$	75	$	—	4.101	%	September 1, 2027
Interest rate swap	2018	50		50		4.101		September 1, 2027
Interest rate swap	2018	450		450		3.300		January 15, 2023
Interest rate swap	2018	—		90		4.350		August 15, 2020
Interest rate swap	2017	—		50		4.350		August 15, 2020
Interest rate swap	2015	—		200		4.350		August 15, 2020
Interest rate swap	2014	—		150		4.350		August 15, 2020
Interest rate swap	2013	—		10		4.350		August 15, 2020
Interest rate swap	2012	—		200		4.350		August 15, 2020
Total notional amount outstanding		$	575	$	1,200

The following amounts were recorded on our consolidated balance sheets related to cumulative basis adjustments for fair value hedges at December 31, 2020 and 2019:


Balance Sheet Classification in Which Hedged Item is Included	Carrying Amount of Hedged Liability				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability
	2020		2019		2020		2019
Current portion of long term-debt	$	700	$	1,598	$	37	$	22
Long-term debt	19,335		17,787		—		(1)

Cash Flow Hedges

We have entered into a series of forward starting pay fixed interest rate swaps with the objective of eliminating the variability of cash flows in the interest payments on future financings that were anticipated at the time of entering into the swaps. During 2020, swaps in the notional amount of $725 were terminated. All swaps have expired or were terminated as of December 31, 2020.

The unrecognized loss for all expired and terminated cash flow hedges included in accumulated other comprehensive income (loss), net of tax, was $250 and $262 at December 31, 2020 and 2019, respectively. As of December 31, 2020, the total amount of amortization over the next twelve months for all cash flow hedges is estimated to increase interest expense by approximately $14. No amounts were excluded from effectiveness testing.

A summary of the effect of cash flow hedges in accumulated other comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018 is as follows:

Hedge
Loss
Recognized
in Other
Comprehensive
Income (Loss)

Income Statement
Location of
Loss
Reclassification
from Accumulated
Other Comprehensive
Income (Loss)

Hedge Loss
Reclassified from
Accumulated
Other
Comprehensive
Income (Loss)

Type of Cash Flow Hedge

Year ended December 31, 2020

Forward starting pay fixed swaps

—

Interest expense

(15)

Year ended December 31, 2019

Forward starting pay fixed swaps

(35)

Interest expense

(15)

Year ended December 31, 2018

Forward starting pay fixed swaps

(33)

Interest expense

(14)

Income Statement Relationship of Fair Value and Cash Flow Hedging

A summary of the relationship between the effects of fair value and cash flow hedges on the total amount of income and expense presented in our consolidated statements of income for the years ended December 31, 2020, 2019 and 2018 is as follows:


	Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	2020				2019				2018
	Net Realized Gains (Losses) on Financial Instruments		Interest Expense		Net Realized Gains (Losses) on Financial Instruments		Interest Expense		Net Realized Gains (Losses) on Financial Instruments		Interest Expense
Total amount of income or expense in the income statement in which the effects of fair value or cash flow hedges are recorded	$	182	$	(784)	$	67	$	(746)	$	(206)	$	(753)

Gain (loss) on fair value hedging relationships:
Interest rate swaps:
Hedged items	—		(15)		—		2		—		—
Derivatives designated as hedging instruments	—		15		—		(2)		—		—

Loss on cash flow hedging relationships:
Forward starting pay fixed swaps:
Amount of loss reclassified from accumulated other comprehensive loss into net income	—		(15)		—		(15)		—		(14)

Non-Hedging Derivatives

A summary of the effect of non-hedging derivatives on our consolidated statements of income for the years ended December 31, 2020, 2019 and 2018 is as follows:


Type of Non-hedging Derivatives	Income Statement Location of Gain (Loss) Recognized	Derivative Gain (Loss) Recognized
Year ended December 31, 2020

Interest rate swaps	Net realized gains (losses) on financial instruments	$	(1)
Options	Net realized gains (losses) on financial instruments	(5)
Futures	Net realized gains (losses) on financial instruments	4

Total		$	(2)
Year ended December 31, 2019
Interest rate swaps	Net realized gains (losses) on financial instruments	$	1
Options	Net realized gains (losses) on financial instruments	(8)
Futures	Net realized gains (losses) on financial instruments	(10)
Total		$	(17)
Year ended December 31, 2018

Interest rate swaps	Net realized gains (losses) on financial instruments	$	14
Options	Net realized gains (losses) on financial instruments	1
Futures	Net realized gains (losses) on financial instruments	8
Total		$	23