Investments and Cash (Tables)

3 Months Ended

Mar. 31, 2013



	First Quarter
	2013			2012
	(in millions)
Income from fixed maturity securities in general investment portfolio	$	79		$	87
Income from fixed maturity securities purchased or obtained for loss mitigation purposes	16			12
Other (1)	1			1
Gross investment income	96			100
Investment expenses	(2		)	(2		)
Net investment income	$	94		$	98



	First Quarter
	2013			2012
	(in millions)
Realized gains on investment portfolio	$	39		$	9
Realized losses on investment portfolio	(6		)	(3		)
Other-than-temporary impairment ("OTTI") (1)	(5		)	(5		)
Net realized investment gains (losses)	$	28		$	1



	First Quarter
	2013		2012
	(in millions)
Balance, beginning of period	$	64	$	47
Additions for credit losses on securities for which an OTTI was not previously recognized	1		2
Additions for credit losses on securities for which an OTTI was previously recognized	4		2
Balance, end of period	$	69	$	51

Fixed Maturity Securities and Short Term Investments

by Security Type

As of March 31, 2013



Investment Category	Percent of Total(1)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		AOCI(2) Gain (Loss) on Securities with OTTI			Weighted Average Credit Quality (3)
	(dollars in millions)
Fixed maturity securities:
U.S. government and agencies	8	%	$	819	$	58	$	0		$	877	$	—		AA+
Obligations of state and political subdivisions	51		5,161		452		(12		)	5,601		8			AA
Corporate securities	9		970		71		(1		)	1,040		0			A+
Mortgage-backed securities(4):	0
RMBS	12		1,210		54		(68		)	1,196		(51		)	A+
CMBS	5		474		31		0			505		0			AAA
Asset-backed securities	5		469		35		(8		)	496		18			BBB-
Foreign government securities	3		260		12		(2		)	270		0			AA+
Total fixed maturity securities	93		9,363		713		(91		)	9,985		(25		)	AA-
Short-term investments	7		729		0		0			729		0			AAA
Total investment portfolio	100	%	$	10,092	$	713	$	(91	)	$	10,714	$	(25	)	AA-

Fixed Maturity Securities and Short Term Investments

by Security Type

As of December 31, 2012



Investment Category	Percent of Total(1)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		AOCI Gain (Loss) on Securities with OTTI			Weighted Average Credit Quality (3)
	(dollars in millions)
Fixed maturity securities:
U.S. government and agencies	7	%	$	732	$	62	$	0		$	794	$	—		AA+
Obligations of state and political subdivisions	51		5,153		489		(11		)	5,631		9			AA
Corporate securities	9		930		80		0			1,010		0			AA-
Mortgage-backed securities(4):
RMBS	13		1,281		62		(77		)	1,266		(59		)	A+
CMBS	5		482		38		0			520		—			AAA
Asset-backed securities	5		482		59		(10		)	531		43			BIG
Foreign government securities	2		286		18		0			304		0			AAA
Total fixed maturity securities	92		9,346		808		(98		)	10,056		(7		)	AA-
Short-term investments	8		817		0		0			817		—			AAA
Total investment portfolio	100	%	$	10,163	$	808	$	(98	)	$	10,873	$	(7	)	AA-

____________________


(1)	Based on amortized cost.


(2)	Accumulated Other Comprehensive Income ("AOCI"). See also Note 17.


(3)	Ratings in the tables above represent the lower of the Moody’s and S&P classifications except for bonds purchased for loss mitigation or risk management strategies, which use internal ratings classifications. The Company’s portfolio consists primarily of high-quality, liquid instruments.


(4)	Government-agency obligations were approximately 60% of mortgage backed securities as of March 31, 2013 and 61% as of December 31, 2012 based on fair value.

As of March 31, 2013

Fair Value of Available-for-Sale Municipal Bond Portfolio by State

As of December 31, 2012

Fixed Maturity Securities

Gross Unrealized Loss by Length of Time

As of March 31, 2013



	Less than 12 months					12 months or more					Total
	Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss
	(dollars in millions)
U.S. government and agencies	$	43	$	0		$	—	$	—		$	43	$	0
Obligations of state and political subdivisions	158		(12		)	—		—			158		(12		)
Corporate securities	76		(1		)	—		—			76		(1		)
Mortgage-backed securities:
RMBS	184		(15		)	99		(53		)	283		(68		)
CMBS	16		0			—		—			16		0
Asset-backed securities	19		0			38		(8		)	57		(8		)
Foreign government securities	62		(2		)	—		—			62		(2		)
Total	$	558	$	(30	)	$	137	$	(61	)	$	695	$	(91	)
Number of securities			105					12					117
Number of securities with OTTI			5					5					10

Fixed Maturity Securities

Gross Unrealized Loss by Length of Time

As of December 31, 2012



	Less than 12 months					12 months or more					Total
	Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss
	(dollars in millions)
U.S. government and agencies	$	62	$	0		$	—	$	—		$	62	$	0
Obligations of state and political subdivisions	79		(11		)	—		—			79		(11		)
Corporate securities	25		0			—		—			25		0
Mortgage-backed securities:
RMBS	108		(19		)	121		(58		)	229		(77		)
CMBS	5		0			—		—			5		0
Asset-backed securities	16		0			35		(10		)	51		(10		)
Foreign government securities	8		0			—		—			8		0
Total	$	303	$	(30	)	$	156	$	(68	)	$	459	$	(98	)
Number of securities			58					16					74
Number of securities with OTTI			5					6					11

Distribution of Fixed-Maturity Securities

by Contractual Maturity

As of March 31, 2013



	Amortized Cost		Estimated Fair Value
	(in millions)
Due within one year	$	152	$	153
Due after one year through five years	1,623		1,700
Due after five years through 10 years	2,328		2,527
Due after 10 years	3,576		3,904
Mortgage-backed securities:
RMBS	1,210		1,196
CMBS	474		505
Total	$	9,363	$	9,985

Loss Mitigation Assets

Carrying Value



	As of March 31, 2013		As of December 31, 2012
	(in millions)
Fixed maturity securities:
Obligations of state and political subdivisions	$	35	$	35
RMBS	216		215
Asset-backed securities	286		306
Other invested assets:
Assets acquired in refinancing transactions	67		72
Other	25		42
Total	$	629	$	670