Investments and Cash (Tables)

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]



	Year Ended December 31,
	2014			2013			2012
	(in millions)
Income from fixed-maturity securities managed by third parties	$	324		$	322		$	346
Income from internally managed securities:
Fixed maturities	74			74			60
Other invested assets	13			5			6
Other	1			0			1
Gross investment income	412			401			413
Investment expenses	(9		)	(8		)	(9		)
Net investment income	$	403		$	393		$	404

Net Realized Investment Gains (Losses)



	Year Ended December 31,
	2014			2013			2012
	(in millions)
Gross realized gains on available-for-sale securities	$	14		$	73		$	29
Gross realized gains on other assets in investment portfolio	8			40			14
Gross realized losses on available-for-sale securities	(5		)	(12		)	(23		)
Gross realized losses on other assets in investment portfolio	(2		)	(7		)	(2		)
Other-than-temporary impairment	(75		)	(42		)	(17		)
Net realized investment gains (losses)	$	(60	)	$	52		$	1

Roll Forward of Credit Losses in the Investment Portfolio

Roll Forward of Credit Losses

in the Investment Portfolio



	Year Ended December 31,
	2014			2013			2012
	(in millions)
Balance, beginning of period	$	80		$	64		$	47
Additions for credit losses on securities for which an other-than-temporary-impairment was not previously recognized	64			18			14
Eliminations of securities issued by FG VIEs	(15		)	—			—
Reductions for securities sold during the period	(12		)	(21		)	—
Additions for credit losses on securities for which an other-than-temporary-impairment was previously recognized	7			19			3
Balance, end of period	$	124		$	80		$	64

Fixed Maturity Securities and Short Term Investments by Security Type

Fixed-Maturity Securities and Short-Term Investments

by Security Type

As of December 31, 2014



Investment Category	Percent of Total(1)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		AOCI(2) Gain (Loss) on Securities with Other-Than-Temporary Impairment			Weighted Average Credit Quality (3)
	(dollars in millions)
Fixed-maturity securities:
Obligations of state and political subdivisions	50	%	$	5,416	$	380	$	(1	)	$	5,795	$	7		AA
U.S. government and agencies	6		635		31		(1		)	665		—			AA+
Corporate securities	12		1,320		53		(5		)	1,368		(2		)	A
Mortgage-backed securities(4):	—
RMBS	12		1,255		51		(21		)	1,285		0			A-
CMBS	6		639		20		0			659		—			AAA
Asset-backed securities	4		411		9		(3		)	417		3			BBB-
Foreign government securities	3		296		8		(2		)	302		—			AA+
Total fixed-maturity securities	93		9,972		552		(33		)	10,491		8			AA-
Short-term investments	7		767		0		0			767		0			AA+
Total investment portfolio	100	%	$	10,739	$	552	$	(33	)	$	11,258	$	8		AA-

Fixed-Maturity Securities and Short-Term Investments

by Security Type

As of December 31, 2013



Investment Category	Percent of Total(1)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		AOCI Gain (Loss) on Securities with Other-Than-Temporary Impairment			Weighted Average Credit Quality (3)
	(dollars in millions)
Fixed-maturity securities:
Obligations of state and political subdivisions	47	%	$	4,899	$	219	$	(39	)	$	5,079	$	4		AA
U.S. government and agencies	6		674		32		(6		)	700		—			AA+
Corporate securities	13		1,314		44		(18		)	1,340		0			A
Mortgage-backed securities(4):
RMBS	11		1,160		34		(72		)	1,122		(43		)	A
CMBS	5		536		17		(4		)	549		—			AAA
Asset-backed securities	6		605		10		(7		)	608		2			BBB+
Foreign government securities	3		300		14		(1		)	313		—			AA+
Total fixed-maturity securities	91		9,488		370		(147		)	9,711		(37		)	AA-
Short-term investments	9		904		0		0			904		—			AAA
Total investment portfolio	100	%	$	10,392	$	370	$	(147	)	$	10,615	$	(37	)	AA-

____________________


(1)	Based on amortized cost.


(2)	Accumulated OCI. See also Note 21, Other Comprehensive Income.


(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 44% of mortgage backed securities as of December 31, 2014 and 50% as of December 31, 2013 based on fair value.

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

Fair Value of Available-for-Sale Portfolio of

Obligations of State and Political Subdivisions

As of December 31, 2014 (1)



State	State General Obligation		Local General Obligation		Revenue Bonds		Fair Value		Amortized Cost		Average Credit Rating
	(in millions)
Texas	$	60	$	293	$	305	$	658	$	613	AA
New York	13		41		551		605		571		AA
California	45		70		377		492		449		A+
Florida	47		34		256		337		311		AA-
Illinois	20		99		177		296		275		A+
Washington	67		48		163		278		262		AA
Massachusetts	46		8		169		223		204		AA
Arizona	—		7		170		177		165		AA
Michigan	—		—		132		132		122		AA-
Ohio	6		40		82		128		119		AA
All others	276		251		1,096		1,623		1,528		AA-
Total	$	580	$	891	$	3,478	$	4,949	$	4,619

Fair Value of Available-for-Sale Portfolio of

Obligations of State and Political Subdivisions

As of December 31, 2013 (1)



State	State General Obligation		Local General Obligation		Revenue Bonds		Fair Value		Amortized Cost		Average Credit Rating
	(in millions)
Texas	$	77	$	299	$	277	$	653	$	629	AA
New York	12		58		519		589		575		AA
California	32		86		354		472		452		A+
Florida	33		59		242		334		318		AA-
Illinois	14		70		156		240		234		A+
Massachusetts	44		16		147		207		200		AA
Washington	31		19		153		203		199		AA
Arizona	—		7		166		173		170		AA
Michigan	—		28		102		130		125		AA-
Georgia	13		18		97		128		128		A+
All others	254		228		943		1,425		1,381		AA-
Total	$	510	$	888	$	3,156	$	4,554	$	4,411	AA-

____________________


(1)	Excludes $846 million and $525 million as of December 31, 2014 and 2013, respectively, of pre-refunded bonds, at fair value. The credit ratings are based on the underlying ratings and do not include any benefit from bond insurance.

Revenue Sources

Revenue Bonds

Sources of Funds



	As of December 31, 2014				As of December 31, 2013
Type	Fair Value		Amortized Cost		Fair Value		Amortized Cost
	(in millions)
Transportation	$	796	$	733	$	642	$	615
Water and sewer	563		527		459		453
Tax backed	551		514		708		686
Higher education	527		492		358		353
Municipal utilities	512		479		500		482
Healthcare	346		317		289		281
All others	183		173		200		192
Total	$	3,478	$	3,235	$	3,156	$	3,062

Fixed Maturity Securities Gross Unrealized Loss by Length of Time

Fixed-Maturity Securities

Gross Unrealized Loss by Length of Time

As of December 31, 2014



	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(dollars in millions)
Obligations of state and political subdivisions	$	64	$	0		$	25	$	(1	)	$	89	$	(1	)
U.S. government and agencies	139		0			68		(1		)	207		(1		)
Corporate securities	189		(3		)	104		(2		)	293		(5		)
Mortgage-backed securities:
RMBS	205		(3		)	159		(18		)	364		(21		)
CMBS	36		0			19		0			55		0
Asset-backed securities	56		(2		)	18		(1		)	74		(3		)
Foreign government securities	108		(2		)	0		0			108		(2		)
Total	$	797	$	(10	)	$	393	$	(23	)	$	1,190	$	(33	)
Number of securities(1)			125					82					198
Number of securities with other-than-temporary impairment			3					7					10

Fixed-Maturity Securities

Gross Unrealized Loss by Length of Time

As of December 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)
Obligations of state and political subdivisions	$	781	$	(39	)	$	5	$	0		$	786	$	(39	)
U.S. government and agencies	173		(6		)	—		—			173		(6		)
Corporate securities	401		(18		)	3		0			404		(18		)
Mortgage-backed securities:
RMBS	414		(21		)	186		(51		)	600		(72		)
CMBS	121		(4		)	—		—			121		(4		)
Asset-backed securities	196		(2		)	42		(5		)	238		(7		)
Foreign government securities	54		(1		)	1		0			55		(1		)
Total	$	2,140	$	(91	)	$	237	$	(56	)	$	2,377	$	(147	)
Number of securities			425					33					458
Number of securities with other-than-temporary impairment			13					11					24

___________________


(1)	The number of securities does not add across because of lots of the same securities that have been purchased at different times and appear in both categories above (i.e., Less than 12 months and 12 months or more). If a security appears in both categories, it is counted only once in the Total column.

Of the

Distribution of Fixed Maturity Securities by Contractual Maturity

Distribution of Fixed-Maturity Securities

by Contractual Maturity

As of December 31, 2014



	Amortized Cost		Estimated Fair Value
	(in millions)
Due within one year	$	111	$	112
Due after one year through five years	1,961		2,028
Due after five years through 10 years	2,286		2,422
Due after 10 years	3,720		3,985
Mortgage-backed securities:
RMBS	1,255		1,285
CMBS	639		659
Total	$	9,972	$	10,491

Internally Managed Investment Portfolio

Internally Managed Portfolio

Carrying Value



	As of December 31,
	2014		2013
	(in millions)
Assets purchased for loss mitigation and other risk management purposes:
Fixed maturity securities	$	835	$	761
Other invested assets	46		82
Other	79		88
Total	$	960	$	931