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Investments and Cash (Tables)
 3 Months Ended
Mar. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Marketable Securities
Investment Portfolio
Carrying Value

 
As of
March 31, 2020
 
As of
December 31, 2019
 
(in millions)
Fixed-maturity securities (1):
 
 
 
Externally managed
$
7,826

 
$
7,978

Internally managed
742

 
876

Short-term investments
933

 
1,268

Other invested assets
 
 
 
Equity method investments
108

 
111

Other
13

 
7

Total
$
9,622

 
$
10,240

____________________
(1)
7.6% and 8.6% of fixed-maturity securities are rated BIG as of March 31, 2020 and December 31, 2019, respectively.
Roll Forward of Credit Losses in the Investment Portfolio
The following table presents the roll-forward of the credit losses on fixed-maturity securities for which the Company has recognized an allowance for credit losses in 2020 or an OTTI and for which unrealized loss was recognized in OCI for 2019.

Roll Forward of Credit Losses
in the Investment Portfolio

 
First Quarter
 
2020
 
2019
 
(in millions)
 
 
Balance, beginning of period
$
—

 
$
185

Effect of adoption of accounting guidance on credit losses on January 1, 2020
62

 
 
Additions for credit losses on securities for which credit impairments were not previously recognized
2

 
—

Additions (reductions) for credit losses on securities for which credit impairments were previously recognized
9

 
12

Balance, end of period
$
73

 
$
197
Fixed Maturity Securities and Short Term Investments by Security Type
Fixed-Maturity Securities and Short-Term Investments
by Security Type 
As of March 31, 2020

Security Type
 
Percent
of
Total (1)
 
Amortized
Cost
 
Allowance for Credit Losses
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
AOCI (2)
Pre-tax Gain
(Loss) on
Securities
with
Credit Loss
 
Weighted
Average
Credit
Rating (3)
 
 
(dollars in millions)
Fixed-maturity securities:
 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 
Obligations of state and political subdivisions
 
42
%
 
$
3,952

 
$
(11
)
 
$
269

 
$
(6
)
 
$
4,204

 
$
(2
)
 
AA-
U.S. government and agencies
 
2

 
160

 
—

 
15

 
—

 
175

 
—

 
AA+
Corporate securities
 
25

 
2,292

 
(39
)
 
58

 
(78
)
 
2,233

 
(36
)
 
A
Mortgage-backed securities (4):
 
0

 
 
 
 
 
 
 
 

 
—

 
 

 
 
RMBS
 
8

 
737

 
(16
)
 
39

 
(43
)
 
717

 
(39
)
 
A
CMBS
 
4

 
399

 
—

 
15

 
—

 
414

 
—

 
AAA
Asset-backed securities
 
7

 
687

 
(7
)
 
9

 
(36
)
 
653

 
(6
)
 
BBB-
Non-U.S. government securities
 
2

 
183

 
—

 
1

 
(12
)
 
172

 
—

 
AA
Total fixed-maturity securities
 
90

 
8,410

 
(73
)
 
406

 
(175
)
 
8,568

 
(83
)
 
A+
Short-term investments
 
10

 
933

 
—

 
1

 
(1
)
 
933

 
—

 
AAA
Total
 
100
%
 
$
9,343

 
$
(73
)
 
$
407

 
$
(176
)
 
$
9,501

 
$
(83
)
 
AA-
Fixed-Maturity Securities and Short-Term Investments
by Security Type 
As of December 31, 2019 

Security Type
 
Percent
of
Total (1)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
AOCI
Pre-tax
Gain
(Loss) on
Securities
with
OTTI
 
Weighted
Average
Credit
Rating (3)
 
 
(dollars in millions)
Fixed-maturity securities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Obligations of state and political subdivisions
 
42
%
 
$
4,036

 
$
305

 
$
(1
)
 
$
4,340

 
$
40

 
AA-
U.S. government and agencies
 
1

 
137

 
10

 
—

 
147

 
—

 
AA+
Corporate securities
 
23

 
2,137

 
103

 
(19
)
 
2,221

 
(8
)
 
A
Mortgage-backed securities (4):
 
 

 
 

 
 

 
 

 
 

 
 

 
 
RMBS
 
8

 
745

 
37

 
(7
)
 
775

 
8

 
A-
CMBS
 
4

 
402

 
17

 
—

 
419

 
—

 
AAA
Asset-backed securities
 
7

 
684

 
38

 
(2
)
 
720

 
16

 
BB+
Non-U.S. government securities
 
2

 
230

 
7

 
(5
)
 
232

 
3

 
AA
Total fixed-maturity securities
 
87

 
8,371

 
517

 
(34
)
 
8,854

 
59

 
A+
Short-term investments
 
13

 
1,268

 
—

 
—

 
1,268

 
—

 
AAA
Total
 
100
%
 
$
9,639

 
$
517

 
$
(34
)
 
$
10,122

 
$
59

 
AA-
____________________
(1)
Based on amortized cost.
 
(2)
Accumulated OCI (AOCI).

(3)
Ratings 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 primarily consists of high-quality, liquid instruments.
 
(4)
U.S. government-agency obligations were approximately 44% of mortgage backed securities as of March 31, 2020 and 42% as of December 31, 2019 based on fair value.

Net Investment Income
Net Investment Income
 
 
First Quarter
 
2020
 
2019
 
(in millions)
Interest income:
 
 
 
Externally managed
$
62

 
$
72

Internally managed
20

 
28

Interest income
82

 
100

Investment expenses
(2
)
 
(2
)
Net investment income
$
80

 
$
98
Net Realized Investment Gains (Losses)
Net Realized Investment Gains (Losses)
 
 
First Quarter
 
2020
 
2019
 
(in millions)
Gross realized gains on available-for-sale securities
$
7

 
$
6

Gross realized losses on available-for-sale securities
(1
)
 
(2
)
Credit impairments (1)
(11
)
 
(16
)
Net realized investment gains (losses) (2)
$
(5
)
 
$
(12
)

____________________
(1)
Credit impairment in First Quarter 2020 related primarily to an increase in the allowance for credit loss on loss mitigation securities. Shut-downs due to COVID-19 pandemic restrictions contributed to the increase in the allowance for credit loss in First Quarter 2020. Credit impairment in First Quarter 2019 was primarily attributable to OTTI on loss mitigation securities and foreign exchange losses.

(2)
Includes foreign currency gains of $3 million and $1 million for First Quarter 2020 and First Quarter 2019, respectively.