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Invested Assets and Related Income (Tables)
12 Months Ended
Dec. 31, 2012
Amortized Cost and Fair Value of Fixed Maturities and Equity Securities

(a)  The amortized cost and fair value of fixed maturities and equity securities were as follows:

 

    December 31, 2012  
    Amortized
Cost
    Gross
Unrealized
Appreciation
    Gross
Unrealized
Depreciation
    Fair
Value
 
    (in millions)  

Fixed maturities

       

Tax exempt

  $ 18,410      $ 1,522      $ 19      $ 19,913   
 

 

 

   

 

 

   

 

 

   

 

 

 

Taxable

       

U.S. government and government agency and
authority obligations

    973        66               1,039   

Corporate bonds

    7,331        609        3        7,937   

Foreign government and government agency obligations

    6,614        395        1        7,008   

Residential mortgage-backed securities

    421        36        2        455   

Commercial mortgage-backed securities

    1,649        76        1        1,724   
 

 

 

   

 

 

   

 

 

   

 

 

 
    16,988        1,182        7        18,163   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities

  $ 35,398      $ 2,704      $ 26      $ 38,076   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities

  $ 1,244      $ 453      $ 34      $ 1,663   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

    December 31, 2011  
    Amortized
Cost
    Gross
Unrealized
Appreciation
    Gross
Unrealized
Depreciation
    Fair
Value
 
    (in millions)  

Fixed maturities

       

Tax exempt

  $ 18,786      $ 1,462      $ 37      $ 20,211   
 

 

 

   

 

 

   

 

 

   

 

 

 

Taxable

       

U.S. government and government agency and authority obligations

    813        57        2        868   

Corporate bonds

    6,049        440        24        6,465   

Foreign government and government agency obligations

    6,409        416        2        6,823   

Residential mortgage-backed securities

    821        41        7        855   

Commercial mortgage-backed securities

    1,884        79        1        1,962   
 

 

 

   

 

 

   

 

 

   

 

 

 
    15,976        1,033        36        16,973   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities

  $ 34,762      $ 2,495      $ 73      $ 37,184   
 

 

 

   

 

 

   

 

 

   

 

 

 

Equity securities

  $ 1,264      $ 319      $ 71      $ 1,512   
 

 

 

   

 

 

   

 

 

   

 

 

 
Summary of Fair Value of Tax Exempt Fixed Securities

The following table summarizes the fair value of the tax exempt fixed maturities at December 31, 2012 and 2011:

 

     2012        2011  
     (in millions)  

Special revenue bonds

   $ 12,233         $ 12,405   

Municipal and political subdivision general obligation bonds

     2,505           2,614   

State general obligation bonds

     2,246           2,548   

Pre-refunded bonds

     2,929           2,644   
  

 

 

      

 

 

 
   $ 19,913         $ 20,211   
  

 

 

      

 

 

 
Fair Value and Amortized Cost of Tax Exempt Fixed Maturities Other Than Pre-Refunded Bonds

The following table summarizes the fair value and amortized cost of the tax exempt fixed maturities other than pre-refunded bonds held at December 31, 2012 and 2011, for the five states having the largest concentration of issuers within the tax exempt fixed maturity portfolio. The remainder of tax exempt fixed maturities were issued by a broad range of other states and municipalities and political subdivisions within those states. In the following table, “state” identifies the issuer or the location of the issuing municipality or political subdivision within a state.

 

    December 31, 2012  
    Fair Value         

State

  Special
Revenue
Bonds
     Municipal
and  Political

Subdivision
General
Obligations
     State
General
Obligations
     Total      Amortized
Cost
 
    (in millions)  

Texas

  $ 1,041       $ 1,053       $ 267       $ 2,361       $ 2,171   

New York

    1,401         169         33         1,603         1,487   

Illinois

    683         518         59         1,260         1,161   

California

    888         107         194         1,189         1,089   

Florida

    771         27         114         912         844   

 

    December 31, 2011  
    Fair Value         

State

  Special
Revenue
Bonds
     Municipal
and Political
Subdivision
General
Obligations
     State
General
Obligations
     Total      Amortized
Cost
 
    (in millions)  

Texas

  $ 1,035       $ 1,156       $ 275       $ 2,466       $ 2,269   

New York

    1,385         139         36         1,560         1,444   

California

    994         140         240         1,374         1,278   

Illinois

    617         486         74         1,177         1,102   

Florida

    726         12         139         877         825   
Fair Value and Amortized Cost of Foreign Government and Government Agency Fixed Maturities

The following table summarizes the fair value and amortized cost of the foreign government and government agency fixed maturities held at December 31, 2012 and 2011, for the five countries having the largest concentration of issuers within the foreign government and government agency fixed maturity portfolio. In the following table, “country” identifies the issuer or the location of the issuing government agency or regional government within a country.

 

    2012      2011  

Country

  Fair
Value
     Amortized
Cost
     Fair
Value
     Amortized
Cost
 
    (in millions)  

Canada

  $ 2,157       $ 2,060       $ 2,075       $ 1,943   

Germany

    1,127         1,070         897         855   

United Kingdom

    1,024         939         1,275         1,145   

Australia

    742         663         623         579   

Brazil

    310         310         334         334   
Fair Value and Amortized Cost of Fixed Maturities by Contractual Maturity

The fair value and amortized cost of fixed maturities at December 31, 2012 by contractual maturity were as follows:

 

    Fair
Value
     Amortized
Cost
 
    (in millions)  

Due in one year or less

  $ 2,213       $ 2,185   

Due after one year through five years

    14,212         13,439   

Due after five years through ten years

    11,594         10,470   

Due after ten years

    7,878         7,234   
 

 

 

    

 

 

 
    35,897         33,328   

Residential mortgage-backed securities

    455         421   

Commercial mortgage-backed securities

    1,724         1,649   
 

 

 

    

 

 

 
  $ 38,076       $ 35,398   
 

 

 

    

 

 

 
Components of Unrealized Appreciation or Depreciation of Investments

(b)  The components of unrealized appreciation or depreciation, including unrealized other-than-temporary impairment losses, of investments carried at fair value were as follows:

 

     December 31  
     2012        2011  
     (in millions)  

Fixed maturities

       

Gross unrealized appreciation

   $ 2,704         $ 2,495   

Gross unrealized depreciation

     26           73   
  

 

 

      

 

 

 
     2,678           2,422   
  

 

 

      

 

 

 

Equity securities

       

Gross unrealized appreciation

     453           319   

Gross unrealized depreciation

     34           71   
  

 

 

      

 

 

 
     419           248   
  

 

 

      

 

 

 
     3,097           2,670   

Deferred income tax liability

     1,084           934   
  

 

 

      

 

 

 
   $ 2,013         $ 1,736   
  

 

 

      

 

 

 
Fair Value and Gross Unrealized Depreciation of Investments in Unrealized Loss Position

The following table summarizes, for all investment securities in an unrealized loss position at December 31, 2012, the aggregate fair value and gross unrealized depreciation, including unrealized other-than-temporary impairment losses, by investment category and length of time that individual securities have continuously been in an unrealized loss position.

 

    Less Than 12 Months     12 Months or More     Total  
    Fair
Value
    Gross
Unrealized
Depreciation
    Fair
Value
    Gross
Unrealized
Depreciation
    Fair
Value
    Gross
Unrealized
Depreciation
 
    (in millions)  

Fixed maturities

           

Tax exempt

  $ 344      $ 6      $ 104      $ 13      $ 448      $ 19   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Taxable

           

U.S. government and government agency
and authority obligations

    28               20               48          

Corporate bonds

    289        2        14        1        303        3   

Foreign government and government
agency obligations

    429        1        13               442        1   

Residential mortgage-backed securities

    1               19        2        20        2   

Commercial mortgage-backed securities

    105        1        3               108        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    852        4        69        3        921        7   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities

    1,196        10        173        16        1,369        26   

Equity securities

    182        21        63        13        245        34   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 1,378      $ 31      $ 236      $ 29      $ 1,614      $ 60   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following table summarizes, for all investment securities in an unrealized loss position at December 31, 2011, the aggregate fair value and gross unrealized depreciation, including unrealized other-than-temporary impairment losses, by investment category and length of time that individual securities have continuously been in an unrealized loss position.

 

    Less Than 12 Months     12 Months or More     Total  
    Fair
Value
    Gross
Unrealized
Depreciation
    Fair
Value
    Gross
Unrealized
Depreciation
    Fair
Value
    Gross
Unrealized
Depreciation
 
    (in millions)  

Fixed maturities

           

Tax exempt

  $ 81      $ 1      $ 240      $ 36      $ 321      $ 37   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Taxable

           

U.S. government and government agency and authority obligations

    19        1        18        1        37        2   

Corporate bonds

    489        14        176        10        665        24   

Foreign government and government agency obligations

    499        1        21        1        520        2   

Residential mortgage-backed securities

    77        2        22        5        99        7   

Commercial mortgage-backed securities

    34        1                      34        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    1,118        19        237        17        1,355        36   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total fixed maturities

    1,199        20        477        53        1,676        73   

Equity securities

    231        45        199        26        430        71   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 1,430      $ 65      $ 676      $ 79      $ 2,106      $ 144   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Change in Unrealized Appreciation or Depreciation of Investments Carried at Fair Value

The change in unrealized appreciation or depreciation of investments carried at fair value, including the change in unrealized other-than-temporary impairment losses, was as follows:

 

     Years Ended December 31  
     2012        2011      2010  
     (in millions)  

Change in unrealized appreciation of fixed maturities

   $ 256         $ 964       $ 70   

Change in unrealized appreciation of equity securities

     171           (17      47   
  

 

 

      

 

 

    

 

 

 
     427           947         117   

Deferred income tax

     150           331         41   
  

 

 

      

 

 

    

 

 

 
   $ 277         $ 616       $ 76   
  

 

 

      

 

 

    

 

 

 
Sources of Net Investment Income

(c)  The sources of net investment income were as follows:

 

     Years Ended December 31  
     2012        2011        2010  
     (in millions)  

Fixed maturities

   $ 1,465         $ 1,549         $ 1,564   

Equity securities

     40           34           47   

Short term investments

     18           16           9   

Other

     33           45           45   
  

 

 

      

 

 

      

 

 

 

Gross investment income

     1,556           1,644           1,665   

Investment expenses

     38           39           35   
  

 

 

      

 

 

      

 

 

 
   $ 1,518         $ 1,605         $ 1,630   
  

 

 

      

 

 

      

 

 

 
Realized Investment Gains and Losses

(d)  Realized investment gains and losses were as follows:

 

     Years Ended December 31  
     2012      2011      2010  
     (in millions)  

Fixed maturities

        

Gross realized gains

   $ 124       $ 70       $ 98   

Gross realized losses

     (20      (39      (26

Other-than-temporary impairment losses

     (5      (1      (5
  

 

 

    

 

 

    

 

 

 
     99         30         67   
  

 

 

    

 

 

    

 

 

 

Equity securities

        

Gross realized gains

     68         74         50   

Gross realized losses

             (1      (1

Other-than-temporary impairment losses

     (40      (22      (6
  

 

 

    

 

 

    

 

 

 
     28         51         43   
  

 

 

    

 

 

    

 

 

 

Other invested assets

     66         207         316   
  

 

 

    

 

 

    

 

 

 
   $ 193       $ 288       $ 426