Invested Assets

6 Months Ended

Jun. 30, 2013

Text Block [Abstract]

Invested Assets

2) Invested Assets

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

	June 30, 2013
	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
	(in millions)
Fixed maturities
Tax exempt	$	18,353	$	953	$	159	$	19,147
Taxable
U.S. government and government agency and authority obligations.		779		40		5		814
Corporate bonds		8,126		401		84		8,443
Foreign government and government agency obligations		6,813		270		21		7,062
Residential mortgage-backed securities		336		26		1		361
Commercial mortgage-backed securities		1,430		46		3		1,473
		17,484		783		114		18,153
Total fixed maturities	$	35,837	$	1,736	$	273	$	37,300
Equity securities	$	1,281	$	574	$	10	$	1,845

	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

The fair value and amortized cost of fixed maturities at June 30, 2013 by contractual maturity were as follows:

	Fair Value		Amortized Cost
	(in millions)
Due in one year or less	$	2,192	$	2,161
Due after one year through five years		14,105		13,532
Due after five years through ten years		11,328		10,699
Due after ten years		7,841		7,679
		35,466		34,071
Residential mortgage-backed securities		361		336
Commercial mortgage-backed securities		1,473		1,430
	$	37,300	$	35,837

Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations.

The Corporation’s equity securities comprise a diversified portfolio of primarily U.S. publicly-traded common stocks.

The Corporation is involved in the normal course of business with variable interest entities (VIEs) primarily as a passive investor in residential mortgage-backed securities, commercial mortgage-backed securities and private equity limited partnerships issued by third party VIEs. The Corporation is not the primary beneficiary of these VIEs. The Corporation’s maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the Corporation’s consolidated balance sheet and any unfunded partnership commitments.

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

	June 30 2013		December 31 2012
	(in millions)
Fixed maturities
Gross unrealized appreciation	$	1,736	$	2,704
Gross unrealized depreciation		273		26
		1,463		2,678
Equity securities
Gross unrealized appreciation		574		453
Gross unrealized depreciation		10		34
		564		419
		2,027		3,097
Deferred income tax liability		710		1,084
	$	1,317	$	2,013

The following table summarizes, for all investment securities in an unrealized loss position at June 30, 2013, 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	$	2,855	$	146	$	126	$	13	$	2,981	$	159
Taxable
U.S. government and government agency and authority obligations.		146		4		19		1		165		5
Corporate bonds		2,616		83		13		1		2,629		84
Foreign government and government agency obligations		1,440		20		9		1		1,449		21
Residential mortgage-backed securities		7		—		16		1		23		1
Commercial mortgage-backed securities		208		3		21		—		229		3
		4,417		110		78		4		4,495		114
Total fixed maturities		7,272		256		204		17		7,476		273
Equity securities		68		6		10		4		78		10
	$	7,340	$	262	$	214	$	21	$	7,554	$	283

At June 30, 2013, approximately 1,120 individual fixed maturities and 10 individual equity securities were in an unrealized loss position. The Corporation does not have the intent to sell and it is not more likely than not that the Corporation will be required to sell these fixed maturities before the securities recover to their amortized cost value. In addition, the Corporation believes that none of the declines in the fair values of these fixed maturities relate to credit losses. The Corporation has the intent and ability to hold the equity securities in an unrealized loss position for a period of time sufficient to allow for the recovery of cost. The Corporation believes that none of the declines in the fair value of these fixed maturities and equity securities were other than temporary at June 30, 2013.

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 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:

	Periods Ended June 30
	Second Quarter						Six Months
	2013			2012			2013			2012
	(in millions)
Change in unrealized appreciation of fixed maturities	$	(1,019	)	$	133		$	(1,215	)	$	116
Change in unrealized appreciation of equity securities		(57	)		(28	)		145			74
		(1,076	)		105			(1,070	)		190
Deferred income tax (credit)		(376	)		37			(374	)		67
	$	(700	)	$	68		$	(696	)	$	123

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

	Periods Ended June 30
	Second Quarter						Six Months
	2013			2012			2013			2012
	(in millions)
Fixed maturities
Gross realized gains	$	14		$	24		$	27		$	62
Gross realized losses		(8	)		(7	)		(10	)		(10	)
Other-than-temporary impairment losses		—			(1	)		—			(2	)
		6			16			17			50
Equity securities
Gross realized gains		119			6			174			25
Other-than-temporary impairment losses		(5	)		(30	)		(7	)		(35	)
		114			(24	)		167			(10	)
Other invested assets		59			55			133			63
	$	179		$	47		$	317		$	103

(d) As of June 30, 2013 and December 31, 2012, fixed maturities still held by the Corporation for which a portion of their other-than-temporary impairment losses were recognized in other comprehensive income had cumulative credit-related losses of $21 million and $22 million, respectively, recognized in net income.