Invested Assets

6 Months Ended

Jun. 30, 2015

Text Block [Abstract]

Invested Assets

4) Invested Assets

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

	June 30, 2015
	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
	(in millions)
Fixed maturities
Tax exempt	$	19,433	$	890	$	79	$	20,244
Taxable
U.S. government and government agency and authority obligations		1,241		41		3		1,279
Corporate bonds		8,723		284		34		8,973
Foreign government and government agency obligations		5,941		287		7		6,221
Residential mortgage-backed securities		158		17		1		174
Commercial mortgage-backed securities		971		19		1		989
		17,034		648		46		17,636
Total fixed maturities	$	36,467	$	1,538	$	125	$	37,880
Equity securities	$	1,083	$	887	$	13	$	1,957

	December 31, 2014
	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
	(in millions)
Fixed maturities
Tax exempt	$	18,614	$	1,174	$	16	$	19,772
Taxable
U.S. government and government agency and authority obligations		1,962		46		1		2,007
Corporate bonds		8,741		327		40		9,028
Foreign government and government agency obligations		6,380		295		3		6,672
Residential mortgage-backed securities		192		20		1		211
Commercial mortgage-backed securities		1,069		22		1		1,090
		18,344		710		46		19,008
Total fixed maturities	$	36,958	$	1,884	$	62	$	38,780
Equity securities	$	1,089	$	894	$	19	$	1,964

The fair value and amortized cost of fixed maturities at June 30, 2015 by contractual maturity were as follows:

	Fair Value		Amortized Cost
	(in millions)
Due in one year or less	$	2,239	$	2,220
Due after one year through five years		12,211		11,745
Due after five years through ten years		13,567		12,939
Due after ten years		8,700		8,434
		36,717		35,338
Residential mortgage-backed securities		174		158
Commercial mortgage-backed securities		989		971
	$	37,880	$	36,467

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 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 2015		December 31 2014
	(in millions)
Fixed maturities
Gross unrealized appreciation	$	1,538	$	1,884
Gross unrealized depreciation		125		62
		1,413		1,822
Equity securities
Gross unrealized appreciation		887		894
Gross unrealized depreciation		13		19
		874		875
		2,287		2,697
Deferred income tax liability		800		944
	$	1,487	$	1,753

The following table summarizes, for all investment securities in an unrealized loss position at June 30, 2015, 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	$	3,868	$	59	$	251	$	20	$	4,119	$	79
Taxable
U.S. government and government agency and authority obligations		306		2		10		1		316		3
Corporate bonds		1,682		22		432		12		2,114		34
Foreign government and government agency obligations		510		6		61		1		571		7
Residential mortgage-backed securities		—		—		5		1		5		1
Commercial mortgage-backed securities		96		1		37		—		133		1
		2,594		31		545		15		3,139		46
Total fixed maturities		6,462		90		796		35		7,258		125
Equity securities		99		11		3		2		102		13
	$	6,561	$	101	$	799	$	37	$	7,360	$	138

At June 30, 2015, approximately 1,330 individual fixed maturities and 20 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, 2015.

The following table summarizes, for all investment securities in an unrealized loss position at December 31, 2014, 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	$	422	$	3	$	305	$	13	$	727	$	16
Taxable
U.S. government and government agency and authority obligations		936		1		36		—		972		1
Corporate bonds		1,327		23		888		17		2,215		40
Foreign government and government agency obligations		318		1		207		2		525		3
Residential mortgage-backed securities		—		—		7		1		7		1
Commercial mortgage-backed securities		106		—		67		1		173		1
		2,687		25		1,205		21		3,892		46
Total fixed maturities		3,109		28		1,510		34		4,619		62
Equity securities		67		11		11		8		78		19
	$	3,176	$	39	$	1,521	$	42	$	4,697	$	81

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
	2015			2014		2015			2014
	(in millions)
Change in unrealized appreciation of fixed maturities	$	(561	)	$	255	$	(409	)	$	617
Change in unrealized appreciation of equity securities		(16	)		111		(1	)		110
		(577	)		366		(410	)		727
Deferred income tax (credit)		(202	)		128		(144	)		254
	$	(375	)	$	238	$	(266	)	$	473

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

	Periods Ended June 30
	Second Quarter						Six Months
	2015			2014			2015			2014
	(in millions)
Fixed maturities
Gross realized gains	$	17		$	69		$	30		$	77
Gross realized losses		(13	)		(17	)		(18	)		(28	)
Other-than-temporary impairment losses		—			(4	)		(1	)		(4	)
		4			48			11			45
Equity securities
Gross realized gains		—			23			16			89
Other-than-temporary impairment losses		—			(1	)		(22	)		(1	)
		—			22			(6	)		88
Other invested assets		16			55			26			108
	$	20		$	125		$	31		$	241

(d) As of June 30, 2015 and December 31, 2014, 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 $17 million and $18 million, respectively, recognized in net income.