Invested Assets

9 Months Ended

Sep. 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:

	September 30, 2015
	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation		Fair Value
	(in millions)
Fixed maturities
Tax exempt	$	18,890	$	1,012	$	29	$	19,873
Taxable
U.S. government and government agency and authority obligations		1,259		54		1		1,312
Corporate bonds		8,409		260		45		8,624
Foreign government and government agency obligations		5,858		269		5		6,122
Residential mortgage-backed securities		110		15		1		124
Commercial mortgage-backed securities		943		19		1		961
		16,579		617		53		17,143
Total fixed maturities	$	35,469	$	1,629	$	82	$	37,016
Equity securities	$	1,060	$	742	$	31	$	1,771

	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 September 30, 2015 by contractual maturity were as follows:

	Fair Value		Amortized Cost
	(in millions)
Due in one year or less	$	2,193	$	2,174
Due after one year through five years		11,621		11,173
Due after five years through ten years		13,722		13,032
Due after ten years		8,395		8,037
		35,931		34,416
Residential mortgage-backed securities		124		110
Commercial mortgage-backed securities		961		943
	$	37,016	$	35,469

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:

	September 30 2015		December 31 2014
	(in millions)
Fixed maturities
Gross unrealized appreciation	$	1,629	$	1,884
Gross unrealized depreciation		82		62
		1,547		1,822
Equity securities
Gross unrealized appreciation		742		894
Gross unrealized depreciation		31		19
		711		875
		2,258		2,697
Deferred income tax liability		790		944
	$	1,468	$	1,753

The following table summarizes, for all investment securities in an unrealized loss position at September 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	$	1,287	$	16	$	249	$	13	$	1,536	$	29
Taxable
U.S. government and government agency and authority obligations		52		1		10		—		62		1
Corporate bonds		1,695		30		441		15		2,136		45
Foreign government and government agency obligations		430		3		125		2		555		5
Residential mortgage-backed securities		—		—		5		1		5		1
Commercial mortgage-backed securities		47		1		32		—		79		1
		2,224		35		613		18		2,837		53
Total fixed maturities		3,511		51		862		31		4,373		82
Equity securities		138		27		8		4		146		31
	$	3,649	$	78	$	870	$	35	$	4,519	$	113

At September 30, 2015, approximately 1,125 individual fixed maturities and 25 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 September 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 September 30
	Third Quarter						Nine Months
	2015			2014			2015			2014
	(in millions)
Change in unrealized appreciation of fixed maturities	$	134		$	2		$	(275	)	$	619
Change in unrealized appreciation of equity securities		(163	)		(73	)		(164	)		37
		(29	)		(71	)		(439	)		656
Deferred income tax (credit)		(10	)		(25	)		(154	)		229
	$	(19	)	$	(46	)	$	(285	)	$	427

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

	Periods Ended September 30
	Third Quarter						Nine Months
	2015			2014			2015			2014
				(in millions)
Fixed maturities
Gross realized gains	$	20		$	27		$	50		$	104
Gross realized losses		(5	)		(5	)		(23	)		(33	)
Other-than-temporary impairment losses		(11	)		—			(12	)		(4	)
		4			22			15			67
Equity securities
Gross realized gains		42			43			58			132
Other-than-temporary impairment losses		(15	)		—			(37	)		(1	)
		27			43			21			131
Other invested assets		51			45			77			153
	$	82		$	110		$	113		$	351

(d) As of September 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 $16 million and $18 million, respectively, recognized in net income.