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Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2018:

 

(in millions)

    Level 1      Level 2      Level 3      Total  

Assets

            

Investments:

            

Fixed maturity securities, available-for-sale:

            

U.S. government and agencies

    $ 485      $ —        $ 1      $ 486  

Obligations of states and political subdivisions

      53        4,235        5        4,293  

Corporate securities

      —          40,345        888        41,233  

Residential mortgage-backed securities

      1,505        1,318        —          2,823  

Commercial mortgage-backed securities

      —          1,721        —          1,721  

Asset-backed securities

      —          2,646        135        2,781  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed maturity securities, available-for-sale, at fair value

    $ 2,043      $ 50,265      $ 1,029      $ 53,337  

Other investments at fair value1

      878        1,195        5        2,078  
  

 

 

     

 

 

     

 

 

     

 

 

  

Investments at fair value

    $ 2,921      $ 51,460      $ 1,034      $ 55,415  
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivative instruments - assets

      —          129        438        567  

Separate account assets2

      94,259        1,328        80        95,667  
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets at fair value

    $ 97,180      $ 52,917      $ 1,552      $ 151,649  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Future policy benefits and claims3

    $ —        $ —        $ 627      $ 627  

Derivative instruments - liabilities

      —          46        14        60  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities at fair value

    $ —        $ 46      $ 641      $ 687  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

1

Includes short-term investments, equity securities and trading securities of $1.9 billion, $121 million and $67 million, respectively.
2

Excludes $1.4 billion of separate account assets that use net asset value (“NAV”) as a practical expedient to estimate fair value.
3

Amount primarily represents the fair value of interest credits associated with certain indexed life and annuity products.

 

The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2017:

 

(in millions)

    Level 1      Level 2      Level 3      Total  

Assets

            

Investments:

            

Fixed maturity securities, available-for-sale:

            

U.S. government and agencies

    $ 395      $ —        $ 1      $ 396  

Obligations of states, political subdivisions and foreign governments

      60        3,780        5        3,845  

Corporate securities

      —          38,529        912        39,441  

Residential mortgage-backed securities

      1,190        1,682        —          2,872  

Commercial mortgage-backed securities

      —          1,161        —          1,161  

Asset-backed securities

      —          2,342        144        2,486  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed maturity securities, available-for-sale, at fair value

    $ 1,645      $ 47,494      $ 1,062      $ 50,201  

Other investments at fair value1

      401        1,157        14        1,572  
  

 

 

     

 

 

     

 

 

     

 

 

  

Investments at fair value

    $ 2,046      $ 48,651      $ 1,076      $ 51,773  
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivative instruments - assets

      —          85        1,070        1,155  

Separate account assets2

      103,532        1,365        61        104,958  
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets at fair value

    $ 105,578      $ 50,101      $ 2,207      $ 157,886  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Future policy benefits and claims3

    $ —        $ —        $ 984      $ 984  

Derivative instruments - liabilities

      —          166        12        178  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities at fair value

    $ —        $ 166      $ 996      $ 1,162  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

1

Primarily includes short-term investments, equity securities and trading securities of $1.4 billion, $79 million and $74 million, respectively.
2

Excludes $649 million of separate account assets that use NAV as a practical expedient to estimate fair value.
3

Amount primarily represents the fair value of interest credits associated with certain indexed life and annuity products.
Fair Value Measurements of Unobservable Inputs

The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2018:

 

(in millions)

    Level 1      Level 2      Level 3      Total  

Assets

            

Investments:

            

Fixed maturity securities, available-for-sale:

            

U.S. government and agencies

    $ 485      $ —        $ 1      $ 486  

Obligations of states and political subdivisions

      53        4,235        5        4,293  

Corporate securities

      —          40,345        888        41,233  

Residential mortgage-backed securities

      1,505        1,318        —          2,823  

Commercial mortgage-backed securities

      —          1,721        —          1,721  

Asset-backed securities

      —          2,646        135        2,781  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total fixed maturity securities, available-for-sale, at fair value

    $ 2,043      $ 50,265      $ 1,029      $ 53,337  

Other investments at fair value1

      878        1,195        5        2,078  
  

 

 

     

 

 

     

 

 

     

 

 

  

Investments at fair value

    $ 2,921      $ 51,460      $ 1,034      $ 55,415  
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivative instruments - assets

      —          129        438        567  

Separate account assets2

      94,259        1,328        80        95,667  
  

 

 

     

 

 

     

 

 

     

 

 

  

Assets at fair value

    $ 97,180      $ 52,917      $ 1,552      $ 151,649  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Future policy benefits and claims3

    $ —        $ —        $ 627      $ 627  

Derivative instruments - liabilities

      —          46        14        60  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities at fair value

    $ —        $ 46      $ 641      $ 687  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

1

Includes short-term investments, equity securities and trading securities of $1.9 billion, $121 million and $67 million, respectively.
2

Excludes $1.4 billion of separate account assets that use net asset value (“NAV”) as a practical expedient to estimate fair value.
3

Amount primarily represents the fair value of interest credits associated with certain indexed life and annuity products.

The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2018:

 

(in millions)

    Fixed
maturity
securities2		     Other
investments		     Derivative
assets3		     Separate
account
assets		      Total assets
at fair value		     Liabilities at
fair value3		  

Balance as of December 31, 2017

    $ 1,062     $ 14     $ 1,070     $ 61      $ 2,207     $ 996  

Net (losses) gains

              

In operations1

      (1 )      —         (489 )      19        (471 )      (355 ) 

In other comprehensive income

      (34 )      —         —         —          (34 )      —    

Purchases

      84       3       376       —          463       —    

Sales

      (168 )      —         (519 )      —          (687 )      —    

Transfers into Level 3

      118       —         —         —          118       —    

Transfers out of Level 3

      (32 )      (12 )      —         —          (44 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

Balance as of December 31, 2018

    $ 1,029     $ 5     $ 438     $ 80      $ 1,552     $ 641  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

    

 

 

  

 

1

Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized (losses) gains included in operations on assets and liabilities still held at the end of the year was ($357) million for future policy benefits and claims, ($302) million for derivative assets, and $2 million for derivative liabilities.
2

Non-binding broker quotes were utilized to determine a fair value of $801 million of the total fixed maturity securities as of December 31, 2018.
3

Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities.
Summary of Significant Unobservable Inputs Used for Fair Value Measurements for Living Benefits Liabilities

The following table summarizes significant unobservable inputs used for fair value measurements for living benefits liabilities, included in future policy benefits and claims and classified as Level 3 as of December 31, 2018:

 

Unobservable Inputs

   

Range

Mortality

    0.1% - 10%3

Lapse

    0% - 35%4

Wait period

    0 yrs - 30 yrs5

Efficiency of benefit utilization1

    60% - 100%6

Discount rate2

    See note 2 below

Index volatility

    15% - 25%

 

1 

The unobservable input is not applicable to GMABs.
2 

Incorporates the liquidity and non-performance risk adjustment. The liquidity spread takes into consideration market observables for spreads in illiquid assets. The non-performance risk adjustment reflects an additional spread over LIBOR, determined by market observables for similarly rated public bonds.
3 

Represents the mortality for the majority of business with living benefits, with policyholder issue ages ranging from 45 to 85.
4 

Certain scenarios could drive dynamic lapses outside of the specified range. The range shown represents lapses for the vast majority of scenarios.
5 

A portion of the contractholders could never use the benefit, which would extend the range to an indeterminate period.
6 

A portion of the contractholders could withdraw more than the benefit guarantee allows. For these policies, the excess withdrawals are assumed to be temporary before reverting back to 100% utilization.
Summary of Significant Unobservable Inputs Used for Fair Value Measurements for Indexed Universal Life Equity Indexed Products

The following table summarizes significant unobservable inputs used for fair value measurements for indexed universal life and indexed annuity products classified as Level 3 as of December 31, 2018:

 

Unobservable Inputs

    Range  

Mortality

      0% - 5%¹  

Lapse

      0% - 10%  

Index volatility

      15% -25% 2  

 

1

Represents the mortality for the majority of business, with policyholder issue ages ranging from 0 to 80.
2

Certain managed volatility indices utilize a 5% index volatility.
Summary of Carrying Value and Fair Value of Financial Instruments not Carried at Fair Value

The following table summarizes the carrying value and fair value of the Company’s financial instruments not carried at fair value as of the dates indicated. The valuation techniques used to estimate these fair values are described below.

 

     December 31, 2018      December 31, 2017  
     Carrying      Fair                    Carrying      Fair                

(in millions)

    value      value      Level 2      Level 3      value      value      Level 2      Level 3  

Assets

                        

Investments:

                        

Mortgage loans, net of allowance

    $ 12,379      $ 12,167      $ —        $ 12,167      $ 10,929      $ 10,876      $ —        $ 10,876  

Policy loans

    $ 1,015      $ 1,015      $ —        $ 1,015      $ 1,030      $ 1,030      $ —        $ 1,030  

Other investments

    $ 84      $ 84      $ —        $ 84      $ 78      $ 78      $ —        $ 78  

Liabilities

                        

Investment contracts

    $ 42,094      $ 40,113      $ —        $ 40,113      $ 36,746      $ 34,711      $ —        $ 34,711  

Short-term debt

    $ 407      $ 407      $ —        $ 407      $ —        $ —        $ —        $ —    

Long-term debt

    $ 771      $ 999      $ 927      $ 71      $ 793      $ 1,070      $ 977      $ 93