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Fair Value (Tables)
 12 Months Ended
Dec. 31, 2013
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring basis are summarized below.
December 31, 2013
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
33

 
$
20,661

 
$
204

 
$
20,898

States, municipalities and political subdivisions
—

 
11,486

 
71

 
11,557

Asset-backed:
 
 
 
 
 
 
 
Residential mortgage-backed
—

 
4,640

 
331

 
4,971

Commercial mortgage-backed
—

 
1,912

 
151

 
2,063

Other asset-backed
—

 
509

 
446

 
955

Total asset-backed
—

 
7,061

 
928

 
7,989

U.S. Treasury and obligations of government-sponsored enterprises
116

 
28

 
—

 
144

Foreign government
81

 
462

 
—

 
543

Redeemable preferred stock
45

 
57

 
—

 
102

Total fixed maturity securities
275

 
39,755

 
1,203

 
41,233

Equity securities
126

 
48

 
11

 
185

Other invested assets
—

 
54

 
—

 
54

Short term investments
769

 
563

 
—

 
1,332

Life settlement contracts, included in Other assets
—

 
—

 
88

 
88

Separate account business
9

 
171

 
1

 
181

Total assets
$
1,179

 
$
40,591

 
$
1,303

 
$
43,073

Liabilities
 
 
 
 
 

 
 

Derivative financial instruments, included in Other liabilities
$
—

 
$
—

 
$
—

 
$
—

Total liabilities
$
—

 
$
—

 
$
—

 
$
—

December 31, 2012
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
6

 
$
22,011

 
$
219

 
$
22,236

States, municipalities and political subdivisions
—

 
10,687

 
96

 
10,783

Asset-backed:
 
 
 
 
 
 
 

Residential mortgage-backed
—

 
5,507

 
413

 
5,920

Commercial mortgage-backed
—

 
1,693

 
129

 
1,822

Other asset-backed
—

 
584

 
368

 
952

Total asset-backed
—

 
7,784

 
910

 
8,694

U.S. Treasury and obligations of government-sponsored enterprises
158

 
24

 
—

 
182

Foreign government
140

 
473

 
—

 
613

Redeemable preferred stock
40

 
59

 
26

 
125

Total fixed maturity securities
344

 
41,038

 
1,251

 
42,633

Equity securities
117

 
98

 
34

 
249

Other invested assets
—

 
58

 
1

 
59

Short term investments
987

 
799

 
6

 
1,792

Life settlement contracts, included in Other assets
—

 
—

 
100

 
100

Separate account business
4

 
306

 
2

 
312

Total assets
$
1,452

 
$
42,299

 
$
1,394

 
$
45,145

Liabilities
 

 
 

 
 

 
 

Derivative financial instruments, included in Other liabilities
$
—

 
$
(2
)
 
$
(1
)
 
$
(3
)
Total liabilities
$
—

 
$
(2
)
 
$
(1
)
 
$
(3
)
Table of reconciliation for assets and liablities measured at fair value on a recurring basis using significant unobservable inputs
The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2013 and 2012.
Level 3
(In millions)
Balance at
January 1,
2013
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
December 31,
2013
 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31, 2013 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
219

 
$
3

 
$
—

 
$
142

 
$
(116
)
 
$
(44
)
 
$
51

 
$
(51
)
 
$
204

 
$
(2
)
States, municipalities and political subdivisions
96

 
(2
)
 
4

 
122

 
(79
)
 
(61
)
 
18

 
(27
)
 
71

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
413

 
4

 
(14
)
 
116

 
(10
)
 
(75
)
 
4

 
(107
)
 
331

 
(3
)
Commercial mortgage-backed
129

 
—

 
11

 
107

 
(3
)
 
(11
)
 
21

 
(103
)
 
151

 
—

Other asset-backed
368

 
5

 
(4
)
 
314

 
(197
)
 
(35
)
 
—

 
(5
)
 
446

 
(2
)
Total asset-backed
910

 
9

 
(7
)
 
537

 
(210
)
 
(121
)
 
25

 
(215
)
 
928

 
(5
)
Redeemable preferred stock
26

 
(1
)
 
—

 
—

 
—

 
(25
)
 
—

 
—

 
—

 
—

Total fixed maturity securities
1,251

 
9

 
(3
)
 
801

 
(405
)
 
(251
)
 
94

 
(293
)
 
1,203

 
(7
)
Equity securities
34

 
(27
)
 
3

 
2

 
—

 
—

 
—

 
(1
)
 
11

 
(27
)
Other invested assets, including derivatives, net
—

 
—

 
—

 
—

 
(1
)
 
1

 
—

 
—

 
—

 
—

Short term investments
6

 
—

 
—

 
—

 
(6
)
 
—

 
—

 
—

 
—

 
—

Life settlement contracts
100

 
13

 
—

 
—

 
—

 
(25
)
 
—

 
—

 
88

 
(2
)
Separate account business
2

 
—

 
—

 
1

 
(2
)
 
—

 
—

 
—

 
1

 
—

Total
$
1,393

 
$
(5
)
 
$
—

 
$
804

 
$
(414
)
 
$
(275
)
 
$
94

 
$
(294
)
 
$
1,303

 
$
(36
)

Level 3
(In millions)
Balance at
January 1,
2012
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
December 31,
2012
 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31, 2012 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
482

 
$
6

 
$
4

 
$
231

 
$
(136
)
 
$
(88
)
 
$
45

 
$
(325
)
 
$
219

 
$
(3
)
States, municipalities and political subdivisions
171

 
—

 
—

 
14

 
—

 
(89
)
 
—

 
—

 
96

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Residential mortgage-backed
452

 
(14
)
 
2

 
97

 
—

 
(40
)
 
—

 
(84
)
 
413

 
(18
)
Commercial mortgage-backed
59

 
8

 
14

 
165

 
(12
)
 
(28
)
 
13

 
(90
)
 
129

 
—

Other asset-backed
343

 
11

 
8

 
615

 
(365
)
 
(128
)
 
—

 
(116
)
 
368

 
—

Total asset-backed
854

 
5

 
24

 
877

 
(377
)
 
(196
)
 
13

 
(290
)
 
910

 
(18
)
Redeemable preferred stock
—

 
—

 
(1
)
 
53

 
(26
)
 
—

 
—

 
—

 
26

 
—

Total fixed maturity securities
1,507

 
11

 
27

 
1,175

 
(539
)
 
(373
)
 
58

 
(615
)
 
1,251

 
(21
)
Equity securities
67

 
(36
)
 
6

 
27

 
(16
)
 
—

 
—

 
(14
)
 
34

 
(38
)
Other invested assets, including derivatives, net
10

 
—

 
—

 
—

 
—

 
(10
)
 
—

 
—

 
—

 
—

Short term investments
27

 
—

 
—

 
23

 
(4
)
 
(41
)
 
1

 
—

 
6

 
—

Life settlement contracts
117

 
53

 
—

 
—

 
—

 
(70
)
 
—

 
—

 
100

 
11

Separate account business
23

 
—

 
—

 
—

 
(21
)
 
—

 
—

 
—

 
2

 
—

Total
$
1,751

 
$
28

 
$
33

 
$
1,225

 
$
(580
)
 
$
(494
)
 
$
59

 
$
(629
)
 
$
1,393

 
$
(48
)
Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets
The table below presents quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the table below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company.
Assets
(In millions)
Fair Value at December 31, 2013
 
Valuation Technique(s)
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
142

 
Discounted cash flow
 
Credit spread
 
1.74% - 19.90% (3.98%)
Equity securities
$
10

 
Market approach
 
Private offering price
 
$360.12 - $4,267.66 per share ($1,147.95)
Life settlement contracts
$
88

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
70% - 743% (191.6%)
Assets
(In millions)
Fair Value at December 31, 2012
 
Valuation Technique(s)
 
Unobservable Input(s)
 
Range
 (Weighted Average)
Fixed maturity securities
$
121

 
Discounted cash flow
 
Expected call date
 
3.3 - 5.3 years (4.3 years)
 
 
 
 
 
Credit spread adjustment
 
0.02% - 0.48% (0.17%)
 
$
72

 
Market approach
 
Private offering price
 
$42.39 - $102.32 ($100.11)
Equity securities
$
34

 
Market approach
 
Private offering price
 
$4.54 - $3,842.00 per share
($571.17 per share)
Life settlement contracts
$
100

 
Discounted cash flow
 
Discount rate risk premium
 
9%
 
 
 
 
 
Mortality assumption
 
69% - 883% (208.9%)
Carrying amount and estimated fair value of financial instrument assets and liabilities not measured at fair value
The carrying amount and estimated fair value of the Company's financial instrument assets and liabilities which are not measured at fair value on the Consolidated Balance Sheets are listed in the tables below.
December 31, 2013
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial assets
 
 
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
23

 
$
—

 
$
—

 
$
23

 
$
23

Mortgage loans
508

 
—

 
—

 
515

 
515

Financial liabilities
 
 
 
 
 
 
 
 
 
Premium deposits and annuity contracts
$
57

 
$
—

 
$
—

 
$
58

 
$
58

Short term debt
549

 
—

 
575

 
—

 
575

Long term debt
2,011

 
—

 
2,328

 
—

 
2,328


December 31, 2012
Carrying
Amount
 
Estimated Fair Value
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial assets
 
 
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
21

 
$
—

 
$
—

 
$
21

 
$
21

Mortgage loans
401

 
—

 
—

 
418

 
418

Financial liabilities
 
 
 
 
 
 
 
 
 
Premium deposits and annuity contracts
$
100

 
$
—

 
$
—

 
$
104

 
$
104

Short term debt
13

 
—

 
13

 
—

 
13

Long term debt
2,557

 
—

 
3,016

 
—

 
3,016