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Investments (Tables)
 12 Months Ended
Dec. 31, 2015
Investments [Abstract]  
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value
The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows:
($ in millions)
Amortized cost
 
Gross unrealized
 
Fair value
 
 
Gains
 
Losses
 
December 31, 2015
 

 
 

 
 

 
 

U.S. government and agencies
$
920

 
$
57

 
$
—

 
$
977

Municipal
2,162

 
292

 
(12
)
 
2,442

Corporate
18,069

 
849

 
(414
)
 
18,504

Foreign government
348

 
36

 
—

 
384

ABS
1,443

 
5

 
(28
)
 
1,420

RMBS
406

 
49

 
(4
)
 
451

CMBS
409

 
31

 
(4
)
 
436

Redeemable preferred stock
13

 
2

 
—

 
15

Total fixed income securities
$
23,770

 
$
1,321

 
$
(462
)
 
$
24,629

 
 
 
 
 
 
 
 
December 31, 2014
 

 
 

 
 

 
 

U.S. government and agencies
$
668

 
$
102

 
$
—

 
$
770

Municipal
3,156

 
520

 
(14
)
 
3,662

Corporate
19,465

 
1,670

 
(150
)
 
20,985

Foreign government
654

 
81

 
—

 
735

ABS
773

 
13

 
(21
)
 
765

RMBS
554

 
55

 
(4
)
 
605

CMBS
538

 
43

 
(2
)
 
579

Redeemable preferred stock
14

 
2

 
—

 
16

Total fixed income securities
$
25,822

 
$
2,486

 
$
(191
)
 
$
28,117
Schedule for fixed income securities based on contractual maturities
The scheduled maturities for fixed income securities are as follows as of December 31, 2015:
($ in millions)
Amortized
cost
 
Fair
value
Due in one year or less
$
996

 
$
1,004

Due after one year through five years
7,362

 
7,640

Due after five years through ten years
8,374

 
8,475

Due after ten years
4,780

 
5,203

 
21,512

 
22,322

ABS, RMBS and CMBS
2,258

 
2,307

Total
$
23,770

 
$
24,629
Schedule of net investment income
Net investment income for the years ended December 31 is as follows:
($ in millions)
2015
 
2014
 
2013
Fixed income securities
$
1,246

 
$
1,522

 
$
1,947

Mortgage loans
203

 
242

 
345

Equity securities
28

 
20

 
12

Limited partnership interests
287

 
267

 
175

Short-term investments
3

 
2

 
2

Policy loans
34

 
39

 
49

Other
75

 
59

 
63

Investment income, before expense
1,876

 
2,151

 
2,593

Investment expense
(57
)
 
(70
)
 
(108
)
Net investment income
$
1,819

 
$
2,081

 
$
2,485
Schedule of realized capital gains and losses by asset type
Realized capital gains and losses by asset type for the years ended December 31 are as follows:
($ in millions)
2015
 
2014
 
2013
Fixed income securities
$
309

 
$
(4
)
 
$
3

Mortgage loans
6

 
2

 
20

Equity securities
(23
)
 
134

 
45

Limited partnership interests
(32
)
 
(4
)
 
(6
)
Derivatives
13

 
12

 
14

Other
(8
)
 
3

 
—

Realized capital gains and losses
$
265

 
$
143

 
$
76
Schedule of realized capital gains and losses by transaction type
Realized capital gains and losses by transaction type for the years ended December 31 are as follows:
($ in millions)
2015
 
2014
 
2013
Impairment write-downs
$
(63
)
 
$
(11
)
 
$
(33
)
Change in intent write-downs
(65
)
 
(44
)
 
(19
)
Net other-than-temporary impairment losses recognized in earnings
(128
)
 
(55
)
 
(52
)
Sales and other
383

 
184

 
114

Valuation and settlements of derivative instruments
10

 
14

 
14

Realized capital gains and losses
$
265

 
$
143

 
$
76
Schedule of other-than-temporary impairment losses by asset type
Other-than-temporary impairment losses by asset type for the years ended December 31 are as follows:
($ in millions)
2015
 
2014
 
2013
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
—

 
$
(1
)
 
$
(8
)
 
$
—

 
$
(8
)
Corporate
(25
)
 
6

 
(19
)
 
(4
)
 
—

 
(4
)
 
—

 
—

 
—

ABS
(16
)
 
10

 
(6
)
 
(5
)
 
—

 
(5
)
 
—

 
(2
)
 
(2
)
RMBS
—

 
—

 
—

 
2

 
(1
)
 
1

 
(2
)
 
2

 
—

CMBS
(1
)
 
—

 
(1
)
 
(1
)
 
—

 
(1
)
 
(32
)
 
(3
)
 
(35
)
Total fixed income securities
(42
)
 
16

 
(26
)
 
(9
)
 
(1
)
 
(10
)
 
(42
)
 
(3
)
 
(45
)
Mortgage loans
4

 
—

 
4

 
5

 
—

 
5

 
11

 
—

 
11

Equity securities
(83
)
 
—

 
(83
)
 
(32
)
 
—

 
(32
)
 
(6
)
 
—

 
(6
)
Limited partnership interests
(17
)
 
—

 
(17
)
 
(18
)
 
—

 
(18
)
 
(9
)
 
—

 
(9
)
Other
(6
)
 
—

 
(6
)
 
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Other-than-temporary impairment losses
$
(144
)
 
$
16

 
$
(128
)
 
$
(54
)
 
$
(1
)
 
$
(55
)
 
$
(49
)
 
$
(3
)
 
$
(52
)
Schedule of other-than-temporary impairment losses on fixed income securities included in accumulated other comprehensive income
The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amount excludes $138 million as of both December 31, 2015 and 2014, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions)
December 31, 2015
 
December 31, 2014
Municipal
$
(5
)
 
$
(5
)
Corporate
(2
)
 
—

ABS
(12
)
 
(1
)
RMBS
(49
)
 
(55
)
CMBS
(6
)
 
(5
)
Total
$
(74
)
 
$
(66
)
Schedule of rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held
Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of December 31 are as follows:
($ in millions)
2015
 
2014
 
2013
Beginning balance
$
(209
)
 
$
(299
)
 
$
(345
)
Additional credit loss for securities previously other-than-temporarily impaired
(8
)
 
(6
)
 
(13
)
Additional credit loss for securities not previously other-than-temporarily impaired
(18
)
 
(9
)
 
(19
)
Reduction in credit loss for securities disposed or collected
33

 
44

 
75

Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell
—

 
—

 
2

Change in credit loss due to accretion of increase in cash flows
2

 
2

 
1

Reduction in credit loss for securities sold in LBL disposition
—

 
59

 
—

Ending balance 
$
(200
)
 
$
(209
)
 
$
(299
)
Schedule of unrealized net capital gains and losses included in accumulated other comprehensive income
Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows:
($ in millions)
Fair value
 
Gross unrealized
 
Unrealized net gains (losses)
December 31, 2015
 
Gains
 
Losses
 
Fixed income securities
$
24,629

 
$
1,321

 
$
(462
)
 
$
859

Equity securities
1,542

 
76

 
(60
)
 
16

Short-term investments 
816

 
—

 
—

 
—

Derivative instruments (1)
10

 
10

 
—

 
10

EMA limited partnerships (2)
 

 
 

 
 

 
(2
)
Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
883

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves (3)
 

 
 

 
 

 
—

DAC and DSI (4)
 

 
 

 
 

 
(62
)
Amounts recognized
 

 
 

 
 

 
(62
)
Deferred income taxes
 

 
 

 
 

 
(293
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
528

____________
(1) 
Included in the fair value of derivative instruments are $6 million classified as assets and $(4) million classified as liabilities.
(2) 
Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable.
(3) 
The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.
(4) 
The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.
($ in millions)
Fair value
 
Gross unrealized
 
Unrealized net gains (losses)
December 31, 2014
 
Gains
 
Losses
 
Fixed income securities
$
28,117

 
$
2,486

 
$
(191
)
 
$
2,295

Equity securities
970

 
57

 
(14
)
 
43

Short-term investments
857

 
—

 
—

 
—

Derivative instruments (1)
2

 
3

 
(1
)
 
2

EMA limited partnerships
 

 
 

 
 

 
(2
)
Investments classified as held for sale
 
 
 
 
 
 
—

Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
2,338

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves
 

 
 

 
 

 
(28
)
DAC and DSI
 

 
 

 
 

 
(176
)
Amounts recognized
 

 
 

 
 

 
(204
)
Deferred income taxes
 

 
 

 
 

 
(752
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
1,382

____________
(1) 
Included in the fair value of derivative instruments are $3 million classified as assets and $1 million classified as liabilities.
Schedule of change in unrealized net capital gains and losses
The change in unrealized net capital gains and losses for the years ended December 31 is as follows:
($ in millions)
2015
 
2014
 
2013
Fixed income securities
$
(1,436
)
 
$
966

 
$
(2,353
)
Equity securities
(27
)
 
(42
)
 
50

Derivative instruments
8

 
15

 
4

EMA limited partnerships
—

 
—

 
(3
)
Investments classified as held for sale
—

 
(190
)
 
190

Total
(1,455
)
 
749

 
(2,112
)
Amounts recognized for:
 

 
 

 
 

Insurance reserves
28

 
(28
)
 
771

DAC and DSI
114

 
(20
)
 
252

Amounts recognized
142

 
(48
)
 
1,023

Deferred income taxes
459

 
(246
)
 
382

(Decrease) increase in unrealized net capital gains and losses, after-tax
$
(854
)
 
$
455

 
$
(707
)
Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time
The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position.
($ in millions)
Less than 12 months
 
12 months or more
 
Total unrealized losses
 
Number
of issues
 
Fair
value
 
Unrealized losses
 
Number
of issues
 
Fair
value
 
Unrealized losses
 
 
 
 
 
 
 
 
December 31, 2015
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
6

 
$
91

 
$
—

 
—

 
$
—

 
$
—

 
$
—

Municipal
15

 
125

 
(3
)
 
5

 
25

 
(9
)
 
(12
)
Corporate
953

 
5,315

 
(281
)
 
78

 
568

 
(133
)
 
(414
)
Foreign government
1

 
2

 
—

 
—

 
—

 
—

 
—

ABS
81

 
1,152

 
(11
)
 
16

 
154

 
(17
)
 
(28
)
RMBS
38

 
7

 
—

 
40

 
53

 
(4
)
 
(4
)
CMBS
12

 
75

 
(2
)
 
1

 
2

 
(2
)
 
(4
)
Total fixed income securities
1,106

 
6,767

 
(297
)
 
140

 
802

 
(165
)
 
(462
)
Equity securities
279

 
543

 
(49
)
 
32

 
56

 
(11
)
 
(60
)
Total fixed income and equity securities
1,385

 
$
7,310

 
$
(346
)
 
172

 
$
858

 
$
(176
)
 
$
(522
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade fixed income securities
780

 
$
5,429

 
$
(175
)
 
82

 
$
503

 
$
(90
)
 
$
(265
)
Below investment grade fixed income securities
326

 
1,338

 
(122
)
 
58

 
299

 
(75
)
 
(197
)
Total fixed income securities
1,106

 
$
6,767

 
$
(297
)
 
140

 
$
802

 
$
(165
)
 
$
(462
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
1

 
$
1

 
$
—

 
—

 
$
—

 
$
—

 
$
—

Municipal
17

 
90

 
(1
)
 
10

 
47

 
(13
)
 
(14
)
Corporate
281

 
1,780

 
(69
)
 
91

 
875

 
(81
)
 
(150
)
Foreign government
—

 
—

 
—

 
1

 
15

 
—

 
—

ABS
19

 
168

 
(2
)
 
23

 
217

 
(19
)
 
(21
)
RMBS
19

 
3

 
—

 
45

 
73

 
(4
)
 
(4
)
CMBS
8

 
33

 
—

 
3

 
32

 
(2
)
 
(2
)
Total fixed income securities
345

 
2,075

 
(72
)
 
173

 
1,259

 
(119
)
 
(191
)
Equity securities
294

 
327

 
(13
)
 
1

 
6

 
(1
)
 
(14
)
Total fixed income and equity securities
639

 
$
2,402

 
$
(85
)
 
174

 
$
1,265

 
$
(120
)
 
$
(205
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade fixed income securities
167

 
$
1,275

 
$
(28
)
 
127

 
$
989

 
$
(79
)
 
$
(107
)
Below investment grade fixed income securities
178

 
800

 
(44
)
 
46

 
270

 
(40
)
 
(84
)
Total fixed income securities
345

 
$
2,075

 
$
(72
)
 
173

 
$
1,259

 
$
(119
)
 
$
(191
)
Principal geographic distribution of commercial real estate represented in the mortgage portfolio
The following table shows the principal geographic distribution of commercial real estate represented in the Company’s mortgage loan portfolio. No other state represented more than 5% of the portfolio as of December 31.
(% of mortgage loan portfolio carrying value)
2015
 
2014
California
21.6
%
 
24.8
%
Texas
9.5

 
7.7

New Jersey
9.1

 
8.3

Illinois
8.0

 
9.2

Florida
5.9

 
4.7

New York
5.0

 
6.0
Types of property collateralizing the mortgage loans
The types of properties collateralizing the mortgage loans as of December 31 are as follows:
(% of mortgage loan portfolio carrying value)
2015
 
2014
Apartment complex
24.5
%
 
20.0
%
Office buildings
23.2

 
25.6

Retail
22.4

 
24.1

Warehouse
18.1

 
18.1

Other
11.8

 
12.2

Total
100.0
%
 
100.0
%
Contractual maturities of the commercial mortgage loan portfolio
The contractual maturities of the mortgage loan portfolio as of December 31, 2015 are as follows:
($ in millions)
Number
of loans
 
Carrying
value
 
Percent
2016
23

 
$
173

 
4.6
%
2017
32

 
356

 
9.4

2018
27

 
288

 
7.6

2019
8

 
206

 
5.4

Thereafter
196

 
2,758

 
73.0

Total
286

 
$
3,781

 
100.0
%
Summary of carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution
The following table reflects the carrying value of non-impaired fixed rate and variable rate mortgage loans summarized by debt service coverage ratio distribution as of December 31.
($ in millions)
2015
 
2014
Debt service coverage ratio distribution
Fixed rate mortgage loans
 
Variable rate mortgage loans
 
Total
 
Fixed rate mortgage loans
 
Variable rate mortgage loans
 
Total
Below 1.0
$
55

 
$
—

 
$
55

 
$
110

 
$
—

 
$
110

1.0 - 1.25
357

 
—

 
357

 
387

 
—

 
387

1.26 - 1.50
1,120

 
—

 
1,120

 
1,118

 
1

 
1,119

Above 1.50
2,243

 
—

 
2,243

 
2,054

 
—

 
2,054

Total non-impaired mortgage loans
$
3,775

 
$
—

 
$
3,775

 
$
3,669

 
$
1

 
$
3,670
Schedule of net carrying value of impaired mortgage loans
The net carrying value of impaired mortgage loans as of December 31 is as follows:
($ in millions)
2015
 
2014
Impaired mortgage loans with a valuation allowance
$
6

 
$
16

Impaired mortgage loans without a valuation allowance
—

 
—

Total impaired mortgage loans
$
6

 
$
16

Valuation allowance on impaired mortgage loans
$
3

 
$
8
Schedule of rollforward of the valuation allowance on impaired mortgage loans
The rollforward of the valuation allowance on impaired mortgage loans for the years ended December 31 is as follows:
($ in millions)
2015
 
2014
 
2013
Beginning balance
$
8

 
$
21

 
$
42

Net decrease in valuation allowance
(4
)
 
(5
)
 
(11
)
Charge offs
(1
)
 
(8
)
 
(8
)
Mortgage loans classified as held for sale
—

 
—

 
(2
)
Ending balance
$
3

 
$
8

 
$
21
Schedule of carrying value of past due mortgage loans
Payments on all mortgage loans were current as of December 31, 2015 and 2014.
Principal geographic distribution of municipal bond
The following table shows the principal geographic distribution of municipal bond issuers represented in the Company’s portfolio as of December 31. No other state represents more than 5% of the portfolio.
(% of municipal bond portfolio carrying value)
2015
 
2014
Texas
15.9
%
 
13.6
%
California
15.0

 
17.0

Oregon
8.4

 
5.8

New Jersey
6.8

 
5.1

Illinois
3.8

 
5.3