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Investments (Tables)
 12 Months Ended
Dec. 31, 2016
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, 2016
 

 
 

 
 

 
 

U.S. government and agencies
$
968

 
$
48

 
$
(2
)
 
$
1,014

Municipal
2,017

 
264

 
(7
)
 
2,274

Corporate
18,945

 
905

 
(169
)
 
19,681

Foreign government
304

 
28

 
—

 
332

ABS
337

 
4

 
(10
)
 
331

RMBS
294

 
42

 
(3
)
 
333

CMBS
233

 
17

 
(9
)
 
241

Redeemable preferred stock
14

 
2

 
—

 
16

Total fixed income securities
$
23,112

 
$
1,310

 
$
(200
)
 
$
24,222

 
 
 
 
 
 
 
 
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
Schedule for fixed income securities based on contractual maturities
The scheduled maturities for fixed income securities are as follows as of December 31, 2016:
($ in millions)
Amortized
cost
 
Fair
value
Due in one year or less
$
1,330

 
$
1,345

Due after one year through five years
8,486

 
8,855

Due after five years through ten years
7,889

 
8,062

Due after ten years
4,543

 
5,055

 
22,248

 
23,317

ABS, RMBS and CMBS
864

 
905

Total
$
23,112

 
$
24,222
Schedule of net investment income
Net investment income for the years ended December 31 is as follows:
($ in millions)
2016
 
2015
 
2014
Fixed income securities
$
1,078

 
$
1,246

 
$
1,522

Mortgage loans
193

 
203

 
242

Equity securities
40

 
28

 
20

Limited partnership interests
292

 
287

 
267

Short-term investments
5

 
3

 
2

Policy loans
32

 
34

 
39

Other
90

 
75

 
59

Investment income, before expense
1,730

 
1,876

 
2,151

Investment expense
(71
)
 
(57
)
 
(70
)
Net investment income
$
1,659

 
$
1,819

 
$
2,081
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)
2016
 
2015
 
2014
Fixed income securities
$
(59
)
 
$
309

 
$
(4
)
Mortgage loans
—

 
6

 
2

Equity securities
(22
)
 
(23
)
 
134

Limited partnership interests
(5
)
 
(32
)
 
(4
)
Derivatives
8

 
13

 
12

Other
1

 
(8
)
 
3

Realized capital gains and losses
$
(77
)
 
$
265

 
$
143
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)
2016
 
2015
 
2014
Impairment write-downs
$
(101
)
 
$
(63
)
 
$
(11
)
Change in intent write-downs
(12
)
 
(65
)
 
(44
)
Net other-than-temporary impairment losses recognized in earnings
(113
)
 
(128
)
 
(55
)
Sales and other
31

 
383

 
184

Valuation and settlements of derivative instruments
5

 
10

 
14

Realized capital gains and losses
$
(77
)
 
$
265

 
$
143
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)
2016
 
2015
 
2014
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
—

 
$
(1
)
Corporate
(23
)
 
6

 
(17
)
 
(25
)
 
6

 
(19
)
 
(4
)
 
—

 
(4
)
ABS
(4
)
 
—

 
(4
)
 
(16
)
 
10

 
(6
)
 
(5
)
 
—

 
(5
)
RMBS
—

 
(1
)
 
(1
)
 
—

 
—

 
—

 
2

 
(1
)
 
1

CMBS
(15
)
 
2

 
(13
)
 
(1
)
 
—

 
(1
)
 
(1
)
 
—

 
(1
)
Total fixed income securities
(42
)
 
7

 
(35
)
 
(42
)
 
16

 
(26
)
 
(9
)
 
(1
)
 
(10
)
Mortgage loans
—

 
—

 
—

 
4

 
—

 
4

 
5

 
—

 
5

Equity securities
(59
)
 
—

 
(59
)
 
(83
)
 
—

 
(83
)
 
(32
)
 
—

 
(32
)
Limited partnership interests
(15
)
 
—

 
(15
)
 
(17
)
 
—

 
(17
)
 
(18
)
 
—

 
(18
)
Other
(4
)
 
—

 
(4
)
 
(6
)
 
—

 
(6
)
 
—

 
—

 
—

Other-than-temporary impairment losses
$
(120
)
 
$
7

 
$
(113
)
 
$
(144
)
 
$
16

 
$
(128
)
 
$
(54
)
 
$
(1
)
 
$
(55
)
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 $131 million and $138 million as of December 31, 2016 and 2015, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions)
December 31, 2016
 
December 31, 2015
Municipal
$
(5
)
 
$
(5
)
Corporate
(5
)
 
(2
)
ABS
(11
)
 
(12
)
RMBS
(43
)
 
(49
)
CMBS
(7
)
 
(6
)
Total
$
(71
)
 
$
(74
)
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)
2016
 
2015
 
2014
Beginning balance
$
(200
)
 
$
(209
)
 
$
(299
)
Additional credit loss for securities previously other-than-temporarily impaired
(16
)
 
(8
)
 
(6
)
Additional credit loss for securities not previously other-than-temporarily impaired
(19
)
 
(18
)
 
(9
)
Reduction in credit loss for securities disposed or collected
58

 
33

 
44

Change in credit loss due to accretion of increase in cash flows
1

 
2

 
2

Reduction in credit loss for securities sold in LBL disposition
—

 
—

 
59

Ending balance 
$
(176
)
 
$
(200
)
 
$
(209
)
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, 2016
 
Gains
 
Losses
 
Fixed income securities
$
24,222

 
$
1,310

 
$
(200
)
 
$
1,110

Equity securities
1,511

 
117

 
(35
)
 
82

Short-term investments 
566

 
—

 
—

 
—

Derivative instruments (1)
5

 
5

 
—

 
5

EMA limited partnerships (2)
 

 
 

 
 

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

 
 

 
 

 
1,195

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves (3)
 

 
 

 
 

 
—

DAC and DSI (4)
 

 
 

 
 

 
(140
)
Amounts recognized
 

 
 

 
 

 
(140
)
Deferred income taxes
 

 
 

 
 

 
(374
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
681

____________
(1) 
Included in the fair value of derivative instruments is $5 million classified as assets.
(2) 
Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable.
(3) 
The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment, if any, primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.
(4) 
The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.
($ in millions)
Fair value
 
Gross unrealized
 
Unrealized net gains (losses)
December 31, 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
)
Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
883

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves
 

 
 

 
 

 
—

DAC and DSI
 

 
 

 
 

 
(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 $(4) million classified as liabilities.
Schedule of change in unrealized net capital gains and losses
The change in unrealized net capital gains and losses for the years ended December 31 is as follows:
($ in millions)
2016
 
2015
 
2014
Fixed income securities
$
251

 
$
(1,436
)
 
$
966

Equity securities
66

 
(27
)
 
(42
)
Derivative instruments
(5
)
 
8

 
15

EMA limited partnerships
—

 
—

 
—

Investments classified as held for sale
—

 
—

 
(190
)
Total
312

 
(1,455
)
 
749

Amounts recognized for:
 

 
 

 
 

Insurance reserves
—

 
28

 
(28
)
DAC and DSI
(78
)
 
114

 
(20
)
Amounts recognized
(78
)
 
142

 
(48
)
Deferred income taxes
(81
)
 
459

 
(246
)
Increase (decrease) in unrealized net capital gains and losses, after-tax
$
153

 
$
(854
)
 
$
455
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, 2016
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
6

 
$
104

 
$
(2
)
 
—

 
$
—

 
$
—

 
$
(2
)
Municipal
8

 
44

 
(1
)
 
3

 
18

 
(6
)
 
(7
)
Corporate
629

 
4,767

 
(118
)
 
56

 
414

 
(51
)
 
(169
)
ABS
18

 
95

 
(1
)
 
13

 
76

 
(9
)
 
(10
)
RMBS
47

 
3

 
—

 
50

 
38

 
(3
)
 
(3
)
CMBS
12

 
57

 
(4
)
 
4

 
15

 
(5
)
 
(9
)
Redeemable preferred stock
1

 
—

 
—

 
—

 
—

 
—

 
—

Total fixed income securities
721

 
5,070

 
(126
)
 
126

 
561

 
(74
)
 
(200
)
Equity securities
167

 
200

 
(19
)
 
62

 
80

 
(16
)
 
(35
)
Total fixed income and equity securities
888

 
$
5,270

 
$
(145
)
 
188

 
$
641

 
$
(90
)
 
$
(235
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment grade fixed income securities
559

 
$
4,348

 
$
(100
)
 
75

 
$
350

 
$
(47
)
 
$
(147
)
Below investment grade fixed income securities
162

 
722

 
(26
)
 
51

 
211

 
(27
)
 
(53
)
Total fixed income securities
721

 
$
5,070

 
$
(126
)
 
126

 
$
561

 
$
(74
)
 
$
(200
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
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)
2016
 
2015
California
19.3
%
 
21.6
%
Texas
11.0

 
9.5

New Jersey
8.5

 
9.1

Illinois
7.4

 
8.0

Florida
6.0

 
5.9

New York
3.8

 
5.0
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)
2016
 
2015
Apartment complex
26.4
%
 
24.5
%
Office buildings
24.3

 
23.2

Retail
21.4

 
22.4

Warehouse
16.5

 
18.1

Other
11.4

 
11.8

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, 2016 are as follows:
($ in millions)
Number
of loans
 
Carrying
value
 
Percent
2017
27

 
$
288

 
7.3
%
2018
24

 
252

 
6.4

2019
7

 
200

 
5.1

2020
14

 
180

 
4.6

Thereafter
206

 
3,018

 
76.6

Total
278

 
$
3,938

 
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 mortgage loans summarized by debt service coverage ratio distribution as of December 31. There were no variable rate mortgage loans as of December 31, 2016 or 2015.
($ in millions)
2016
 
2015
Below 1.0
$
52

 
$
55

1.0 - 1.25
321

 
357

1.26 - 1.50
1,196

 
1,120

Above 1.50
2,364

 
2,243

Total non-impaired mortgage loans
$
3,933

 
$
3,775
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)
2016
 
2015
Impaired mortgage loans with a valuation allowance
$
5

 
$
6

Impaired mortgage loans without a valuation allowance
—

 
—

Total impaired mortgage loans
$
5

 
$
6

Valuation allowance on impaired mortgage loans
$
3

 
$
3
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)
2016
 
2015
 
2014
Beginning balance
$
3

 
$
8

 
$
21

Net decrease in valuation allowance
—

 
(4
)
 
(5
)
Charge offs
—

 
(1
)
 
(8
)
Ending balance
$
3

 
$
3

 
$
8
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)
2016
 
2015
Texas
16.9
%
 
15.9
%
California
14.9

 
15.0

Oregon
9.0

 
8.4

New Jersey
5.4

 
6.8

Michigan
5.2

 
4.9

New York
5.1

 
4.8