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Investments (Tables)
 6 Months Ended
Jun. 30, 2018
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
 
Gross unrealized
 
Fair
 
cost
 
Gains
 
Losses
 
value
June 30, 2018
 

 
 

 
 

 
 

U.S. government and agencies
$
376

 
$
27

 
$
—

 
$
403

Municipal
2,036

 
218

 
(4
)
 
2,250

Corporate
17,731

 
527

 
(306
)
 
17,952

Foreign government
271

 
12

 
—

 
283

Asset-backed securities (“ABS”)
382

 
4

 
(4
)
 
382

Residential mortgage-backed securities (“RMBS”)
178

 
48

 
(1
)
 
225

Commercial mortgage-backed securities (“CMBS”)
53

 
6

 
(2
)
 
57

Redeemable preferred stock
14

 
1

 
—

 
15

Total fixed income securities
$
21,041

 
$
843

 
$
(317
)
 
$
21,567

 
 
 
 
 
 
 
 
December 31, 2017
 

 
 

 
 

 
 

U.S. government and agencies
$
768

 
$
38

 
$
(2
)
 
$
804

Municipal
2,001

 
275

 
(3
)
 
2,273

Corporate
18,262

 
960

 
(86
)
 
19,136

Foreign government
279

 
20

 
—

 
299

ABS
383

 
6

 
(4
)
 
385

RMBS
205

 
49

 
(1
)
 
253

CMBS
93

 
6

 
(2
)
 
97

Redeemable preferred stock
13

 
1

 
—

 
14

Total fixed income securities
$
22,004

 
$
1,355

 
$
(98
)
 
$
23,261
Schedule for fixed income securities based on contractual maturities
The scheduled maturities for fixed income securities are as follows as of June 30, 2018:
($ in millions)
Amortized cost
 
Fair value
Due in one year or less
$
1,170

 
$
1,177

Due after one year through five years
8,135

 
8,264

Due after five years through ten years
7,149

 
7,092

Due after ten years
3,974

 
4,370

 
20,428

 
20,903

ABS, RMBS and CMBS
613

 
664

Total
$
21,041

 
$
21,567
Schedule of net investment income
Net investment income is as follows:
($ in millions)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Fixed income securities
$
247

 
$
269

 
$
498

 
$
537

Mortgage loans
53

 
45

 
97

 
94

Equity securities
16

 
14

 
23

 
29

Limited partnership interests (1) (2)
92

 
135

 
188

 
200

Short-term investments
5

 
2

 
9

 
3

Policy loans
8

 
7

 
15

 
15

Other
23

 
21

 
45

 
40

Investment income, before expense
444

 
493

 
875

 
918

Investment expense
(25
)
 
(20
)
 
(49
)
 
(41
)
Net investment income
$
419

 
$
473

 
$
826

 
$
877

_______________
 
(1) 
Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income.
(2) 
Includes net investment income of $82 million and $140 million for EMA limited partnership interests and $10 million and $48 million for limited partnership interests carried at fair value for the three months and six months ended June 30, 2018, respectively.
Schedule of realized capital gains and losses by asset type
Realized capital gains and losses by asset type are as follows:
($ in millions)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Fixed income securities
$
(12
)
 
$
(6
)
 
$
(18
)
 
$
(13
)
Mortgage loans
2

 
—

 
2

 
—

Equity securities
20

 
(4
)
 
(6
)
 
(4
)
Limited partnership interests
(11
)
 
10

 
(8
)
 
23

Derivatives
10

 
(4
)
 
7

 
(9
)
Other
(1
)
 
—

 
(1
)
 
(2
)
Realized capital gains and losses
$
8

 
$
(4
)
 
$
(24
)
 
$
(5
)
Schedule of realized capital gains and losses by transaction type
Realized capital gains and losses by transaction type are as follows:
($ in millions)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Impairment write-downs (1)
$
(2
)
 
$
(12
)
 
$
(3
)
 
$
(33
)
Change in intent write-downs (1)
—

 
(1
)
 
—

 
(4
)
Net OTTI losses recognized in earnings
(2
)
 
(13
)
 
(3
)
 
(37
)
Sales (1)
(7
)
 
13

 
(12
)
 
41

Valuation of equity investments (1)

10

 
—

 
(13
)
 
—

Valuation and settlements of derivative instruments
7

 
(4
)
 
4

 
(9
)
Realized capital gains and losses
$
8

 
$
(4
)
 
$
(24
)
 
$
(5
)
_______________
 
(1) 
Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales.
Realized gain (loss) on investments
Valuation changes included in net income for investments still held as of June 30, 2018 are as follows:
($ in millions)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2018
Equity securities (1)
$
20

 
$
14

Limited partnership interests carried at fair value (1)
11

 
49

Total valuation changes
$
31

 
$
63


_______________
 
(1) 
Investments held at the end of a prior quarter that were sold in the current quarter are not included in the year-to-date amounts shown in the table above; therefore, the sum of the quarterly amounts may not equal the year-to-date amount.
Schedule of other-than-temporary impairment losses by asset type
OTTI losses by asset type are as follows:
($ in millions)
Three months ended June 30, 2018
 
Three months ended June 30, 2017
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
—

 
$
(1
)
RMBS
(1
)
 
—

 
(1
)
 
—

 
—

 
—

CMBS
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Total fixed income securities
(1
)
 
—

 
(1
)
 
(4
)
 
—

 
(4
)
Equity securities (1)
—

 
—

 
—

 
(5
)
 
—

 
(5
)
Limited partnership interests (1)
—

 
—

 
—

 
(4
)
 
—

 
(4
)
Other
(1
)
 
—

 
(1
)
 
—

 
—

 
—

OTTI losses
$
(2
)
 
$
—

 
$
(2
)
 
$
(13
)
 
$
—

 
$
(13
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2018
 
Six months ended June 30, 2017
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
—

 
$
(1
)
Corporate
—

 
—

 
—

 
(7
)
 
3

 
(4
)
RMBS
(1
)
 
—

 
(1
)
 
—

 
(2
)
 
(2
)
CMBS
—

 
(1
)
 
(1
)
 
(9
)
 
3

 
(6
)
Total fixed income securities
(1
)
 
(1
)
 
(2
)
 
(17
)
 
4

 
(13
)
Equity securities (1)
—

 
—

 
—

 
(15
)
 
—

 
(15
)
Limited partnership interests (1)
—

 
—

 
—

 
(7
)
 
—

 
(7
)
Other
(1
)
 
—

 
(1
)
 
(2
)
 
—

 
(2
)
Other-than-temporary impairment losses
$
(2
)
 
$
(1
)
 
$
(3
)
 
$
(41
)
 
$
4

 
$
(37
)
_______________
 
(1) 
Due to the adoption of the recognition and measurement accounting standard, equity securities and limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net income and are no longer included in the table above.
Schedule of other-than-temporary impairment losses on fixed income securities included in accumulated other comprehensive income
The total amount of OTTI losses included in AOCI at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $109 million and $113 million as of June 30, 2018 and December 31, 2017, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions)
June 30, 2018
 
December 31, 2017
Municipal
$
(4
)
 
$
(4
)
ABS
(6
)
 
(8
)
RMBS
(34
)
 
(37
)
CMBS
(4
)
 
(4
)
Total
$
(48
)
 
$
(53
)
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 the end of the period are as follows:
($ in millions)
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Beginning balance
$
(128
)
 
$
(167
)
 
$
(138
)
 
$
(176
)
Additional credit loss for securities previously other-than-temporarily impaired
(1
)
 
(3
)
 
(2
)
 
(6
)
Additional credit loss for securities not previously other-than-temporarily impaired
—

 
(1
)
 
—

 
(7
)
Reduction in credit loss for securities disposed or collected
5

 
11

 
16

 
29

Ending balance
$
(124
)
 
$
(160
)
 
$
(124
)
 
$
(160
)
Schedule of unrealized net capital gains and losses included in accumulated other comprehensive income
Unrealized net capital gains and losses included in AOCI are as follows:
($ in millions)
Fair value
 
Gross unrealized
 
Unrealized net gains (losses)
June 30, 2018
 
Gains
 
Losses
 
Fixed income securities
$
21,567

 
$
843

 
$
(317
)
 
$
526

Short-term investments
1,066

 
—

 
—

 
—

EMA limited partnerships (1)
 

 
 

 
 

 
1

Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
527

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves (2)
 

 
 

 
 

 
—

DAC and DSI (3)
 

 
 

 
 

 
(70
)
Amounts recognized
 

 
 

 
 

 
(70
)
Deferred income taxes
 

 
 

 
 

 
(96
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
361

_______________
(1) 
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.
(2) 
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 lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities).
(3) 
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, 2017
 
Gains
 
Losses
 
Fixed income securities
$
23,261

 
$
1,355

 
$
(98
)
 
$
1,257

Equity securities
1,614

 
311

 
(3
)
 
308

Short-term investments
725

 
—

 
—

 
—

Derivative instruments (1)
2

 
2

 
—

 
2

EMA limited partnerships
 

 
 

 
 

 
1

Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
1,568

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves
 

 
 

 
 

 
(315
)
DAC and DSI
 

 
 

 
 

 
(189
)
Amounts recognized
 

 
 

 
 

 
(504
)
Deferred income taxes
 

 
 

 
 

 
(229
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
835

_______________
 
(1) 
Included in the fair value of derivative instruments is $2 million classified as liabilities.
Schedule of change in unrealized net capital gains and losses
The change in unrealized net capital gains and losses for the six months ended June 30, 2018 is as follows:
($ in millions)
 

Fixed income securities
$
(731
)
Equity securities (1)
—

Derivative instruments
(2
)
Total
(733
)
Amounts recognized for:
 

Insurance reserves
315

DAC and DSI
119

Amounts recognized
434

Deferred income taxes
63

Decrease in unrealized net capital gains and losses, after-tax
$
(236
)
______________
 
(1) Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $308 million of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income.  See Note 1 of the condensed consolidated financial statements.
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 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
 
 
 
June 30, 2018
 

 
 

 
 

 
 

 
 

 
 

 
 

 
Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

 
U.S. government and agencies
7

 
$
77

 
$
—

 
1

 
$
5

 
$
—

 
$
—

 
Municipal
54

 
117

 
(2
)
 
1

 
12

 
(2
)
 
(4
)
 
Corporate
1,290

 
7,670

 
(216
)
 
135

 
1,127

 
(90
)
 
(306
)
 
Foreign government
2

 
15

 
—

 
—

 
—

 
—

 
—

 
ABS
41

 
194

 
(1
)
 
6

 
9

 
(3
)
 
(4
)
 
RMBS
90

 
4

 
—

 
56

 
16

 
(1
)
 
(1
)
 
CMBS
2

 
11

 
(1
)
 
5

 
10

 
(1
)
 
(2
)
 
Redeemable preferred stock
1

 
—

 
—

 
—

 
—

 
—

 
—

 
Total fixed income securities
1,487

 
$
8,088

 
$
(220
)
 
204

 
$
1,179

 
$
(97
)
 
$
(317
)
 
Investment grade fixed income securities
1,102

 
$
6,719

 
$
(176
)
 
171

 
$
1,086

 
$
(86
)
 
$
(262
)
 
Below investment grade fixed income securities
385

 
1,369

 
(44
)
 
33

 
93

 
(11
)
 
(55
)
 
Total fixed income securities
1,487

 
$
8,088

 
$
(220
)
 
204

 
$
1,179

 
$
(97
)
 
$
(317
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 

 
 

 
 

 
 

 
 

 
 

 
 

 
Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

 
U.S. government and agencies
17

 
$
443

 
$
(2
)
 
2

 
$
25

 
$
—

 
$
(2
)
 
Municipal
4

 
14

 
—

 
1

 
11

 
(3
)
 
(3
)
 
Corporate
456

 
2,899

 
(28
)
 
144

 
1,324

 
(58
)
 
(86
)
 
ABS
33

 
170

 
(1
)
 
8

 
24

 
(3
)
 
(4
)
 
RMBS
70

 
3

 
—

 
56

 
18

 
(1
)
 
(1
)
 
CMBS
2

 
1

 
—

 
6

 
23

 
(2
)
 
(2
)
 
Redeemable preferred stock
1

 
—

 
—

 
—

 
—

 
—

 
—

 
Total fixed income securities
583

 
3,530

 
(31
)
 
217

 
1,425

 
(67
)
 
(98
)
 
Equity securities
87

 
66

 
(3
)
 
1

 
—

 
—

 
(3
)
 
Total fixed income and equity securities
670

 
$
3,596

 
$
(34
)
 
218

 
$
1,425

 
$
(67
)
 
$
(101
)
 
Investment grade fixed income securities
472

 
$
3,192

 
$
(22
)
 
181

 
$
1,320

 
$
(52
)
 
$
(74
)
 
Below investment grade fixed income securities
111

 
338

 
(9
)
 
36

 
105

 
(15
)
 
(24
)
 
Total fixed income securities
583

 
$
3,530

 
$
(31
)
 
217

 
$
1,425

 
$
(67
)
 
$
(98
)
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 mortgage loans summarized by debt service coverage ratio distribution.
($ in millions)
 
June 30, 2018
 
December 31, 2017
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
 
$
3

 
$
15

 
$
18

 
$
3

 
$
—

 
$
3

1.0 - 1.25
 
293

 
—

 
293

 
326

 
—

 
326

1.26 - 1.50
 
1,058

 
—

 
1,058

 
1,033

 
15

 
1,048

Above 1.50
 
2,424

 
42

 
2,466

 
2,482

 
13

 
2,495

Total non-impaired mortgage loans
 
$
3,778

 
$
57

 
$
3,835

 
$
3,844

 
$
28

 
$
3,872
Schedule of rollforward of the valuation allowance on impaired mortgage loans
The net carrying value of impaired mortgage loans is as follows:
($ in millions)
June 30, 2018
 
December 31, 2017
Impaired mortgage loans with a valuation allowance
$
4

 
$
4

Impaired mortgage loans without a valuation allowance
—

 
—

Total impaired mortgage loans
$
4

 
$
4

Valuation allowance on impaired mortgage loans
$
3

 
$
3
Schedule of other investments, by type
The following table summarizes other investments.
($ in millions)
 
June 30, 2018
 
December 31, 2017
Agent loans
 
$
570

 
$
538

Bank loans
 
447

 
437

Real estate
 
212

 
157

Derivatives and other
 
93

 
122

Total
 
$
1,322

 
$
1,254