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Investments (Tables)
 12 Months Ended
Dec. 31, 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 cost
 
Gross unrealized
 
Fair value
 
 
Gains
 
Losses
 
December 31, 2018
 

 
 

 
 

 
 

U.S. government and agencies
$
740

 
$
33

 
$
—

 
$
773

Municipal
1,997

 
202

 
(4
)
 
2,195

Corporate
17,521

 
433

 
(381
)
 
17,573

Foreign government
170

 
9

 
—

 
179

ABS
429

 
3

 
(3
)
 
429

RMBS
154

 
44

 
(1
)
 
197

CMBS
33

 
7

 
—

 
40

Redeemable preferred stock
13

 
1

 
—

 
14

Total fixed income securities
$
21,057

 
$
732

 
$
(389
)
 
$
21,400

 
 
 
 
 
 
 
 
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 December 31, 2018:
($ in millions)
Amortized
cost
 
Fair
value
Due in one year or less
$
1,193

 
$
1,205

Due after one year through five years
8,135

 
8,207

Due after five years through ten years
7,220

 
7,132

Due after ten years
3,893

 
4,190

 
20,441

 
20,734

ABS, RMBS and CMBS
616

 
666

Total
$
21,057

 
$
21,400
Schedule of net investment income
Net investment income for the years ended December 31 is as follows:
($ in millions)
2018
 
2017
 
2016
Fixed income securities
$
991

 
$
1,058

 
$
1,078

Mortgage loans
188

 
182

 
193

Equity securities
39

 
48

 
40

Limited partnership interests (1)(2)
327

 
457

 
292

Short-term investments
21

 
9

 
5

Policy loans
31

 
31

 
32

Other
91

 
79

 
90

Investment income, before expense
1,688

 
1,864

 
1,730

Investment expense
(103
)
 
(87
)
 
(71
)
Net investment income
$
1,585

 
$
1,777

 
$
1,659

_______________
(1) 
 Due to the adoption of the recognition and measurement accounting standard on January 1, 2018, 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 $213 million for EMA limited partnership interests and $114 million for limited partnership interests carried at fair value for 2018.
Schedule of realized capital gains and losses by asset type
Realized capital gains (losses) by asset type for the years ended December 31 are as follows:
($ in millions)
2018
 
2017
 
2016
Fixed income securities
$
(40
)
 
$
(6
)
 
$
(59
)
Mortgage loans
2

 
1

 
—

Equity securities
(124
)
 
21

 
(22
)
Limited partnership interests
(22
)
 
46

 
(5
)
Derivatives
10

 
(16
)
 
8

Other
(1
)
 
3

 
1

Realized capital gains (losses)
$
(175
)
 
$
49

 
$
(77
)
Schedule of realized capital gains and losses by transaction type
Realized capital gains (losses) by transaction type for the years ended December 31 are as follows:
($ in millions)
2018
 
2017
 
2016
Impairment write-downs (1)
$
(9
)
 
$
(41
)
 
$
(101
)
Change in intent write-downs (1)
—

 
(4
)
 
(12
)
Net OTTI losses recognized in earnings
(9
)
 
(45
)
 
(113
)
Sales (1)
(27
)
 
110

 
31

Valuation of equity investments (1)(2)
(146
)
 
—

 
—

Valuation and settlements of derivative instruments
7

 
(16
)
 
5

Realized capital gains (losses)
$
(175
)
 
$
49

 
$
(77
)
_______________
 
(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.
(2) 
Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities.
Schedule of valuation changes
The following table presents the net pre-tax appreciation (decline) during 2018 of equity securities and limited partnership interests carried at fair value still held as of December 31, 2018, recognized in net income.
 
 
For the year ended
($ in millions)
 
December 31, 2018
Equity securities
 
$
(78
)
Limited partnership interests carried at fair value
 
113

Total
 
$
35
Schedule of other-than-temporary impairment losses by asset type
OTTI losses by asset type for the years ended December 31 are as follows:
($ in millions)
2018
 
2017
 
2016
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
—

 
$
(1
)
 
$
—

 
$
—

 
$
—

Corporate
(1
)
 
—

 
(1
)
 
(7
)
 
3

 
(4
)
 
(23
)
 
6

 
(17
)
ABS
—

 
(1
)
 
(1
)
 
(1
)
 
(1
)
 
(2
)
 
(4
)
 
—

 
(4
)
RMBS
(1
)
 
—

 
(1
)
 
—

 
(2
)
 
(2
)
 
—

 
(1
)
 
(1
)
CMBS
(4
)
 
(1
)
 
(5
)
 
(9
)
 
1

 
(8
)
 
(15
)
 
2

 
(13
)
Total fixed income securities
(6
)
 
(2
)
 
(8
)
 
(18
)
 
1

 
(17
)
 
(42
)
 
7

 
(35
)
Mortgage loans
—

 
—

 
—

 
(1
)
 
—

 
(1
)
 
—

 
—

 
—

Equity securities (1)
—

 
—

 
—

 
(16
)
 
—

 
(16
)
 
(59
)
 
—

 
(59
)
Limited partnership interests (1)
—

 
—

 
—

 
(9
)
 
—

 
(9
)
 
(15
)
 
—

 
(15
)
Other
(1
)
 
—

 
(1
)
 
(2
)
 
—

 
(2
)
 
(4
)
 
—

 
(4
)
OTTI losses
$
(7
)
 
$
(2
)
 
$
(9
)
 
$
(46
)
 
$
1

 
$
(45
)
 
$
(120
)
 
$
7

 
$
(113
)
______________
(1) 
Due to the adoption of the recognition and measurement accounting standard on January 1, 2018, 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 $101 million and $113 million as of December 31, 2018 and 2017, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions)
December 31, 2018
 
December 31, 2017
Municipal
$
(4
)
 
$
(4
)
Corporate
(1
)
 
—

ABS
(5
)
 
(8
)
RMBS
(32
)
 
(37
)
CMBS
(2
)
 
(4
)
Total
$
(44
)
 
$
(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 December 31 are as follows:
($ in millions)
2018
 
2017
 
2016
Beginning balance
$
(138
)
 
$
(176
)
 
$
(200
)
Additional credit loss for securities previously other-than-temporarily impaired
(7
)
 
(9
)
 
(16
)
Additional credit loss for securities not previously other-than-temporarily impaired
(1
)
 
(8
)
 
(19
)
Reduction in credit loss for securities disposed or collected
22

 
54

 
58

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

 
1

 
1

Ending balance 
$
(123
)
 
$
(138
)
 
$
(176
)
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)
December 31, 2018
 
Gains
 
Losses
 
Fixed income securities
$
21,400

 
$
732

 
$
(389
)
 
$
343

Short-term investments 
810

 
—

 
—

 
—

Derivative instruments
—

 
—

 
—

 
—

EMA limited partnerships (1)
 

 
 

 
 

 
—

Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
343

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves (2)
 

 
 

 
 

 
—

DAC and DSI (3)
 

 
 

 
 

 
(35
)
Amounts recognized
 

 
 

 
 

 
(35
)
Deferred income taxes
 

 
 

 
 

 
(65
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
243

____________
(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 $2 million classified as liabilities.
Schedule of change in unrealized net capital gains and losses
The change in unrealized net capital gains and losses for the years ended December 31 is as follows:
($ in millions)
2018
 
2017
 
2016
Fixed income securities
$
(914
)
 
$
147

 
$
251

Equity securities (1)
—

 
226

 
66

Derivative instruments
(2
)
 
(3
)
 
(5
)
EMA limited partnerships
(1
)
 
3

 
—

Total
(917
)
 
373

 
312

Amounts recognized for:
 

 
 

 
 

Insurance reserves
315

 
(315
)
 
—

DAC and DSI
154

 
(49
)
 
(78
)
Amounts recognized
469

 
(364
)
 
(78
)
Deferred income taxes
94

 
145

 
(81
)
(Decrease) increase in unrealized net capital gains and losses, after-tax
$
(354
)
 
$
154

 
$
153

_______________
(1) 
Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $308 million of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. See Note 2 for further details.
Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time
The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position.
($ 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, 2018
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
2

 
$
6

 
$
—

 
1

 
$
1

 
$
—

 
$
—

Municipal
38

 
98

 
(1
)
 
5

 
26

 
(3
)
 
(4
)
Corporate
1,260

 
6,799

 
(218
)
 
370

 
2,633

 
(163
)
 
(381
)
ABS
30

 
167

 
(1
)
 
11

 
31

 
(2
)
 
(3
)
RMBS
124

 
11

 
—

 
47

 
10

 
(1
)
 
(1
)
CMBS
3

 
7

 
—

 
2

 
—

 
—

 
—

Redeemable preferred stock
1

 
—

 
—

 
—

 
—

 
—

 
—

Total fixed income securities
1,458

 
$
7,088

 
$
(220
)
 
436

 
$
2,701

 
$
(169
)
 
$
(389
)
Investment grade fixed income securities
948

 
$
5,255

 
$
(121
)
 
388

 
$
2,551

 
$
(147
)
 
$
(268
)
Below investment grade fixed income securities
510

 
1,833

 
(99
)
 
48

 
150

 
(22
)
 
(121
)
Total fixed income securities
1,458

 
$
7,088

 
$
(220
)
 
436

 
$
2,701

 
$
(169
)
 
$
(389
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
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)
2018
 
2017
Texas
15.6
%
 
13.0
%
California
15.2

 
19.6

Illinois
8.5

 
8.2

New Jersey
7.2

 
8.0

Florida
6.4

 
6.7
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)
2018
 
2017
Apartment complex
33.5
%
 
29.2
%
Office buildings
23.9

 
23.8

Warehouse
15.9

 
15.5

Retail
15.0

 
19.2

Other
11.7

 
12.3

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, 2018 are as follows:
($ in millions)
Number
of loans
 
Carrying
value
 
Percent
2019
5

 
$
108

 
2.7
%
2020
13

 
110

 
2.8

2021
39

 
428

 
10.7

2022
28

 
401

 
10.0

Thereafter
178

 
2,948

 
73.8

Total
263

 
$
3,995

 
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 mortgage loans summarized by debt service coverage ratio distribution as of December 31.
($ in millions)
2018
 
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
$
6

 
$
15

 
$
21

 
$
3

 
$
—

 
$
3

1.0 - 1.25
221

 
—

 
221

 
326

 
—

 
326

1.26 - 1.50
1,048

 
—

 
1,048

 
1,033

 
15

 
1,048

Above 1.50
2,659

 
42

 
2,701

 
2,482

 
13

 
2,495

Total non-impaired mortgage loans
$
3,934

 
$
57

 
$
3,991

 
$
3,844

 
$
28

 
$
3,872
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)
2018
 
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 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)
2018
 
2017
 
2016
Beginning balance
$
3

 
$
3

 
$
3

Net increase in valuation allowance
—

 
1

 
—

Charge offs
—

 
(1
)
 
—

Ending balance
$
3

 
$
3

 
$
3
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)
2018
 
2017
Texas
17.6
%
 
16.9
%
California
15.0

 
15.1

Oregon
9.8

 
9.4

New York
5.7

 
5.2
Schedule of other investments
The following table summarizes other investments by asset type.
($ in millions)
 
December 31, 2018
 
December 31, 2017
Agent loans
 
$
620

 
$
538

Bank loans
 
422

 
437

Real estate
 
228

 
157

Derivatives and other
 
30

 
122

Total
 
$
1,300

 
$
1,254