Investments (Tables)

12 Months Ended

Dec. 31, 2013

Investments

Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value

($ in millions)		Amortized		Gross unrealized				Fair
		cost		Gains		Losses		value
December 31, 2013
U.S. government and agencies	$	678	$	90	$	(2)	$	766
Municipal		3,135		231		(62)		3,304
Corporate		20,397		1,214		(295)		21,316
Foreign government		715		83		(6)		792
ABS		1,011		30		(34)		1,007
RMBS		752		50		(12)		790
CMBS		724		47		(7)		764
Redeemable preferred stock		15		2		--		17
Total fixed income securities	$	27,427	$	1,747	$	(418)	$	28,756
December 31, 2012
U.S. government and agencies	$	2,137	$	242	$	--	$	2,379
Municipal		4,153		612		(61)		4,704
Corporate		28,748		2,896		(113)		31,531
Foreign government		1,017		164		(1)		1,180
ABS		1,921		49		(105)		1,865
RMBS		1,778		82		(69)		1,791
CMBS		1,425		60		(77)		1,408
Redeemable preferred stock		15		3		--		18
Total fixed income securities	$	41,194	$	4,108	$	(426)	$	44,876

Schedule for fixed income securities based on contractual maturities

The scheduled maturities for fixed income securities are as follows as of December 31, 2013:

($ in millions)		Amortized cost		Fair value
Due in one year or less	$	1,106	$	1,132
Due after one year through five years		5,060		5,457
Due after five years through ten years		10,955		11,316
Due after ten years		7,819		8,290
		24,940		26,195
ABS, RMBS and CMBS		2,487		2,561
Total	$	27,427	$	28,756

Schedule of net investment income

($ in millions)		2013		2012		2011
Fixed income securities	$	1,947	$	2,084	$	2,264
Mortgage loans		345		345		345
Equity securities		12		9		7
Limited partnership interests (1)		175		159		49
Short-term investments		2		2		3
Policy loans		49		51		53
Other		63		61		18
Investment income, before expense		2,593		2,711		2,739
Investment expense		(108)		(114)		(102)
Net investment income	$	2,485	$	2,597	$	2,637
(1) Income from EMA limited partnerships is reported in net investment income in 2013 and 2012 and realized capital gains and losses in 2011.

Schedule of realized capital gains and losses by asset type

($ in millions)		2013		2012		2011
Fixed income securities	$	3	$	(62)	$	539
Mortgage loans		20		8		(23)
Equity securities		45		--		14
Limited partnership interests (1)		(6)		--		62
Derivatives		14		34		(203)
Other		--		4		1
Realized capital gains and losses	$	76	$	(16)	$	390
(1) Income from EMA limited partnerships is reported in net investment income in 2013 and 2012 and realized capital gains and losses in 2011.

Schedule of realized capital gains and losses by transaction type

($ in millions)		2013		2012		2011
Impairment write-downs	$	(33)	$	(51)	$	(242)
Change in intent write-downs		(19)		(17)		(51)
Net other-than-temporary impairment losses recognized in earnings		(52)		(68)		(293)
Sales		114		17		823
Valuation of derivative instruments		(3)		(16)		(224)
Settlements of derivative instruments		17		51		22
EMA limited partnership income		--		--		62
Realized capital gains and losses	$	76	$	(16)	$	390

Schedule of other-than-temporary impairment losses by asset type

($ in millions)		2013						2012						2011
				Included						Included						Included
		Gross		in OCI		Net		Gross		in OCI		Net		Gross		in OCI		Net
Fixed income securities:
Municipal	$	(8)	$	--	$	(8)	$	--	$	--	$	--	$	(14)	$	(3)	$	(17)
Corporate		--		--		--		(16)		(2)		(18)		(28)		6		(22)
ABS		--		(2)		(2)		--		--		--		(8)		2		(6)
RMBS		(2)		2		--		(23)		(9)		(32)		(111)		(20)		(131)
CMBS		(32)		(3)		(35)		(22)		3		(19)		(66)		1		(65)
Total fixed income securities		(42)		(3)		(45)		(61)		(8)		(69)		(227)		(14)		(241)
Mortgage loans		11		--		11		5		--		5		(33)		--		(33)
Equity securities		(6)		--		(6)		(1)		--		(1)		(5)		--		(5)
Limited partnership interests		(9)		--		(9)		(3)		--		(3)		(3)		--		(3)
Other		(3)		--		(3)		--		--		--		(11)		--		(11)
Other-than-temporary impairment losses	$	(49)	$	(3)	$	(52)	$	(60)	$	(8)	$	(68)	$	(279)	$	(14)	$	(293)

Schedule of other-than-temporary impairment losses on fixed income securities included in accumulated other comprehensive income

($ in millions)		December 31, 2013		December 31, 2012
Municipal	$	(5)	$	(5)
Corporate		--		(1)
ABS		(10)		(14)
RMBS		(90)		(103)
CMBS		(12)		(19)
Total	$	(117)	$	(142)

Schedule of rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held

($ in millions)			2013		2012		2011
Beginning balance		$	(345)	$	(581)	$	(701)
Additional credit loss for securities previously other-than-temporarily impaired			(13)		(33)		(76)
Additional credit loss for securities not previously other-than-temporarily impaired			(19)		(20)		(114)
Reduction in credit loss for securities disposed or collected			75		288		288
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		--		13
Change in credit loss due to accretion of increase in cash flows			1		1		9
Ending balance (1)		$	(299)	$	(345)	$	(581)
	(1) The December 31, 2013 ending balance includes $60 million of cumulative credit losses recognized in earnings for fixed income securities that are classified as held for sale.

Schedule of unrealized net capital gains and losses included in accumulated other comprehensive income

($ in millions)		Fair		Gross unrealized				Unrealized net
December 31, 2013		value		Gains		Losses		gains (losses)
Fixed income securities	$	28,756	$	1,747	$	(418)	$	1,329
Equity securities		650		90		(5)		85
Short-term investments		590		--		--		--
Derivative instruments (1)		(13)		1		(14)		(13)
EMA limited partnerships (2)								(2)
Investments classified as held for sale								190
Unrealized net capital gains and losses, pre-tax								1,589
Amounts recognized for:
Insurance reserves (3)								--
DAC and DSI (4)								(156)
Amounts recognized								(156)
Deferred income taxes								(506)
Unrealized net capital gains and losses, after-tax							$	927
(1) Included in the fair value of derivative instruments are $1 million classified as assets and $14 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 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		Gross unrealized				Unrealized net
December 31, 2012		value		Gains		Losses		gains (losses)
Fixed income securities	$	44,876	$	4,108	$	(426)	$	3,682
Equity securities		345		36		(1)		35
Short-term investments		875		--		--		--
Derivative instruments (1)		(17)		2		(19)		(17)
EMA limited partnerships								1
Unrealized net capital gains and losses, pre-tax								3,701
Amounts recognized for:
Insurance reserves								(771)
DAC and DSI								(408)
Amounts recognized								(1,179)
Deferred income taxes								(888)
Unrealized net capital gains and losses, after-tax							$	1,634
(1) Included in the fair value of derivative instruments are $2 million classified as assets and $19 million classified as liabilities.

Schedule of change in unrealized net capital gains and losses

($ in millions)		2013		2012		2011
Fixed income securities	$	(2,353)	$	1,735	$	1,219
Equity securities		50		(1)		(11)
Derivative instruments		4		(5)		5
EMA limited partnerships		(3)		--		1
Investments classified as held for sale		190		--		--
Total		(2,112)		1,729		1,214
Amounts recognized for:
Insurance reserves		771		(177)		(585)
DAC and DSI		252		(288)		(207)
Amounts recognized		1,023		(465)		(792)
Deferred income taxes		382		(443)		(147)
(Decrease) increase in unrealized net capital gains and losses, after-tax	$	(707)	$	821	$	275

Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time

($ in millions)	Less than 12 months					12 months or more						Total
	Number		Fair		Unrealized	Number		Fair		Unrealized		unrealized
	of issues		value		losses	of issues		value		losses		losses
December 31, 2013
Fixed income securities
U.S. government and agencies	4	$	76	$	(2)	--	$	--	$	--	$	(2)
Municipal	63		347		(24)	21		99		(38)		(62)
Corporate	530		5,191		(224)	48		467		(71)		(295)
Foreign government	7		76		(4)	1		13		(2)		(6)
ABS	17		162		(1)	42		400		(33)		(34)
RMBS	35		42		(2)	47		129		(10)		(12)
CMBS	5		14		--	6		52		(7)		(7)
Redeemable preferred stock	--		--		--	--		--		--		--
Total fixed income securities	661		5,908		(257)	165		1,160		(161)		(418)
Equity securities	25		80		(5)	--		--		--		(5)
Total fixed income and equity securities	686	$	5,988	$	(262)	165	$	1,160	$	(161)	$	(423)
Investment grade fixed income securities	526	$	5,272	$	(236)	110	$	834	$	(112)	$	(348)
Below investment grade fixed income securities	135		636		(21)	55		326		(49)		(70)
Total fixed income securities	661	$	5,908	$	(257)	165	$	1,160	$	(161)	$	(418)
December 31, 2012
Fixed income securities
U.S. government and agencies	1	$	15	$	--	--	$	--	$	--	$	--
Municipal	11		101		(7)	50		395		(54)		(61)
Corporate	79		1,086		(27)	66		829		(86)		(113)
Foreign government	2		121		(1)	--		--		--		(1)
ABS	5		38		--	76		763		(105)		(105)
RMBS	49		30		--	164		442		(69)		(69)
CMBS	10		65		--	43		358		(77)		(77)
Redeemable preferred stock	--		--		--	1		--		--		--
Total fixed income securities	157		1,456		(35)	400		2,787		(391)		(426)
Equity securities	3		57		(1)	1		--		--		(1)
Total fixed income and equity securities	160	$	1,513	$	(36)	401	$	2,787	$	(391)	$	(427)
Investment grade fixed income securities	132	$	1,244	$	(29)	262	$	1,919	$	(195)	$	(224)
Below investment grade fixed income securities	25		212		(6)	138		868		(196)		(202)
Total fixed income securities	157	$	1,456	$	(35)	400	$	2,787	$	(391)	$	(426)

Principal geographic distribution of commercial real estate represented in the mortgage portfolio

(% of mortgage loan portfolio carrying value)	2013		2012
California	24.0	%	24.2	%
Illinois	9.7		7.8
New Jersey	7.2		6.5
Texas	6.3		6.0
New York	6.2		6.6
District of Columbia	5.4		3.8
Florida	5.2		4.3
Pennsylvania	3.9		5.1

Types of property collateralizing the mortgage loans

(% of mortgage loan portfolio carrying value)	2013		2012
Office buildings	28.3	%	28.0	%
Retail	22.9		24.0
Apartment complex	19.2		17.4
Warehouse	18.6		20.4
Other	11.0		10.2
Total	100.0	%	100.0	%

Contractual maturities of the commercial mortgage loan portfolio

($ in millions)	Number of loans		Carrying value	Percent
2014	23	$	325	7.8	%
2015	38		616	14.8
2016	34		334	8.0
2017	40		449	10.8
Thereafter	193		2,449	58.6
Total	328	$	4,173	100.0	%

Summary of carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution

($ in millions)		2013						2012
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	$	153	$	--	$	153	$	266	$	--	$	266
1.0 - 1.25		560		--		560		1,158		--		1,158
1.26 - 1.50		1,167		2		1,169		1,364		17		1,381
Above 1.50		2,176		38		2,214		2,854		129		2,983
Total non-impaired mortgage loans	$	4,056	$	40	$	4,096	$	5,642	$	146	$	5,788

Schedule of net carrying value of impaired mortgage loans

($ in millions)		2013		2012
Impaired mortgage loans with a valuation allowance	$	77	$	147
Impaired mortgage loans without a valuation allowance		--		8
Total impaired mortgage loans	$	77	$	155
Valuation allowance on impaired mortgage loans	$	21	$	42

Schedule of rollforward of the valuation allowance on impaired mortgage loans

($ in millions)		2013		2012		2011
Beginning balance	$	42	$	63	$	84
Net (decrease) increase in valuation allowance		(11)		(5)		33
Charge offs		(8)		(16)		(54)
Mortgage loans classified as held for sale		(2)		--		--
Ending balance	$	21	$	42	$	63

Schedule of carrying value of past due mortgage loans

($ in millions)		2013		2012
Less than 90 days past due	$	--	$	20
90 days or greater past due		--		4
Total past due		--		24
Current loans		4,173		5,919
Total mortgage loans	$	4,173	$	5,943

Principal geographic distribution of municipal bond

(% of municipal bond portfolio carrying value)	2013		2012
California	15.9	%	14.1	%
Texas	13.5		11.8
Oregon	5.4		4.7
New Jersey	5.2		4.5
New York	5.2		7.1
Illinois	5.1		4.3