Investments (Tables)

6 Months Ended

Jun. 30, 2018



Net Realized Capital Gains (Losses)
	Successor Company			Predecessor Company
(Before tax)	June 1, 2018 to June 30, 2018			April 1, 2018 to May 31, 2018			For the three months ended June 30, 2017			January 1, 2018 to May 31, 2018			For the six months ended June 30, 2017
Gross gains on sales	$	1		$	28		$	63		$	49		$	113
Gross losses on sales	(1		)	(95		)	(11		)	(112		)	(40		)
Equity securities [1]	2			(9		)	—			2			—
Net OTTI losses recognized in earnings	—			—			(13		)	—			(13		)
Valuation allowances on mortgage loans	—			—			2			—			2
Results of variable annuity hedge program
GMWB derivatives, net	7			8			20			12			38
Macro hedge program	—			(54		)	(38		)	(36		)	(124		)
Total results of variable annuity hedge program	7			(46		)	(18		)	(24		)	(86		)
Transactional foreign currency revaluation	7			8			4			(6		)	(14		)
Non-qualifying foreign currency derivatives	(8		)	(10		)	(9		)	7			8
Other, net [2]	(4		)	(4		)	—			(23		)	2
Net realized capital gains (losses)	$	4		$	(128	)	$	18		$	(107	)	$	(28	)


[1]	Effective January 1, 2018, with adoption of new accounting standards for equity securities, include all changes in fair value and trading gains and losses for equity securities at fair value.

[2]

Includes gains (losses) on non-qualifying derivatives, excluding foreign currency derivatives, of $(1) for the period of June 1, 2018 to June 30, 2018 (Successor Company), $(5) for the period of April 1, 2018 to May 31, 2018 (Predecessor Company) and $(10) for the period of January 1, 2018 to May 31, 2018 (Predecessor Company). Includes gains (losses) on non-qualifying derivatives, excluding foreign currency derivatives, of $(5) and $(3) for the three and six months ended June 30, 2017 (Predecessor Company).

Impairments



Impairments in Earnings by Type
	Successor Company		Predecessor Company
	June 1, 2018 to June 30, 2018		April 1, 2018 to May 31, 2018		For the three months ended June 30, 2017		January 1, 2018 to May 31, 2018		For the six months ended June 30, 2017
Credit impairments	$	—	$	—	$	13	$	—	$	13
Intent-to-sell impairments	—		—		—		—		—
Impairments on equity securities	—		—		—		—		—
Total impairments	$	—	$	—	$	13	$	—	$	13



Cumulative Credit Impairments
	Successor Company		Predecessor Company
(Before tax)	June 1, 2018 to June 30, 2018		April 1, 2018 to May 31, 2018			For the three months ended June 30, 2017			January 1, 2018 to May 31, 2018			For the six months ended June 30, 2017
Balance as of beginning of period	$	—	$	(84	)	$	(161	)	$	(88	)	$	(170	)
Additions for credit impairments recognized on [1]:
Securities not previously impaired	—		—			(1		)	—			(1		)
Securities previously impaired	—		—			(12		)	—			(12		)
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period	—		13			28			17			33
Securities due to an increase in expected cash flows	—		1			4			1			8
Balance as of end of period	$	—	$	(70	)	$	(142	)	$	(70	)	$	(142	)


[1]	These additions are included in the net OTTI losses recognized in earnings in the Condensed Consolidated Statements of Operations.

Schedule of Available-for-sale Securities

Available-for-Sale Securities



AFS Securities by Type
	Successor Company											Predecessor Company
	June 30, 2018											December 31, 2017
	Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [2]		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [2]
ABS	$	541	$	—	$	(1	)	$	540	$	—	$	821	$	9	$	(11	)	$	819	$	—
CDOs	699		—		—			699		—		886		2		—			888		—
CMBS	1,429		3		(6		)	1,423		—		2,061		45		(22		)	2,084		(1		)
Corporate	8,261		12		(97		)	8,211		—		12,587		1,483		(32		)	14,038		—
Foreign govt./govt. agencies	376		1		—			374		—		379		30		(2		)	407		—
Municipal	777		1		(3		)	776		—		1,125		142		(1		)	1,266		—
RMBS	1,058		1		(1		)	1,058		—		1,388		41		(2		)	1,427		—
U.S. Treasuries	1,330		2		(4		)	1,328		—		1,667		206		(3		)	1,870		—
Total fixed maturities, AFS	14,471		20		(112		)	14,409		—		20,914		1,958		(73		)	22,799		(1		)
Equity securities, AFS [3]												140		14		—			154		—
Total AFS securities	$	14,471	$	20	$	(112	)	$	14,409	$	—	$	21,054	$	1,972	$	(73	)	$	22,953	$	(1	)


[1]	The cost or amortized cost of assets that support modified coinsurance reinsurance contracts were not adjusted as part of the application of pushdown accounting. As a result, gross unrealized gains (losses) only include subsequent changes in value recorded in AOCI beginning June 1, 2018. Prior changes in value have been recorded in additional paid-in capital.


[2]	Represents the amount of cumulative non-credit OTTI losses recognized in OCI on securities that also had credit impairments. These losses are included in gross unrealized losses as of June 30, 2018 (Successor Company) and December 31, 2017 (Predecessor Company).


[3]	Effective January 1, 2018, with the adoption of new accounting standards for financial instruments, equity securities, AFS were reclassified to equity securities at fair value and are excluded from the table above as of June 30, 2018.



Fixed maturities, AFS, by Contractual Maturity Year
	Successor Company				Predecessor Company
	June 30, 2018				December 31, 2017
Contractual Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	458	$	458	$	844	$	850
Over one year through five years	1,806		1,802		3,498		3,580
Over five years through ten years	1,998		1,982		3,178		3,321
Over ten years	6,482		6,447		8,238		9,830
Subtotal	10,744		10,689		15,758		17,581
Mortgage-backed and asset-backed securities	3,727		3,720		5,156		5,218
Total fixed maturities, AFS	$	14,471	$	14,409	$	20,914	$	22,799

Est

Investments by Contractual Maturity Year



Fixed maturities, AFS, by Contractual Maturity Year
	Successor Company				Predecessor Company
	June 30, 2018				December 31, 2017
Contractual Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	458	$	458	$	844	$	850
Over one year through five years	1,806		1,802		3,498		3,580
Over five years through ten years	1,998		1,982		3,178		3,321
Over ten years	6,482		6,447		8,238		9,830
Subtotal	10,744		10,689		15,758		17,581
Mortgage-backed and asset-backed securities	3,727		3,720		5,156		5,218
Total fixed maturities, AFS	$	14,471	$	14,409	$	20,914	$	22,799

Estimated maturities may differ from contractual maturities due to security call or prepayment provisions. Due to the potential for variability in payment speeds (i.e. prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity.

Unrealized Loss on Investments

Unrealized Losses on AFS Securities



Unrealized Loss Aging for AFS Securities by Type and Length of Time as of June 30, 2018
Successor Company
	Less Than 12 Months							12 Months or More						Total
	Amortized Cost [1]		Fair Value		Unrealized Losses			Amortized Cost [1]		Fair Value		Unrealized Losses		Amortized Cost [1]		Fair Value		Unrealized Losses
ABS	$	295	$	293	$	(1	)	$	—	$	—	$	—	$	295	$	293	$	(1	)
CDOs	451		451		—			—		—		—		451		451		—
CMBS	1,115		1,106		(6		)	—		—		—		1,115		1,106		(6		)
Corporate	7,286		7,223		(97		)	—		—		—		7,286		7,223		(97		)
Foreign govt./govt. agencies	178		176		—			—		—		—		178		176		—
Municipal	475		472		(3		)	—		—		—		475		472		(3		)
RMBS	630		630		(1		)	—		—		—		630		630		(1		)
U.S. Treasuries	1,105		1,101		(4		)	—		—		—		1,105		1,101		(4		)
Total fixed maturities, AFS in an unrealized loss position	$	11,535	$	11,452	$	(112	)	$	—	$	—	$	—	$	11,535	$	11,452	$	(112	)



Unrealized Loss Aging for AFS Securities by Type and Length of Time as of December 31, 2017
Predecessor Company
	Less Than 12 Months							12 Months or More							Total
	Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses
ABS	$	158	$	157	$	(1	)	$	219	$	209	$	(10	)	$	377	$	366	$	(11	)
CDOs	242		242		—			37		37		—			279		279		—
CMBS	524		517		(7		)	346		331		(15		)	870		848		(22		)
Corporate	1,082		1,074		(8		)	779		755		(24		)	1,861		1,829		(32		)
Foreign govt./govt. agencies	60		59		(1		)	35		34		(1		)	95		93		(2		)
Municipal	9		9		—			10		9		(1		)	19		18		(1		)
RMBS	288		287		(1		)	28		27		(1		)	316		314		(2		)
U.S. Treasuries	382		380		(2		)	38		37		(1		)	420		417		(3		)
Total fixed maturities, AFS in an unrealized loss position	2,745		2,725		(20		)	1,492		1,439		(53		)	4,237		4,164		(73		)
Equity securities, AFS [2]	6		6		—			3		3		—			9		9		—
Total securities in an unrealized loss position	$	2,751	$	2,731	$	(20	)	$	1,495	$	1,442	$	(53	)	$	4,246	$	4,173	$	(73	)


[1]	The cost or amortized cost of assets that support modified coinsurance reinsurance contracts were not adjusted as part of the application of pushdown accounting. As a result, gross unrealized gains (losses) only include subsequent changes in value recorded in AOCI beginning June 1, 2018. Prior changes in value have been recorded in additional paid-in capital.


[2]	Effective January 1, 2018, with the adoption of new accounting standards for financial instruments, equity securities, AFS were reclassified to equity securities at fair value and are excluded from the table above as of June 30, 2018.

Valuation Allowance Activity



Valuation Allowance Activity
	Successor Company		Predecessor Company
	June 1, 2018 to June 30, 2018		January 1, 2018 to May 31, 2018		For the six months ended June 30, 2017
Beginning Balance	$	—	$	—	$	(19	)
Reversals/(Additions)	—		—		(1		)
Deductions	—		—		19
Ending Balance	$	—	$	—	$	(1	)

Loans Credit Quality



Commercial Mortgage Loans Credit Quality
	Successor Company			Predecessor Company
	June 30, 2018			December 31, 2017
Loan-to-value	Carrying Value		Avg. Debt-Service Coverage Ratio	Carrying Value		Avg. Debt-Service Coverage Ratio
Greater than 80%	$	5	1.28x	$	5	1.26x
65% - 80%	151		1.78x	125		1.88x
Less than 65%	1,804		2.62x	2,742		2.69x
Total commercial mortgage loans	$	1,960	2.55x	$	2,872	2.65x

Mortgage Loans



Mortgage Loans by Region
	Successor Company			Predecessor Company
	June 30, 2018			December 31, 2017
	Carrying Value		Percent of Total	Carrying Value		Percent of Total
East North Central	$	62	3.2%	$	62	2.1%
East South Central	19		1.0%	14		0.5%
Middle Atlantic	135		6.9%	291		10.1%
Mountain	51		2.6%	53		1.9%
New England	42		2.1%	92		3.2%
Pacific	665		33.9%	838		29.2%
South Atlantic	452		23.1%	608		21.2%
West South Central	227		11.5%	195		6.8%
Other [1]	307		15.7%	719		25.0%
Total mortgage loans	$	1,960	100.0%	$	2,872	100.0%


[1]	Primarily represents loans collateralized by multiple properties in various regions.



Mortgage Loans by Property Type
	Successor Company			Predecessor Company
	June 30, 2018			December 31, 2017
	Carrying Value		Percent of Total	Carrying Value		Percent of Total
Commercial
Industrial	$	561	28.6%	$	743	25.9%
Lodging	25		1.3%	24		0.8%
Multifamily	512		26.1%	662		23.0%
Office	423		21.6%	685		23.9%
Retail	291		14.8%	557		19.4%
Other	148		7.6%	201		7.0%
Total mortgage loans	$	1,960	100.0%	$	2,872	100.0%

Offsetting Liabilities



Securities Lending and Repurchase Agreements
	Successor Company		Predecessor Company
	June 30, 2018		December 31, 2017
	Fair Value		Fair Value
Securities Lending Transactions:
Gross amount of securities on loan	$	256	$	674
Gross amount of associated liability for collateral received [1]	$	262	$	689

Repurchase agreements:
Gross amount of recognized liabilities for repurchase agreements	$	192	$	202
Gross amount of collateral pledged related to repurchase agreements [2]	$	199	$	206

[1]

Cash collateral received is reinvested in fixed maturities, AFS and short term investments which are included in the Condensed Consolidated Balance Sheets. Amount includes additional securities collateral received of $1 and $1 which are excluded from the Company's Condensed Consolidated Balance Sheets as of June 30, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), respectively.


[2]	Collateral pledged is included within fixed maturities, AFS and short term investments in the Company's Condensed Consolidated Balance Sheets.



Offsetting Derivative Assets and Liabilities
	(i)			(ii)			(iii) = (i) - (ii)						(iv)				(v) = (iii) - (iv)
							Net Amounts Presented in the Statement of Financial Position							Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities) [1]			Gross Amounts Offset in the Statement of Financial Position			Derivative Assets [2] (Liabilities) [3]			Accrued Interest and Cash Collateral Received [4] Pledged [3]				Financial Collateral Received [5]			Net Amount
Successor Company
As of June 30, 2018
Other investments	$	307		$	270		$	40		$	(3	)		$	3		$	34
Other liabilities	$	(758	)	$	(119	)	$	(491	)	$	(148	)		$	(638	)	$	(1	)
Predecessor Company
As of December 31, 2017
Other investments	$	380		$	338		$	135		$	(93	)		$	—		$	42
Other liabilities	$	(833	)	$	(154	)	$	(588	)	$	(91	)		$	(674	)	$	(5	)


[1]	Certain prior year amounts have been restated to conform to the current year presentation for OTC-cleared derivatives.


[2]	Included in other invested assets in the Company's Condensed Consolidated Balance Sheets.


[3]	Included in other liabilities in the Company's Condensed Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.


[4]	Included in other investments in the Company's Condensed Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.


[5]	Excludes collateral associated with exchange-traded derivative instruments.