Investments (Tables)

12 Months Ended

Dec. 31, 2016

Text Block [Abstract]

Net Investment Income and Investment Gains (Losses)

Net investment income is as follows:

Year Ended December 31	2016		2015		2014
(In millions)
Fixed maturity securities	$	1,819	$	1,751	$	1,803
Limited partnership investments		199		119		304
Short term investments		9		11		4
Equity securities		10		12		12
Income from trading portfolio (a)		112		2		64
Other		45		34		34
Total investment income		2,194		1,929		2,221
Investment expenses		(59)		(63)		(58)
Net investment income	$	2,135	$	1,866	$	2,163

(a) Includes net unrealized gains (losses) related to changes in fair value on trading securities still held of $44, $(46) and $42 for the years ended December 31, 2016, 2015 and 2014.

As of December 31, 2016, the Company held no non-income producing fixed maturity securities. As of December 31, 2015, the Company held $54 million of non-income producing fixed maturity securities. As of December 31, 2016 and 2015, no investments in a single issuer exceeded 10% of shareholders’ equity other than investments in securities issued by the U.S. Treasury and obligations of government-sponsored enterprises.

Investment gains (losses) are as follows:

Year Ended December 31	2016			2015			2014
(In millions)
Fixed maturity securities	$	54		$	(66	)	$         41
Equity securities		(5	)		(23	)	1
Derivative instruments		(2	)		10		(1)
Short term investments and other		3			8		13
Investment gains (losses) (a)	$	50		$	(71	)	$         54
(a)    Includes gross realized gains of $209, $133 and $178 and gross realized losses of $160, $222 and $136 on available-for-sale securities for the years ended December 31, 2016, 2015 and 2014.

Schedule of Net Change in Unrealized Gains (Losses) on Available-for-Sale Investments

Net change in unrealized gains (losses) on available-for-sale investments is as follows:
Year Ended December 31	2016			2015			2014
(In millions)
Fixed maturity securities	$	225		$	(1,114	)	$    1,511
Equity securities		(2	)		(6	)	6
Other		1			1
Total net change in unrealized gains (losses) on available-for-sale investments	$	224		$	(1,119	)	$    1,517

Components of OTTI Losses Recognized in Earnings by Asset Type

The components of OTTI losses recognized in earnings by asset type are as follows:
Year Ended December 31	2016		2015		2014
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	59	$	104	$         18
States, municipalities and political subdivisions				18	46
Asset-backed:
Residential mortgage-backed		10		8	5
Other asset-backed		3		1	1
Total asset-backed		13		9	6
Total fixed maturities available-for-sale		72		131	70
Equity securities available-for-sale - common stock		9		25	7
Net OTTI losses recognized in earnings	$	81	$	156	$         77

Amortized Cost and Fair Values of Securities

The amortized cost and fair values of securities are as follows:

	Cost or		Gross		Gross				Unrealized
	Amortized		Unrealized		Unrealized		Estimated		OTTI Losses
December 31, 2016	Cost		Gains		Losses		Fair Value		(Gains)
(In millions)
Fixed maturity securities:
Corporate and other bonds		$    17,711		$    1,323		$      76		$    18,958		$       (1)
States, municipalities and political subdivisions		12,060		1,213		33		13,240		(16)
Asset-backed:
Residential mortgage-backed		5,004		120		51		5,073		(28)
Commercial mortgage-backed		2,016		48		24		2,040
Other asset-backed		1,022		8		5		1,025
Total asset-backed		8,042		176		80		8,138		(28)
U.S. Treasury and obligations of government-sponsored enterprises		83		10				93
Foreign government		435		13		3		445
Redeemable preferred stock		18		1				19
Fixed maturities available-for-sale		38,349		2,736		192		40,893		(45)
Fixed maturities, trading		598		3				601
Total fixed maturities		38,947		2,739		192		41,494		(45)
Equity securities:
Common stock		13		6				19
Preferred stock		93		2		4		91
Equity securities available-for-sale		106		8		4		110		-
Equity securities, trading		465		60		86		439
Total equity securities		571		68		90		549		-
Total		$    39,518		$    2,807		$    282		$    42,043		$      (45)
December 31, 2015
(In millions)
Fixed maturity securities:
Corporate and other bonds		$    17,097		$    1,019		$    347		$    17,769
States, municipalities and political subdivisions		11,729		1,453		8		13,174		$       (4)
Asset-backed:
Residential mortgage-backed		4,935		154		17		5,072		(37)
Commercial mortgage-backed		2,154		55		12		2,197
Other asset-backed		923		6		8		921
Total asset-backed		8,012		215		37		8,190		(37)
U.S. Treasury and obligations of government-sponsored enterprises		62		5				67
Foreign government		334		13		1		346
Redeemable preferred stock		33		2				35
Fixed maturities available-for-sale		37,267		2,707		393		39,581		(41)
Fixed maturities, trading		140				20		120
Total fixed maturities		37,407		2,707		413		39,701		(41)
Equity securities:
Common stock		46		3		1		48
Preferred stock		145		7		3		149
Equity securities available-for-sale		191		10		4		197		-
Equity securities, trading		633		56		134		555
Total equity securities		824		66		138		752		-
Total		$    38,231		$    2,773		$    551		$    40,453		$      (41)

Securities Available-for-Sale in Gross Unrealized Loss Position

The available-for-sale securities in a gross unrealized loss position are as follows:

	Less than				12 Months
	12 Months				or Longer				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
December 31, 2016	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(In millions)
Fixed maturity securities:
Corporate and other bonds		$    2,615		$      61		$    254		$    15		$    2,869		$      76
States, municipalities and political subdivisions		959		32		23		1		982		33
Asset-backed:
Residential mortgage-backed		2,136		44		201		7		2,337		51
Commercial mortgage-backed		756		22		69		2		825		24
Other asset-backed		398		5		24				422		5
Total asset-backed		3,290		71		294		9		3,584		80
U.S. Treasury and obligations of government-sponsored enterprises		5								5
Foreign government		108		3						108		3
Total fixed maturity securities		6,977		167		571		25		7,548		192
Equity securities		12				13		4		25		4
Total		$    6,989		$    167		$    584		$    29		$    7,573		$    196
December 31, 2015
(In millions)
Fixed maturity securities:
Corporate and other bonds		$    4,882		$    302		$    174		$    45		$    5,056		$    347
States, municipalities and political subdivisions		338		8		75				413		8
Asset-backed:
Residential mortgage-backed		963		9		164		8		1,127		17
Commercial mortgage-backed		652		10		96		2		748		12
Other asset-backed		552		8		5				557		8
Total asset-backed		2,167		27		265		10		2,432		37
U.S. Treasury and obligations of government-sponsored enterprises		4								4
Foreign government		54		1						54		1
Redeemable preferred stock		3								3
Total fixed maturity securities		7,448		338		514		55		7,962		393
Equity securities:
Common stock		3		1						3		1
Preferred stock		13		3						13		3
Total equity securities		16		4						16		4
Total		$    7,464		$    342		$    514		$    55		$    7,978		$    397

Pretax Credit Loss Component Reflected in Retained Earnings on Fixed Maturity Securities

The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at December 31, 2016, 2015 and 2014 for which a portion of an OTTI loss was recognized in Other comprehensive income.

Year Ended December 31	2016			2015			2014
(In millions)
Beginning balance of credit losses on fixed maturity securities	$	53		$	62		$	74
Reductions for securities sold during the period		(16	)		(9	)		(9	)
Reductions for securities the Company intends to sell or more likely than not will be required to sell		(1	)					(3	)
Ending balance of credit losses on fixed maturity securities	$	36		$	53		$	62

Available-for-Sale Fixed Maturity Securities by Contractual Maturity

The following table presents available-for-sale fixed maturity securities by contractual maturity.

December 31	2016				2015
	Cost or				Cost or
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
(In millions)
Due in one year or less		$    1,779		$    1,828		$    1,574		$    1,595
Due after one year through five years		7,566		7,955		7,738		8,082
Due after five years through ten years		15,892		16,332		14,652		14,915
Due after ten years		13,112		14,778		13,303		14,989
Total		$  38,349		$  40,893		$  37,267		$  39,581

Summary of Aggregate Contractual or Notional Amount and Estimated Fair Value Related to Derivative Financial Instruments

The following tables present the aggregate contractual or notional amount and estimated fair value related to derivative financial instruments.

December 31	2016			2015
	Contractual/			Contractual/
	Notional	Estimated Fair Value		Notional	Estimated Fair Value
	Amount	Asset	(Liability)	Amount	Asset	(Liability)
(In millions)
Without hedge designation:
Equity markets:
Options  – purchased	$ 223	$   14		$ 501	$   16
– written	267		$   (8)	614		$  (28)
Futures – long				312		(1)
Futures – short	225	1
Interest rate risk:
Futures – long				63
Foreign exchange:
Currency forwards – long				133	2
– short				152
Currency options – long				550	7
Commodities:
Futures – long	42
Embedded derivative on funds withheld liability	174	3		179	5