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Investments (Tables)

6 Months Ended

Jun. 30, 2020

Total investments at June 30, 2020 and December 31, 2019 were as follows:



	June 30, 2020						December 31, 2019
In millions	Current		Long-term		Total		Current		Long-term		Total
Debt securities available for sale	$	2,396	$	16,158	$	18,554	$	2,251	$	14,671	$	16,922
Mortgage loans	200		938		1,138		122		1,091		1,213
Other investments	—		1,498		1,498		—		1,552		1,552
Total investments	$	2,596	$	18,594	$	21,190	$	2,373	$	17,314	$	19,687

Debt Securities Available For Sale

Debt securities available for sale at June 30, 2020 and December 31, 2019 were as follows:



In millions	Gross Amortized Cost		Allowance for Credit Losses ⁽¹⁾			Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2020
Debt securities:
U.S. government securities	$	1,924	$	—		$	1,924	$	156	$	—		$	2,080
States, municipalities and political subdivisions	2,312		—			2,312		138		(2		)	2,448
U.S. corporate securities	7,352		(1		)	7,351		837		(18		)	8,170
Foreign securities	2,266		(1		)	2,265		231		(11		)	2,485
Residential mortgage-backed securities	666		—			666		36		—			702
Commercial mortgage-backed securities	754		—			754		69		—			823
Other asset-backed securities	1,815		(1		)	1,814		30		(22		)	1,822
Redeemable preferred securities	22		—			22		2		—			24
Total debt securities ⁽²⁾	$	17,111	$	(3	)	$	17,108	$	1,499	$	(53	)	$	18,554

December 31, 2019
Debt securities:
U.S. government securities	$	1,791	$	—		$	1,791	$	62	$	(1	)	$	1,852
States, municipalities and political subdivisions	2,202		—			2,202		108		(1		)	2,309
U.S. corporate securities	7,167		—			7,167		573		(3		)	7,737
Foreign securities	2,149		—			2,149		200		(1		)	2,348
Residential mortgage-backed securities	508		—			508		25		—			533
Commercial mortgage-backed securities	654		—			654		46		—			700
Other asset-backed securities	1,397		—			1,397		13		(5		)	1,405
Redeemable preferred securities	30		—			30		8		—			38
Total debt securities ⁽²⁾	$	15,898	$	—		$	15,898	$	1,035	$	(11	)	$	16,922

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(1)

Effective January 1, 2020, the Company adopted the available-for-sale debt security impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The new impairment model requires the write down of amortized cost through an allowance for credit losses, rather than through a reduction of the amortized cost basis of the available-for-sale debt security. As the Company adopted the new available-for-sale debt security impairment model on a prospective basis, there was no allowance for credit losses recorded on available-for-sale debt securities at December 31, 2019.

(2)

Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At June 30, 2020, debt securities with a fair value of $931 million, gross unrealized capital gains of $118 million and gross unrealized capital losses of $2 million and at December 31, 2019, debt securities with a fair value of $965 million, gross unrealized capital gains of $83 million and no gross unrealized capital losses were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income.

Fair Value of Debt Securities by Contractual Maturity

The net amortized cost and fair value of debt securities at June 30, 2020 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.



In millions	Net Amortized Cost		Fair Value
Due to mature:
Less than one year	$	1,198	$	1,214
One year through five years	5,619		5,925
After five years through ten years	3,160		3,448
Greater than ten years	3,897		4,620
Residential mortgage-backed securities	666		702
Commercial mortgage-backed securities	754		823
Other asset-backed securities	1,814		1,822
Total	$	17,108	$	18,554

Debt Securities In An Unrealized Capital Loss Position

Summarized below are the debt securities the Company held at June 30, 2020 and December 31, 2019 that were in an unrealized capital loss position, aggregated by the length of time the investments have been in that position:



	Less than 12 months					Greater than 12 months					Total
In millions, except number of securities	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
June 30, 2020
Debt securities:
U.S. government securities	22	$	105	$	—	—	$	—	$	—	22	$	105	$	—
States, municipalities and political subdivisions	83	169		2		—	—		—		83	169		2
U.S. corporate securities	569	481		17		8	3		1		577	484		18
Foreign securities	171	245		11		—	—		—		171	245		11
Residential mortgage-backed securities	21	52		—		4	—		—		25	52		—
Commercial mortgage-backed securities	13	65		—		—	—		—		13	65		—
Other asset-backed securities	400	567		16		97	81		6		497	648		22
Total debt securities	1,279	$	1,684	$	46	109	$	84	$	7	1,388	$	1,768	$	53

December 31, 2019
Debt securities:
U.S. government securities	52	$	168	$	1	—	$	—	$	—	52	$	168	$	1
States, municipalities and political subdivisions	66	115		1		2	5		—		68	120		1
U.S. corporate securities	181	305		2		2	—		1		183	305		3
Foreign securities	39	75		1		—	—		—		39	75		1
Residential mortgage-backed securities	30	16		—		9	—		—		39	16		—
Commercial mortgage-backed securities	16	49		—		—	—		—		16	49		—
Other asset-backed securities	138	254		1		187	182		4		325	436		5
Total debt securities	522	$	982	$	6	200	$	187	$	5	722	$	1,169	$	11

The maturity dates for debt securities in an unrealized capital loss position at June 30, 2020 were as follows:



	Supporting experience-rated products				Supporting remaining products				Total
In millions	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Due to mature:
Less than one year	$	3	$	—	$	45	$	—	$	48	$	—
One year through five years	5		—		365		9		370		9
After five years through ten years	10		—		316		12		326		12
Greater than ten years	3		1		256		9		259		10
Residential mortgage-backed securities	—		—		52		—		52		—
Commercial mortgage-backed securities	—		—		65		—		65		—
Other asset-backed securities	12		1		636		21		648		22
Total	$	33	$	2	$	1,735	$	51	$	1,768	$	53

Activity in Mortgage Loan Portfolio

During the three and six months ended June 30, 2020 and 2019, the Company had the following activity in its mortgage loan portfolio:



	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2020		2019		2020		2019
New mortgage loans	$	16	$	37	$	24	$	78
Mortgage loans fully repaid	33		19		77		71
Mortgage loans foreclosed	—		—		—		—

Mortgage Loan Internal Credit Rating

Based on the Company’s assessments at June 30, 2020 and December 31, 2019, the amortized cost basis of the Company's mortgage loans within each credit quality indicator by year of origination was as follows:



	Amortized Cost Basis by Year of Origination
In millions, except credit quality indicator	2020		2019		2018		2017		2016		Prior		Total
June 30, 2020
1	$	—	$	—	$	—	$	22	$	—	$	40	$	62
2 to 4	11		95		89		157		130		546		1,028
5 and 6	—		—		4		—		—		35		39
7	—		—		—		9		—		—		9
Total	$	11	$	95	$	93	$	188	$	130	$	621	$	1,138

December 31, 2019
1	$	—	$	—	$	—	$	15	$	—	$	43	$	58
2 to 4	5		88		93		206		140		611		1,143
5 and 6	—		—		—		—		—		12		12
7	—		—		—		—		—		—		—
Total	$	5	$	88	$	93	$	221	$	140	$	666	$	1,213

Net Investment Income

Sources of net investment income for the three and six months ended June 30, 2020 and 2019 were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
In millions	2020			2019			2020			2019
Debt securities	$	146		$	146		$	290		$	292
Mortgage loans	15			18			30			35
Other investments	(20		)	67			27			103
Gross investment income	141			231			347			430
Investment expenses	(9		)	(9		)	(17		)	(18		)
Net investment income (excluding net realized capital gains or losses)	132			222			330			412
Net realized capital gains ⁽¹⁾	52			71			16			130
Net investment income ⁽²⁾	$	184		$	293		$	346		$	542

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(1)

Net realized capital gains include the reversal of previously recorded credit-related impairment losses on debt securities of $42 million and yield-related impairment losses on debt securities of $1 million in the three months ended June 30, 2020. Net realized capital gains include credit-related and yield-related impairment losses on debt securities of $3 million and $42 million, respectively, in the six months ended June 30, 2020. Net realized capital gains are net of other than temporary impairment losses on debt securities of $6 million and $13 million, respectively, in the three and six months ended June 30, 2019.


(2)	Net investment income includes $10 million and $21 million for the three and six months ended June 30, 2020, respectively, and $12 million and $23 million for the three and six months ended June 30, 2019, respectively, related to investments supporting experience-rated products.

Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three and six months ended June 30, 2020 and 2019 were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2020		2019		2020		2019
Proceeds from sales	$	1,419	$	1,273	$	2,142	$	2,762
Gross realized capital gains	23		37		43		72
Gross realized capital losses	21		2		56		4