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Investments
 6 Months Ended
Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]  
Investments
Investments
Available-for-Sale securities distributed by type were as follows:
 
 
June 30, 2014
Description of Securities
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Noncredit
OTTI(1)
 
 
(in millions)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Corporate debt securities
 
$
14,019

 
$
1,696

 
$
(19
)
 
$
15,696

 
$
3

Residential mortgage backed securities
 
3,652

 
158

 
(50
)
 
3,760

 
(12
)
Commercial mortgage backed securities
 
2,222

 
140

 
(4
)
 
2,358

 
—

State and municipal obligations
 
942

 
160

 
(28
)
 
1,074

 
—

Asset backed securities
 
935

 
55

 
(1
)
 
989

 
—

Foreign government bonds and obligations
 
238

 
24

 
(4
)
 
258

 
—

U.S. government and agencies obligations
 
36

 
4

 
—

 
40

 
—

Total fixed maturities
 
22,044

 
2,237

 
(106
)
 
24,175

 
(9
)
Common stocks
 
2

 
6

 
—

 
8

 
3

Total
 
$
22,046

 
$
2,243

 
$
(106
)
 
$
24,183

 
$
(6
)
 
 
December 31, 2013
Description of Securities
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Noncredit
OTTI(1)
 
 
(in millions)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Corporate debt securities
 
$
14,658

 
$
1,311

 
$
(96
)
 
$
15,873

 
$
3

Residential mortgage backed securities
 
3,773

 
133

 
(95
)
 
3,811

 
(18
)
Commercial mortgage backed securities
 
2,309

 
136

 
(11
)
 
2,434

 
—

State and municipal obligations
 
950

 
87

 
(39
)
 
998

 
—

Asset backed securities
 
938

 
48

 
(5
)
 
981

 
—

Foreign government bonds and obligations
 
234

 
19

 
(8
)
 
245

 
—

U.S. government and agencies obligations
 
40

 
5

 
—

 
45

 
—

Total fixed maturities
 
22,902

 
1,739

 
(254
)
 
24,387

 
(15
)
Common stocks
 
2

 
4

 
—

 
6

 
2

Total
 
$
22,904

 
$
1,743

 
$
(254
)
 
$
24,393

 
$
(13
)
 (1)
Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income. Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.
As of June 30, 2014 and December 31, 2013, investment securities with a fair value of $1.9 billion and $2.3 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings.
At both June 30, 2014 and December 31, 2013, fixed maturity securities comprised approximately 83% of the Company’s total investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. At June 30, 2014 and December 31, 2013, approximately $1.2 billion and $1.3 billion, respectively, of securities were internally rated by Columbia Management Investment Advisers, LLC, an affiliate of the Company, using criteria similar to those used by NRSROs.
A summary of fixed maturity securities by rating was as follows:
 
 
June 30, 2014
 
December 31, 2013
Ratings
 
Amortized
Cost
 
Fair
Value
 
Percent of
Total Fair
Value
 
Amortized
 Cost
 
Fair
Value
 
Percent of
Total Fair
Value
 
 
(in millions, except percentages)
AAA
 
$
5,384

 
$
5,649

 
23
%
 
$
5,557

 
$
5,738

 
23
%
AA
 
986

 
1,158

 
5

 
1,055

 
1,171

 
5

A
 
4,513

 
5,049

 
21

 
4,687

 
5,062

 
21

BBB
 
9,659

 
10,799

 
45

 
10,062

 
10,897

 
45

Below investment grade
 
1,502

 
1,520

 
6

 
1,541

 
1,519

 
6

Total fixed maturities
 
$
22,044

 
$
24,175

 
100
%
 
$
22,902

 
$
24,387

 
100
%

At June 30, 2014 and December 31, 2013, approximately 44% and 41%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. No holdings of any other issuer were greater than 10% of total equity.
The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:
 
 
June 30, 2014
 
 
Less than 12 months
 
12 months or more
 
Total
Description of Securities 
 
Number of
Securities
 
Fair
Value
 
Unrealized
Losses
 
Number of
Securities
 
Fair
Value
 
Unrealized
Losses
 
Number of
Securities
 
Fair
Value
 
Unrealized
Losses
 
 
(in millions, except number of securities)
Corporate debt securities
 
18

 
$
157

 
$
(1
)
 
51

 
$
789

 
$
(18
)
 
69

 
$
946

 
$
(19
)
Residential mortgage backed securities
 
15

 
122

 
(1
)
 
63

 
845

 
(49
)
 
78

 
967

 
(50
)
Commercial mortgage backed securities
 
4

 
3

 
—

 
9

 
96

 
(4
)
 
13

 
99

 
(4
)
State and municipal obligations
 
—

 
—

 
—

 
2

 
101

 
(28
)
 
2

 
101

 
(28
)
Asset backed securities
 
—

 
—

 
—

 
7

 
74

 
(1
)
 
7

 
74

 
(1
)
Foreign government bonds and obligations
 
3

 
20

 
—

 
14

 
27

 
(4
)
 
17

 
47

 
(4
)
Total
 
40

 
$
302

 
$
(2
)
 
146

 
$
1,932

 
$
(104
)
 
186

 
$
2,234

 
$
(106
)
 
 
December 31, 2013
 
 
Less than 12 months
 
12 months or more
 
Total
Description of Securities 
 
Number of 
Securities
 
Fair
Value
 
Unrealized
Losses
 
Number of
Securities
 
Fair
Value
 
Unrealized
Losses
 
Number of
Securities
 
Fair
Value
 
Unrealized
Losses
 
 
(in millions, except number of securities)
Corporate debt securities
 
156

 
$
2,567

 
$
(82
)
 
10

 
$
160

 
$
(14
)
 
166

 
$
2,727

 
$
(96
)
Residential mortgage backed securities
 
52

 
1,411

 
(54
)
 
45

 
295

 
(41
)
 
97

 
1,706

 
(95
)
Commercial mortgage backed securities
 
27

 
323

 
(9
)
 
3

 
22

 
(2
)
 
30

 
345

 
(11
)
State and municipal obligations
 
4

 
38

 
(2
)
 
2

 
92

 
(37
)
 
6

 
130

 
(39
)
Asset backed securities
 
17

 
219

 
(4
)
 
3

 
26

 
(1
)
 
20

 
245

 
(5
)
Foreign government bonds and obligations
 
23

 
77

 
(8
)
 
—

 
—

 
—

 
23

 
77

 
(8
)
Total
 
279

 
$
4,635

 
$
(159
)
 
63

 
$
595

 
$
(95
)
 
342

 
$
5,230

 
$
(254
)

As part of the Company’s ongoing monitoring process, management determined that a majority of the change in gross unrealized losses on its Available-for-Sale securities is attributable to movement in interest rates.
The following table presents a rollforward of the cumulative amounts recognized in the Consolidated Statements of Income for other-than-temporary impairments related to credit losses on Available-for-Sale securities for which a portion of the securities’ total other-than-temporary impairments was recognized in other comprehensive income (loss):
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
(in millions)
Beginning balance
 
$
54

 
$
75

 
$
54

 
$
87

Credit losses for which an other-than-temporary impairment was previously recognized
 
—

 
1

 
—

 
2

Reductions for securities sold during the period (realized)
 
—

 
(10
)
 
—

 
(23
)
Ending balance
 
$
54

 
$
66

 
$
54

 
$
66


The change in net unrealized securities gains (losses) in other comprehensive income (loss) includes three components, net of tax: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit other-than-temporary impairment losses to credit losses; and (iii) other items primarily consisting of adjustments in asset and liability balances, such as deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.
The following table presents a rollforward of the net unrealized securities gains on Available-for-Sale securities included in accumulated other comprehensive income:
 
 
Net Unrealized Securities Gains
 
Deferred
Income
Tax
 
Accumulated Other Comprehensive Income Related to Net Unrealized Securities Gains
 
 
 
(in millions)
 
Balance at January 1, 2013
 
$
1,930

 
$
(675
)
 
$
1,255

 
Net unrealized securities losses arising during the period(1)
 
(1,129
)
 
385

 
(744
)
 
Reclassification of net securities losses included in net income
 
1

 
—

 
1

 
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables
 
407

 
(142
)
 
265

 
Balance at June 30, 2013
 
$
1,209

 
$
(432
)
 
$
777

(2) 
 
 
 
 
 
 
 
 
Balance at January 1, 2014
 
$
1,033

 
$
(366
)
 
$
667

 
Net unrealized securities gains arising during the period(1)
 
653

 
(231
)
 
422

 
Reclassification of net securities gains included in net income
 
(5
)
 
2

 
(3
)
 
Impact of DAC, DSIC, benefit reserves and reinsurance recoverables
 
(257
)
 
90

 
(167
)
 
Balance at June 30, 2014
 
$
1,424

 
$
(505
)
 
$
919

(2) 
(1)
Includes other-than-temporary impairment losses on Available-for-Sale securities related to factors other than credit that were recognized in other comprehensive income (loss) during the period.
(2) 
Includes $3 million and $9 million of noncredit related impairments on securities and net unrealized securities losses on previously impaired securities at June 30, 2014 and 2013, respectively.
Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net realized investment gains (losses) were as follows:
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
(in millions)
Gross realized investment gains
 
$
3

 
$
2

 
$
9

 
$
2

Gross realized investment losses
 
(2
)
 
(1
)
 
(3
)
 
(1
)
Other-than-temporary impairments
 
—

 
(1
)
 
(1
)
 
(2
)
Total
 
$
1

 
$
—

 
$
5

 
$
(1
)

Other-than-temporary impairments for the six months ended June 30, 2014 primarily related to the timing of the Company’s decision to sell and subsequent disposition of a corporate debt security. Other-than-temporary impairments for the three months and six months ended June 30, 2013 primarily related to credit losses on non-agency residential mortgage backed securities.
Available-for-Sale securities by contractual maturity at June 30, 2014 were as follows:
 
 
Amortized Cost
 
Fair Value
 
 
(in millions)
Due within one year
 
$
1,028

 
$
1,053

Due after one year through five years
 
5,685

 
6,301

Due after five years through 10 years
 
5,011

 
5,345

Due after 10 years
 
3,511

 
4,369

 
 
15,235

 
17,068

Residential mortgage backed securities
 
3,652

 
3,760

Commercial mortgage backed securities
 
2,222

 
2,358

Asset backed securities
 
935

 
989

Common stocks
 
2

 
8

Total
 
$
22,046

 
$
24,183


Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities, as well as common stocks, were not included in the maturities distribution.
Net investment income is summarized as follows:
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
(in millions)
Fixed maturities
 
$
278

 
$
303

 
$
564

 
$
612

Mortgage loans
 
45

 
52

 
91

 
103

Other investments
 
8

 
11

 
17

 
17

 
 
331

 
366

 
672

 
732

Less: investment expenses
 
8

 
7

 
16

 
15

Total
 
$
323

 
$
359

 
$
656

 
$
717