XML 39 R31.htm IDEA: XBRL DOCUMENT v2.4.0.8
Derivatives and Hedging Activities (Tables)
 6 Months Ended
Jun. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of gross fair value of derivative instruments, including embedded derivatives
The Company currently uses derivatives as economic hedges and accounting hedges. The following table presents the balance sheet location and the gross fair value of derivative instruments, including embedded derivatives:
 
 
 
 
Assets
 
 
 
Liabilities
Derivatives not designated
as hedging instruments
 
Balance Sheet
Location
 
June 30,
2014
 
December 31,
2013
 
Balance Sheet Location
 
June 30,
2014
 
December 31,
2013
 
 
 
 
(in millions)
 
 
 
(in millions)
GMWB and GMAB
 
 
 
 

 
 

 
 
 
 

 
 

Interest rate contracts
 
Other assets
 
$
1,585

 
$
1,484

 
Other liabilities
 
$
1,306

 
$
1,672

Equity contracts
 
Other assets
 
1,642

 
1,741

 
Other liabilities
 
2,767

 
2,918

Credit contracts
 
Other assets
 
—

 
3

 
Other liabilities
 
—

 
—

Foreign exchange contracts
 
Other assets
 
2

 
2

 
Other liabilities
 
—

 
—

Embedded derivatives(1)
 
N/A
 
—

 
—

 
Policyholder account balances, future policy benefits and claims(2)
 
(347
)
 
(575
)
Total GMWB and GMAB
 
 
 
3,229

 
3,230

 
 
 
3,726

 
4,015

Other derivatives:
 
 
 
 

 
 

 
 
 
 

 
 

Equity
 
 
 
 

 
 

 
 
 
 

 
 

EIA embedded derivatives
 
N/A
 
—

 
—

 
Policyholder account balances, future policy benefits and claims
 
5

 
5

IUL
 
Other assets
 
33

 
27

 
Other liabilities
 
11

 
13

IUL embedded derivatives
 
N/A
 
—

 
—

 
Policyholder account balances, future policy benefits and claims
 
184

 
125

Other
 
 
 
 
 
 
 
 
 
 
 
 
Macro hedge program
 
Other assets
 
1

 
4

 
Other liabilities
 
13

 
29

Total other
 
 
 
34

 
31

 
 
 
213

 
172

Total derivatives
 
 
 
$
3,263

 
$
3,261

 
 
 
$
3,939

 
$
4,187

N/A
Not applicable.
(1)
The fair values of GMWB and GMAB embedded derivatives fluctuate based on changes in equity, interest rate and credit markets.
(2)
The fair value of the GMWB and GMAB embedded derivatives was a net asset at June 30, 2014 and December 31, 2013 and the amount is reported as a contra liability.
Schedule of gain (loss) on derivative instruments
The following table presents a summary of the impact of derivatives not designated as hedging instruments on the Consolidated Statements of Income:
 
 
 
 
Amount of Gain (Loss) on Derivatives
Recognized in Income
Derivatives not designated as hedging instruments
 
Location of Gain (Loss) on Derivatives Recognized in Income
 
Three Months Ended June 30,
 
Six Months Ended 
 June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
(in millions)
GMWB and GMAB
 
 
 
 

 
 

 
 

 
 

Interest rate contracts
 
Benefits, claims, losses and settlement expenses
 
$
245

 
$
(380
)
 
$
509

 
$
(512
)
Equity contracts
 
Benefits, claims, losses and settlement expenses
 
(197
)
 
12

 
(387
)
 
(480
)
Credit contracts
 
Benefits, claims, losses and settlement expenses
 
(12
)
 
8

 
(22
)
 
8

Foreign exchange contracts
 
Benefits, claims, losses and settlement expenses
 
—

 
2

 
(1
)
 
7

Embedded derivatives(1)
 
Benefits, claims, losses and settlement expenses
 
(124
)
 
255

 
(228
)
 
822

Total GMWB and GMAB
 
 
 
(88
)
 
(103
)
 
(129
)
 
(155
)
Other derivatives:
 
 
 
 

 
 

 
 

 
 

Interest rate
 
 
 
 
 
 
 
 
 
 
Tax hedge
 
Net investment income
 
—

 
—

 
3

 
—

Equity
 
 
 
 

 
 

 
 

 
 

EIA
 
Interest credited to fixed accounts
 
1

 
—

 
1

 
1

EIA embedded derivatives
 
Interest credited to fixed accounts
 
(1
)
 
—

 
(1
)
 
(1
)
IUL
 
Interest credited to fixed accounts
 
6

 
2

 
11

 
6

IUL embedded derivatives
 
Interest credited to fixed accounts
 
5

 
2

 
11

 
5

Other
 
 
 
 
 
 
 
 
 
 
Macro hedge program
 
Benefits, claims, losses and settlement expenses
 
(10
)
 
—

 
3

 
—

Total other
 
 
 
1

 
4


28


11

Total derivatives
 
 
 
$
(87
)
 
$
(99
)
 
$
(101
)
 
$
(144
)
(1)
The fair values of GMWB and GMAB embedded derivatives fluctuate based on changes in equity, interest rate and credit markets.
Schedule of payments to make and receive for options
The deferred premium associated with certain of the above options is paid or received semi-annually over the life of the option contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options:
 
 
Premiums Payable
 
Premiums Receivable
 
 
(in millions)
2014(1)
 
$
185

 
$
56

2015
 
355

 
67

2016
 
313

 
54

2017
 
242

 
53

2018
 
194

 
56

2019-2026
 
512

 
82

  Total
 
$
1,801

 
$
368

(1)
2014 amounts represent the amounts payable and receivable for the period from July 1, 2014 to December 31, 2014.
Summary of unrealized derivative losses included in accumulated other comprehensive income (loss) related to cash flow hedges
The following table presents a rollforward of unrealized derivative losses related to cash flow hedges included in accumulated other comprehensive income (loss):
 
 
2014
 
2013
 
 
(in millions)
Net unrealized derivative losses at January 1
 
$
(17
)
 
$
(21
)
Reclassification of realized losses(1)
 
3

 
4

Income tax benefit
 
(1
)
 
(1
)
Net unrealized derivative losses at June 30
 
$
(15
)
 
$
(18
)
(1)
Loss reclassified from AOCI to net investment income on the Consolidated Statements of Income.