5. Financing Receivables

The Company’s financing receivables include commercial and residential mortgage loans, syndicated loans and policy loans. Syndicated loans are reflected in other investments. Policy loans do not exceed the cash surrender value of the policy at origination. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses for policy loans.

Allowance for Loan Losses

The following tables present a rollforward of the allowance for loan losses for the six months ended and the ending balance of the allowance for loan losses by impairment method and type of loan:

	June 30, 2013						June 30, 2012
	Commercial Mortgage Loans		Syndicated Loans		Total		Commercial Mortgage Loans			Syndicated Loans			Total
	(in millions)
Beginning balance	$	26	$	4	$	30	$	32		$	5		$	37
Charge-offs	—		—		—		(2		)	(1		)	(3		)
Ending balance	$	26	$	4	$	30	$	30		$	4		$	34
Individually evaluated for impairment	$	7	$	—	$	7	$	8		$	—		$	8
Collectively evaluated for impairment	19		4		23		22			4			26

The recorded investment in financing receivables by impairment method and type of loan was as follows:

	June 30, 2013
	Commercial Mortgage Loans		Residential Mortgage Loans		Syndicated Loans		Total
	(in millions)
Individually evaluated for impairment	$	55	$	—	$	2	$	57
Collectively evaluated for impairment	2,469		862		288		3,619
Total	$	2,524	$	862	$	290	$	3,676

	December 31, 2012
	Commercial Mortgage Loans		Residential Mortgage Loans		Syndicated Loans		Total
	(in millions)
Individually evaluated for impairment	$	39	$	—	$	—	$	39
Collectively evaluated for impairment	2,442		934		303		3,679
Total	$	2,481	$	934	$	303	$	3,718

As of June 30, 2013 and December 31, 2012, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $11 million and $10 million, respectively.

Residential mortgage loans are presented net of unamortized discount of $65 million and $80 million as of June 30, 2013 and December 31, 2012, respectively.

Purchases and sales of syndicated loans were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(in millions)
Purchases	$	37	$	24	$	59	$	53
Sales	—		—		1		—

Credit Quality Information

Nonperforming loans, which are generally loans 90 days or more past due, were $18 million and $4 million as of June 30, 2013 and December 31, 2012, respectively. All other loans were considered to be performing.

Commercial Mortgage Loans

The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were 2% of total commercial mortgage loans at both June 30, 2013 and December 31, 2012. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. In addition, the Company reviews the concentrations of credit risk by region and property type.

Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:

	Loans				Percentage
	June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012
	(in millions)
South Atlantic	$	639	$	625	25	%	25	%
Pacific	595		565		24		23
Mountain	260		262		10		11
East North Central	253		255		10		10
West North Central	209		216		8		9
Middle Atlantic	199		198		8		8
West South Central	165		159		7		6
New England	134		135		5		5
East South Central	70		66		3		3
	2,524		2,481		100	%	100	%
Less: allowance for loan losses	26		26
Total	$	2,498	$	2,455

Concentrations of credit risk of commercial mortgage loans by property type were as follows:

	Loans				Percentage
	June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012
	(in millions)
Retail	$	863	$	822	34	%	33	%
Office	581		597		23		24
Industrial	443		449		18		18
Apartments	438		415		17		17
Mixed use	33		42		1		2
Hotel	26		36		1		1
Other	140		120		6		5
	2,524		2,481		100	%	100	%
Less: allowance for loan losses	26		26
Total	$	2,498	$	2,455

Residential Mortgage Loans

In October 2012, the Company purchased $954 million of residential mortgage loans at fair value from an affiliate, Ameriprise Bank, FSB. The purchase price takes into account the credit quality of the loan portfolio resulting in no allowance for loan losses recorded at purchase. The Company considers the credit worthiness of borrowers (FICO score), collateral characteristics such as loan-to-value (“LTV”) and geographic concentration to determine when an amount for an allowance for loan losses for residential mortgage loans is appropriate. At a minimum, management updates FICO scores and LTV ratios semiannually. As of June 30, 2013 and December 31, 2012, no allowance for loan losses was recorded.

As of June 30, 2013 and December 31, 2012, approximately 4% and 3%, respectively, of residential mortgage loans had FICO scores below 640. At June 30, 2013 and December 31, 2012, approximately 1% and 7%, respectively, of the Company’s residential mortgage loans had LTV ratios greater than 90%. The Company’s most significant geographic concentration for residential mortgage loans is in California representing 38% of the portfolio as of both June 30, 2013 and December 31, 2012. No other state represents more than 10% of the total residential mortgage loan portfolio.

Syndicated Loans

The Company’s syndicated loan portfolio is diversified across industries and issuers. The primary credit indicator for syndicated loans is whether the loans are performing in accordance with the contractual terms of the syndication. Total nonperforming syndicated loans at both June 30, 2013 and December 31, 2012 were $2 million.

Troubled Debt Restructurings

The following table presents the number of loans restructured by the Company during the period and their recorded investment at the end of the period:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment		Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(in millions, except number of loans)
Commercial mortgage loans	3	$	9	1	$	1	3	$	9	1	$	1
Residential mortgage loans	—	—		—	—		2	—		—	—
Syndicated loans	—	—		—	—		—	—		1	1
Total	3	$	9	1	$	1	5	$	9	2	$	2

The troubled debt restructurings did not have a material impact to the Company’s allowance for loan losses or income recognized for the three months and six months ended June 30, 2013 and 2012. There are no material commitments to lend additional funds to borrowers whose loans have been restructured.