Investments (Tables)

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Fixed Maturity Securities AFS by Sector

The following table presents the fixed maturity securities AFS by sector at:

	June 30, 2019											December 31, 2018
	Amortized Cost		Gross Unrealized							Estimated Fair Value		Amortized Cost		Gross Unrealized							Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses (1)							Gains		Temporary Losses		OTTI Losses (1)
	(In millions)
Fixed maturity securities: (2)
U.S. corporate	$	25,634	$	2,190	$	86	$	—		$	27,738	$	23,902	$	816	$	659	$	—		$	24,059
U.S. government and agency	5,318		1,742		—		—			7,060		7,503		1,251		110		—			8,644
RMBS	8,883		425		18		(4		)	9,294		8,309		246		122		(2		)	8,435
Foreign corporate	8,981		532		97		—			9,416		8,044		157		306		—			7,895
CMBS	4,932		249		4		—			5,177		5,177		42		87		(1		)	5,133
State and political subdivision	3,192		634		1		—			3,825		3,202		399		15		—			3,586
ABS	1,827		24		9		—			1,842		2,120		13		22		—			2,111
Foreign government	1,459		203		3		—			1,659		1,415		101		31		—			1,485
Total fixed maturity securities	$	60,226	$	5,999	$	218	$	(4	)	$	66,011	$	59,672	$	3,025	$	1,352	$	(3	)	$	61,348

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(1) Noncredit OTTI losses included in accumulated other comprehensive income (loss) (“AOCI”) in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities.

(2)

Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at June 30, 2019:

	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	1,561	$	6,889	$	12,017	$	24,117	$	15,642	$	60,226
Estimated fair value	$	1,571	$	7,080	$	12,659	$	28,388	$	16,313	$	66,011

Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:

	June 30, 2019								December 31, 2018
	Less than 12 Months				Equal to or Greater than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(Dollars in millions)
Fixed maturity securities:
U.S. corporate	$	1,323	$	40	$	1,224	$	46	$	10,450	$	465	$	2,290	$	194
U.S. government and agency	99		—		58		—		359		7		1,355		103
RMBS	105		1		1,378		13		1,550		21		2,567		99
Foreign corporate	740		27		743		70		3,916		199		746		107
CMBS	78		—		262		4		2,264		52		800		34
State and political subdivision	5		—		36		1		346		7		158		8
ABS	560		4		357		5		1,407		21		70		1
Foreign government	54		3		—		—		520		25		132		6
Total fixed maturity securities	$	2,964	$	75	$	4,058	$	139	$	20,812	$	797	$	8,118	$	552
Total number of securities in an unrealized loss position	639				511				2,988				1,022

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	June 30, 2019					December 31, 2018
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	9,239		61.7	%	$	8,502		62.6	%
Agricultural	3,184			21.2		2,874			21.1
Residential	2,627			17.5		2,276			16.7
Subtotal (1)	15,050			100.4		13,652			100.4
Valuation allowances (2)	(63		)	(0.4	)	(56		)	(0.4	)
Total mortgage loans, net	$	14,987		100.0	%	$	13,596		100.0	%

__________________

(1) Purchases of mortgage loans from third parties were $86 million and $563 million for the three months and six months ended June 30, 2019, respectively, and $518 million and $604 million for the three months and six months ended June 30, 2018, respectively, and were primarily comprised of residential mortgage loans.

(2)

The valuation allowances were primarily from collective evaluation (non-specific loan related).

Credit Quality of Mortgage Loans by Portfolio Segment

The credit quality of agricultural mortgage loans was as follows at: 

	June 30, 2019				December 31, 2018
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	2,833	89.0	%	$	2,551	88.8	%
65% to 75%	350		11.0		322		11.2
76% to 80%	1		—		1		—
Total	$	3,184	100.0	%	$	2,874	100.0	%

The credit quality of commercial mortgage loans was as follows at:

	Recorded Investment
	Debt Service Coverage Ratios								% of Total		Estimated Fair Value		% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(Dollars in millions)
June 30, 2019
Loan-to-value ratios:
Less than 65%	$	8,170	$	120	$	113	$	8,403	91.0	%	$	8,790	91.1	%
65% to 75%	688		—		—		688		7.4		712		7.4
76% to 80%	139		—		9		148		1.6		148		1.5
Total	$	8,997	$	120	$	122	$	9,239	100.0	%	$	9,650	100.0	%
December 31, 2018
Loan-to-value ratios:
Less than 65%	$	7,444	$	89	$	34	$	7,567	89.0	%	$	7,642	89.0	%
65% to 75%	762		—		24		786		9.2		797		9.3
76% to 80%	141		—		8		149		1.8		145		1.7
Total	$	8,347	$	89	$	66	$	8,502	100.0	%	$	8,584	100.0	%

The credit quality of residential mortgage loans was as follows at:

	June 30, 2019				December 31, 2018
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	2,590	98.6	%	$	2,240	98.4	%
Nonperforming	37		1.4		36		1.6
Total	$	2,627	100.0	%	$	2,276	100.0	%

Net Unrealized Investment Gains (Losses)

The components of net unrealized investment gains (losses), included in AOCI, were as follows:

	June 30, 2019			December 31, 2018
	(In millions)
Fixed maturity securities	$	5,785		$	1,679
Derivatives	243			253
Other	(13		)	(15		)
Subtotal	6,015			1,917
Amounts allocated from:
Future policy benefits	(2,317		)	(885		)
DAC, VOBA and DSI	(289		)	(90		)
Subtotal	(2,606		)	(975		)
Deferred income tax benefit (expense)	(716		)	(198		)
Net unrealized investment gains (losses)	$	2,693		$	744

The changes in net unrealized investment gains (losses) were as follows:

	Six Months Ended   June 30, 2019
	(In millions)
Balance, December 31, 2018	$	744
Unrealized investment gains (losses) during the period	4,098
Unrealized investment gains (losses) relating to:
Future policy benefits	(1,432		)
DAC, VOBA and DSI	(199		)
Deferred income tax benefit (expense)	(518		)
Balance, June 30, 2019	$	2,693
Change in net unrealized investment gains (losses)	$	1,949

Securities Lending

Elements of the securities lending program are presented below at:

	June 30, 2019		December 31, 2018
	(In millions)
Securities on loan: (1)
Amortized cost	$	2,038	$	3,056
Estimated fair value	$	2,973	$	3,628
Cash collateral received from counterparties (2)	$	3,023	$	3,646
Security collateral received from counterparties (3)	$	18	$	55
Reinvestment portfolio — estimated fair value	$	3,072	$	3,658

__________________

(1) Included within fixed maturity securities.

(2) Included within payables for collateral under securities loaned and other transactions.

(3) Security collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:

	June 30, 2019								December 31, 2018
	Remaining Tenor of Securities Lending Agreements								Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less		1 to 6 Months		Total
	(In millions)
U.S. government and agency	$	1,446	$	686	$	891	$	3,023	$	1,474	$	1,823	$	349	$	3,646

__________________

(1)

The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value at:

	June 30, 2019		December 31, 2018
	(In millions)
Invested assets on deposit (regulatory deposits) (1)	$	8,988	$	8,172
Invested assets held in trust (reinsurance agreements) (2)	4,087		3,455
Invested assets pledged as collateral (3)	3,335		3,340
Total invested assets on deposit, held in trust and pledged as collateral	$	16,410	$	14,967

__________________

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $171 million and $55 million of the assets on deposit balance represents restricted cash at June 30, 2019 and December 31, 2018, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions. $52 million and $87 million of the assets held in trust balance represents restricted cash at June 30, 2019 and December 31, 2018, respectively.

(3)

The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Consolidated Financial Statements included in the 2018 Annual Report) and derivative transactions (see Note 5).

Variable Interest Entities

The carrying amount and maximum exposure to loss related to the VIEs in which the Company concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:

	June 30, 2019				December 31, 2018
	Carrying Amount		Maximum Exposure to Loss		Carrying Amount		Maximum Exposure to Loss
	(In millions)
Fixed maturity securities	$	13,219	$	12,609	$	12,848	$	12,848
Limited partnerships and LLCs	1,761		2,989		1,743		3,130
Total	$	14,980	$	15,598	$	14,591	$	15,978

Components of Net Investment Income

The components of net investment income were as follows:

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2019		2018		2019		2018
	(In millions)
Investment income:
Fixed maturity securities	$	666	$	621	$	1,308	$	1,233
Equity securities	2		2		5		4
Mortgage loans	175		127		333		244
Policy loans	12		28		22		38
Real estate limited partnerships and limited liability companies	12		10		20		24
Other limited partnership interests	75		24		75		89
Cash, cash equivalents and short-term investments	17		5		27		10
Other	7		11		18		20
Subtotal	966		828		1,808		1,662
Less: Investment expenses	48		48		102		90
Net investment income	$	918	$	780	$	1,706	$	1,572

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2019			2018			2019			2018
	(In millions)
Fixed maturity securities	$	62		$	(65	)	$	47		$	(103	)
Equity securities	1			(2		)	11			(3		)
Mortgage loans	(3		)	(3		)	(7		)	(7		)
Real estate limited partnerships and limited liability companies	1			—			—			42
Other limited partnership interests	(4		)	—			(5		)	—
Other	(1		)	(4		)	—			(7		)
Total net investment gains (losses)	$	56		$	(74	)	$	46		$	(78	)

Sales or Disposals of Fixed Maturity Securities

Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below.

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2019			2018			2019			2018
	(In millions)
Proceeds	$	3,416		$	2,450		$	6,636		$	5,288
Gross investment gains	$	99		$	9		$	163		$	12
Gross investment losses	(37		)	(74		)	(116		)	(115		)
Net investment gains (losses)	$	62		$	(65	)	$	47		$	(103	)