Investments

9 Months Ended

Sep. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Investments

4.  Investments

Fixed Maturity and Equity Securities Available-for-Sale

Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following table presents the fixed maturity and equity securities available-for-sale (“AFS”) by sector. The unrealized loss amounts presented below include the noncredit loss component of other-than-temporary impairments (“OTTI”) losses. Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities and non-redeemable preferred stock is reported within equity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”) and commercial mortgage-backed securities (“CMBS”).

	September 30, 2013										December 31, 2012
	Cost or Amortized Cost		Gross Unrealized						Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized						Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses						Gains		Temporary Losses		OTTI Losses
	(In millions)
Fixed maturity securities:
U.S. corporate	$	16,405	$	1,258	$	215	$	—	$	17,448	$	16,914	$	2,063	$	82	$	—	$	18,895
U.S. Treasury and agency	7,425		484		153		—		7,756		7,678		1,186		—		—		8,864
Foreign corporate	8,332		531		68		—		8,795		8,618		853		26		—		9,445
RMBS	4,971		237		60		44		5,104		5,492		360		50		64		5,738
ABS	1,924		35		11		—		1,948		2,204		67		18		—		2,253
State and political subdivision	2,014		153		45		—		2,122		2,002		354		27		—		2,329
CMBS	1,597		70		4		—		1,663		2,221		141		6		—		2,356
Foreign government	992		117		15		—		1,094		876		214		2		—		1,088
Total fixed maturity securities	$	43,660	$	2,885	$	571	$	44	$	45,930	$	46,005	$	5,238	$	211	$	64	$	50,968
Equity securities:
Non-redeemable preferred stock	$	229	$	6	$	27	$	—	$	208	$	151	$	11	$	22	$	—	$	140
Common stock	159		33		3		—		189		160		18		1		—		177
Total equity securities	$	388	$	39	$	30	$	—	$	397	$	311	$	29	$	23	$	—	$	317

The Company held non-income producing fixed maturity securities with an estimated fair value of $22 million at both September 30, 2013 and December 31, 2012, with unrealized gains (losses) of $4 million and $3 million at September 30, 2013 and December 31, 2012, respectively.

Maturities of Fixed Maturity Securities

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

	September 30, 2013				December 31, 2012
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	1,828	$	1,869	$	4,831	$	4,875
Due after one year through five years	10,242		10,681		8,646		9,192
Due after five years through ten years	7,435		8,008		7,967		8,960
Due after ten years	15,663		16,657		14,644		17,594
Subtotal	35,168		37,215		36,088		40,621
Structured securities (RMBS, ABS and CMBS)	8,492		8,715		9,917		10,347
Total fixed maturity securities	$	43,660	$	45,930	$	46,005	$	50,968

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. RMBS, ABS and CMBS are shown separately, as they are not due at a single maturity.

Continuous Gross Unrealized Losses for Fixed Maturity and Equity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity and equity 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. The unrealized loss amounts include the noncredit component of OTTI loss.

	September 30, 2013								December 31, 2012
	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
	(In millions, except number of securities)
Fixed maturity securities:
U.S. corporate	$	2,665	$	159	$	456	$	56	$	784	$	16	$	621	$	66
U.S. Treasury and agency	2,520		153		—		—		200		—		—		—
Foreign corporate	1,494		58		136		10		494		8		203		18
RMBS	1,141		32		469		72		62		6		781		108
ABS	495		2		153		9		208		1		266		17
State and political subdivision	407		30		57		15		44		2		55		25
CMBS	149		4		37		—		59		1		101		5
Foreign government	182		15		—		—		116		2		—		—
Total fixed maturity securities	$	9,053	$	453	$	1,308	$	162	$	1,967	$	36	$	2,027	$	239
Equity securities:
Non-redeemable preferred stock	$	103	$	18	$	34	$	9	$	—	$	—	$	50	$	22
Common stock	2		3		7		—		10		1		7		—
Total equity securities	$	105	$	21	$	41	$	9	$	10	$	1	$	57	$	22
Total number of securities in an unrealized loss position	1,076				302				327				420

Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities

As described more fully in Notes 1 and 7 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report, the Company performs a regular evaluation of all investment classes for impairment, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy, in order to evaluate whether such investments are other-than-temporarily impaired.

Current Period Evaluation

Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired at September 30, 2013. Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), and changes in credit ratings, collateral valuation, interest rates and credit spreads. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods.

Gross unrealized losses on fixed maturity securities in an unrealized loss position increased $340 million during the nine months endedSeptember 30, 2013 from $275 million to $615 million. The increase in gross unrealized losses for the nine months endedSeptember 30, 2013 was primarily attributable to an increase in interest rates.

At September 30, 2013, $59 million of the total $615 million of gross unrealized losses was from 16 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Investment Grade Fixed Maturity Securities

Of the $59 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $33 million, or 56%, is related to gross unrealized losses on nine investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads and, with respect to fixed rate fixed maturity securities, rising interest rates since purchase.

Below Investment Grade Fixed Maturity Securities

Of the $59 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $26 million, or 44%, is related to gross unrealized losses on seven below investment grade fixed maturity securities. Unrealized losses on below investment grade fixed maturity securities are principally related to non-agency RMBS (primarily alternative residential mortgage loans) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over the financial services industry sector, unemployment levels and valuations of residential real estate supporting non-agency RMBS. Management evaluates these non-agency RMBS based on actual and projected cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security.

Equity Securities

Equity securities in an unrealized loss position increased $7 million during the nine months endedSeptember 30, 2013 from $23 million to $30 million. Of the $30 million, $6 million was from two equity securities with gross unrealized losses of 20% or more of cost for 12 months or greater, all of which were financial services industry investment grade non-redeemable preferred stock, of which 38% were rated A or better.

Fair Value Option Securities

See Note 6 for tables that present fair value option (“FVO”) securities. See “— Net Investment Income” and “— Net Investment Gains (Losses)” for the net investment income recognized on FVO securities and the related changes in estimated fair value subsequent to purchase included in net investment income and net investment gains (losses) for securities still held as of the end of the respective periods, as applicable.

Mortgage Loans

Mortgage Loans Held-for-Investment and Held-for-Sale by Portfolio Segment

Mortgage loans are summarized as follows at:

	September 30, 2013					December 31, 2012
	Carrying Value			% of Total		Carrying Value			% of Total
	(In millions)					(In millions)
Mortgage loans held-for-investment:
Commercial	$	5,114		59.9	%	$	5,266		57.5	%
Agricultural	1,310			15.3		1,260			13.8
Subtotal (1)	6,424			75.2		6,526			71.3
Valuation allowances	(34		)	(0.4	)	(35		)	(0.4	)
Subtotal mortgage loans held-for-investment, net	6,390			74.8		6,491			70.9
Commercial mortgage loans held by CSEs	2,096			24.5		2,666			29.1
Total mortgage loans held-for-investment, net	8,486			99.3		9,157			100.0
Mortgage loans held-for-sale	63			0.7		—			—
Total mortgage loans, net	$	8,549		100.0	%	$	9,157		100.0	%

____________

(1) There were no mortgage loan purchases for the three months ended September 30, 2013. Purchases of mortgage loans were $5 million for the nine months ended September 30, 2013 and $27 million for both the three months and nine months endedSeptember 30, 2012.

See “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”).

See “— Related Party Investment Transactions” for discussion of related party mortgage loans.

Mortgage Loans and Valuation Allowance by Portfolio Segment

The carrying value prior to valuation allowance (“recorded investment”) in mortgage loans held-for-investment, by portfolio segment, by method of evaluation of credit loss, and the related valuation allowances, by type of credit loss, were as follows at:

	September 30, 2013						December 31, 2012
	Commercial		Agricultural		Total		Commercial		Agricultural		Total
	(In millions)
Mortgage loans:
Evaluated individually for credit losses	$	72	$	4	$	76	$	76	$	—	$	76
Evaluated collectively for credit losses	5,042		1,306		6,348		5,190		1,260		6,450
Total mortgage loans	5,114		1,310		6,424		5,266		1,260		6,526
Valuation allowances:
Specific credit losses	7		—		7		11		—		11
Non-specifically identified credit losses	23		4		27		21		3		24
Total valuation allowances	30		4		34		32		3		35
Mortgage loans, net of valuation allowances	$	5,084	$	1,306	$	6,390	$	5,234	$	1,257	$	6,491

Valuation Allowance Rollforward by Portfolio Segment

The changes in the valuation allowance, by portfolio segment, were as follows:

	Three Months Ended September 30,
	2013								2012
	Commercial			Agricultural		Total			Commercial			Agricultural		Total
	(In millions)
Balance, beginning of period	$	30		$	4	$	34		$	39		$	3	$	42
Provision (release)	—			—		—			(1		)	—		(1		)
Balance, end of period	$	30		$	4	$	34		$	38		$	3	$	41
	Nine Months Ended September 30,
	2013								2012
	Commercial			Agricultural		Total			Commercial			Agricultural		Total
	(In millions)
Balance, beginning of period	$	32		$	3	$	35		$	58		$	3	$	61
Provision (release)	(2		)	1		(1		)	(20		)	—		(20		)
Balance, end of period	$	30		$	4	$	34		$	38		$	3	$	41

Credit Quality of Commercial Mortgage Loans

Information about the credit quality of commercial mortgage loans held-for-investment is presented below at:

	Recorded Investment
	Debt Service Coverage Ratios								% of Total		Estimated Fair Value		% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(In millions)										(In millions)
September 30, 2013:
Loan-to-value ratios:
Less than 65%	$	3,868	$	142	$	57	$	4,067	79.5	%	$	4,337	80.5	%
65% to 75%	898		10		27		935		18.3		951		17.6
76% to 80%	13		12		—		25		0.5		25		0.5
Greater than 80%	39		26		22		87		1.7		76		1.4
Total	$	4,818	$	190	$	106	$	5,114	100.0	%	$	5,389	100.0	%
December 31, 2012:
Loan-to-value ratios:
Less than 65%	$	3,888	$	106	$	89	$	4,083	77.5	%	$	4,459	78.5	%
65% to 75%	626		32		27		685		13.0		711		12.5
76% to 80%	343		8		57		408		7.8		428		7.6
Greater than 80%	39		28		23		90		1.7		81		1.4
Total	$	4,896	$	174	$	196	$	5,266	100.0	%	$	5,679	100.0	%

Credit Quality of Agricultural Mortgage Loans

Information about the credit quality of agricultural mortgage loans held-for-investment is presented below at:

	September 30, 2013				December 31, 2012
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(In millions)				(In millions)
Loan-to-value ratios:
Less than 65%	$	1,253	95.6	%	$	1,184	94.0	%
65% to 75%	57		4.4		76		6.0
Total	$	1,310	100.0	%	$	1,260	100.0	%

The estimated fair value of agricultural mortgage loans held-for-investment was $1.4 billion and $1.3 billion at September 30, 2013 and December 31, 2012, respectively.

Past Due and Interest Accrual Status of Mortgage Loans

The Company has a high quality, well performing mortgage loan portfolio, with 99% of mortgage loans classified as performing at September 30, 2013 and all mortgage loans classified as performing at December 31, 2012. The Company defines delinquency consistent with industry practice, when the mortgage loan is past due as follows: commercial mortgage loans — 60 days and agricultural mortgage loans — 90 days. The Company had no mortgage loans past due and one commercial mortgage loan in nonaccrual status with a recorded investment of $22 million at September 30, 2013. The Company had no mortgage loans past due and no loans in nonaccrual status at December 31, 2012.

Impaired Mortgage Loans

Information regarding impaired mortgage loans held-for-investment including those modified in a troubled debt restructuring, by portfolio segment, was as follows at:

	Loans with a Valuation Allowance								Loans without a  Valuation Allowance				All Impaired Loans
	Unpaid Principal Balance		Recorded Investment		Valuation Allowances		Carrying Value		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Carrying Value
	(In millions)
September 30, 2013:
Commercial	$	22	$	22	$	7	$	15	$	53	$	50	$	75	$	65
Agricultural (1)	4		4		—		4		—		—		4		4
Total	$	26	$	26	$	7	$	19	$	53	$	50	$	79	$	69
December 31, 2012:
Commercial	$	76	$	76	$	11	$	65	$	—	$	—	$	76	$	65
Agricultural	—		—		—		—		—		—		—		—
Total	$	76	$	76	$	11	$	65	$	—	$	—	$	76	$	65

____________

(1) Valuation allowance on impaired agricultural mortgage loans was less than $1 million.

Unpaid principal balance is generally prior to any charge-offs.

The average recorded investment in impaired mortgage loans held-for-investment, including those modified in a troubled debt restructuring, and the related interest income, which is primarily recognized on a cash basis, by portfolio segment, was:

	Impaired Mortgage Loans
	Three Months Ended September 30,								Nine Months Ended September 30,
	2013				2012				2013				2012
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(In millions)
Commercial	$	72	$	—	$	47	$	—	$	73	$	2	$	39	$	1
Agricultural	4		—		—		—		2		—		—		—
Total	$	76	$	—	$	47	$	—	$	75	$	2	$	39	$	1

Mortgage Loans Modified in a Troubled Debt Restructuring

There were no mortgage loans modified in a troubled debt restructuring during the three months ended September 30, 2013. There was one agricultural mortgage loan modified in a troubled debt restructuring with a pre-modification and post-modification carrying value of $4 million during the nine months ended September 30, 2013. There were no mortgage loans modified in a troubled debt restructuring during the three months and nine months endedSeptember 30, 2012.

During the three months and nine months endedSeptember 30, 2013 and 2012, the Company had no mortgage loans with subsequent payment defaults that were modified in a troubled debt restructuring during the previous 12 months. Payment default is determined in the same manner as delinquency status as described above.

Cash Equivalents

The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $939 million and $654 million at September 30, 2013 and December 31, 2012, respectively.

Net Unrealized Investment Gains (Losses)

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

	September 30, 2013			December 31, 2012
	(In millions)
Fixed maturity securities	$	2,315		$	5,019
Fixed maturity securities with noncredit OTTI losses in AOCI	(44		)	(64		)
Total fixed maturity securities	2,271			4,955
Equity securities	5			12
Derivatives	79			243
Short-term investments	—			(2		)
Other	(41		)	(17		)
Subtotal	2,314			5,191
Amounts allocated from:
Insurance liability loss recognition	1			(739		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	—			4
DAC and VOBA	(309		)	(671		)
Subtotal	(308		)	(1,406		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	16			22
Deferred income tax benefit (expense)	(736		)	(1,358		)
Net unrealized investment gains (losses)	$	1,286		$	2,449

The changes in fixed maturity securities with noncredit OTTI losses included in AOCI were as follows:

	Nine Months   Ended   September 30, 2013			Year   Ended   December 31, 2012
	(In millions)
Balance, beginning of period	$	(64	)	$	(125	)
Noncredit OTTI losses and subsequent changes recognized (1)	11			(3		)
Securities sold with previous noncredit OTTI loss	18			35
Subsequent changes in estimated fair value	(9		)	29
Balance, end of period	$	(44	)	$	(64	)

____________

(1) Noncredit OTTI losses and subsequent changes recognized, net of DAC, were $9 million and $5 million for the nine months endedSeptember 30, 2013 and the year ended December 31, 2012, respectively.

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

	Nine Months   Ended   September 30, 2013
	(In millions)
Balance, beginning of period	$	2,449
Fixed maturity securities on which noncredit OTTI losses have been recognized	20
Unrealized investment gains (losses) during the period	(2,897		)
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition	740
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(4		)
DAC and VOBA	362
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(6		)
Deferred income tax benefit (expense)	622
Balance, end of period	$	1,286
Change in net unrealized investment gains (losses)	$	(1,163	)

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s stockholders’ equity, other than the U.S. government and its agencies, at both September 30, 2013 and December 31, 2012.

Securities Lending

The Company participates in a securities lending program. Elements of the securities lending program are presented below at:

	September 30, 2013		December 31, 2012
	(In millions)
Securities on loan: (1)
Amortized cost	$	6,695	$	6,154
Estimated fair value	$	6,959	$	7,339
Cash collateral on deposit from counterparties (2)	$	7,108	$	7,502
Security collateral on deposit from counterparties (3)	$	5	$	51
Reinvestment portfolio — estimated fair value	$	7,123	$	7,533

____________

(1) Included within fixed maturity securities, short-term investments, cash and cash equivalents and equity securities.

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

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

Invested Assets on Deposit and Pledged as Collateral

Invested assets on deposit and pledged as collateral are presented below at estimated fair value for cash and cash equivalents, short-term investments and fixed maturity securities and at carrying value for mortgage loans.

	September 30, 2013		December 31, 2012
	(In millions)
Invested assets on deposit (regulatory deposits)	$	57	$	58
Invested assets pledged as collateral (1)	1,432		1,569
Total invested assets on deposit and pledged as collateral	$	1,489	$	1,627

____________

(1) The Company has pledged fixed maturity securities, mortgage loans and cash and cash equivalents in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report) and derivative transactions (see Note 5).

Variable Interest Entities

The Company has invested in certain structured transactions that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity.

The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity. The Company generally uses a qualitative approach to determine whether it is the primary beneficiary. However, for VIEs that are investment companies or apply measurement principles consistent with those utilized by investment companies, the primary beneficiary is based on a risks and rewards model and is defined as the entity that will absorb a majority of a VIE’s expected losses, receive a majority of a VIE’s expected residual returns if no single entity absorbs a majority of expected losses, or both. The Company reassesses its involvement with VIEs on a quarterly basis. The use of different methodologies, assumptions and inputs in the determination of the primary beneficiary could have a material effect on the amounts presented within the consolidated financial statements.

Consolidated VIEs

The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at September 30, 2013 and December 31, 2012. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.

	September 30, 2013		December 31, 2012
	(In millions)
CSEs: (1)
Assets:
Mortgage loans (commercial mortgage loans)	$	2,096	$	2,666
Accrued investment income	11		13
Total assets	$	2,107	$	2,679
Liabilities:
Long-term debt	$	1,969	$	2,559
Other liabilities	10		13
Total liabilities	$	1,979	$	2,572

____________

(1) The Company consolidates former qualified special purpose entities (“QSPEs”) that are structured as CMBS. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in the former QSPEs of $110 million and $92 million at estimated fair value at September 30, 2013 and December 31, 2012, respectively. The long-term debt bears interest primarily at fixed rates ranging from 2.25% to 5.57%, payable primarily on a monthly basis. Interest expense related to these obligations, included in other expenses, was $30 million and $96 million for the three months and nine months endedSeptember 30, 2013, respectively, and $40 million and $125 million for the three months and nine months endedSeptember 30, 2012, respectively.

Unconsolidated VIEs

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:

	September 30, 2013				December 31, 2012
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured securities (RMBS, CMBS and ABS) (2)	$	8,715	$	8,715	$	10,347	$	10,347
U.S. and foreign corporate	548		548		651		651
Other limited partnership interests	1,573		2,047		1,408		1,930
Real estate joint ventures	68		72		71		74
Total	$	10,904	$	11,382	$	12,477	$	13,002

____________

(1) The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments of the Company. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2) For these variable interests, the Company’s involvement is limited to that of a passive investor.

As described in Note 10, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during the nine months endedSeptember 30, 2013 and 2012.

Net Investment Income

The components of net investment income were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Investment income:
Fixed maturity securities	$	523		$	531		$	1,589		$	1,595
Equity securities	3			(1		)	8			6
FVO securities — FVO general account securities (1)	—			2			1			2
Mortgage loans	82			85			247			262
Policy loans	14			14			42			44
Real estate and real estate joint ventures	10			9			36			77
Other limited partnership interests	41			18			195			115
Cash, cash equivalents and short-term investments	—			1			3			3
International joint ventures	6			—			(4		)	(3		)
Other	(4		)	1			(3		)	4
Subtotal	675			660			2,114			2,105
Less: Investment expenses	30			27			86			75
Subtotal, net	645			633			2,028			2,030
FVO securities — FVO contractholder-directed unit-linked investments	—			—			—			62
FVO CSEs — interest income — commercial mortgage loans	33			42			104			131
Subtotal	33			42			104			193
Net investment income	$	678		$	675		$	2,132		$	2,223

____________

(1) Changes in estimated fair value subsequent to purchase for securities still held as of the end of the respective periods included in net investment income were:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In millions)
FVO general account securities	$	1	$	—	$	—	$	—

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of affiliated net investment income and investment expenses.

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized — by sector and industry:
U.S. and foreign corporate securities — by industry:
Finance	$	—		$	—		$	(3	)	$	(7	)
Utility	—			—			—			(3		)
Communications	—			—			—			(2		)
Industrial	—			—			—			(1		)
Transportation	(3		)	(10		)	(3		)	(16		)
Total U.S. and foreign corporate securities	(3		)	(10		)	(6		)	(29		)
RMBS	(6		)	(3		)	(14		)	(13		)
OTTI losses on fixed maturity securities recognized in earnings	(9		)	(13		)	(20		)	(42		)
Fixed maturity securities — net gains (losses) on sales and disposals	(50		)	6			33			84
Total gains (losses) on fixed maturity securities	(59		)	(7		)	13			42
Total gains (losses) on equity securities:
Total OTTI losses recognized — by sector:
Non-redeemable preferred stock	—			—			(3		)	—
Common stock	—			—			—			(6		)
OTTI losses on equity securities recognized in earnings	—			—			(3		)	(6		)
Equity securities — net gains (losses) on sales and disposals	(2		)	1			4			4
Total gains (losses) on equity securities	(2		)	1			1			(2		)
FVO securities — FVO general account securities — changes in estimated fair value subsequent to purchase	—			(1		)	—			—
Mortgage loans	(1		)	—			—			20
Real estate and real estate joint ventures	—			—			—			(3		)
Other limited partnership interests	—			2			1			3
Other investment portfolio gains (losses)	1			2			2			2
Subtotal — investment portfolio gains (losses)	(61		)	(3		)	17			62
FVO CSEs — changes in estimated fair value subsequent to consolidation:
Commercial mortgage loans	(14		)	9			(50		)	8
Long-term debt — related to commercial mortgage loans	18			(2		)	68			9
Non-investment portfolio gains (losses)	6			—			(4		)	—
Subtotal FVO CSEs and non-investment portfolio gains (losses)	10			7			14			17
Total net investment gains (losses)	$	(51	)	$	4		$	31		$	79

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of affiliated net investment gains (losses) related to transfers of invested assets to affiliates.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were $6 million and ($3) million for the three months and nine months endedSeptember 30, 2013, respectively, and $1 million and $2 million for the three months and nine months endedSeptember 30, 2012, respectively.

Sales or Disposals and Impairments of Fixed Maturity and Equity Securities

Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) are as shown in the tables below. Investment gains and losses on sales of securities are determined on a specific identification basis. 

	Three Months Ended September 30,
	2013			2012			2013			2012			2013			2012
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)
Proceeds	$	3,914		$	1,354		$	13		$	5		$	3,927		$	1,359
Gross investment gains	$	9		$	13		$	—		$	2		$	9		$	15
Gross investment losses	(59		)	(7		)	(2		)	(1		)	(61		)	(8		)
Total OTTI losses recognized in earnings:
Credit-related	(9		)	(13		)	—			—			(9		)	(13		)
Other (1)	—			—			—			—			—			—
Total OTTI losses recognized in earnings	(9		)	(13		)	—			—			(9		)	(13		)
Net investment gains (losses)	$	(59	)	$	(7	)	$	(2	)	$	1		$	(61	)	$	(6	)
	Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012
	Fixed Maturity Securities						Equity Securities						Total
	(In millions)
Proceeds	$	9,269		$	4,348		$	55		$	31		$	9,324		$	4,379
Gross investment gains	$	124		$	117		$	10		$	9		$	134		$	126
Gross investment losses	(91		)	(33		)	(6		)	(5		)	(97		)	(38		)
Total OTTI losses recognized in earnings:
Credit-related	(17		)	(35		)	—			—			(17		)	(35		)
Other (1)	(3		)	(7		)	(3		)	(6		)	(6		)	(13		)
Total OTTI losses recognized in earnings	(20		)	(42		)	(3		)	(6		)	(23		)	(48		)
Net investment gains (losses)	$	13		$	42		$	1		$	(2	)	$	14		$	40

____________

(1) Other OTTI losses recognized in earnings include impairments on (i) equity securities, (ii) perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and (iii) fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value.

Credit Loss Rollforward

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (loss) (“OCI”): 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Balance, beginning of period	$	58		$	56		$	59		$	55
Additions:
Initial impairments — credit loss OTTI recognized on securities not previously impaired	—			1			1			5
Additional impairments — credit loss OTTI recognized on securities previously impaired	5			2			12			9
Reductions:
Sales (maturities, pay downs or prepayments) during the period of securities previously impaired as credit loss OTTI	(4		)	(7		)	(13		)	(11		)
Increases in cash flows — accretion of previous credit loss OTTI	—			—			—			(6		)
Balance, end of period	$	59		$	52		$	59		$	52

Related Party Investment Transactions

In the normal course of business, the Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Invested assets transferred to and from affiliates were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In millions)
Estimated fair value of invested assets transferred to affiliates	$	—	$	—	$	13	$	—
Amortized cost of invested assets transferred to affiliates	$	—	$	—	$	12	$	—
Net investment gains (losses) recognized on transfers	$	—	$	—	$	1	$	—
Estimated fair value of invested assets transferred from affiliates	$	—	$	—	$	83	$	—

The Company receives investment administrative services from an affiliate. The related investment administrative service charges were $17 million and $51 million for the three months and nine months endedSeptember 30, 2013, respectively, and $16 million and $50 million for the three months and nine months endedSeptember 30, 2012, respectively. The Company also had additional affiliated net investment income (loss) of less than $1 million and ($1) million for the three months and nine months endedSeptember 30, 2013, respectively, and less than $1 million for both the three months and nine months endedSeptember 30, 2012.

Below is a summary of certain affiliated loans, which are more fully described in Note 7 of the Notes of the Consolidated Financial Statements in the 2012 Annual Report.

The Company has loans outstanding to wholly-owned real estate subsidiaries of an affiliate, Metropolitan Life Insurance Company (“MLIC”), which are included in mortgage loans. The carrying value of these loans was $304 million and $306 million at September 30, 2013 and December 31, 2012, respectively. The loans to affiliates are secured by interests in the real estate subsidiaries, which own operating real estate with a fair value in excess of the loans. Net investment income from these loans was $4 million and $12 million for both the three months and nine months endedSeptember 30, 2013 and 2012, respectively.

The Company has affiliated loans outstanding to MetLife, which are included in other invested assets, totaling $430 million at both September 30, 2013 and December 31, 2012. Net investment income from these loans was $6 million and $18 million for both the three months and nine months endedSeptember 30, 2013 and 2012, respectively.