Investments (Tables)

6 Months Ended

Jun. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of June 30, 2019:

	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives(2)		Fair Value		OTTI(3)(4)
Fixed maturities:
U.S. Treasuries	$	450	$	126	$	—	$	—	$	576	$	—
State, municipalities and political subdivisions	752		62		1		—		813		—
U.S. corporate public securities	7,340		762		32		—		8,070		—
U.S. corporate private securities	3,711		244		25		—		3,930		—
Foreign corporate public securities and foreign governments(1)	2,500		211		15		—		2,696		—
Foreign corporate private securities(1)	3,160		156		9		—		3,307		—
Residential mortgage-backed securities	3,481		139		14		11		3,617		3
Commercial mortgage-backed securities	2,152		109		2		—		2,259		—
Other asset-backed securities	1,428		16		12		—		1,432		1
Total fixed maturities, including securities pledged	24,974		1,825		110		11		26,700		4
Less: Securities pledged	869		113		7		—		975		—
Total fixed maturities	$	24,105	$	1,712	$	103	$	11	$	25,725	$	4

⁽¹⁾ Primarily U.S. dollar denominated.

⁽²⁾ Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

⁽³⁾ Represents Other-than-Temporary-Impairments ("OTTI") reported as a component of Other comprehensive income (loss).

⁽⁴⁾ Amount excludes $187 of net unrealized gains on impaired available-for-sale securities.

Available-for-sale and FVO fixed maturities were as follows as of December 31, 2018:

	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Embedded Derivatives(2)		Fair Value		OTTI(3)(4)
Fixed maturities:
U.S. Treasuries	$	651	$	87	$	—	$	—	$	738	$	—
State, municipalities and political subdivisions	754		18		8		—		764		—
U.S. corporate public securities	7,908		288		181		—		8,015		—
U.S. corporate private securities	3,686		73		106		—		3,653		—
Foreign corporate public securities and foreign governments(1)	2,551		69		80		—		2,540		—
Foreign corporate private securities(1)	3,235		37		97		—		3,175		—
Residential mortgage-backed securities	2,966		93		32		9		3,036		3
Commercial mortgage-backed securities	1,917		16		28		—		1,905		—
Other asset-backed securities	1,230		6		28		—		1,208		2
Total fixed maturities, including securities pledged	24,898		687		560		9		25,034		5
Less: Securities pledged	867		45		30		—		882		—
Total fixed maturities	$	24,031	$	642	$	530	$	9	$	24,152	$	5

⁽¹⁾ Primarily U.S. dollar denominated.

⁽²⁾ Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

⁽³⁾ Represents OTTI reported as a component of Other comprehensive income (loss).

⁽⁴⁾ Amount excludes $137 of net unrealized gains on impaired available-for-sale securities.

Investments Classified by Contractual Maturity Date

The amortized cost and fair value of fixed maturities, including securities pledged, as of June 30, 2019, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.

	Amortized Cost		Fair Value
Due to mature:
One year or less	$	582	$	587
After one year through five years	3,644		3,784
After five years through ten years	5,631		5,944
After ten years	8,056		9,077
Mortgage-backed securities	5,633		5,876
Other asset-backed securities	1,428		1,432
Fixed maturities, including securities pledged	$	24,974	$	26,700

U.S. and Foreign Corporate Securities by Industry

The following tables present the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:

	Amortized Cost		Gross Unrealized Capital Gains		Gross Unrealized Capital Losses		Fair Value
June 30, 2019
Communications	$	1,083	$	133	$	—	$	1,216
Financial	2,628		246		4		2,870
Industrial and other companies	7,236		521		26		7,731
Energy	1,722		162		32		1,852
Utilities	2,885		219		12		3,092
Transportation	809		64		2		871
Total	$	16,363	$	1,345	$	76	$	17,632
December 31, 2018
Communications	$	1,139	$	55	$	21	$	1,173
Financial	2,707		101		47		2,761
Industrial and other companies	7,604		152		214		7,542
Energy	1,884		55		81		1,858
Utilities	2,974		80		74		2,980
Transportation	729		14		17		726
Total	$	17,037	$	457	$	454	$	17,040

Schedule of Securities Borrowed Under Securities Lending Transactions

The following table presents borrowings under securities lending transactions by asset class pledged for the dates indicated:

	June 30, 2019 (1)(2)		December 31, 2018 (1)(2)
U.S. Treasuries	$	185	$	92
U.S. corporate public securities	446		523
Short-term Investments	51		—
Foreign corporate public securities and foreign governments	212		170
Equity Securities	—		1
Payables under securities loan agreements	$	894	$	786

⁽¹⁾ As of June 30, 2019 and December 31, 2018, borrowings under securities lending transactions include cash collateral of $769 and $719, respectively.

Schedule of Unrealized Loss on Investments

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of June 30, 2019:

	Twelve Months or Less Below Amortized Cost					More Than Twelve Months Below Amortized Cost					Total
	Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses
U.S. Treasuries	$	—	$	—		$	13	$	—	*	$	13	$	—	*
State, municipalities and political subdivisions	3		—		*	20		1			23		1
U.S. corporate public securities	173		3			393		29			566		32
U.S. corporate private securities	162		3			312		22			474		25
Foreign corporate public securities and foreign governments	58		1			172		14			230		15
Foreign corporate private securities	52		1			306		8			358		9
Residential mortgage-backed	468		8			272		6			740		14
Commercial mortgage-backed	111		1			39		1			150		2
Other asset-backed	386		5			373		7			759		12
Total	$	1,413	$	22		$	1,900	$	88		$	3,313	$	110
Total number of securities in an unrealized loss position	281					404					685

*Less than $1.

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of December 31, 2018:

	Twelve Months or Less Below Amortized Cost				More Than Twelve Months Below Amortized Cost					Total
	Fair Value		Unrealized Capital Losses		Fair Value		Unrealized Capital Losses			Fair Value		Unrealized Capital Losses
U.S. Treasuries	$	—	$	—	$	15	$	—	*	$	15	$	—	*
State, municipalities and political subdivisions	191		3		88		5			279		8
U.S. corporate public securities	3,060		131		535		50			3,595		181
U.S. corporate private securities	1,502		40		579		66			2,081		106
Foreign corporate public securities and foreign governments	1,159		54		169		26			1,328		80
Foreign corporate private securities	1,504		77		221		20			1,725		97
Residential mortgage-backed	560		11		412		21			972		32
Commercial mortgage-backed	865		16		312		12			1,177		28
Other asset-backed	892		27		61		1			953		28
Total	$	9,733	$	359	$	2,392	$	201		$	12,125	$	560
Total number of securities in an unrealized loss position	1,894				550					2,444

*Less than $1.

Other than Temporary Impairment, Credit Losses Recognized in Earnings

Evaluating Securities for Other-Than-Temporary Impairments

The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

The following table identifies the Company's impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:

	Three Months Ended June 30,
	2019				2018
	Impairment			No. of Securities	Impairment		No. of Securities
Foreign corporate public securities and foreign governments(1)	$	1		1	$	—	—
Residential mortgage-backed	—		*	7	1		21
Other asset-backed	—		*	1	—		—
Total	$	1		9	$	1	21
Credit Impairments	$	—			$	1
Intent Impairments	$	1			$	—
(1) Primarily U.S. dollar denominated.
*Less than $1.
	Six Months Ended June 30,
	2019				2018
	Impairment			No. of Securities	Impairment		No. of Securities
Foreign corporate public securities and foreign governments(1)	$	1		1	$	—	—
Foreign corporate private securities(1)	18			3	9		1
Residential mortgage-backed	—		*	13	1		24
Other asset-backed	—		*	3	—		—
Total	$	19		20	$	10	25
Credit Impairments	$	18			$	10
Intent Impairments	$	1			$	—
(1) Primarily U.S. dollar denominated.
*Less than $1.

The Company may sell securities during the period in which fair value has declined below amortized cost for fixed maturities. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. Accordingly, these factors may lead the Company to record additional intent related capital losses.

The following table presents the amount of credit impairments on fixed maturities for which a portion of the OTTI loss was recognized in Other comprehensive income (loss) and the corresponding changes in such amounts for the periods indicated:

	Three Months Ended June 30,
	2019		2018
Balance at April 1	$	5	$	6
Additional credit impairments:
On securities not previously impaired	—		—
On securities previously impaired	—		—
Reductions:
Securities intent impaired	—		—
Increase in cash flows	—		—
Securities sold, matured, prepaid or paid down	—		1
Balance at June 30	$	5	$	5
*Less than $1.
	Six Months Ended June 30,
	2019		2018
Balance at January 1	$	5	$	16
Additional credit impairments:
On securities previously impaired	—		—
Reductions:
Increase in cash flows	—		—
Securities sold, matured, prepaid or paid down	—		11
Balance at June 30	$	5	$	5

Schedule of Mortgage Loans Real Estate and Valuation Allowance

The following table summarizes the Company's investment in mortgage loans as of the dates indicated:

	June 30, 2019						December 31, 2018
	Impaired		Non Impaired		Total		Impaired		Non Impaired			Total
Commercial mortgage loans	$	4	$	4,737	$	4,741	$	4	$	4,915		$	4,919
Collective valuation allowance for losses	—		—		—		N/A		(1		)	(1		)
Total net commercial mortgage loans	$	4	$	4,737	$	4,741	$	4	$	4,914		$	4,918
N/A- Not Applicable

Financing Receivable, Allowance for Credit Loss

The following table summarizes the activity in the allowance for losses for commercial mortgage loans for the periods indicated:

	June 30, 2019			December 31, 2018
Collective valuation allowance for losses, balance at January 1	$	1		$	1
Addition to (reduction of) allowance for losses	(1		)	—
Collective valuation allowance for losses, end of period	$	—		$	1

Impaired Financing Receivables

The carrying values and unpaid principal balances of impaired mortgage loans were as follows as of the dates indicated:

	June 30, 2019		December 31, 2018
Impaired loans, gross	$	4	$	4
Less: Allowances for losses on impaired loans	—		—
Impaired loans, net	$	4	$	4
Unpaid principal balance of impaired loans	$	5	$	5

The following table presents information on the average investment during the period in impaired loans and interest income recognized on impaired and troubled debt restructured loans for the periods indicated:

	Six Months Ended June 30,
	2019		2018
Impaired loans, average investment during the period (amortized cost)(1)	$	7	$	4
Interest income recognized on impaired loans, on an accrual basis(1)	—		—
Interest income recognized on impaired loans, on a cash basis(1)	—		—
Interest income recognized on troubled debt restructured loans, on an accrual basis	—		—
(1)Includes amounts for Troubled debt restructured loans.

Loans Receivable, Grouped by Loan to Value and Debt Service Coverage Ratio

The following tables present the LTV and DSC ratios as of the dates indicated:

	Recorded Investment
	Debt Service Coverage Ratios
	> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total
June 30, 2019 (1)
Loan-to-Value Ratios:
0% - 50%	$	265	$	23	$	9	$	—	$	—	$	297	6.3	%
>50% - 60%	1,091		49		23		4		—		1,167		24.6	%
>60% - 70%	1,953		286		439		92		37		2,807		59.2	%
>70% - 80%	184		150		53		27		8		422		8.9	%
>80% and above	9		39		—		—		—		48		1.0	%
Total	$	3,502	$	547	$	524	$	123	$	45	$	4,741	100.0	%
(1) Balances do not include collective valuation allowance for losses.
	Recorded Investment
	Debt Service Coverage Ratios
	> 1.5x		>1.25x - 1.5x		>1.0x - 1.25x		< 1.0x		Commercial mortgage loans secured by land or construction loans		Total		% of Total
December 31, 2018 (1)
Loan-to-Value Ratios:
0% - 50%	$	284	$	24	$	23	$	—	$	—	$	331	6.7	%
>50% - 60%	1,133		40		11		—		—		1,184		24.1	%
>60% - 70%	2,070		328		503		34		26		2,961		60.2	%
>70% - 80%	213		87		66		19		4		389		7.9	%
>80% and above	18		5		10		—		21		54		1.1	%
Total	$	3,718	$	484	$	613	$	53	$	51	$	4,919	100.0	%
(1) Balances do not include collective valuation allowance for losses.

Mortgage Loans by Geographic Location of Collateral

Properties collateralizing mortgage loans are geographically dispersed throughout the United States, as well as diversified by property type, as reflected in the following tables as of the dates indicated:

	June 30, 2019				December 31, 2018
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Commercial Mortgage Loans by U.S. Region:
Pacific	$	1,030	21.8	%	$	994	20.2	%
South Atlantic	950		20.0	%	1,011		20.5	%
Middle Atlantic	1,023		21.7	%	1,039		21.2	%
West South Central	546		11.5	%	566		11.5	%
Mountain	443		9.3	%	458		9.3	%
East North Central	386		8.1	%	465		9.5	%
New England	85		1.8	%	75		1.5	%
West North Central	225		4.7	%	258		5.2	%
East South Central	53		1.1	%	53		1.1	%
Total Commercial mortgage loans	$	4,741	100.0	%	$	4,919	100.0	%

Mortgage Loans by Property Type of Collateral

	June 30, 2019				December 31, 2018
	Gross Carrying Value		% of Total		Gross Carrying Value		% of Total
Commercial Mortgage Loans by Property Type:
Retail	$	1,304	27.6	%	$	1,335	27.2	%
Industrial	1,282		27.1	%	1,323		26.9	%
Apartments	1,072		22.6	%	1,104		22.4	%
Office	707		14.9	%	791		16.1	%
Hotel/Motel	125		2.6	%	111		2.3	%
Mixed Use	45		0.9	%	46		0.9	%
Other	206		4.3	%	209		4.2	%
Total Commercial mortgage loans	$	4,741	100.0	%	$	4,919	100.0	%

Investment Income

Net Investment Income

The following table summarizes Net investment income for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Fixed maturities	$	354	$	341	$	706	$	664
Equity securities	1		1		3		2
Mortgage loans on real estate	55		54		109		107
Policy loans	2		3		4		5
Short-term investments and cash equivalents	1		1		2		2
Other	32		15		33		34
Gross investment income	445		415		857		814
Less: Investment expenses	17		18		35		35
Net investment income	$	428	$	397	$	822	$	779

Realized Gain (Loss) on Investments

Net realized capital gains (losses) were as follows for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Fixed maturities, available-for-sale, including securities pledged	$	3		$	(19	)	$	(13	)	$	(33	)
Fixed maturities, at fair value option	53			(82		)	77			(181		)
Equity securities	3			2			4			—
Derivatives	(50		)	6			(82		)	11
Embedded derivatives - fixed maturities	1			(2		)	2			(4		)
Guaranteed benefit derivatives	(13		)	12			(13		)	32
Other investments	1			—			(1		)	5
Net realized capital gains (losses)	$	(2	)	$	(83	)	$	(26	)	$	(170	)

Gain (Loss) on Securities

Proceeds from the sale of fixed maturities, available-for-sale, and equity securities and the related gross realized gains and losses, before tax, were as follows for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Proceeds on sales	$	352	$	1,180	$	1,575	$	1,840
Gross gains	7		7		19		11
Gross losses	3		20		14		27