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Investments (Tables)
 9 Months Ended
Sep. 30, 2017
Investments [Abstract]  
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value
The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows:
($ in millions)
Amortized cost
 
Gross unrealized
 
Fair
value
 
 
Gains
 
Losses
 
September 30, 2017
 

 
 

 
 

 
 

U.S. government and agencies
$
3,843

 
$
65

 
$
(8
)
 
$
3,900

Municipal
7,484

 
332

 
(22
)
 
7,794

Corporate
43,259

 
1,419

 
(132
)
 
44,546

Foreign government
1,077

 
30

 
(14
)
 
1,093

Asset-backed securities (“ABS”)
1,263

 
16

 
(9
)
 
1,270

Residential mortgage-backed securities (“RMBS”)
512

 
101

 
(2
)
 
611

Commercial mortgage-backed securities (“CMBS”)
149

 
8

 
(4
)
 
153

Redeemable preferred stock
21

 
3

 
—

 
24

Total fixed income securities
$
57,608

 
$
1,974

 
$
(191
)
 
$
59,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 

 
 

 
 

 
 

U.S. government and agencies
$
3,572

 
$
74

 
$
(9
)
 
$
3,637

Municipal
7,116

 
304

 
(87
)
 
7,333

Corporate
42,742

 
1,178

 
(319
)
 
43,601

Foreign government
1,043

 
36

 
(4
)
 
1,075

ABS
1,169

 
13

 
(11
)
 
1,171

RMBS
651

 
85

 
(8
)
 
728

CMBS
262

 
17

 
(9
)
 
270

Redeemable preferred stock
21

 
3

 
—

 
24

Total fixed income securities
$
56,576

 
$
1,710

 
$
(447
)
 
$
57,839
Schedule for fixed income securities based on contractual maturities
The scheduled maturities for fixed income securities are as follows as of September 30, 2017:
($ in millions)
Amortized cost
 
Fair value
Due in one year or less
$
4,392

 
$
4,415

Due after one year through five years
29,466

 
30,044

Due after five years through ten years
16,604

 
17,042

Due after ten years
5,222

 
5,856

 
55,684

 
57,357

ABS, RMBS and CMBS
1,924

 
2,034

Total
$
57,608

 
$
59,391
Schedule of net investment income
Net investment income is as follows:
($ in millions)
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Fixed income securities
$
519

 
$
508

 
$
1,564

 
$
1,546

Equity securities
37

 
31

 
130

 
103

Mortgage loans
52

 
56

 
157

 
162

Limited partnership interests
223

 
136

 
596

 
383

Short-term investments
9

 
4

 
21

 
11

Other
58

 
55

 
174

 
163

Investment income, before expense
898

 
790

 
2,642

 
2,368

Investment expense
(55
)
 
(42
)
 
(154
)
 
(127
)
Net investment income
$
843

 
$
748

 
$
2,488

 
$
2,241
Schedule of realized capital gains and losses by asset type
Realized capital gains and losses by asset type are as follows:
($ in millions)
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Fixed income securities
$
41

 
$
(1
)
 
$
78

 
$
(48
)
Equity securities
57

 
45

 
182

 
(34
)
Mortgage loans
1

 
—

 
1

 
1

Limited partnership interests
21

 
12

 
92

 
25

Derivatives
(17
)
 
(15
)
 
(40
)
 
(22
)
Other
—

 
(8
)
 
5

 
(14
)
Realized capital gains and losses
$
103

 
$
33

 
$
318

 
$
(92
)
Schedule of realized capital gains and losses by transaction type
Realized capital gains and losses by transaction type are as follows:
($ in millions)
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Impairment write-downs
$
(23
)
 
$
(63
)
 
$
(94
)
 
$
(185
)
Change in intent write-downs
(5
)
 
(10
)
 
(43
)
 
(48
)
Net other-than-temporary impairment losses recognized in earnings
(28
)
 
(73
)
 
(137
)
 
(233
)
Sales and other
148

 
121

 
495

 
166

Valuation and settlements of derivative instruments
(17
)
 
(15
)
 
(40
)
 
(25
)
Realized capital gains and losses
$
103

 
$
33

 
$
318

 
$
(92
)
Schedule of other-than-temporary impairment losses by asset type
Other-than-temporary impairment losses by asset type are as follows:
($ in millions)
Three months ended September 30, 2017
 
Three months ended September 30, 2016
 
Gross
 
Included
 in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

Corporate
$
—

 
$
—

 
$
—

 
$
(13
)
 
$
—

 
$
(13
)
ABS
—

 
(1
)
 
(1
)
 
—

 
—

 
—

RMBS
—

 
—

 
—

 
(1
)
 
—

 
(1
)
CMBS
(1
)
 
(1
)
 
(2
)
 
(3
)
 
—

 
(3
)
Total fixed income securities
(1
)
 
(2
)
 
(3
)
 
(17
)
 
—

 
(17
)
Equity securities
(8
)
 
—

 
(8
)
 
(27
)
 
—

 
(27
)
Mortgage loans
(1
)
 
—

 
(1
)
 
—

 
—

 
—

Limited partnership interests
(16
)
 
—

 
(16
)
 
(22
)
 
—

 
(22
)
Other
—

 
—

 
—

 
(7
)
 
—

 
(7
)
Other-than-temporary impairment losses
$
(26
)
 
$
(2
)
 
$
(28
)
 
$
(73
)
 
$
—

 
$
(73
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2017
 
Nine months ended September 30, 2016
 
Gross
 
Included
 in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

Municipal
$
(1
)
 
$
(2
)
 
$
(3
)
 
$
—

 
$
—

 
$
—

Corporate
(9
)
 
3

 
(6
)
 
(30
)
 
7

 
(23
)
ABS
(1
)
 
(1
)
 
(2
)
 
(6
)
 
—

 
(6
)
RMBS
(1
)
 
(3
)
 
(4
)
 
(1
)
 
—

 
(1
)
CMBS
(9
)
 
1

 
(8
)
 
(7
)
 
1

 
(6
)
Total fixed income securities
(21
)
 
(2
)
 
(23
)
 
(44
)
 
8

 
(36
)
Equity securities
(77
)
 
—

 
(77
)
 
(155
)
 
—

 
(155
)
Mortgage loans
(1
)
 
—

 
(1
)
 
—

 
—

 
—

Limited partnership interests
(32
)
 
—

 
(32
)
 
(33
)
 
—

 
(33
)
Other
(4
)
 
—

 
(4
)
 
(9
)
 
—

 
(9
)
Other-than-temporary impairment losses
$
(135
)
 
$
(2
)
 
$
(137
)
 
$
(241
)
 
$
8

 
$
(233
)
Schedule of other-than-temporary impairment losses on fixed income securities included in Accumulated Other Comprehensive Income
The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $213 million and $221 million as of September 30, 2017 and December 31, 2016, respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date.
($ in millions)
September 30, 2017
 
December 31, 2016
Municipal
$
(5
)
 
$
(8
)
Corporate
(3
)
 
(7
)
ABS
(15
)
 
(21
)
RMBS
(80
)
 
(90
)
CMBS
(5
)
 
(7
)
Total
$
(108
)
 
$
(133
)
Schedule of credit losses on fixed income securities recognized in earnings
Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of the end of the period are as follows:
($ in millions)
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Beginning balance
$
(281
)
 
$
(331
)
 
$
(318
)
 
$
(392
)
Additional credit loss for securities previously other-than-temporarily impaired
(3
)
 
(3
)
 
(15
)
 
(14
)
Additional credit loss for securities not previously other-than-temporarily impaired
—

 
(14
)
 
(8
)
 
(22
)
Reduction in credit loss for securities disposed or collected
20

 
12

 
76

 
92

Change in credit loss due to accretion of increase in cash flows
—

 
—

 
1

 
—

Ending balance
$
(264
)
 
$
(336
)
 
$
(264
)
 
$
(336
)
Schedule of unrealized net capital gains and losses
Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows:
($ in millions)
Fair
value
 
Gross unrealized
 
Unrealized net
gains (losses)
September 30, 2017
 
Gains
 
Losses
 
Fixed income securities
$
59,391

 
$
1,974

 
$
(191
)
 
$
1,783

Equity securities
6,434

 
1,006

 
(40
)
 
966

Short-term investments
2,198

 
—

 
—

 
—

Derivative instruments (1)
1

 
2

 
(4
)
 
(2
)
Equity method (“EMA”) limited partnerships (2)
 

 
 

 
 

 
—

Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
2,747

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves (3)
 

 
 

 
 

 
—

DAC and DSI (4)
 

 
 

 
 

 
(203
)
Amounts recognized
 

 
 

 
 

 
(203
)
Deferred income taxes
 

 
 

 
 

 
(893
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
1,651

_______________
(1) 
Included in the fair value of derivative instruments is $1 million classified as assets.
(2) 
Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable.
(3) 
The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment, if any, primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.
(4) 
The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.
($ in millions)
Fair
value
 
Gross unrealized
 
Unrealized net
gains (losses)
December 31, 2016
 
Gains
 
Losses
 
Fixed income securities
$
57,839

 
$
1,710

 
$
(447
)
 
$
1,263

Equity securities
5,666

 
594

 
(85
)
 
509

Short-term investments
4,288

 
—

 
—

 
—

Derivative instruments (1)
5

 
5

 
(3
)
 
2

EMA limited partnerships
 

 
 

 
 

 
(4
)
Unrealized net capital gains and losses, pre-tax
 

 
 

 
 

 
1,770

Amounts recognized for:
 

 
 

 
 

 
 

Insurance reserves
 

 
 

 
 

 
—

DAC and DSI
 

 
 

 
 

 
(146
)
Amounts recognized
 

 
 

 
 

 
(146
)
Deferred income taxes
 

 
 

 
 

 
(571
)
Unrealized net capital gains and losses, after-tax
 

 
 

 
 

 
$
1,053

_______________
(1) Included in the fair value of derivative instruments is $5 million classified as assets.
Schedule of change in unrealized net capital gains and losses
The change in unrealized net capital gains and losses for the nine months ended September 30, 2017 is as follows:
($ in millions)
 
Fixed income securities
$
520

Equity securities
457

Derivative instruments
(4
)
EMA limited partnerships
4

Total
977

Amounts recognized for:
 

Insurance reserves
—

DAC and DSI
(57
)
Amounts recognized
(57
)
Deferred income taxes
(322
)
Increase in unrealized net capital gains and losses, after-tax
$
598
Schedule of gross unrealized losses and fair value of available for sale securities by length of time
The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position.
($ in millions)
Less than 12 months
 
12 months or more
 
Total
unrealized
losses
 
Number
of issues
 
Fair
value
 
Unrealized
losses
 
Number
of issues
 
Fair
value
 
Unrealized
losses
 
September 30, 2017
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
64

 
$
2,625

 
$
(7
)
 
7

 
$
93

 
$
(1
)
 
$
(8
)
Municipal
938

 
1,736

 
(14
)
 
83

 
172

 
(8
)
 
(22
)
Corporate
560

 
7,468

 
(74
)
 
94

 
1,370

 
(58
)
 
(132
)
Foreign government
68

 
697

 
(14
)
 
—

 
—

 
—

 
(14
)
ABS
44

 
379

 
(1
)
 
10

 
34

 
(8
)
 
(9
)
RMBS
84

 
42

 
—

 
176

 
57

 
(2
)
 
(2
)
CMBS
5

 
20

 
(2
)
 
4

 
15

 
(2
)
 
(4
)
Total fixed income securities
1,763

 
12,967

 
(112
)
 
374

 
1,741

 
(79
)
 
(191
)
Equity securities
129

 
544

 
(30
)
 
17

 
48

 
(10
)
 
(40
)
Total fixed income and equity securities
1,892

 
$
13,511

 
$
(142
)
 
391

 
$
1,789

 
$
(89
)
 
$
(231
)
Investment grade fixed income securities
1,689

 
$
12,345

 
$
(96
)
 
323

 
$
1,530

 
$
(53
)
 
$
(149
)
Below investment grade fixed income securities
74

 
622

 
(16
)
 
51

 
211

 
(26
)
 
(42
)
Total fixed income securities
1,763

 
$
12,967

 
$
(112
)
 
374

 
$
1,741

 
$
(79
)
 
$
(191
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
46

 
$
943

 
$
(9
)
 
—

 
$
—

 
$
—

 
$
(9
)
Municipal
1,310

 
3,073

 
(76
)
 
8

 
29

 
(11
)
 
(87
)
Corporate
862

 
13,343

 
(256
)
 
83

 
678

 
(63
)
 
(319
)
Foreign government
41

 
225

 
(4
)
 
—

 
—

 
—

 
(4
)
ABS
31

 
222

 
(1
)
 
14

 
109

 
(10
)
 
(11
)
RMBS
89

 
53

 
(1
)
 
179

 
91

 
(7
)
 
(8
)
CMBS
15

 
59

 
(4
)
 
4

 
15

 
(5
)
 
(9
)
Redeemable preferred stock
1

 
—

 
—

 
—

 
—

 
—

 
—

Total fixed income securities
2,395

 
17,918

 
(351
)
 
288

 
922

 
(96
)
 
(447
)
Equity securities
195

 
654

 
(56
)
 
46

 
165

 
(29
)
 
(85
)
Total fixed income and equity securities
2,590

 
$
18,572

 
$
(407
)
 
334

 
$
1,087

 
$
(125
)
 
$
(532
)
Investment grade fixed income securities
2,202

 
$
15,678

 
$
(293
)
 
201

 
$
493

 
$
(51
)
 
$
(344
)
Below investment grade fixed income securities
193

 
2,240

 
(58
)
 
87

 
429

 
(45
)
 
(103
)
Total fixed income securities
2,395

 
$
17,918

 
$
(351
)
 
288

 
$
922

 
$
(96
)
 
$
(447
)
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution
The following table reflects the carrying value of non-impaired fixed rate and variable rate mortgage loans summarized by debt service coverage ratio distribution.
($ in millions)
September 30, 2017
 
December 31, 2016
Debt service coverage ratio distribution
Fixed rate
mortgage
loans
 
Variable rate
mortgage
loans
 
Total
 
Fixed rate
mortgage
loans
 
Variable rate
mortgage
loans
 
Total
Below 1.0
$
4

 
$
—

 
$
4

 
$
60

 
$
—

 
$
60

1.0 - 1.25
349

 
—

 
349

 
324

 
—

 
324

1.26 - 1.50
1,111

 
—

 
1,111

 
1,293

 
—

 
1,293

Above 1.50
2,804

 
39

 
2,843

 
2,765

 
39

 
2,804

Total non-impaired mortgage loans
$
4,268

 
$
39

 
$
4,307

 
$
4,442

 
$
39

 
$
4,481
Net carrying value of impaired mortgage loans
The net carrying value of impaired mortgage loans is as follows:
($ in millions)
September 30, 2017
 
December 31, 2016
Impaired mortgage loans with a valuation allowance
$
15

 
$
5

Impaired mortgage loans without a valuation allowance
—

 
—

Total impaired mortgage loans
$
15

 
$
5

Valuation allowance on impaired mortgage loans
$
4

 
$
3
Valuation allowance on impaired mortgage loans
The rollforward of the valuation allowance on impaired mortgage loans is as follows:
($ in millions)
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Beginning balance
$
3

 
$
3

 
$
3

 
$
3

Net increase in valuation allowance
1

 
—

 
1

 
—

Charge offs
—

 
—

 
—

 
—

Ending balance
$
4

 
$
3

 
$
4

 
$
3