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Investments (Tables)
 6 Months Ended
Jun. 30, 2019
Investments [Abstract]  
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value
Amortized cost, gross unrealized gains (losses) and fair value for fixed income securities
($ in millions)
 
Amortized cost
 
Gross unrealized
 
Fair
value
 
 
Gains
 
Losses
 
June 30, 2019
 
 

 
 

 
 

 
 

U.S. government and agencies
 
$
3,980

 
$
180

 
$
—

 
$
4,160

Municipal
 
8,378

 
516

 
(3
)
 
8,891

Corporate
 
41,620

 
1,731

 
(78
)
 
43,273

Foreign government
 
766

 
26

 
(1
)
 
791

Asset-backed securities (“ABS”)
 
853

 
11

 
(5
)
 
859

Residential mortgage-backed securities (“RMBS”)
 
325

 
94

 
(1
)
 
418

Commercial mortgage-backed securities (“CMBS”)
 
65

 
8

 
(3
)
 
70

Redeemable preferred stock
 
21

 
1

 
—

 
22

Total fixed income securities
 
$
56,008

 
$
2,567

 
$
(91
)
 
$
58,484

 
 
 
 
 
 
 
 
 
December 31, 2018
 
 

 
 

 
 

 
 

U.S. government and agencies
 
$
5,386

 
$
137

 
$
(6
)
 
$
5,517

Municipal
 
8,963

 
249

 
(43
)
 
9,169

Corporate
 
40,536

 
490

 
(890
)
 
40,136

Foreign government
 
739

 
13

 
(5
)
 
747

ABS
 
1,049

 
6

 
(10
)
 
1,045

RMBS
 
377

 
89

 
(2
)
 
464

CMBS
 
63

 
8

 
(1
)
 
70

Redeemable preferred stock
 
21

 
1

 
—

 
22

Total fixed income securities
 
$
57,134

 
$
993

 
$
(957
)
 
$
57,170
Schedule for fixed income securities based on contractual maturities
Scheduled maturities for fixed income securities
($ in millions)
 
As of June 30, 2019
 
Amortized cost
 
Fair value
Due in one year or less
 
$
2,827

 
$
2,849

Due after one year through five years
 
25,060

 
25,659

Due after five years through ten years
 
17,602

 
18,394

Due after ten years
 
9,276

 
10,235

 
 
54,765

 
57,137

ABS, RMBS and CMBS
 
1,243

 
1,347

Total
 
$
56,008

 
$
58,484
Schedule of net investment income
Net investment income
 
 
 
 
($ in millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Fixed income securities
 
$
543

 
$
509

 
$
1,081

 
$
1,017

Equity securities
 
68

 
61

 
98

 
95

Mortgage loans
 
54

 
60

 
107

 
111

Limited partnership interests
 
254

 
173

 
263

 
353

Short-term investments
 
26

 
19

 
52

 
31

Other
 
67

 
68

 
130

 
134

Investment income, before expense
 
1,012

 
890

 
1,731

 
1,741

Investment expense
 
(70
)
 
(66
)
 
(141
)
 
(131
)
Net investment income 
 
$
942

 
$
824

 
$
1,590

 
$
1,610
Schedule of realized capital gains and losses by asset type
Realized capital gains (losses) by asset type
 
 
 
 
 
 
 
 
($ in millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Fixed income securities
 
$
79

 
$
(80
)
 
$
143

 
$
(123
)
Equity securities
 
178

 
74

 
731

 
(19
)
Mortgage loans
 
—

 
2

 
—

 
2

Limited partnership interests
 
21

 
(43
)
 
93

 
(33
)
Derivatives
 
22

 
23

 
(24
)
 
15

Other
 
24

 
(1
)
 
43

 
(1
)
Realized capital gains and losses
 
$
324

 
$
(25
)
 
$
986

 
$
(159
)
Schedule of realized capital gains and losses by transaction type
Realized capital gains (losses) by transaction type
 
 
 
 
 
 
 
 
($ in millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Impairment write-downs
 
$
(15
)
 
$
(4
)
 
$
(29
)
 
$
(5
)
Sales
 
117

 
(75
)
 
212

 
(117
)
Valuation of equity investments (1)
 
200

 
34

 
827

 
(49
)
Valuation and settlements of derivative instruments
 
22

 
20

 
(24
)
 
12

Realized capital gains and losses
 
$
324

 
$
(25
)
 
$
986

 
$
(159
)

(1) 
Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities
Valuation changes included in net income for investments
The following table presents the net pre-tax appreciation (decline) during 2019 and 2018 of equity securities and limited partnership interests carried at fair value still held as of June 30, 2019 and June 30, 2018 recognized in net income.
Net appreciation (decline) recognized in net income
 
 
 
 
 
 
($ in millions)
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
Equity securities
 
$
207

 
$
94

 
$
688

 
$
71

Limited partnership interests carried at fair value 
 
95

 
28

 
59

 
106

Total
 
$
302

 
$
122

 
$
747

 
$
177
Schedule of other-than-temporary impairment losses by asset type
OTTI losses by asset type
($ in millions)
 
Three months ended
 
Three months ended
 
June 30, 2019
 
June 30, 2018
 
Gross
 
Included
 in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 
 

 
 

 
 

 
 

 
 

 
 

Corporate
 
$
(3
)
 
$
(4
)
 
$
(7
)
 
$
—

 
$
—

 
$
—

ABS
 
(1
)
 
(1
)
 
(2
)
 
(1
)
 
—

 
(1
)
RMBS
 
—

 
—

 
—

 
(1
)
 
—

 
(1
)
CMBS
 
(2
)
 
2

 
—

 
—

 
—

 
—

Total fixed income securities
 
(6
)
 
(3
)
 
(9
)
 
(2
)
 
—

 
(2
)
Limited partnership interests
 
(2
)
 
—

 
(2
)
 
(1
)
 
—

 
(1
)
Other
 
(4
)
 
—

 
(4
)
 
(1
)
 
—

 
(1
)
OTTI losses
 
$
(12
)
 
$
(3
)
 
$
(15
)
 
$
(4
)
 
$
—

 
$
(4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended
 
Six months ended
 
June 30, 2019
 
June 30, 2018
 
Gross
 
Included
 in OCI
 
Net
 
Gross
 
Included
in OCI
 
Net
Fixed income securities:
 
 

 
 

 
 

 
 

 
 

 
 

Corporate
 
$
(5
)
 
$
(2
)
 
$
(7
)
 
$
—

 
$
—

 
$
—

ABS
 
(3
)
 
—

 
(3
)
 
(1
)
 
—

 
(1
)
RMBS
 
—

 
(1
)
 
(1
)
 
(1
)
 
—

 
(1
)
CMBS
 
(2
)
 
2

 
—

 
—

 
(1
)
 
(1
)
Total fixed income securities
 
(10
)
 
(1
)
 
(11
)
 
(2
)
 
(1
)
 
(3
)
Limited partnership interests
 
(3
)
 
—

 
(3
)
 
(1
)
 
—

 
(1
)
Other
 
(15
)
 
—

 
(15
)
 
(1
)
 
—

 
(1
)
OTTI losses
 
$
(28
)
 
$
(1
)
 
$
(29
)
 
$
(4
)
 
$
(1
)
 
$
(5
)
Schedule of other-than-temporary impairment losses on fixed income securities included in Accumulated Other Comprehensive Income
OTTI losses included in AOCI at the time of impairment for fixed income securities which were not included in earnings
($ in millions)
 
June 30, 2019
 
December 31, 2018
Municipal
 
$
(5
)
 
$
(5
)
Corporate
 
—

 
(2
)
ABS
 
(10
)
 
(10
)
RMBS
 
(61
)
 
(67
)
CMBS
 
(4
)
 
(2
)
Total
 
$
(80
)
 
$
(86
)
Schedule of credit losses on fixed income securities recognized in earnings
Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held as of June 30,
($ in millions)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Beginning balance
 
$
(202
)
 
$
(212
)
 
$
(204
)
 
$
(226
)
Additional credit loss for securities previously other-than-temporarily impaired
 
(6
)
 
(1
)
 
(8
)
 
(2
)
Additional credit loss for securities not previously other-than-temporarily impaired
 
(3
)
 
(1
)
 
(3
)
 
(1
)
Reduction in credit loss for securities disposed or collected
 
3

 
7

 
7

 
22

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

 
1

 
—

 
1

Ending balance
 
$
(208
)
 
$
(206
)
 
$
(208
)
 
$
(206
)
Schedule of unrealized net capital gains and losses
Unrealized net capital gains and losses included in AOCI
($ in millions)
 
Fair
value
 
Gross unrealized
 
Unrealized net
gains (losses)
June 30, 2019
 
 
Gains
 
Losses
 
Fixed income securities
 
$
58,484

 
$
2,567

 
$
(91
)
 
$
2,476

Short-term investments
 
3,740

 
—

 
—

 
—

Derivative instruments
 
—

 
—

 
(3
)
 
(3
)
Equity method of accounting (“EMA”) limited partnerships (1)
 
 

 
 

 
 

 
(1
)
Unrealized net capital gains and losses, pre-tax
 
 

 
 

 
 

 
2,472

Amounts recognized for:
 
 

 
 

 
 

 
 

Insurance reserves (2)
 
 

 
 

 
 

 
(178
)
DAC and DSI (3)
 
 

 
 

 
 

 
(194
)
Amounts recognized
 
 

 
 

 
 

 
(372
)
Deferred income taxes
 
 

 
 

 
 

 
(446
)
Unrealized net capital gains and losses, after-tax
 
 

 
 

 
 

 
$
1,654


(1) 
Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable.
(2) 
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 lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities).
(3) 
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.

Unrealized net capital gains and losses included in AOCI
($ in millions)
 
Fair
value
 
Gross unrealized
 
Unrealized net
gains (losses)
December 31, 2018
 
 
Gains
 
Losses
 
Fixed income securities
 
$
57,170

 
$
993

 
$
(957
)
 
$
36

Short-term investments
 
3,027

 
—

 
—

 
—

Derivative instruments
 
—

 
—

 
(3
)
 
(3
)
EMA limited partnerships
 
 

 
 

 
 

 
—

Unrealized net capital gains and losses, pre-tax
 
 

 
 

 
 

 
33

Amounts recognized for:
 
 

 
 

 
 

 
 

Insurance reserves
 
 

 
 

 
 

 
—

DAC and DSI
 
 

 
 

 
 

 
(33
)
Amounts recognized
 
 

 
 

 
 

 
(33
)
Deferred income taxes
 
 

 
 

 
 

 
(2
)
Unrealized net capital gains and losses, after-tax
 
 

 
 

 
 

 
$
(2
)
Schedule of change in unrealized net capital gains and losses
Change in unrealized net capital gains (losses)
($ in millions)
 
Six months ended June 30, 2019
Fixed income securities
 
$
2,440

Derivative instruments
 
—

EMA limited partnerships
 
(1
)
Total
 
2,439

Amounts recognized for:
 
 

Insurance reserves
 
(178
)
DAC and DSI
 
(161
)
Amounts recognized
 
(339
)
Deferred income taxes
 
(444
)
Increase in unrealized net capital gains and losses, after-tax
 
$
1,656
Schedule of gross unrealized losses and fair value of available for sale securities by length of time
Gross unrealized losses by unrealized loss position and credit quality as of June 30, 2019
($ in millions)
 
Investment
grade
 
Below investment grade
 
Total
Fixed income securities with unrealized loss position less than 20% of amortized cost (1) (2)
 
$
(35
)
 
$
(38
)
 
$
(73
)
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost (3) (4)
 
(12
)
 
(6
)
 
(18
)
Total unrealized losses
 
$
(47
)
 
$
(44
)
 
$
(91
)
(1) 
Includes $18 million of below investment grade fixed income securities that have been in an unrealized loss position for less than twelve months.
(2) 
Related to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired.
(3) 
Includes $2 million of below investment grade fixed income securities that have been in unrealized loss position for a period of twelve or more consecutive months.
(4) 
Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations.
Gross unrealized losses and fair value by type and length of time held 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
 
June 30, 2019
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
 
—

 
$
—

 
$
—

 
21

 
$
63

 
$
—

 
$
—

Municipal
 
85

 
133

 
—

 
103

 
98

 
(3
)
 
(3
)
Corporate
 
129

 
1,120

 
(19
)
 
271

 
3,054

 
(59
)
 
(78
)
Foreign government
 
2

 
46

 
—

 
6

 
141

 
(1
)
 
(1
)
ABS
 
18

 
121

 
(2
)
 
18

 
97

 
(3
)
 
(5
)
RMBS
 
52

 
8

 
—

 
165

 
39

 
(1
)
 
(1
)
CMBS
 
2

 
8

 
(3
)
 
1

 
—

 
—

 
(3
)
Redeemable preferred stock
 
1

 
—

 
—

 
—

 
—

 
—

 
—

Total fixed income securities
 
289

 
$
1,436

 
$
(24
)
 
585

 
$
3,492

 
$
(67
)
 
$
(91
)
Investment grade fixed income securities
 
201

 
$
801

 
$
(3
)
 
514

 
$
3,068

 
$
(44
)
 
$
(47
)
Below investment grade fixed income securities
 
88

 
635

 
(21
)
 
71

 
424

 
(23
)
 
(44
)
Total fixed income securities
 
289

 
$
1,436

 
$
(24
)
 
585

 
$
3,492

 
$
(67
)
 
$
(91
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Fixed income securities
 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. government and agencies
 
11

 
$
55

 
$
—

 
38

 
$
364

 
$
(6
)
 
$
(6
)
Municipal
 
943

 
1,633

 
(10
)
 
1,147

 
1,554

 
(33
)
 
(43
)
Corporate
 
1,735

 
19,243

 
(543
)
 
645

 
8,374

 
(347
)
 
(890
)
Foreign government
 
7

 
20

 
(1
)
 
27

 
412

 
(4
)
 
(5
)
ABS
 
64

 
454

 
(5
)
 
28

 
161

 
(5
)
 
(10
)
RMBS
 
166

 
30

 
—

 
195

 
52

 
(2
)
 
(2
)
CMBS
 
3

 
7

 
—

 
2

 
—

 
(1
)
 
(1
)
Redeemable preferred stock
 
1

 
—

 
—

 
—

 
—

 
—

 
—

Total fixed income securities
 
2,930

 
$
21,442

 
$
(559
)
 
2,082

 
$
10,917

 
$
(398
)
 
$
(957
)
Investment grade fixed income securities
 
2,348

 
$
17,485

 
$
(331
)
 
2,021

 
$
10,626

 
$
(360
)
 
$
(691
)
Below investment grade fixed income securities
 
582

 
3,957

 
(228
)
 
61

 
291

 
(38
)
 
(266
)
Total fixed income securities
 
2,930

 
$
21,442

 
$
(559
)
 
2,082

 
$
10,917

 
$
(398
)
 
$
(957
)
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution
Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution
($ in millions)
 
June 30, 2019
 
December 31, 2018
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
 
$
2

 
$
31

 
$
33

 
$
6

 
$
31

 
$
37

1.0 - 1.25
 
222

 
—

 
222

 
273

 
—

 
273

1.26 - 1.50
 
1,329

 
—

 
1,329

 
1,192

 
—

 
1,192

Above 1.50
 
2,996

 
103

 
3,099

 
3,063

 
101

 
3,164

Total non-impaired mortgage loans
 
$
4,549

 
$
134

 
$
4,683

 
$
4,534

 
$
132

 
$
4,666
Net carrying value of impaired mortgage loans
Net carrying value of impaired mortgage loans
($ in millions)
 
June 30, 2019
 
December 31, 2018
Impaired mortgage loans with a valuation allowance
 
$
4

 
$
4

Impaired mortgage loans without a valuation allowance
 
—

 
—

Total impaired mortgage loans
 
$
4

 
$
4

Valuation allowance on impaired mortgage loans
 
$
3

 
$
3
Schedule of other investments by type
Other investments by asset type
($ in millions)
 
June 30, 2019
 
December 31, 2018
Bank loans
 
$
1,259

 
$
1,350

Policy loans
 
880

 
891

Real estate
 
872

 
791

Agent loans
 
654

 
620

Derivatives and other
 
191

 
200

Total
 
$
3,856

 
$
3,852