Investments | 1.25 1.00 - 1.25 N/A(a) June 30, 2016 LTV Ratios: Less than 50% $ 182 $ 19 $ 1 $ 202 32 % $ 205 32 % 50% to 60% 181 — — 181 29 % 185 29 % 60% to 75% 240 — — 240 39 % 248 39 % Commercial mortgage loans $ 603 $ 19 $ 1 $ 623 100 % $ 638 100 % September 30, 2015 LTV Ratios: Less than 50% $ 115 $ — $ 11 $ 126 25 % $ 125 25 % 50% to 60% 161 20 — 181 37 % 180 37 % 60% to 75% 185 — — 185 38 % 185 38 % Commercial mortgage loans $ 461 $ 20 $ 11 $ 492 100 % $ 490 100 % (a) N/A - Current DSC ratio not available. We establish a general mortgage loan allowance based upon the underlying risk and quality of the mortgage loan portfolio using DSC ratio and LTV ratio. A higher LTV ratio will result in a higher allowance. A higher DSC ratio will result in a lower allowance. We believe that the DSC ratio is an indicator of default risk on loans. We believe that the LTV ratio is an indicator of the principal recovery risk for loans that default. June 30, 2016 September 30, 2015 Gross balance commercial mortgage loans $ 623 $ 492 Allowance for loan loss (1 ) (1 ) Net balance commercial mortgage loans $ 622 $ 491 The Company recognizes a mortgage loan as delinquent when payments on the loan are greater than 30 days past due. At June 30, 2016 and September 30, 2015 , we had no CMLs that were delinquent in principal or interest payments. The following provides the current and past due composition of our CMLs: June 30, 2016 September 30, 2015 Current to 30 days $ 623 $ 492 Past due — — Total carrying value $ 623 $ 492 A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty: • borrower is in default, • borrower has declared bankruptcy, • there is growing concern about the borrower's ability to continue as a going concern, • borrower has insufficient cash flows to service debt, • borrower's inability to obtain funds from other sources, and • there is a breach of financial covenants by the borrower. If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower will be granted a concession: • assets used to satisfy debt are less than our recorded investment, • interest rate is modified, • maturity date extension at an interest rate less than market rate, • capitalization of interest, • delaying principal and/or interest for a period of three months or more, and • partial forgiveness of the balance or charge-off. Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. As of June 30, 2016 , our CML portfolio had no impairments, modifications or troubled debt restructuring. Net investment income The major sources of “ Net investment income ” on the accompanying unaudited Condensed Consolidated Statements of Operations were as follows: Three months ended Nine months ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Fixed maturity available-for-sale securities $ 223 $ 199 $ 644 $ 589 Equity available-for-sale securities 7 8 23 26 Commercial mortgage loans 6 3 18 7 Related party loans 1 2 3 5 Invested cash and short-term investments 1 — 3 — Other investments 3 5 8 16 Gross investment income 241 217 699 643 Investment expense (5 ) (5 ) (14 ) (15 ) Net investment income $ 236 $ 212 $ 685 $ 628 During the fiscal quarter ended June 30, 2015, the Company received notice that we are entitled to receive a settlement as a result of our ownership of certain RMBS that were issued by Countrywide Financial Corp. ("Countrywide"), an entity which was later acquired by Bank of America Corporation. An $18 cash settlement was received in the current quarter for a majority of the Countrywide securities, and another $2 is expected to be paid in the second fiscal quarter of 2017. In compliance with the Company's accounting policy described in "Note 2. Significant Accounting Policies and Practices" of the 2015 Form 10-K, the Company updated its cash flow projections for its best estimate of the recovery as of May 31, 2016 and determined the new effective yield, with the resulting immaterial impact recognized in “Net Investment Income”. Net investment Gains (Losses) Details underlying “Net investment gains (losses)” reported on the accompanying unaudited Condensed Consolidated Statements of Operations were as follows: Three months ended Nine months ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Net realized gains (losses) on fixed maturity available-for-sale securities $ 4 $ 47 $ 6 $ 24 Realized gains (losses) on equity securities 1 1 2 — Change in fair value of other derivatives and embedded derivatives (2 ) (2 ) (1 ) 10 Realized losses on other invested assets (10 ) (1 ) (13 ) (39 ) Net realized (losses) gains on available-for-sale securities (7 ) 45 (6 ) (5 ) Realized gains (losses) on certain derivative instruments (32 ) 37 (86 ) 118 Unrealized gains (losses) on certain derivative instruments 48 (44 ) 112 (90 ) Change in fair value of reinsurance related embedded derivative (37 ) 36 (27 ) 52 Realized (losses) gains on hedging derivatives and reinsurance-related embedded derivatives (21 ) 29 (1 ) 80 Net investment (losses) gains $ (28 ) $ 74 $ (7 ) $ 75 For the three and nine months ended June 30, 2016 , proceeds from the sale of fixed maturity available-for-sale securities totaled $190 and $939 , gross gains on such sales totaled $7 and $25 , and gross losses totaled $3 and $15 , respectively. For the three and nine months ended June 30, 2015 , proceeds from the sale of fixed maturity available-for-sale securities, totaled $1,864 and $3,670 , gross gains on such sales totaled $61 and $96 , and gross losses totaled $2 and $36 , respectively. Unconsolidated Variable Interest Entities The Company owns investments in VIEs that are not consolidated within the Company’s financial statements. VIEs do not have sufficient equity to finance their own activities without additional financial support and certain of its investors lack certain characteristics of a controlling financial interest. These VIEs are not consolidated in the Company’s financial statements for the following reasons: 1) FGL Insurance does not have any voting rights or notice rights; 2) the Company does not have any rights to remove the investment manager; and 3) the Company was not involved in the design of the investment. These characteristics indicate that FGL Insurance lacks the ability to direct the activities, or otherwise exert control, of the VIEs and is not considered the primary beneficiary of them. FGL Insurance participates in loans to third parties originated by Salus. Salus is an affiliated, limited liability company indirectly owned by HRG that originates senior secured asset-based loans to unaffiliated third-party borrowers. FGL Insurance also participates in CLOs managed by Salus and owns preferred equity in Salus within the funds withheld portfolio of the FSRCI treaty. Because Salus is not consolidated, the Company’s maximum exposure to loss as a result of its investments in or with Salus is limited to the carrying value of its investments in Salus which totaled $117 and $251 as of June 30, 2016 and September 30, 2015 , respectively. FGL’s investments in or with Salus are detailed in “Note 14. Related Party Transactions” to the Company’s unaudited Condensed Consolidated Financial Statements. During the fiscal quarter ended June 30, 2015, FGL invested in Boardwalk, an unaffiliated limited partnership fund that will invest in consumer whole loans, asset-backed investments, high yield, private investments, bank portfolio liquidations, bridge financing and other investments. The initial funding occurred March 20, 2015 with the remaining commitment expected to fund over the course of the next 3 years . FGL has funded $11 of a $35 commitment as of June 30, 2016 . FGL also executed a commitment of $75 to purchase common shares in an unaffiliated private business development company ("BDC"). The BDC invests in secured and unsecured debt and equity securities of middle market companies in the United States. Due to the voting structure of the transaction, FGL does not have voting power. The initial capital call occurred June 30, 2015, with the remaining commitment expected to fund through 2017. FGL has funded $38 as of June 30, 2016 ." id="sjs-B4">Investments The Company’s debt and equity securities investments have been designated as available-for-sale and are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) (“AOCI”) net of associated adjustments for deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), and deferred income taxes. The Company’s consolidated investments at June 30, 2016 and September 30, 2015 are summarized as follows: June 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for sale securities Asset-backed securities $ 2,395 $ 5 $ (108 ) $ 2,292 $ 2,292 Commercial mortgage-backed securities 844 17 (15 ) 846 846 Corporates 10,663 651 (187 ) 11,127 11,127 Equities 600 49 (4 ) 645 645 Hybrids 1,326 62 (71 ) 1,317 1,317 Municipals 1,528 217 (4 ) 1,741 1,741 Residential mortgage-backed securities 1,392 54 (42 ) 1,404 1,404 U.S. Government 233 12 — 245 245 Total available-for-sale securities 18,981 1,067 (431 ) 19,617 19,617 Derivative investments 223 42 (49 ) 216 216 Commercial mortgage loans 622 — — 638 622 Other invested assets 94 — (1 ) 91 93 Total investments $ 19,920 $ 1,109 $ (481 ) $ 20,562 $ 20,548 September 30, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Carrying Value Available-for-sale securities Asset-backed securities $ 2,148 $ 5 $ (47 ) $ 2,106 $ 2,106 Commercial mortgage-backed securities 878 14 (10 ) 882 882 Corporates 9,533 351 (354 ) 9,530 9,530 Equities 597 27 (4 ) 620 620 Hybrids 1,211 45 (42 ) 1,214 1,214 Municipals 1,520 103 (15 ) 1,608 1,608 Residential mortgage-backed securities 2,099 89 (26 ) 2,162 2,162 U.S. Government 233 11 — 244 244 Total available-for-sale securities 18,219 645 (498 ) 18,366 18,366 Derivative investments 218 13 (149 ) 82 82 Commercial mortgage loans 491 — — 490 491 Other invested assets 164 — (9 ) 153 155 Total investments $ 19,092 $ 658 $ (656 ) $ 19,091 $ 19,094 Included in AOCI were cumulative gross unrealized gains of $1 and gross unrealized losses of $2 related to the non-credit portion of other-than-temporary impairments ("OTTI") on non-agency residential mortgage-backed securities ("RMBS") at June 30, 2016 and September 30, 2015 , respectively. The non-agency RMBS unrealized gains and losses represent the difference between amortized cost and fair value on securities that were previously impaired. Securities held on deposit with various state regulatory authorities had a fair value of $17,389 and $16,012 at June 30, 2016 and September 30, 2015 , respectively. Under Iowa regulations, insurance companies are required to hold securities on deposit in an amount no less than the Company's legal reserve as prescribed by Iowa regulations. At June 30, 2016 and September 30, 2015 , the company held investments that were non-income producing for a period greater than twelve months with fair values of $3 and $0 , respectively. In accordance with the Company's Federal Home Loan Bank of Atlanta (“FHLB”) agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities. The collateral investments had a fair value of $671 and $524 at June 30, 2016 and September 30, 2015 , respectively. The amortized cost and fair value of fixed maturity available-for-sale securities by contractual maturities, as applicable, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations. June 30, 2016 Amortized Cost Fair Value Corporates, Non-structured Hybrids, Municipal and U.S. Government securities: Due in one year or less $ 255 $ 258 Due after one year through five years 1,868 1,913 Due after five years through ten years 3,257 3,384 Due after ten years 7,649 8,168 Subtotal 13,029 13,723 Other securities which provide for periodic payments: Asset-backed securities 2,395 2,292 Commercial mortgage-backed securities 844 846 Structured hybrids 721 707 Residential mortgage-backed securities 1,392 1,404 Subtotal 5,352 5,249 Total fixed maturity available-for-sale securities $ 18,381 $ 18,972 The Company's available-for-sale securities with unrealized losses are reviewed for potential OTTI. In evaluating whether a decline in value is other-than-temporary, the Company considers several factors including, but not limited to the following: (1) the extent and the duration of the decline; (2) the reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); and (3) the financial condition of and near-term prospects of the issuer. The Company also considers the ability and intent to hold the investment for a period of time to allow for a recovery of value. The Company analyzes its ability to recover the amortized cost by comparing the net present value of cash flows expected to be collected with the amortized cost of the security. For mortgage-backed and asset-backed securities, cash flow estimates consider the payment terms of the underlying assets backing a particular security, including interest rate and prepayment assumptions, based on data from widely accepted third-party data sources or internal estimates. In addition to interest rate and prepayment assumptions, cash flow estimates also include other assumptions regarding the underlying collateral including default rates and recoveries, which vary based on the asset type and geographic location, as well as the vintage year of the security. For structured securities, the payment priority within the tranche structure is also considered. For all other debt securities, cash flow estimates are driven by assumptions regarding probability of default and estimates regarding timing and amount of recoveries associated with a default. If the net present value is less than the amortized cost of the investment, an OTTI is recognized. Based on the results of our process for evaluating available-for-sales securities in unrealized loss positions for OTTI discussed above, the Company determined that the unrealized losses as of June 30, 2016 were primarily due to credit spread widening. While recovery in the commodity and energy markets improved the overall portfolio, certain securities held in these sectors are still impacted by the sharp declines in energy prices experienced in 2015. Similarly, the high yield market, which affects prices of leveraged loans typically used to secure collateralized loan obligations ("CLO"), improved during the quarter but certain securities still show negative effects from commodity price declines from last year. Nevertheless, the overall average rating of the Company’s holdings in these sectors remains investment grade. Based on an assessment of all securities in the portfolio in unrealized loss positions, the Company determined that the unrealized losses on the securities presented in the table below were not other-than-temporarily impaired as of June 30, 2016 . The fair value and gross unrealized losses of available-for-sale securities, aggregated by investment category and duration of fair value below amortized cost, were as follows: June 30, 2016 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Available-for-sale securities Asset-backed securities $ 782 $ (34 ) $ 1,178 $ (74 ) $ 1,960 $ (108 ) Commercial mortgage-backed securities 84 (2 ) 250 (13 ) 334 (15 ) Corporates 587 (16 ) 1,660 (171 ) 2,247 (187 ) Equities 36 (1 ) 57 (3 ) 93 (4 ) Hybrids 132 (4 ) 442 (67 ) 574 (71 ) Municipals 2 — 48 (4 ) 50 (4 ) Residential mortgage-backed securities 233 (6 ) 508 (36 ) 741 (42 ) Total available-for-sale securities $ 1,856 $ (63 ) $ 4,143 $ (368 ) $ 5,999 $ (431 ) Total number of available-for-sale securities in an unrealized loss position less than twelve months 305 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 577 Total number of available-for-sale securities in an unrealized loss position 882 September 30, 2015 Less than 12 months 12 months or longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Available-for-sale securities Asset-backed securities $ 816 $ (14 ) $ 833 $ (33 ) $ 1,649 $ (47 ) Commercial mortgage-backed securities 262 (8 ) 133 (2 ) 395 (10 ) Corporates 2,342 (201 ) 1,328 (153 ) 3,670 (354 ) Equities 37 — 106 (4 ) 143 (4 ) Hybrids 88 (4 ) 542 (38 ) 630 (42 ) Municipals 220 (6 ) 192 (9 ) 412 (15 ) Residential mortgage-backed securities 423 (10 ) 294 (16 ) 717 (26 ) Total available-for-sale securities $ 4,188 $ (243 ) $ 3,428 $ (255 ) $ 7,616 $ (498 ) Total number of available-for-sale securities in an unrealized loss position less than twelve months 712 Total number of available-for-sale securities in an unrealized loss position twelve months or longer 396 Total number of available-for-sale securities in an unrealized loss position 1,108 At June 30, 2016 and September 30, 2015 , securities in an unrealized loss position were primarily concentrated in investment grade, asset-backed, RMBS, hybrid and corporate debt instruments. At June 30, 2016 and September 30, 2015 , securities with a fair value of $312 and $302 , respectively, had an unrealized loss greater than 20% of amortized cost (excluding U.S. Government and U.S. Government sponsored agency securities), which represented less than 2% of the carrying value of all investments in both reporting periods. The following table provides a reconciliation of the beginning and ending balances of the credit loss portion of OTTI on fixed maturity available-for-sale securities held by the Company for the three and nine months ended June 30, 2016 and 2015 , for which a portion of the OTTI was recognized in AOCI: Three months ended Nine months ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Beginning balance $ 3 $ 3 $ 3 $ 3 Increases attributable to credit losses on securities: OTTI was previously recognized — — — — OTTI was not previously recognized — — — — Ending balance $ 3 $ 3 $ 3 $ 3 The Company recognized $13 and $24 of credit impairment losses in operations during the three and nine months ended June 30, 2016 , respectively, and $4 of change of intent losses during the three and nine months ended June 30, 2016 , respectively, related to fixed maturity securities with an amortized cost of $275 and a fair value of $247 at June 30, 2016 . During the three and nine months ended June 30, 2015 , respectively, the Company recognized $4 and $65 of credit impairment losses in operations related to fixed maturity securities and other invested assets with an amortized cost of $156 and a fair value of $91 at June 30, 2015 . Details underlying write-downs taken as a result of OTTI that were recognized in "Net income" and included in net realized gains on securities were as follows: Three months ended Nine months ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 OTTI Recognized in Net Income: Asset-backed securities $ 4 $ 3 $ 9 $ 27 Corporates — — 6 2 Related party loans 4 — 4 — Other invested assets 9 — 9 — Other assets — 1 — 36 Total $ 17 $ 4 $ 28 $ 65 The portion of OTTI recognized in AOCI is disclosed in the unaudited Condensed Consolidated Statements of Comprehensive Income. In the second quarter of Fiscal 2015, the Company recognized credit-related impairment losses of $59 , net of reinsurance, on available-for-sale debt securities, available-for-sale equity securities and other invested assets related to direct and indirect investments in RadioShack Corporation ("RSH") and other loans because the Company concluded the decline in the fair value of these investments was other-than-temporary. A summary of the RSH-related impairments by investment is as follows: Three Months Ended March 31, 2015 Type Balance Sheet Classification OTTI Losses Collateralized loan obligations ("CLOs") (a) Fixed maturities, available-for-sale $ 25 Preferred equity (a) Equity securities, available-for-sale 21 Participations Other invested assets 35 OTTI, gross of reinsurance $ 81 CLOs (a) Fixed maturities, available-for-sale (1 ) Preferred equity (a) Equity securities, available-for-sale (21 ) OTTI, net of reinsurance $ 59 (a) Preferred equity and a portion of the CLOs are included in the FSRCI funds withheld portfolio, accordingly all income and losses on these assets are ceded to FSRCI. The fair values of the impairments summarized above were determined using the following inputs as follows: • CLOs - The Company utilized a price from a third party valuation firm which considered the sufficiency of underlying loan collateral for the RSH loan and other loans. • Preferred equity - The Company utilized a price from a third party valuation firm which considered the updated fair value estimates of the Salus Capital Partners LLC ("Salus") CLO and the Salus participation in RSH, in which Salus owns investment interests. • Participations - The Company considered the recovery of the underlying loan collateral for RSH based on the evidence obtained. The total gross impact of the impairment losses above, excluding reinsurance with FSRCI was $81 for the second fiscal quarter ended March 31, 2015 . RSH filed for bankruptcy on February 5, 2015. In late March 2015, the Court awarded a sale of assets at auction to another bidder, causing our collateral claim to become more junior to other claimants and resulting in our conclusion that the Company had realized an OTTI. In June 2016 , the cash proceeds from the RSH liquidation trust were distributed and the Company received $22 . This reflected a recovery of 43% of par value, an increase over the 30% estimated recovery value recorded in the second fiscal quarter of 2015. As a result, the Company recognized a realized gain of $7 in the quarter ended June 30, 2016. The Company has a remaining direct investment in RSH of $3 as of June 30, 2016 . Commercial Mortgage Loans Commercial mortgage loans ("CMLs") represented approximately 3% of the Company’s total investments as of June 30, 2016 and September 30, 2015 . The Company primarily makes mortgage loans on income producing properties including hotels, industrial properties, retail buildings, multifamily properties and office buildings. The Company diversifies its CML portfolio by geographic region and property type to reduce concentration risk. Subsequent to origination, the Company continuously evaluates CMLs based on relevant current information to ensure properties are performing at a consistent and acceptable level to secure the related debt. The distribution of CMLs, gross of valuation allowances, by property type and geographic region is reflected in the following tables: June 30, 2016 September 30, 2015 Gross Carrying Value % of Total Gross Carrying Value % of Total Property Type: Funeral Home $ 1 — % $ 1 — % Hotel 23 4 % 13 3 % Industrial - General 37 6 % 38 8 % Industrial - Warehouse 86 14 % 76 15 % Multifamily 71 11 % 64 13 % Office 184 30 % 137 28 % Retail 221 35 % 163 33 % Total commercial mortgage loans, gross of valuation allowance $ 623 100 % $ 492 100 % Allowance for loan loss (1 ) (1 ) Total commercial mortgage loans $ 622 $ 491 U.S. Region: East North Central $ 138 22 % $ 121 25 % East South Central 21 3 % 12 2 % Middle Atlantic 97 16 % 87 18 % Mountain 69 11 % 42 9 % New England 14 2 % 9 2 % Pacific 160 26 % 113 23 % South Atlantic 67 11 % 69 13 % West North Central 14 2 % 14 3 % West South Central 43 7 % 25 5 % Total commercial mortgage loans, gross of valuation allowance $ 623 100 % $ 492 100 % Allowance for loan loss (1 ) (1 ) Total commercial mortgage loans $ 622 $ 491 Within the Company's CML portfolio, 100% of all CMLs have a loan-to-value (“LTV”) ratio of less than 75% at June 30, 2016 and September 30, 2015 . As of June 30, 2016 , all CMLs are current and have not experienced credit or other events which would require the recording of an impairment loss. LTV and debt service coverage (“DSC”) ratios are measures commonly used to assess the risk and quality of mortgage loans. The LTV ratio, calculated at time of origination, is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A LTV ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The DSC ratio, based upon the most recently received financial statements, is expressed as a percentage of the amount of a property’s net income to its debt service payments. A DSC ratio of less than 1.00 indicates that a property’s operations do not generate sufficient income to cover debt payments. The following table presents the recorded investment in CMLs by LTV and DSC ratio categories and estimated fair value by the indicated loan-to-value ratios at June 30, 2016 and September 30, 2015 : Debt Service Coverage Ratios Total Amount % of Total Estimated Fair Value % of Total >1.25 1.00 - 1.25 N/A(a) June 30, 2016 LTV Ratios: Less than 50% $ 182 $ 19 $ 1 $ 202 32 % $ 205 32 % 50% to 60% 181 — — 181 29 % 185 29 % 60% to 75% 240 — — 240 39 % 248 39 % Commercial mortgage loans $ 603 $ 19 $ 1 $ 623 100 % $ 638 100 % September 30, 2015 LTV Ratios: Less than 50% $ 115 $ — $ 11 $ 126 25 % $ 125 25 % 50% to 60% 161 20 — 181 37 % 180 37 % 60% to 75% 185 — — 185 38 % 185 38 % Commercial mortgage loans $ 461 $ 20 $ 11 $ 492 100 % $ 490 100 % (a) N/A - Current DSC ratio not available. We establish a general mortgage loan allowance based upon the underlying risk and quality of the mortgage loan portfolio using DSC ratio and LTV ratio. A higher LTV ratio will result in a higher allowance. A higher DSC ratio will result in a lower allowance. We believe that the DSC ratio is an indicator of default risk on loans. We believe that the LTV ratio is an indicator of the principal recovery risk for loans that default. June 30, 2016 September 30, 2015 Gross balance commercial mortgage loans $ 623 $ 492 Allowance for loan loss (1 ) (1 ) Net balance commercial mortgage loans $ 622 $ 491 The Company recognizes a mortgage loan as delinquent when payments on the loan are greater than 30 days past due. At June 30, 2016 and September 30, 2015 , we had no CMLs that were delinquent in principal or interest payments. The following provides the current and past due composition of our CMLs: June 30, 2016 September 30, 2015 Current to 30 days $ 623 $ 492 Past due — — Total carrying value $ 623 $ 492 A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty: • borrower is in default, • borrower has declared bankruptcy, • there is growing concern about the borrower's ability to continue as a going concern, • borrower has insufficient cash flows to service debt, • borrower's inability to obtain funds from other sources, and • there is a breach of financial covenants by the borrower. If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower will be granted a concession: • assets used to satisfy debt are less than our recorded investment, • interest rate is modified, • maturity date extension at an interest rate less than market rate, • capitalization of interest, • delaying principal and/or interest for a period of three months or more, and • partial forgiveness of the balance or charge-off. Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. As of June 30, 2016 , our CML portfolio had no impairments, modifications or troubled debt restructuring. Net investment income The major sources of “ Net investment income ” on the accompanying unaudited Condensed Consolidated Statements of Operations were as follows: Three months ended Nine months ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Fixed maturity available-for-sale securities $ 223 $ 199 $ 644 $ 589 Equity available-for-sale securities 7 8 23 26 Commercial mortgage loans 6 3 18 7 Related party loans 1 2 3 5 Invested cash and short-term investments 1 — 3 — Other investments 3 5 8 16 Gross investment income 241 217 699 643 Investment expense (5 ) (5 ) (14 ) (15 ) Net investment income $ 236 $ 212 $ 685 $ 628 During the fiscal quarter ended June 30, 2015, the Company received notice that we are entitled to receive a settlement as a result of our ownership of certain RMBS that were issued by Countrywide Financial Corp. ("Countrywide"), an entity which was later acquired by Bank of America Corporation. An $18 cash settlement was received in the current quarter for a majority of the Countrywide securities, and another $2 is expected to be paid in the second fiscal quarter of 2017. In compliance with the Company's accounting policy described in "Note 2. Significant Accounting Policies and Practices" of the 2015 Form 10-K, the Company updated its cash flow projections for its best estimate of the recovery as of May 31, 2016 and determined the new effective yield, with the resulting immaterial impact recognized in “Net Investment Income”. Net investment Gains (Losses) Details underlying “Net investment gains (losses)” reported on the accompanying unaudited Condensed Consolidated Statements of Operations were as follows: Three months ended Nine months ended June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015 Net realized gains (losses) on fixed maturity available-for-sale securities $ 4 $ 47 $ 6 $ 24 Realized gains (losses) on equity securities 1 1 2 — Change in fair value of other derivatives and embedded derivatives (2 ) (2 ) (1 ) 10 Realized losses on other invested assets (10 ) (1 ) (13 ) (39 ) Net realized (losses) gains on available-for-sale securities (7 ) 45 (6 ) (5 ) Realized gains (losses) on certain derivative instruments (32 ) 37 (86 ) 118 Unrealized gains (losses) on certain derivative instruments 48 (44 ) 112 (90 ) Change in fair value of reinsurance related embedded derivative (37 ) 36 (27 ) 52 Realized (losses) gains on hedging derivatives and reinsurance-related embedded derivatives (21 ) 29 (1 ) 80 Net investment (losses) gains $ (28 ) $ 74 $ (7 ) $ 75 For the three and nine months ended June 30, 2016 , proceeds from the sale of fixed maturity available-for-sale securities totaled $190 and $939 , gross gains on such sales totaled $7 and $25 , and gross losses totaled $3 and $15 , respectively. For the three and nine months ended June 30, 2015 , proceeds from the sale of fixed maturity available-for-sale securities, totaled $1,864 and $3,670 , gross gains on such sales totaled $61 and $96 , and gross losses totaled $2 and $36 , respectively. Unconsolidated Variable Interest Entities The Company owns investments in VIEs that are not consolidated within the Company’s financial statements. VIEs do not have sufficient equity to finance their own activities without additional financial support and certain of its investors lack certain characteristics of a controlling financial interest. These VIEs are not consolidated in the Company’s financial statements for the following reasons: 1) FGL Insurance does not have any voting rights or notice rights; 2) the Company does not have any rights to remove the investment manager; and 3) the Company was not involved in the design of the investment. These characteristics indicate that FGL Insurance lacks the ability to direct the activities, or otherwise exert control, of the VIEs and is not considered the primary beneficiary of them. FGL Insurance participates in loans to third parties originated by Salus. Salus is an affiliated, limited liability company indirectly owned by HRG that originates senior secured asset-based loans to unaffiliated third-party borrowers. FGL Insurance also participates in CLOs managed by Salus and owns preferred equity in Salus within the funds withheld portfolio of the FSRCI treaty. Because Salus is not consolidated, the Company’s maximum exposure to loss as a result of its investments in or with Salus is limited to the carrying value of its investments in Salus which totaled $117 and $251 as of June 30, 2016 and September 30, 2015 , respectively. FGL’s investments in or with Salus are detailed in “Note 14. Related Party Transactions” to the Company’s unaudited Condensed Consolidated Financial Statements. During the fiscal quarter ended June 30, 2015, FGL invested in Boardwalk, an unaffiliated limited partnership fund that will invest in consumer whole loans, asset-backed investments, high yield, private investments, bank portfolio liquidations, bridge financing and other investments. The initial funding occurred March 20, 2015 with the remaining commitment expected to fund over the course of the next 3 years . FGL has funded $11 of a $35 commitment as of June 30, 2016 . FGL also executed a commitment of $75 to purchase common shares in an unaffiliated private business development company ("BDC"). The BDC invests in secured and unsecured debt and equity securities of middle market companies in the United States. Due to the voting structure of the transaction, FGL does not have voting power. The initial capital call occurred June 30, 2015, with the remaining commitment expected to fund through 2017. FGL has funded $38 as of June 30, 2016 . |