| 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 AFS by sector. 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”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”). June 30, 2017 December 31, 2016 Cost or Gross Unrealized Estimated Cost or Gross Unrealized Estimated Gains Temporary OTTI Gains Temporary OTTI (In millions) Fixed maturity securities: U.S. corporate $ 20,837 $ 1,700 $ 125 $ — $ 22,412 $ 21,278 $ 1,324 $ 291 $ — $ 22,311 U.S. government and agency 13,959 1,673 121 — 15,511 12,032 1,294 236 — 13,090 RMBS 7,973 264 74 (5 ) 8,168 7,961 206 144 — 8,023 Foreign corporate 6,395 334 102 — 6,627 6,343 230 180 — 6,393 State and political subdivision 3,573 483 13 — 4,043 3,590 393 38 — 3,945 CMBS 3,247 67 16 (1 ) 3,299 3,799 44 32 (1 ) 3,812 ABS 2,223 19 4 — 2,238 2,654 12 14 — 2,652 Foreign government 1,070 143 4 — 1,209 1,058 116 12 — 1,162 Total fixed maturity securities $ 59,277 $ 4,683 $ 459 $ (6 ) $ 63,507 $ 58,715 $ 3,619 $ 947 $ (1 ) $ 61,388 Equity securities: Non-redeemable preferred stock $ 147 $ 11 $ 2 $ — $ 156 $ 180 $ 6 $ 9 $ — $ 177 Common stock 100 22 — — 122 100 23 — — 123 Total equity securities $ 247 $ 33 $ 2 $ — $ 278 $ 280 $ 29 $ 9 $ — $ 300 __________________ (1) Noncredit OTTI losses included in accumulated other comprehensive income (“AOCI”) in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).” The Company held non-income producing fixed maturity securities with an estimated fair value of less than $1 million and $5 million with unrealized gains (losses) of less than ($1) million and less than $1 million at June 30, 2017 and December 31, 2016 , 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 June 30, 2017 : Due in One Year or Less Due After One Year Through Five Years Due After Five Years Through Ten Years Due After Ten Years Structured Securities Total Fixed Maturity Securities (In millions) Amortized cost $ 1,770 $ 11,680 $ 9,720 $ 22,664 $ 13,443 $ 59,277 Estimated fair value $ 1,780 $ 12,110 $ 10,019 $ 25,893 $ 13,705 $ 63,507 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. Structured Securities 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 at: June 30, 2017 December 31, 2016 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 (Dollars in millions) Fixed maturity securities: U.S. corporate $ 2,842 $ 82 $ 529 $ 43 $ 4,676 $ 189 $ 745 $ 102 U.S. government and agency 5,763 121 — — 4,396 236 — — RMBS 2,853 53 522 16 3,494 112 818 32 Foreign corporate 643 21 634 81 1,466 66 633 114 State and political subdivision 403 11 29 2 889 35 29 3 CMBS 620 12 102 3 1,572 27 171 4 ABS 244 2 195 2 478 6 461 8 Foreign government 178 3 7 1 273 11 6 1 Total fixed maturity securities $ 13,546 $ 305 $ 2,018 $ 148 $ 17,244 $ 682 $ 2,863 $ 264 Equity securities: Non-redeemable preferred stock $ 7 $ — $ 22 $ 2 $ 57 $ 2 $ 40 $ 7 Total equity securities $ 7 $ — $ 22 $ 2 $ 57 $ 2 $ 40 $ 7 Total number of securities in an unrealized loss position 1,165 365 1,741 483 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 Combined Financial Statements included in the Form 10, 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 concluded that these securities were not other-than-temporarily impaired at June 30, 2017 . Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings, collateral valuation, interest rates and credit spreads, as well as a change in the Company’s intention to hold or sell a security that is in an unrealized loss position. 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 decreased $493 million during the six months ended June 30, 2017 to $453 million . The decrease in gross unrealized losses for the six months ended June 30, 2017 was primarily attributable to narrowing credit spreads and decreasing longer-term interest rates. At June 30, 2017 , $5 million of the total $453 million of gross unrealized losses were from nine fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater. The change in gross unrealized losses on equity securities was not significant during the six months ended June 30, 2017 . Investment Grade Fixed Maturity Securities Of the $5 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, $4 million , or 80% , were related to gross unrealized losses on three investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads since purchase and, with respect to fixed-rate fixed maturity securities, rising interest rates since purchase. Below Investment Grade Fixed Maturity Securities Of the $5 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, $1 million , or 20% , were related to gross unrealized losses on six below investment grade fixed maturity securities. Unrealized losses on below investment grade fixed maturity securities are principally related to U.S. and foreign corporate securities (primarily industrial securities) 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 lower oil prices in the energy sector. Management evaluates U.S. and foreign corporate securities based on factors such as expected cash flows and the financial condition and near-term and long-term prospects of the issuers. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at: June 30, 2017 December 31, 2016 Carrying Value % of Total Carrying Value % of Total (Dollars in millions) Mortgage loans: Commercial $ 6,959 67.8 % $ 6,523 69.6 % Agricultural 2,116 20.6 1,892 20.2 Residential 1,109 10.8 867 9.2 Subtotal (1) 10,184 99.2 9,282 99.0 Valuation allowances (44 ) (0.4 ) (40 ) (0.4 ) Subtotal mortgage loans, net 10,140 98.8 9,242 98.6 Commercial mortgage loans held by CSEs — FVO 123 1.2 136 1.4 Total mortgage loans, net $ 10,263 100.0 % $ 9,378 100.0 % __________________ (1) Purchases of mortgage loans were $147 million and $307 million for the three months and six months ended June 30, 2017 , respectively, and were primarily comprised of residential mortgage loans. Purchases of mortgage loans were $192 million and $231 million for the three months and six months ended June 30, 2016 , respectively, and were primarily comprised of residential mortgage loans. See “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”). Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on commercial mortgage loans held by CSEs — FVO is presented in Note 6 . The Company elects the FVO for certain commercial mortgage loans and related long-term debt that are managed on a total return basis. Mortgage Loans, Valuation Allowance and Impaired Loans by Portfolio Segment Mortgage loans by portfolio segment, by method of evaluation of credit loss, impaired mortgage loans including those modified in a troubled debt restructuring, and the related valuation allowances, were as follows at: Evaluated Individually for Credit Losses Evaluated Collectively for Credit Losses Impaired Loans Impaired Loans with a Valuation Allowance Impaired Loans without a Valuation Allowance Unpaid Principal Balance Recorded Investment Valuation Unpaid Principal Balance Recorded Recorded Valuation Carrying (In millions) June 30, 2017 Commercial $ — $ — $ — $ — $ — $ 6,959 $ 34 $ — Agricultural 4 3 — — — 2,113 6 3 Residential — — — 3 3 1,106 4 3 Total $ 4 $ 3 $ — $ 3 $ 3 $ 10,178 $ 44 $ 6 December 31, 2016 Commercial $ — $ — $ — $ — $ — $ 6,523 $ 32 $ — Agricultural 4 3 — — — 1,889 5 3 Residential — — — 1 1 866 3 1 Total $ 4 $ 3 $ — $ 1 $ 1 $ 9,278 $ 40 $ 4 The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $0 , $3 million and $2 million , respectively, for both the three months and six months ended June 30, 2017 . The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $0 , $3 million and $0 , respectively, for both the three months and six months ended June 30, 2016 . Valuation Allowance Rollforward by Portfolio Segment The changes in the valuation allowance, by portfolio segment, were as follows: Six Months 2017 2016 Commercial Agricultural Residential Total Commercial Agricultural Residential Total (In millions) Balance, beginning of period $ 32 $ 5 $ 3 $ 40 $ 29 $ 5 $ 3 $ 37 Provision (release) 2 1 1 4 4 — 1 5 Balance, end of period $ 34 $ 6 $ 4 $ 44 $ 33 $ 5 $ 4 $ 42 Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans was as follows at: Recorded Investment Debt Service Coverage Ratios % of Total Estimated Fair Value % of Total > 1.20x 1.00x - 1.20x < 1.00x Total (Dollars in millions) June 30, 2017 Loan-to-value ratios: Less than 65% $ 6,035 $ 329 $ — $ 6,364 91.4 % $ 6,544 91.7 % 65% to 75% 476 34 18 528 7.6 529 7.4 76% to 80% — 33 9 42 0.6 41 0.6 Greater than 80% — — 25 25 0.4 23 0.3 Total $ 6,511 $ 396 $ 52 $ 6,959 100.0 % $ 7,137 100.0 % December 31, 2016 Loan-to-value ratios: Less than 65% $ 5,744 $ 230 $ 167 $ 6,141 94.1 % $ 6,222 94.3 % 65% to 75% 291 — 19 310 4.8 303 4.6 76% to 80% 34 — — 34 0.5 33 0.5 Greater than 80% 24 14 — 38 0.6 37 0.6 Total $ 6,093 $ 244 $ 186 $ 6,523 100.0 % $ 6,595 100.0 % Credit Quality of Agricultural Mortgage Loans The credit quality of agricultural mortgage loans was as follows at: June 30, 2017 December 31, 2016 Recorded Investment % of Total Recorded Investment % of Total (Dollars in millions) Loan-to-value ratios: Less than 65% $ 2,000 94.6 % $ 1,849 97.7 % 65% to 75% 116 5.4 43 2.3 Total $ 2,116 100.0 % $ 1,892 100.0 % The estimated fair value of agricultural mortgage loans was $2.1 billion and $1.9 billion at June 30, 2017 and December 31, 2016 , respectively. Credit Quality of Residential Mortgage Loans The credit quality of residential mortgage loans was as follows at: June 30, 2017 December 31, 2016 Recorded Investment % of Total Recorded Investment % of Total (Dollars in millions) Performance indicators: Performing $ 1,092 98.5 % $ 856 98.7 % Nonperforming 17 1.5 11 1.3 Total $ 1,109 100.0 % $ 867 100.0 % The estimated fair value of residential mortgage loans was $1.1 billion and $867 million at June 30, 2017 and December 31, 2016 , respectively. Past Due and Nonaccrual Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with over 99% of all mortgage loans classified as performing at June 30, 2017 and December 31, 2016 . The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days. The past due and nonaccrual mortgage loans at recorded investment, prior to valuation allowances, by portfolio segment, were as follows at: Past Due Nonaccrual Status June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 (Dollars in millions) Agricultural $ 1 $ — $ — $ — Residential 17 11 17 11 Total $ 18 $ 11 $ 17 $ 11 Mortgage Loans Modified in a Troubled Debt Restructuring During the three months and six months ended June 30, 2017 the Company did not have a significant amount of mortgage loans modified in a troubled debt restructuring. During the three months and six months ended June 30, 2016 , there were no mortgage loans modified in a troubled debt restructuring. 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 $3.7 billion and $4.8 billion at June 30, 2017 and December 31, 2016 , respectively. Net Unrealized Investment Gains (Losses) Unrealized investment gains (losses) on fixed maturity and equity securities AFS and the effect on DAC, VOBA, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI. The components of net unrealized investment gains (losses), included in AOCI, were as follows: June 30, 2017 December 31, 2016 (In millions) Fixed maturity securities $ 4,214 $ 2,663 Fixed maturity securities with noncredit OTTI losses included in AOCI 6 1 Total fixed maturity securities 4,220 2,664 Equity securities 58 32 Derivatives 346 414 Short-term investments — (42 ) Other (8 ) (26 ) Subtotal 4,616 3,042 Amounts allocated from: Future policy benefits (1,309 ) (802 ) DAC and VOBA related to noncredit OTTI losses recognized in AOCI (2 ) (2 ) DAC, VOBA and DSI (297 ) (214 ) Subtotal (1,608 ) (1,018 ) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (2 ) — Deferred income tax benefit (expense) (1,062 ) (712 ) Net unrealized investment gains (losses) $ 1,944 $ 1,312 The changes in net unrealized investment gains (losses) were as follows: Six Months (In millions) Balance, beginning of period $ 1,312 Fixed maturity securities on which noncredit OTTI losses have been recognized 4 Unrealized investment gains (losses) during the period 1,570 Unrealized investment gains (losses) relating to: Future policy benefits (507 ) DAC, VOBA and DSI (83 ) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (2 ) Deferred income tax benefit (expense) (350 ) Balance, end of period $ 1,944 Change in net unrealized investment gains (losses) $ 632 Concentrations of Credit Risk There were no investments in any counterparty that were greater than 10% of the Company’s shareholder’s net investment, other than the U.S. government and its agencies, at both June 30, 2017 and December 31, 2016 . Securities Lending Elements of the securities lending program are presented below at: June 30, 2017 December 31, 2016 (In millions) Securities on loan: (1) Amortized cost $ 5,694 $ 5,895 Estimated fair value $ 6,595 $ 6,555 Cash collateral received from counterparties (2) $ 6,750 $ 6,642 Security collateral received from counterparties (3) $ 24 $ 27 Reinvestment portfolio — estimated fair value $ 6,788 $ 6,571 __________________ (1) Included within fixed maturity securities. (2) Included within payables for collateral under securities loaned and other transactions. (3) Security collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the combined financial statements. The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at: June 30, 2017 December 31, 2016 Remaining Tenor of Securities Lending Agreements Remaining Tenor of Securities Lending Agreements Open (1) 1 Month or Less 1 to 6 Months Total Open (1) 1 Month or Less 1 to 6 Months Total (In millions) Cash collateral liability by loaned security type: U.S. government and agency $ 2,188 $ 2,813 $ 1,492 $ 6,493 $ 2,129 $ 1,906 $ 1,743 $ 5,778 U.S. corporate — — — — — 480 — 480 Agency RMBS — 257 — 257 — — 274 274 Foreign corporate — — — — — 58 — 58 Foreign government — — — — — 52 — 52 Total $ 2,188 $ 3,070 $ 1,492 $ 6,750 $ 2,129 $ 2,496 $ 2,017 $ 6,642 __________________ (1) The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral. If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at June 30, 2017 was $2.1 billion , all of which were U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement. The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, ABS, U.S. government and agency securities, non-agency RMBS and U.S. and foreign corporate securities) with 64% invested in agency RMBS, cash equivalents, short-term investments, U.S. government and agency securities, or held in cash at June 30, 2017 . If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company. Invested Assets on Deposit, Held in Trust and Pledged as Collateral Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value at: June 30, 2017 December 31, 2016 (In millions) Invested assets on deposit (regulatory deposits) $ 8,018 $ 7,648 Invested assets held in trust (reinsurance agreements) 4,237 9,054 Invested assets pledged as collateral 3,754 3,548 Total invested assets on deposit, held in trust and pledged as collateral $ 16,009 $ 20,250 The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Combined Financial Statements included in the Form 10) and derivative transactions (see Note 5 ). The Company held in trust certain investments in connection with certain reinsurance transactions. In April 2017, the MetLife Reinsurance Company of South Carolina (“MRSC”) collateral financing arrangement was repaid in connection with the Restructuring (see Note 7). Amounts in the table above include invested assets and cash and cash equivalents. See “— Securities Lending” for information regarding securities on loan. Variable Interest Entities The Company has invested in legal entities 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. Consolidated VIEs Creditors or beneficial interest holders of VIEs where the Company is the pr imary 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. The following table presents the total assets and total liabilities re lating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at: June 30, 2017 December 31, 2016 Total Assets Total Liabilities Total Assets Total Liabilities (In millions) MRSC (collateral financing arrangement) (1) $ — $ — $ 3,422 $ — CSEs (assets (primarily loans) and liabilities (primarily debt)) (2) 124 16 137 24 Total $ 124 $ 16 $ 3,559 $ 24 __________________ (1) See Note 12 of the Notes to the Combined Financial Statements included in the Form 10 for a description of the MRSC collateral financing arrangement. In April 2017, these assets were liquidated and the proceeds were used to repay the collateral financing arrangement. See Note 7. These assets historically consisted of fixed maturity securities, short-term investments and cash equivalents, but were transitioned into short-term investments and cash equivalents prior to termination of the arrangement. (2) The Company consolidates entities 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 these entities of $89 million and $95 million at estimated fair value at June 30, 2017 and December 31, 2016 , 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: June 30, 2017 December 31, 2016 Carrying Amount Maximum Exposure to Loss (1) Carrying Amount Maximum Exposure to Loss (1) (In millions) Fixed maturity securities AFS: Structured Securities (2) $ 12,174 $ 12,174 $ 13,062 $ 13,062 U.S. and foreign corporate 503 503 518 518 Other limited partnership interests 1,471 2,330 1,495 2,292 Other investments (3) 77 87 90 101 Total $ 14,225 $ 15,094 $ 15,165 $ 15,973 __________________ (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. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties. There were no income tax credits at both June 30, 2017 and December 31, 2016 . 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 in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity. (3) Other investments is comprised of real estate joint ventures, other invested assets and non-redeemable preferred stock. As described in Note 11, 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 both the three months and six months ended June 30, 2017 and 2016 . Net Investment Income The components of net investment income were as follows: Three Months Six Months 2017 2016 2017 2016 (In millions) Investment income: Fixed maturity securities $ 598 $ 680 $ 1,208 $ 1,311 Equity securities 4 4 7 10 Mortgage loans 111 112 220 203 Policy loans 18 20 35 40 Real estate and real estate joint ventures 14 2 26 15 Other limited partnership interests 49 20 106 41 Cash, cash equivalents and short-term investments 10 5 18 10 Other 6 2 13 3 Subtotal 810 845 1,633 1,633 Less: Investment expenses 46 43 89 85 Subtotal, net 764 802 1,544 1,548 FVO CSEs — interest income — commercial mortgage loans 2 3 4 5 Net investment income $ 766 $ 805 $ 1,548 $ 1,553 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 Six Months 2017 2016 2017 2016 (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: Industrial $ — $ (1 ) $ — $ (16 ) Total U.S. and foreign corporate securities — (1 ) — (16 ) RMBS — (1 ) — (2 ) State and political subdivision (1 ) — (1 ) — OTTI losses on fixed maturity securities recognized in earnings (1 ) (2 ) (1 ) (18 ) Fixed maturity securities — net gains (losses) on sales and disposals 2 29 (36 ) (17 ) Total gains (losses) on fixed maturity securities 1 27 (37 ) (35 ) Total gains (losses) on equity securities: Total OTTI losses recognized — by sector: Common stock — — — (1 ) OTTI losses on equity securities recognized in earnings — — — (1 ) Equity securities — net gains (losses) on sales and disposals 1 — 1 4 Total gains (losses) on equity securities 1 — 1 3 Mortgage loans (2 ) (4 ) (5 ) (6 ) Real estate and real estate joint ventures 1 — 3 (1 ) Other limited partnership interests — (2 ) (10 ) (6 ) Other 1 2 (5 ) 5 Subtotal 2 23 (53 ) (40 ) FVO CSEs: Commercial mortgage loans — (1 ) (1 ) — Long-term debt — related to commercial mortgage loans (1 ) — — — Non-investment portfolio gains (losses) (1 ) (2 ) (1 ) (1 ) Subtotal (2 ) (3 ) (2 ) (1 ) Total net investment gains (losses) $ — $ 20 $ (55 ) $ (41 ) 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 $1 million and ($5) million for the three months and six months ended June 30, 2017 , respectively, and $3 million and $5 million for the three months and six months ended June 30, 2016 , respectively. Sales or Disposals and Impairments of Fixed Maturity and Equity Securities Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown in the table below. Three Months Ended June 30, 2017 2016 2017 2016 Fixed Maturity Securities Equity Securities (In millions) Proceeds $ 2,411 $ 5,550 $ 12 $ 3 Gross investment gains $ 12 $ 51 $ 1 $ — Gross investment losses (10 ) (22 ) — — OTTI losses (1 ) (2 ) — — Net investment gains (losses) $ 1 $ 27 $ 1 $ — Six Months 2017 2016 2017 2016 Fixed Maturity Securities Equity Securities (In millions) Proceeds $ 4,387 $ 14,889 $ 13 $ 6 Gross investment gains $ 20 $ 88 $ 1 $ 4 Gross investment losses (56 ) (105 ) — — OTTI losses (1 ) (18 ) — (1 ) Net investment gains (losses) $ (37 ) $ (35 ) $ 1 $ 3 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 Six Months 2017 2016 2017 2016 (In millions) Balance, beginning of period $ 10 $ 64 $ 28 $ 66 Additions: Additional impairments — credit loss OTTI on securities previously impaired — 1 — 2 Reductions: Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI (1 ) (5 ) (19 ) (8 ) Balance, end of period $ 9 $ 60 $ 9 $ 60 Related Party Investment Transactions 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 Six Months 2017 2016 2017 2016 (In millions) Estimated fair value of invested assets transferred to affiliates $ — $ — $ 292 $ — Amortized cost of invested assets transferred to affiliates $ — $ — $ 294 $ — Net investment gains (losses) recognized on transfers $ — $ — $ (2 ) $ — Change in additional paid-in-capital recognized on transfers $ — $ — $ — $ — Estimated fair value of invested assets transferred from affiliates $ — $ 4,042 $ — $ 4,279 In April 2016, the Company received a transfer of investments and cash and cash equivalents of $4.3 billion for the recapture of risks related to certain single premium deferred annuity contracts previously reinsured to Metropolitan Life Insurance Company (“MLIC”), an affiliate, which are included in the table above. See Note 6 of the Notes to the Combined Financial Statements included in the Form 10 for additional information related to the transfer. The Company had loans outstanding to MetLife, Inc., which were included in other invested assets, totaling $1.1 billion at December 31, 2016 . These loans bear interest at fixed rates of 4.21% and 5.10% , payable semiannually, and were due on September 30, 2032 and December 31, 2033 , respectively. In April 2017 , the two loans were repaid. See Note 7. The Company receives investment administrative services from an affiliate. The related investment administrative service charges were $24 million and $49 million , respectively, for both the three months and six months ended June 30, 2017 and June 30, 2016. I n January 2017, MLIC recaptured risks related to guaranteed minimum benefit guarantees on certain variable annuities being reinsured by the Company. The Company transferred investments and cash and cash equivalents which are included in the table above. See Note 12 for additional information related to the transfer. In March 2017, the Company sold an operating joint venture with a book value of $89 million to MLIC, an affiliate, for $286 million . The operating joint venture was accounted for under the equity method and included in other invested assets. This sale resulted in an increase in additional paid-in capital of $202 million in the first quarter of 2017. |
