Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2015 | |
Document Information [Line Items] | |
Document Type | POS AM |
Amendment Flag | true |
Amendment Description | Amendment to update for 12/31/2015 financial statements |
Document Period End Date | Dec. 31, 2015 |
Trading Symbol | NWLIC |
Entity Registrant Name | NATIONWIDE LIFE INSURANCE CO |
Entity Central Index Key | 205,695 |
Entity Filer Category | Non-accelerated Filer |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | |||
Policy charges | $ 2,216 | $ 2,065 | $ 1,849 |
Premiums | 786 | 831 | 724 |
Net investment income | 1,982 | 1,900 | 1,849 |
Net realized investment gains (losses), including other-than-temporary impairment losses | 82 | (1,078) | 678 |
Other revenues | 14 | 11 | 17 |
Total revenues | 5,080 | 3,729 | 5,117 |
Benefits and expenses | |||
Interest credited to policyholder account values | 1,078 | 1,096 | 1,067 |
Benefits and claims | 1,662 | 1,502 | 1,354 |
Amortization of deferred policy acquisition costs | 68 | 207 | 374 |
Other expenses, net of deferrals | 1,044 | 1,055 | 981 |
Total benefits and expenses | 3,852 | 3,860 | 3,776 |
Income (loss) before federal income taxes and noncontrolling interests | 1,228 | (131) | 1,341 |
Federal income tax expense (benefit) | 293 | (147) | 313 |
Net income | 935 | 16 | 1,028 |
Noncontrolling interest adjustment for consolidated net expenses, net of tax | 96 | 94 | 82 |
Net income attributable to Nationwide Life Insurance Company | $ 1,031 | $ 110 | $ 1,110 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net income | $ 935 | $ 16 | $ 1,028 |
Other comprehensive (loss) income, net of tax | |||
Net unrealized (losses) gains on available-for-sale securities | (720) | 435 | (663) |
Other | 43 | 27 | (7) |
Total other comprehensive (loss) income, net of tax | (677) | 462 | (670) |
Total comprehensive income (loss) | 258 | 478 | 358 |
Noncontrolling interest adjustment for consolidated net expenses, net of tax | 96 | 94 | 82 |
Total comprehensive income attributable to Nationwide Life Insurance Company | $ 354 | $ 572 | $ 440 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Assets | |||
Fixed maturity securities, available-for-sale | $ 37,570 | $ 35,418 | |
Mortgage loans, net of allowance | 8,396 | 7,270 | |
Policy loans | 993 | 992 | |
Short-term investments | 766 | 935 | |
Other investments | 943 | 822 | |
Total investments | 48,668 | 45,437 | |
Cash and cash equivalents | 67 | 77 | |
Accrued investment income | 477 | 670 | |
Deferred policy acquisition costs | 5,200 | 4,063 | |
Goodwill | [1] | 200 | 200 |
Other assets | 2,328 | 5,001 | |
Separate account assets | 87,238 | 88,076 | |
Total assets | 144,178 | 143,524 | |
Liabilities | |||
Future policy benefits and claims | 45,397 | 40,730 | |
Short-term debt | 400 | 660 | |
Long-term debt | 707 | 709 | |
Other liabilities | 2,042 | 5,313 | |
Separate account liabilities | 87,238 | 88,076 | |
Total liabilities | 135,784 | 135,488 | |
Shareholder's equity | |||
Common stock value | 4 | 4 | |
Additional paid-in capital | 1,718 | 1,718 | |
Retained earnings | 5,661 | 4,630 | |
Accumulated other comprehensive income | 367 | 1,044 | |
Total shareholder's equity | 7,750 | 7,396 | |
Noncontrolling interests | 644 | 640 | |
Total equity | 8,394 | 8,036 | |
Total liabilities and equity | $ 144,178 | $ 143,524 | |
[1] | The goodwill balances have not been previously impaired. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, shares issued | 3,814,779 | 3,814,779 |
Common stock, shares outstanding | 3,814,779 | 3,814,779 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Millions | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total shareholder's equity | Non-controlling interest |
Beginning Balance at Dec. 31, 2012 | $ 6,731 | $ 4 | $ 1,718 | $ 3,410 | $ 1,252 | $ 6,384 | $ 347 |
Comprehensive income (loss): | |||||||
Net income (loss) | 1,028 | 1,110 | 1,110 | (82) | |||
Other comprehensive income (loss) | (670) | (670) | (670) | ||||
Total comprehensive income (loss) | 358 | 1,110 | (670) | 440 | (82) | ||
Change in noncontrolling interest | 415 | 415 | |||||
Ending Balance at Dec. 31, 2013 | 7,504 | 4 | 1,718 | 4,520 | 582 | 6,824 | 680 |
Comprehensive income (loss): | |||||||
Net income (loss) | 16 | 110 | 110 | (94) | |||
Other comprehensive income (loss) | 462 | 462 | 462 | ||||
Total comprehensive income (loss) | 478 | 110 | 462 | 572 | (94) | ||
Change in noncontrolling interest | 54 | 54 | |||||
Ending Balance at Dec. 31, 2014 | 8,036 | 4 | 1,718 | 4,630 | 1,044 | 7,396 | 640 |
Comprehensive income (loss): | |||||||
Net income (loss) | 935 | 1,031 | 1,031 | (96) | |||
Other comprehensive income (loss) | (677) | (677) | (677) | ||||
Total comprehensive income (loss) | 258 | 1,031 | (677) | 354 | (96) | ||
Change in noncontrolling interest | 100 | 100 | |||||
Ending Balance at Dec. 31, 2015 | $ 8,394 | $ 4 | $ 1,718 | $ 5,661 | $ 367 | $ 7,750 | $ 644 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | |||
Net income | $ 935 | $ 16 | $ 1,028 |
Adjustments to net income: | |||
Net realized investment (gains) losses, including other-than-temporary impairment losses | (82) | 1,078 | (678) |
Interest credited to policyholder account values | 1,078 | 1,096 | 1,067 |
Capitalization of deferred policy acquisition costs | (870) | (685) | (604) |
Amortization of deferred policy acquisition costs | 68 | 207 | 374 |
Amortization and depreciation | 107 | 128 | 77 |
Deferred tax expense (benefit) | 217 | (152) | 346 |
Changes in: | |||
Policy liabilities | (249) | (421) | (475) |
Derivatives, net | (141) | (181) | (483) |
Other, net | (280) | (59) | 88 |
Net cash provided by operating activities | 783 | 1,027 | 740 |
Cash flows from investing activities | |||
Proceeds from maturities of available-for-sale securities | 2,828 | 2,798 | 3,689 |
Proceeds from sales of available-for-sale securities | 466 | 647 | 1,091 |
Purchases of available-for-sale securities | (7,106) | (5,640) | (6,842) |
Proceeds from repayments and sales of mortgage loans | 1,027 | 920 | 1,091 |
Issuances of mortgage loans | (2,155) | (1,837) | (1,593) |
Net sales (purchases) of short-term investments | 169 | (524) | 654 |
Collateral received (paid), net | 48 | 399 | (637) |
Other, net | (136) | (94) | 42 |
Net cash used in investing activities | (4,859) | (3,331) | (2,505) |
Cash flows from financing activities | |||
Net change in short-term debt | (260) | 382 | (22) |
Proceeds from issuance of long-term debt | 2 | ||
Repayments of long-term debt | (2) | (299) | |
Investment and universal life insurance product deposits | 8,224 | 6,037 | 6,139 |
Investment and universal life insurance product withdrawals | (3,884) | (4,095) | (4,034) |
Other, net | (12) | (4) | (22) |
Net cash provided by financing activities | 4,066 | 2,320 | 1,764 |
Net (decrease) increase in cash and cash equivalents | (10) | 16 | (1) |
Cash and cash equivalents at beginning of year | 77 | 61 | 62 |
Cash and cash equivalents at end of year | $ 67 | $ 77 | $ 61 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2015 | |
Nature of Operations | (1) Nature of Operations Nationwide Life Insurance Company (“NLIC,” or collectively with its subsidiaries, “the Company”) was incorporated in 1929 and is an Ohio domiciled stock life insurance company. The Company is a member of the Nationwide group of companies (“Nationwide”), which is comprised of Nationwide Mutual Insurance Company (“NMIC”) and all of its subsidiaries and affiliates. All of the outstanding shares of NLIC’s common stock are owned by Nationwide Financial Services, Inc. (“NFS”), a holding company formed by Nationwide Corporation (“Nationwide Corp.”), a majority-owned subsidiary of NMIC. The Company is a leading provider of long-term savings and retirement products in the United States of America (“U.S.”). The Company develops and sells a wide range of products and services, which include fixed and variable individual annuities, private and public sector group retirement plans, life insurance, investment advisory services, banking products and services, mutual funds and other investment products. The Company sells its products through a diverse distribution network. Unaffiliated entities that sell the Company’s products to their own customer bases include independent broker-dealers, financial institutions, wirehouse and regional firms, pension plan administrators and life insurance specialists. Representatives of affiliates who market products directly to a customer base include Nationwide Retirement Solutions, Inc. (“NRS”) and Nationwide Financial Network (“NFN”) producers, which includes the agency distribution force of the Company’s ultimate parent company, NMIC. Wholly-owned subsidiaries of NLIC as of December 31, 2015 include Nationwide Life and Annuity Insurance Company (“NLAIC”), Nationwide Investment Services Corporation (“NISC”), Nationwide Investment Advisor (“NIA”) and Eagle Captive Reinsurance, LLC (“Eagle”). NLAIC primarily offers universal life insurance, variable universal life insurance, term life insurance, corporate-owned life insurance (“COLI”) and individual annuity contracts on a non-participating basis. NISC is a registered broker-dealer. NIA is a registered investment advisor. Eagle is an Ohio domiciled special purpose financial captive insurance company, and a member of the Nationwide group of companies, which is comprised of NMIC and all of its subsidiaries and affiliates. Eagle is a wholly-owned subsidiary of NLIC. Eagle commenced operations effective October 1, 2015, following surplus contributions of $50 million by NLIC for the purpose of assuming net of third party reinsurance, 100% of NLIC’s liability with respect to specified guaranteed minimum death benefits (“GMDB”) and guaranteed lifetime withdrawal benefits (“GLWB”) provided under substantially all of the variable annuity contracts issued and to be issued by NLIC. The base annuity contracts and any non-reinsured risks will be retained by NLIC. As of December 31, 2015 and 2014, the Company did not have a significant concentration of financial instruments in a single investee, industry or geographic region. Also, the Company did not have a concentration of business transactions with a particular customer, lender, distribution source, market or geographic region in which a single event could cause a severe impact on the Company’s financial position. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. The consolidated financial statements include majority-owned subsidiaries and consolidated variable interest entities (“VIEs”). All intercompany accounts and transactions have been eliminated. Use of Estimates The Company’s consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates include the balance and amortization of deferred policy acquisition costs (“DAC”), legal and regulatory reserves, certain investment and derivative valuations, future policy benefits and claims including the valuation of embedded derivatives resulting from living benefit guarantees on variable annuity contracts expected to net settle, goodwill, provision for income taxes and valuation of deferred tax assets. Actual results could differ significantly from those estimates. Revenues and Benefits Investment and universal life insurance products. Traditional life insurance products. Future Policy Benefits and Claims Investment and universal life insurance products. The Company offers guarantees which can include a return of no less than the total deposits made on the contract less any customer withdrawals, total deposits made on the contract less any customer withdrawals plus a minimum return, or the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees can also include benefits payable in the event of death, upon annuitization, upon periodic withdrawal or at specified dates during the accumulation period. Refer to Note 4 for further discussion of these guarantees. As part of its valuation procedures, the Company makes an assumption of the expected utilization of guarantee benefits by participants. Guarantees that include a benefit that is wholly life contingent or is expected to be exercised upon annuitization are accounted for as insurance liabilities that accumulate over time. Guarantees that are expected to be exercised using a net settlement option are accounted for as embedded derivatives, which are required to be separated from, and valued apart from, the host variable annuity contracts. Guarantees on variable annuity and fixed annuity products accounted for as insurance liabilities primarily include GMDB and certain GLWB. Liabilities for these guarantees are calculated by multiplying the current benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date, less the cumulative guaranteed benefit payments plus interest. The Company annually evaluates its experience and assumptions and adjusts the benefit ratio as appropriate. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes, with a related charge or credit to benefits and claims in the period of evaluation. Determination of the expected benefit payments and assessments are based on a range of scenarios and assumptions, including those related to market rates of return and volatility, contract surrenders and mortality experience. The accounting for these guarantees impacts estimated gross profits used to calculate the balance and amortization of DAC and other expenses. Refer to Note 4 for further discussion of these guarantees. Certain guaranteed minimum accumulation benefits (“GMAB”) and the GLWB that are expected to net settle on variable annuity products represent embedded derivatives which are held at fair value and include the present value of attributed fees. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivatives incorporate numerous, unobservable assumptions including, but not limited to, mortality, lapse rates, index volatility, benefit utilization and discounting. Benefit utilization includes a wait period (the number of years the policyholder is assumed to wait prior to beginning withdrawals once eligible) and efficiency of benefit utilization (the percent of the maximum permitted withdrawal that a policyholder takes). Discounting includes liquidity and non-performance risk (the risk that the liability will not be fulfilled) and affects the value at which the liability is transferred. The Company derives these inputs, which vary widely by product, attained age, policy duration, benefits in the money and the existence of surrender charges, from experience and industry data. The Company offers certain indexed life insurance and annuity products for which the policyholders’ interest credits are based on market performance with caps and floors. The interest credits represent embedded derivatives within the insurance contract and therefore are required to be separated, and valued apart from, the host contracts. The embedded derivatives are held at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of interest credited. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivatives incorporate numerous unobservable assumptions including, but not limited to, mortality, lapse rates and index volatility. The assumptions used to calculate the fair value of embedded derivatives are reviewed as part of an annual comprehensive study of assumptions. Quarterly, consideration is given as to whether adjustments to these assumptions are necessary. The Company offers certain universal life and variable universal life insurance products with no-lapse guarantees. Liabilities for these guarantees are calculated by multiplying the current benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date, less the cumulative guaranteed benefit payments plus interest. The Company annually evaluates its experience and assumptions and adjusts the benefit ratio as appropriate. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes with a related charge or credit to other benefits and claims in the period of evaluation. Determination of the expected benefit payments and assessments are based on a range of scenarios and assumptions, including those related to market rates of return and volatility, contract surrenders and mortality experience. The accounting for these guarantees impacts estimated gross profits used to calculate the balance and amortization of DAC and other expenses. Refer to Note 4 for further discussion of these guarantees. Traditional life and other insurance products. The liability for future policy benefits and claims for traditional life insurance policies was determined using the net level premium method, with weighted average interest rates of 6.6% and estimates of mortality, morbidity, investment yields and persistency that were used or being experienced at the time the policies were issued, with a provision for adverse deviation. The liability for future policy benefits for certain annuities with life contingencies was calculated using the present value of future benefits and certain expenses, discounted using weighted average interest rates of 4.7% with a provision for adverse deviation. The Company issues fixed and floating rate funding agreements to the Federal Home Loan Bank of Cincinnati (“FHLB”). The liability for such funding agreements is recorded in future policy benefits and claims. The amount of collateralized funding agreements outstanding with the FHLB as of December 31, 2015 and 2014 was $2.3 billion and $1.8 billion, respectively. In connection with an FHLB requirement for funding agreements, the Company held $46 million and $35 million of FHLB stock as of December 31, 2015 and 2014, respectively. Reinsurance Ceded The Company cedes insurance to other companies in order to limit potential losses and to diversify its exposures. Such agreements do not relieve the original insurer from its primary obligation to the policyholder in the event the reinsurer is unable to meet the obligations it has assumed. Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company. Deferred Policy Acquisition Costs The Company has deferred certain acquisition costs that are directly related to the successful acquisition of new and renewal insurance and investment contracts. The methods and assumptions used to amortize and assess recoverability of the DAC balance depend on the type of product. Investment and universal life insurance products. The assumptions used in the estimation of gross profits are based on the Company’s current best estimates of future events and are reviewed as part of an annual comprehensive study of assumptions. The most significant assumptions that are involved in the estimation of future gross profits include future net general and separate account investment performance, surrender/lapse rates, interest margins, renewal premiums and mortality. Quarterly, consideration is given as to whether adjustments to these assumptions are necessary. The Company uses a reversion to the mean process to determine the assumption for the future net separate account investment performance. This process assumes different performance levels over the next three years, such that the separate account mean return, measured from the anchor date to the end of the life of the product, equals the long-term assumption. The Company’s long-term assumptions for net separate account investment performance consist of assumed gross returns of 10.5% for equity funds and 5.0% for fixed funds. Changes in assumptions can have a significant impact on the amount of DAC reported for investment and universal life insurance products and on their related amortization patterns. In the event actual experience differs from assumptions or future assumptions are revised, the Company will record an increase or decrease in DAC amortization expense, which could be significant. Traditional life insurance products. premium-paying Refer to Note 5 for discussion regarding DAC amortization and related balances. Investments Available-for-sale securities Available-for-sale As of December 31, 2015 and 2014, 99% of fixed maturity securities were priced using externally sourced data. Independent pricing services are most often utilized (86% and 87% as of December 31, 2015 and 2014, respectively) to determine the fair value of securities for which market quotations are available. For these securities, the Company obtains the pricing services’ methodologies, pricing from additional sources, and classifies the investments accordingly in the fair value hierarchy. A corporate pricing matrix is used in valuing certain corporate debt securities. The corporate pricing matrix was developed using publicly and privately available spreads for privately placed corporate securities with varying weighted average lives and credit quality ratings. The weighted average life and credit quality rating of a particular fixed maturity security to be priced using the corporate pricing matrix are important inputs into the model and are used to determine a corresponding spread that is added to the appropriate U.S. Treasury yield to create an estimated market yield for that security. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular security. Non-binding broker quotes are also utilized to determine the fair value of certain fixed maturity securities when deemed appropriate or when quotes are not available from independent pricing services or a corporate pricing matrix. These securities, consisting primarily of private placement corporate bonds, are classified with the lowest priority in the fair value hierarchy as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and/or the transaction volume in the same or similar investments has decreased. Inputs used in the development of prices are not provided to the Company by the brokers, as the brokers often do not provide the necessary transparency into their quotes and methodologies. At least annually, the Company performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value. Price movements of broker quotes are subject to validation and require approval from the Company’s management. Management uses its knowledge of the investment and current market conditions to determine if the price is indicative of the investment’s fair value. When the collectability of contractual interest payments on fixed maturity securities is considered doubtful, such securities are placed in non-accrual status and any accrued interest is excluded from investment income. These securities are not restored to accrual status until the Company determines that future payment of principal and interest is probable. The Company has entered into securities lending agreements with a custodial bank whereby eligible securities are loaned to third parties, primarily major brokerage firms. These transactions are used to generate additional income in the securities portfolio. The Company is entitled to receive from the borrower any payments of interest and dividends received on loaned securities during the loan term. The agreements require a minimum of 102% of the fair value of the loaned securities to be held as collateral. Cash collateral is invested by the custodial bank in investment-grade securities, which are included in the total investments of the Company. Additionally, the Company may receive non-cash collateral, which would be recorded off-balance sheet. As of December 31, 2015 and December 31, 2014, the fair value of the securities received as collateral and recorded off balance sheet is $167 million and $0, respectively. The Company recognizes loaned securities in available-for-sale investments. A securities lending payable is recorded in other liabilities for the amount of cash collateral received. Net income received from securities lending activities is included in net investment income. As of December 31, 2015 and 2014, the fair value of loaned securities was $389 million and $254 million, respectively. For investments in certain residential and commercial mortgage-backed securities, the Company recognizes income and amortizes discounts and premiums using the effective-yield method, based on prepayment assumptions and the estimated economic life of the securities. When actual prepayments differ significantly from estimated prepayments, the effective-yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income in the period the estimates are revised. All other investment income is recorded using the effective-yield method without anticipating the impact of prepayments. The Company periodically reviews its available-for-sale securities to determine if any decline in fair value to below amortized cost is other-than-temporary. Factors considered in determining whether a decline is other-than-temporary include the length of time a security has been in an unrealized loss position, the severity of the unrealized loss, reasons for the decline in value and expectations for the amount and timing of a recovery in fair value. In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt, the Company’s intent to sell the security and whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost basis. The Company evaluates U.S. government, agencies and obligations of states and political subdivisions securities for other-than-temporary impairment by examining similar characteristics. Mortgage-backed securities are assessed for impairment using default estimates based on loan level data, where available. Where loan level data is not available, a proxy based on collateral characteristics is used. The impairment assessment considers loss severity as a function of multiple factors, including unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property value, loan-to-value (“LTV”) ratio at origination and prepayment speeds. Cash flows generated by the collateral are then utilized, along with consideration of the instrument’s position in the overall structure, to determine cash flows associated with the security. Certain asset-backed securities are assessed for impairment using expected cash flows based on various inputs, including default estimates based on the underlying corporate securities, historical and forecasted loss severities or other market inputs when recovery estimates are not feasible. When the collateral is regional bank and insurance company trust preferred securities, default estimates used to estimate cash flows are based on U.S. Bank Rating service data and broker research. The Company evaluates its intent to sell on an individual security basis. Other-than-temporary impairment losses on securities when the Company does not intend to sell the security and it is not more likely than not it will be required to sell the security prior to recovery of the security’s amortized cost basis are bifurcated, with the credit related portion of the impairment loss being recognized in earnings and the non-credit related portion of the impairment loss and any subsequent changes in the fair value of those debt securities being recognized in other comprehensive income, net of applicable taxes and other offsets. To estimate the credit related portion of an impairment loss recognized in earnings, the Company considers the present value of the cash flows. To the extent that the present value of cash flows generated by a debt security is less than the amortized cost, an other-than-temporary impairment is recognized through earnings. It is possible that further declines in fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments, which could be significant. The Company invests in fixed maturity securities that could qualify as variable interest entities (“VIEs”), including corporate securities, mortgage-backed securities and asset-backed securities. The Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impact the entities’ performance. The Company’s potential loss is limited to the carrying values of these securities. There are no liquidity arrangements, guarantees or other commitments by third parties that affect the fair value of the Company’s interest in these assets. Mortgage loans, net of allowance As part of the underwriting process, specific guidelines are followed to ensure the initial quality of a new mortgage loan. Third-party appraisals are obtained to support loaned amounts, as the loans are usually collateral dependent. The collectability and value of a mortgage loan are based on the ability of the borrower to repay and/or the value of the underlying collateral. Many of the commercial mortgage loans are structured with balloon payment maturities, exposing the Company to risks associated with the borrowers’ ability to make the balloon payment or refinance the property. Mortgage loans require a loan-specific reserve when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan requires a loan-specific reserve, a provision for loss is established equal to the difference between the carrying value and either the fair value of the collateral less costs to sell or the present value of expected future cash flows, discounted at the loan’s market interest rate. Loan-specific reserve charges are recorded in net realized investment gains and losses. In the event a loan-specific reserve charge is reversed, the recovery is also recorded in net realized investment gains and losses. In addition to the loan-specific reserves, the Company maintains a non-specific reserve based primarily on loan surveillance categories and property type classes, which reflects management’s best estimates of probable credit losses inherent in the portfolio of loans without specific reserves as of the balance sheet date. Management’s periodic evaluation of the adequacy of the non-specific reserve is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, the composition of the loan portfolio, current economic conditions and other relevant factors. Non-specific reserve changes are recorded in net realized investment gains and losses. Management evaluates the credit quality of individual commercial mortgage loans and the portfolio as a whole through a number of loan quality measurements, including but not limited to LTV and debt service coverage (“DSC”) ratios. The LTV ratio is calculated as a ratio of the amortized cost of a loan to the estimated value of the underlying collateral. DSC is the amount of cash flow generated by the underlying collateral of the mortgage loan available to meet periodic interest and principal payments of the loan. This process identifies commercial mortgage loans representing the lowest risk profile and lowest potential for loss and those representing the highest risk profile and highest potential for loss. These factors are updated and evaluated at least annually. Interest income on performing mortgage loans is recognized over the life of the loan using the effective-yield method. Loans in default or in the process of foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans is included in net investment income in the period received. Loans are restored to accrual status when the principal and interest is current and it is determined the future principal and interest payments are probable or the loan is modified. Loans are considered delinquent when contractual payments are 90 days past due. Policy loans. Short-term investments. Other investments. The Company holds investments in limited partnerships and similar entities including private equity funds, tax credit funds and real estate related funds. The Company applies the equity method of accounting to these investments as it does not have a controlling financial interest. The Company recognizes the change in equity method investments in net investment income. The Company’s unfunded commitments related to these investments were $315 million and $123 million as of December 31, 2015 and 2014, respectively. The carrying value of these investments was $199 million and $141 million as of December 31, 2015 and 2014, respectively. The Company has sold $1.4 billion and $1.3 billion in Tax Credit Funds to unrelated third parties as of December 31, 2015 and 2014, respectively. The Company has guaranteed after-tax benefits to the third party investors through periods ending in 2031. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, the Company must fund any shortfall. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $720 million, but the Company does not anticipate making any material payments related to the guarantees. The Company’s risks are mitigated in the following ways: (1) the Company has the right to buyout the equity related to the guarantee under certain circumstances, (2) the Company may replace underperforming properties to mitigate exposure to guarantee payments and (3) the Company oversees the asset management of the deals. In the normal course of business, the Company has relationships with VIEs. If the Company determines that it has a variable interest and is the primary beneficiary, it consolidates the VIE. The Company is the primary beneficiary if the Company has the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and the obligation to absorb losses or receive benefits from the entity that could be potentially significant to the VIE. This determination is based on a review of the entity’s contract and other deal-related information, such as the entity’s equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity. These consolidated VIEs are primarily made up of the Tax Credit Funds discussed above. Net assets (controlling and noncontrolling interests) of all consolidated VIEs totaled $644 million and $640 million as of December 31, 2015 and 2014, respectively, and are included within the balance sheet primarily as other investments of $585 million, other assets of $113 million and other liabilities of $67 million as of December 31, 2015, and other investments of $580 million, other assets of $109 million and other liabilities of $75 million as of December 31, 2014. The Company’s general credit is not exposed to the creditors or beneficial interest holders of these consolidated VIEs. The results of operations and financial positions of each VIE for which the Company is the primary beneficiary, as well as the corresponding noncontrolling interests, are recorded in the consolidated financial statements. Ownership interests held by unrelated third parties in the consolidated VIEs are presented as noncontrolling interests in the equity section of the consolidated financial statements. Losses attributable to noncontrolling interests are excluded from the net income attributable to the Company on the consolidated statements of operations. The Company is not required and does not intend to provide financial or other support outside of contractual requirements to any VIE. Derivative Instruments The Company uses derivative instruments to manage exposures and mitigate risks primarily associated with interest rates, equity markets and foreign currency. These derivative instruments primarily include interest rate swaps, futures contracts and options. Certain features embedded in the Company’s indexed products and certain variable annuity contracts require derivative accounting. All derivative instruments are held at fair value and are reflected as other assets or liabilities in the consolidated balance sheets. The fair value of derivative instruments is determined using various valuation techniques relying predominantly on observable market inputs. These inputs include interest rate swap curves, credit spreads, interest rates, counterparty credit risk, equity volatility and equity index levels. In cases where observable inputs are not available, the Company will utilize non-binding broker quotes to determine fair value, and these instruments are classified accordingly in the fair value hierarchy. Price movements of these broker quotes are subject to validation and require approval from the Company’s management. Management uses models to internally value the instruments for comparison to the values received through broker quotes. For derivatives that are not designated for hedge accounting, the gain or loss on the derivative is recognized in net realized investment gains and losses. For derivative instruments that are designated and qualify for cash flow hedge accounting, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income and reclassified into earnings in the same period or periods that the hedged transaction impacts earnings. The ineffective portion of the derivative’s change in value, if any, along with any of the derivative’s change in value that is excluded from the assessment of hedge effectiveness, are recorded in net realized investment gains and losses. The Company’s derivative transaction counterparties are generally financial institutions. To reduce the credit risk associated with open contracts, the Company enters into master netting agreements, which permit the closeout and netting of transactions with the same counterparty upon the occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. The Company accepts collateral in the forms of cash and marketable securities. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In determining fair value, the Company uses various methods, including market, income and cost approaches. The Company categorizes its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety. The Company categorizes assets and liabilities held at fair value in the consolidated balance sheets as follows: Level 1. Unadjusted quoted prices accessible in active markets for identical assets or liabilities at the measurement date and mutual funds, where the value per share (unit) is determined and published daily and is the basis for current transactions. Level 2. Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means. Primary inputs to this valuation technique may include comparative trades, bid/asks, interest rate movements, U.S. Treasury rates, London Interbank Offered Rate (“LIBOR”), prime rates, cash flows, maturity dates, call ability, estimated prepayments and/or underlying collateral values. Level 3. Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimates of the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs. The Company reviews its fair value hierarchy class |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2015 | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adopted Accounting Standards On January 1, 2015, the Company adopted ASU 2014-04, which amends existing guidance in ASC 310, Receivables Property, Plant and Equipment On January 1, 2015, the Company adopted ASU 2014-11, which amends existing guidance in ASC 860, Transfers and Servicing On January 1, 2015, the Company adopted ASU 2014-14, which amends ASC 310, Receivables On January 1, 2015, the Company adopted ASU 2014-17, which amends ASC 805, Business Combinations On January 1, 2015, the Company adopted ASU 2015-02, which amends existing guidance in ASC 810, Consolidation Pending Accounting Standards In January 2015, the FASB issued ASU 2015-01, which amends existing guidance in ASC 225, Income Statement In April 2015, the FASB issued ASU 2015-03, which amends existing guidance in ASC 835, Interest In May 2015, the FASB issued ASU 2015-07, which amends ASC 820, Fair Value Measurements In May 2015, the FASB issued ASU 2015-09, which amends ASC 944, Financial Services-Insurance In August 2015, the FASB issued ASU 2015-14, which amends ASC 606, Revenue from Contracts from Customers In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Liabilities |
Certain Long-Duration Contracts
Certain Long-Duration Contracts | 12 Months Ended |
Dec. 31, 2015 | |
Certain Long-Duration Contracts | (4) Certain Long-Duration Contracts Variable Annuity Contracts The Company provides various forms of guarantees to benefit the related contractholders of variable annuity contracts issued through separate accounts. The Company provides four primary guarantee types: (1) GMDB, (2) GLWB, (3) GMAB and (4) guaranteed minimum income benefits (“GMIB”). The GMDB, offered on variable annuity contracts, provides a specified minimum return upon death. Many of these death benefits are spousal, whereby a death benefit will be paid upon death of the first spouse. The survivor has the option to terminate the contract or continue it by having the death benefit paid into the contract and having a second death benefit paid upon the survivor’s death. The GLWB, primarily offered in the Company’s Lifetime Income products, are living benefits that provide for enhanced retirement income security without the liquidity loss associated with annuitization. The withdrawal rates vary based on the age when withdrawals begin and are applied to a benefit base to determine the guaranteed lifetime income amount available to a contractholder. The benefit base is equal to the variable annuity premium at contract issuance and may increase as a result of a feature driven by minimum return and policy duration. The GMAB, which was offered in the Company’s Capital Preservation Plus product, is a living benefit that provides the contractholder with a guaranteed return of deposits, adjusted proportionately for withdrawals, after a specified time period (5, 7 or 10 years) selected by the contractholder at the issuance of the variable annuity contract. In some cases, the contractholder also has the option, after a specified time period, to drop the guarantee and continue the variable annuity contract without the GMAB. In general, the GMAB requires a minimum allocation to guaranteed term options or adherence to limitations required by an approved asset allocation strategy. The GMIB, which was offered with several variable annuity contracts, is a living benefit that provides the contractholder with a guaranteed annuitization stream of income. The following table summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts, as of the dates indicated (a contract may contain multiple guarantees): December 31, 2015 December 31, 2014 (in millions) General Separate Net 1 Average 2 General Separate Net 1 Average 2 Contracts with GMDB: Return of net deposits $ 885 $ 24,452 $ 208 66 $ 872 $ 23,079 $ 21 65 Minimum return or anniversary contract value 1,817 31,511 1,133 70 1,918 33,662 292 69 Total contracts with GMDB $ 2,702 $ 55,963 $ 1,341 68 $ 2,790 $ 56,741 $ 313 68 GLWB Minimum return or anniversary contract value 3 $ 141 $ 32,187 $ 142 67 $ 135 $ 31,406 $ 195 66 GMAB Return of net deposits 3 $ 19 $ 496 $ 2 66 $ 43 $ 1,177 $ — 67 GMIB Minimum return or anniversary contract value $ 46 $ 380 $ 1 67 $ 45 $ 451 $ 1 66 1 Net amount at risk is calculated on a policy-level basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). 2 Represents the weighted average attained age of contractholders at the respective date. 3 Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. The following table summarizes the reserve balances for guarantees on variable annuity contracts, as of the dates indicated: December 31, (in millions) 2015 2014 GMDB $ 148 $ 76 GLWB 1 $ 180 $ 185 GMAB 1 $ — $ (8 ) GMIB $ 2 $ 1 1 Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. During 2015, the Company recognized a net decrease in the liability for future policy benefits and claims in conjunction with the annual comprehensive review of assumptions, primarily related to the Company’s assumption for participant benefit utilization of the net settlement option within the GLWB. The Company changed its estimate to reduce expected utilization of the net settlement option. For the year ended December 31, 2015, the change in estimate resulted in net realized investment gains of $187 million, an increase to benefits and claims of $164 million and lower amortization of deferred policy acquisition costs of $28 million. Paid claims for GMDBs were $20 million and $11 million for the years ended December 31, 2015 and 2014, respectively. Paid claims for GLWBs, GMABs and GMIBs were immaterial for the years ended December 31, 2015 and 2014. The following table summarizes the account balances of deferred variable annuity contracts with guarantees invested in separate accounts, as of the dates indicated: December 31, (in millions) 2015 2014 Mutual funds: Bond $ 5,371 $ 5,280 Domestic equity 46,469 47,316 International equity 3,001 2,969 Total mutual funds $ 54,841 $ 55,565 Money market funds 1,122 1,176 Total 1 $ 55,963 $ 56,741 1 Excludes $31.3 billion as of December 31, 2015 and 2014 of separate account assets not related to deferred variable annuity contracts with guarantees, primarily attributable to retirement plan, variable universal life and COLI products. Fixed Annuity Contracts The Company offers certain fixed annuity products with GMDB and GLWB. As of December 31, 2015 and 2014, the general account value for contracts with GMDB was $2.7 billion and $351 million, respectively, which includes $1.4 billion and $185 million, respectively, of general account value relating to contracts that also have GLWB. The net amount at risk and reserve balances on these guarantees were immaterial as of December 31, 2015 and 2014. Paid claims for GMDB were immaterial for the years ended December 31, 2015 and 2014. There were no paid claims for GLWB during the years ended December 31, 2015 and 2014. Universal and Variable Universal Life Insurance Contracts The Company offers certain universal life and variable universal life insurance products with no-lapse guarantees. These no-lapse guarantees provide that a policy will not lapse so long as the policyholder makes minimum premium payments. The reserve balances on these guarantees were $548 million and $401 million as of December 31, 2015 and 2014, respectively. Paid claims on these guarantees were immaterial for the years ended December 31, 2015 and 2014. The following table summarizes information regarding universal and variable universal life insurance contracts with no-lapse guarantees invested in general and separate accounts, as of the dates indicated: (in millions) General account Separate account Adjusted insurance 1 Average age 2 December 31, 2015 $ 2,473 $ 2,053 $ 48,140 51 December 31, 2014 $ 1,954 $ 2,191 $ 41,484 51 1 The adjusted insurance in force is calculated on a policy-level basis and equals the respective guaranteed death benefit less the account value and reinsurance. 2 Represents the weighted average attained age of contractholders at the respective date. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 12 Months Ended |
Dec. 31, 2015 | |
Deferred Policy Acquisition Costs | 5) Deferred Policy Acquisition Costs The following table summarizes changes in the DAC balance, as of the dates indicated: December 31, (in millions) 2015 2014 2013 Balance at beginning of year $ 4,063 $ 3,778 $ 3,249 Capitalization of DAC 870 685 604 Amortization of DAC, excluding unlocks (326 ) (397 ) (373 ) Amortization of DAC related to unlocks 258 190 (1 ) Adjustments to DAC related to unrealized gains and losses on available-for-sale securities 335 (193 ) 299 Balance at end of year $ 5,200 $ 4,063 $ 3,778 During 2015, the Company recognized a decrease in DAC amortization of $258 million as a result of the annual comprehensive review of model assumptions and enhancements. The impact was primarily related to revisions made to the Company’s economic hedging strategies in conjunction with the change in estimate discussed in Note 4, as well as a decrease in the expected lapse rates for certain variable annuity products. During 2014, the Company recognized a decrease in DAC amortization of $190 million as a result of the annual comprehensive review of model assumptions and enhancements. The updated assumptions were primarily related to the actual performance of the block of business since the prior year review and the expectations for lapses, partially offset by an update to the Company’s long-term assumptions for separate account investment performance. During 2013, the net change in DAC amortization as a result of the annual comprehensive review of model assumptions was immaterial. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2015 | |
Investments | (6) Investments Available-for-Sale Securities The following table summarizes the amortized cost, unrealized gains and losses and fair value of available-for-sale securities, as of the dates indicated: (in millions) Amortized Unrealized Unrealized Fair December 31, 2015 Fixed maturity securities: U.S. government and agencies $ 343 $ 59 $ — $ 402 Obligations of states, political subdivisions and foreign governments 2,137 241 11 2,367 Corporate public securities 23,174 868 752 23,290 Corporate private securities 5,082 203 115 5,170 Residential mortgage-backed securities 3,036 152 42 3,146 Commercial mortgage-backed securities 1,539 37 11 1,565 Asset-backed securities 1,685 19 74 1,630 Total fixed maturity securities $ 36,996 $ 1,579 $ 1,005 $ 37,570 Equity securities 7 14 — 21 Total available-for-sale securities $ 37,003 $ 1,593 $ 1,005 $ 37,591 December 31, 2014 Fixed maturity securities: U.S. government and agencies $ 448 $ 79 $ — $ 527 Obligations of states, political subdivisions and foreign governments 1,966 320 1 2,285 Corporate public securities 19,851 1,519 120 21,250 Corporate private securities 4,398 286 34 4,650 Residential mortgage-backed securities 3,694 190 45 3,839 Commercial mortgage-backed securities 1,431 74 3 1,502 Asset-backed securities 1,410 27 72 1,365 Total fixed maturity securities $ 33,198 $ 2,495 $ 275 $ 35,418 Equity securities 6 15 — 21 Total available-for-sale securities $ 33,204 $ 2,510 $ 275 $ 35,439 The fair value of the Company’s available-for-sale securities may fluctuate significantly in response to changes in interest rates, investment quality ratings and credit spreads. The Company has the ability and intent to hold equity securities until recovery. The Company does not have the intent to sell, nor is it more likely than not that it will be required to sell, fixed maturity securities in an unrealized loss position. The following table summarizes the amortized cost and fair value of fixed maturity securities, by contractual maturity, as of December 31, 2015. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without early redemption penalties. (in millions) Amortized Fair Fixed maturity securities: Due in one year or less $ 977 $ 982 Due after one year through five years 10,512 10,861 Due after five years through ten years 9,302 9,295 Due after ten years 9,945 10,091 Subtotal $ 30,736 $ 31,229 Residential mortgage-backed securities 3,036 3,146 Commercial mortgage-backed securities 1,539 1,565 Asset-backed securities 1,685 1,630 Total fixed maturity securities $ 36,996 $ 37,570 The following table summarizes the components of net unrealized gains and losses, as of the dates indicated: (in millions) December 31, 2015 2014 Net unrealized gains on available-for-sale securities, before adjustments and taxes 1 $ 588 $ 2,235 Adjustment to DAC and other expense (33 ) (372 ) Adjustment to future policy benefits and claims (16 ) (159 ) Adjustment to policyholder dividend obligations (67 ) (120 ) Deferred federal income tax expense (156 ) (548 ) Net unrealized gains on available-for-sale securities $ 316 $ 1,036 1 Includes net unrealized losses of $20 million and $9 million as of December 31, 2015 and 2014, respectively, related to the non-credit portion of other-than-temporarily impaired securities. The following table summarizes the change in net unrealized gains and losses reported in accumulated other comprehensive income, for the years ended: December 31, (in millions) 2015 2014 Balance at beginning of year $ 1,036 $ 601 Unrealized gains and losses arising during the year: Net unrealized (losses) gains on available-for-sale securities before adjustments (1,662 ) 939 Non-credit impairments and subsequent changes in fair value of impaired debt securities (11 ) 31 Net adjustment to DAC and other expense 339 (196 ) Net adjustment to future policy benefits and claims 143 (70 ) Net adjustment to policyholder dividend obligations 53 (35 ) Related federal income tax benefit (expense) 401 (234 ) Unrealized (losses) gains on available-for-sale securities $ (737 ) $ 435 Less: Reclassification adjustment for net losses realized on available-for-sale securities, net of tax benefit ($9 and $0 as of December 31, 2015 and 2014, respectively) (17 ) — Net unrealized (losses) gains on available-for-sale securities $ (720 ) $ 435 Balance at end of year $ 316 $ 1,036 The following table summarizes, by asset class, available-for-sale securities, in an unrealized loss position based on the amount of time each type of security has been in an unrealized loss position, as well as the related fair value, as of the dates indicated: Less than or equal to one year More than one year Total (in millions) Fair Unrealized Fair Unrealized Unrealized 1 December 31, 2015 Fixed maturity securities: Corporate public securities $ 8,170 $ 455 $ 975 $ 297 $ 752 Corporate private securities 1,642 56 418 59 115 Asset-backed securities 654 7 756 67 74 Other 1,271 23 504 41 64 Total 2 $ 11,737 $ 541 $ 2,653 $ 464 $ 1,005 December 31, 2014 Fixed maturity securities: Corporate public securities $ 1,642 $ 63 $ 1,578 $ 57 $ 120 Corporate private securities 589 27 256 7 34 Asset-backed securities 662 5 493 67 72 Other 268 2 688 47 49 Total 2 $ 3,161 $ 97 $ 3,015 $ 178 $ 275 1 As of December 31, 2015 and 2014, there were $448 million and $66 million, respectively, of unrealized losses related to available-for-sale securities with a fair value to amortized cost ratio of less than 80%. 2 Represents 1,059 and 541 available-for-sale securities in an unrealized loss position as of December 31, 2015 and 2014, respectively. The Company believes the unrealized losses on these available-for-sale securities represent temporary fluctuations in economic factors that are not indicative of other-than-temporary-impairment. Mortgage Loans, Net of Allowance The following table summarizes the amortized cost of mortgage loans by method of evaluation for credit loss, and the related valuation allowances by type of credit loss, as of the dates indicated: December 31, (in millions) 2015 2014 Amortized cost: Loans with non-specific reserves $ 8,403 $ 7,279 Loans with specific reserves 19 17 Total amortized cost $ 8,422 $ 7,296 Valuation allowance: Non-specific reserves $ 23 $ 21 Specific reserves 3 5 Total valuation allowance $ 26 $ 26 Mortgage loans, net of allowance $ 8,396 $ 7,270 The following table summarizes activity in the valuation allowance for mortgage loans, for the years ended: December 31, (in millions) 2015 2014 2013 Balance at beginning of year $ 26 $ 35 $ 44 Current period provision 1 2 (8 ) (4 ) Recoveries 2 (2 ) (1 ) (5 ) Balance at end of year $ 26 $ 26 $ 35 1 Includes specific reserve provisions and all changes in non-specific reserves. 2 Includes recoveries on sales and increases in the valuation of loans with specific reserves. Interest income recognized on commercial mortgage loans with a specific reserve was $2 million, $1 million and $3 million for the years ended December 31, 2015, 2014 and 2013, respectively. The average recorded investment was $14 million, $16 million and $30 million for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014, the Company’s mortgage loans classified as delinquent and/or in non-accrual status were immaterial in relation to the total mortgage loan portfolio. The Company had no mortgage loans 90 days or more past due and still accruing interest. The following table summarizes the LTV ratio and DSC ratios of the mortgage loan portfolio, as of the dates indicated: LTV ratio DSC ratio (in millions) Less 90% Total 1 Greater Less Total 1 December 31, 2015 Apartment $ 2,791 $ — $ 2,791 $ 2,791 $ — $ 2,791 Industrial 1,221 25 1,246 1,193 53 1,246 Office 1,318 3 1,321 1,286 35 1,321 Retail 2,765 2 2,767 2,756 11 2,767 Other 297 — 297 297 — 297 Total 2 $ 8,392 $ 30 $ 8,422 $ 8,323 $ 99 $ 8,422 December 31, 2014 Apartment $ 2,267 $ 17 $ 2,284 $ 2,278 $ 6 $ 2,284 Industrial 1,165 35 1,200 1,137 63 1,200 Office 1,020 20 1,040 994 46 1,040 Retail 2,570 11 2,581 2,549 32 2,581 Other 191 — 191 191 — 191 Total 3 $ 7,213 $ 83 $ 7,296 $ 7,149 $ 147 $ 7,296 1 While these loan quality measurements contribute to management’s assessment of relative credit risk in the commercial mortgage loan portfolio for the dates indicated, based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible. 2 As of December 31, 2015, the weighted average DSC ratios for the respective LTV ratio ranges above were 2.02 and 0.83, with a total weighted average DSC ratio of 2.02. As of December 31, 2015, the weighted average LTV ratios for the respective DSC ratio ranges above were 60% and 85%, with a total weighted average LTV ratio of 60%. 3 As of December 31, 2014, the weighted average DSC ratios for the respective LTV ratio ranges above were 1.94 and 0.90, with a total weighted average DSC ratio of 1.93. As of December 31, 2014, the weighted average LTV ratios for the respective DSC ratio ranges above were 60% and 90%, with a total weighted average LTV ratio of 60%. While these loan quality measurements contribute to management’s assessment of relative credit risk in the mortgage loan portfolio for the dates indicated, based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible. Available-For-Sale Securities on Deposit, Held in Trust and Pledged as Collateral Available-for-sale securities with a carrying value of $8 million were on deposit with various regulatory agencies as required by law as of December 31, 2015 and 2014. Additionally, available-for-sale securities with a carrying value of $538 million and $683 million were pledged as collateral to secure recoveries under reinsurance contracts and other funding agreements as of December 31, 2015 and 2014, respectively. These securities are primarily included in fixed maturity securities in the consolidated balance sheets. Net Investment Income The following table summarizes net investment income, by investment type, for the years ended: December 31, (in millions) 2015 2014 2013 Fixed maturity securities, available-for-sale $ 1,646 $ 1,575 $ 1,565 Mortgage loans 390 362 348 Alternative Investments (56 ) (32 ) (68 ) Policy loans 51 51 52 Other 12 3 11 Gross investment income $ 2,043 $ 1,959 $ 1,908 Investment expenses 61 59 59 Net investment income $ 1,982 $ 1,900 $ 1,849 Net Realized Investment Gains and Losses, Including Other-Than-Temporary Impairments The following table summarizes net realized investment gains and losses, including other-than-temporary impairments, by source, for the years ended: December 31, (in millions) 2015 2014 2013 Net realized derivative gains (losses) $ 120 $ (1,087 ) $ 705 Realized gains on sales 11 31 32 Realized losses on sales (37 ) (19 ) (54 ) Other (11 ) 2 — Net realized investment gains (losses) before other-than-temporary-impairments on fixed maturity securities $ 83 $ (1,073 ) $ 683 Other-than-temporary-impairments on fixed maturity securities 1 (1 ) (5 ) (5 ) Net realized investment gains (losses), including other-than-temporary-impairments $ 82 $ (1,078 ) $ 678 1 Other-than-temporary impairments on fixed maturity securities are net $2 million, $1 million and $6 million of non-credit losses included in other comprehensive income for the years ended December 31, 2015, 2014 and 2013, respectively. Proceeds from the sale of available-for-sale securities were $466 million, $647 million and $1.1 billion during the years ended December 31, 2015, 2014 and 2013, respectively. Gross gains of $11 million, $17 million and $31 million and gross losses of $36 million, $10 million and $50 million were realized on sales of available-for-sale securities during the years ended December 31, 2015, 2014 and 2013, respectively. The following table summarizes the cumulative credits losses, for the years ended: December 31, (in millions) 2015 2014 2013 Cumulative credit losses at beginning of year 1 $ (254 ) $ (272 ) $ (289 ) New credit losses (1 ) (2 ) (3 ) Incremental credit losses — (4 ) (3 ) Losses related to securities included in the beginning balance sold or paid down during the period 31 24 23 Cumulative credit losses at end of year 1 $ (224 ) $ (254 ) $ (272 ) 1 Cumulative credit losses are defined as amounts related to the Company’s credit portion of the other-than-temporary impairment losses on debt securities that the Company does not intend to sell and that it is not more likely than not the Company will be required to sell prior to recovery of the amortized cost basis. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments | (7) Derivative Instruments The Company is exposed to certain risks related to its ongoing business operations which are managed using derivative instruments. Interest rate risk management. Interest rate contracts are used by the Company in association with fixed and variable rate investments to achieve cash flow streams that support certain financial obligations of the Company and to produce desired investment returns. As such, interest rate contracts are generally used to convert fixed rate cash flow streams to variable rate cash flow streams or vice versa. In addition, prior to expiry in June 2015, the Company engaged in an interest rate swap program, which was structured to provide an offset against the negative impact of higher interest rates on the Company’s statutory surplus position and to mitigate the negative impact of lower interest rates on certain guarantees related to variable annuity contracts. Equity market risk management. Other risk management. Credit risk associated with derivatives transactions. The following table summarizes the fair value and related notional amounts of derivative instruments, as of the dates indicated: Derivative assets Derivative liabilities (in millions) Fair value Notional Fair value Notional December 31, 2015 Derivatives designated and qualifying as hedging instruments $ 86 $ 725 $ 2 $ 89 Derivatives not designated as hedging instruments: Interest rate contracts 1 $ 39 $ 875 $ 98 $ 1,059 Equity contracts 445 7,329 — — Total return swaps and other derivative contracts — 77 6 2 Total derivatives 2 $ 570 $ 9,006 $ 106 $ 1,150 December 31, 2014 Derivatives designated and qualifying as hedging instruments $ 29 $ 381 $ 9 $ 176 Derivatives not designated as hedging instruments: Interest rate contracts 1 $ 2,602 $ 32,829 $ 2,611 $ 32,756 Equity contracts 411 5,990 — — Total return swaps and other derivative contracts — — 44 2,810 Total derivatives 2 $ 3,042 $ 39,200 $ 2,664 $ 35,742 1 The decreases in the fair value and notional amounts of interest rate contracts are primarily a result of revisions made to the Company’s economic hedging strategies in conjunction with the change in estimate discussed in Note 4. 2 Fair value balance excludes accrued interest on derivative assets and liabilities of $10 and $11 million, respectively, for the year ended December 31, 2015. Fair value balance excludes accrued interest on derivative assets and liabilities of $243 million and $244 million, respectively, for the year ended December 31, 2014. Of the $570 million and $3.0 billion of fair value of total derivative assets at December 31, 2015 and 2014, $48 million and $2.6 billion, respectively, are subject to master netting agreements. The Company received $374 million and $535 million of cash collateral and held $99 million and $64 million, respectively, of securities as off-balance sheet collateral, resulting in an immaterial uncollateralized position as of December 31, 2015 and 2014. Of the $106 million and $2.7 billion of fair value of total derivative liabilities at December 31, 2015 and 2014, $48 million and $2.6 billion, respectively, are subject to master netting agreements. The Company posted $92 million and $330 million of cash collateral and pledged securities with a fair value of $64 million and $174 million, respectively, resulting in an immaterial uncollateralized position as of December 31, 2015 and 2014. The following table summarizes gains and losses for derivative instruments recognized in net realized investment gains and losses in the consolidated statements of operations, for the years ended: December 31, (in millions) 2015 2014 2013 Derivatives designated and qualifying as hedging instruments $ — $ — $ (1 ) Derivatives not designated as hedging instruments: Interest rate contracts $ (141 ) $ 142 $ (209 ) Equity contracts (257 ) (79 ) (776 ) Total return swaps (44 ) (195 ) (321 ) Other derivative contracts (6 ) 4 (9 ) Net interest settlements 32 20 14 Total derivative losses 1 $ (416 ) $ (108 ) $ (1,302 ) Change in embedded derivative liabilities and related fees 2 $ 536 $ (979 ) $ 2,007 Net realized derivative gains (losses) $ 120 $ (1,087 ) $ 705 1 Included in total derivative losses are economic hedging (losses) gains of $(402) million, $941 million and $(1.8) billion related to the guaranteed benefit annuity programs for the years ended December 31, 2015, 2014 and 2013, respectively. Also included are economic hedging gains (losses) of $52 million, $(1.0) billion and $645 million, respectively, related to the program that protects against the negative impact of higher interest rates on the Company’s statutory surplus position through expiry. 2 During 2015, the annual comprehensive review of model assumptions for the individual variable annuity business produced a favorable impact of $187 million for the year ended December 31, 2015, attributable to the change in estimate discussed in Note 4. During 2014 and 2013, the annual comprehensive review of model assumptions for the individual variable annuity business included a favorable impact for the years ended December 31, 2014 and 2013, primarily due to model enhancements and updated assumptions for discounting and benefit utilization, partially offset by mortality and lapse rates. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements | 8) Fair Value Measurements The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2015: (in millions) Level 1 Level 2 Level 3 Total Assets Investments: Fixed maturity securities, available-for-sale: U.S. government and agencies $ 399 $ 1 $ 2 $ 402 Obligations of states, political subdivisions and foreign governments 63 2,304 — 2,367 Corporate public securities — 23,142 148 23,290 Corporate private securities — 4,226 944 5,170 Residential mortgage-backed securities 846 2,291 9 3,146 Commercial mortgage-backed securities — 1,565 — 1,565 Asset-backed securities — 1,505 125 1,630 Total fixed maturity securities, available-for-sale, at fair value $ 1,308 $ 35,034 $ 1,228 $ 37,570 Other investments at fair value 1 270 546 37 853 Investments at fair value $ 1,578 $ 35,580 $ 1,265 $ 38,423 Derivative instruments - assets — 125 445 570 Separate account assets 83,466 1,323 2,449 87,238 Assets at fair value $ 85,044 $ 37,028 $ 4,159 $ 126,231 Liabilities Future policy benefits and claims $ — $ — $ (65 ) $ (65 ) Derivative instruments - liabilities — (100 ) (6 ) (106 ) Liabilities at fair value $ — $ (100 ) $ (71 ) $ (171 ) 1 Other investments at fair value includes $66 million of trading securities as of December 31, 2015. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2015: (in millions) Fixed 2 Other Derivative 3 Separate Total assets Liabilities at 3 Balance as of December 31, 2014 $ 1,267 $ 36 $ 411 $ 2,106 $ 3,820 $ (264 ) Net (losses) gains In operations 1 (6 ) — (46 ) 18 (34 ) 313 In other comprehensive income (44 ) — — — (44 ) — Purchases 142 1 104 325 572 (144 ) Sales (162 ) — (24 ) — (186 ) 24 Transfers into Level 3 201 — — — 201 — Transfers out of Level 3 (170 ) — — — (170 ) — Balance as of December 31, 2015 $ 1,228 $ 37 $ 445 $ 2,449 $ 4,159 $ (71 ) 1 Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized gains (losses) included in operations on assets and liabilities still held at the end of the year was $316 million for future policy benefits and claims, $(9) million for derivative assets, and $2 million for derivative liabilities. 2 Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2015. 3 Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities. Transfers into and out of Level 3 during the year ended December 31, 2015 are primarily due to certain corporate private securities priced using unobservable inputs to priced using observable inputs. There were no material transfers between Levels 1 and 2 during the year ended December 31, 2015. Living Benefit Guarantees The following table summarizes significant unobservable inputs used for fair value measurements for living benefits liabilities, included in future policy benefits and claims and classified as Level 3 as of December 31, 2015: Unobservable Inputs Range Mortality 0.1% - 8% 2 Lapse 0% - 35% Wait period 0 yrs - 30 yrs 3 Efficiency of benefit utilization 1 60% - 100% Discount rate 4 See note 4 below Index volatility 15% - 25% 1 The unobservable input is not applicable to GMABs. 2 Represents the mortality for the majority of business with living benefits, with policyholders ranging from 45 to 85. 3 A portion of the contractholders could never use the benefit, which would extend the range to an indeterminate period. 4 Incorporates the liquidity and non-performance risk adjustment. The liquidity spread takes into consideration market observables for spreads in illiquid assets. The non-performance risk adjustment reflects an additional spread over LIBOR determined by market observables for similarly rated public bonds. The following changes in any of the significant unobservable inputs presented in the table above may result in a change in the fair value measurements of the living benefits liability: Higher mortality rates tend to decrease the value of the liability and lower mortality rates tend to increase the value of the liability. Higher lapse rates tend to decrease the value of the liability and lower lapse rates tend to increase the value of the liability. Factors that impact the predicted lapse rate can include: age, policy duration, policy size, benefit in-the-moneyness, tax status (i.e. qualified or non-qualified), interest rate levels, short-term equity market performance, partial withdrawal behavior and applicable surrender charges. All else being equal, policies that are in-the-money will have lower lapse rates than policies that are out-of-the-money, and policies that have a surrender charge present will have lower lapse rates than policies without a surrender charge. The assumed wait period and the efficiency of utilization determine the timing and amount of living benefits withdrawals. These assumptions vary by the product type, age of the policyholder, policy size and policy duration. Many products have a bonus feature which enhances the guarantee on every policy anniversary for the first ten years so long as withdrawals have not commenced. All else being equal, policies commencing withdrawals at a time around the year ten bonus will have higher liability values than policies commencing withdrawals 20 years after issue or policies commencing withdrawals only one year after issue. In addition, policies that are assumed to withdraw the maximum permitted amount will have a higher liability value than a policy that is assumed to withdraw less than the maximum allowed amount. A higher discount rate tends to decrease the value of the liability and a lower discount rate tends to increase the value of the liability. Higher index volatility tends to increase the value of the liability and lower index volatility tends to decrease the value of the liability. Indexed Products The following table summarizes significant unobservable inputs used for fair value measurements for indexed universal life and indexed annuity products classified as Level 3 as of December 31, 2015: Unobservable Inputs Range Mortality 0% - 4%¹ Lapse 0% - 10% Index volatility 15% - 25% 1 Represents the mortality for the majority of business, with policyholders ranging from 0 to 75. The following changes in any of the significant unobservable inputs presented in the table above may result in a change in the fair value measurements of the indexed products: Higher mortality rates tend to decrease the value of the liability and lower mortality rates tend to increase the value of the liability. Higher lapse rates tend to decrease the value of the liability and lower lapse rates tend to increase the value of the liability. Factors that impact the predicted lapse rate can include: age, policy duration, policy size, and applicable surrender charges. All else being equal, policies with a surrender charge present will have lower lapse rates than policies without a surrender charge. Higher index volatility tends to increase the value of the liability and lower index volatility tends to decrease the value of the liability. Separate Accounts The Company’s separate account assets include an investment in a mutual fund with a non-readily determinable fair value. Net asset value has been used to estimate the fair value of this investment as a practical expedient. The investments are included in Level 3 as they may not be redeemed until the guarantee period expires in 2016. The investment strategy of this fund is to build a portfolio where the assets shall be sufficient to achieve a target portfolio value by the end of the guarantee period. The net asset value of this fund reported in separate account assets was $1.7 billion as of December 31, 2015 and 2014. The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2014: (in millions) Level 1 Level 2 Level 3 Total Assets Investments: Fixed maturity securities, available-for-sale: U.S. government and agencies $ 523 $ 1 $ 3 $ 527 Obligations of states, political subdivisions and foreign governments 66 2,219 — 2,285 Corporate public securities — 21,158 92 21,250 Corporate private securities — 3,659 991 4,650 Residential mortgage-backed securities 1,034 2,796 9 3,839 Commercial mortgage-backed securities — 1,499 3 1,502 Other asset-backed securities — 1,196 169 1,365 Total fixed maturity securities, available-for-sale, at fair value $ 1,623 $ 32,528 $ 1,267 $ 35,418 Other investments at fair value 1 42 899 36 977 Investments at fair value $ 1,665 $ 33,427 $ 1,303 $ 36,395 Derivative instruments - assets — 2,631 411 3,042 Separate account assets 84,583 1,387 2,106 88,076 Assets at fair value $ 86,248 $ 37,445 $ 3,820 $ 127,513 Liabilities Future policy benefits and claims at fair value $ — $ — $ (261 ) $ (261 ) Derivative instruments - liabilities — (2,661 ) (3 ) (2,664 ) Liabilities at fair value $ — $ (2,661 ) $ (264 ) $ (2,925 ) 1 Other investments at fair value includes $21 million of trading securities as of December 31, 2014. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2014: (in millions) Fixed 2 Other Derivative 3 Separate Total assets Liabilities at 3 Balance as of December 31, 2013 $ 1,088 $ 45 $ 343 $ 2,083 $ 3,559 $ 1,005 Net gains (losses) In operations 1 (5 ) 6 40 23 64 (1,269 ) In other comprehensive income 21 1 — — 22 — Purchases 121 — 46 — 167 — Sales (241 ) (16 ) (18 ) — (275 ) — Transfers into Level 3 400 — — — 400 — Transfers out of Level 3 (117 ) — — — (117 ) — Balance as of December 31, 2014 $ 1,267 $ 36 $ 411 $ 2,106 $ 3,820 $ (264 ) 1 Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized (losses) gains included in operations on assets and liabilities still held as of the end of the year was $(1.3) billion for future policy benefits and claims, $154 million for derivative assets and $6 million for other investments at fair value. 2 Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2014. 3 Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities. Transfers into and out of Level 3 during the year ended December 31, 2014 are primarily due to certain corporate private securities and other asset-backed securities, which changed pricing sources between broker quotes and independent pricing services. There were no transfers between Levels 1 and 2 during the year ended December 31, 2014. Financial Instruments Not Carried at Fair Value The following table summarizes the carrying value and fair value of the Company’s financial instruments not carried at fair value as of the dates indicated. The valuation techniques used to estimate these fair values are described below. December 31, 2015 December 31, 2014 (in millions) Carrying Fair Level 2 Level 3 Carrying Fair Level 2 Level 3 Assets Investments: Mortgage loans, net of allowance $ 8,396 $ 8,462 $ — $ 8,462 $ 7,270 $ 7,616 $ — $ 7,616 Policy loans $ 993 $ 993 $ — $ 993 $ 992 $ 992 $ — $ 992 Other investments $ 71 $ 71 $ — $ 71 $ 60 $ 60 $ — $ 60 Liabilities Investment contracts $ 27,301 $ 25,822 $ — $ 25,822 $ 23,470 $ 21,742 $ — $ 21,742 Short-term debt $ 400 $ 400 $ — $ 400 $ 660 $ 660 $ — $ 660 Long-term debt $ 707 $ 941 $ 934 $ 7 $ 709 $ 1,069 $ 1,060 $ 9 Mortgage loans, net of allowance Policy loans Other investments Investment contracts Short-term debt Long-term debt |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill | (9) Goodwill The following table summarizes changes in the carrying value of goodwill by segment for the years indicated: (in millions) Retirement Individual Solutions -Life Total Balance as of December 31, 2013 1 $ 25 $ 175 $ 200 Adjustments — — — Balance as of December 31, 2014 1 $ 25 $ 175 $ 200 Adjustments — — — Balance as of December 31, 2015 1 $ 25 $ 175 $ 200 1 The goodwill balances have not been previously impaired. |
Closed Block
Closed Block | 12 Months Ended |
Dec. 31, 2015 | |
Closed Block | (10) Closed Block The amounts shown in the following tables for assets, liabilities, revenues and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders. The following table summarizes financial information for the closed block, as of the dates indicated: December 31, (in millions) 2015 2014 Liabilities: Future policyholder benefits $ 1,637 $ 1,669 Policyholder funds and accumulated dividends 138 139 Policyholder dividends payable 21 22 Policyholder dividend obligation 99 152 Other policy obligations and liabilities 35 33 Total liabilities $ 1,930 $ 2,015 Assets: Fixed maturity securities, available-for-sale $ 1,316 $ 1,336 Mortgage loans, net of allowance 235 272 Policy loans 146 149 Other assets 71 86 Total assets $ 1,768 $ 1,843 Excess of reported liabilities over assets 162 172 Portion of above representing other comprehensive income: (Decrease) increase in unrealized gain on fixed maturity securities, available-for-sale $ (53 ) $ 35 Adjustment to policyholder dividend obligation 53 (35 ) Total $ — $ — Maximum future earnings to be recognized from assets and liabilities $ 162 $ 172 Other comprehensive income: Fixed maturity securities, available-for-sale: Fair value $ 1,316 $ 1,336 Amortized cost 1,249 1,216 Shadow policyholder dividend obligation (67 ) (120 ) Net unrealized appreciation $ — $ — The following table summarizes closed block operations for the years ended: December 31, (in millions) 2015 2014 2013 Revenues: Premiums $ 58 $ 61 $ 66 Net investment income 87 93 94 Realized investment gains 1 1 — Realized losses credited to policyholder benefit obligation (5 ) (5 ) (4 ) Total revenues $ 141 $ 150 $ 156 Benefits and expenses: Policy and contract benefits $ 122 $ 124 $ 123 Change in future policyholder benefits and interest credited to policyholder accounts (33 ) (34 ) (29 ) Policyholder dividends 40 43 44 Change in policyholder dividend obligation (4 ) (1 ) 3 Other expenses 1 2 (2 ) Total benefits and expenses $ 126 $ 134 $ 139 Total revenues, net of benefits and expenses, before federal income tax expense $ 15 $ 16 $ 17 Federal income tax expense 5 6 6 Revenues, net of benefits and expenses and federal income tax expense $ 10 $ 10 $ 11 Maximum future earnings from assets and liabilities: Beginning of period $ 172 $ 182 $ 193 Change during period (10 ) (10 ) (11 ) End of period $ 162 $ 172 $ 182 Cumulative closed block earnings from inception through December 31, 2015, 2014 and 2013 were higher than expected as determined in the actuarial calculation. Therefore, policyholder dividend obligations (excluding the adjustment for unrealized gains on available-for-sale securities) were $32 million, $32 million and $28 million as of December 31, 2015, 2014 and 2013, respectively. |
Short-Term Debt
Short-Term Debt | 12 Months Ended |
Dec. 31, 2015 | |
Short-Term Debt | (11) Short-Term Debt The Company classifies debt as short-term if the maturity date at inception is less than one year. The following table summarizes the carrying value of short-term debt and weighted average annual interest rates, as of the dates indicated: December 31, (in millions) 2015 2014 $750 million commercial paper program (0.45% and 0.00%, respectively) 1 $ 400 $ — $600 million commercial paper program (0.00% and 0.20%, respectively) 1 — 264 $400 million revolving variable rate line of credit (0.00% and 1.57%, respectively) — 396 Total short-term debt $ 400 $ 660 1 On December 4, 2015, the Company renewed an agreement to increase its $600 million commercial paper program to $750 million. In November 2015, the Company terminated its $400 million unsecured revolving promissory note and line of credit agreement with its parent company. In March 2015, the Company renewed an agreement to extend its ability to borrow with the FHLB. This extension, which expires on March 25, 2016, allows the Company access to borrow up to $250 million, which would be collateralized by pledged securities. The Company had $6.7 billion and $8.5 billion in eligible collateral and no amounts outstanding under the agreement as of December 31, 2015 and 2014, respectively. Additionally, in connection with the agreement, NLIC purchased $10 million in capital stock with the FHLB. On April 2, 2015, Nationwide Mutual Insurance Company (“NMIC”) and NLIC replaced their previous $600 million revolving credit facility with a new credit facility of $750 million, which expires on April 2, 2020. The Company had no amounts outstanding under this agreement as of December 31, 2015 and 2014. The Company has entered into an agreement with its custodial bank to borrow against the cash collateral that is posted in connection with its securities lending program. The maximum amount available under the agreement is $350 million. The borrowing rate on this program is equal to one-month U.S. LIBOR. The Company had no amounts outstanding under this agreement as of December 31, 2015 and 2014. The terms of certain debt instruments contain various restrictive covenants, including, but not limited to, minimum statutory surplus defined in the agreements. The Company was in compliance with all covenants as of December 31, 2015 and 2014. The amount of interest paid on short-term debt was immaterial in 2015, 2014 and 2013. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2015 | |
Long-Term Debt | (12) Long-Term Debt The following table summarizes the carrying value of long-term debt, as of the dates indicated: December 31, (in millions) 2015 2014 8.15% surplus note, due June 26, 2032, payable to NFS $ 300 $ 300 7.50% surplus note, due December 17, 2031, payable to NFS 300 300 6.75% surplus note, due December 23, 2033, payable to NFS 100 100 Other 7 9 Total long-term debt $ 707 $ 709 The Company made interest payments to NFS on surplus notes totaling $54 million for the years ended December 31, 2015, 2014 and 2013. Payments of interest and principal under the notes require the prior approval of the ODI. |
Federal Income Taxes
Federal Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Federal Income Taxes | (13) Federal Income Taxes The following table summarizes the components of federal income tax expense (benefit) for the years ended: December 31, (in millions) 2015 2014 2013 Current tax expense (benefit) $ 76 $ 5 $ (33 ) Deferred tax expense (benefit) 217 (152 ) 346 Total tax expense (benefit) $ 293 $ (147 ) $ 313 The following table summarizes how the total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to net income for the years ended: December 31, 2015 2014 2013 (in millions) Amount % Amount % Amount % Rate reconciliation: Computed (expected tax expense (benefit)) $ 430 35 % $ (46 ) 35 % $ 469 35 % Dividends received deduction (118 ) (10 )% (87 ) 66 % (112 ) (8 )% Tax credits (63 ) (5 )% (53 ) 41 % (82 ) (6 )% Other, net 44 4 % 39 (30 )% 38 2 % Total $ 293 24 % $ (147 ) 112 % $ 313 23 % The Company’s current federal income tax liability was $61 million and $18 million as of December 31, 2015 and 2014, respectively. The Company made $33 million and immaterial payments for the years ended December 31, 2015 and 2014, respectively, and received a refund of $107 million for the year ended 2013. During 2015 and 2014, the Company recorded a tax (benefit) expense of $(1) million and $16 million, respectively. These changes in estimates were primarily driven by differences in the Company’s separate account dividends received deduction (“DRD”) between the previous year’s estimate and the amount reported on the previous year’s tax return. As of December 31, 2015, the Company had gross federal net operating loss carryforwards of $248 million, which expire in 2028. In addition, the Company had $218 million in low-income-housing credit carryforwards, which expire between 2024 and 2035, and $197 million in alternative minimum tax credit carryforwards, which have an unlimited carryforward. In addition, the Company had $68 million in foreign tax credit carryforwards which expire between 2019 and 2025. The Company expects to fully utilize all carryforwards. The following table summarizes the tax effects of temporary differences that gave rise to significant components of the net deferred tax liability included in other liabilities in the consolidated balance sheets, as of the dates indicated: December 31, (in millions) 2015 2014 1 Deferred tax assets Future policy benefits and claims $ 825 $ 839 Tax credit carryforwards 483 355 Derivatives, including embedded derivatives 120 147 Other 411 439 Gross deferred tax assets $ 1,839 $ 1,780 Valuation allowance (17 ) (17 ) Gross deferred tax assets, net of valuation allowance $ 1,822 $ 1,763 Deferred tax liabilities Deferred policy acquisition costs $ 1,502 $ 1,113 Available-for-sale securities 315 839 Other 249 209 Gross deferred tax liabilities $ 2,066 $ 2,161 Net deferred tax liability $ 244 $ 398 1 Prior year amounts primarily related to certain annuity and life insurance balances have been reclassified between future policy benefits, available-for-sale securities, derivatives, other assets and other liabilities to conform with current year presentation. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion of the total gross deferred tax assets will not be realized. Based on the Company’s analysis, it is more likely than not that the results of future operations and the implementation of tax planning strategies will generate sufficient taxable income to enable the Company to realize the deferred tax assets for which the Company has not established valuation allowances. The following table is a rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties: (in millions) 2015 2014 2013 Balance at beginning of period $ 38 $ 36 $ 36 Additions for current year tax positions 1 3 2 Reductions for prior years tax positions (3 ) (1 ) (2 ) Balance at end of period $ 36 $ 38 $ 36 The Company believes it is reasonably possible that the 2006 to 2010 IRS audit for the NLIC’s consolidated tax returns will be effectively settled within the next 12 months and as a result the liability for unrecognized tax benefits could decrease $15 million. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities through the 2010 tax year. In 2015, the IRS commenced an examination of the Company’s U.S. income tax returns for the years 2011 through 2012. Any adjustments that may result from IRS examination of tax returns are not expected to have a material effect on the results of operations, cash flows or financial position of the Company. |
Statutory Financial Information
Statutory Financial Information | 12 Months Ended |
Dec. 31, 2015 | |
Statutory Financial Information | (14) Statutory Financial Information Statutory Results The Company’s life insurance subsidiaries prepare their statutory financial statements in conformity with the statutory accounting practices prescribed and permitted by insurance regulatory authorities, subject to any deviations prescribed or permitted by the applicable state departments of insurance. Olentangy Reinsurance, LLC (“Olentangy”), a special purpose financial captive insurance company subsidiary of NLAIC domiciled in the State of Vermont, was granted a permitted practice from the State of Vermont that increased NLAIC’s valuation of this subsidiary by $56 million and $66 million as of December 31, 2015 and 2014, respectively, which also allowed NLIC to admit additional deferred tax assets of $8 million and $10 million as of December 31, 2015 and 2014, respectively. Eagle applies a prescribed practice from the State of Ohio that allows an alternative reserve basis on assumed liabilities, net of third party reinsurance, with respect to specified GMDB and GLWB obligations provided under substantially all of the variable annuity contracts issued and to be issued by NLIC. This prescribed practice decreased NLIC’s valuation of this subsidiary by $64 million as of December 31, 2015 and also reduced NLIC’s admitted deferred tax assets by $10 million. Statutory accounting practices focus on insurer solvency and differ materially from GAAP primarily due to charging policy acquisition and other costs to expense as incurred, establishing future policy benefits and claims reserves based on different actuarial assumptions, excluding certain assets from statutory admitted assets and valuing investments and establishing deferred taxes on a different basis. The following table summarizes the statutory net income (loss) and statutory capital and surplus for the Company’s primary life insurance subsidiaries for the years ended: December 31, (in millions) 2015 2014 2013 Statutory net income (loss) NLIC $ 167 $ 341 $ 262 NLAIC $ (99 ) $ (122 ) $ (103 ) Statutory capital and surplus NLIC $ 4,567 $ 4,408 $ 3,550 NLAIC $ 735 $ 691 $ 534 Dividend Restrictions The payment of dividends by NLIC is subject to restrictions set forth in the insurance laws and regulations of the State of Ohio, its domiciliary state. The State of Ohio insurance laws require Ohio-domiciled life insurance companies to notify the Ohio Superintendent of Insurance of all dividends prior to payment and must seek prior regulatory approval to pay a dividend or distribute cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer as of the prior December 31. During the years ended December 31, 2015, 2014 and 2013 NLIC did not pay any dividends to NFS. As of January 1, 2016, NLIC has the ability to pay dividends to NFS totaling $457 million without obtaining prior approval. The State of Ohio insurance laws also require insurers to seek prior regulatory approval for any dividend paid from other than earned surplus. Earned surplus is defined under the State of Ohio insurance laws as the amount equal to the Company’s unassigned funds as set forth in its most recent statutory financial statements, including net unrealized capital gains and losses or revaluation of assets. Additionally, following any dividend, an insurer’s policyholder surplus must be reasonable in relation to the insurer’s outstanding liabilities and adequate for its financial needs. The payment of dividends by the Company may also be subject to restrictions set forth in the insurance laws of the State of New York that limit the amount of statutory profits on the Company’s participating policies (measured before dividends to policyholders) available for the benefit of the Company and its stockholders. The Company currently does not expect such regulatory requirements to impair the ability to pay operating expenses and dividends in the future. Regulatory Risk-Based Capital The National Association of Insurance Commissioners’ (“NAIC”) Risk-Based Capital (“RBC”) model law requires every insurer to calculate its total adjusted capital and RBC requirement to ensure insurer solvency. Regulatory guidelines provide for an insurance commissioner to intervene if the insurer experiences financial difficulty, as evidenced by a company’s total adjusted capital falling below established relationships to required RBC. The model includes components for asset risk, liability risk, interest rate exposure and other factors. The State of Ohio imposes minimum RBC requirements that are developed by the NAIC. The formulas in the model for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital to authorized control level RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, all of which require specified corrective action. NLIC, NLAIC, Olentangy and Eagle each exceeded the minimum RBC requirements for all periods presented. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | (15) Related Party Transactions The Company has entered into significant, recurring transactions and agreements with NMIC, other affiliates and subsidiaries as a part of its ongoing operations. These include annuity and life insurance contracts, agreements related to reinsurance, cost sharing, tax sharing, administrative services, marketing, intercompany loans, intercompany repurchases, cash management services and software licensing. In addition, employees of the company participate in several benefit plans sponsored by NMIC, for which the Company has no legal obligations. Measures used to allocate expenses among companies include individual employee estimates of time spent, special cost studies, claims counts, policies in force, direct written premium, paid losses, pro rate share of employees or their salaries, the number of full-time employees, commission expense and other methods agreed to by the participating companies. Effective January 1, 2015, the Company became party to a revised tax sharing agreement that reflects the new NMIC consolidated federal return group which includes its eligible life and non-life insurance company subsidiaries. The method of allocation among the companies is based upon separate return calculations with current benefit for tax losses and credits utilized in the consolidated return In addition, Nationwide Services Company, LLC (“NSC”), a subsidiary of NMIC, provides data processing, systems development, hardware and software support, telephone, mail and other services to the Company, based on specified rates for units of service consumed pursuant to the enterprise cost sharing agreement. For the years ended December 31, 2015, 2014 and 2013, the Company was allocated costs from NMIC and NSC totaling $289 million, $275 million and $277 million, respectively. The Company has issued group annuity and life insurance contracts and performs administrative services for various employee benefit plans sponsored by NMIC or its affiliates. Total account values of these contracts were $3.3 billion as of December 31, 2015 and 2014. Total revenues from these contracts were $129 million, $131 million and $137 million for the years ended December 31, 2015, 2014 and 2013, respectively, and include policy charges, net investment income from investments backing the contracts and administrative fees. Total interest credited to the account balances was $106 million for the year ended December 31, 2015 and $109 million for the years ended December 31, 2014 and 2013. The Company may underwrite insurance policies for its agents, employees, officers and/or directors. The Company may offer discounts on certain products that are subject to applicable state insurance laws and approvals. Under the enterprise cost sharing agreement, the Company has a cost sharing arrangement with NMIC to occupy office space. The Company made payments to NMIC of $18 million for the year ended December 31, 2015 and $16 million for the years ended December 31, 2014 and 2013. NLIC has a reinsurance agreement with NMIC whereby all of NLIC’s accident and health business not ceded to unaffiliated reinsurers is ceded to NMIC on a modified coinsurance basis. Either party may terminate the agreement on January 1 of any year with prior notice. Under a modified coinsurance agreement, the ceding company retains invested assets, and investment earnings are paid to the reinsurer. Under the terms of NLIC’s agreements, the investment risk associated with changes in interest rates is borne by the reinsurer. The ceding of risk does not discharge the original insurer from its primary obligation to the policyholder. Revenues ceded to NMIC for the years ended December 31, 2015, 2014 and 2013 were $209 million, $208 million and $179 million, respectively, while benefits, claims and expenses ceded during these years were $207 million, $217 million and $178 million, respectively. Funds of Nationwide Funds Group (“NFG”), a group of Nationwide businesses that develops, sells and services mutual funds, are offered to the Company’s customers as investment options in certain of the Company’s products. As of December 31, 2015 and 2014, customer allocations to NFG funds totaled $59.1 billion and $58.1 billion, respectively. For the years ended December 31, 2015, 2014 and 2013, NFG paid the Company $196 million, $185 million and $163 million, respectively, for the distribution and servicing of these funds. Amounts on deposit with NCMC for the benefit of the Company were $501 million and $636 million as of December 31, 2015 and 2014, respectively. Nationwide Bank has a line of credit agreement with NLIC that allows the Bank access to borrow up to $50 million from NLIC. The borrowing rate on the line of credit is equal to the daily Prime Rate. The Bank had no amounts outstanding under this agreement as of December 31, 2015 and 2014. Certain annuity products are sold through affiliated companies, which are also subsidiaries of NFS. Total commissions and fees paid to these affiliates were $63 million, $57 million and $54 million for the years ended December 31, 2015, 2014 and 2013, respectively. The Company provides financing to subsidiaries Nationwide Realty Investors, LTD, a subsidiary of NMIC. As of December 31, 2015 and 2014, the Company had notes receivable outstanding of $238 million and $142 million, respectively. |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Contingencies | (16) Contingencies Legal and Regulatory Matters The Company is subject to legal and regulatory proceedings in the ordinary course of its business. The Company’s legal and regulatory matters include proceedings specific to the Company and other proceedings generally applicable to business practices in the industries in which the Company operates. These matters are subject to many uncertainties, and given their complexity and scope, their outcomes cannot be predicted. Regulatory proceedings could also affect the outcome of one or more of the Company’s litigation matters. Furthermore, it is often not possible to determine the ultimate outcomes of the pending regulatory investigations and legal proceedings or to provide reasonable ranges of potential losses with any degree of certainty. Some matters, including certain of those referred to below, are in very preliminary stages, and the Company does not have sufficient information to make an assessment of the plaintiffs’ claims for liability or damages. In some of the cases seeking to be certified as class actions, the court has not yet decided whether a class will be certified or (in the event of certification) the size of the class and class period. In many of the cases, the plaintiffs are seeking undefined amounts of damages or other relief, including punitive damages and equitable remedies, which are difficult to quantify and cannot be defined based on the information currently available. The Company believes, however, that based on currently known information, the ultimate outcome of all pending legal and regulatory matters is not likely to have a material adverse effect on the Company’s consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that such outcomes could materially affect the Company’s consolidated financial position or results of operations. The various businesses conducted by the Company are subject to oversight by numerous federal and state regulatory entities, including but not limited to the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Department of Labor, the IRS and state insurance authorities. Such regulatory entities may, in the normal course, be engaged in general or targeted inquiries, examinations and investigations of the Company and/or its affiliates. The financial services industry has been the subject of increasing scrutiny in connection with a broad spectrum of regulatory issues; with respect to all such scrutiny directed at the Company and/or its affiliates, the Company is cooperating with regulators. The Company will cooperate with NMIC insofar as any inquiry, examination or investigation encompasses NMIC’s operations. On August 15, 2001, NFS and NLIC were named in a lawsuit filed in the United States District Court for the District of Connecticut entitled Lou Haddock, as trustee of the Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al v. Nationwide Financial Services, Inc. and Nationwide Life Insurance Company Indemnifications In the normal course of business, the Company provides standard indemnifications to contractual counterparties. The types of indemnifications typically provided include breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated, and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2015 | |
Reinsurance | (17) Reinsurance The following table summarizes the effects of reinsurance on life, accident and health insurance in force and premiums for the years ended: December 31, (in millions) 2015 2014 2013 Premiums Direct $ 1,144 $ 1,178 $ 1,015 Assumed from other companies — — — Ceded to other companies (358 ) (347 ) (291 ) Net $ 786 $ 831 $ 724 Life, accident and health insurance in force Direct $ 260,465 $ 241,936 $ 228,095 Assumed from other companies 5 5 6 Ceded to other companies (60,976 ) (59,588 ) (58,310 ) Net $ 199,494 $ 182,353 $ 169,791 Amounts recoverable under reinsurance contracts totaled $647 million, $704 million and $675 million as of December 31, 2015, 2014 and 2013, respectively, and are included in other assets in the consolidated balance sheets. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information | (18) Segment Information Management views the Company’s business primarily based on its underlying products and uses this basis to define its four reportable segments: Individual Products and Solutions-Annuity, Retirement Plans, Individual Products and Solutions-Life and NBSG and Corporate and Other. The primary segment profitability measure that management uses is a non-GAAP financial measure called pre-tax operating earnings (loss), which is calculated by adjusting income before federal income taxes to exclude: (1) certain changes in variable annuity liabilities and net realized investment gains and losses, except for operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges); (2) the adjustment to amortization of DAC related to certain changes in variable annuity liabilities and net realized investment gains and losses; and (3) net losses attributable to noncontrolling interest. Individual Products and Solutions-Annuity The Individual Products & Solutions - Annuity segment consists of individual annuity products marketed under the Nationwide Destination SM Retirement Plans The Retirement Plans segment is comprised of the private and public sector retirement plans businesses. The private sector business primarily includes Internal Revenue Code (“IRC”) Section 401 qualified plans funded through fixed and variable group annuity contracts issued through NLIC. The public sector business primarily includes IRC Section 457 (b) and Section 401(a) governmental plans, both in the form of full-service arrangements that provide plan administration along with fixed and variable group annuities, as well as administration-only business. Across the public and private sector business Nationwide Investment Advisors managed account services are also available. The Retirement Plans segment also includes stable value wrap products and solutions. Individual Products and Solutions-Life and NBSG The Individual Products & Solutions - Life and NBSG segment consists of life insurance products, including individual variable universal life, COLI and BOLI products, traditional life insurance products, fixed universal life insurance products and indexed universal life insurance products. Life insurance products provide a death benefit and, for certain products, allow the customer to build cash value on a tax-advantaged basis. Corporate and Other The Corporate and Other segment includes certain non-operating changes in variable annuity liabilities and non-operating realized gains and losses, related amortization and other revenues and expenses not allocated to other segments. Additionally, this segment includes the funding agreements with the FHLB. The following tables summarize the Company’s business segment operating results for the years ended: (in millions) Individual Retirement Individual Solutions-Life Corporate Total December 31, 2015 Revenues: Policy charges $ 1,259 111 846 — $ 2,216 Premiums 459 — 292 35 786 Net investment income 591 752 602 37 1,982 Non-operating changes in variable annuity liabilities and net realized investment losses 1 — — — (56 ) (56 ) Other revenues 2 (76 ) — (7 ) 7 (76 ) Total revenues $ 2,233 $ 863 $ 1,733 $ 23 $ 4,852 Benefits and expenses: Interest credited to policyholder accounts $ 328 494 236 20 $ 1,078 Benefits and claims 3 700 — 705 29 1,434 Amortization of DAC 13 7 115 (67 ) 68 Other expenses, net of deferrals 334 163 371 176 1,044 Total benefits and expenses $ 1,375 $ 664 $ 1,427 $ 158 $ 3,624 Income before federal income taxes and noncontrolling interests $ 858 199 306 (135 ) $ 1,228 Less: certain non-operating changes in variable annuity liabilities and net realized investment gains (losses) 1 — — — 56 Less: adjustment to amortization of DAC and other related expenses related to non-operating items above — — — (74 ) Less: net loss attributable to noncontrolling interest — — — 96 Pre-tax operating earnings (loss) $ 858 $ 199 $ 306 $ (57 ) Assets as of year end $ 73,370 $ 30,524 $ 30,650 $ 9,634 $ 144,178 1 Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). 2 Includes operating items discussed above. 3 Excludes certain non-operating changes in variable annuity liabilities. (in millions) Individual Retirement Individual Solutions-Life Corporate Total December 31, 2014 Revenues: Policy charges $ 1,175 $ 107 $ 783 $ — $ 2,065 Premiums 518 — 284 29 831 Net investment income 546 750 565 39 1,900 Non-operating net realized investment gains, including other-than-temporary impairment losses 1 — — — (1,051 ) (1,051 ) Other revenues 2 (38 ) — 12 10 (16 ) Total revenues $ 2,201 $ 857 $ 1,644 $ (973 ) $ 3,729 Benefits and expenses: Interest credited to policyholder accounts $ 370 $ 482 $ 231 $ 13 $ 1,096 Benefits and claims 828 — 644 30 1,502 Amortization of DAC 120 (28 ) 122 (7 ) 207 Other expenses, net of deferrals 300 153 348 254 1,055 Total benefits and expenses $ 1,618 $ 607 $ 1,345 $ 290 $ 3,860 Income before federal income taxes and noncontrolling interests $ 583 $ 250 $ 299 $ (1,263 ) $ (131 ) Less: non-operating net realized investment gains, including other-than-temporary impairment losses 1 — — — 1,051 Less: adjustment to amortization of DAC and other related expenses related to net realized investment gains and losses — — — (11 ) Less: net loss attributable to noncontrolling interest — — — 94 Pre-tax operating earnings (loss) $ 583 $ 250 $ 299 $ (129 ) Assets as of year end $ 72,429 $ 30,744 $ 29,322 $ 11,029 $ 143,524 1 Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). 2 Includes operating items discussed above. (in millions) Individual Retirement Individual Solutions-Life Corporate Total December 31, 2013 Revenues: Policy charges $ 1,021 $ 101 $ 727 $ — $ 1,849 Premiums 416 — 282 26 724 Net investment income 546 743 544 16 1,849 Non-operating net realized investment gains,including of other-than-temporary impairment losses 1 — — — 783 783 Other revenues 2 (109 ) — 6 15 (88 ) Total revenues $ 1,874 $ 844 $ 1,559 $ 840 $ 5,117 Benefits and expenses: Interest credited to policyholder accounts $ 377 $ 473 $ 213 $ 4 $ 1,067 Benefits and claims 694 — 636 24 1,354 Amortization of DAC 185 (2 ) 125 66 374 Other expenses, net of deferrals 295 151 347 188 981 Total benefits and expenses $ 1,551 $ 622 $ 1,321 $ 282 $ 3,776 Income before federal income taxes and noncontrolling interests $ 323 $ 222 $ 238 $ 558 $ 1,341 Less: non-operating net realized investment gains,including other-than-temporary impairment losses 1 — — — (783 ) Less: adjustment to amortization of DAC and other related expenses related to net realized investment gains and losses — — — 70 Less: net loss attributable to noncontrolling interest — — — 82 Pre-tax operating earnings (loss) $ 323 $ 222 $ 238 $ (73 ) Assets as of year end $ 68,805 $ 29,904 $ 27,183 $ 7,553 $ 133,445 1 Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). 2 Includes operating items discussed above. |
Consolidated Summary of Investm
Consolidated Summary of Investments - Other Than Investments in Related Parties | 12 Months Ended |
Dec. 31, 2015 | |
Consolidated Summary of Investments - Other Than Investments in Related Parties | NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Nationwide Financial Services, Inc.) As of December 31, 2015 (in millions) Column A Column B Column C Column D Amount at which shown in the Fair consolidated Type of investment Cost value balance sheet Fixed maturity securities, available-for-sale: Bonds: U.S. government and agencies $ 343 $ 402 $ 402 Obligations of states, political subdivisions and foreign governments 2,136 2,367 2,367 Public utilities 3,411 3,495 3,495 All other corporate, mortgage-backed and asset-backed securities 31,106 31,306 31,306 Total fixed maturity securities, available-for-sale $ 36,996 $ 37,570 $ 37,570 Equity securities, available-for-sale: Common stocks: Industrial, miscellaneous and all other $ 7 $ 17 $ 17 Nonredeemable preferred stocks — 4 4 Total equity securities, available-for-sale $ 7 $ 21 $ 21 Trading assets 72 67 67 Mortgage loans, net of allowance 8,422 8,396 1 Policy loans 993 993 Other investments 855 855 Short-term investments 766 766 Total investments $ 48,111 $ 48,668 1 Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans (see Note 6 to the audited consolidated financial statements). See accompanying notes to consolidated financial statements and report of independent registered public accounting firm. |
Supplementary Insurance Informa
Supplementary Insurance Information | 12 Months Ended |
Dec. 31, 2015 | |
Supplementary Insurance Information | Schedule III Supplementary Insurance Information As of December 31, 2015, 2014 and 2013 and for each of the years then ended (in millions) Column A Column B Column C Column D Column E Column F Year: Segment Deferred Future policy Unearned 1 Other policy 1 Premium 2015 IPS - Annuity $ 3,070 $ 15,160 $ 459 Retirement Plans 222 15,940 — IPS - Life and NBSG 1,937 11,582 292 Corporate and Other (29 ) 2,715 35 Total $ 5,200 $ 45,397 $ 786 2014 IPS - Annuity $ 2,495 $ 12,619 $ 518 Retirement Plans 216 14,905 — IPS - Life and NBSG 1,717 10,763 284 Corporate and Other (365 ) 2,443 29 Total $ 4,063 $ 40,730 $ 831 2013 IPS - Annuity $ 2,214 $ 10,985 $ 416 Retirement Plans 179 14,313 — IPS - Life and NBSG 1,557 10,068 282 Corporate and Other (172 ) 1,399 26 Total $ 3,778 $ 36,765 $ 724 Column A Column G Column H Column I Column J Column K Year: Segment Net 2 Benefits, claims, Amortization Other 2 Premiums 2015 IPS - Annuity $ 591 $ 1,257 $ 13 334 Retirement Plans 752 494 7 163 IPS - Life and NBSG 602 941 115 371 Corporate and Other 37 48 (67 ) 176 Total $ 1,982 $ 2,740 $ 68 $ 1,044 2014 IPS - Annuity $ 546 $ 1,198 $ 120 $ 300 Retirement Plans 750 482 (28 ) 153 IPS - Life and NBSG 565 875 122 348 Corporate and Other 39 43 (7 ) 254 Total $ 1,900 $ 2,598 $ 207 $ 1,055 2013 IPS - Annuity $ 546 $ 1,071 $ 185 $ 295 Retirement Plans 743 473 (2 ) 151 IPS - Life and NBSG 544 849 125 347 Corporate and Other 16 28 66 188 Total $ 1,849 $ 2,421 $ 374 $ 981 1 Unearned premiums and other policy claims and benefits payable are included in Column C amounts. 2 Allocations of net investment income and certain operating expenses are based on numerous assumptions and estimates, and reported segment operating results would change if different methods were applied. See accompanying notes to consolidated financial statements and report of independent registered public accounting firm. |
Reinsurance28
Reinsurance | 12 Months Ended |
Dec. 31, 2015 | |
Reinsurance | NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Nationwide Financial Services, Inc.) As of December 31, 2015, 2014 and 2013 and for each of the years then ended (in millions) Column A Column B Column C Column D Column E Ceded to Assumed Gross other from other Net amount companies companies amount 2015 Life, accident and health insurance in force $ 260,465 $ (60,976 ) $ 5 $ 199,494 Premiums: Life insurance 1 $ 842 $ (56 ) $ — $ 786 Accident and health insurance 302 (302 ) — — Total $ 1,144 $ (358 ) $ — $ 786 2014 Life, accident and health insurance in force $ 241,936 $ (59,588 ) $ 5 $ 182,353 Premiums: Life insurance 1 $ 888 $ (57 ) $ — $ 831 Accident and health insurance 290 (290 ) — — Total $ 1,178 $ (347 ) $ — $ 831 2013 Life, accident and health insurance in force $ 228,095 $ (58,310 ) $ 6 $ 169,791 Premiums: Life insurance 1 $ 783 $ (59 ) $ — $ 724 Accident and health insurance 232 (232 ) — — Total $ 1,015 $ (291 ) $ — $ 724 1 Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment and universal life insurance products. See accompanying notes to consolidated financial statements and report of independent registered public accounting firm. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts | NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Nationwide Financial Services, Inc.) Years ended December 31, 2015, 2014 and 2013 (in millions) Column A Column B Column C Column D Column E Balance at Charged to Charged to Balance at beginning costs and other end of Description of period expenses accounts Deductions 1 period 2015 Valuation allowances - mortgage loans $ 26 $ 2 $ — $ (2 ) $ 26 2014 Valuation allowances - mortgage loans $ 35 $ (8 ) $ — $ (1 ) $ 26 2013 Valuation allowances - mortgage loans $ 44 $ (4 ) $ — $ (5 ) $ 35 1 Amounts generally represent payoffs, sales and recoveries. See accompanying notes to consolidated financial statements and report of independent registered public accounting firm. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of NLIC and companies in which NLIC directly or indirectly has a controlling financial interest. The consolidated financial statements include majority-owned subsidiaries and consolidated variable interest entities (“VIEs”). All intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates The Company’s consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates include the balance and amortization of deferred policy acquisition costs (“DAC”), legal and regulatory reserves, certain investment and derivative valuations, future policy benefits and claims including the valuation of embedded derivatives resulting from living benefit guarantees on variable annuity contracts expected to net settle, goodwill, provision for income taxes and valuation of deferred tax assets. Actual results could differ significantly from those estimates. |
Revenues and Benefits | Revenues and Benefits Investment and universal life insurance products. Traditional life insurance products. |
Future Policy Benefits and Claims | Future Policy Benefits and Claims Investment and universal life insurance products. The Company offers guarantees which can include a return of no less than the total deposits made on the contract less any customer withdrawals, total deposits made on the contract less any customer withdrawals plus a minimum return, or the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees can also include benefits payable in the event of death, upon annuitization, upon periodic withdrawal or at specified dates during the accumulation period. Refer to Note 4 for further discussion of these guarantees. As part of its valuation procedures, the Company makes an assumption of the expected utilization of guarantee benefits by participants. Guarantees that include a benefit that is wholly life contingent or is expected to be exercised upon annuitization are accounted for as insurance liabilities that accumulate over time. Guarantees that are expected to be exercised using a net settlement option are accounted for as embedded derivatives, which are required to be separated from, and valued apart from, the host variable annuity contracts. Guarantees on variable annuity and fixed annuity products accounted for as insurance liabilities primarily include GMDB and certain GLWB. Liabilities for these guarantees are calculated by multiplying the current benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date, less the cumulative guaranteed benefit payments plus interest. The Company annually evaluates its experience and assumptions and adjusts the benefit ratio as appropriate. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes, with a related charge or credit to benefits and claims in the period of evaluation. Determination of the expected benefit payments and assessments are based on a range of scenarios and assumptions, including those related to market rates of return and volatility, contract surrenders and mortality experience. The accounting for these guarantees impacts estimated gross profits used to calculate the balance and amortization of DAC and other expenses. Refer to Note 4 for further discussion of these guarantees. Certain guaranteed minimum accumulation benefits (“GMAB”) and the GLWB that are expected to net settle on variable annuity products represent embedded derivatives which are held at fair value and include the present value of attributed fees. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of net realized investment gains and losses. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivatives incorporate numerous, unobservable assumptions including, but not limited to, mortality, lapse rates, index volatility, benefit utilization and discounting. Benefit utilization includes a wait period (the number of years the policyholder is assumed to wait prior to beginning withdrawals once eligible) and efficiency of benefit utilization (the percent of the maximum permitted withdrawal that a policyholder takes). Discounting includes liquidity and non-performance risk (the risk that the liability will not be fulfilled) and affects the value at which the liability is transferred. The Company derives these inputs, which vary widely by product, attained age, policy duration, benefits in the money and the existence of surrender charges, from experience and industry data. The Company offers certain indexed life insurance and annuity products for which the policyholders’ interest credits are based on market performance with caps and floors. The interest credits represent embedded derivatives within the insurance contract and therefore are required to be separated, and valued apart from, the host contracts. The embedded derivatives are held at fair value. Subsequent changes in the fair value of the embedded derivatives are recognized in earnings as a component of interest credited. The fair value of the embedded derivatives is calculated based on a combination of capital market and actuarial assumptions. Projections of cash flows inherent in the valuation of the embedded derivatives incorporate numerous unobservable assumptions including, but not limited to, mortality, lapse rates and index volatility. The assumptions used to calculate the fair value of embedded derivatives are reviewed as part of an annual comprehensive study of assumptions. Quarterly, consideration is given as to whether adjustments to these assumptions are necessary. The Company offers certain universal life and variable universal life insurance products with no-lapse guarantees. Liabilities for these guarantees are calculated by multiplying the current benefit ratio by the cumulative assessments recorded from contract inception through the balance sheet date, less the cumulative guaranteed benefit payments plus interest. The Company annually evaluates its experience and assumptions and adjusts the benefit ratio as appropriate. If experience or assumption changes result in a new benefit ratio, the reserves are adjusted to reflect the changes with a related charge or credit to other benefits and claims in the period of evaluation. Determination of the expected benefit payments and assessments are based on a range of scenarios and assumptions, including those related to market rates of return and volatility, contract surrenders and mortality experience. The accounting for these guarantees impacts estimated gross profits used to calculate the balance and amortization of DAC and other expenses. Refer to Note 4 for further discussion of these guarantees. Traditional life and other insurance products. The liability for future policy benefits and claims for traditional life insurance policies was determined using the net level premium method, with weighted average interest rates of 6.6% and estimates of mortality, morbidity, investment yields and persistency that were used or being experienced at the time the policies were issued, with a provision for adverse deviation. The liability for future policy benefits for certain annuities with life contingencies was calculated using the present value of future benefits and certain expenses, discounted using weighted average interest rates of 4.7% with a provision for adverse deviation. The Company issues fixed and floating rate funding agreements to the Federal Home Loan Bank of Cincinnati (“FHLB”). The liability for such funding agreements is recorded in future policy benefits and claims. The amount of collateralized funding agreements outstanding with the FHLB as of December 31, 2015 and 2014 was $2.3 billion and $1.8 billion, respectively. In connection with an FHLB requirement for funding agreements, the Company held $46 million and $35 million of FHLB stock as of December 31, 2015 and 2014, respectively. |
Reinsurance Ceded | Reinsurance Ceded The Company cedes insurance to other companies in order to limit potential losses and to diversify its exposures. Such agreements do not relieve the original insurer from its primary obligation to the policyholder in the event the reinsurer is unable to meet the obligations it has assumed. Reinsurance premiums ceded and reinsurance recoveries on benefits and claims incurred are deducted from the respective income and expense accounts. Assets and liabilities related to reinsurance ceded are reported in the consolidated balance sheets on a gross basis, separately from the related future policy benefits and claims of the Company. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs The Company has deferred certain acquisition costs that are directly related to the successful acquisition of new and renewal insurance and investment contracts. The methods and assumptions used to amortize and assess recoverability of the DAC balance depend on the type of product. Investment and universal life insurance products. The assumptions used in the estimation of gross profits are based on the Company’s current best estimates of future events and are reviewed as part of an annual comprehensive study of assumptions. The most significant assumptions that are involved in the estimation of future gross profits include future net general and separate account investment performance, surrender/lapse rates, interest margins, renewal premiums and mortality. Quarterly, consideration is given as to whether adjustments to these assumptions are necessary. The Company uses a reversion to the mean process to determine the assumption for the future net separate account investment performance. This process assumes different performance levels over the next three years, such that the separate account mean return, measured from the anchor date to the end of the life of the product, equals the long-term assumption. The Company’s long-term assumptions for net separate account investment performance consist of assumed gross returns of 10.5% for equity funds and 5.0% for fixed funds. Changes in assumptions can have a significant impact on the amount of DAC reported for investment and universal life insurance products and on their related amortization patterns. In the event actual experience differs from assumptions or future assumptions are revised, the Company will record an increase or decrease in DAC amortization expense, which could be significant. Traditional life insurance products. premium-paying Refer to Note 5 for discussion regarding DAC amortization and related balances. |
Investments | Investments Available-for-sale securities Available-for-sale As of December 31, 2015 and 2014, 99% of fixed maturity securities were priced using externally sourced data. Independent pricing services are most often utilized (86% and 87% as of December 31, 2015 and 2014, respectively) to determine the fair value of securities for which market quotations are available. For these securities, the Company obtains the pricing services’ methodologies, pricing from additional sources, and classifies the investments accordingly in the fair value hierarchy. A corporate pricing matrix is used in valuing certain corporate debt securities. The corporate pricing matrix was developed using publicly and privately available spreads for privately placed corporate securities with varying weighted average lives and credit quality ratings. The weighted average life and credit quality rating of a particular fixed maturity security to be priced using the corporate pricing matrix are important inputs into the model and are used to determine a corresponding spread that is added to the appropriate U.S. Treasury yield to create an estimated market yield for that security. The estimated market yield and other relevant factors are then used to estimate the fair value of the particular security. Non-binding broker quotes are also utilized to determine the fair value of certain fixed maturity securities when deemed appropriate or when quotes are not available from independent pricing services or a corporate pricing matrix. These securities, consisting primarily of private placement corporate bonds, are classified with the lowest priority in the fair value hierarchy as only one broker quote is ordinarily obtained, the investment is not traded on an exchange, the pricing is not available to other entities and/or the transaction volume in the same or similar investments has decreased. Inputs used in the development of prices are not provided to the Company by the brokers, as the brokers often do not provide the necessary transparency into their quotes and methodologies. At least annually, the Company performs reviews and tests to ensure that quotes are a reasonable estimate of the investments’ fair value. Price movements of broker quotes are subject to validation and require approval from the Company’s management. Management uses its knowledge of the investment and current market conditions to determine if the price is indicative of the investment’s fair value. When the collectability of contractual interest payments on fixed maturity securities is considered doubtful, such securities are placed in non-accrual status and any accrued interest is excluded from investment income. These securities are not restored to accrual status until the Company determines that future payment of principal and interest is probable. The Company has entered into securities lending agreements with a custodial bank whereby eligible securities are loaned to third parties, primarily major brokerage firms. These transactions are used to generate additional income in the securities portfolio. The Company is entitled to receive from the borrower any payments of interest and dividends received on loaned securities during the loan term. The agreements require a minimum of 102% of the fair value of the loaned securities to be held as collateral. Cash collateral is invested by the custodial bank in investment-grade securities, which are included in the total investments of the Company. Additionally, the Company may receive non-cash collateral, which would be recorded off-balance sheet. As of December 31, 2015 and December 31, 2014, the fair value of the securities received as collateral and recorded off balance sheet is $167 million and $0, respectively. The Company recognizes loaned securities in available-for-sale investments. A securities lending payable is recorded in other liabilities for the amount of cash collateral received. Net income received from securities lending activities is included in net investment income. As of December 31, 2015 and 2014, the fair value of loaned securities was $389 million and $254 million, respectively. For investments in certain residential and commercial mortgage-backed securities, the Company recognizes income and amortizes discounts and premiums using the effective-yield method, based on prepayment assumptions and the estimated economic life of the securities. When actual prepayments differ significantly from estimated prepayments, the effective-yield is recalculated to reflect actual payments to date and anticipated future payments. Any resulting adjustment is included in net investment income in the period the estimates are revised. All other investment income is recorded using the effective-yield method without anticipating the impact of prepayments. The Company periodically reviews its available-for-sale securities to determine if any decline in fair value to below amortized cost is other-than-temporary. Factors considered in determining whether a decline is other-than-temporary include the length of time a security has been in an unrealized loss position, the severity of the unrealized loss, reasons for the decline in value and expectations for the amount and timing of a recovery in fair value. In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations, the value of the company or specific collateral securing the debt, the Company’s intent to sell the security and whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost basis. The Company evaluates U.S. government, agencies and obligations of states and political subdivisions securities for other-than-temporary impairment by examining similar characteristics. Mortgage-backed securities are assessed for impairment using default estimates based on loan level data, where available. Where loan level data is not available, a proxy based on collateral characteristics is used. The impairment assessment considers loss severity as a function of multiple factors, including unpaid balance, interest rate, mortgage insurance ratios, assessed property value at origination, change in property value, loan-to-value (“LTV”) ratio at origination and prepayment speeds. Cash flows generated by the collateral are then utilized, along with consideration of the instrument’s position in the overall structure, to determine cash flows associated with the security. Certain asset-backed securities are assessed for impairment using expected cash flows based on various inputs, including default estimates based on the underlying corporate securities, historical and forecasted loss severities or other market inputs when recovery estimates are not feasible. When the collateral is regional bank and insurance company trust preferred securities, default estimates used to estimate cash flows are based on U.S. Bank Rating service data and broker research. The Company evaluates its intent to sell on an individual security basis. Other-than-temporary impairment losses on securities when the Company does not intend to sell the security and it is not more likely than not it will be required to sell the security prior to recovery of the security’s amortized cost basis are bifurcated, with the credit related portion of the impairment loss being recognized in earnings and the non-credit related portion of the impairment loss and any subsequent changes in the fair value of those debt securities being recognized in other comprehensive income, net of applicable taxes and other offsets. To estimate the credit related portion of an impairment loss recognized in earnings, the Company considers the present value of the cash flows. To the extent that the present value of cash flows generated by a debt security is less than the amortized cost, an other-than-temporary impairment is recognized through earnings. It is possible that further declines in fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments, which could be significant. The Company invests in fixed maturity securities that could qualify as variable interest entities (“VIEs”), including corporate securities, mortgage-backed securities and asset-backed securities. The Company is not the primary beneficiary of these securities as the Company does not have the power to direct the activities that most significantly impact the entities’ performance. The Company’s potential loss is limited to the carrying values of these securities. There are no liquidity arrangements, guarantees or other commitments by third parties that affect the fair value of the Company’s interest in these assets. Mortgage loans, net of allowance As part of the underwriting process, specific guidelines are followed to ensure the initial quality of a new mortgage loan. Third-party appraisals are obtained to support loaned amounts, as the loans are usually collateral dependent. The collectability and value of a mortgage loan are based on the ability of the borrower to repay and/or the value of the underlying collateral. Many of the commercial mortgage loans are structured with balloon payment maturities, exposing the Company to risks associated with the borrowers’ ability to make the balloon payment or refinance the property. Mortgage loans require a loan-specific reserve when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When management determines that a loan requires a loan-specific reserve, a provision for loss is established equal to the difference between the carrying value and either the fair value of the collateral less costs to sell or the present value of expected future cash flows, discounted at the loan’s market interest rate. Loan-specific reserve charges are recorded in net realized investment gains and losses. In the event a loan-specific reserve charge is reversed, the recovery is also recorded in net realized investment gains and losses. In addition to the loan-specific reserves, the Company maintains a non-specific reserve based primarily on loan surveillance categories and property type classes, which reflects management’s best estimates of probable credit losses inherent in the portfolio of loans without specific reserves as of the balance sheet date. Management’s periodic evaluation of the adequacy of the non-specific reserve is based on past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of the underlying collateral, the composition of the loan portfolio, current economic conditions and other relevant factors. Non-specific reserve changes are recorded in net realized investment gains and losses. Management evaluates the credit quality of individual commercial mortgage loans and the portfolio as a whole through a number of loan quality measurements, including but not limited to LTV and debt service coverage (“DSC”) ratios. The LTV ratio is calculated as a ratio of the amortized cost of a loan to the estimated value of the underlying collateral. DSC is the amount of cash flow generated by the underlying collateral of the mortgage loan available to meet periodic interest and principal payments of the loan. This process identifies commercial mortgage loans representing the lowest risk profile and lowest potential for loss and those representing the highest risk profile and highest potential for loss. These factors are updated and evaluated at least annually. Interest income on performing mortgage loans is recognized over the life of the loan using the effective-yield method. Loans in default or in the process of foreclosure are placed on non-accrual status. Interest received on non-accrual status mortgage loans is included in net investment income in the period received. Loans are restored to accrual status when the principal and interest is current and it is determined the future principal and interest payments are probable or the loan is modified. Loans are considered delinquent when contractual payments are 90 days past due. Policy loans. Short-term investments. Other investments. The Company holds investments in limited partnerships and similar entities including private equity funds, tax credit funds and real estate related funds. The Company applies the equity method of accounting to these investments as it does not have a controlling financial interest. The Company recognizes the change in equity method investments in net investment income. The Company’s unfunded commitments related to these investments were $315 million and $123 million as of December 31, 2015 and 2014, respectively. The carrying value of these investments was $199 million and $141 million as of December 31, 2015 and 2014, respectively. The Company has sold $1.4 billion and $1.3 billion in Tax Credit Funds to unrelated third parties as of December 31, 2015 and 2014, respectively. The Company has guaranteed after-tax benefits to the third party investors through periods ending in 2031. These guarantees are in effect for periods of approximately 15 years each. The Tax Credit Funds provide a stream of tax benefits to the investors that will generate a yield and return of capital. If the tax benefits are not sufficient to provide these cumulative after-tax yields, the Company must fund any shortfall. The maximum amount of undiscounted future payments that the Company could be required to pay the investors under the terms of the guarantees is $720 million, but the Company does not anticipate making any material payments related to the guarantees. The Company’s risks are mitigated in the following ways: (1) the Company has the right to buyout the equity related to the guarantee under certain circumstances, (2) the Company may replace underperforming properties to mitigate exposure to guarantee payments and (3) the Company oversees the asset management of the deals. In the normal course of business, the Company has relationships with VIEs. If the Company determines that it has a variable interest and is the primary beneficiary, it consolidates the VIE. The Company is the primary beneficiary if the Company has the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and the obligation to absorb losses or receive benefits from the entity that could be potentially significant to the VIE. This determination is based on a review of the entity’s contract and other deal-related information, such as the entity’s equity investment at risk, decision-making abilities, obligations to absorb economic risks and right to receive economic rewards of the entity. These consolidated VIEs are primarily made up of the Tax Credit Funds discussed above. Net assets (controlling and noncontrolling interests) of all consolidated VIEs totaled $644 million and $640 million as of December 31, 2015 and 2014, respectively, and are included within the balance sheet primarily as other investments of $585 million, other assets of $113 million and other liabilities of $67 million as of December 31, 2015, and other investments of $580 million, other assets of $109 million and other liabilities of $75 million as of December 31, 2014. The Company’s general credit is not exposed to the creditors or beneficial interest holders of these consolidated VIEs. The results of operations and financial positions of each VIE for which the Company is the primary beneficiary, as well as the corresponding noncontrolling interests, are recorded in the consolidated financial statements. Ownership interests held by unrelated third parties in the consolidated VIEs are presented as noncontrolling interests in the equity section of the consolidated financial statements. Losses attributable to noncontrolling interests are excluded from the net income attributable to the Company on the consolidated statements of operations. The Company is not required and does not intend to provide financial or other support outside of contractual requirements to any VIE. |
Derivative Instruments | Derivative Instruments The Company uses derivative instruments to manage exposures and mitigate risks primarily associated with interest rates, equity markets and foreign currency. These derivative instruments primarily include interest rate swaps, futures contracts and options. Certain features embedded in the Company’s indexed products and certain variable annuity contracts require derivative accounting. All derivative instruments are held at fair value and are reflected as other assets or liabilities in the consolidated balance sheets. The fair value of derivative instruments is determined using various valuation techniques relying predominantly on observable market inputs. These inputs include interest rate swap curves, credit spreads, interest rates, counterparty credit risk, equity volatility and equity index levels. In cases where observable inputs are not available, the Company will utilize non-binding broker quotes to determine fair value, and these instruments are classified accordingly in the fair value hierarchy. Price movements of these broker quotes are subject to validation and require approval from the Company’s management. Management uses models to internally value the instruments for comparison to the values received through broker quotes. For derivatives that are not designated for hedge accounting, the gain or loss on the derivative is recognized in net realized investment gains and losses. For derivative instruments that are designated and qualify for cash flow hedge accounting, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income and reclassified into earnings in the same period or periods that the hedged transaction impacts earnings. The ineffective portion of the derivative’s change in value, if any, along with any of the derivative’s change in value that is excluded from the assessment of hedge effectiveness, are recorded in net realized investment gains and losses. The Company’s derivative transaction counterparties are generally financial institutions. To reduce the credit risk associated with open contracts, the Company enters into master netting agreements, which permit the closeout and netting of transactions with the same counterparty upon the occurrence of certain events. In addition, the Company attempts to reduce credit risk by obtaining collateral from counterparties. The determination of the need for and the levels of collateral vary based on an assessment of the credit risk of the counterparty. The Company accepts collateral in the forms of cash and marketable securities. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. In determining fair value, the Company uses various methods, including market, income and cost approaches. The Company categorizes its financial instruments into a three-level hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument in its entirety. The Company categorizes assets and liabilities held at fair value in the consolidated balance sheets as follows: Level 1. Unadjusted quoted prices accessible in active markets for identical assets or liabilities at the measurement date and mutual funds, where the value per share (unit) is determined and published daily and is the basis for current transactions. Level 2. Unadjusted quoted prices for similar assets or liabilities in active markets or inputs (other than quoted prices) that are observable or that are derived principally from or corroborated by observable market data through correlation or other means. Primary inputs to this valuation technique may include comparative trades, bid/asks, interest rate movements, U.S. Treasury rates, London Interbank Offered Rate (“LIBOR”), prime rates, cash flows, maturity dates, call ability, estimated prepayments and/or underlying collateral values. Level 3. Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimates of the assumptions market participants would use at the measurement date in pricing the asset or liability. Consideration is given to the risk inherent in both the method of valuation and the valuation inputs. The Company reviews its fair value hierarchy classifications for assets and liabilities quarterly. Changes in the observability of significant valuation inputs identified during these reviews may trigger reclassifications. Reclassifications are reported as transfers at the beginning of the period in which the change occurs. Fair Value Option. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of less than three months. |
Goodwill | Goodwill In connection with business acquisitions, the Company recognizes goodwill as the excess of the purchase price or fair value of consideration exchanged over the fair values of tangible assets acquired, liabilities assumed and separately identified intangible assets. Goodwill is not amortized, but is evaluated for impairment at the reporting unit level annually. Goodwill of a reporting unit is tested for impairment on an interim basis, in addition to the annual evaluation, if an event occurs or circumstances change which would more likely than not reduce the fair value of a reporting unit below its carrying amount. If a reporting unit’s fair value is less than its carrying value, the Company will calculate implied goodwill. Goodwill is impaired at the reporting unit level if its carrying value exceeds the implied value of its goodwill. The process of evaluating goodwill for impairment requires several judgments and assumptions to be made to determine the fair value of the reporting units, including the method used to determine fair value, discount rates, expected levels of cash flows, revenues and earnings and the selection of comparable companies used to develop market-based assumptions. The Company performed its 2015 annual impairment test and determined that no impairment was required. As of December 31, 2015 and 2014, there were no accumulated impairments. |
Closed Block | Closed Block In connection with the sponsored demutualization of Provident Mutual Life Insurance Company (“Provident”) prior to its acquisition by the Company, Provident established a closed block for the benefit of certain classes of individual participating policies that had a dividend scale payable in 2001. Assets were allocated to the closed block in an amount that produces cash flows which, together with anticipated revenues from closed block business, is reasonably expected to be sufficient to provide for (1) payment of policy benefits, specified expenses and taxes, and (2) the continuation of dividends throughout the life of the Provident policies included in the closed block based upon the dividend scales payable for 2001, if the experience underlying such dividend scales continues. Assets allocated to the closed block benefit only the holders of the policies included in the closed block and will not revert to the benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the closed block and other portions of the Company’s general account, any of its separate accounts, or any affiliate of the Company without the approval of the Pennsylvania Insurance Department and ODI. The closed block will remain in effect as long as any policy in the closed block is in force. If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will increase. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from the Company’s assets outside of the closed block, which are general account assets. The assets and liabilities allocated to the closed block are recorded in the Company’s consolidated financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date Provident was acquired by the Company represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income, for the benefit of stockholders, over the period the policies in the closed block remain in force. If actual cumulative earnings exceed expected cumulative earnings, the expected earnings are recognized in income. This is because the excess actual cumulative earnings over expected cumulative earnings, which represents undistributed accumulated earnings attributable to policyholders, is recorded as a policyholder dividend obligation. Therefore, the excess will be paid to closed block policyholders as an additional policyholder dividend expense in the future unless it is otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, actual earnings will be recognized in income. The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholder benefits, policyholder dividends, premium taxes and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions and net investment income and realized gains and losses on investments held outside of the closed block that support the closed block business, all of which enter into the determination of total gross margins of closed block policies. See Note 10 for further disclosure. |
Separate Accounts | Separate Accounts Separate account assets and liabilities represent contractholders’ funds that have been legally segregated into accounts with specific investment objectives. In the separate account, investment income and gains and losses on investments accrue directly to, and investment risk is borne by, the contractholder. Separate account assets are primarily comprised of public, privately-registered and non-registered mutual funds. Separate account assets are recorded at fair value based on the methodology that would be applicable to the underlying assets. The value of separate account liabilities is set to equal the fair value for separate account assets. |
Federal Income Taxes | Federal Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded to reduce a deferred tax asset to the amount expected to be realized. Interest expense and any associated penalties which relate to tax years still subject to review by the Internal Revenue Service (“IRS”) are recorded as income tax expenses. The Company provides for federal income taxes based on amounts the Company believes it ultimately will owe. Inherent in the provision for federal income taxes are estimates regarding the deductibility of certain items and the realization of certain tax credits. In the event the ultimate deductibility of certain items or the realization of certain tax credits differs from estimates, the Company may be required to change the provision for federal income taxes recorded in the consolidated financial statements, which could be significant. Tax reserves are reviewed regularly and are adjusted as events occur that the Company believes impact its liability for additional taxes, such as the lapsing of applicable statutes of limitations, conclusion of tax audits or substantial agreement with taxing authorities on the deductibility/nondeductibility of uncertain items, additional exposure based on current calculations, identification of new issues, release of administrative guidance or rendering of a court decision affecting a particular tax issue. The Company believes its tax reserves reasonably provide for potential assessments that may result from IRS examinations and other tax-related matters for all open tax years. Effective January 1, 2015, the Company is included in the NMIC consolidated federal income tax return. Prior to 2015, NLIC filed a separate consolidated federal income tax return with its subsidiaries. |
Participating Business | Participating Business Participating business, which refers to policies that participate in profits through policyholder dividends, represented approximately 3% of the Company’s life insurance in force in 2015 (4% in 2014 and 2013) and 35% of the number of life insurance policies in force in 2015 (37% in 2014 and 38% in 2013). The provision for policyholder dividends was based on the respective year’s dividend scales and has been included in future policy benefits and claims in the consolidated balance sheets. |
Subsequent Events | Subsequent Events The Company evaluated subsequent events through February 23, 2016, the date the consolidated financial statements were issued. |
Certain Long-Duration Contrac31
Certain Long-Duration Contracts (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | The following table summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts, as of the dates indicated (a contract may contain multiple guarantees): December 31, 2015 December 31, 2014 (in millions) General Separate Net 1 Average 2 General Separate Net 1 Average 2 Contracts with GMDB: Return of net deposits $ 885 $ 24,452 $ 208 66 $ 872 $ 23,079 $ 21 65 Minimum return or anniversary contract value 1,817 31,511 1,133 70 1,918 33,662 292 69 Total contracts with GMDB $ 2,702 $ 55,963 $ 1,341 68 $ 2,790 $ 56,741 $ 313 68 GLWB Minimum return or anniversary contract value 3 $ 141 $ 32,187 $ 142 67 $ 135 $ 31,406 $ 195 66 GMAB Return of net deposits 3 $ 19 $ 496 $ 2 66 $ 43 $ 1,177 $ — 67 GMIB Minimum return or anniversary contract value $ 46 $ 380 $ 1 67 $ 45 $ 451 $ 1 66 1 Net amount at risk is calculated on a policy-level basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). 2 Represents the weighted average attained age of contractholders at the respective date. 3 Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. |
Summarizes the reserve balances, for variable annuity contracts with guarantees | The following table summarizes the reserve balances for guarantees on variable annuity contracts, as of the dates indicated: December 31, (in millions) 2015 2014 GMDB $ 148 $ 76 GLWB 1 $ 180 $ 185 GMAB 1 $ — $ (8 ) GMIB $ 2 $ 1 1 Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. |
Summarizes account balances of deferred variable annuity | The following table summarizes the account balances of deferred variable annuity contracts with guarantees invested in separate accounts, as of the dates indicated: (in millions) December 31, 2015 2014 Mutual funds: Bond $ 5,371 $ 5,280 Domestic equity 46,469 47,316 International equity 3,001 2,969 Total mutual funds $ 54,841 $ 55,565 Money market funds 1,122 1,176 Total 1 $ 55,963 $ 56,741 1 Excludes $31.3 billion as of December 31, 2015 and 2014 of separate account assets not related to deferred variable annuity contracts with guarantees, primarily attributable to retirement plan, variable universal life and COLI products. |
Summarizes information regarding universal and variable universal life insurance contracts with no lapse guarantees invested in general and separate accounts | The following table summarizes information regarding universal and variable universal life insurance contracts with no-lapse guarantees invested in general and separate accounts, as of the dates indicated: (in millions) General account Separate account Adjusted insurance 1 Average age 2 December 31, 2015 $ 2,473 $ 2,053 $ 48,140 51 December 31, 2014 $ 1,954 $ 2,191 $ 41,484 51 1 The adjusted insurance in force is calculated on a policy-level basis and equals the respective guaranteed death benefit less the account value and reinsurance. 2 Represents the weighted average attained age of contractholders at the respective date. |
Deferred Policy Acquisition C32
Deferred Policy Acquisition Costs (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Deferred policy acquisition costs | The following table summarizes changes in the DAC balance, as of the dates indicated: December 31, (in millions) 2015 2014 2013 Balance at beginning of year $ 4,063 $ 3,778 $ 3,249 Capitalization of DAC 870 685 604 Amortization of DAC, excluding unlocks (326 ) (397 ) (373 ) Amortization of DAC related to unlocks 258 190 (1 ) Adjustments to DAC related to unrealized gains and losses on available-for-sale securities 335 (193 ) 299 Balance at end of year $ 5,200 $ 4,063 $ 3,778 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Available-for-Sale Securities | The following table summarizes the amortized cost, unrealized gains and losses and fair value of available-for-sale securities, as of the dates indicated: (in millions) Amortized Unrealized Unrealized Fair December 31, 2015 Fixed maturity securities: U.S. government and agencies $ 343 $ 59 $ — $ 402 Obligations of states, political subdivisions and foreign governments 2,137 241 11 2,367 Corporate public securities 23,174 868 752 23,290 Corporate private securities 5,082 203 115 5,170 Residential mortgage-backed securities 3,036 152 42 3,146 Commercial mortgage-backed securities 1,539 37 11 1,565 Asset-backed securities 1,685 19 74 1,630 Total fixed maturity securities $ 36,996 $ 1,579 $ 1,005 $ 37,570 Equity securities 7 14 — 21 Total available-for-sale securities $ 37,003 $ 1,593 $ 1,005 $ 37,591 December 31, 2014 Fixed maturity securities: U.S. government and agencies $ 448 $ 79 $ — $ 527 Obligations of states, political subdivisions and foreign governments 1,966 320 1 2,285 Corporate public securities 19,851 1,519 120 21,250 Corporate private securities 4,398 286 34 4,650 Residential mortgage-backed securities 3,694 190 45 3,839 Commercial mortgage-backed securities 1,431 74 3 1,502 Asset-backed securities 1,410 27 72 1,365 Total fixed maturity securities $ 33,198 $ 2,495 $ 275 $ 35,418 Equity securities 6 15 — 21 Total available-for-sale securities $ 33,204 $ 2,510 $ 275 $ 35,439 |
Summarizes the amortized cost and fair value of fixed maturity securities | Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without early redemption penalties. (in millions) Amortized Fair Fixed maturity securities: Due in one year or less $ 977 $ 982 Due after one year through five years 10,512 10,861 Due after five years through ten years 9,302 9,295 Due after ten years 9,945 10,091 Subtotal $ 30,736 $ 31,229 Residential mortgage-backed securities 3,036 3,146 Commercial mortgage-backed securities 1,539 1,565 Asset-backed securities 1,685 1,630 Total fixed maturity securities $ 36,996 $ 37,570 |
Summarizes components of net unrealized gains and losses on available-for-sale securities | The following table summarizes the components of net unrealized gains and losses, as of the dates indicated: (in millions) December 31, 2015 2014 Net unrealized gains on available-for-sale securities, before adjustments and taxes 1 $ 588 $ 2,235 Adjustment to DAC and other expense (33 ) (372 ) Adjustment to future policy benefits and claims (16 ) (159 ) Adjustment to policyholder dividend obligations (67 ) (120 ) Deferred federal income tax expense (156 ) (548 ) Net unrealized gains on available-for-sale securities $ 316 $ 1,036 1 Includes net unrealized losses of $20 million and $9 million as of December 31, 2015 and 2014, respectively, related to the non-credit portion of other-than-temporarily impaired securities. |
Summarizes change in net unrealized gains and losses on available for sale securities | The following table summarizes the change in net unrealized gains and losses reported in accumulated other comprehensive income, for the years ended: December 31, (in millions) 2015 2014 Balance at beginning of year $ 1,036 $ 601 Unrealized gains and losses arising during the year: Net unrealized (losses) gains on available-for-sale securities before adjustments (1,662 ) 939 Non-credit impairments and subsequent changes in fair value of impaired debt securities (11 ) 31 Net adjustment to DAC and other expense 339 (196 ) Net adjustment to future policy benefits and claims 143 (70 ) Net adjustment to policyholder dividend obligations 53 (35 ) Related federal income tax benefit (expense) 401 (234 ) Unrealized (losses) gains on available-for-sale securities $ (737 ) $ 435 Less: Reclassification adjustment for net losses realized on available-for-sale securities, net of tax benefit ($9 and $0 as of December 31, 2015 and 2014, respectively) (17 ) — Net unrealized (losses) gains on available-for-sale securities $ (720 ) $ 435 Balance at end of year $ 316 $ 1,036 |
Summarizes available for sale securities by asset class in gross unrealized loss position | The following table summarizes, by asset class, available-for-sale securities, in an unrealized loss position based on the amount of time each type of security has been in an unrealized loss position, as well as the related fair value, as of the dates indicated: Less than or equal to one year More than one year Total (in millions) Fair Unrealized Fair Unrealized Unrealized 1 December 31, 2015 Fixed maturity securities: Corporate public securities $ 8,170 $ 455 $ 975 $ 297 $ 752 Corporate private securities 1,642 56 418 59 115 Asset-backed securities 654 7 756 67 74 Other 1,271 23 504 41 64 Total 2 $ 11,737 $ 541 $ 2,653 $ 464 $ 1,005 December 31, 2014 Fixed maturity securities: Corporate public securities $ 1,642 $ 63 $ 1,578 $ 57 $ 120 Corporate private securities 589 27 256 7 34 Asset-backed securities 662 5 493 67 72 Other 268 2 688 47 49 Total 2 $ 3,161 $ 97 $ 3,015 $ 178 $ 275 1 As of December 31, 2015 and 2014, there were $448 million and $66 million, respectively, of unrealized losses related to available-for-sale securities with a fair value to amortized cost ratio of less than 80%. 2 Represents 1,059 and 541 available-for-sale securities in an unrealized loss position as of December 31, 2015 and 2014, respectively. The Company believes the unrealized losses on these available-for-sale securities represent temporary fluctuations in economic factors that are not indicative of other-than-temporary-impairment. |
Summary of the amortized cost of mortgage loans | The following table summarizes the amortized cost of mortgage loans by method of evaluation for credit loss, and the related valuation allowances by type of credit loss, as of the dates indicated: December 31, (in millions) 2015 2014 Amortized cost: Loans with non-specific reserves $ 8,403 $ 7,279 Loans with specific reserves 19 17 Total amortized cost $ 8,422 $ 7,296 Valuation allowance: Non-specific reserves $ 23 $ 21 Specific reserves 3 5 Total valuation allowance $ 26 $ 26 Mortgage loans, net of allowance $ 8,396 $ 7,270 |
Activity in the valuation allowance for mortgage loans | The following table summarizes activity in the valuation allowance for mortgage loans, for the years ended: (in millions) December 31, 2015 2014 2013 Balance at beginning of year $ 26 $ 35 $ 44 Current period provision 1 2 (8 ) (4 ) Recoveries 2 (2 ) (1 ) (5 ) Balance at end of year $ 26 $ 26 $ 35 1 Includes specific reserve provisions and all changes in non-specific reserves. 2 Includes recoveries on sales and increases in the valuation of loans with specific reserves. |
Summary of LTV ratio and DSC ratios of the mortgage loan portfolio | The following table summarizes the LTV ratio and DSC ratios of the mortgage loan portfolio, as of the dates indicated: LTV ratio DSC ratio (in millions) Less than 90% or Total 1 Greater than Less than Total 1 December 31, 2015 Apartment $ 2,791 $ — $ 2,791 $ 2,791 $ — $ 2,791 Industrial 1,221 25 1,246 1,193 53 1,246 Office 1,318 3 1,321 1,286 35 1,321 Retail 2,765 2 2,767 2,756 11 2,767 Other 297 — 297 297 — 297 Total 2 $ 8,392 $ 30 $ 8,422 $ 8,323 $ 99 $ 8,422 December 31, 2014 Apartment $ 2,267 $ 17 $ 2,284 $ 2,278 $ 6 $ 2,284 Industrial 1,165 35 1,200 1,137 63 1,200 Office 1,020 20 1,040 994 46 1,040 Retail 2,570 11 2,581 2,549 32 2,581 Other 191 — 191 191 — 191 Total 3 $ 7,213 $ 83 $ 7,296 $ 7,149 $ 147 $ 7,296 1 While these loan quality measurements contribute to management’s assessment of relative credit risk in the commercial mortgage loan portfolio for the dates indicated, based on underwriting criteria and ongoing assessment of the properties’ performance, management believes the amounts, net of valuation allowance, are collectible. 2 As of December 31, 2015, the weighted average DSC ratios for the respective LTV ratio ranges above were 2.02 and 0.83, with a total weighted average DSC ratio of 2.02. As of December 31, 2015, the weighted average LTV ratios for the respective DSC ratio ranges above were 60% and 85%, with a total weighted average LTV ratio of 60%. 3 As of December 31, 2014, the weighted average DSC ratios for the respective LTV ratio ranges above were 1.94 and 0.90, with a total weighted average DSC ratio of 1.93. As of December 31, 2014, the weighted average LTV ratios for the respective DSC ratio ranges above were 60% and 90%, with a total weighted average LTV ratio of 60%. |
Summary of net investment income by investment type | The following table summarizes net investment income, by investment type, for the years ended: December 31, (in millions) 2015 2014 2013 Fixed maturity securities, available-for-sale $ 1,646 $ 1,575 $ 1,565 Mortgage loans 390 362 348 Alternative Investments (56 ) (32 ) (68 ) Policy loans 51 51 52 Other 12 3 11 Gross investment income $ 2,043 $ 1,959 $ 1,908 Investment expenses 61 59 59 Net investment income $ 1,982 $ 1,900 $ 1,849 |
Net Realized Investment Gains and Losses | he following table summarizes net realized investment gains and losses, including other-than-temporary impairments, by source, for the years ended: December 31, (in millions) 2015 2014 2013 Net realized derivative gains (losses) $ 120 $ (1,087 ) $ 705 Realized gains on sales 11 31 32 Realized losses on sales (37 ) (19 ) (54 ) Other (11 ) 2 — Net realized investment gains (losses) before other-than-temporary-impairments on fixed maturity securities $ 83 $ (1,073 ) $ 683 Other-than-temporary-impairments on fixed maturity securities 1 (1 ) (5 ) (5 ) Net realized investment gains (losses), including other-than-temporary-impairments $ 82 $ (1,078 ) $ 678 1 Other-than-temporary impairments on fixed maturity securities are net $2 million, $1 million and $6 million of non-credit losses included in other comprehensive income for the years ended December 31, 2015, 2014 and 2013, respectively. |
Other-Than-Temporary Impairment Losses | The following table summarizes the cumulative credits losses, for the years ended: December 31, (in millions) 2015 2014 2013 Cumulative credit losses at beginning of year 1 $ (254 ) $ (272 ) $ (289 ) New credit losses (1 ) (2 ) (3 ) Incremental credit losses — (4 ) (3 ) Losses related to securities included in the beginning balance sold or paid down during the period 31 24 23 Cumulative credit losses at end of year 1 $ (224 ) $ (254 ) $ (272 ) 1 Cumulative credit losses are defined as amounts related to the Company’s credit portion of the other-than-temporary impairment losses on debt securities that the Company does not intend to sell and that it is not more likely than not the Company will be required to sell prior to recovery of the amortized cost basis. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of fair value of derivative instruments | The following table summarizes the fair value and related notional amounts of derivative instruments, as of the dates indicated: Derivative assets Derivative liabilities (in millions) Fair value Notional Fair value Notional December 31, 2015 Derivatives designated and qualifying as hedging instruments $ 86 $ 725 $ 2 $ 89 Derivatives not designated as hedging instruments: Interest rate contracts 1 $ 39 $ 875 $ 98 $ 1,059 Equity contracts 445 7,329 — — Total return swaps and other derivative contracts — 77 6 2 Total derivatives 2 $ 570 $ 9,006 $ 106 $ 1,150 December 31, 2014 Derivatives designated and qualifying as hedging instruments $ 29 $ 381 $ 9 $ 176 Derivatives not designated as hedging instruments: Interest rate contracts 1 $ 2,602 $ 32,829 $ 2,611 $ 32,756 Equity contracts 411 5,990 — — Total return swaps and other derivative contracts — — 44 2,810 Total derivatives 2 $ 3,042 $ 39,200 $ 2,664 $ 35,742 1 The decreases in the fair value and notional amounts of interest rate contracts are primarily a result of revisions made to the Company’s economic hedging strategies in conjunction with the change in estimate discussed in Note 4. 2 Fair value balance excludes accrued interest on derivative assets and liabilities of $10 and $11 million, respectively, for the year ended December 31, 2015. Fair value balance excludes accrued interest on derivative assets and liabilities of $243 million and $244 million, respectively, for the year ended December 31, 2014. |
Summary of realized gains and losses for derivative instruments | The following table summarizes gains and losses for derivative instruments recognized in net realized investment gains and losses in the consolidated statements of operations, for the years ended: December 31, (in millions) 2015 2014 2013 Derivatives designated and qualifying as hedging instruments $ — $ — $ (1 ) Derivatives not designated as hedging instruments: Interest rate contracts $ (141 ) $ 142 $ (209 ) Equity contracts (257 ) (79 ) (776 ) Total return swaps (44 ) (195 ) (321 ) Other derivative contracts (6 ) 4 (9 ) Net interest settlements 32 20 14 Total derivative losses 1 $ (416 ) $ (108 ) $ (1,302 ) Change in embedded derivative liabilities and related fees 2 $ 536 $ (979 ) $ 2,007 Net realized derivative gains (losses) $ 120 $ (1,087 ) $ 705 1 Included in total derivative losses are economic hedging (losses) gains of $(402) million, $941 million and $(1.8) billion related to the guaranteed benefit annuity programs for the years ended December 31, 2015, 2014 and 2013, respectively. Also included are economic hedging gains (losses) of $52 million, $(1.0) billion and $645 million, respectively, related to the program that protects against the negative impact of higher interest rates on the Company’s statutory surplus position through expiry. 2 During 2015, the annual comprehensive review of model assumptions for the individual variable annuity business produced a favorable impact of $187 million for the year ended December 31, 2015, attributable to the change in estimate discussed in Note 4. During 2014 and 2013, the annual comprehensive review of model assumptions for the individual variable annuity business included a favorable impact for the years ended December 31, 2014 and 2013, primarily due to model enhancements and updated assumptions for discounting and benefit utilization, partially offset by mortality and lapse rates. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Assets and liabilities measured at fair value on a recurring basis | The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2015: (in millions) Level 1 Level 2 Level 3 Total Assets Investments: Fixed maturity securities, available-for-sale: U.S. government and agencies $ 399 $ 1 $ 2 $ 402 Obligations of states, political subdivisions and foreign governments 63 2,304 — 2,367 Corporate public securities — 23,142 148 23,290 Corporate private securities — 4,226 944 5,170 Residential mortgage-backed securities 846 2,291 9 3,146 Commercial mortgage-backed securities — 1,565 — 1,565 Asset-backed securities — 1,505 125 1,630 Total fixed maturity securities, available-for-sale, at fair value $ 1,308 $ 35,034 $ 1,228 $ 37,570 Other investments at fair value 1 270 546 37 853 Investments at fair value $ 1,578 $ 35,580 $ 1,265 $ 38,423 Derivative instruments — assets — 125 445 570 Separate account assets 83,466 1,323 2,449 87,238 Assets at fair value $ 85,044 $ 37,028 $ 4,159 $ 126,231 Liabilities Future policy benefits and claims $ — $ — $ (65 ) $ (65 ) Derivative instruments — liabilities — (100 ) (6 ) (106 ) Liabilities at fair value $ — $ (100 ) $ (71 ) $ (171 ) 1 Other investments at fair value includes $66 million of trading securities as of December 31, 2015. The following table summarizes assets and liabilities held at fair value on a recurring basis as of December 31, 2014: (in millions) Level 1 Level 2 Level 3 Total Assets Investments: Fixed maturity securities, available-for-sale: U.S. government and agencies $ 523 $ 1 $ 3 $ 527 Obligations of states, political subdivisions and foreign governments 66 2,219 — 2,285 Corporate public securities — 21,158 92 21,250 Corporate private securities — 3,659 991 4,650 Residential mortgage-backed securities 1,034 2,796 9 3,839 Commercial mortgage-backed securities — 1,499 3 1,502 Other asset-backed securities — 1,196 169 1,365 Total fixed maturity securities, available-for-sale, at fair value $ 1,623 $ 32,528 $ 1,267 $ 35,418 Other investments at fair value 1 42 899 36 977 Investments at fair value $ 1,665 $ 33,427 $ 1,303 $ 36,395 Derivative instruments - assets — 2,631 411 3,042 Separate account assets 84,583 1,387 2,106 88,076 Assets at fair value $ 86,248 $ 37,445 $ 3,820 $ 127,513 Liabilities Future policy benefits and claims at fair value $ — $ — $ (261 ) $ (261 ) Derivative instruments - liabilities — (2,661 ) (3 ) (2,664 ) Liabilities at fair value $ — $ (2,661 ) $ (264 ) $ (2,925 ) 1 Other investments at fair value includes $21 million of trading securities as of December 31, 2014. |
Fair value measurements of unobservable inputs | The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2015: (in millions) Fixed 2 Other Derivative 3 Separate Total assets Liabilities 3 Balance as of December 31, 2014 $ 1,267 $ 36 $ 411 $ 2,106 $ 3,820 $ (264 ) Net (losses) gains In operations 1 (6 ) — (46 ) 18 (34 ) 313 In other comprehensive income (44 ) — — — (44 ) — Purchases 142 1 104 325 572 (144 ) Sales (162 ) — (24 ) — (186 ) 24 Transfers into Level 3 201 — — — 201 — Transfers out of Level 3 (170 ) — — — (170 ) — Balance as of December 31, 2015 $ 1,228 $ 37 $ 445 $ 2,449 $ 4,159 $ (71 ) 1 Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized gains (losses) included in operations on assets and liabilities still held at the end of the year was $316 million for future policy benefits and claims, $(9) million for derivative assets, and $2 million for derivative liabilities. 2 Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2015. 3 Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the year ended December 31, 2014: (in millions) Fixed 2 Other Derivative 3 Separate Total assets Liabilities at 3 Balance as of December 31, 2013 $ 1,088 $ 45 $ 343 $ 2,083 $ 3,559 $ 1,005 Net gains (losses) In operations 1 (5 ) 6 40 23 64 (1,269 ) In other comprehensive income 21 1 — — 22 — Purchases 121 — 46 — 167 — Sales (241 ) (16 ) (18 ) — (275 ) — Transfers into Level 3 400 — — — 400 — Transfers out of Level 3 (117 ) — — — (117 ) — Balance as of December 31, 2014 $ 1,267 $ 36 $ 411 $ 2,106 $ 3,820 $ (264 ) 1 Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company’s earnings. The change in unrealized (losses) gains included in operations on assets and liabilities still held as of the end of the year was $(1.3) billion for future policy benefits and claims, $154 million for derivative assets and $6 million for other investments at fair value. 2 Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2014. 3 Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities. |
Summary of significant unobservable inputs used for fair value measurements for living benefits liabilities | The following table summarizes significant unobservable inputs used for fair value measurements for living benefits liabilities, included in future policy benefits and claims and classified as Level 3 as of December 31, 2015: Unobservable Inputs Range Mortality 0.1% - 8% 2 Lapse 0% - 35% Wait period 0 yrs - 30 yrs 3 Efficiency of benefit utilization 1 60% - 100% Discount rate 4 See note 4 below Index volatility 15% - 25% 1 The unobservable input is not applicable to GMABs. 2 Represents the mortality for the majority of business with living benefits, with policyholders ranging from 45 to 85. 3 A portion of the contractholders could never use the benefit, which would extend the range to an indeterminate period. 4 Incorporates the liquidity and non-performance risk adjustment. The liquidity spread takes into consideration market observables for spreads in illiquid assets. The non-performance risk adjustment reflects an additional spread over LIBOR determined by market observables for similarly rated public bonds. |
Summary of significant unobservable inputs used for fair value measurements for indexed universal life equity indexed products | The following table summarizes significant unobservable inputs used for fair value measurements for indexed universal life and indexed annuity products classified as Level 3 as of December 31, 2015: Unobservable Inputs Range Mortality 0% - 4%¹ Lapse 0% - 10% Index volatility 15% - 25% 1 Represents the mortality for the majority of business, with policyholders ranging from 0 to 75. |
Summary of carrying value and fair value of the Company's financial instruments not carried at fair value | The following table summarizes the carrying value and fair value of the Company’s financial instruments not carried at fair value as of the dates indicated. The valuation techniques used to estimate these fair values are described below. December 31, 2015 December 31, 2014 (in millions) Carrying Fair Level 2 Level 3 Carrying Fair Level 2 Level 3 Assets Investments: Mortgage loans, net of allowance $ 8,396 $ 8,462 $ — $ 8,462 $ 7,270 $ 7,616 $ — $ 7,616 Policy loans $ 993 $ 993 $ — $ 993 $ 992 $ 992 $ — $ 992 Other investments $ 71 $ 71 $ — $ 71 $ 60 $ 60 $ — $ 60 Liabilities Investment contracts $ 27,301 $ 25,822 $ — $ 25,822 $ 23,470 $ 21,742 $ — $ 21,742 Short-term debt $ 400 $ 400 $ — $ 400 $ 660 $ 660 $ — $ 660 Long-term debt $ 707 $ 941 $ 934 $ 7 $ 709 $ 1,069 $ 1,060 $ 9 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of changes in the carrying value of goodwill by segment | The following table summarizes changes in the carrying value of goodwill by segment for the years indicated: (in millions) Retirement Individual Solutions -Life Total Balance as of December 31, 2013 1 $ 25 $ 175 $ 200 Adjustments — — — Balance as of December 31, 2014 1 $ 25 $ 175 $ 200 Adjustments — — — Balance as of December 31, 2015 1 $ 25 $ 175 $ 200 1 The goodwill balances have not been previously impaired. |
Closed Block (Tables)
Closed Block (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of financial information for the closed block | The following table summarizes financial information for the closed block, as of the dates indicated: December 31, (in millions) 2015 2014 Liabilities: Future policyholder benefits $ 1,637 $ 1,669 Policyholder funds and accumulated dividends 138 139 Policyholder dividends payable 21 22 Policyholder dividend obligation 99 152 Other policy obligations and liabilities 35 33 Total liabilities $ 1,930 $ 2,015 Assets: Fixed maturity securities, available-for-sale $ 1,316 $ 1,336 Mortgage loans, net of allowance 235 272 Policy loans 146 149 Other assets 71 86 Total assets $ 1,768 $ 1,843 Excess of reported liabilities over assets 162 172 Portion of above representing other comprehensive income: (Decrease) increase in unrealized gain on fixed maturity securities, available-for-sale $ (53 ) $ 35 Adjustment to policyholder dividend obligation 53 (35 ) Total $ — $ — Maximum future earnings to be recognized from assets and liabilities $ 162 $ 172 Other comprehensive income: Fixed maturity securities, available-for-sale: Fair value $ 1,316 $ 1,336 Amortized cost 1,249 1,216 Shadow policyholder dividend obligation (67 ) (120 ) Net unrealized appreciation $ — $ — |
Summary of closed block operations | The following table summarizes closed block operations for the years ended: December 31, (in millions) 2015 2014 2013 Revenues: Premiums $ 58 $ 61 $ 66 Net investment income 87 93 94 Realized investment gains 1 1 — Realized losses credited to policyholder benefit obligation (5 ) (5 ) (4 ) Total revenues $ 141 $ 150 $ 156 Benefits and expenses: Policy and contract benefits $ 122 $ 124 $ 123 Change in future policyholder benefits and interest credited to policyholder accounts (33 ) (34 ) (29 ) Policyholder dividends 40 43 44 Change in policyholder dividend obligation (4 ) (1 ) 3 Other expenses 1 2 (2 ) Total benefits and expenses $ 126 $ 134 $ 139 Total revenues, net of benefits and expenses, before federal income tax expense $ 15 $ 16 $ 17 Federal income tax expense 5 6 6 Revenues, net of benefits and expenses and federal income tax expense $ 10 $ 10 $ 11 Maximum future earnings from assets and liabilities: Beginning of period $ 172 $ 182 $ 193 Change during period (10 ) (10 ) (11 ) End of period $ 162 $ 172 $ 182 |
Short-Term Debt (Tables)
Short-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of short-term debt and weighted average annual interest rates | The following table summarizes the carrying value of short-term debt and weighted average annual interest rates, as of the dates indicated: December 31, (in millions) 2015 2014 $750 million commercial paper program (0.45% and 0.00%, respectively) 1 $ 400 $ — $600 million commercial paper program (0.00% and 0.20%, respectively) 1 — 264 $400 million revolving variable rate line of credit (0.00% and 1.57%, respectively) — 396 Total short-term debt $ 400 $ 660 1 On December 4, 2015, the Company renewed an agreement to increase its $600 million commercial paper program to $750 million. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of long-term debt | The following table summarizes the carrying value of long-term debt, as of the dates indicated: December 31, (in millions) 2015 2014 8.15% surplus note, due June 26, 2032, payable to NFS $ 300 $ 300 7.50% surplus note, due December 17, 2031, payable to NFS 300 300 6.75% surplus note, due December 23, 2033, payable to NFS 100 100 Other 7 9 Total long-term debt $ 707 $ 709 |
Federal Income Taxes (Tables)
Federal Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of federal income tax expense | The following table summarizes the components of federal income tax expense (benefit) for the years ended: (in millions) December 31, 2015 2014 2013 Current tax expense (benefit) $ 76 $ 5 $ (33 ) Deferred tax expense (benefit) 217 (152 ) 346 Total tax expense (benefit) $ 293 $ (147 ) $ 313 |
Summary of amount computed by applying the U.S. federal income tax rate to income | The following table summarizes how the total federal income tax expense (benefit) differs from the amount computed by applying the U.S. federal income tax rate to net income for the years ended: December 31, 2015 2014 2013 (in millions) Amount % Amount % Amount % Rate reconciliation: Computed (expected tax expense (benefit)) $ 430 35 % $ (46 ) 35 % $ 469 35 % Dividends received deduction (118 ) (10 )% (87 ) 66 % (112 ) (8 )% Tax credits (63 ) (5 )% (53 ) 41 % (82 ) (6 )% Other, net 44 4 % 39 (30 )% 38 2 % Total $ 293 24 % $ (147 ) 112 % $ 313 23 % |
Net deferred tax liability | The following table summarizes the tax effects of temporary differences that gave rise to significant components of the net deferred tax liability included in other liabilities in the consolidated balance sheets, as of the dates indicated: December 31, (in millions) 2015 2014 1 Deferred tax assets Future policy benefits and claims $ 825 $ 839 Tax credit carryforwards 483 355 Derivatives, including embedded derivatives 120 147 Other 411 439 Gross deferred tax assets $ 1,839 $ 1,780 Valuation allowance (17 ) (17 ) Gross deferred tax assets, net of valuation allowance $ 1,822 $ 1,763 Deferred tax liabilities Deferred policy acquisition costs $ 1,502 $ 1,113 Available-for-sale securities 315 839 Other 249 209 Gross deferred tax liabilities $ 2,066 $ 2,161 Net deferred tax liability $ 244 $ 398 1 Prior year amounts primarily related to certain annuity and life insurance balances have been reclassified between future policy benefits, available-for-sale securities, derivatives, other assets and other liabilities to conform with current year presentation. |
Uncertain tax positions | The following table is a rollforward of the beginning and ending uncertain tax positions, including permanent and temporary differences, but excluding interest and penalties: (in millions) 2015 2014 2013 Balance at beginning of period $ 38 $ 36 $ 36 Additions for current year tax positions 1 3 2 Reductions for prior years tax positions (3 ) (1 ) (2 ) Balance at end of period $ 36 $ 38 $ 36 |
Statutory Financial Informati41
Statutory Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of statutory net income loss and statutory capital and surplus | The following table summarizes the statutory net income (loss) and statutory capital and surplus for the Company’s primary life insurance subsidiaries for the years ended: December 31, (in millions) 2015 2014 2013 Statutory net income (loss) NLIC $ 167 $ 341 $ 262 NLAIC $ (99 ) $ (122 ) $ (103 ) Statutory capital and surplus NLIC $ 4,567 $ 4,408 $ 3,550 NLAIC $ 735 $ 691 $ 534 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of the Effects of Reinsurance on Life, Accident and Health Insurance | The following table summarizes the effects of reinsurance on life, accident and health insurance in force and premiums for the years ended: December 31, (in millions) 2015 2014 2013 Premiums Direct $ 1,144 $ 1,178 $ 1,015 Assumed from other companies — — — Ceded to other companies (358 ) (347 ) (291 ) Net $ 786 $ 831 $ 724 Life, accident and health insurance in force Direct $ 260,465 $ 241,936 $ 228,095 Assumed from other companies 5 5 6 Ceded to other companies (60,976 ) (59,588 ) (58,310 ) Net $ 199,494 $ 182,353 $ 169,791 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of the Company's Business Segment Operating Results | The following tables summarize the Company’s business segment operating results for the years ended: (in millions) Individual Retirement Individual Solutions-Life Corporate Total December 31, 2015 Revenues: Policy charges $ 1,259 111 846 — $ 2,216 Premiums 459 — 292 35 786 Net investment income 591 752 602 37 1,982 Non-operating changes in variable annuity liabilities and net realized investment losses 1 — — — (56 ) (56 ) Other revenues 2 (76 ) — (7 ) 7 (76 ) Total revenues $ 2,233 $ 863 $ 1,733 $ 23 $ 4,852 Benefits and expenses: Interest credited to policyholder accounts $ 328 494 236 20 $ 1,078 Benefits and claims 3 700 — 705 29 1,434 Amortization of DAC 13 7 115 (67 ) 68 Other expenses, net of deferrals 334 163 371 176 1,044 Total benefits and expenses $ 1,375 $ 664 $ 1,427 $ 158 $ 3,624 Income before federal income taxes and noncontrolling interests $ 858 199 306 (135 ) $ 1,228 Less: certain non-operating changes in variable annuity liabilities and net realized investment gains (losses) 1 — — — 56 Less: adjustment to amortization of DAC and other related expenses related to non-operating items above — — — (74 ) Less: net loss attributable to noncontrolling interest — — — 96 Pre-tax operating earnings (loss) $ 858 $ 199 $ 306 $ (57 ) Assets as of year end $ 73,370 $ 30,524 $ 30,650 $ 9,634 $ 144,178 1 Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). 2 Includes operating items discussed above. 3 Excludes certain non-operating changes in variable annuity liabilities. (in millions) Individual Retirement Individual Solutions-Life Corporate Total December 31, 2014 Revenues: Policy charges $ 1,175 $ 107 $ 783 $ — $ 2,065 Premiums 518 — 284 29 831 Net investment income 546 750 565 39 1,900 Non-operating net realized investment gains, including other-than-temporary impairment losses 1 — — — (1,051 ) (1,051 ) Other revenues 2 (38 ) — 12 10 (16 ) Total revenues $ 2,201 $ 857 $ 1,644 $ (973 ) $ 3,729 Benefits and expenses: Interest credited to policyholder accounts $ 370 $ 482 $ 231 $ 13 $ 1,096 Benefits and claims 828 — 644 30 1,502 Amortization of DAC 120 (28 ) 122 (7 ) 207 Other expenses, net of deferrals 300 153 348 254 1,055 Total benefits and expenses $ 1,618 $ 607 $ 1,345 $ 290 $ 3,860 Income before federal income taxes and noncontrolling interests $ 583 $ 250 $ 299 $ (1,263 ) $ (131 ) Less: non-operating net realized investment gains, including other-than-temporary impairment losses 1 — — — 1,051 Less: adjustment to amortization of DAC and other related expenses related to net realized investment gains and losses — — — (11 ) Less: net loss attributable to noncontrolling interest — — — 94 Pre-tax operating earnings (loss) $ 583 $ 250 $ 299 $ (129 ) Assets as of year end $ 72,429 $ 30,744 $ 29,322 $ 11,029 $ 143,524 1 Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). 2 Includes operating items discussed above. (in millions) Individual Retirement Individual Solutions-Life Corporate Total December 31, 2013 Revenues: Policy charges $ 1,021 $ 101 $ 727 $ — $ 1,849 Premiums 416 — 282 26 724 Net investment income 546 743 544 16 1,849 Non-operating net realized investment gains,including of other-than-temporary impairment losses 1 — — — 783 783 Other revenues 2 (109 ) — 6 15 (88 ) Total revenues $ 1,874 $ 844 $ 1,559 $ 840 $ 5,117 Benefits and expenses: Interest credited to policyholder accounts $ 377 $ 473 $ 213 $ 4 $ 1,067 Benefits and claims 694 — 636 24 1,354 Amortization of DAC 185 (2 ) 125 66 374 Other expenses, net of deferrals 295 151 347 188 981 Total benefits and expenses $ 1,551 $ 622 $ 1,321 $ 282 $ 3,776 Income before federal income taxes and noncontrolling interests $ 323 $ 222 $ 238 $ 558 $ 1,341 Less: non-operating net realized investment gains,including other-than-temporary impairment losses 1 — — — (783 ) Less: adjustment to amortization of DAC and other related expenses related to net realized investment gains and losses — — — 70 Less: net loss attributable to noncontrolling interest — — — 82 Pre-tax operating earnings (loss) $ 323 $ 222 $ 238 $ (73 ) Assets as of year end $ 68,805 $ 29,904 $ 27,183 $ 7,553 $ 133,445 1 Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). 2 Includes operating items discussed above. |
Nature of Operations - Addition
Nature of Operations - Additional Information (Detail) - Eagle Captive Reinsurance LLC [Member] $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Nature Of Operations [Line Items] | |
Proceeds from surplus contributions by parent | $ 50 |
Percentage of third party reinsurance liability | 100.00% |
Summary of Significant Accoun45
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Premium method using interest rates | 6.60% | ||
Expenses discounted using weighted average interest rates | 4.70% | ||
Reversion period | 3 years | ||
Fixed maturity securities priced using external source data | 86.00% | 87.00% | |
Fixed maturity securities priced using independent pricing services | 99.00% | 99.00% | |
Agreements require a minimum of fair value | 102.00% | ||
Fair value of securities received as collateral and recorded off balance sheet | $ 167 | $ 0 | |
Fair value of loaned securities | $ 389 | 254 | |
Loans delinquent period | 90 days | ||
Valuation allowance for policy loan | $ 0 | ||
Government agency discount notes maturity period | 12 months | ||
Unfunded commitments, equity method investments | $ 315 | 123 | |
Carrying value of investments in limited partnerships | 199 | 141 | |
LIHTC Funds Sold | $ 1,400 | $ 1,300 | |
Cumulative yields after tax maturity | 2,031 | ||
Effective period of Guarantees | 15 years | 15 years | |
Maximum amount payment to investors under guarantees | $ 720 | ||
Net assets of all consolidated VIEs | $ 644 | $ 640 | |
Cash and cash equivalents liquid investments maturities period | Less than three months | ||
Company's life insurance | 3.00% | 4.00% | 4.00% |
Life insurance policies | 35.00% | 37.00% | 38.00% |
Other [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Other long-term investments | $ 585 | $ 580 | |
Other Assets [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Other assets | 113 | 109 | |
Other Liabilities [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Other liabilities | 67 | 75 | |
Federal Home Loan Bank Borrowings [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Amount of collateralized funding agreements outstanding | 2,300 | 1,800 | |
Federal Home Loan Bank stock held | $ 46 | $ 35 | |
Equity securities [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Reflect assumed gross returns, discount rate | 10.50% | ||
Fixed maturity securities [Member] | |||
Summary of Significant Accounting Policies (Textual) [Abstract] | |||
Reflect assumed gross returns, discount rate | 5.00% |
Certain Long Duration Contracts
Certain Long Duration Contracts - Additional Information (Detail) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015USD ($)Security | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | ||
Certain Long Duration Contracts Textual [Abstract] | ||||
Number of primary guarantee types | Security | 4 | |||
Guaranteed return of deposits period one | 5 years | |||
Guaranteed return of deposits period two | 7 years | |||
Guaranteed return of deposits period three | 10 years | |||
Realized investment gains,net | $ 82 | $ (1,078) | $ 678 | |
Amortization of deferred policy acquisition costs | 68 | 207 | $ 374 | |
Reserve balances on guarantees | 548 | 401 | ||
GMDB [Member] | ||||
Certain Long Duration Contracts Textual [Abstract] | ||||
Paid claims for variable annuity contracts with guarantees | 20 | 11 | ||
General account value for annuity contracts | 2.7 | 351 | ||
Reserve balances on guarantees | 148 | 76 | ||
GLWB [Member] | ||||
Certain Long Duration Contracts Textual [Abstract] | ||||
Realized investment gains,net | 187 | |||
Increase to benefits and claim | 164 | |||
Amortization of deferred policy acquisition costs | 28 | |||
General account value for annuity contracts | 1.4 | 185 | ||
Annuity claims paid | 0 | 0 | ||
Reserve balances on guarantees | [1] | $ 180 | $ 185 | |
[1] | Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. |
Summary of Annuity Contracts wi
Summary of Annuity Contracts with Guarantees Invested in General and Separate Accounts (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
GMDB [Member] | |||
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | |||
Net general account value | $ 2,702 | $ 2,790 | |
Net separate account value | 55,963 | 56,741 | |
Net amount at risk | [1] | $ 1,341 | $ 313 |
Average age | [2] | 68 years | 68 years |
GMDB [Member] | Return of net deposits [Member] | |||
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | |||
Net general account value | $ 885 | $ 872 | |
Net separate account value | 24,452 | 23,079 | |
Net amount at risk | [1] | $ 208 | $ 21 |
Average age | [2] | 66 years | 65 years |
GMDB [Member] | Minimum return or anniversary contract value [Member] | |||
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | |||
Net general account value | $ 1,817 | $ 1,918 | |
Net separate account value | 31,511 | 33,662 | |
Net amount at risk | [1] | $ 1,133 | $ 292 |
Average age | [2] | 70 years | 69 years |
GMAB [Member] | |||
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | |||
Net general account value | [3] | $ 19 | $ 43 |
Net separate account value | [3] | 496 | $ 1,177 |
Net amount at risk | [1],[3] | $ 2 | |
Average age | [2],[3] | 66 years | 67 years |
GLWB [Member] | |||
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | |||
Net general account value | [3] | $ 141 | $ 135 |
Net separate account value | [3] | 32,187 | 31,406 |
Net amount at risk | [1],[3] | $ 142 | $ 195 |
Average age | [2],[3] | 67 years | 66 years |
GMIB [Member] | |||
Summarizes information regarding variable annuity contracts with guarantees invested in general and separate accounts | |||
Net general account value | $ 46 | $ 45 | |
Net separate account value | 380 | 451 | |
Net amount at risk | [1] | $ 1 | $ 1 |
Average age | [2] | 67 years | 66 years |
[1] | Net amount at risk is calculated on a policy-level basis and equals the respective guaranteed benefit less the account value (or zero if the account value exceeds the guaranteed benefit). | ||
[2] | Represents the weighted average attained age of contractholders at the respective date. | ||
[3] | Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. |
Summary of Reserve Balances for
Summary of Reserve Balances for Variable Annuity Contracts With Guarantees (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Summarizes the reserve balances, for variable annuity contracts with guarantees | |||
Reserve balances on guarantees | $ 548 | $ 401 | |
GMDB [Member] | |||
Summarizes the reserve balances, for variable annuity contracts with guarantees | |||
Reserve balances on guarantees | 148 | 76 | |
GMAB [Member] | |||
Summarizes the reserve balances, for variable annuity contracts with guarantees | |||
Reserve balances on guarantees | [1] | (8) | |
GLWB [Member] | |||
Summarizes the reserve balances, for variable annuity contracts with guarantees | |||
Reserve balances on guarantees | [1] | 180 | 185 |
GMIB [Member] | |||
Summarizes the reserve balances, for variable annuity contracts with guarantees | |||
Reserve balances on guarantees | $ 2 | $ 1 | |
[1] | Certain prior period amounts related to contracts with a hybrid accumulation/withdrawal benefit have been reclassified to conform with current period presentation. |
Summary of Account Balances of
Summary of Account Balances of Deferred Variable Annuity Contracts With Guarantees Invested in Separate Accounts (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Summarizes account balances of deferred variable annuity | |||
Deferred variable annuity | [1] | $ 55,963 | $ 56,741 |
Bonds [Member] | |||
Summarizes account balances of deferred variable annuity | |||
Deferred variable annuity | 5,371 | 5,280 | |
Domestic equity [Member] | |||
Summarizes account balances of deferred variable annuity | |||
Deferred variable annuity | 46,469 | 47,316 | |
International Equity [Member] | |||
Summarizes account balances of deferred variable annuity | |||
Deferred variable annuity | 3,001 | 2,969 | |
Total mutual funds [Member] | |||
Summarizes account balances of deferred variable annuity | |||
Deferred variable annuity | 54,841 | 55,565 | |
Money market funds [Member] | |||
Summarizes account balances of deferred variable annuity | |||
Deferred variable annuity | $ 1,122 | $ 1,176 | |
[1] | Excludes $31.3 billion as of December 31, 2015 and 2014 of separate account assets not related to deferred variable annuity contracts with guarantees, primarily attributable to retirement plan, variable universal life and COLI products. |
Summary of Account Balances o50
Summary of Account Balances of Deferred Variable Annuity Contracts With Guarantees Invested in Separate Accounts (Parenthetical) (Detail) - USD ($) $ in Billions | Dec. 31, 2015 | Dec. 31, 2014 |
Separate Account Value [Member] | ||
Summarizes account balances of deferred variable annuity | ||
Deferred variable annuity | $ 31.3 | $ 31.3 |
Summary of Universal and Univer
Summary of Universal and Universal Variable Life Insurance Contracts With No Larger Guarantees Invested in general and Separate Accounts (Detail) - Universal Life [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Summarizes information regarding universal and variable universal life insurance contracts with no lapse guarantees invested in general and separate accounts | |||
General account value | $ 2,473 | $ 1,954 | |
Separate account value | 2,053 | 2,191 | |
Adjusted insurance in force | [1] | $ 48,140 | $ 41,484 |
Average age | [2] | 51 years | 51 years |
[1] | The adjusted insurance in force is calculated on a policy-level basis and equals the respective guaranteed death benefit less the account value and reinsurance. | ||
[2] | Represents the weighted average attained age of contractholders at the respective date. |
Summary of Changes in DAC Balan
Summary of Changes in DAC Balance (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred Policy Acquisition Costs | |||
Balance at beginning of year | $ 4,063 | $ 3,778 | $ 3,249 |
Capitalization of DAC | 870 | 685 | 604 |
Amortization of DAC, excluding unlocks | (326) | (397) | (373) |
Amortization of DAC related to unlocks | 258 | 190 | (1) |
Adjustments to DAC related to unrealized gains and losses on available-for-sale securities | 335 | (193) | 299 |
Balance at end of year | $ 5,200 | $ 4,063 | $ 3,778 |
Deferred Policy Acquisition C53
Deferred Policy Acquisition Costs and Value of Business Acquired - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |||
Amortization of DAC related to unlocks | $ 258 | $ 190 | $ (1) |
Summary of Amortized Cost, Unre
Summary of Amortized Cost, Unrealized Gains and Losses and Fair Value of Available For Sale Securities (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | $ 37,003 | $ 33,204 |
Available-for-sale Securities, Gross unrealized gains | 1,593 | 2,510 |
Available-for-sale Securities, Gross unrealized losses | 1,005 | 275 |
Available-for-sale Securities, Fair value | 37,591 | 35,439 |
Fixed maturity securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 36,996 | 33,198 |
Available-for-sale Securities, Gross unrealized gains | 1,579 | 2,495 |
Available-for-sale Securities, Gross unrealized losses | 1,005 | 275 |
Available-for-sale Securities, Fair value | 37,570 | 35,418 |
Fixed maturity securities [Member] | U.S. Treasury securities and obligations of U.S. Government corporations and agencies [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 343 | 448 |
Available-for-sale Securities, Gross unrealized gains | 59 | 79 |
Available-for-sale Securities, Fair value | 402 | 527 |
Fixed maturity securities [Member] | Obligations of states, political subdivisions and foreign governments [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 2,137 | 1,966 |
Available-for-sale Securities, Gross unrealized gains | 241 | 320 |
Available-for-sale Securities, Gross unrealized losses | 11 | 1 |
Available-for-sale Securities, Fair value | 2,367 | 2,285 |
Fixed maturity securities [Member] | Corporate public securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 23,174 | 19,851 |
Available-for-sale Securities, Gross unrealized gains | 868 | 1,519 |
Available-for-sale Securities, Gross unrealized losses | 752 | 120 |
Available-for-sale Securities, Fair value | 23,290 | 21,250 |
Fixed maturity securities [Member] | Corporate private securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 5,082 | 4,398 |
Available-for-sale Securities, Gross unrealized gains | 203 | 286 |
Available-for-sale Securities, Gross unrealized losses | 115 | 34 |
Available-for-sale Securities, Fair value | 5,170 | 4,650 |
Fixed maturity securities [Member] | Residential mortgage-backed securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 3,036 | 3,694 |
Available-for-sale Securities, Gross unrealized gains | 152 | 190 |
Available-for-sale Securities, Gross unrealized losses | 42 | 45 |
Available-for-sale Securities, Fair value | 3,146 | 3,839 |
Fixed maturity securities [Member] | Commercial mortgage-backed securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 1,539 | 1,431 |
Available-for-sale Securities, Gross unrealized gains | 37 | 74 |
Available-for-sale Securities, Gross unrealized losses | 11 | 3 |
Available-for-sale Securities, Fair value | 1,565 | 1,502 |
Fixed maturity securities [Member] | Asset-backed Securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 1,685 | 1,410 |
Available-for-sale Securities, Gross unrealized gains | 19 | 27 |
Available-for-sale Securities, Gross unrealized losses | 74 | 72 |
Available-for-sale Securities, Fair value | 1,630 | 1,365 |
Equity securities [Member] | ||
Available-for-Sale Securities | ||
Available-for-Sale Securities, Amortized cost | 7 | 6 |
Available-for-sale Securities, Gross unrealized gains | 14 | 15 |
Available-for-sale Securities, Fair value | $ 21 | $ 21 |
Summary of Amortized Cost and F
Summary of Amortized Cost and Fair Value of Fixed Maturity Securities, By Maturity (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Summarizes the amortized cost and fair value of fixed maturity securities | ||
Subtotal, Fair value | $ 37,570 | $ 35,418 |
Available-for-Sale Securities, Amortized cost | 37,003 | 33,204 |
Available-for-sale Securities, Fair value | 37,591 | 35,439 |
Fixed maturity securities [Member] | ||
Summarizes the amortized cost and fair value of fixed maturity securities | ||
Due in one year or less, Amortized cost | 977 | |
Due in one year or less, Fair Value | 982 | |
Due after one year through five years, Amortized cost | 10,512 | |
Due after one year through five years, Fair value | 10,861 | |
Due after five years through ten years, Amortized cost | 9,302 | |
Due after five years through ten years, Fair value | 9,295 | |
Due after ten years, Amortized cost | 9,945 | |
Due after ten years, Fair value | 10,091 | |
Subtotal, Amortized cost | 30,736 | |
Subtotal, Fair value | 31,229 | |
Available-for-Sale Securities, Amortized cost | 36,996 | 33,198 |
Available-for-sale Securities, Fair value | 37,570 | 35,418 |
Fixed maturity securities [Member] | Residential mortgage-backed securities [Member] | ||
Summarizes the amortized cost and fair value of fixed maturity securities | ||
Available-for-Sale Securities, Amortized cost | 3,036 | 3,694 |
Available-for-sale Securities, Fair value | 3,146 | 3,839 |
Fixed maturity securities [Member] | Commercial mortgage-backed securities [Member] | ||
Summarizes the amortized cost and fair value of fixed maturity securities | ||
Available-for-Sale Securities, Amortized cost | 1,539 | 1,431 |
Available-for-sale Securities, Fair value | 1,565 | 1,502 |
Fixed maturity securities [Member] | Asset-backed Securities [Member] | ||
Summarizes the amortized cost and fair value of fixed maturity securities | ||
Available-for-Sale Securities, Amortized cost | 1,685 | 1,410 |
Available-for-sale Securities, Fair value | $ 1,630 | $ 1,365 |
Summary of Components of Net Un
Summary of Components of Net Unrealized Gains and Losses (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summarizes components of net unrealized gains and losses on available-for-sale securities | ||
Net unrealized gains on available-for-sale securities, before adjustments and taxes | $ 588 | $ 2,235 |
Adjustment to DAC and other expense | (33) | (372) |
Adjustment to future policy benefits and claims | (16) | (159) |
Adjustment to policyholder dividend obligations | (67) | (120) |
Deferred federal income tax expense | (156) | (548) |
Net unrealized gains on available-for-sale securities | $ 316 | $ 1,036 |
Summary of Components of Net 57
Summary of Components of Net Unrealized Gains and Losses (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | ||
Non-credit portion of other-than-temporary impairments | $ 20 | $ 9 |
Summary of Change in Net Unreal
Summary of Change in Net Unrealized Gains and Losses Reported in Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summarizes the change in net unrealized gains and losses on available-for-sale securities | |||
Balance at beginning of period | $ 1,036 | $ 601 | |
Unrealized gains and losses arising during the year: | |||
Net unrealized (losses) gains on available-for-sale securities before adjustments | (1,662) | 939 | |
Non-credit impairments and subsequent changes in fair value of impaired debt securities | (11) | 31 | |
Net adjustment to DAC and other expense | 339 | (196) | |
Net adjustment to future policy benefits and claims | 143 | (70) | |
Net adjustment to policyholder dividend obligations | 53 | (35) | |
Related federal income tax benefit (expense) | 401 | (234) | |
Unrealized (losses) gains on available-for-sale securities | (737) | 435 | |
Less: Reclassification adjustment for net losses realized on available-for-sale securities, net of tax benefit ($9 and $0 as of December 31, 2015 and 2014, respectively) | (17) | ||
Net unrealized (losses) gains on available-for-sale securities | (720) | 435 | $ (663) |
Balance at end of period | $ 316 | $ 1,036 | $ 601 |
Summary of Change in Net Unre59
Summary of Change in Net Unrealized Gains and Losses Reported in Accumulated Other Comprehensive Income (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summarizes the change in net unrealized gains and losses on available-for-sale securities | ||
Reclassification adjustments to net investment losses, tax benefit | $ 9 | $ 0 |
Summary of Available for Sale S
Summary of Available for Sale Securities, By Asset Class, in Unrealized Loss Position (Detail) - Fixed maturity securities [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Fair value | |||
Less than or equal to one year, Fair value | [1] | $ 11,737 | $ 3,161 |
More than one year, Fair value | [1] | 2,653 | 3,015 |
Gross unrealized losses | |||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Less than or equal to one year | [1] | 541 | 97 |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | [1],[2] | 464 | 178 |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Total | [1],[2] | 1,005 | 275 |
Corporate public securities [Member] | |||
Fair value | |||
Less than or equal to one year, Fair value | 8,170 | 1,642 | |
More than one year, Fair value | 975 | 1,578 | |
Gross unrealized losses | |||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Less than or equal to one year | 455 | 63 | |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | [2] | 297 | 57 |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Total | [2] | 752 | 120 |
Corporate private securities [Member] | |||
Fair value | |||
Less than or equal to one year, Fair value | 1,642 | 589 | |
More than one year, Fair value | 418 | 256 | |
Gross unrealized losses | |||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Less than or equal to one year | 56 | 27 | |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | [2] | 59 | 7 |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Total | [2] | 115 | 34 |
Other asset-backed securities [Member] | |||
Fair value | |||
Less than or equal to one year, Fair value | 654 | 662 | |
More than one year, Fair value | 756 | 493 | |
Gross unrealized losses | |||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Less than or equal to one year | 7 | 5 | |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | [2] | 67 | 67 |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Total | [2] | 74 | 72 |
Other [Member] | |||
Fair value | |||
Less than or equal to one year, Fair value | 1,271 | 268 | |
More than one year, Fair value | 504 | 688 | |
Gross unrealized losses | |||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Less than or equal to one year | 23 | 2 | |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | [2] | 41 | 47 |
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, Total | [2] | $ 64 | $ 49 |
[1] | Represents 1,059 and 541 available-for-sale securities in an unrealized loss position as of December 31, 2015 and 2014, respectively. | ||
[2] | As of December 31, 2015 and 2014, there were $448 million and $66 million, respectively, of unrealized losses related to available-for-sale securities with a fair value to amortized cost ratio of less than 80%. |
Summary of Available for Sale61
Summary of Available for Sale Securities, By Asset Class, in Unrealized Loss Position (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Net Investment Income [Line Items] | ||||
Net unrealized (losses) gains on available-for-sale securities | $ (720) | $ 435 | $ (663) | |
Fixed maturity securities [Member] | ||||
Net Investment Income [Line Items] | ||||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | [1],[2] | $ 464 | $ 178 | |
Ratio of estimated fair value to amortized cost | 80.00% | 80.00% | ||
Net unrealized (losses) gains on available-for-sale securities | $ 1,059 | $ 541 | ||
Less than 80.0% [Member] | Fixed maturity securities [Member] | ||||
Net Investment Income [Line Items] | ||||
Gross unrealized losses based on the ratio of estimated fair value to amortized cost, More than one year | $ 448 | $ 66 | ||
[1] | As of December 31, 2015 and 2014, there were $448 million and $66 million, respectively, of unrealized losses related to available-for-sale securities with a fair value to amortized cost ratio of less than 80%. | |||
[2] | Represents 1,059 and 541 available-for-sale securities in an unrealized loss position as of December 31, 2015 and 2014, respectively. |
Summary Of Amortized Cost Of Mo
Summary Of Amortized Cost Of Mortgage Loans (Detail) - Mortgage loans, net of allowance [Member] - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of the amortized cost of mortgage loans | ||
Total amortized cost | $ 8,422 | $ 7,296 |
Total valuation allowance | 26 | 26 |
Mortgage loans, net of allowance | 8,396 | 7,270 |
Non-specific reserves [Member] | ||
Summary of the amortized cost of mortgage loans | ||
Amortized cost | 8,403 | 7,279 |
Non-specific reserves | 23 | 21 |
Specific reserve [Member] | ||
Summary of the amortized cost of mortgage loans | ||
Amortized cost | 19 | 17 |
Specific reserves | $ 3 | $ 5 |
Summary Of Activity In Valuatio
Summary Of Activity In Valuation Allowance For Mortgage Loans (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Activity in the valuation allowance for mortgage loans | ||||
Balance at end of period | $ 0 | |||
Mortgage loans, net of allowance [Member] | ||||
Activity in the valuation allowance for mortgage loans | ||||
Balance at beginning of year | 26 | $ 35 | $ 44 | |
Current period provision | [1] | 2 | (8) | (4) |
Recoveries | [2] | (2) | (1) | (5) |
Balance at end of period | $ 26 | $ 26 | $ 35 | |
[1] | Includes specific reserve provisions and all changes in non-specific reserves. | |||
[2] | Includes recoveries on sales and increases in the valuation of loans with specific reserves. |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Investments (Textual) [Abstract] | |||
Interest income recognized | $ 2 | $ 1 | $ 3 |
Average recorded investment | $ 14 | 16 | 30 |
No mortgage loans past due and still accruing | 90 days | ||
Available-for-sale securities, carrying value | $ 37,591 | 35,439 | |
Proceeds from sales of available-for-sale securities | 466 | 647 | 1,091 |
Gross realized gains | 11 | 17 | 31 |
Gross realized losses | 36 | 10 | $ 50 |
Deposits [Member] | |||
Investments (Textual) [Abstract] | |||
Available-for-sale securities, carrying value | 8 | 8 | |
Available-for-sale securities, collateral value | 538 | $ 683 | |
Mortgage loans, net of allowance [Member] | |||
Investments (Textual) [Abstract] | |||
Mortgage Loans | $ 0 |
Summary of LTV Ratio and DSC Ra
Summary of LTV Ratio and DSC Ratios of Mortgage Loan (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | ||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | $ 8,422 | [1] | $ 7,296 | [2] |
Less than 90% [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 8,392 | [1] | 7,213 | [2] |
90% or greater [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 30 | [1] | 83 | [2] |
Use Greater than One [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 8,323 | [1] | 7,149 | [2] |
Less than 1.00 [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 99 | [1] | 147 | [2] |
Apartment [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2,791 | 2,284 | ||
Apartment [Member] | Less than 90% [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2,791 | 2,267 | ||
Apartment [Member] | 90% or greater [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 17 | |||
Apartment [Member] | Use Greater than One [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2,791 | 2,278 | ||
Apartment [Member] | Less than 1.00 [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 6 | |||
Warehouse [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 1,246 | 1,200 | ||
Warehouse [Member] | Less than 90% [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 1,221 | 1,165 | ||
Warehouse [Member] | 90% or greater [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 25 | 35 | ||
Warehouse [Member] | Use Greater than One [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 1,193 | 1,137 | ||
Warehouse [Member] | Less than 1.00 [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 53 | 63 | ||
Office [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 1,321 | 1,040 | ||
Office [Member] | Less than 90% [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 1,318 | 1,020 | ||
Office [Member] | 90% or greater [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 3 | 20 | ||
Office [Member] | Use Greater than One [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 1,286 | 994 | ||
Office [Member] | Less than 1.00 [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 35 | 46 | ||
Retail [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2,767 | 2,581 | ||
Retail [Member] | Less than 90% [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2,765 | 2,570 | ||
Retail [Member] | 90% or greater [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2 | 11 | ||
Retail [Member] | Use Greater than One [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 2,756 | 2,549 | ||
Retail [Member] | Less than 1.00 [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 11 | 32 | ||
Other [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 297 | 191 | ||
Other [Member] | Less than 90% [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | 297 | 191 | ||
Other [Member] | Use Greater than One [Member] | ||||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||||
Total | $ 297 | $ 191 | ||
[1] | As of December 31, 2015, the weighted average DSC ratios for the respective LTV ratio ranges above were 2.02 and 0.83, with a total weighted average DSC ratio of 2.02. As of December 31, 2015, the weighted average LTV ratios for the respective DSC ratio ranges above were 60% and 85%, with a total weighted average LTV ratio of 60%. | |||
[2] | As of December 31, 2014, the weighted average DSC ratios for the respective LTV ratio ranges above were 1.94 and 0.90, with a total weighted average DSC ratio of 1.93. As of December 31, 2014, the weighted average LTV ratios for the respective DSC ratio ranges above were 60% and 90%, with a total weighted average LTV ratio of 60%. |
Summary of LTV Ratio and DSC 66
Summary of LTV Ratio and DSC Ratios of Mortgage Loan (Parenthetical) (Detail) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||
Weighted-average DSC ratio | 2.02 | 1.93 |
Weighted-average LTV ratio | 0.60 | 0.60 |
Less than 90% [Member] | ||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||
Weighted-average DSC ratio | 2.02 | 1.94 |
90% or greater [Member] | ||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||
Weighted-average DSC ratio | 0.83 | 0.90 |
Use Greater than One [Member] | ||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||
Weighted-average LTV ratio | 0.60 | 0.60 |
Less than 1.00 [Member] | ||
Summary of loan-to-value ratio and debt service coverage ratios of the commercial mortgage loan portfolio | ||
Weighted-average LTV ratio | 0.85 | 0.90 |
Summary of Net Investment Incom
Summary of Net Investment Income by Investment Type (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of net investment income by investment type | |||
Gross investment income | $ 2,043 | $ 1,959 | $ 1,908 |
Investment expenses | 61 | 59 | 59 |
Net investment income | 1,982 | 1,900 | 1,849 |
Fixed maturity securities [Member] | |||
Summary of net investment income by investment type | |||
Gross investment income | 1,646 | 1,575 | 1,565 |
Mortgage loans, net of allowance [Member] | |||
Summary of net investment income by investment type | |||
Gross investment income | 390 | 362 | 348 |
Alternative Investments [Member] | |||
Summary of net investment income by investment type | |||
Gross investment income | (56) | (32) | (68) |
Policy loans [Member] | |||
Summary of net investment income by investment type | |||
Gross investment income | 51 | 51 | 52 |
Other [Member] | |||
Summary of net investment income by investment type | |||
Gross investment income | $ 12 | $ 3 | $ 11 |
Summary of Net Realized Investm
Summary of Net Realized Investment Gains And Losses (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Net Realized Investment Gains and Losses | ||||
Net realized derivative (losses) gains | $ 120 | $ (1,087) | $ 705 | |
Realized gains on sales | 11 | 31 | 32 | |
Realized losses on sales | (37) | (19) | (54) | |
Other | (11) | 2 | ||
Net realized investment (losses) gains before other-than-temporary impairments on fixed maturity securities | 83 | (1,073) | 683 | |
Other-than-temporary impairments on fixed maturity securities | [1] | (1) | (5) | (5) |
Net realized investment (losses) gains, including other-than-temporary impairments | $ 82 | $ (1,078) | $ 678 | |
[1] | Other-than-temporary impairments on fixed maturity securities are net $2 million, $1 million and $6 million of non-credit losses included in other comprehensive income for the years ended December 31, 2015, 2014 and 2013, respectively. |
Summary of Net Realized Inves69
Summary of Net Realized Investment Gains And Losses (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Net Realized Investment Gains and Losses | |||
Non-credit losses included in other comprehensive income | $ 2 | $ 1 | $ 6 |
Summary of Cumulative Credit Lo
Summary of Cumulative Credit Losses (Detail) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Other-Than-Temporary Impairment Losses on Debt Securities | ||||||
Cumulative credit losses at beginning of year | $ (254) | [1] | $ (272) | [1] | $ (289) | |
New credit losses | (1) | (2) | (3) | |||
Incremental credit losses | (4) | (3) | ||||
Losses related to securities included in the beginning balance sold or paid down during the period | 31 | 24 | 23 | |||
Cumulative credit losses at end of year | [1] | $ (224) | $ (254) | $ (272) | ||
[1] | Cumulative credit losses are defined as amounts related to the Company's credit portion of the other-than-temporary impairment losses on debt securities that the Company does not intend to sell and that it is not more likely than not the Company will be required to sell prior to recovery of the amortized cost basis. |
Summary of Fair Value and Relat
Summary of Fair Value and Related Notional Amounts of Derivative Instruments (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of fair value of derivative instruments | |||
Derivative asset, Fair value | $ 570 | $ 3,042 | |
Derivative liability, Fair value | 106 | 2,664 | |
Designated as Hedging Instrument [Member] | |||
Summary of fair value of derivative instruments | |||
Derivative asset, Fair value | 86 | 29 | |
Derivative asset, Notional amount | 725 | 381 | |
Derivative liability, Fair value | 2 | 9 | |
Derivative liability, Notional amount | 89 | 176 | |
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts [Member] | |||
Summary of fair value of derivative instruments | |||
Derivative asset, Fair value | [1] | 39 | 2,602 |
Derivative asset, Notional amount | [1] | 875 | 32,829 |
Derivative liability, Fair value | [1] | 98 | 2,611 |
Derivative liability, Notional amount | [1] | 1,059 | 32,756 |
Not Designated as Hedging Instrument [Member] | Equity Contracts [Member] | |||
Summary of fair value of derivative instruments | |||
Derivative asset, Fair value | 445 | 411 | |
Derivative asset, Notional amount | 7,329 | 5,990 | |
Not Designated as Hedging Instrument [Member] | Total Return Swaps and Other Derivative contracts [Member] | |||
Summary of fair value of derivative instruments | |||
Derivative asset, Notional amount | 77 | ||
Derivative liability, Fair value | 6 | 44 | |
Derivative liability, Notional amount | 2 | 2,810 | |
Other Assets Liabilities [Member] | |||
Summary of fair value of derivative instruments | |||
Derivative asset, Fair value | [2] | 570 | 3,042 |
Derivative asset, Notional amount | [2] | 9,006 | 39,200 |
Derivative liability, Fair value | [2] | 106 | 2,664 |
Derivative liability, Notional amount | [2] | $ 1,150 | $ 35,742 |
[1] | The decreases in the fair value and notional amounts of interest rate contracts are primarily a result of revisions made to the Company's economic hedging strategies in conjunction with the change in estimate discussed in Note 4. | ||
[2] | Fair value balance excludes accrued interest on derivative assets and liabilities of $10 and $11 million, respectively, for the year ended December 31, 2015. Fair value balance excludes accrued interest on derivative assets and liabilities of $243 million and $244 million, respectively, for the year ended December 31, 2014. |
Summary of Fair Value and Rel72
Summary of Fair Value and Related Notional Amounts of Derivative Instruments (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of fair value of derivative instruments | ||
Fair value balance excludes accrued interest on derivative assets | $ 570 | $ 3,042 |
Fair value balance excludes accrued interest on derivative liabilities | 106 | 2,664 |
Accrued Interest [Member] | ||
Summary of fair value of derivative instruments | ||
Fair value balance excludes accrued interest on derivative assets | 10 | 243 |
Fair value balance excludes accrued interest on derivative liabilities | $ 11 | $ 244 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative Instruments (Textual) [Abstract] | ||
Derivative asset, Fair value | $ 570 | $ 3,042 |
Fair value of Derivative subject to offsetting by collateral agreement | 48 | 2,600 |
Cash collateral from derivative counterparties | 374 | 535 |
Off balance sheet Collateral | $ 99 | 64 |
Net uncollateralized derivative asset and liability | The Company received $374 million and $535 million of cash collateral and held $99 million and $64 million, respectively, of securities as off-balance sheet collateral, resulting in an immaterial uncollateralized position as of December 31, 2015 and 2014. | |
Derivative liability, Fair value | $ 106 | 2,664 |
Posted cash collateral | 92 | 330 |
Pledged securities of fair value | $ 64 | $ 174 |
Summary of Gains and Losses for
Summary of Gains and Losses for Derivative Instruments Recognized in Net Realized Investment Gains and Losses in Statements of Operations (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | [1] | $ (416) | $ (108) | $ (1,302) |
Change in embedded derivative liabilities and related fees | [2] | 536 | (979) | 2,007 |
Net realized derivative gains (losses) | 120 | (1,087) | 705 | |
Designated as Hedging Instrument [Member] | ||||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | (1) | |||
Not Designated as Hedging Instrument [Member] | Total Return Swap [Member] | ||||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | (44) | (195) | (321) | |
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts [Member] | ||||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | (141) | 142 | (209) | |
Not Designated as Hedging Instrument [Member] | Equity Contracts [Member] | ||||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | (257) | (79) | (776) | |
Not Designated as Hedging Instrument [Member] | Other Derivative Contracts [Member] | ||||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | (6) | 4 | (9) | |
Not Designated as Hedging Instrument [Member] | Net Interest Settlements [Member] | ||||
Summary of realized gains and losses for derivative instruments | ||||
Total derivative losses | $ 32 | $ 20 | $ 14 | |
[1] | Included in total derivative losses are economic hedging (losses) gains of $(402) million, $941 million and $(1.8) billion related to the guaranteed benefit annuity programs for the years ended December 31, 2015, 2014 and 2013, respectively. Also included are economic hedging gains (losses) of $52 million, $(1.0) billion and $645 million, respectively, related to the program that protects against the negative impact of higher interest rates on the Company's statutory surplus position through expiry. | |||
[2] | During 2015, the annual comprehensive review of model assumptions for the individual variable annuity business produced a favorable impact of $187 million for the year ended December 31, 2015, attributable to the change in estimate discussed in Note 4. During 2014 and 2013, the annual comprehensive review of model assumptions for the individual variable annuity business included a favorable impact for the years ended December 31, 2014 and 2013, primarily due to model enhancements and updated assumptions for discounting and benefit utilization, partially offset by mortality and lapse rates. |
Summary of Gains and Losses f75
Summary of Gains and Losses for Derivative Instruments Recognized in Net Realized Investment Gains and Losses in Statements of Operations (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of realized gains and losses for derivative instruments | |||
Individual variable annuity favorable impact | $ 187 | ||
GBAP [Member] | |||
Summary of realized gains and losses for derivative instruments | |||
Hedging gains/losses | (402) | $ 941 | $ (1,800) |
Negative Impact of Higher Interest Rate Risk [Member] | |||
Summary of realized gains and losses for derivative instruments | |||
Hedging gains/losses | $ 52 | $ (1,000) | $ 645 |
Summary of Assets and Liabiliti
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |||
Assets | |||||
Separate account assets | [1] | $ 55,963 | $ 56,741 | ||
Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 38,423 | 36,395 | |||
Derivative instruments - assets | 570 | 3,042 | |||
Separate account assets | 87,238 | 88,076 | |||
Assets at fair value | 126,231 | 127,513 | |||
Liabilities | |||||
Future policy benefits and claims | (65) | (261) | |||
Derivative instruments - liabilities | (106) | (2,664) | |||
Liabilities at fair value | (171) | (2,925) | |||
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||||
Assets | |||||
Investments at fair value | 1,578 | 1,665 | |||
Separate account assets | 83,466 | 84,583 | |||
Assets at fair value | 85,044 | 86,248 | |||
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 35,580 | 33,427 | |||
Derivative instruments - assets | 125 | 2,631 | |||
Separate account assets | 1,323 | 1,387 | |||
Assets at fair value | 37,028 | 37,445 | |||
Liabilities | |||||
Derivative instruments - liabilities | (100) | (2,661) | |||
Liabilities at fair value | (100) | (2,661) | |||
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 1,265 | 1,303 | |||
Derivative instruments - assets | 445 | 411 | |||
Separate account assets | 2,449 | 2,106 | |||
Assets at fair value | 4,159 | 3,820 | |||
Liabilities | |||||
Future policy benefits and claims | (65) | (261) | |||
Derivative instruments - liabilities | (6) | (3) | |||
Liabilities at fair value | (71) | (264) | |||
Fixed maturity securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 37,570 | 35,418 | |||
Fixed maturity securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||||
Assets | |||||
Investments at fair value | 1,308 | 1,623 | |||
Fixed maturity securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 35,034 | 32,528 | |||
Fixed maturity securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 1,228 | 1,267 | |||
Fixed maturity securities [Member] | U.S. Treasury securities and obligations of U.S. Government corporations and agencies [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 402 | 527 | |||
Fixed maturity securities [Member] | U.S. Treasury securities and obligations of U.S. Government corporations and agencies [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||||
Assets | |||||
Investments at fair value | 399 | 523 | |||
Fixed maturity securities [Member] | U.S. Treasury securities and obligations of U.S. Government corporations and agencies [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 1 | 1 | |||
Fixed maturity securities [Member] | U.S. Treasury securities and obligations of U.S. Government corporations and agencies [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 2 | 3 | |||
Fixed maturity securities [Member] | Obligations of states, political subdivisions and foreign governments [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 2,367 | 2,285 | |||
Fixed maturity securities [Member] | Obligations of states, political subdivisions and foreign governments [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||||
Assets | |||||
Investments at fair value | 63 | 66 | |||
Fixed maturity securities [Member] | Obligations of states, political subdivisions and foreign governments [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 2,304 | 2,219 | |||
Fixed maturity securities [Member] | Corporate public securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 23,290 | 21,250 | |||
Fixed maturity securities [Member] | Corporate public securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 23,142 | 21,158 | |||
Fixed maturity securities [Member] | Corporate public securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 148 | 92 | |||
Fixed maturity securities [Member] | Corporate private securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 5,170 | 4,650 | |||
Fixed maturity securities [Member] | Corporate private securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 4,226 | 3,659 | |||
Fixed maturity securities [Member] | Corporate private securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 944 | 991 | |||
Fixed maturity securities [Member] | Residential mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 3,146 | 3,839 | |||
Fixed maturity securities [Member] | Residential mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||||
Assets | |||||
Investments at fair value | 846 | 1,034 | |||
Fixed maturity securities [Member] | Residential mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 2,291 | 2,796 | |||
Fixed maturity securities [Member] | Residential mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 9 | 9 | |||
Fixed maturity securities [Member] | Commercial mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 1,565 | 1,502 | |||
Fixed maturity securities [Member] | Commercial mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 1,565 | 1,499 | |||
Fixed maturity securities [Member] | Commercial mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 3 | ||||
Fixed maturity securities [Member] | Other asset-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 1,365 | ||||
Fixed maturity securities [Member] | Other asset-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 1,196 | ||||
Fixed maturity securities [Member] | Other asset-backed securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 169 | ||||
Fixed maturity securities [Member] | Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 1,630 | ||||
Fixed maturity securities [Member] | Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 1,505 | ||||
Fixed maturity securities [Member] | Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | 125 | ||||
Other [Member] | Fair Value, Measurements, Recurring [Member] | |||||
Assets | |||||
Investments at fair value | 853 | [2] | 977 | [3] | |
Other [Member] | Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | |||||
Assets | |||||
Investments at fair value | 270 | [2] | 42 | [3] | |
Other [Member] | Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | |||||
Assets | |||||
Investments at fair value | 546 | [2] | 899 | [3] | |
Other [Member] | Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | |||||
Assets | |||||
Investments at fair value | $ 37 | [2] | $ 36 | [3] | |
[1] | Excludes $31.3 billion as of December 31, 2015 and 2014 of separate account assets not related to deferred variable annuity contracts with guarantees, primarily attributable to retirement plan, variable universal life and COLI products. | ||||
[2] | Other investments at fair value includes $66 million of trading securities as of December 31, 2015. | ||||
[3] | Other investments at fair value includes $21 million of trading securities as of December 31, 2014. |
Summary of Assets and Liabili77
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Trading assets [Member] | Other [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | $ 66 | $ 21 |
Rollforward of Level 3 Assets a
Rollforward of Level 3 Assets and Liabilities Held at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | ||||
Significant unobservable inputs (Level 3) to determine fair value | |||||
Assets, Beginning balance | $ 3,820 | $ 3,559 | |||
Assets, Net gains (losses) In operations | (34) | [1] | 64 | [2] | |
Assets, Net gains (losses) In OCI | (44) | 22 | |||
Assets, Purchases | 572 | 167 | |||
Assets, Sales | (186) | (275) | |||
Assets, Transfers in to Level 3 | 201 | 400 | |||
Assets, Transfers out of Level 3 | (170) | (117) | |||
Assets, ending balance | 4,159 | 3,820 | |||
Liability value, beginning balance | [3] | (264) | 1,005 | ||
Net (losses) gains In operations | [3] | 313 | [1] | (1,269) | [4] |
Liability, Net gains (losses) In operations | [3] | 0 | 0 | ||
Liability, Purchases | [3] | (144) | |||
Liability, Sales | [3] | 24 | |||
Liability, Transfers into Level 3 | [3] | 0 | 0 | ||
Liability, Transfers out of Level 3 | [3] | 0 | 0 | ||
Liability value, ending balance | [3] | (71) | (264) | ||
Fixed maturity securities [Member] | |||||
Significant unobservable inputs (Level 3) to determine fair value | |||||
Assets, Beginning balance | [2] | 1,267 | [5] | 1,088 | |
Assets, Net gains (losses) In operations | (6) | [1],[5] | (5) | [2] | |
Assets, Net gains (losses) In OCI | (44) | [5] | 21 | [2] | |
Assets, Purchases | 142 | [5] | 121 | [2] | |
Assets, Sales | (162) | [5] | (241) | [2] | |
Assets, Transfers in to Level 3 | 201 | [5] | 400 | [2] | |
Assets, Transfers out of Level 3 | (170) | [5] | (117) | [2] | |
Assets, ending balance | [5] | 1,228 | 1,267 | [2] | |
Other [Member] | |||||
Significant unobservable inputs (Level 3) to determine fair value | |||||
Assets, Beginning balance | 36 | 45 | |||
Assets, Net gains (losses) In operations | [2] | 6 | |||
Assets, Net gains (losses) In OCI | 1 | ||||
Assets, Purchases | 1 | ||||
Assets, Sales | (16) | ||||
Assets, ending balance | 37 | 36 | |||
Derivative Assets [Member] | |||||
Significant unobservable inputs (Level 3) to determine fair value | |||||
Assets, Beginning balance | 411 | [3] | 343 | ||
Assets, Net gains (losses) In operations | (46) | [1],[3] | 40 | [2] | |
Assets, Purchases | 104 | [3] | 46 | ||
Assets, Sales | (24) | [3] | (18) | ||
Assets, ending balance | [3] | 445 | 411 | ||
Separate Account Assets [Member] | |||||
Significant unobservable inputs (Level 3) to determine fair value | |||||
Assets, Beginning balance | 2,106 | 2,083 | |||
Assets, Net gains (losses) In operations | 18 | [1] | 23 | [2] | |
Assets, Purchases | 325 | ||||
Assets, ending balance | $ 2,449 | $ 2,106 | |||
[1] | Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company's earnings. The change in unrealized gains (losses) included in operations on assets and liabilities still held at the end of the year was $316 million for future policy benefits and claims, $(9) million for derivative assets, and $2 million for derivative liabilities. | ||||
[2] | Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2014. | ||||
[3] | Non-binding broker quotes were utilized to determine a fair value of all Level 3 derivative assets and liabilities. | ||||
[4] | Net gains and losses included in operations are reported in net realized investment gains and losses and interest credited to policyholder accounts. The net unrealized gains on separate account assets are attributable to contractholders and therefore are not included in the Company's earnings. The change in unrealized (losses) gains included in operations on assets and liabilities still held as of the end of the year was $(1.3) billion for future policy benefits and claims, $154 million for derivative assets and $6 million for other investments at fair value. | ||||
[5] | Non-binding broker quotes were utilized to determine a fair value of $1.1 billion of total fixed maturity securities as of December 31, 2015. |
Rollforward of Level 3 Assets79
Rollforward of Level 3 Assets and Liabilities Held at Fair Value on a Recurring Basis (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Significant unobservable inputs (Level 3) to determine fair value | ||
Unrealized gain (loss) on other investments | $ 316 | $ (1,300) |
Unrealized gain (loss) on derivatives | (9) | 154 |
Unrealized gain (loss) on future policy benefits and claims | 2 | 6 |
Fair value of fixed maturity securities that were determined using non binding broker quotes | 37,591 | 35,439 |
Fixed Maturity Securities Held At Fair Value [Member] | ||
Significant unobservable inputs (Level 3) to determine fair value | ||
Fair value of fixed maturity securities that were determined using non binding broker quotes | $ 1,100 | $ 1,100 |
Summary of Significant observab
Summary of Significant observable Inputs Used for Fair Value Measurements for Living Benefits Liabilities Classified as Level 3 (Detail) - Living Benefits [Member] | 12 Months Ended | |
Dec. 31, 2015 | ||
Summary of significant unobservable inputs used for fair value measurements for living benefits liabilities | ||
Fair value unobservable inputs Discount rate | [1] | |
Minimum [Member] | ||
Summary of significant unobservable inputs used for fair value measurements for living benefits liabilities | ||
Fair value unobservable inputs Mortality | 0.10% | [2] |
Fair value unobservable inputs Lapse | 0.00% | |
Fair value unobservable inputs wait period | 0 years | [3] |
Fair value unobservable inputs efficiency of benefit utilization | 60.00% | |
Fair value unobservable inputs index Volatility | 15.00% | |
Maximum [Member] | ||
Summary of significant unobservable inputs used for fair value measurements for living benefits liabilities | ||
Fair value unobservable inputs Mortality | 8.00% | [2] |
Fair value unobservable inputs Lapse | 35.00% | |
Fair value unobservable inputs wait period | 30 years | [3] |
Fair value unobservable inputs efficiency of benefit utilization | 100.00% | |
Fair value unobservable inputs index Volatility | 25.00% | |
[1] | Incorporates the liquidity and non-performance risk adjustment. The liquidity spread takes into consideration market observables for spreads in illiquid assets. The non-performance risk adjustment reflects an additional spread over LIBOR determined by market observables for similarly rated public bonds. | |
[2] | Represents the mortality for the majority of business with living benefits, with policyholders ranging from 45 to 85. | |
[3] | A portion of the contractholders could never use the benefit, which would extend the range to an indeterminate period. |
Summary of Significant observ81
Summary of Significant observable Inputs Used for Fair Value Measurements for Living Benefits Liabilities Classified as Level 3 (Parenthetical) (Detail) - Living Benefits [Member] | 12 Months Ended |
Dec. 31, 2015Person | |
Minimum [Member] | |
Summary of significant unobservable inputs used for fair value measurements for living benefits liabilities | |
Policyholders of mortality for majority of business | 45 |
Maximum [Member] | |
Summary of significant unobservable inputs used for fair value measurements for living benefits liabilities | |
Policyholders of mortality for majority of business | 85 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value of Financial Instruments (Textual) [Abstract] | ||
Enhancing guarantee bonus feature period | 10 years | |
High liability value policy withdrawal period | 20 years | |
Policy withdrawal period | 1 year | |
Separate account expiration year | 2,016 | |
Transfers from Level 1 to Level 2 | $ 0 | |
Level 3 [Member] | ||
Fair Value of Financial Instruments (Textual) [Abstract] | ||
Separate account assets | $ 1,700 | $ 1,700 |
Summary of Significant Unobserv
Summary of Significant Unobservable Inputs Used for Fair Value Measurements For Indexed Universal Life Equity Indexed Products Classified as Level 3 (Detail) - Equity Index Product [Member] | 12 Months Ended | |
Dec. 31, 2015 | ||
Minimum [Member] | ||
Summary Of Significant Unobservable Inputs Used For Fair Value Measurements For Equity Indexed Products [Abstract] | ||
Fair value unobservable inputs Mortality | 0.00% | [1] |
Fair value unobservable inputs Lapse | 0.00% | |
Fair value unobservable inputs index Volatility | 15.00% | |
Maximum [Member] | ||
Summary Of Significant Unobservable Inputs Used For Fair Value Measurements For Equity Indexed Products [Abstract] | ||
Fair value unobservable inputs Mortality | 4.00% | [1] |
Fair value unobservable inputs Lapse | 10.00% | |
Fair value unobservable inputs index Volatility | 25.00% | |
[1] | Represents the mortality for the majority of business, with policyholders ranging from 0 to 75. |
Summary of Significant Unobse84
Summary of Significant Unobservable Inputs Used for Fair Value Measurements For Indexed Universal Life Equity Indexed Products Classified as Level 3 (Parenthetical) (Detail) - Equity Index Product [Member] | 12 Months Ended |
Dec. 31, 2015Person | |
Minimum [Member] | |
Summary Of Significant Unobservable Inputs Used For Fair Value Measurements For Equity Indexed Products [Abstract] | |
Policyholders of mortality for majority of business | 0 |
Maximum [Member] | |
Summary Of Significant Unobservable Inputs Used For Fair Value Measurements For Equity Indexed Products [Abstract] | |
Policyholders of mortality for majority of business | 75 |
Financial Instruments Not Carri
Financial Instruments Not Carried at Fair Value (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Investments: | ||
Mortgage loans, net of allowance | $ 8,396 | $ 7,270 |
Policy loans | 993 | 992 |
Liabilities | ||
Short-term debt | 400 | 660 |
Long-term debt | 707 | 709 |
Level 2 [Member] | ||
Liabilities | ||
Long-term debt | 934 | 1,060 |
Level 3 [Member] | ||
Liabilities | ||
Investment contracts | 25,822 | 21,742 |
Short-term debt | 400 | 660 |
Long-term debt | 7 | 9 |
Mortgage loans held-for-investment [Member] | Level 3 [Member] | ||
Investments: | ||
Investments | 8,462 | 7,616 |
Policy loans [Member] | Level 3 [Member] | ||
Investments: | ||
Investments | 993 | 992 |
Other [Member] | Level 3 [Member] | ||
Investments: | ||
Investments | 71 | 60 |
Fair Value [Member] | ||
Liabilities | ||
Investment contracts | 25,822 | 21,742 |
Short-term debt | 400 | 660 |
Long-term debt | 941 | 1,069 |
Fair Value [Member] | Mortgage loans held-for-investment [Member] | ||
Investments: | ||
Investments | 8,462 | 7,616 |
Fair Value [Member] | Policy loans [Member] | ||
Investments: | ||
Investments | 993 | 992 |
Fair Value [Member] | Other [Member] | ||
Investments: | ||
Investments | 71 | 60 |
Carrying Value [Member] | ||
Liabilities | ||
Investment contracts | 27,301 | 23,470 |
Short-term debt | 400 | 660 |
Long-term debt | 707 | 709 |
Carrying Value [Member] | Mortgage loans held-for-investment [Member] | ||
Investments: | ||
Mortgage loans, net of allowance | 8,396 | 7,270 |
Carrying Value [Member] | Policy loans [Member] | ||
Investments: | ||
Policy loans | 993 | 992 |
Carrying Value [Member] | Other [Member] | ||
Investments: | ||
Other investments | $ 71 | $ 60 |
Goodwill (Detail)
Goodwill (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | ||
Summary of changes in the carrying value of goodwill by segment | |||
Goodwill, beginning balance | [1] | $ 200 | $ 200 |
Adjustments | 0 | 0 | |
Goodwill, ending balance | [1] | 200 | 200 |
Retirement Plans [Member] | |||
Summary of changes in the carrying value of goodwill by segment | |||
Goodwill, beginning balance | [1] | 25 | 25 |
Adjustments | 0 | 0 | |
Goodwill, ending balance | [1] | 25 | 25 |
Individual Products and Solutions - Life and NBSG [Member] | |||
Summary of changes in the carrying value of goodwill by segment | |||
Goodwill, beginning balance | [1] | 175 | 175 |
Adjustments | 0 | 0 | |
Goodwill, ending balance | [1] | $ 175 | $ 175 |
[1] | The goodwill balances have not been previously impaired. |
Goodwill (Parenthetical) (Detai
Goodwill (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of changes in the carrying value of goodwill by segment | ||
Impairment of goodwill | $ 0 | $ 0 |
Summary of Financial Informatio
Summary of Financial Information For Closed Block (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Liabilities: | ||||
Future policyholder benefits | $ 1,637 | $ 1,669 | ||
Policyholder funds and accumulated dividends | 138 | 139 | ||
Policyholder dividends payable | 21 | 22 | ||
Policyholder dividend obligation | 99 | 152 | ||
Other policy obligations and liabilities | 35 | 33 | ||
Total liabilities | 1,930 | 2,015 | ||
Assets: | ||||
Fixed maturity securities, available-for-sale | 1,316 | 1,336 | ||
Mortgage loans, net of allowance | 235 | 272 | ||
Policy loans | 146 | 149 | ||
Other assets | 71 | 86 | ||
Total assets | 1,768 | 1,843 | ||
Excess of reported liabilities over assets | 162 | 172 | ||
Portion of above representing other comprehensive income: | ||||
(Decrease) increase in unrealized gain on fixed maturity securities, available-for-sale | (53) | 35 | ||
Adjustment to policyholder dividend obligation | 53 | (35) | ||
Maximum future earnings to be recognized from assets and liabilities | 162 | 172 | $ 182 | $ 193 |
Available-for-Sale Securities | ||||
Fair value | 1,316 | 1,336 | ||
Amortized cost | 1,249 | 1,216 | ||
Shadow policyholder dividend obligation | (67) | (120) | ||
Net unrealized appreciation | $ 0 | $ 0 |
Summary of Closed Block Operati
Summary of Closed Block Operations (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues: | |||
Premiums | $ 58 | $ 61 | $ 66 |
Net investment income | 87 | 93 | 94 |
Realized investment gains | 1 | 1 | |
Realized losses credited to policyholder benefit obligation | (5) | (5) | (4) |
Total revenues | 141 | 150 | 156 |
Benefits and expenses: | |||
Policy and contract benefits | 122 | 124 | 123 |
Change in future policyholder benefits and interest credited to policyholder accounts | (33) | (34) | (29) |
Policyholder dividends | 40 | 43 | 44 |
Change in policyholder dividend obligation | (4) | (1) | 3 |
Other expenses | 1 | 2 | (2) |
Total benefits and expenses | 126 | 134 | 139 |
Total revenues, net of benefits and expenses, before federal income tax expense | 15 | 16 | 17 |
Federal income tax expense | 5 | 6 | 6 |
Revenues, net of benefits and expenses and federal income tax expense | 10 | 10 | 11 |
Maximum future earnings from assets and liabilities: | |||
Beginning of period | 172 | 182 | 193 |
Change during period | (10) | (10) | (11) |
End of period | $ 162 | $ 172 | $ 182 |
Closed Block - Additional Infor
Closed Block - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Closed Block (Textual) [Abstract] | |||
Policyholder dividend obligation | $ 32 | $ 32 | $ 28 |
Short-Term Debt - Additional In
Short-Term Debt - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Nov. 30, 2015 | Apr. 02, 2015 | |
Short Term Debt (Textual) [Abstract] | ||||
Cash equivalent maturity description | less than one year | |||
Unsecured revolving promissory note and line of credit agreement terminated | $ 400 | |||
Maximum borrowing capacity of short term debt | $ 350 | |||
Revolving Credit Facility [Member] | ||||
Short Term Debt (Textual) [Abstract] | ||||
Maximum borrowing capacity of short term debt | $ 600 | $ 750 | ||
Outstanding amounts | $ 0 | 0 | ||
Line of credit facility, expiry date | Apr. 2, 2020 | |||
Custodial Bank [Member] | ||||
Short Term Debt (Textual) [Abstract] | ||||
Interest rate basis on outstanding principal balances of the line of credit | One-month U.S. LIBOR | |||
Federal Home Loan Bank Borrowings [Member] | ||||
Short Term Debt (Textual) [Abstract] | ||||
Maximum borrowing capacity of short term debt | $ 250 | |||
Eligible collateral for short term borrowings | 6,700 | 8,500 | ||
Outstanding amounts | 0 | 0 | ||
Federal Home Loan Bank capital stock purchased | $ 10 | |||
Line of credit facility, expiry date | Mar. 25, 2016 | |||
Amounts outstanding under agreement with Federal Home Loan Bank | $ 0 | $ 0 |
Summary of Short Term Debt and
Summary of Short Term Debt and Weighted Average Annual Interest Rates (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of short-term debt and weighted average annual interest rates | |||
Total short-term debt | $ 400 | $ 660 | |
Revolving Credit Facility [Member] | |||
Summary of short-term debt and weighted average annual interest rates | |||
$400 million revolving variable rate line of credit (0.00% and 1.57%, respectively) | 0 | 0 | |
$750 million Commercial Paper Program [Member] | |||
Summary of short-term debt and weighted average annual interest rates | |||
Commercial paper program | [1] | $ 400 | |
$600 million Commercial Paper Program [Member] | |||
Summary of short-term debt and weighted average annual interest rates | |||
Commercial paper program | [1] | 264 | |
Line of Credit [Member] | Revolving Credit Facility [Member] | |||
Summary of short-term debt and weighted average annual interest rates | |||
$400 million revolving variable rate line of credit (0.00% and 1.57%, respectively) | $ 396 | ||
[1] | On December 4, 2015, the Company renewed an agreement to increase its $600 million commercial paper program to $750 million. |
Summary of Short Term Debt an93
Summary of Short Term Debt and Weighted Average Annual Interest Rates (Parenthetical) (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 04, 2015 | Apr. 02, 2015 | Dec. 31, 2014 | |
Summary of short-term debt and weighted average annual interest rates | ||||
Maximum borrowing capacity of short term debt | $ 350 | |||
$750 million Commercial Paper Program [Member] | ||||
Summary of short-term debt and weighted average annual interest rates | ||||
Maximum borrowing capacity of short term debt | $ 750 | $ 750 | ||
Weighted average annual interest rate | 0.45% | 0.00% | ||
$600 million Commercial Paper Program [Member] | ||||
Summary of short-term debt and weighted average annual interest rates | ||||
Maximum borrowing capacity of short term debt | $ 600 | |||
Weighted average annual interest rate | 0.00% | 0.20% | ||
Revolving Credit Facility [Member] | ||||
Summary of short-term debt and weighted average annual interest rates | ||||
Maximum borrowing capacity of short term debt | $ 750 | $ 600 | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | ||||
Summary of short-term debt and weighted average annual interest rates | ||||
Maximum borrowing capacity of short term debt | $ 400 | $ 400 | ||
Weighted average annual interest rate | 0.00% | 1.57% | ||
Interest rate terms | Variable |
Long-Term Debt (Detail)
Long-Term Debt (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of long-term debt | ||
Long-term debt | $ 707 | $ 709 |
8.15% surplus note, due June 26, 2032, payable to NFS [Member] | ||
Summary of long-term debt | ||
Long-term debt | 300 | 300 |
7.50% surplus note, due December 17, 2031, payable to NFS [Member] | ||
Summary of long-term debt | ||
Long-term debt | 300 | 300 |
6.75% surplus note, due December 23, 2033, payable to NFS [Member] | ||
Summary of long-term debt | ||
Long-term debt | 100 | 100 |
Other [Member] | ||
Summary of long-term debt | ||
Long-term debt | $ 7 | $ 9 |
Long-Term Debt (Parenthetical)
Long-Term Debt (Parenthetical) (Detail) | Dec. 31, 2015 |
8.15% surplus note, due June 26, 2032, payable to NFS [Member] | |
Summary of long-term debt | |
Interest rate of surplus note | 8.15% |
7.50% surplus note, due December 17, 2031, payable to NFS [Member] | |
Summary of long-term debt | |
Interest rate of surplus note | 7.50% |
6.75% surplus note, due December 23, 2033, payable to NFS [Member] | |
Summary of long-term debt | |
Interest rate of surplus note | 6.75% |
Long-Term Debt - Additional inf
Long-Term Debt - Additional information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Long Term Debt (Textual) [Abstract] | |||
Interest payments on surplus notes payable to NFS | $ 54 | $ 54 | $ 54 |
Summary of Federal Income Tax E
Summary of Federal Income Tax Expense (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of federal income tax (benefit) expense attributable to (loss) income before income attributable to noncontrolling interest | |||
Current tax expense (benefit) | $ 76 | $ 5 | $ (33) |
Deferred tax expense (benefit) | 217 | (152) | 346 |
Total tax (benefit) expense | $ 293 | $ (147) | $ 313 |
Summary of Federal Income Tax98
Summary of Federal Income Tax Expense Attributable to Income (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of percentage computed by applying the U.S. federal income tax rate to (loss) income before federal income taxes and noncontrolling interests | |||
Computed (expected tax expense (benefit)) | $ 430 | $ (46) | $ 469 |
Dividends received deduction | (118) | (87) | (112) |
Tax credits | (63) | (53) | (82) |
Other, net | 44 | 39 | 38 |
Total tax (benefit) expense | $ 293 | $ (147) | $ 313 |
Computed (expected tax expense (benefit)), percentage | 35.00% | 35.00% | 35.00% |
Dividends received deduction, percentage | (10.00%) | 66.00% | (8.00%) |
Tax credit, percentage | (5.00%) | 41.00% | (6.00%) |
Other, net, percentage | 4.00% | (30.00%) | 2.00% |
Total percentage | 24.00% | 112.00% | 23.00% |
Summary of Tax Effects of Tempo
Summary of Tax Effects of Temporary Differences Included in Net Deferred Tax (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | [1] |
Deferred tax assets | |||
Future policy benefits and claims | $ 825 | $ 839 | |
Tax credit carryforwards | 483 | 355 | |
Derivatives, including embedded derivatives | 120 | 147 | |
Other | 411 | 439 | |
Gross deferred tax assets | 1,839 | 1,780 | |
Valuation allowance | (17) | (17) | |
Gross deferred tax assets, net of valuation allowance | 1,822 | 1,763 | |
Deferred tax liabilities | |||
Deferred policy acquisition costs | 1,502 | 1,113 | |
Available-for-sale securities | 315 | 839 | |
Other | 249 | 209 | |
Gross deferred tax liabilities | 2,066 | 2,161 | |
Net deferred tax liability | $ 244 | $ 398 | |
[1] | Prior year amounts primarily related to certain annuity and life insurance balances have been reclassified between future policy benefits, available-for-sale securities, other assets and other liabilities to conform with current year presentation. |
Rollforward of Uncertain Tax Po
Rollforward of Uncertain Tax Positions (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Uncertain tax positions including permanent and temporary differences | |||
Balance at beginning of period | $ 38 | $ 36 | $ 36 |
Additions for current year tax positions | 1 | 3 | 2 |
Reductions for prior years tax positions | (3) | (1) | (2) |
Balance at end of period | $ 36 | $ 38 | $ 36 |
Federal Income Taxes - Addition
Federal Income Taxes - Additional information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Federal Income Taxes (Textual) [Abstract] | |||
Decrease of unrecognized tax benefits | $ (15) | ||
IRS audit of tax return | The Company believes it is reasonably possible that the 2006 to 2010 IRS audit for the NLIC's consolidated tax returns will be effectively settled within the next 12 months and as a result the liability for unrecognized tax benefits could decrease $15 million. | ||
Federal income tax liability | $ 61 | $ 18 | |
Federal income taxes refunded | $ 107 | ||
Federal income taxes | The Company made $33 million and immaterial payments for the years ended December 31, 2015 and 2014, respectively | ||
Federal income taxes paid | $ 33 | ||
Company recorded tax expense (benefit) | $ (1) | $ 16 | |
Income-housing credit carryforwards description | Income-housing credit carryforwards, which expire between 2024 and 2035 | ||
Low Income-housing credit carry forwards | $ 218 | ||
Minimum tax credit carryforwards | 197 | ||
Foreign tax credit carryforwards | $ 68 | ||
Local income tax examinations year by tax authorities | 2,010 | ||
Income tax returns description | The IRS commenced an examination of the Company's U.S. income tax returns for the years 2011 through 2012. | ||
Earliest Tax Year [Member] | |||
Federal Income Taxes (Textual) [Abstract] | |||
Tax Examination year | 2,006 | ||
Foreign tax credit carryforwards expiring period | 2,025 | ||
Latest Tax Year [Member] | |||
Federal Income Taxes (Textual) [Abstract] | |||
Tax Examination year | 2,010 | ||
Foreign tax credit carryforwards expiring period | 2,019 | ||
Domestic Tax Authority [Member] | |||
Federal Income Taxes (Textual) [Abstract] | |||
Gross federal net operating loss carryforwards | $ 248 | ||
Gross federal net operating loss carryforwards expiration period | 2,028 |
Statutory Financial Informat102
Statutory Financial Information - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statutory Financial Information (Textual) [Abstract] | |||
Deferred tax asset, subsidiaries | $ 8 | $ 10 | |
State of Ohio insurance laws description | The State of Ohio insurance laws require Ohio-domiciled life insurance companies to notify the Ohio Superintendent of Insurance of all dividends prior to payment and must seek prior regulatory approval to pay a dividend or distribute cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding twelve months, exceeds the greater of (1) 10% of statutory-basis policyholders’ surplus as of the prior December 31 or (2) the statutory-basis net income of the insurer as of the prior December 31. | ||
Dividend distributions made for the period | 12 months | ||
Statutory basis policyholders surplus | 10.00% | ||
Cash dividend paid | $ 0 | 0 | $ 0 |
NLIC paid dividend | 457 | ||
Subsidiaries [Member] | |||
Statutory Financial Information (Textual) [Abstract] | |||
Change in deferred tax valuation | 56 | $ 66 | |
Eagle Captive Reinsurance LLC [Member] | |||
Statutory Financial Information (Textual) [Abstract] | |||
Change in deferred tax valuation | (64) | ||
Deferred tax asset, subsidiaries | $ 10 |
Statutory Financial Informat103
Statutory Financial Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Parent Company [Member] | |||
Summarize the statutory net income (loss) and statutory capital and surplus for the Company and its primary insurance subsidiary | |||
Statutory net income (loss) | $ 167 | $ 341 | $ 262 |
Statutory capital and surplus | 4,567 | 4,408 | 3,550 |
Subsidiaries [Member] | |||
Summarize the statutory net income (loss) and statutory capital and surplus for the Company and its primary insurance subsidiary | |||
Statutory net income (loss) | (99) | (122) | (103) |
Statutory capital and surplus | $ 735 | $ 691 | $ 534 |
Related Party Transactions - Ad
Related Party Transactions - Additional information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions (Textual) [Abstract] | |||
IT service payments to NMIC and NSC | $ 289 | $ 275 | $ 277 |
Total account values of group annuity and life insurance contracts | 3,300 | 3,300 | |
Revenue from group annuity and life insurance contracts | 129 | 131 | 137 |
Total interest credited to the account balances | 106 | 109 | 109 |
Company made lease payments to NMIC | 18 | 16 | 16 |
Revenues ceded to NMIC | 358 | 347 | 291 |
Benefits, claims and expenses | 207 | 217 | 178 |
Customer allocations to NFG funds | 59,100 | 58,100 | |
NFG paid to NLIC | 196 | 185 | 163 |
Amounts on deposit with NCMC | 501 | 636 | |
Total commissions and fees paid | 63 | 57 | 54 |
Notes receivable outstanding | 238 | 142 | |
Life insurance [Member] | |||
Related Party Transactions (Textual) [Abstract] | |||
Revenues ceded to NMIC | 209 | 208 | $ 179 |
Nation Wide Bank [Member] | |||
Related Party Transactions (Textual) [Abstract] | |||
Line of credit borrowing capacity by related party | 50 | ||
Line of credit outstanding | $ 0 | $ 0 |
Reinsurance (Detail)
Reinsurance (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Premiums | |||
Direct | $ 1,144 | $ 1,178 | $ 1,015 |
Assumed from other companies | 0 | 0 | 0 |
Ceded to other companies | (358) | (347) | (291) |
Premiums | 786 | 831 | 724 |
Life, accident and health insurance in force | |||
Direct | 260,465 | 241,936 | 228,095 |
Assumed from other companies | 5 | 5 | 6 |
Ceded to other companies | (60,976) | (59,588) | (58,310) |
Life, accident and health insurance | $ 199,494 | $ 182,353 | $ 169,791 |
Reinsurance - Additional inform
Reinsurance - Additional information (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Other Assets [Member] | |||
Reinsurance (Textual) [Abstract] | |||
Amounts recoverable under reinsurance contracts | $ 647 | $ 704 | $ 675 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2015Segment | |
Segment Reporting Disclosure [Line Items] | |
Number of reportable segments | 4 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Revenues: | |||||
Policy charges | $ 2,216 | $ 2,065 | $ 1,849 | ||
Premiums | 786 | 831 | 724 | ||
Net investment income | 1,982 | 1,900 | 1,849 | ||
Non-operating changes in variable annuity liabilities and net realized investment losses | [1] | (56) | (1,051) | 783 | |
Other revenues | [2] | (76) | (16) | (88) | |
Total revenues | 5,080 | 3,729 | 5,117 | ||
Benefits and expenses: | |||||
Interest credited to policyholder accounts | 1,078 | 1,096 | 1,067 | ||
Benefits and claims | 1,662 | 1,502 | 1,354 | ||
Amortization of DAC | 68 | 207 | 374 | ||
Other expenses, net of deferrals | 1,044 | 1,055 | 981 | ||
Total benefits and expenses | 3,852 | 3,860 | 3,776 | ||
Income before federal income taxes and noncontrolling interests | 1,228 | (131) | 1,341 | ||
Less: non-operating net realized investment gains, including other-than-temporary impairment losses | [1] | 56 | 1,051 | (783) | |
Less: net loss attributable to noncontrolling interest | 96 | 94 | 82 | ||
Assets as of year end | 144,178 | 143,524 | 133,445 | ||
Adjustment [Member] | |||||
Revenues: | |||||
Total revenues | 4,852 | ||||
Benefits and expenses: | |||||
Benefits and claims | 1,434 | ||||
Total benefits and expenses | 3,624 | ||||
Individual Products and Solutions - Annuity [Member] | |||||
Revenues: | |||||
Policy charges | 1,259 | 1,175 | 1,021 | ||
Premiums | 459 | 518 | 416 | ||
Net investment income | 591 | 546 | 546 | ||
Other revenues | [2] | (76) | (38) | (109) | |
Total revenues | 2,233 | 2,201 | 1,874 | ||
Benefits and expenses: | |||||
Interest credited to policyholder accounts | 328 | 370 | 377 | ||
Benefits and claims | 700 | [3] | 828 | 694 | |
Amortization of DAC | 13 | 120 | 185 | ||
Other expenses, net of deferrals | 334 | 300 | 295 | ||
Total benefits and expenses | 1,375 | 1,618 | 1,551 | ||
Income before federal income taxes and noncontrolling interests | 858 | 583 | 323 | ||
Pre-tax operating earnings (loss) | 858 | 583 | 323 | ||
Assets as of year end | 73,370 | 72,429 | 68,805 | ||
Retirement Plans [Member] | |||||
Revenues: | |||||
Policy charges | 111 | 107 | 101 | ||
Net investment income | 752 | 750 | 743 | ||
Total revenues | 863 | 857 | 844 | ||
Benefits and expenses: | |||||
Interest credited to policyholder accounts | 494 | 482 | 473 | ||
Amortization of DAC | 7 | (28) | (2) | ||
Other expenses, net of deferrals | 163 | 153 | 151 | ||
Total benefits and expenses | 664 | 607 | 622 | ||
Income before federal income taxes and noncontrolling interests | 199 | 250 | 222 | ||
Pre-tax operating earnings (loss) | 199 | 250 | 222 | ||
Assets as of year end | 30,524 | 30,744 | 29,904 | ||
Individual Products and Solutions - Life and NBSG [Member] | |||||
Revenues: | |||||
Policy charges | 846 | 783 | 727 | ||
Premiums | 292 | 284 | 282 | ||
Net investment income | 602 | 565 | 544 | ||
Other revenues | [2] | (7) | 12 | 6 | |
Total revenues | 1,733 | 1,644 | 1,559 | ||
Benefits and expenses: | |||||
Interest credited to policyholder accounts | 236 | 231 | 213 | ||
Benefits and claims | 705 | [3] | 644 | 636 | |
Amortization of DAC | 115 | 122 | 125 | ||
Other expenses, net of deferrals | 371 | 348 | 347 | ||
Total benefits and expenses | 1,427 | 1,345 | 1,321 | ||
Income before federal income taxes and noncontrolling interests | 306 | 299 | 238 | ||
Pre-tax operating earnings (loss) | 306 | 299 | 238 | ||
Assets as of year end | 30,650 | 29,322 | 27,183 | ||
Corporate and Other [Member] | |||||
Revenues: | |||||
Premiums | 35 | 29 | 26 | ||
Net investment income | 37 | 39 | 16 | ||
Non-operating changes in variable annuity liabilities and net realized investment losses | [1] | (56) | (1,051) | 783 | |
Other revenues | [2] | 7 | 10 | 15 | |
Total revenues | 23 | (973) | 840 | ||
Benefits and expenses: | |||||
Interest credited to policyholder accounts | 20 | 13 | 4 | ||
Benefits and claims | 29 | [3] | 30 | 24 | |
Amortization of DAC | (67) | (7) | 66 | ||
Other expenses, net of deferrals | 176 | 254 | 188 | ||
Total benefits and expenses | 158 | 290 | 282 | ||
Income before federal income taxes and noncontrolling interests | (135) | (1,263) | 558 | ||
Less: non-operating net realized investment gains, including other-than-temporary impairment losses | [1] | 56 | 1,051 | (783) | |
Less: adjustment to amortization of DAC and other related expenses related to net realized investment gains and losses | (74) | (11) | 70 | ||
Less: net loss attributable to noncontrolling interest | 96 | 94 | 82 | ||
Pre-tax operating earnings (loss) | (57) | (129) | (73) | ||
Assets as of year end | $ 9,634 | $ 11,029 | $ 7,553 | ||
[1] | Excluding operating items (trading portfolio realized gains and losses, trading portfolio valuation changes and net realized gains and losses related to certain product hedges). | ||||
[2] | Includes operating items discussed above. | ||||
[3] | Excludes certain non-operating changes in variable annuity liabilities |
Consolidated Summary of Inve109
Consolidated Summary of Investments (Detail) $ in Millions | Dec. 31, 2015USD ($) | |
Summary of Investments Other Than Investments in Related Parties | ||
Cost | $ 48,111 | |
Amount at which shown in the consolidated balance sheet | 48,668 | |
Policy loans [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 993 | |
Amount at which shown in the consolidated balance sheet | 993 | |
Other investments [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 855 | |
Amount at which shown in the consolidated balance sheet | 855 | |
Short-term investments [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 766 | |
Amount at which shown in the consolidated balance sheet | 766 | |
Fixed maturity securities [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 36,996 | |
Fair value | 37,570 | |
Amount at which shown in the consolidated balance sheet | 37,570 | |
Fixed maturity securities [Member] | US Government Corporations and Agencies securities [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 343 | |
Fair value | 402 | |
Amount at which shown in the consolidated balance sheet | 402 | |
Fixed maturity securities [Member] | Obligations of states, political subdivisions and foreign governments [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 2,136 | |
Fair value | 2,367 | |
Amount at which shown in the consolidated balance sheet | 2,367 | |
Fixed maturity securities [Member] | Public Utility, Bonds [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 3,411 | |
Fair value | 3,495 | |
Amount at which shown in the consolidated balance sheet | 3,495 | |
Fixed maturity securities [Member] | All Other Corporate Bonds [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 31,106 | |
Fair value | 31,306 | |
Amount at which shown in the consolidated balance sheet | 31,306 | |
Equity securities [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 7 | |
Fair value | 21 | |
Amount at which shown in the consolidated balance sheet | 21 | |
Equity securities [Member] | Industrial, miscellaneous and all other [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 7 | |
Fair value | 17 | |
Amount at which shown in the consolidated balance sheet | 17 | |
Equity securities [Member] | Nonredeemable preferred stocks [Member] | Available-for-sale Securities [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Fair value | 4 | |
Amount at which shown in the consolidated balance sheet | 4 | |
Trading assets [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 72 | |
Fair value | 67 | |
Amount at which shown in the consolidated balance sheet | 67 | |
Mortgage loans, net of allowance [Member] | ||
Summary of Investments Other Than Investments in Related Parties | ||
Cost | 8,422 | |
Amount at which shown in the consolidated balance sheet | $ 8,396 | [1] |
[1] | Difference from Column B primarily is attributable to valuation allowances due to impairments on mortgage loans (see Note 6 to the audited consolidated financial statements). |
Schedule - Supplementary Insura
Schedule - Supplementary Insurance Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Supplementary Insurance Information | ||||
Supplementary Insurance Information, Deferred policy acquisition costs | $ 5,200 | $ 4,063 | $ 3,778 | |
Supplementary Insurance Information, Future policy benefits, losses, claims and loss expenses | 45,397 | 40,730 | 36,765 | |
Supplementary Insurance Information, Unearned premiums | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Other policy claims and benefits payable | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Premium revenue | 786 | 831 | 724 | |
Supplementary Insurance Information, Net investment income | [2] | 1,982 | 1,900 | 1,849 |
Supplementary Insurance Information, Benefits, claims, losses and settlement expenses | 2,740 | 2,598 | 2,421 | |
Supplementary Insurance Information, Amortization of deferred policy acquisition costs | 68 | 207 | 374 | |
Supplementary Insurance Information, Other operating expenses | [2] | 1,044 | 1,055 | 981 |
Supplementary Insurance Information, Premiums written | 0 | 0 | 0 | |
IPS - Annuity [Member] | ||||
Supplementary Insurance Information | ||||
Supplementary Insurance Information, Deferred policy acquisition costs | 3,070 | 2,495 | 2,214 | |
Supplementary Insurance Information, Future policy benefits, losses, claims and loss expenses | 15,160 | 12,619 | 10,985 | |
Supplementary Insurance Information, Unearned premiums | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Other policy claims and benefits payable | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Premium revenue | 459 | 518 | 416 | |
Supplementary Insurance Information, Net investment income | [2] | 591 | 546 | 546 |
Supplementary Insurance Information, Benefits, claims, losses and settlement expenses | 1,257 | 1,198 | 1,071 | |
Supplementary Insurance Information, Amortization of deferred policy acquisition costs | 13 | 120 | 185 | |
Supplementary Insurance Information, Other operating expenses | [2] | 334 | 300 | 295 |
Supplementary Insurance Information, Premiums written | 0 | 0 | 0 | |
Retirement Plans Segment [Member] | ||||
Supplementary Insurance Information | ||||
Supplementary Insurance Information, Deferred policy acquisition costs | 222 | 216 | 179 | |
Supplementary Insurance Information, Future policy benefits, losses, claims and loss expenses | 15,940 | 14,905 | 14,313 | |
Supplementary Insurance Information, Unearned premiums | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Other policy claims and benefits payable | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Net investment income | [2] | 752 | 750 | 743 |
Supplementary Insurance Information, Benefits, claims, losses and settlement expenses | 494 | 482 | 473 | |
Supplementary Insurance Information, Amortization of deferred policy acquisition costs | 7 | (28) | (2) | |
Supplementary Insurance Information, Other operating expenses | [2] | 163 | 153 | 151 |
Supplementary Insurance Information, Premiums written | 0 | 0 | 0 | |
IPS - Life And NBSG [Member] | ||||
Supplementary Insurance Information | ||||
Supplementary Insurance Information, Deferred policy acquisition costs | 1,937 | 1,717 | 1,557 | |
Supplementary Insurance Information, Future policy benefits, losses, claims and loss expenses | 11,582 | 10,763 | 10,068 | |
Supplementary Insurance Information, Unearned premiums | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Other policy claims and benefits payable | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Premium revenue | 292 | 284 | 282 | |
Supplementary Insurance Information, Net investment income | [2] | 602 | 565 | 544 |
Supplementary Insurance Information, Benefits, claims, losses and settlement expenses | 941 | 875 | 849 | |
Supplementary Insurance Information, Amortization of deferred policy acquisition costs | 115 | 122 | 125 | |
Supplementary Insurance Information, Other operating expenses | [2] | 371 | 348 | 347 |
Supplementary Insurance Information, Premiums written | 0 | 0 | 0 | |
Corporate and Other Segment [Member] | ||||
Supplementary Insurance Information | ||||
Supplementary Insurance Information, Deferred policy acquisition costs | (29) | (365) | (172) | |
Supplementary Insurance Information, Future policy benefits, losses, claims and loss expenses | 2,715 | 2,443 | 1,399 | |
Supplementary Insurance Information, Unearned premiums | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Other policy claims and benefits payable | [1] | 0 | 0 | 0 |
Supplementary Insurance Information, Premium revenue | 35 | 29 | 26 | |
Supplementary Insurance Information, Net investment income | [2] | 37 | 39 | 16 |
Supplementary Insurance Information, Benefits, claims, losses and settlement expenses | 48 | 43 | 28 | |
Supplementary Insurance Information, Amortization of deferred policy acquisition costs | (67) | (7) | 66 | |
Supplementary Insurance Information, Other operating expenses | [2] | 176 | 254 | 188 |
Supplementary Insurance Information, Premiums written | $ 0 | $ 0 | $ 0 | |
[1] | Unearned premiums and other policy claims and benefits payable are included in Column C amounts. | |||
[2] | Allocations of net investment income and certain operating expenses are based on numerous assumptions and estimates, and reported segment operating results would change if different methods were applied. |
Schedule of Reinsurance (Detail
Schedule of Reinsurance (Detail) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Reinsurance Premiums for Insurance Companies, by Product Segment, Net Amount [Abstract] | ||||
Reinsurance Premiums for Insurance Companies, Product Segment, Gross amount | $ 1,144 | $ 1,178 | $ 1,015 | |
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded to other companies | (358) | (347) | (291) | |
Reinsurance Effect on Claims and Benefits Incurred, Amount Assumed from other companies | 0 | 0 | 0 | |
Reinsurance Effect on Claims and Benefits Incurred, Net amount | 786 | 831 | 724 | |
Life, accident and health insurance in force [Member] | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment, Net Amount [Abstract] | ||||
Reinsurance Premiums for Insurance Companies, Product Segment, Gross amount | 260,465 | 241,936 | 228,095 | |
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded to other companies | (60,976) | (59,588) | (58,310) | |
Reinsurance Effect on Claims and Benefits Incurred, Amount Assumed from other companies | 5 | 5 | 6 | |
Reinsurance Effect on Claims and Benefits Incurred, Net amount | 199,494 | 182,353 | 169,791 | |
Life insurance [Member] | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment, Net Amount [Abstract] | ||||
Reinsurance Premiums for Insurance Companies, Product Segment, Gross amount | [1] | 842 | 888 | 783 |
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded to other companies | [1] | (56) | (57) | (59) |
Reinsurance Effect on Claims and Benefits Incurred, Net amount | [1] | 786 | 831 | 724 |
Accident and health insurance [Member] | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment, Net Amount [Abstract] | ||||
Reinsurance Premiums for Insurance Companies, Product Segment, Gross amount | 302 | 290 | 232 | |
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded to other companies | $ (302) | $ (290) | $ (232) | |
[1] | Primarily represents premiums from traditional life insurance and life-contingent immediate annuities and excludes deposits on investment and universal life insurance products. |
Schedule of Valuation and Quali
Schedule of Valuation and Qualifying Accounts (Detail) - Allowance For Mortgage Loan [Member] - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Activity in the valuation allowance for mortgage loans | ||||
Valuation Allowances and Reserves, beginning Balance | $ 26 | $ 35 | $ 44 | |
Charged to costs and expenses | 2 | (8) | (4) | |
Charged to other accounts | 0 | 0 | 0 | |
Deductions | [1] | (2) | (1) | (5) |
Valuation Allowances and Reserves, Ending Balance | $ 26 | $ 26 | $ 35 | |
[1] | Amounts generally represent payoffs, sales and recoveries. |