Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2020 | |
Document and Entity Information | |
Document Type | POS AM |
Entity Registrant Name | ALLSTATE LIFE INSURANCE CO |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0000352736 |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | |||
Premiums (net of reinsurance ceded of $94, $139 and $138) | $ 618 | $ 677 | $ 704 |
Contract charges, other revenue | 675 | 682 | 695 |
Net investment income | 1,242 | 1,411 | 1,585 |
Realized capital gains and losses | 266 | 341 | (175) |
Total revenues | 2,835 | 3,153 | 2,847 |
Costs and expenses | |||
Contract benefits (net of reinsurance ceded of $176, $187 and $249) | 1,729 | 1,481 | 1,446 |
Interest credited to contractholder funds (net of reinsurance ceded of $44, $40 and $44) | 579 | 585 | 601 |
Amortization of deferred policy acquisition costs | 147 | 180 | 146 |
Operating costs and expenses | 229 | 249 | 271 |
Restructuring and related charges | 5 | 1 | 2 |
Interest expense | 7 | 5 | 5 |
Total costs and expenses | 2,696 | 2,501 | 2,471 |
Gain on disposition of operations | 4 | 6 | 6 |
Income from operations before income tax expense | 143 | 658 | 382 |
Income tax expense | 7 | 128 | 17 |
Net income | 136 | 530 | 365 |
Other comprehensive income (loss), after-tax | |||
Change in unrealized net capital gains and losses | 282 | 679 | (354) |
Change in unrealized foreign currency translation adjustments | 10 | (17) | 0 |
Other comprehensive income (loss), after-tax | 292 | 662 | (354) |
Comprehensive income | 428 | 1,192 | 11 |
Other revenue | |||
Revenues | |||
Contract charges, other revenue | $ 34 | $ 42 | $ 38 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Ceded premiums earned | $ 94 | $ 139 | $ 138 |
Contract charges, reinsurance ceded | 177 | 180 | 188 |
Policyholder benefits and claims incurred, ceded | (176) | (187) | (249) |
Interest credited to contractholder funds | $ (44) | $ (40) | $ (44) |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Investments | ||
Fixed income securities, at fair value (amortized cost, net $21,522 and $20,217) | $ 23,907 | $ 21,725 |
Mortgage loans, net | 3,359 | 3,988 |
Equity securities, at fair value (cost $1,107 and $1,123) | 1,536 | 1,469 |
Limited partnership interests | 3,065 | 3,250 |
Short-term, at fair value (amortized cost $974 and $1,191) | 974 | 1,191 |
Policy loans | 582 | 557 |
Other, net | 1,375 | 1,427 |
Total investments | 34,798 | 33,607 |
Cash | 36 | 43 |
Deferred policy acquisition costs | 973 | 947 |
Reinsurance recoverable | 1,989 | 2,490 |
Accrued investment income | 231 | 239 |
Other assets, net | 714 | 794 |
Separate Accounts | 3,294 | 3,009 |
Total assets | 42,035 | 41,129 |
Liabilities | ||
Contractholder funds | 16,481 | 16,711 |
Total reserve for life-contingent contract benefits | 11,800 | 11,272 |
Unearned premiums | 3 | 4 |
Payable to affiliates, net | 33 | 35 |
Other liabilities and accrued expenses | 1,007 | 1,181 |
Deferred income taxes | 956 | 894 |
Notes due to related parties | 214 | 214 |
Separate Accounts | 3,294 | 3,009 |
Total liabilities | 33,788 | 33,320 |
Commitments and Contingent Liabilities (Notes 7 and 11) | ||
Shareholder’s Equity | ||
Common stock, $227 par value, 23,800 shares authorized and outstanding | 5 | 5 |
Additional capital paid-in | 2,083 | 2,024 |
Retained income | 4,952 | 4,865 |
Unrealized net capital gains and losses [Abstract] | ||
Unrealized net capital gains and losses on fixed income securities with credit losses | 0 | 41 |
Other unrealized net capital gains and losses | 1,882 | 1,149 |
Unrealized adjustment to DAC, DSI and insurance reserves | (678) | (268) |
Total unrealized net capital gains and losses | 1,204 | 922 |
Unrealized foreign currency translation adjustments | 3 | (7) |
Total accumulated other comprehensive income (“AOCI”) | 1,207 | 915 |
Total shareholder’s equity | 8,247 | 7,809 |
Total liabilities and shareholder’s equity | 42,035 | 41,129 |
Series A | ||
Shareholder’s Equity | ||
Redeemable preferred stock | 0 | 0 |
Series B | ||
Shareholder’s Equity | ||
Redeemable preferred stock | 0 | 0 |
Non-affiliate | ||
Investments | ||
Reinsurance recoverable | 1,989 | 2,082 |
Affiliate | ||
Investments | ||
Reinsurance recoverable | $ 0 | $ 408 |
CONSOLIDATED STATEMENTS OF FI_2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Fixed income securities, at fair value, amortized cost | $ 21,522 | $ 20,217 |
Equity securities, at fair value, cost | 1,107 | 1,123 |
Short-term, at fair value, amortized cost | $ 974 | $ 1,191 |
Common stock, par value (in dollars per share) | $ 227 | $ 227 |
Common stock, authorized (in shares) | 23,800 | 23,800 |
Common stock, outstanding (in shares) | 23,800 | 23,800 |
Series A | ||
Redeemable preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Redeemable preferred stock, authorized (in shares) | 1,500,000 | 1,500,000 |
Redeemable preferred stock, issued (in shares) | 0 | 0 |
Series B | ||
Redeemable preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
Redeemable preferred stock, authorized (in shares) | 1,500,000 | 1,500,000 |
Redeemable preferred stock, issued (in shares) | 0 | 0 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY - USD ($) $ in Millions | Total | Common stock | Additional capital paid-in | Retained income | Accumulated other comprehensive income |
Increase (decrease) in equity | |||||
Cumulative effect of change in accounting principle | $ 314 | ||||
Cumulative effect of change in accounting principle | Adjustments for New Accounting Pronouncement | $ (238) | ||||
Balance, beginning of year at Dec. 31, 2017 | $ 2,024 | 3,981 | $ 845 | ||
Increase (decrease) in equity | |||||
Gain on reinsurance with an affiliate | 0 | ||||
Net income | 365 | 365 | |||
Dividends | (250) | ||||
Change in unrealized net capital gains and losses | (354) | (354) | |||
Change in unrealized foreign currency translation adjustments | 0 | 0 | |||
Balance, end of year at Dec. 31, 2018 | 6,692 | $ 5 | 2,024 | 4,410 | 253 |
Increase (decrease) in equity | |||||
Gain on reinsurance with an affiliate | 0 | ||||
Net income | 530 | 530 | |||
Dividends | (75) | ||||
Change in unrealized net capital gains and losses | 679 | 679 | |||
Change in unrealized foreign currency translation adjustments | (17) | (17) | |||
Balance, end of year at Dec. 31, 2019 | 7,809 | 5 | 2,024 | 4,865 | 915 |
Balance, end of year (Adjustments for New Accounting Pronouncement) at Dec. 31, 2019 | (49) | ||||
Increase (decrease) in equity | |||||
Cumulative effect of change in accounting principle | 11 | ||||
Cumulative effect of change in accounting principle | Adjustments for New Accounting Pronouncement | (49) | ||||
Gain on reinsurance with an affiliate | 59 | ||||
Net income | 136 | 136 | |||
Dividends | 0 | ||||
Change in unrealized net capital gains and losses | 282 | 282 | |||
Change in unrealized foreign currency translation adjustments | 10 | 10 | |||
Balance, end of year at Dec. 31, 2020 | $ 8,247 | $ 5 | $ 2,083 | $ 4,952 | $ 1,207 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | |||
Net income | $ 136,000,000 | $ 530,000,000 | $ 365,000,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization and other non-cash items | (51,000,000) | (60,000,000) | (58,000,000) |
Realized capital gains and losses | (266,000,000) | (341,000,000) | 175,000,000 |
Gain on disposition of operations | (4,000,000) | (6,000,000) | (6,000,000) |
Interest credited to contractholder funds | 579,000,000 | 585,000,000 | 601,000,000 |
Changes in: | |||
Policy benefits and other insurance reserves | (430,000,000) | (610,000,000) | (612,000,000) |
Deferred policy acquisition costs | 96,000,000 | 125,000,000 | 67,000,000 |
Reinsurance recoverables, net | 90,000,000 | 66,000,000 | 51,000,000 |
Income taxes | (86,000,000) | 8,000,000 | (64,000,000) |
Other operating assets and liabilities | 245,000,000 | 69,000,000 | 136,000,000 |
Net cash provided by operating activities | 309,000,000 | 366,000,000 | 655,000,000 |
Proceeds from sales | |||
Fixed income securities | 3,370,000,000 | 3,800,000,000 | 4,858,000,000 |
Equity securities | 1,591,000,000 | 984,000,000 | 1,257,000,000 |
Limited partnership interests | 336,000,000 | 354,000,000 | 367,000,000 |
Mortgage loans | 212,000,000 | 0 | 0 |
Other investments | 58,000,000 | 61,000,000 | 39,000,000 |
Investment collections | |||
Fixed income securities | 1,333,000,000 | 1,355,000,000 | 1,448,000,000 |
Mortgage loans | 550,000,000 | 537,000,000 | 434,000,000 |
Other investments | 50,000,000 | 76,000,000 | 168,000,000 |
Investment purchases | |||
Fixed income securities | (5,335,000,000) | (4,406,000,000) | (5,444,000,000) |
Equity securities | (1,431,000,000) | (844,000,000) | (1,086,000,000) |
Limited partnership interests | (375,000,000) | (398,000,000) | (551,000,000) |
Mortgage loans | (112,000,000) | (532,000,000) | (552,000,000) |
Other investments | (45,000,000) | (103,000,000) | (270,000,000) |
Change in short-term investments, net | 25,000,000 | (343,000,000) | (3,000,000) |
Change in policy loans and other investments, net | 54,000,000 | (63,000,000) | (69,000,000) |
Net cash provided by investing activities | 281,000,000 | 478,000,000 | 596,000,000 |
Cash flows from financing activities | |||
Contractholder fund deposits | 753,000,000 | 747,000,000 | 771,000,000 |
Contractholder fund withdrawals | (1,373,000,000) | (1,599,000,000) | (1,893,000,000) |
Proceeds from issuance of notes to related parties | 0 | 215,000,000 | 0 |
Repayment of notes to related parties | 0 | (141,000,000) | 0 |
Dividends paid | 0 | (75,000,000) | (250,000,000) |
Other | 23,000,000 | 0 | 28,000,000 |
Net cash used in financing activities | (597,000,000) | (853,000,000) | (1,344,000,000) |
Net decrease in cash | (7,000,000) | (9,000,000) | (93,000,000) |
Cash at beginning of year | 43,000,000 | 52,000,000 | 145,000,000 |
Cash at end of year | $ 36,000,000 | $ 43,000,000 | $ 52,000,000 |
General
General | 12 Months Ended |
Dec. 31, 2020 | |
General | |
General | General Basis of presentation The accompanying consolidated financial statements include the accounts of Allstate Life Insurance Company (“ALIC”) and its wholly owned subsidiaries (collectively referred to as the “Company”). ALIC is wholly owned by Allstate Insurance Company (“AIC”), which is wholly owned by Allstate Insurance Holdings, LLC, a wholly owned subsidiary of The Allstate Corporation (the “Corporation”). These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company operates as a single segment entity based on the manner in which the Company uses financial information to evaluate business performance and to determine the allocation of resources. Nature of operations The Company offers traditional, interest-sensitive and variable life insurance in New York and term conversion interest-sensitive life insurance countrywide. The Company previously sold traditional life insurance countrywide through June 2019 and variable life insurance nationwide through September 2017. The Company distributes its products through Allstate exclusive agents and exclusive financial specialists. The Company also offers voluntary accident and health insurance through workplace enrolling independent agents and benefits brokers in New York. The Company previously offered and continues to have in force fixed annuities such as deferred and immediate annuities. The Company also previously offered variable annuities and substantially all of this business is reinsured. The following table summarizes premiums and contract charges by product. ($ in millions) 2020 2019 2018 Premiums Traditional life insurance $ 531 $ 557 $ 582 Accident and health insurance 87 120 122 Total premiums 618 677 704 Contract charges Interest-sensitive life insurance 665 669 680 Fixed annuities 10 13 15 Total contract charges 675 682 695 Total premiums and contract charges $ 1,293 $ 1,359 $ 1,399 The Company, through several subsidiaries, operates in the U.S. (all 50 states and the District of Columbia). For 2020, the top geographic locations for direct statutory premiums and annuity considerations were New York, California, Texas, Florida and Illinois. No other jurisdiction accounted for more than 5% of direct statutory premiums and annuity considerations. Subsequent event |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Investments Fixed income securities include bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”). MBS includes residential and commercial mortgage-backed securities. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale (“AFS”) and are carried at fair value. The difference between amortized cost, net of credit loss allowances (“amortized cost, net”) and fair value, net of deferred income taxes and related deferred policy acquisition costs (“DAC”), deferred sales inducement costs (“DSI”) and reserves for life-contingent contract benefits, is reflected as a component of AOCI. The Company excludes accrued interest receivable from the amortized cost basis of its AFS fixed income securities. Cash received from calls and make-whole payments is reflected as a component of proceeds from sales and cash received from maturities and pay-downs is reflected as a component of investment collections within the Consolidated Statements of Cash Flows. Mortgage loans and loans reported in other investments (bank loans and agent loans) are carried at amortized cost, net, which represent the amount expected to be collected. The Company excludes accrued interest receivable from the amortized cost basis of its mortgage, bank and agent loans. Credit loss allowances are estimates of expected credit losses, established for loans upon origination or purchase, and are established considering all relevant information available, including past events, current conditions, and reasonable and supportable forecasts over the life of the loans. Loans are evaluated on a pooled basis when they share similar risk characteristics; otherwise, they are evaluated individually. Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments. Equity securities are carried at fair value. Equity securities without readily determinable or estimable fair values are measured using the measurement alternative, which is cost less impairment, if any, and adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Investments in limited partnership interests are primarily accounted for in accordance with the equity method of accounting (“EMA”) and include interests in private equity funds, real estate funds and other funds. Investments in limited partnership interests purchased prior to January 1, 2018, where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies are accounted for at fair value primarily utilizing the net asset value (“NAV”) as a practical expedient to determine fair value. Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. Policy loans are carried at unpaid principal balances. Other investments primarily consist of bank loans, real estate, agent loans and derivatives. Bank loans are primarily senior secured corporate loans. Real estate is carried at cost less accumulated depreciation. Agent loans are loans issued to exclusive Allstate agents. Derivatives are carried at fair value. Investment income primarily consists of interest, dividends, income from limited partnership interests, rental income from real estate, and income from certain derivative transactions. Interest is recognized on an accrual basis using the effective yield method and dividends are recorded at the ex-dividend date. Interest income for ABS and MBS is determined considering estimated pay-downs, including prepayments, obtained from third-party data sources and internal estimates. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For ABS and MBS of high credit quality with fixed interest rates, the effective yield is recalculated on a retrospective basis. For all others, the effective yield is generally recalculated on a prospective basis. Net investment income for AFS fixed income securities includes the impact of accreting the credit loss allowance for the time value of money. Accrual of income is suspended for fixed income securities when the timing and amount of cash flows expected to be received is not reasonably estimable. Accrual of income is suspended for mortgage loans, bank loans and agent loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on investments on nonaccrual status are generally recorded as a reduction of amortized cost. Income from limited partnership interests carried at fair value is recognized based upon the changes in fair value of the investee’s equity primarily determined using NAV. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ earnings. Income from EMA limited partnership interests is generally recognized on a three month delay due to the availability of the related financial statements from investees. Realized capital gains and losses include gains and losses on investment sales, changes in the credit loss allowances related to fixed income securities, mortgage loans, bank loans and agent loans, impairments, valuation changes of equity investments, including equity securities and certain limited partnerships where the underlying assets are predominately public equity securities, and periodic changes in fair value and settlements of certain derivatives including hedge ineffectiveness. Realized capital gains and losses on investment sales are determined on a specific identification basis and are net of credit losses already recognized through an allowance. Derivative and embedded derivative financial instruments Derivative financial instruments include interest rate swaps, credit default swaps, futures (interest rate and equity), options (including swaptions), interest rate caps, warrants, foreign currency swaps, foreign currency forwards, total return swaps and certain investment risk transfer reinsurance agreements. Derivatives required to be separated from the host instrument and accounted for as derivative financial instruments (“subject to bifurcation”) are embedded in equity-indexed life and annuity contracts and reinsured variable annuity contracts. All derivatives are accounted for on a fair value basis and reported as other investments, other assets, other liabilities and accrued expenses or contractholder funds. Embedded derivative instruments subject to bifurcation are also accounted for on a fair value basis and are reported together with the host contract. The change in fair value of derivatives embedded in life and annuity product contracts and subject to bifurcation is reported in contract benefits or interest credited to contractholder funds. Cash flows from embedded derivatives subject to bifurcation and derivatives receiving hedge accounting are reported consistently with the host contracts and hedged risks, respectively, within the Consolidated Statements of Cash Flows. Cash flows from other derivatives are reported in cash flows from investing activities within the Consolidated Statements of Cash Flows. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. The hedged item may be either all or a specific portion of a recognized asset, liability or an unrecognized firm commitment attributable to a particular risk for fair value hedges. At the inception of the hedge, the Company formally documents the hedging relationship and risk management objective and strategy. The documentation identifies the hedging instrument, the hedged item, the nature of the risk being hedged and the methodology used to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk. For a cash flow hedge, this documentation includes the exposure to changes in the variability in cash flows attributable to the hedged risk. The Company does not exclude any component of the change in fair value of the hedging instrument from the effectiveness assessment. At each reporting date, the Company confirms that the hedging instrument continues to be highly effective in offsetting the hedged risk. Fair value hedges The change in fair value of hedging instruments used in fair value hedges of investment assets or a portion thereof is reported in net investment income, together with the change in fair value of the hedged items. The change in fair value of hedging instruments used in fair value hedges of contractholder funds liabilities or a portion thereof is reported in interest credited to contractholder funds, together with the change in fair value of the hedged items. Accrued periodic settlements on swaps are reported together with the changes in fair value of the related swaps in net investment income or interest credited to contractholder funds. The amortized cost, net for fixed income securities, the carrying value for mortgage loans or the carrying value of a designated hedged liability is adjusted for the change in fair value of the hedged risk. Cash flow hedges For hedging instruments used in cash flow hedges, the changes in fair value of the derivatives are reported in AOCI. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged or forecasted transaction affects income. Accrued periodic settlements on derivatives used in cash flow hedges are reported in net investment income. The amount reported in AOCI for a hedged transaction is the cumulative gain or loss on the derivative instrument from inception of the hedge less gains or losses previously reclassified from AOCI into income. If the Company expects at any time that the loss reported in AOCI would lead to a net loss on the combination of the hedging instrument and the hedged transaction which may not be recoverable, a loss is recognized immediately in realized capital gains and losses. If an impairment loss is recognized on an asset or an additional obligation is incurred on a liability involved in a hedge transaction, any offsetting gain in AOCI is reclassified and reported together with the impairment loss or recognition of the obligation. Termination of hedge accounting If, subsequent to entering into a hedge transaction, the derivative becomes ineffective (including if the hedged item is sold or otherwise extinguished, the occurrence of a hedged forecasted transaction is no longer probable or the hedged asset has a credit loss), the Company may terminate the derivative position. The Company may also terminate derivative instruments or redesignate them as non-hedge as a result of other events or circumstances. If the derivative instrument is not terminated when a fair value hedge is no longer effective, the future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a fair value hedge is no longer effective, is redesignated as non-hedge or when the derivative has been terminated, the fair value gain or loss on the hedged asset, liability or portion thereof previously recognized in income while the hedge was in place and used to adjust the amortized cost, net of hedged fixed income securities or mortgage loans or carrying value of a hedged liability, is amortized over the remaining life of the hedged asset, liability or portion thereof, and reflected in net investment income or interest credited to contractholder funds beginning in the period that hedge accounting is no longer applied. When a derivative instrument used in a cash flow hedge of an existing asset or liability is no longer effective or is terminated, the gain or loss recognized on the derivative is reclassified from AOCI to income as the hedged risk impacts income. If the derivative instrument is not terminated when a cash flow hedge is no longer effective, future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a derivative instrument used in a cash flow hedge of a forecasted transaction is terminated because it is probable the forecasted transaction will not occur, the gain or loss recognized on the derivative is immediately reclassified from AOCI to realized capital gains and losses in the period that hedge accounting is no longer applied. Non-hedge derivative financial instruments For derivatives for which hedge accounting is not applied, the income statement effects, including fair value gains and losses and accrued periodic settlements, are reported either in realized capital gains and losses or in a single line item together with the results of the associated asset or liability for which risks are being managed. Securities loaned The Company’s business activities include securities lending transactions, which are used primarily to generate net investment income. The proceeds received in conjunction with securities lending transactions can be reinvested in short-term investments or fixed income securities. These transactions are short-term in nature, usually 30 days or less. The Company receives cash collateral for securities loaned in an amount generally equal to 102% and 105% of the fair value of domestic and foreign securities, respectively, and records the related obligations to return the collateral in other liabilities and accrued expenses. The carrying value of these obligations approximates fair value because of their relatively short-term nature. The Company monitors the market value of securities loaned on a daily basis and obtains additional collateral as necessary under the terms of the agreements to mitigate counterparty credit risk. The Company maintains the right and ability to repossess the securities loaned on short notice. Recognition of premium revenues and contract charges, and related benefits and interest credited Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Voluntary accident and health insurance products are expected to remain in force for an extended period and therefore are primarily classified as long-duration contracts. Premiums from these products are recognized as revenue when due from policyholders, net of any credit loss allowance for uncollectible premiums. Benefits are reflected in contract benefits and recognized over the life of the policy in relation to premiums. Immediate annuities with life contingencies, including certain structured settlement annuities, provide benefits over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits are recognized in relation to premiums with the establishment of a reserve. The change in reserve over time is recorded in contract benefits and primarily relates to accumulation at the discount rate and annuitant mortality. Profits from these policies come primarily from investment income, which is recognized over the life of the contract. Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and contract charges assessed against the contractholder account balance. Premiums from these contracts are reported as contractholder fund deposits. Contract charges consist of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the contract prior to contractually specified dates. These contract charges are recognized as revenue when assessed against the contractholder account balance. Contract benefits include life-contingent benefit payments in excess of the contractholder account balance. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, are considered investment contracts. Consideration received for such contracts is reported as contractholder fund deposits. Contract charges for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the contractholder account balance. Interest credited to contractholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities are generally based on a specified interest rate index or an equity index, such as the Standard & Poor’s 500 Index (“S&P 500”). Interest credited also includes amortization of DSI expenses. DSI is amortized into interest credited using the same method used to amortize DAC. Contract charges for variable life and variable annuity products consist of fees assessed against the contractholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Contract benefits incurred for variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits. Substantially all of the Company’s variable annuity business is ceded through reinsurance agreements and the contract charges and contract benefits related thereto are reported net of reinsurance ceded. Other revenue Other revenue represents gross dealer concessions received in connection with sales of non-proprietary products by Allstate exclusive agents and exclusive financial specialists. Other revenue is recognized when performance obligations are fulfilled. Deferred policy acquisition and sales inducement costs Costs that are related directly to the successful acquisition of new or renewal life insurance policies and investment contracts are deferred and recorded as DAC. These costs are principally agent and broker remuneration and certain underwriting expenses. DSI costs, which are deferred and recorded as other assets, relate to sales inducements offered on sales to new customers, principally on fixed annuity and interest-sensitive life contracts. These sales inducements are primarily in the form of additional credits to the customer’s account balance or enhancements to interest credited for a specified period which are in excess of the rates currently being credited to similar contracts without sales inducements. All other acquisition costs are expensed as incurred and included in operating costs and expenses. Amortization of DAC is included in amortization of deferred policy acquisition costs and is described in more detail below. DSI is amortized into income using the same methodology and assumptions as DAC and is included in interest credited to contractholder funds. For traditional life and voluntary accident and health insurance, DAC is amortized over the premium paying period of the related policies in proportion to the estimated revenues on such business. Assumptions used in the amortization of DAC and reserve calculations are established at the time the policy is issued and are generally not revised during the life of the policy. Any deviations from projected business in force resulting from actual policy terminations differing from expected levels and any estimated premium deficiencies may result in a change to the rate of amortization in the period such events occur. Generally, the amortization periods for these policies approximates the estimated lives of the policies. The Company periodically reviews the recoverability of DAC using actual experience and current assumptions. Traditional life insurance products, immediate annuities with life contingencies, and voluntary accident and health insurance products are reviewed individually. If actual experience and current assumptions are adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required for any remaining deficiency. For interest-sensitive life insurance and fixed annuities, DAC and DSI are amortized in proportion to the incidence of the total present value of gross profits, which includes both actual historical gross profits (“AGP”) and estimated future gross profits (“EGP”) expected to be earned over the estimated lives of the contracts. The amortization is net of interest on the prior period DAC balance using rates established at the inception of the contracts. Actual amortization periods generally range from 15-30 years; however, incorporating estimates of the rate of customer surrenders, partial withdrawals and deaths generally results in the majority of the DAC being amortized during the surrender charge period, which is typically 10-20 years for interest-sensitive life and 5-10 years for fixed annuities. The rate of DAC and DSI amortization is reestimated and adjusted by a cumulative charge or credit to income when there is a difference between the incidence of actual versus expected gross profits in a reporting period or when there is a change in total EGP. When DAC or DSI amortization or a component of gross profits for a quarterly period is potentially negative (which would result in an increase of the DAC or DSI balance) as a result of negative AGP, the specific facts and circumstances surrounding the potential negative amortization are considered to determine whether it is appropriate for recognition in the consolidated financial statements. Negative amortization is only recorded when the increased DAC or DSI balance is determined to be recoverable based on facts and circumstances. Recapitalization of DAC and DSI is limited to the originally deferred costs plus interest. AGP and EGP primarily consist of the following components: contract charges for the cost of insurance less mortality costs and other benefits; investment income and realized capital gains and losses less interest credited; and surrender and other contract charges less maintenance expenses. The principal assumptions for determining the amount of EGP are mortality, persistency, expenses, investment returns, including capital gains and losses on assets supporting contract liabilities, interest crediting rates to contractholders, and the effects of any hedges. For products whose supporting investments are exposed to capital losses in excess of the Company’s expectations which may cause periodic AGP to become temporarily negative, EGP and AGP utilized in DAC and DSI amortization may be modified to exclude the excess capital losses. The Company performs quarterly reviews of DAC and DSI recoverability for interest-sensitive life and fixed annuity contracts using current assumptions. If a change in the amount of EGP is significant, it could result in the unamortized DAC or DSI not being recoverable, resulting in a charge which is included as a component of amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. The DAC and DSI balances presented include adjustments to reflect the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized capital gains or losses in the respective product investment portfolios were actually realized. The adjustments are recorded net of tax in AOCI. DAC, DSI and deferred income taxes determined on unrealized capital gains and losses and reported in AOCI recognize the impact on shareholder’s equity consistently with the amounts that would be recognized in the income statement on realized capital gains and losses. Customers of the Company may exchange one insurance policy or investment contract for another offered by the Company, or make modifications to an existing investment or life contract issued by the Company. These transactions are identified as internal replacements for accounting purposes. Internal replacement transactions determined to result in replacement contracts that are substantially unchanged from the replaced contracts are accounted for as continuations of the replaced contracts. Unamortized DAC and DSI related to the replaced contracts continue to be deferred and amortized in connection with the replacement contracts. For interest-sensitive life and investment contracts, the EGP of the replacement contracts are treated as a revision to the EGP of the replaced contracts in the determination of amortization of DAC and DSI. For traditional life insurance policies, any changes to unamortized DAC that result from replacement contracts are treated as prospective revisions. Any costs associated with the issuance of replacement contracts are characterized as maintenance costs and expensed as incurred. Internal replacement transactions determined to result in a substantial change to the replaced contracts are accounted for as an extinguishment of the replaced contracts, and any unamortized DAC and DSI related to the replaced contracts are eliminated with a corresponding charge to amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. The costs assigned to the right to receive future cash flows from certain business purchased from other insurers are also classified as DAC in the Consolidated Statements of Financial Position. The costs capitalized represent the present value of future profits expected to be earned over the lives of the contracts acquired. These costs are amortized as profits emerge over the lives of the acquired business and are periodically evaluated for recoverability. The present value of future profits was $3 million as of both December 31, 2020 and 2019. Amortization expense of the present value of future profits was $508 thousand, $357 thousand and $249 thousand in 2020, 2019 and 2018, respectively. Reinsurance In the normal course of business, the Company seeks to limit aggregate and single exposure to losses on large risks by purchasing reinsurance. The Company has also used reinsurance to effect the disposition of certain blocks of business. The amounts reported as reinsurance recoverables include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance reserves and contractholder funds that have not yet been paid. Reinsurance recoverables on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance reserves are reported gross of reinsurance recoverables. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company evaluates reinsurer counterparty credit risk and records reinsurance recoverables net of credit loss allowances. The Company assesses counterparty credit risk for individual reinsurers separately when more relevant or on a pooled basis when shared risk characteristics exist. The evaluation considers the credit quality of the reinsurer and the period over which the recoverable balances are expected to be collected. The Company considers factors including past events, current conditions and reasonable and supportable forecasts in the development of the estimate of credit loss allowances. The Company uses a probability of default and loss given default model developed independently of the Company to estimate current expected credit losses. The model utilizes factors including historical industry factors based on the probability of liquidation, and incorporates current loss given default factors reflective of the industry. The Company monitors the credit ratings of reinsurer counterparties and evaluates the circumstances surrounding credit rating changes as inputs into its credit loss assessments. Uncollectible reinsurance recoverable balances are written off against the allowances when there is no reasonable expectation of recovery. The changes in the allowance are reported in contract benefits. Income taxes Income taxes are accounted for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are insurance reserves, investments (including unrealized capital gains and losses) and DAC. A deferred tax asset valuation allowance is established when it is more likely than not such assets will not be realized. The Company recognizes interest expense related to income tax matters in income tax expense and penalties in operating costs and expenses. Reserve for life-contingent contract benefits The reserve for life-contingent contract benefits payable under insurance policies, including traditional life insurance, life-contingent immediate annuities and voluntary accident and health insurance products, is computed on the basis of long-term actuarial assumptions of future investment yields, mortality, morbidity, policy terminations and expenses. These assumptions, which for traditional life insurance are applied using the net level premium method, include provisions for adverse deviation and generally vary by characteristics such as type of coverage, year of issue and policy duration. The assumptions are established at the time the policy is issued and are generally not changed during the life of the policy. The Company periodically reviews the adequacy of reserves using actual experience and current assumptions. If actual experience and current assumptions are adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required for any remaining deficiency. Traditional life insurance products, immediate annuities with life contingencies, and voluntary accident and health insurance are reviewed individually. The Company also reviews these policies for circumstances where projected profits would be recognized in early years followed by projected losses in later years. If this circumstance exists, the Company will accrue a liability, during the period of profits, to offset the losses at such time as the future losses are expected to commence using a method updated prospectively over time. To the extent that unrealized gains on fixed income securities would result in a premium deficiency if those gains were realized, the related increase in reserves for certain immediate annuities with life contingencies is recorded net of tax as a reduction of unrealized net capital gains included in AOCI. Contractholder funds Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance and fixed annuities. Contractholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses. Contractholder funds also include reserves for secondary guarantees on interest-sensitive life insurance and certain fixed annuity contracts and reserves |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Non-cash investing activities include $5 million, $67 million and $43 million related to mergers and exchanges completed with equity securities, fixed income securities and limited partnerships, and modifications of certain mortgage loans and other investments in 2020, 2019 and 2018, respectively. Non-cash investing activities also include transfers of invested assets related to a coinsurance reinsurance agreement with Allstate Assurance Company (“AAC”) (see Note 4). Liabilities for collateral received in conjunction with the Company’s securities lending program were $331 million, $522 million and $517 million as of December 31, 2020, 2019 and 2018, respectively, and are reported in other liabilities and accrued expenses. Obligations to return cash collateral for over-the-counter (“OTC”) and cleared derivatives were $3 million, $8 million and $8 million as of December 31, 2020, 2019 and 2018, respectively, and are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Net change in proceeds managed Net change in fixed income securities $ — $ 28 $ 94 Net change in short-term investments 196 (33) (77) Operating cash flow provided (used) 196 (5) 17 Net change in cash — — — Net change in proceeds managed $ 196 $ (5) $ 17 Net change in liabilities Liabilities for collateral, beginning of year $ (530) $ (525) $ (542) Liabilities for collateral, end of year (334) (530) (525) Operating cash flow (used) provided $ (196) $ 5 $ (17) |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Business operations The Company uses services performed by AIC and other affiliates, and business facilities owned or leased and operated by AIC in conducting its business activities. In addition, the Company shares the services of employees with AIC. The Company reimburses its affiliates for the operating expenses incurred on behalf of the Company. The Company is charged for the cost of these operating expenses based on the level of services provided. Operating expenses, including compensation, retirement and other benefit programs (see Note 15), allocated to the Company were $191 million, $211 million and $235 million in 2020, 2019 and 2018, respectively. Agent loan sale and securitization On December 22, 2016, ALIC’s subsidiary Allstate Finance Company, LLC (“AFC”) sold agent loans with a fair value of $419 million to affiliate Allstate Finance Company Agency Loans LLC (“AFCAL”) and AFCAL used the loans as collateral in the issuance of notes. On December 16, 2019, investors in the notes approved redemption of the original notes and AFCAL issued replacement notes at new terms. Concurrent with redemption, AFC sold agent loans with a fair value of $222 million to AFCAL, and AFCAL used the loans as collateral in the issuance of additional notes. Investors in the notes are as follows: ($ in millions) December 31, 2020 December 31, 2019 Class A Notes, Due March 10, 2037 (1) Allstate New Jersey Insurance Company $ 101 $ 83 American Heritage Life Insurance Company 62 59 Allstate Assurance Company — 33 First Colonial Insurance Company 9 9 Allstate Fire & Casualty Insurance Company 10 7 Allstate Property and Casualty Insurance Company 9 6 Allstate Indemnity Company 4 4 Esurance Insurance Company 7 4 North Light Specialty Insurance Company 4 3 Allstate Vehicle and Property Insurance Company 2 2 Allstate New Jersey Property and Casualty Insurance Company 2 2 Esurance Property and Casualty Insurance Company 4 2 Subtotal - Class A 214 214 Class B Deferrable Notes, Due March 10, 2037 Allstate Life Insurance Company 214 214 Class C Deferrable Notes, Due March 10, 2037 Allstate Life Insurance Company 168 168 Subordinated Notes, Due March 10, 2037 Allstate Life Insurance Company 45 45 Total $ 641 $ 641 _______________ (1) As of December 31, 2020 and 2019, $74 million of these notes have an annual interest rate of 3.16% and $140 million have an annual interest rate of 3.36%. AFCAL is a VIE established as a bankruptcy-remote entity whose assets are isolated from those of ALIC and are not available to ALIC’s creditors. ALIC is the primary beneficiary since ALIC has control over the significant activities of AFCAL, the obligation to absorb significant losses and the rights to residual returns. Therefore, AFCAL is included in ALIC’s consolidated financial statements. Transactions between ALIC, AFC and AFCAL are eliminated in consolidation. The Company’s Consolidated Statements of Financial Position included $568 million of agent loans, zero cash and $214 million of notes due to related parties as of December 31, 2020 and $612 million of agent loans, $1 million of cash and $214 million of notes due to related parties as of December 31, 2019 associated with AFCAL. The Company incurred interest expense related to these notes of $7 million in 2020 and $5 million in both 2019 and 2018. Reinsurance The Company has coinsurance reinsurance agreements with its unconsolidated affiliate American Heritage Life Insurance Company (“AHL”) whereby the Company assumes certain interest-sensitive life insurance, fixed annuity contracts and accident and health insurance policies. The amounts assumed are disclosed in Note 9. Effective December 1, 2020, ALIC entered into a coinsurance reinsurance agreement with AAC to assume all of AAC’s term and interest-sensitive life insurance policies, and to recapture certain interest-sensitive life insurance policies previously ceded to AAC. In connection with the agreement, the Company recorded invested assets of $534 million, DAC of $245 million, reserve for life-contingent contract benefits of $118 million, contractholder funds of $256 million and reduced reinsurance recoverables by $397 million. The $59 million gain on the transaction was recorded as an increase to additional capital paid-in since the transaction was between entities under common control. ALIC enters into certain intercompany reinsurance transactions with its wholly owned subsidiaries. ALIC enters into these transactions in order to maintain underwriting control and spread risk among various legal entities. These reinsurance agreements have been approved by the appropriate regulatory authorities. All significant intercompany transactions have been eliminated in consolidation. Broker-Dealer agreement The Company receives distribution services from Allstate Financial Services, LLC, an affiliated broker-dealer company, for certain annuity and variable life insurance contracts sold by Allstate exclusive agents and exclusive financial specialists. For these services, the Company incurred commission and other distribution expenses of $3 million in each year of 2020, 2019 and 2018. Structured settlement annuities The Company previously issued structured settlement annuities, a type of immediate annuity, to fund structured settlements in matters involving AIC. In most cases, these annuities were issued under a “qualified assignment” whereby Allstate Assignment Company and prior to July 1, 2001 Allstate Settlement Corporation (“ASC”), both wholly owned subsidiaries of ALIC, purchased annuities from ALIC and assumed AIC’s obligation to make future payments. AIC issued surety bonds to guarantee the payment of structured settlement benefits assumed by ASC (from both AIC and non-related parties) and funded by certain annuity contracts issued by the Company through June 30, 2001. ASC entered into a General Indemnity Agreement pursuant to which it indemnified AIC for any liabilities associated with the surety bonds and gave AIC certain collateral security rights with respect to the annuities and certain other rights in the event of any defaults covered by the surety bonds. ALIC guaranteed the payment of structured settlement benefits on all contracts issued on or after July 1, 2001. Reserves recorded by the Company for annuities that are guaranteed by the surety bonds of AIC were $4.73 billion and $4.57 billion as of December 31, 2020 and 2019, respectively. Income taxes The Company is a party to a federal income tax allocation agreement with the Corporation (see Note 12). Surplus notes On December 2, 2016, the Company purchased for cash a $40 million, 3.07% surplus note due December 2, 2036 that was issued by AAC. No payment of principal or interest was permitted on the surplus note without the written approval from the proper regulatory authority. The surplus note was classified as fixed income securities on the Consolidated Statements of Financial Position. The Company recorded investment income on this surplus note of $1 million in each year of 2020, 2019 and 2018. On December 1, 2020, with regulatory approval, AAC repaid the entire principal of this surplus note. Liquidity and intercompany loan agreements The Company is party to an Amended and Restated Intercompany Liquidity Agreement (“Liquidity Agreement”) with certain of its affiliates, which include, but are not limited to, AIC, AAC and the Corporation. The Liquidity Agreement allows for short-term advances of funds to be made between parties for liquidity and other general corporate purposes. The Liquidity Agreement does not establish a commitment to advance funds on the part of any party. The Company and AIC each serve as a lender and borrower, AAC and certain other affiliates serve only as borrowers, and the Corporation serves only as a lender. The maximum amount of advances each party may make or receive is limited to $1 billion. Netting or offsetting of advances made and received is not permitted. Advances between the parties are required to have specified due dates less than or equal to 364 days from the date of the advance and be payable upon demand by written request from the lender at least 10 business days prior to the demand date. The borrower may make prepayments of the outstanding principal balance of an advance without penalty. Advances will bear interest equal to or greater than the rate applicable to 30-day commercial paper issued by the Corporation on the date the advance is made with an adjustment on the first day of each month thereafter. The Company had no amounts outstanding under the Liquidity Agreement as of December 31, 2020 or 2019. In addition to the Liquidity Agreement, the Company has an intercompany loan agreement with the Corporation. The amount of intercompany loans available to the Company is at the discretion of the Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1 billion. The Corporation may use commercial paper borrowings, bank lines of credit and securities lending to fund intercompany borrowings. The Company had no amounts outstanding under the intercompany loan agreement as of December 31, 2020 or 2019. Road Bay Investments, LLC (“RBI”), a consolidated subsidiary of ALIC, has a Revolving Loan Credit Agreement (“Credit Agreement”) with AHL, according to which AHL agreed to extend revolving credit loans to RBI. As security for its obligations under the Credit Agreement, RBI entered into a Pledge and Security Agreement with AHL, according to which RBI agreed to grant a pledge of and security interest in RBI’s right, title, and interest in certain assets of RBI. The Company had no amounts outstanding under the Credit Agreement as of December 31, 2020 or 2019. Capital support agreement The Company has a capital support agreement with AIC. Under the terms of this agreement, AIC agrees to provide capital to maintain the amount of statutory capital and surplus necessary to maintain a company action level risk-based capital (“RBC”) ratio of at least 150%. AIC’s obligation to provide capital to the Company under the agreement is limited to an aggregate amount of $1 billion. In exchange for providing this capital, the Company will pay AIC an annual commitment fee of 1% of the amount of the Capital and Surplus maximum that remains available on January 1 of such year. The Company or AIC have the right to terminate this agreement when: 1) the Company qualifies for a financial strength rating from S&P, Moody’s or A.M. Best, without giving weight to the existence of this agreement, that is the same or better than its rating with such support; 2) the Company’s RBC ratio is at least 300%; or 3) AIC no longer directly or indirectly owns at least 50% of the voting stock of the Company. During 2020 and 2019, no capital had been provided by AIC under this agreement. External financing agreement In January 2017, ALIC Reinsurance Company (“ALIC Re”), a wholly owned subsidiary of the Company, entered into a master transaction agreement with Bueller Financing LLC (“Bueller”), an external financing provider. In accordance with the agreement, Bueller issued a variable funding puttable note (“credit-linked note”) that is held in a trust. The credit-linked note can be put back to Bueller for cash in the event certain ALIC Re statutory reserves and capital are depleted. The balance of the credit-linked note will vary based on the statutory reserve balance with a maximum value of $1.75 billion. The impacts of the agreement are eliminated in consolidation and have no impact on the Consolidated Statements of Financial Position. Dividends The Company did not pay dividends in 2020 and paid $75 million and $250 million to AIC in the form of cash in 2019 and 2018, respectively. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2020 | |
Investments [Abstract] | |
Investments | Investments Portfolio composition The composition of the investment portfolio is presented as follows: As of December 31, ($ in millions) 2020 2019 Fixed income securities, at fair value $ 23,907 $ 21,725 Mortgage loans, net 3,359 3,988 Equity securities, at fair value 1,536 1,469 Limited partnership interests 3,065 3,250 Short-term investments, at fair value 974 1,191 Policy loans 582 557 Other, net 1,375 1,427 Total $ 34,798 $ 33,607 Fair values The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows: ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses December 31, 2020 U.S. government and agencies $ 1,060 $ 45 $ — $ 1,105 Municipal 1,650 357 — 2,007 Corporate 18,287 2,009 (40) 20,256 Foreign government 91 5 — 96 ABS 420 6 (2) 424 MBS 14 5 — 19 Total fixed income securities $ 21,522 $ 2,427 $ (42) $ 23,907 December 31, 2019 U.S. government and agencies $ 848 $ 34 $ — $ 882 Municipal 1,483 279 (7) 1,755 Corporate 17,301 1,170 (30) 18,441 Foreign government 142 7 — 149 ABS 316 4 (3) 317 MBS 127 55 (1) 181 Total fixed income securities $ 20,217 $ 1,549 $ (41) $ 21,725 Scheduled maturities The scheduled maturities for fixed income securities are as follows: ($ in millions) As of December 31, 2020 Amortized Fair Due in one year or less $ 1,625 $ 1,651 Due after one year through five years 6,974 7,423 Due after five years through ten years 8,255 9,197 Due after ten years 4,234 5,193 21,088 23,464 ABS and MBS 434 443 Total $ 21,522 $ 23,907 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS and MBS are shown separately because of potential prepayment of principal prior to contractual maturity dates. Net investment income Net investment income for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Fixed income securities $ 894 $ 963 $ 991 Mortgage loans 184 190 188 Equity securities 19 29 39 Limited partnership interests 99 175 327 Short-term investments 6 31 21 Policy loans 31 34 31 Other 90 93 91 Investment income, before expense 1,323 1,515 1,688 Investment expense (81) (104) (103) Net investment income $ 1,242 $ 1,411 $ 1,585 Realized capital gains and losses Realized capital gains (losses) by asset type for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Fixed income securities $ 54 $ 25 $ (40) Mortgage loans (45) — 2 Equity securities 225 276 (124) Limited partnership interests 38 43 (22) Derivatives 5 11 10 Other (11) (14) (1) Realized capital gains (losses) $ 266 $ 341 $ (175) Realized capital gains (losses) by transaction type for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Sales $ 42 $ 54 $ (27) Credit losses (1) (47) (21) (9) Valuation of equity investments (2) 266 297 (146) Valuation and settlements of derivative instruments 5 11 7 Realized capital gains (losses) $ 266 $ 341 $ (175) _______________ (1) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, prior period other-than-temporary impairment write-downs are now presented as credit losses. (2) Includes valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. Gross realized gains (losses) on sales of fixed income securities for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Gross realized gains $ 101 $ 65 $ 34 Gross realized losses (44) (35) (66) The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of December 31, 2020 and 2019, respectively. For the years ended December 31, ($ in millions) 2020 2019 Equity securities $ 229 $ 216 Limited partnership interests carried at fair value 100 57 Total $ 329 $ 273 Credit losses recognized in net income (1) for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Fixed income securities: Corporate $ — $ (2) $ (1) ABS (1) (1) (1) MBS (2) (2) (6) Total fixed income securities (3) (5) (8) Mortgage loans (37) — — Limited partnership interests (4) (2) — Other investments Bank loans (4) (13) — Agent loans — (1) (1) Total credit losses by asset type $ (48) $ (21) $ (9) Liabilities Commitments to fund commercial mortgage loans, bank loans and agent loans 1 — — Total $ (47) $ (21) $ (9) _______________ (1) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as other-than-temporary impairment write-downs are now presented as credit losses. Unrealized net capital gains and losses Unrealized net capital gains and losses included in AOCI are as follows: ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2020 Gains Losses Fixed income securities $ 23,907 $ 2,427 $ (42) $ 2,385 Short-term investments 974 — — — EMA limited partnerships (1) (2) Unrealized net capital gains and losses, pre-tax 2,383 Amounts recognized for: Insurance reserves (2) (496) DAC and DSI (3) (363) Amounts recognized (859) Deferred income taxes (320) Unrealized net capital gains and losses, after-tax $ 1,204 December 31, 2019 Fixed income securities $ 21,725 $ 1,549 $ (41) $ 1,508 Short-term investments 1,191 — — — EMA limited partnerships (2) Unrealized net capital gains and losses, pre-tax 1,506 Amounts recognized for: Insurance reserves (126) DAC and DSI (213) Amounts recognized (339) Deferred income taxes (245) Unrealized net capital gains and losses, after-tax $ 922 ____________ (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity). (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. Change in unrealized net capital gains and losses The change in unrealized net capital gains and losses for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Fixed income securities $ 877 $ 1,165 $ (914) Short-term investments — — — Derivative instruments — — (2) EMA limited partnerships — (2) (1) Total 877 1,163 (917) Amounts recognized for: Insurance reserves (370) (126) 315 DAC and DSI (150) (178) 154 Amounts recognized (520) (304) 469 Deferred income taxes (75) (180) 94 Increase (decrease) in unrealized net capital gains and losses, after-tax $ 282 $ 679 $ (354) Mortgage loans The Company’s mortgage loans are commercial mortgage loans collateralized by a variety of commercial real estate property types located across the United States and totaled $3.36 billion and $3.99 billion, net of credit loss allowance, as of December 31, 2020 and 2019, respectively. Substantially all of the commercial mortgage loans are non-recourse to the borrower. The following table shows the principal geographic distribution of commercial real estate represented in the Company’s mortgage loan portfolio. No other state represented more than 5% of the portfolio as of December 31. (% of mortgage loan portfolio carrying value) 2020 2019 Texas 20.1 % 16.8 % California 14.3 14.1 Illinois 6.9 8.0 Florida 6.3 6.7 North Carolina 5.6 4.9 New Jersey 3.9 6.0 The types of properties collateralizing the mortgage loans as of December 31 are as follows: (% of mortgage loan portfolio carrying value) 2020 2019 Apartment complex 34.1 % 35.6 % Office buildings 23.3 22.4 Retail 15.8 14.3 Warehouse 14.5 16.2 Other 12.3 11.5 Total 100.0 % 100.0 % The contractual maturities of the mortgage loan portfolio as of December 31, 2020 are a s fo llows: ($ in millions) Number Amortized cost, net Percent 2021 28 $ 254 7.6 % 2022 23 291 8.7 2023 41 485 14.4 2024 25 510 15.2 Thereafter 115 1,819 54.1 Total 232 $ 3,359 100.0 % Limited partnerships Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. Principal factors influencing carrying value appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. For equity method limited partnerships, the Company recognizes an impairment loss when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. Changes in fair value limited partnerships are recorded through net investment income and therefore are not tested for impairment. The carrying value for limited partnership interest as of December 31 is as follows: 2020 2019 ($ in millions) EMA Fair Value Total EMA Fair Value Total Private equity $ 1,768 $ 721 $ 2,489 $ 2,029 $ 723 $ 2,752 Real estate 334 42 376 319 50 369 Other (1) 200 — 200 129 — 129 Total $ 2,302 $ 763 $ 3,065 $ 2,477 $ 773 $ 3,250 ____________ (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. Municipal bonds The Company maintains a diversified portfolio of municipal bonds which totaled $2.01 billion and $1.76 billion as of December 31, 2020 and 2019, respectively. The municipal bond portfolio includes general obligations of state and local issuers and revenue bonds (including pre-refunded bonds, which are bonds for which an irrevocable trust has been established to fund the remaining payments of principal and interest). The following table shows the principal geographic distribution of municipal bond issuers represented in the Company’s portfolio as of December 31. No other state represents more than 5% of the portfolio. (% of municipal bond portfolio carrying value) 2020 2019 Texas 16.8 % 17.8 % California 16.8 15.0 Oregon 11.3 12.6 New Jersey 7.4 6.7 Illinois 6.2 6.3 New York 5.3 7.0 Short-term investments Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. As of December 31, 2020 and 2019, the fair value of short-term investments totaled $974 million and $1.19 billion, respectively. Policy loans Policy loans are carried at unpaid principal balances. As of December 31, 2020 and 2019, the carrying value of policy loans totaled $582 million and $557 million, respectively. Other investments Other investments primarily consist of agent loans, real estate, bank loans and derivatives. Agent loans are loans issued to exclusive Allstate agents and are carried at amortized cost, net. Real estate is carried at cost less accumulated depreciation. Bank loans are primarily senior secured corporate loans and are carried at amortized cost, net. Derivatives are carried at fair value. The following table summarizes other investments by asset type. As of December 31, ($ in millions) 2020 2019 Agent loans, net $ 631 $ 666 Real estate 315 292 Bank loans, net 245 344 Derivatives and other 184 125 Total $ 1,375 $ 1,427 Concentration of credit risk As of December 31, 2020, the Company is not exposed to any credit concentration risk of a single issuer and its affiliates greater than 10% of the Company’s shareholder’s equity, other than the U.S. government and its agencies. Securities loaned The Company’s business activities include securities lending programs with third parties, mostly large banks. As of December 31, 2020 and 2019, fixed income and equity securities with a carrying value of $322 million and $506 million, respectively, were on loan under these agreements. Interest income on collateral, net of fees, was $1 million in each of 2020, 2019 and 2018. Other investment information Included in fixed income securities are below investment grade assets totaling $2.99 billion and $2.83 billion as of December 31, 2020 and 2019, respectively. As of December 31, 2020, fixed income securities and short-term investments with a carrying value of $21 million were on deposit with regulatory authorities as required by law. As of December 31, 2020, the carrying value of fixed income securities and other investments that were non-income producing was $38 million. Portfolio monitoring and credit losses Fixed income securities The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income security that may require a credit loss allowance. For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, any existing credit loss allowance would be written-off against the amortized cost basis of the asset along with any remaining unrealized losses, with incremental losses recorded in earnings. If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value based on the best estimate of future cash flows considering past events, current conditions and reasonable and supportable forecasts. The estimated future cash flows are discounted at the security’s current effective rate and is compared to the amortized cost of the security. The determination of cash flow estimates is inherently subjective, and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security is considered when developing the estimate of cash flows expected to be collected. That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, origination vintage year, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third-party guarantees and other credit enhancements. Other information, such as industry analyst reports and forecasts, credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, a credit loss allowance is recorded in earnings for the shortfall in expected cash flows; however, the amortized cost, net of the credit loss allowance, may not be lower than the fair value of the security. The portion of the unrealized loss related to factors other than credit remains classified in AOCI. If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings. When a security is sold or otherwise disposed or when the security is deemed uncollectible and written off, the Company removes amounts previously recognized in the credit loss allowance. Recoveries after write-offs are recognized when received. Accrued interest excluded from the amortized cost of fixed income securities totaled $198 million as of December 31, 2020 and is reported within the accrued investment income line of the Consolidated Statements of Financial Position. The Company monitors accrued interest and writes off amounts when they are not expected to be received. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost is below internally established thresholds. The process also includes the monitoring of other credit loss indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential credit losses using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of credit losses for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value requires a credit loss allowance are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the extent to which the fair value has been less than amortized cost. Rollforward of credit loss allowance for fixed income securities for the year ended December 31, 2020 is as follows: ($ in millions) 2020 Beginning balance $ — Credit losses on securities for which credit losses not previously reported (3) Reduction of allowance related to sales 2 Write-offs — Ending balance (1) $ (1) ____________ (1) Allowance for fixed income securities as of December 31, 2020 comprised $1 million of ABS. The following table summarizes the gross unrealized losses and fair value of securities by the length of time that individual securities have been in a continuous unrealized loss position. ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number Fair Unrealized losses Number Fair Unrealized losses December 31, 2020 Fixed income securities U.S. government and agencies 10 $ 17 $ — — $ — $ — $ — Municipal 7 31 — — — — — Corporate 114 558 (19) 25 153 (21) (40) ABS 5 2 — 4 5 (2) (2) MBS 3 — — 10 — — — Total fixed income securities 139 $ 608 $ (19) 39 $ 158 $ (23) $ (42) Investment grade fixed income securities 69 $ 388 $ (5) 19 $ 73 $ (17) $ (22) Below investment grade fixed income securities 70 220 (14) 20 85 (6) (20) Total fixed income securities 139 $ 608 $ (19) 39 $ 158 $ (23) $ (42) December 31, 2019 Fixed income securities U.S. government and agencies 6 $ 74 $ — — $ — $ — $ — Municipal 4 22 (5) 1 14 (2) (7) Corporate 92 504 (8) 43 237 (22) (30) ABS 22 61 (1) 5 19 (2) (3) MBS 8 1 — 22 5 (1) (1) Total fixed income securities 132 $ 662 $ (14) 71 $ 275 $ (27) $ (41) Investment grade fixed income securities 85 $ 524 $ (3) 39 $ 152 $ (17) $ (20) Below investment grade fixed income securities 47 138 (11) 32 123 (10) (21) Total fixed income securities 132 $ 662 $ (14) 71 $ 275 $ (27) $ (41) The following table summarizes gross unrealized losses by unrealized loss position and credit quality as of December 31, 2020. ($ in millions) Investment Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2) $ (7) $ (12) $ (19) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4) (15) (8) (23) Total unrealized losses $ (22) $ (20) $ (42) _______________ (1) Below investment grade fixed income securities include $7 million that have been in an unrealized loss position for less than twelve months. (2) Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses. (3) No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months. (4) Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. Investment grade is defined as a security having a rating of Aaa, Aa, A or Baa from Moody’s, a rating of AAA, AA, A or BBB from S&P Global Ratings (“S&P”), a comparable rating from another nationally recognized rating agency, or a comparable internal rating if an externally provided rating is not available. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third-party rating. Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates or wider credit spreads since the time of initial purchase. The unrealized losses are expected to reverse as the securities approach maturity. ABS and MBS in an unrealized loss position were evaluated based on actual and projected collateral losses relative to the securities’ positions in the respective securitization trusts, security specific expectations of cash flows, and credit ratings. This evaluation also takes into consideration credit enhancement, measured in terms of (i) subordination from other classes of securities in the trust that are contractually obligated to absorb losses before the class of security the Company owns, and (ii) the expected impact of other structural features embedded in the securitization trust beneficial to the class of securities the Company owns, such as overcollateralization and excess spread. Municipal bonds in an unrealized loss position were evaluated based on the underlying credit quality of the primary obligor, obligation type and quality of the underlying assets. As of December 31, 2020, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis. Loans The Company establishes a credit loss allowance for mortgage loans, agent loans and bank loans when they are originated or purchased, and for unfunded commitments unless they are unconditionally cancellable by the Company. The Company uses a probability of default and loss given default model for mortgage loans and bank loans to estimate current expected credit losses that considers all relevant information available including past events, current conditions, and reasonable and supportable forecasts over the life of an asset. The Company also considers such factors as historical losses, expected prepayments and various economic factors. For mortgage loans the Company considers origination vintage year and property level information such as debt service coverage, property type, property location and collateral value. For bank loans the Company considers the credit rating of the borrower, credit spreads and type of loan. After the reasonable and supportable forecast period, the Company’s model reverts to historical loss trends. Given the less complex and homogenous nature of agent loans, the Company estimates current expected credit losses using historical loss experience over the estimated life of the loans, adjusted for current conditions, reasonable and supportable forecasts and expected prepayments. Loans are evaluated on a pooled basis when they share similar risk characteristics. The Company monitors loans through a quarterly credit monitoring process to determine when they no longer share similar risk characteristics and are to be evaluated individually when estimating credit losses. Loans are written off against their corresponding allowances when there is no reasonable expectation of recovery. If a loan recovers after a write-off, the estimate of expected credit losses includes the expected recovery. Accrual of income is suspended for loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on loans on non-accrual status are generally recorded as a reduction of amortized cost. Accrued interest is excluded from the amortized cost of loans and is reported within the accrued investment income line of the Consolidated Statements of Financial Position. As of December 31, 2020, accrued interest totaled $13 million, $2 million and $1 million for mortgage loans, agent loans and bank loans, respectively. Mortgage loans When it is determined a mortgage loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as using collateral value less estimated costs to sell where applicable, including when foreclosure is probable or when repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. When collateral value is used, the mortgage loans may not have a credit loss allowance when the fair value of the collateral exceeds the loan’s amortized cost. An alternative approach may be utilized to estimate credit losses using the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Individual loan credit loss allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell, when applicable, or present value of the loan’s expected future repayment cash flows. Debt service coverage ratio is considered a key credit quality indicator when mortgage loan credit loss allowances are estimated. Debt service coverage ratio represents the amount of estimated cash flow from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. The following table reflects mortgage loans amortized cost by debt service coverage ratio distribution and year of origination as of December 31. ($ in millions) 2020 2019 2015 and prior 2016 2017 2018 2019 Current Total Total Below 1.0 $ 15 $ — $ — $ — $ — $ — $ 15 $ 40 1.0 - 1.25 130 27 32 57 33 14 293 161 1.26 - 1.50 365 41 134 159 201 6 906 1,066 Above 1.50 963 350 240 279 327 45 2,204 2,724 Amortized cost before allowance $ 1,473 $ 418 $ 406 $ 495 $ 561 $ 65 $ 3,418 $ 3,991 Allowance (1) (59) (3) Amortized cost, net $ 3,359 $ 3,988 ____________ (1) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, prior valuation allowance is now presented as an allowance for expected credit losses. Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to situations where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered temporary, or there are other risk mitigating factors such as additional collateral, escrow balances or borrower guarantees. Payments on all mortgage loans were current as of December 31, 2020, 2019 and 2018. During the fourth quarter of 2020, the Company sold $217 million of mortgage loans, net of a $15 million credit loss allowance, resulting in a net realized capital loss of $4 million. The rollforward of credit loss allowance for mortgage loans for the years ended December 31 is a s follows: ($ in millions) 2020 Beginning balance $ (3) Cumulative effect of change in accounting principle (33) Net increases related to credit losses (37) Reduction of allowance related to sales 15 Loans transferred due to reinsurance agreement with AAC (1) Write-offs — Ending balance $ (59) Agent loans The Company monitors agent loans to determine when they should be removed from the pool and assessed for credit losses individually by using internal credit risk grades that classify the loans into risk categories. The categorization is based on relevant information about the ability of borrowers to service their debt, such as historical payment experience, current business trends, cash flow coverage and collateral quality. Internal credit risk grades are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. As of December 31, 2020, 85% of agent loans balance represents the top three highest credit quality categories. The allowance for agent loans totaled $5 million as of December 31, 2020 and did not change from January 1, 2020. Bank loans When it is determined a bank loan shall be evaluated individually, the Company uses various methods to estimate credit losses on individual loans such as the present value of the loan’s expected future repayment cash flows discounted at the loan’s current effective interest rate. Credit ratings of the borrower are considered a key credit quality indicator when bank loan credit loss allowances are estimated. The ratings are updated quarterly and are either received from a nationally recognized rating agency or a comparable internal rating is derived if an externally provided rating is not available. The year of origination is determined to be the year in which the asset is acquired. The bank loans amortized cost by credit rating and year of origination as of December 31 is as follows: ($ in millions) 2020 2015 and Prior 2016 2017 2018 2019 Current Total BBB $ — $ — $ 4 $ — $ — $ 2 $ 6 BB 10 — 1 16 11 5 43 B 5 8 42 37 23 35 150 CCC and below 3 8 15 12 18 6 62 Amortized cost before allowance $ 18 $ 16 $ 62 $ 65 $ 52 $ 48 $ 261 Allowance (16) Amortized cost, net $ 245 The rollforward of credit loss allowance for bank loans for the years ended December 31 is a s follows: ($ in millions) 2020 Beginning balance $ — Cumulative effect of change in accounting principle (16) Net increases related to credit losses (4) Reduction of allowance related to sales 3 Write-offs 1 Ending balance $ (16) |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities 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. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third-party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy: (1) Specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. (2) Quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including mortgage loans, bank loans, agent loans and policy loans, and these are only included in the fair value hierarchy disclosure when the individual investment is reported at fair value. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant inputs and valuation techniques for Level 2 and Level 3 assets and liabilities measured at fair value on a recurring basis Level 2 measurements • Fixed income securities: U.S. government and agencies, municipal, corporate - public and foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Privately placed are valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Corporate - privately placed also includes redeemable preferred stock that are valued using quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. ABS and MBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Certain ABS are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. ABS and residential MBS include prepayment speeds as a primary input for valuation. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third-party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Corporate - public and privately placed, ABS and MBS: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs for corporate fixed income securities include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Other investments: Certain OTC derivatives, such as interest rate caps and certain credit default swaps, are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. Investments excluded from the fair value hierarchy Limited partnerships carried at fair value, which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold without approval of the general partner. The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4-9 of the typical contractual life of 10-12 years. As of December 31, 2020, the Company has commitments to invest $166 million in these limited partnership interests. The following table summarizes the Company’s assets and liabilities measured at fair value as of December 31, 2020. ($ in millions) Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 784 $ 321 $ — $ 1,105 Municipal — 1,958 49 2,007 Corporate - public — 14,535 31 14,566 Corporate - privately placed — 5,622 68 5,690 Foreign government — 96 — 96 ABS — 419 5 424 MBS — 19 — 19 Total fixed income securities 784 22,970 153 23,907 Equity securities 1,408 14 114 1,536 Short-term investments 601 373 — 974 Other investments: Free-standing derivatives — 190 — $ (6) 184 Separate account assets 3,294 — — 3,294 Total recurring basis assets $ 6,087 $ 23,547 $ 267 $ (6) $ 29,895 % of total assets at fair value 20.3 % 78.8 % 0.9 % — % 100.0 % Investments reported at NAV 763 Total $ 30,658 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (516) $ (516) Other liabilities: Free-standing derivatives — (119) — $ 9 (110) Total recurring basis liabilities $ — $ (119) $ (516) $ 9 $ (626) % of total liabilities at fair value — % 19.0 % 82.4 % (1.4) % 100.0 % The following table s ummarizes the Company’s assets and liabilities measured at fair value as of December 31, 2019. ($ in millions) Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 590 $ 292 $ — $ 882 Municipal — 1,715 40 1,755 Corporate - public — 12,777 25 12,802 Corporate - privately placed — 5,517 122 5,639 Foreign government — 149 — 149 ABS — 301 16 317 MBS — 176 5 181 Total fixed income securities 590 20,927 208 21,725 Equity securities 1,340 13 116 1,469 Short-term investments 493 698 — 1,191 Other investments: Free-standing derivatives — 134 — $ (10) 124 Separate account assets 3,009 — — 3,009 Total recurring basis assets $ 5,432 $ 21,772 $ 324 $ (10) $ 27,518 % of total assets at fair value 19.7 % 79.1 % 1.2 % — % 100 % Investments reported at NAV 773 Total $ 28,291 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (427) $ (427) Other liabilities: Free-standing derivatives — (65) — $ 3 (62) Total recurring basis liabilities $ — $ (65) $ (427) $ 3 $ (489) % of total liabilities at fair value — % 13.3 % 87.3 % (0.6) % 100 % The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. ($ in millions) Fair value Valuation Unobservable Range Weighted December 31, 2020 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (483) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.80 % December 31, 2019 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (395) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.57 % The embedded derivatives are equity-indexed and forward starting options in certain life and annuity products that provide customers with interest crediting rates based on the performance of the S&P 500. If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value. As of December 31, 2020 and 2019, Level 3 fair value measurements of fixed income securities total $153 million and $208 million, respectively, and include $24 million and $38 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. As the Company does not develop the Level 3 fair value unobservable inputs for these fixed income securities, they are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value. The following table presents the rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2020. ($ in millions) Total gains (losses) Balance as of December 31, 2019 Net income OCI Transfers Transfers Purchases Sales Issues Settlements Balance as of December 31, 2020 Assets Fixed income securities: Municipal $ 40 $ 1 $ 2 $ 20 $ (11) $ — $ (1) $ — $ (2) $ 49 Corporate - public 25 — — — — 7 — — (1) 31 Corporate - privately placed 122 2 (7) 32 (32) 8 (55) — (2) 68 ABS 16 — — — — — (10) — (1) 5 MBS 5 1 (2) — — — (3) — (1) — Total fixed income securities 208 4 (7) 52 (43) 15 (69) — (7) 153 Equity securities 116 (3) — — — 9 (8) — — 114 Free-standing derivatives, net — — — — — — — — — — Total recurring Level 3 assets $ 324 $ 1 $ (7) $ 52 $ (43) $ 24 $ (77) $ — $ (7) $ 267 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (427) $ (24) $ — $ (54) $ — $ — $ — $ (34) $ 23 $ (516) Total recurring Level 3 liabilities $ (427) $ (24) $ — $ (54) $ — $ — $ — $ (34) $ 23 $ (516) The following table presents the total Level 3 gains (losses) included in net income for the year ended December 31, 2020. ($ in millions) Net investment income Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total Components of net income $ (8) $ 9 $ (1) $ (23) $ (23) T he following table p resents the rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2019. ($ in millions) Total gains (losses) Balance as of December 31, 2018 Net income OCI Transfers Transfers Purchases Sales Issues Settlements Balance as of December 31, 2019 Assets Fixed income securities: Municipal $ 39 $ — $ 4 $ — $ — $ — $ (1) $ — $ (2) $ 40 Corporate - public 33 — — 5 (38) 32 (2) — (5) 25 Corporate - privately placed 97 (1) 1 43 (1) 4 (13) — (8) 122 ABS 22 1 (1) — (30) 36 (6) — (6) 16 MBS — — (1) 6 — — — — — 5 Total fixed income securities 191 — 3 54 (69) 72 (22) — (21) 208 Equity securities 129 15 — — — 10 (38) — — 116 Free-standing derivatives, net 1 (1) — — — — — — — — Total recurring Level 3 assets $ 321 $ 14 $ 3 $ 54 $ (69) $ 82 $ (60) $ — $ (21) $ 324 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (223) $ (52) $ — $ (154) $ — $ — $ — $ (10) $ 12 $ (427) Total recurring Level 3 liabilities $ (223) $ (52) $ — $ (154) $ — $ — $ — $ (10) $ 12 $ (427) The following table presents the total Level 3 gains (losses) included in net income for the year ended December 31, 2019. ($ in millions) Net investment income Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total Components of net income $ (2) $ 16 $ 7 $ (59) $ (38) The following table presents the rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2018. ($ in millions) Total gains (losses) Balance as of December 31, 2017 Net income OCI Transfers Transfers Purchases Sales Issues Settlements Balance as of December 31, 2018 Assets Fixed income securities: Municipal $ 57 $ — $ (2) $ — $ (16) $ 2 $ (2) $ — $ — $ 39 Corporate - public 49 — (2) 3 (3) — (11) — (3) 33 Corporate - privately placed 220 (2) (2) 10 (101) 12 — — (40) 97 ABS 50 — — 12 (18) 20 (19) — (23) 22 Total fixed income securities 376 (2) (6) 25 (138) 34 (32) — (66) 191 Equity securities 90 16 — — — 30 (7) — — 129 Free-standing derivatives, net 1 — — — — — — — — 1 (1) Total recurring Level 3 assets $ 467 $ 14 $ (6) $ 25 $ (138) $ 64 $ (39) $ — $ (66) $ 321 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (284) $ 57 $ — $ — $ — $ — $ — $ (2) $ 6 $ (223) Total recurring Level 3 liabilities $ (284) $ 57 $ — $ — $ — $ — $ — $ (2) $ 6 $ (223) ____________________ (1) Comprises $1 million of assets. The following table presents the total Level 3 gains (losses) included in net income for the year ended December 31, 2018. ($ in millions) Net investment income Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total Components of net income $ — $ 14 $ (5) $ 62 $ 71 Transfers into Level 3 during 2020, 2019 and 2018 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers into Level 3 during 2020 also included derivatives embedded in equity-indexed universal life contracts related to reinsurance assumed from AAC. Transfers into Level 3 during 2019 also included derivatives embedded in equity-indexed universal life contracts due to refinements in the valuation modeling resulting in an increase in significance of non-market observable inputs. Transfers out of Level 3 during 2020, 2019 and 2018 included situations where a broker quote was used in the prior period and a quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant. The table below provides valuation changes included in net income and OCI for Level 3 assets and liabilities held as of December 31. ($ in millions) 2020 2019 2018 Assets Fixed income securities: Municipal $ 1 $ 1 $ — Corporate - public — — — Corporate - privately placed 2 — — Total fixed income securities 3 1 — Equity securities (3) 2 16 Free-standing derivatives, net — (1) — Total recurring Level 3 assets $ — $ 2 $ 16 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (24) $ (52) $ 57 Total recurring Level 3 liabilities $ (24) $ (52) $ 57 Total included in net income $ (24) $ (50) $ 73 Components of net income Net investment income $ (8) $ (2) $ — Realized capital gains (losses) 8 4 16 Contract benefits (1) 7 (5) Interest credited to contractholder funds (23) (59) 62 Total included in net income $ (24) $ (50) $ 73 Assets Municipal $ 2 Corporate - public — Corporate - privately placed (7) Changes in unrealized net capital gains and losses reported in OCI (1) $ (5) ___________________ (1) Effective January 1, 2020, the Company adopted the fair value accounting standard that prospectively requires the disclosure of valuation changes reported in OCI. Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. ($ in millions) December 31, 2020 December 31, 2019 Financial assets Fair value level Amortized cost, net Fair Amortized cost, net Fair Mortgage loans Level 3 $ 3,359 $ 3,587 $ 3,988 $ 4,159 Bank loans Level 3 245 250 344 337 Agent loans Level 3 631 634 666 664 Financial liabilities Fair value level Carrying value (1) Fair Carrying value (1) Fair Contractholder funds on investment contracts Level 3 $ 7,764 $ 9,058 $ 8,403 $ 9,123 Liability for collateral Level 2 334 334 530 530 Notes due to related parties Level 3 214 225 214 215 ____________________ (1) Represents the amounts reported on the Consolidated Statements of Financial Position |
Derivative Financial Instrument
Derivative Financial Instruments and Off-balance sheet Financial Instruments | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments and Off-balance sheet Financial Instruments | Derivative Financial Instruments and Off-balance sheet Financial InstrumentsThe Company uses derivatives for risk reduction and to increase investment portfolio returns through asset replication. Risk reduction activity is focused on managing the risks with certain assets and liabilities arising from the potential adverse impacts from changes in risk-free interest rates, changes in equity market valuations, increases in credit spreads and foreign currency fluctuations. Asset replication refers to the “synthetic” creation of assets through the use of derivatives. The Company replicates fixed income securities using a combination of a credit default swap, index total return swap, options, or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities. The Company replicates equity securities using futures, index total return swaps and options to increase equity exposure. The Company utilizes several derivative strategies to manage risk. Asset-liability management is a risk management strategy that is principally employed to balance the respective interest-rate sensitivities of the Company’s assets and liabilities. Depending upon the attributes of the assets acquired and liabilities issued, derivative instruments such as interest rate swaps, caps, swaptions and futures are utilized to change the interest rate characteristics of existing assets and liabilities to ensure the relationship is maintained within specified ranges and to reduce exposure to rising or falling interest rates. Fixed income index total return swaps are used to offset valuation losses in the portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Company’s fixed income portfolio. Futures and options are used for hedging the equity exposure contained in the Company’s equity indexed life and annuity product contracts that offer equity returns to contractholders. In addition, the Company uses equity index total return swaps, options and futures to offset valuation losses in the equity portfolio during periods of declining equity market values. Foreign currency swaps and forwards are primarily used to reduce the foreign currency risk associated with holding foreign currency denominated investments. The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income. The Company’s primary embedded derivatives are equity options in life and annuity product contracts, which provide returns linked to equity indices to contractholders. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. The Company designates certain investment risk transfer reinsurance agreements as fair value hedges when the hedging instrument is highly effective in offsetting the risk of changes in the fair value of the hedged item. The fair value of the hedged liability is reported in contractholder funds in the Consolidated Statements of Financial Position. The impact from results of the fair value hedge is reported in interest credited to contractholder funds in the Consolidated Statements of Operations and Comprehensive Income. The Company designates certain of its foreign currency swap contracts as cash flow hedges when the hedging instrument is highly effective in offsetting the exposure of variations in cash flows for the hedged risk that could affect net income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged item affects net income. The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Consolidated Statements of Financial Position. For those derivatives which qualify and have been designated as fair value accounting hedges, net income includes the changes in the fair value of both the derivative instrument and the hedged risk. For cash flow hedges, gains and losses are amortized from AOCI and are reported in net income in the same period the forecasted transactions being hedged impact net income. Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. Fair value hedges The Company had one derivative designated as a fair value hedge and had no foreign currency contracts designated as fair value hedges during 2020, 2019 and 2018. Cash flow hedges The Company had no derivatives designated as cash flow hedges during 2020 and 2019 and one foreign currency contract designated as a cash flow hedge during 2018. The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2020. ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional Number Fair Gross Gross Asset derivatives Derivatives designated as fair value accounting hedging instruments Other Other assets $ 3 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments 13 n/a — — — Futures Other assets n/a 312 — — — Equity and index contracts Options Other investments n/a 2,831 184 184 — Futures Other assets n/a 46 — — — Total return index contracts Total return swap agreements - equity index Other investments 8 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other investments 113 n/a 1 4 (3) Embedded derivative financial instruments Other embedded derivative financial instruments Other investments 750 n/a — — — Credit default contracts Credit default swaps - buying protection Other investments 17 n/a (1) — (1) Credit default swaps - selling protection Other investments 4 n/a — — — Subtotal 905 3,189 185 189 (4) Total asset derivatives $ 908 3,189 $ 185 $ 189 $ (4) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 19 n/a $ — $ — $ — Futures Other liabilities & accrued expenses n/a 25 — — — Equity and index contracts Options Other liabilities & accrued expenses n/a 2,712 (110) — (110) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 117 n/a (4) 1 (5) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 128 n/a (18) — (18) Guaranteed withdrawal benefits Contractholder funds 190 n/a (15) — (15) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,785 n/a (483) — (483) Credit default contracts Credit default swaps - selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 2,240 2,737 (630) $ 1 $ (631) Total derivatives $ 3,148 5,926 $ (445) _________________________________________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2019. ($ in millions, except number of contracts) Volume Balance sheet location Notional Number Fair Gross Gross Asset derivatives Derivatives designated as accounting hedging instruments Other Other assets $ 2 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other assets n/a 476 — — — Equity and index contracts Options Other investments n/a 2,981 124 124 — Futures Other assets n/a 27 — — — Total return index contracts Total return swap agreements - fixed income Other investments 7 n/a — — — Credit default contracts Credit default swaps - buying protection Other investments 1 n/a — — — Subtotal 8 3,484 124 124 — Total asset derivatives $ 10 3,484 $ 124 $ 124 $ — Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 34 n/a $ — $ — $ — Futures Other liabilities & accrued expenses n/a 263 — — — Equity and index contracts Options Other liabilities & accrued expenses n/a 2,844 (60) — (60) Futures Other liabilities & accrued expenses n/a 1 — — Total return index contracts Total return swap agreements - fixed income Other liabilities & accrued expenses 10 n/a — — — Total return swap agreements - equity Other liabilities & accrued expenses 14 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 242 n/a 6 9 (3) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 161 n/a (18) — (18) Guaranteed withdrawal benefits Contractholder funds 205 n/a (14) — (14) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,678 n/a (395) — (395) Credit default contracts Credit default swaps - buying protection Other liabilities & accrued expenses 26 n/a (2) — (2) Credit default swaps - selling protection Other liabilities & accrued expenses 5 n/a — — — Total liability derivatives 2,375 3,108 (482) $ 10 $ (492) Total derivatives $ 2,385 6,592 $ (358) The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross Counter- Cash Net Securities Net December 31, 2020 Asset derivatives $ 6 $ (5) $ (1) $ — $ — $ — Liability derivatives (9) 5 4 — — — December 31, 2019 Asset derivatives $ 10 $ (10) $ — $ — $ — $ — Liability derivatives (5) 10 (7) (2) — (2) The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships for the years ended December 31. ($ in millions) 2020 2019 2018 Gain recognized in OCI on derivatives during the period $ — $ — $ 1 Gain recognized in OCI on derivatives during the term of the hedging relationship — — — Gain reclassified from AOCI into income (net investment income) — — — Gain reclassified from AOCI into income (realized capital gains and losses) — — 3 The following tables present gains and losses from valuation and settlements reported on derivatives not designated as accounting hedging instruments in the Consolidated Statements of Operations and Comprehensive Income. ($ in millions) Realized capital gains and losses Contract Interest credited to contractholder funds Total gain (loss) recognized in net income on derivatives 2020 Interest rate contracts $ 4 $ — $ — $ 4 Equity and index contracts 6 — 20 26 Embedded derivative financial instruments — (1) (34) (35) Foreign currency contracts (7) — — (7) Credit default contracts 1 — — 1 Total return swaps - equity index 1 — — 1 Total $ 5 $ (1) $ (14) $ (10) 2019 Equity and index contracts $ 5 $ — $ 58 $ 63 Embedded derivative financial instruments — 7 (57) (50) Foreign currency contracts 3 — — 3 Credit default contracts (1) — — (1) Total return swaps - fixed income 1 — — 1 Total return swaps - equity index 3 — — 3 Total $ 11 $ 7 $ 1 $ 19 2018 Interest rate contracts $ 1 $ — $ — $ 1 Equity and index contracts (4) — (23) (27) Embedded derivative financial instruments — (5) 66 61 Foreign currency contracts 12 — — 12 Total return swaps - fixed income (1) — — (1) Total return swaps - equity index (1) — — (1) Total $ 7 $ (5) $ 43 $ 45 The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate. The Company uses MNAs for OTC derivative transactions that permit either party to net payments due for transactions and collateral is either pledged or obtained when certain predetermined exposure limits are exceeded. As of December 31, 2020, counterparties pledged $3 million in collateral to the Company, and the Company pledged $6 million in cash and securities to counterparties which includes $5 million of collateral posted under MNAs for contracts containing credit-risk contingent provisions that are in a liability position. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. The following table summarizes the counterparty credit exposure as of December 31 by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) 2020 2019 Rating (1) Number of counter-parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter-parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ 3 $ 94 $ 3 $ — 5 $ 296 $ 7 $ — Total 3 $ 94 $ 3 $ — 5 $ 296 $ 7 $ — _________________________ (1) Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of December 31, 2020, the Company pledged $6 million in the form of margin deposits. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions. Certain of the Company’s derivative instruments contain credit-risk-contingent cross-default provisions. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. The following summarizes the fair value of derivative instruments with credit-risk-contingent features that are in a gross liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) 2020 2019 Gross liability fair value of contracts containing credit-risk-contingent features $ 8 $ 4 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (3) (3) Collateral posted under MNAs for contracts containing credit-risk-contingent features (5) (1) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ — Credit derivatives - selling protection A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative. CDS typically have a five-year term. The following table show s the CDS notional amounts by credit rating and fair value of protection sold. ($ in millions) Notional amount AA A BBB BB and Total Fair December 31, 2020 Single name Corporate debt $ — $ — $ — $ 5 $ 5 $ — Total $ — $ — $ — $ 5 $ 5 $ — December 31, 2019 Single name Corporate debt $ — $ — $ — $ 5 $ 5 $ — Total $ — $ — $ — $ 5 $ 5 $ — In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement. With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed. With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names. CDX is utilized to take a position on multiple (generally 125) reference entities. Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities. If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement. In a physical settlement, a reference asset is delivered by the buyer of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset. When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset. The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored. Off-balance sheet financial instruments The contractual amounts of off-balance sheet financial instruments as of December 31 are as follows: ($ in millions) 2020 2019 Commitments to invest in limited partnership interests $ 918 $ 1,063 Private placement commitments — 16 Other loan commitments 75 118 In the preceding table, the contractual amounts represent the amount at risk if the contract is fully drawn upon, the counterparty defaults and the value of any underlying security becomes worthless. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet financial instruments with credit risk. Commitments to invest in limited partnership interests represent agreements to acquire new or additional participation in certain limited partnership investments. The Company enters into these agreements in the normal course of business. Because the investments in limited partnerships are not actively traded, it is not practical to estimate the fair value of these commitments. Private placement commitments represent commitments to purchase private placement debt and private equity securities at a future date. The Company enters into these agreements in the normal course of business. The fair value of the debt commitments generally cannot be estimated on the date the commitment is made as the terms and conditions of the underlying private placement securities are not yet final. Because the private equity securities are not actively traded, it is not practical to estimate fair value of the commitments. Other loan commitments are agreements to lend to a borrower provided there is no violation of any condition established in the contract. The Company enters into these agreements to commit to future loan fundings at predetermined interest rates. Unless unconditionally cancellable, the Company recognizes a credit loss allowance on such commitments. Commitments have either fixed or varying expiration dates or other termination clauses. The fair value of these commitments is insignificant. |
Reserve for Life-Contingent Con
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | 12 Months Ended |
Dec. 31, 2020 | |
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | |
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | Reserve for Life-Contingent Contract Benefits and Contractholder Funds As of December 31, the reserve for life-contingent contract benefits consists of the following: ($ in millions) 2020 2019 Immediate fixed annuities: Structured settlement annuities $ 7,407 $ 6,840 Other immediate fixed annuities 1,507 1,607 Traditional life insurance 2,650 2,552 Accident and health insurance 169 195 Other 67 78 Total reserve for life-contingent contract benefits $ 11,800 $ 11,272 The following table highlights the key assumptions generally used in calculating the reserve for life-contingent contract benefits. Product Mortality Interest rate Estimation method Structured settlement annuities Actual company experience with projected calendar year improvements 4.7% Present value of contractually specified future benefits and expenses Other immediate fixed annuities Actual company experience with projected calendar year improvements 4.7% Present value of expected future benefits and expenses Traditional life insurance Actual company experience plus loading Interest rate assumptions range from 2.5% to 11.3% Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims Accident and health insurance Actual company experience plus loading Interest rate assumptions range from 3.0% to 7.0% Unearned premium; additional contract reserves for mortality risk and unpaid claims Other: Variable annuity guaranteed minimum death benefits (1) Annuity 2012 mortality table with internal modifications Interest rate assumptions range from 1.4% to 5.8% Projected benefit ratio applied to cumulative assessments ______________________ (1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”). In the third quarter of 2020, the premium deficiency evaluation of the Company’s immediate annuities with life contingencies resulted in a premium deficiency reserve of $226 million. The long-term investment yield assumption was lowered, which resulted in the prior sufficiency changing to a deficiency. The deficiency was recognized as an increase in the reserve for life contingent contract benefits. The original assumptions used to establish reserves were updated to reflect current assumptions, and the primary changes included mortality expectations, where annuitants are living longer than originally anticipated, and long-term investment yields. In 2019, the Company’s reviews concluded that no premium deficiency adjustments were necessary. To the extent that unrealized gains on fixed income securities would result in a premium deficiency had those gains actually been realized, an insurance reserves adjustment is recorded for certain immediate annuities with life contingencies. This liability is included in the reserve for life-contingent contract benefits with respect to this unrealized deficiency. The offset to this liability is recorded as a reduction of the unrealized net capital gains included in AOCI. This liability was $496 million and $126 million as of December 31, 2020 and 2019, respectively. As of December 31, contractholder funds consist of the following: ($ in millions) 2020 2019 Interest-sensitive life insurance $ 7,794 $ 7,442 Investment contracts: Fixed annuities 8,163 8,811 Other investment contracts 524 458 Total contractholder funds $ 16,481 $ 16,711 The following table highlights the key contract provisions relating to contractholder funds. Product Interest rate Withdrawal/surrender charges Interest-sensitive life insurance Interest rates credited range from 0.0% to 9.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products Either a percentage of account balance or dollar amount grading off generally over 20 years Fixed annuities Interest rates credited range from 0.5% to 7.5% for immediate annuities; (8.0)% to 9.0%for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 5.0% for all other products Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 11.0% of fixed annuities are subject to market value adjustment for discretionary withdrawals Other investment contracts: Guaranteed minimum income, accumulation and withdrawal benefits on variable (1) and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities Interest rates used in establishing reserves range from 1.7% to 10.3% Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract ______________________ (1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. Contractholder funds activity for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Balance, beginning of year $ 16,711 $ 17,470 $ 18,592 Deposits 818 834 863 Interest credited 574 581 597 Benefits (733) (769) (810) Surrenders and partial withdrawals (649) (844) (1,095) Contract charges (643) (637) (645) Net transfers from separate accounts 5 11 7 Reinsurance assumed from AAC 256 — — Other adjustments 142 65 (39) Balance, end of year $ 16,481 $ 16,711 $ 17,470 The Company offered various guarantees to variable annuity contractholders. In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. Liabilities for variable contract guarantees related to death benefits are included in the reserve for life-contingent contract benefits and the liabilities related to the income, withdrawal and accumulation benefits are included in contractholder funds. All liabilities for variable contract guarantees are reported on a gross basis on the balance sheet with a corresponding reinsurance recoverable asset for those contracts subject to reinsurance. Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death, a specified contract anniversary date, partial withdrawal or annuitization, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. The account balances of variable annuity contracts’ separate accounts with guarantees included $2.94 billion and $2.66 billion of equity, fixed income and balanced mutual funds and $238 million and $252 million of money market mutual funds as of December 31, 2020 and 2019, respectively. The table below presents information regarding the Company’s variable annuity contracts with guarantees. The Company’s variable annuity contracts may offer more than one type of guarantee in each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts’ separate accounts with guarantees. ($ in millions) As of December 31, 2020 2019 In the event of death Separate account value $ 3,174 $ 2,908 Net amount at risk (1) $ 308 $ 373 Average attained age of contractholders 72 years 71 years At annuitization (includes income benefit guarantees) Separate account value $ 925 $ 848 Net amount at risk (2) $ 140 $ 173 Weighted average waiting period until annuitization options available None None For cumulative periodic withdrawals Separate account value $ 178 $ 190 Net amount at risk (3) $ 12 $ 13 Accumulation at specified dates Separate account value $ 93 $ 123 Net amount at risk (4) $ 11 $ 15 Weighted average waiting period until guarantee date 3 years 4 years ____________ (1) Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date. (2) Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance. (3) Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date. (4) Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance. The liability for death and income benefit guarantees is equal to a benefit ratio multiplied by the cumulative contract charges earned, plus accrued interest less contract excess guarantee benefit payments. The benefit ratio is calculated as the estimated present value of all expected contract excess guarantee benefits divided by the present value of all expected contract charges. The establishment of reserves for these guarantees requires the projection of future fund values, mortality, persistency and customer benefit utilization rates. These assumptions are periodically reviewed and updated. For guarantees related to death benefits, benefits represent the projected excess guaranteed minimum death benefit payments. For guarantees related to income benefits, benefits represent the present value of the minimum guaranteed annuitization benefits in excess of the projected account balance at the time of annuitization. Projected benefits and contract charges used in determining the liability for certain guarantees are developed using models and stochastic scenarios that are also used in the development of estimated expected gross profits. Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based on factors such as the extent of benefit to the potential annuitant, eligibility conditions and the annuitant’s attained age. The liability for guarantees is re-evaluated periodically, and adjustments are made to the liability balance through a charge or credit to contract benefits. Guarantees related to the majority of withdrawal and accumulation benefits are considered to be derivative financial instruments; therefore, the liability for these benefits is established based on its fair value. The following table summarizes the liabilities for guarantees. ($ in millions) Liability for guarantees related to death benefits and interest-sensitive life products Liability for guarantees related to income benefits Liability for guarantees related to accumulation and withdrawal benefits Total Balance, December 31, 2019 $ 292 $ 23 $ 103 $ 418 Less reinsurance recoverables 81 20 32 133 Net balance as of December 31, 2019 211 3 71 285 Incurred guarantee benefits 49 — 17 66 Paid guarantee benefits (2) — — (2) Reinsurance assumed from AAC 2 — — 2 Net change 49 — 17 66 Net balance as of December 31, 2020 260 3 88 351 Plus reinsurance recoverables 69 23 33 125 Balance, December 31, 2020 $ 329 $ 26 $ 121 $ 476 Balance, December 31, 2018 $ 307 $ 38 $ 98 $ 443 Less reinsurance recoverables 111 35 39 185 Net balance as of December 31, 2018 196 3 59 258 Incurred guarantee benefits 18 — 12 30 Paid guarantee benefits (3) — — (3) Net change 15 — 12 27 Net balance as of December 31, 2019 211 3 71 285 Plus reinsurance recoverables 81 20 32 133 Balance, December 31, 2019 $ 292 $ 23 $ 103 $ 418 The following table summarizes reserves included in total liability balance for guarantees by type of benefit as of December 31. ($ in millions) 2020 2019 2018 Variable annuity Death benefits $ 67 $ 78 $ 109 Income benefits 24 21 36 Accumulation benefits 18 18 25 Withdrawal benefits 15 14 14 Other guarantees 352 287 259 Total $ 476 $ 418 $ 443 |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | ReinsuranceThe Company reinsures certain of its risks to other insurers primarily under yearly renewable term, coinsurance and modified coinsurance agreements. These agreements result in a passing of the agreed-upon percentage of risk to the reinsurer in exchange for negotiated reinsurance premium payments. Modified coinsurance is similar to coinsurance, except that the cash and investments that support the liability for contract benefits are not transferred to the assuming company and settlements are made on a net basis between the companies. For certain term life insurance policies issued prior to October 2009, the Company ceded up to 90% of the mortality risk depending on the year of policy issuance under coinsurance agreements to a pool of thirteen unaffiliated reinsurers. Effective October 2009, mortality risk on term business is ceded under yearly renewable term agreements under which the Company cedes mortality in excess of its retention, which is consistent with how the Company generally reinsures its permanent life insurance business. The following table summarizes those retention limits by period of policy issuance. Period Retention limits April 2015 through current Single life: $2 million per life Joint life: no longer offered April 2011 through March 2015 Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria July 2007 through March 2011 $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria September 1998 through June 2007 $2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met August 1998 and prior Up to $1 million per life In addition, the Company has used reinsurance to effect the disposition of certain blocks of business. The Company had reinsurance recoverables of $1.28 billion and $1.29 billion as of December 31, 2020 and 2019, respectively, due from Prudential related to the disposal of substantially all of its variable annuity business that was effected through reinsurance agreements. The amounts ceded to Prudential for t he years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Premiums and contract charges $ 64 $ 65 $ 72 Contract benefits 46 (4) 87 Interest credited to contractholder funds 20 19 20 Operating costs and expenses 12 12 14 As of December 31, 2020 and 2019, the Company had reinsurance recoverables of $99 million and $112 million, respectively, due from subsidiaries of Citigroup (Triton Insurance and American Health and Life Insurance) and Scottish Re (U.S.), Inc. in connection with the disposition of substantially all of the direct response distribution business in 2003. As of December 31, 2020 and 2019, the Company had $66 million and $73 million, of reinsurance recoverables related to Scottish Re (U.S.), Inc. On December 14, 2018, the Delaware Insurance Commissioner placed Scottish Re (U.S.), Inc. under regulatory supervision. On March 6, 2019, the Chancery Court of the State of Delaware entered a Rehabilitation and Injunction Order (the “Rehabilitation Order”) in response to a petition filed by the Insurance Commissioner (the “Petition”). The Company joined in a joint motion filed on behalf of several affected parties asking the court to allow a specified amount of offsetting claim payments and losses against premiums remitted to Scottish Re (U.S.), Inc. The Company also filed a separate motion related to the reimbursement of claim payments where Scottish Re (U.S.), Inc. is also acting as administrator. The Court has not yet ruled on either of these motions. In the interim, the Company and several other affected parties have been permitted to exercise certain setoff rights while the parties address any potential disputes. On June 30, 2020, pursuant to the Petition, Scottish Re (U.S.), Inc. submitted a proposed Plan of Rehabilitation (“Plan”) for consideration by the Court. On November 2, 2020, the Court issued a Third Amended Order to Show Cause scheduling a hearing on the Petition and Plan for May 25, 2021. The Company continues to monitor Scottish Re (U.S.), Inc. for future developments and will reevaluate its allowance for expected credit losses as new information becomes available. The Company is the assuming reinsurer for Lincoln Benefit Life Company’s (“LBL’s”) life insurance business sold through the Allstate agency channel and LBL’s payout annuity business in force prior to the sale of LBL on April 1, 2014. Under the terms of the reinsurance agreement, the Company is required to have a trust with assets greater than or equal to the statutory reserves ceded by LBL to the Company, measured on a monthly basis. As of December 31, 2020, the trust held $6.29 billion of investments, which are reported in the Consolidated Statement of Financial Position. ALIC and its subsidiary ALNY are parties to a reinsurance treaty through which ALNY cedes reinvestment related risk on its structured settlement annuities to ALIC. The reinsurance treaty is eliminated in consolidation. In 2019, ALIC established a trust for the benefit of ALNY and will maintain it with assets equal to or greater than ALNY’s statutory-basis cession. As of December 31, 2020, the trust held $1.56 billion of investments, which are reported in the Consolidated Statement of Financial Position. As of December 31, 2020, the gross life insurance in force was $435.85 billion of which $63.70 billion was ceded to unaffiliated reinsurers. The effec ts of reinsurance on p remiums and contract charges for t he years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Direct $ 652 $ 748 $ 743 Assumed Affiliate 241 231 241 Non-affiliate 671 699 741 Ceded Affiliate (44) (49) (51) Non-affiliate (227) (270) (275) Premiums and contract charges, net of reinsurance $ 1,293 $ 1,359 $ 1,399 The effects of reinsurance on contract benefits for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Direct $ 1,238 $ 1,038 $ 1,062 Assumed Affiliate 157 137 149 Non-affiliate 510 493 484 Ceded Affiliate (37) (35) (35) Non-affiliate (139) (152) (214) Contract benefits, net of reinsurance $ 1,729 $ 1,481 $ 1,446 The effects of reinsurance on interest credited to contractholder funds for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Direct $ 452 $ 463 $ 533 Assumed Affiliate 9 8 8 Non-affiliate 162 154 104 Ceded Affiliate (18) (20) (20) Non-affiliate (26) (20) (24) Interest credited to contractholder funds, net of reinsurance $ 579 $ 585 $ 601 Reinsurance recoverables, net of allowance, as of December 31 are summarized in the following table. ($ in millions) 2020 2019 Annuities $ 1,282 $ 1,293 Life insurance 660 1,145 Other 47 52 Total $ 1,989 $ 2,490 As of December 31, 2020 and 2019, approximately 94% and 78%, respectively, of the Company’s reinsurance recoverables are due from companies rated A- or better by S&P. The following table shows the rollforward of the credit loss allowance for reinsurance recoverables for the year ended December 31. ($ in millions) 2020 Beginning balance $ (3) Cumulative effect of change in accounting principle (11) Increase in the provision for credit losses (1) Write-offs — Ending Balance $ (15) |
Deferred Policy Acquisition and
Deferred Policy Acquisition and Sales Inducement Costs | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Policy Acquisition and Sales Inducement Costs | |
Deferred Policy Acquisition and Sales Inducement Costs | Deferred Policy Acquisition and Sales Inducement Costs Deferred policy acquisition costs for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Balance, beginning of year $ 947 $ 1,232 $ 1,156 Acquisition costs deferred 51 55 78 Amortization charged to income (147) (180) (146) Effect of unrealized gains and losses (123) (160) 144 Reinsurance assumed from AAC 245 — — Balance, end of year $ 973 $ 947 $ 1,232 DSI activity, which primarily relates to fixed annuities and interest-sensitive life contracts, for the years ended December 31 was as follows: ($ in millions) 2020 2019 2018 Balance, beginning of year $ 27 $ 34 $ 36 Amortization charged to income (5) (5) (4) Effect of unrealized gains and losses 3 (2) 2 Balance, end of year $ 25 $ 27 $ 34 |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Guarantees [Abstract] | |
Guarantees and Contingent Liabilities | Guarantees and Contingent Liabilities Guaranty funds Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. Amounts assessed to each company are typically related to its proportion of business written in each state. The Company’s policy is to accrue assessments when the entity for which the insolvency relates has met its state of domicile’s statutory definition of insolvency and the amount of the loss is reasonably estimable. In most states, the definition is met with a declaration of financial insolvency by a court of competent jurisdiction. In certain states there must also be a final order of liquidation. Since most states allow a credit against premium or other state related taxes for assessments, an asset is recorded based on paid and accrued assessments for the amount the Company expects to recover on the respective state’s tax return and is realized over the period allocated by each state. As of both December 31, 2020 and 2019, the liability balance included in other liabilities and accrued expenses was $4 million. The related premium tax offsets included in other assets were $6 million as of both December 31, 2020 and 2019. Guarantees In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous transactions, including acquisitions and divestitures. The types of indemnifications typically provided include indemnifications for 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 maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations. The aggregate liability balance related to all guarantees was not material as of December 31, 2020. Regulation and compliance The Company is subject to extensive laws, regulations and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to impose additional regulations regarding agent and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the U.S. Department of Justice. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes ALIC and its subsidiaries (the “Allstate Life Group”) join with the Corporation (the “Allstate Group”) in the filing of a consolidated federal income tax return and are party to a federal income tax allocation agreement (the “Allstate Tax Sharing Agreement”). Under the Allstate Tax Sharing Agreement, the Allstate Life Group pays to or receives from the Corporation the amount, if any, by which the Allstate Group’s federal income tax liability is affected by virtue of inclusion of the Allstate Life Group in the consolidated federal income tax return. Effectively, this results in the Allstate Life Group’s annual income tax provision being computed, with adjustments, as if the Allstate Life Group filed a separate return. Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted through income tax expense as changes in tax laws or rates are enacted. The Internal Revenue Service (“IRS”) has completed its exam of the Allstate Group’s 2013 through 2016 federal income tax returns. The 2017 and 2018 audit cycle is expected to begin in the first quarter of 2021. Any adjustments that may result from IRS examinations of the Allstate Group’s tax returns are not expected to have a material effect on the consolidated financial statements. The Company recognizes tax positions in the consolidated financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the consolidated financial statements. The Company had $12 million, $14 million and $14 million liability for unrecognized tax benefits as of December 31, 2020, 2019 and 2018, respectively. The change in the liability for unrecognized tax benefits in 2020 related to a decrease for settlements. The $12 million increase in the liability for unrecognized tax benefits in 2018 related to the increase for tax positions taken in the current year. The Company believes that the unrecognized tax benefits balance will not materially change within the next twelve months. The components of the deferred income tax assets and liabilities as of December 31 are as fo llows: ($ in millions) 2020 2019 Deferred tax assets Deferred reinsurance gain $ 5 $ 6 Other assets 1 1 Total deferred tax assets 6 7 Deferred tax liabilities Unrealized net capital gains (320) (245) Life and annuity reserves (231) (253) Investments (181) (185) DAC (181) (169) Other liabilities (49) (49) Total deferred tax liabilities (962) (901) Net deferred tax liability $ (956) $ (894) Although realization is not assured, management believes it is more likely than not that the deferred tax assets will be realized based on the Company’s assessment that the deductions ultimately recognized for tax purposes will be fully utilized. The components of income tax expense for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Current $ 26 $ 76 $ 116 Deferred (19) 52 (99) Total income tax expense $ 7 $ 128 $ 17 The Company paid taxes of $30 million, $62 million and $30 million in 2020, 2019 and 2018, respectively. The Company had current income tax receivable of $35 million as of December 31, 2020 and current income tax payable of $29 million as of December 31, 2019. A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Statutory federal income tax rate - expense 21.0 % 21.0 % 21.0 % Tax credits (14.9) (1.9) (3.2) Adjustments to prior year tax liabilities (3.1) 0.2 (0.3) Dividends received deduction (1.9) (0.5) (0.7) State income taxes 3.4 0.5 1.5 Non-deductible expenses — 0.1 — Tax Legislation benefit — — (14.0) Other (0.1) — 0.1 Effective income tax rate - expense 4.4 % 19.4 % 4.4 % |
Capital Structure
Capital Structure | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Capital Structure | Capital Structure Debt outstanding All of the Company’s outstanding debt as of December 31, 2020 and 2019 relates to intercompany obligations. These obligations reflect notes due to related parties and are discussed in Note 4. The Company paid $7 million, $5 million and $5 million of interest on debt in 2020, 2019 and 2018, respectively. The Company had $85 million and $61 million of investment-related debt that is reported in other liabilities and accrued expenses as of December 31, 2020 and 2019, respectively. |
Statutory Financial Information
Statutory Financial Information and Dividend Limitations | 12 Months Ended |
Dec. 31, 2020 | |
Statutory Financial Information and Dividend Limitations | |
Statutory Financial Information and Dividend Limitations | Statutory Financial Information and Dividend Limitations ALIC and its insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis. ALIC and its insurance subsidiaries had a statutory net loss of $125 million in 2020 and statutory net income of $363 million and $410 million in 2019 and 2018, respectively. Statutory capital and surplus was $3.93 billion and $3.81 billion as of December 31, 2020 and 2019, respectively. Dividend Limitations The ability of ALIC to pay dividends is dependent on business conditions, income, cash requirements and other relevant factors. The payment of shareholder dividends by ALIC to AIC without the prior approval of the Illinois Department of Insurance (“IL DOI”) is limited to formula amounts based on net income and capital and surplus, determined in conformity with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. The Company did not pay dividends in 2020. The maximum amount of dividends ALIC will be able to pay without prior IL DOI approval at a given point in time during 2021 is $393 million. The payment of a dividend in excess of this amount requires 30 days advance written notice to the IL DOI. The dividend is deemed approved, unless the IL DOI disapproves it within the 30 day notice period. Additionally, any dividend must be paid out of unassigned surplus excluding unrealized appreciation from investments, which for ALIC totaled $864 million as of December 31, 2020, and cannot result in capital and surplus being less than the minimum amount required by law. ALIC may receive dividends from time to time from its insurance subsidiaries. The ability of these insurance subsidiaries to pay dividends is generally dependent on business conditions, income, cash requirements, and other relevant factors. Insurance subsidiaries cannot pay dividends to ALIC without prior DOI approval at any given point during 2021. ALIC did not receive dividends from its insurance subsidiaries during 2020 or 2019. Under state insurance laws, insurance companies are required to maintain paid up capital of not less than the minimum capital requirement applicable to the types of insurance they are authorized to write. Insurance companies are also subject to risk-based capital (“RBC”) requirements adopted by state insurance regulators. A company’s “authorized control level RBC” is calculated using various factors applied to certain financial balances and activity. Companies that do not maintain adjusted statutory capital and surplus at a level in excess of the company action level RBC, which is two times authorized control level RBC, are required to take specified actions. Company action level RBC is significantly in excess of the minimum capital requirements. Total adjusted statutory capital and surplus and authorized control level RBC of ALIC were $4.44 billion and $622 million, respectively, as of December 31, 2020. ALIC’s insurance subsidiaries are included as a component of ALIC’s total statutory capital and surplus. Intercompany transactions Notification and approval of intercompany lending activities is also required by the IL DOI when ALIC does not have unassigned surplus and for transactions that exceed a level that is based on a formula using statutory admitted assets and statutory surplus. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans Pension and other postretirement plans Defined benefit pension plans and other postretirement plans, sponsored by the Corporation, cover most full-time employees, certain part-time employees and employee-agents. Benefits under the pension plans are based upon the employee’s length of service and eligible annual compensation. The Corporation also provides a medical coverage subsidy for eligible employees hired before January 1, 2003, including their eligible dependents, when they retire. In September 2020, the Corporation announced it will eliminate the medical coverage subsidy effective January 1, 2021 for employees who are not eligible to retire as of December 31, 2020. The cost allocated to the Company for these plans was $2 million, $3 million and $2 million in 2020, 2019 and 2018, respectively. The Corporation has reserved the right to modify or terminate its benefit plans at any time and for any reason. Allstate 401(k) Savings Plan Employees of AIC are eligible to become members of the Allstate 401(k) Savings Plan (“Allstate Plan”). The Corporation’s contributions are based on the Corporation’s matching obligation. The cost allocated to the Company for the Allstate Plan was $4 million, $4 million and $5 million in 2020, 2019 and 2018, respectively. |
Other Comprehensive Income
Other Comprehensive Income | 12 Months Ended |
Dec. 31, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income The components of other comprehensive income (loss) on a pre-tax and after-tax basis for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Pre- Tax After- Pre- Tax After- Pre- Tax After- Unrealized net holding gains and losses arising during the period, net of related offsets $ 405 $ (85) $ 320 $ 878 $ (184) $ 694 $ (483) $ 101 $ (382) Less: reclassification adjustment of realized capital gains and losses 48 (10) 38 19 (4) 15 (35) 7 (28) Unrealized net capital gains and losses 357 (75) 282 859 (180) 679 (448) 94 (354) Unrealized foreign currency translation adjustments 13 (3) 10 (22) 5 (17) — — — Other comprehensive income (loss) $ 370 $ (78) $ 292 $ 837 $ (175) $ 662 $ (448) $ 94 $ (354) |
SCHEDULE I - SUMMARY OF INVESTM
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract] | |
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES | SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES DECEMBER 31, 2020 ($ in millions) Cost/ Fair Amount shown Type of investment Fixed maturities: Bonds: United States government, government agencies and authorities $ 1,060 $ 1,105 $ 1,105 States, municipalities and political subdivisions 1,650 2,007 2,007 Foreign governments 91 96 96 Public utilities 3,209 3,673 3,673 All other corporate bonds 15,078 16,583 16,583 Asset-backed securities 420 424 424 Mortgage-backed securities 14 19 19 Total fixed maturities 21,522 $ 23,907 23,907 Equity securities: Common stocks: Public utilities 16 $ 26 26 Banks, trusts and insurance companies 82 132 132 Industrial, miscellaneous and all other 985 1,348 1,348 Nonredeemable preferred stocks 24 30 30 Total equity securities 1,107 $ 1,536 1,536 Mortgage loans on real estate 3,359 $ 3,587 3,359 Real estate (none acquired in satisfaction of debt) 315 315 Policy loans 582 582 Derivative instruments 184 $ 184 184 Limited partnership interests 3,065 3,065 Other long-term investments 876 876 Short-term investments 974 $ 974 974 Total investments $ 31,984 $ 34,798 |
SCHEDULE IV - REINSURANCE
SCHEDULE IV - REINSURANCE | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] | |
SCHEDULE IV - REINSURANCE | SCHEDULE IV - REINSURANCE ($ in millions) Gross Ceded to other companies (1) Assumed Net Percentage Year ended December 31, 2020 Life insurance in force $ 99,351 $ 63,697 $ 336,500 $ 372,154 90.4 % Premiums and contract charges: Life insurance $ 618 $ 256 $ 844 $ 1,206 70.0 % Accident and health insurance 34 15 68 87 78.2 % Total premiums and contract charges $ 652 $ 271 $ 912 $ 1,293 70.5 % Year ended December 31, 2019 Life insurance in force $ 107,014 $ 75,159 $ 284,518 $ 316,373 89.9 % Premiums and contract charges: Life insurance $ 683 $ 302 $ 858 $ 1,239 69.2 % Accident and health insurance 65 17 72 120 60.0 % Total premiums and contract charges $ 748 $ 319 $ 930 $ 1,359 68.4 % Year ended December 31, 2018 Life insurance in force $ 113,202 $ 83,166 $ 301,316 $ 331,352 90.9 % Premiums and contract charges: Life insurance $ 679 $ 308 $ 906 $ 1,277 70.9 % Accident and health insurance 64 18 76 122 62.3 % Total premiums and contract charges $ 743 $ 326 $ 982 $ 1,399 70.2 % ______________________________ (1) No reinsurance or coinsurance income was netted against premium ceded in 2020, 2019 or 2018. |
SCHEDULE V - VALUATION ALLOWANC
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2020 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS | SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS ($ in millions) Additions Description Balance Cumulative effect of change in accounting principle (1) Charged Other Deductions Balance Year ended December 31, 2020 Allowance for credit losses on fixed income securities $ — $ — $ 3 $ — $ 2 $ 1 Allowance for credit losses on mortgage loans 3 33 37 1 15 59 Allowance for credit losses on bank loans — 16 4 — 4 16 Allowance for credit losses on agent loans 3 2 — — — 5 Allowance for credit losses on reinsurance recoverables 3 11 1 — — 15 Allowances for credit losses on other assets 7 — — — — 7 Allowance for credit losses on commitments to fund mortgage loans, bank loans and agent loans — 1 — — 1 — Year ended December 31, 2019 Allowance for reinsurance recoverables $ — $ 3 $ — $ — $ 3 Allowance for estimated losses on mortgage loans 3 — — — 3 Allowance for estimated losses on agent loans 2 1 — — 3 Year ended December 31, 2018 Allowance for estimated losses on mortgage loans $ 3 $ — $ — $ — $ 3 Allowance for estimated losses on agent loans 2 — — — 2 (1) Effective January 1, 2020, the Company adopted the measurement of credit losses on financial instruments accounting standard that primarily affected mortgage loans, bank loans and reinsurance recoverables. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements include the accounts of Allstate Life Insurance Company (“ALIC”) and its wholly owned subsidiaries (collectively referred to as the “Company”). ALIC is wholly owned by Allstate Insurance Company (“AIC”), which is wholly owned by Allstate Insurance Holdings, LLC, a wholly owned subsidiary of The Allstate Corporation (the “Corporation”). These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company operates as a single segment entity based on the manner in which the Company uses financial information to evaluate business performance and to determine the allocation of resources. |
Investments | Investments Fixed income securities include bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”). MBS includes residential and commercial mortgage-backed securities. Fixed income securities, which may be sold prior to their contractual maturity, are designated as available-for-sale (“AFS”) and are carried at fair value. The difference between amortized cost, net of credit loss allowances (“amortized cost, net”) and fair value, net of deferred income taxes and related deferred policy acquisition costs (“DAC”), deferred sales inducement costs (“DSI”) and reserves for life-contingent contract benefits, is reflected as a component of AOCI. The Company excludes accrued interest receivable from the amortized cost basis of its AFS fixed income securities. Cash received from calls and make-whole payments is reflected as a component of proceeds from sales and cash received from maturities and pay-downs is reflected as a component of investment collections within the Consolidated Statements of Cash Flows. Mortgage loans and loans reported in other investments (bank loans and agent loans) are carried at amortized cost, net, which represent the amount expected to be collected. The Company excludes accrued interest receivable from the amortized cost basis of its mortgage, bank and agent loans. Credit loss allowances are estimates of expected credit losses, established for loans upon origination or purchase, and are established considering all relevant information available, including past events, current conditions, and reasonable and supportable forecasts over the life of the loans. Loans are evaluated on a pooled basis when they share similar risk characteristics; otherwise, they are evaluated individually. Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Certain exchange traded and mutual funds have fixed income securities as their underlying investments. Equity securities are carried at fair value. Equity securities without readily determinable or estimable fair values are measured using the measurement alternative, which is cost less impairment, if any, and adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Investments in limited partnership interests are primarily accounted for in accordance with the equity method of accounting (“EMA”) and include interests in private equity funds, real estate funds and other funds. Investments in limited partnership interests purchased prior to January 1, 2018, where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies are accounted for at fair value primarily utilizing the net asset value (“NAV”) as a practical expedient to determine fair value. Short-term investments, including money market funds, commercial paper, U.S. Treasury bills and other short-term investments, are carried at fair value. Policy loans are carried at unpaid principal balances. Other investments primarily consist of bank loans, real estate, agent loans and derivatives. Bank loans are primarily senior secured corporate loans. Real estate is carried at cost less accumulated depreciation. Agent loans are loans issued to exclusive Allstate agents. Derivatives are carried at fair value. Investment income primarily consists of interest, dividends, income from limited partnership interests, rental income from real estate, and income from certain derivative transactions. Interest is recognized on an accrual basis using the effective yield method and dividends are recorded at the ex-dividend date. Interest income for ABS and MBS is determined considering estimated pay-downs, including prepayments, obtained from third-party data sources and internal estimates. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. For ABS and MBS of high credit quality with fixed interest rates, the effective yield is recalculated on a retrospective basis. For all others, the effective yield is generally recalculated on a prospective basis. Net investment income for AFS fixed income securities includes the impact of accreting the credit loss allowance for the time value of money. Accrual of income is suspended for fixed income securities when the timing and amount of cash flows expected to be received is not reasonably estimable. Accrual of income is suspended for mortgage loans, bank loans and agent loans that are in default or when full and timely collection of principal and interest payments is not probable. Accrued income receivable is monitored for recoverability and when not expected to be collected is written off through net investment income. Cash receipts on investments on nonaccrual status are generally recorded as a reduction of amortized cost. Income from limited partnership interests carried at fair value is recognized based upon the changes in fair value of the investee’s equity primarily determined using NAV. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ earnings. Income from EMA limited partnership interests is generally recognized on a three month delay due to the availability of the related financial statements from investees. Realized capital gains and losses include gains and losses on investment sales, changes in the credit loss allowances related to fixed income securities, mortgage loans, bank loans and agent loans, impairments, valuation changes of equity investments, including equity securities and certain limited partnerships where the underlying assets are predominately public equity securities, and periodic changes in fair value and settlements of certain derivatives including hedge ineffectiveness. Realized capital gains and losses on investment sales are determined on a specific identification basis and are net of credit losses already recognized through an allowance. |
Derivative and embedded derivative financial instruments | Derivative and embedded derivative financial instruments Derivative financial instruments include interest rate swaps, credit default swaps, futures (interest rate and equity), options (including swaptions), interest rate caps, warrants, foreign currency swaps, foreign currency forwards, total return swaps and certain investment risk transfer reinsurance agreements. Derivatives required to be separated from the host instrument and accounted for as derivative financial instruments (“subject to bifurcation”) are embedded in equity-indexed life and annuity contracts and reinsured variable annuity contracts. All derivatives are accounted for on a fair value basis and reported as other investments, other assets, other liabilities and accrued expenses or contractholder funds. Embedded derivative instruments subject to bifurcation are also accounted for on a fair value basis and are reported together with the host contract. The change in fair value of derivatives embedded in life and annuity product contracts and subject to bifurcation is reported in contract benefits or interest credited to contractholder funds. Cash flows from embedded derivatives subject to bifurcation and derivatives receiving hedge accounting are reported consistently with the host contracts and hedged risks, respectively, within the Consolidated Statements of Cash Flows. Cash flows from other derivatives are reported in cash flows from investing activities within the Consolidated Statements of Cash Flows. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. The hedged item may be either all or a specific portion of a recognized asset, liability or an unrecognized firm commitment attributable to a particular risk for fair value hedges. At the inception of the hedge, the Company formally documents the hedging relationship and risk management objective and strategy. The documentation identifies the hedging instrument, the hedged item, the nature of the risk being hedged and the methodology used to assess the effectiveness of the hedging instrument in offsetting the exposure to changes in the hedged item’s fair value attributable to the hedged risk. For a cash flow hedge, this documentation includes the exposure to changes in the variability in cash flows attributable to the hedged risk. The Company does not exclude any component of the change in fair value of the hedging instrument from the effectiveness assessment. At each reporting date, the Company confirms that the hedging instrument continues to be highly effective in offsetting the hedged risk. Fair value hedges The change in fair value of hedging instruments used in fair value hedges of investment assets or a portion thereof is reported in net investment income, together with the change in fair value of the hedged items. The change in fair value of hedging instruments used in fair value hedges of contractholder funds liabilities or a portion thereof is reported in interest credited to contractholder funds, together with the change in fair value of the hedged items. Accrued periodic settlements on swaps are reported together with the changes in fair value of the related swaps in net investment income or interest credited to contractholder funds. The amortized cost, net for fixed income securities, the carrying value for mortgage loans or the carrying value of a designated hedged liability is adjusted for the change in fair value of the hedged risk. Cash flow hedges For hedging instruments used in cash flow hedges, the changes in fair value of the derivatives are reported in AOCI. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged or forecasted transaction affects income. Accrued periodic settlements on derivatives used in cash flow hedges are reported in net investment income. The amount reported in AOCI for a hedged transaction is the cumulative gain or loss on the derivative instrument from inception of the hedge less gains or losses previously reclassified from AOCI into income. If the Company expects at any time that the loss reported in AOCI would lead to a net loss on the combination of the hedging instrument and the hedged transaction which may not be recoverable, a loss is recognized immediately in realized capital gains and losses. If an impairment loss is recognized on an asset or an additional obligation is incurred on a liability involved in a hedge transaction, any offsetting gain in AOCI is reclassified and reported together with the impairment loss or recognition of the obligation. Termination of hedge accounting If, subsequent to entering into a hedge transaction, the derivative becomes ineffective (including if the hedged item is sold or otherwise extinguished, the occurrence of a hedged forecasted transaction is no longer probable or the hedged asset has a credit loss), the Company may terminate the derivative position. The Company may also terminate derivative instruments or redesignate them as non-hedge as a result of other events or circumstances. If the derivative instrument is not terminated when a fair value hedge is no longer effective, the future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a fair value hedge is no longer effective, is redesignated as non-hedge or when the derivative has been terminated, the fair value gain or loss on the hedged asset, liability or portion thereof previously recognized in income while the hedge was in place and used to adjust the amortized cost, net of hedged fixed income securities or mortgage loans or carrying value of a hedged liability, is amortized over the remaining life of the hedged asset, liability or portion thereof, and reflected in net investment income or interest credited to contractholder funds beginning in the period that hedge accounting is no longer applied. When a derivative instrument used in a cash flow hedge of an existing asset or liability is no longer effective or is terminated, the gain or loss recognized on the derivative is reclassified from AOCI to income as the hedged risk impacts income. If the derivative instrument is not terminated when a cash flow hedge is no longer effective, future gains and losses recognized on the derivative are reported in realized capital gains and losses. When a derivative instrument used in a cash flow hedge of a forecasted transaction is terminated because it is probable the forecasted transaction will not occur, the gain or loss recognized on the derivative is immediately reclassified from AOCI to realized capital gains and losses in the period that hedge accounting is no longer applied. Non-hedge derivative financial instruments For derivatives for which hedge accounting is not applied, the income statement effects, including fair value gains and losses and accrued periodic settlements, are reported either in realized capital gains and losses or in a single line item together with the results of the associated asset or liability for which risks are being managed. |
Securities loaned | Securities loaned The Company’s business activities include securities lending transactions, which are used primarily to generate net investment income. The proceeds received in conjunction with securities lending transactions can be reinvested in short-term investments or fixed income securities. These transactions are short-term in nature, usually 30 days or less. The Company receives cash collateral for securities loaned in an amount generally equal to 102% and 105% of the fair value of domestic and foreign securities, respectively, and records the related obligations to return the collateral in other liabilities and accrued expenses. The carrying value of these obligations approximates fair value because of their relatively short-term nature. The Company monitors the market value of securities loaned on a daily basis and obtains additional collateral as necessary under the terms of the agreements to mitigate counterparty credit risk. The Company maintains the right and ability to repossess the securities loaned on short notice. |
Recognition of premium revenues and contract charges, and related benefits and interest credited | Recognition of premium revenues and contract charges, and related benefits and interest credited Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Voluntary accident and health insurance products are expected to remain in force for an extended period and therefore are primarily classified as long-duration contracts. Premiums from these products are recognized as revenue when due from policyholders, net of any credit loss allowance for uncollectible premiums. Benefits are reflected in contract benefits and recognized over the life of the policy in relation to premiums. Immediate annuities with life contingencies, including certain structured settlement annuities, provide benefits over a period that extends beyond the period during which premiums are collected. Premiums from these products are recognized as revenue when received at the inception of the contract. Benefits are recognized in relation to premiums with the establishment of a reserve. The change in reserve over time is recorded in contract benefits and primarily relates to accumulation at the discount rate and annuitant mortality. Profits from these policies come primarily from investment income, which is recognized over the life of the contract. Interest-sensitive life contracts, such as universal life and single premium life, are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and contract charges assessed against the contractholder account balance. Premiums from these contracts are reported as contractholder fund deposits. Contract charges consist of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender of the contract prior to contractually specified dates. These contract charges are recognized as revenue when assessed against the contractholder account balance. Contract benefits include life-contingent benefit payments in excess of the contractholder account balance. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed annuities, including market value adjusted annuities, equity-indexed annuities and immediate annuities without life contingencies, are considered investment contracts. Consideration received for such contracts is reported as contractholder fund deposits. Contract charges for investment contracts consist of fees assessed against the contractholder account balance for maintenance, administration and surrender of the contract prior to contractually specified dates, and are recognized when assessed against the contractholder account balance. Interest credited to contractholder funds represents interest accrued or paid on interest-sensitive life and investment contracts. Crediting rates for certain fixed annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions subject to contractually guaranteed minimum rates. Crediting rates for indexed life and annuities are generally based on a specified interest rate index or an equity index, such as the Standard & Poor’s 500 Index (“S&P 500”). Interest credited also includes amortization of DSI expenses. DSI is amortized into interest credited using the same method used to amortize DAC. Contract charges for variable life and variable annuity products consist of fees assessed against the contractholder account balances for contract maintenance, administration, mortality, expense and surrender of the contract prior to contractually specified dates. Contract benefits incurred for variable annuity products include guaranteed minimum death, income, withdrawal and accumulation benefits. Substantially all of the Company’s variable annuity business is ceded through reinsurance agreements and the contract charges and contract benefits related thereto are reported net of reinsurance ceded. |
Other revenue | Other revenue Other revenue represents gross dealer concessions received in connection with sales of non-proprietary products by Allstate exclusive agents and exclusive financial specialists. Other revenue is recognized when performance obligations are fulfilled. |
Deferred policy acquisition and sales inducement costs | Deferred policy acquisition and sales inducement costs Costs that are related directly to the successful acquisition of new or renewal life insurance policies and investment contracts are deferred and recorded as DAC. These costs are principally agent and broker remuneration and certain underwriting expenses. DSI costs, which are deferred and recorded as other assets, relate to sales inducements offered on sales to new customers, principally on fixed annuity and interest-sensitive life contracts. These sales inducements are primarily in the form of additional credits to the customer’s account balance or enhancements to interest credited for a specified period which are in excess of the rates currently being credited to similar contracts without sales inducements. All other acquisition costs are expensed as incurred and included in operating costs and expenses. Amortization of DAC is included in amortization of deferred policy acquisition costs and is described in more detail below. DSI is amortized into income using the same methodology and assumptions as DAC and is included in interest credited to contractholder funds. For traditional life and voluntary accident and health insurance, DAC is amortized over the premium paying period of the related policies in proportion to the estimated revenues on such business. Assumptions used in the amortization of DAC and reserve calculations are established at the time the policy is issued and are generally not revised during the life of the policy. Any deviations from projected business in force resulting from actual policy terminations differing from expected levels and any estimated premium deficiencies may result in a change to the rate of amortization in the period such events occur. Generally, the amortization periods for these policies approximates the estimated lives of the policies. The Company periodically reviews the recoverability of DAC using actual experience and current assumptions. Traditional life insurance products, immediate annuities with life contingencies, and voluntary accident and health insurance products are reviewed individually. If actual experience and current assumptions are adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required for any remaining deficiency. For interest-sensitive life insurance and fixed annuities, DAC and DSI are amortized in proportion to the incidence of the total present value of gross profits, which includes both actual historical gross profits (“AGP”) and estimated future gross profits (“EGP”) expected to be earned over the estimated lives of the contracts. The amortization is net of interest on the prior period DAC balance using rates established at the inception of the contracts. Actual amortization periods generally range from 15-30 years; however, incorporating estimates of the rate of customer surrenders, partial withdrawals and deaths generally results in the majority of the DAC being amortized during the surrender charge period, which is typically 10-20 years for interest-sensitive life and 5-10 years for fixed annuities. The rate of DAC and DSI amortization is reestimated and adjusted by a cumulative charge or credit to income when there is a difference between the incidence of actual versus expected gross profits in a reporting period or when there is a change in total EGP. When DAC or DSI amortization or a component of gross profits for a quarterly period is potentially negative (which would result in an increase of the DAC or DSI balance) as a result of negative AGP, the specific facts and circumstances surrounding the potential negative amortization are considered to determine whether it is appropriate for recognition in the consolidated financial statements. Negative amortization is only recorded when the increased DAC or DSI balance is determined to be recoverable based on facts and circumstances. Recapitalization of DAC and DSI is limited to the originally deferred costs plus interest. AGP and EGP primarily consist of the following components: contract charges for the cost of insurance less mortality costs and other benefits; investment income and realized capital gains and losses less interest credited; and surrender and other contract charges less maintenance expenses. The principal assumptions for determining the amount of EGP are mortality, persistency, expenses, investment returns, including capital gains and losses on assets supporting contract liabilities, interest crediting rates to contractholders, and the effects of any hedges. For products whose supporting investments are exposed to capital losses in excess of the Company’s expectations which may cause periodic AGP to become temporarily negative, EGP and AGP utilized in DAC and DSI amortization may be modified to exclude the excess capital losses. The Company performs quarterly reviews of DAC and DSI recoverability for interest-sensitive life and fixed annuity contracts using current assumptions. If a change in the amount of EGP is significant, it could result in the unamortized DAC or DSI not being recoverable, resulting in a charge which is included as a component of amortization of deferred policy acquisition costs or interest credited to contractholder funds, respectively. The DAC and DSI balances presented include adjustments to reflect the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized capital gains or losses in the respective product investment portfolios were actually realized. The adjustments are recorded net of tax in AOCI. DAC, DSI and deferred income taxes determined on unrealized capital gains and losses and reported in AOCI recognize the impact on shareholder’s equity consistently with the amounts that would be recognized in the income statement on realized capital gains and losses. Customers of the Company may exchange one insurance policy or investment contract for another offered by the Company, or make modifications to an existing investment or life contract issued by the Company. These transactions are identified as internal replacements for accounting purposes. Internal replacement transactions determined to result in replacement contracts that are substantially unchanged from the replaced contracts are accounted for as continuations of the replaced contracts. Unamortized DAC and DSI related to the replaced contracts continue to be deferred and amortized in connection with the replacement contracts. For interest-sensitive life and investment contracts, the EGP of the replacement contracts are treated as a revision to the EGP of the replaced contracts in the determination of amortization of DAC and DSI. For traditional life insurance policies, any changes to unamortized DAC that result from replacement contracts are treated as |
Reinsurance | Reinsurance In the normal course of business, the Company seeks to limit aggregate and single exposure to losses on large risks by purchasing reinsurance. The Company has also used reinsurance to effect the disposition of certain blocks of business. The amounts reported as reinsurance recoverables include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance reserves and contractholder funds that have not yet been paid. Reinsurance recoverables on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance reserves are reported gross of reinsurance recoverables. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company evaluates reinsurer counterparty credit risk and records reinsurance recoverables net of credit loss allowances. The Company assesses counterparty credit risk for individual reinsurers separately when more relevant or on a pooled basis when shared risk characteristics exist. The evaluation considers the credit quality of the reinsurer and the period over which the recoverable balances are expected to be collected. The Company considers factors including past events, current conditions and reasonable and supportable forecasts in the development of the estimate of credit loss allowances. The Company uses a probability of default and loss given default model developed independently of the Company to estimate current expected credit losses. The model utilizes factors including historical industry factors based on the probability of liquidation, and incorporates current loss given default factors reflective of the industry. The Company monitors the credit ratings of reinsurer counterparties and evaluates the circumstances surrounding credit rating changes as inputs into its credit loss assessments. Uncollectible reinsurance recoverable balances are written off against the allowances when there is no reasonable expectation of recovery. The changes in the allowance are reported in contract benefits. |
Income taxes | Income taxes Income taxes are accounted for using the asset and liability method under which deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are insurance reserves, investments (including unrealized capital gains and losses) and DAC. A deferred tax asset valuation allowance is established when it is more likely than not such assets will not be realized. The Company recognizes interest expense related to income tax matters in income tax expense and penalties in operating costs and expenses. |
Reserve for life-contingent contract benefits | Reserve for life-contingent contract benefits The reserve for life-contingent contract benefits payable under insurance policies, including traditional life insurance, life-contingent immediate annuities and voluntary accident and health insurance products, is computed on the basis of long-term actuarial assumptions of future investment yields, mortality, morbidity, policy terminations and expenses. These assumptions, which for traditional life insurance are applied using the net level premium method, include provisions for adverse deviation and generally vary by characteristics such as type of coverage, year of issue and policy duration. The assumptions are established at the time the policy is issued and are generally not changed during the life of the policy. The Company periodically reviews the adequacy of reserves using actual experience and current assumptions. If actual experience and current assumptions are adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required for any remaining deficiency. Traditional life insurance products, immediate annuities with life contingencies, and voluntary accident and health insurance are reviewed individually. The Company also reviews these policies for circumstances where projected profits would be recognized in early years followed by projected losses in later years. If this circumstance exists, the Company will accrue a liability, during the period of profits, to offset the losses at such time as the future losses are expected to commence using a method updated prospectively over time. To the extent that |
Contractholder funds | Contractholder funds Contractholder funds represent interest-bearing liabilities arising from the sale of products such as interest-sensitive life insurance and fixed annuities. Contractholder funds primarily comprise cumulative deposits received and interest credited to the contractholder less cumulative contract benefits, surrenders, withdrawals and contract charges for mortality or administrative expenses. Contractholder funds also include reserves for secondary guarantees on interest-sensitive life insurance and certain fixed annuity contracts and reserves for certain guarantees on reinsured variable annuity contracts. |
Separate accounts | Separate accounts Separate accounts assets are carried at fair value. The assets of the separate accounts are legally segregated and available only to settle separate accounts contract obligations. Separate accounts liabilities represent the contractholders’ claims to the related assets and are carried at an amount equal to the separate accounts assets. Investment income and realized capital gains and losses of the separate accounts accrue directly to the contractholders and therefore are not included in the Company’s Consolidated Statements of Operations and Comprehensive Income. Deposits to and surrenders and withdrawals from the separate accounts are reflected in separate accounts liabilities and are not included in consolidated cash flows. Absent any contract provision wherein the Company provides a guarantee, variable annuity and variable life insurance contractholders bear the investment risk that the separate accounts’ funds may not meet their stated investment objectives. Substantially all of the Company’s variable annuity business was reinsured beginning in 2006. |
Measurement of credit losses | Measurement of credit losses The Company carries an allowance for expected credit losses for all financial assets measured at amortized cost on the Consolidated Statements of Financial Position. The Company considers past events, current conditions and reasonable and supportable forecasts in estimating an allowance for credit losses. The Company also carries a credit loss allowance for fixed income securities where applicable and, when amortized cost is reported, it is net of credit loss allowances. For additional information, refer to the Investments or Reinsurance topics of this section. The Company also estimates a credit loss allowance for commitments to fund mortgage loans, bank loans and agent loans unless they are unconditionally cancellable by the Company. The related allowance is reported in other liabilities and accrued expenses. |
Off-balance sheet financial instruments | Off-balance sheet financial instruments Commitments to invest, commitments to purchase private placement securities, commitments to fund loans, financial guarantees and credit guarantees have off-balance sheet risk because their contractual amounts are not recorded in the Company’s Consolidated Statements of Financial Position (see Note 7 and Note 11). |
Consolidation of variable interest entities | Consolidation of variable interest entities (“VIEs”) The Company consolidates VIEs when it is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. |
Adopted accounting standard and Pending accounting standard | Adopted accounting standard Measurement of Credit Losses on Financial Instruments Effective January 1, 2020 the Company adopted new Financial Accounting Standards Board (“FASB”) guidance related to the measurement of credit losses on financial instruments that primarily affected mortgage loans, bank loans and reinsurance recoverables. Upon adoption of the guidance, the Company recorded a total allowance for expected credit losses of $79 million, pre-tax. After consideration of existing valuation allowances maintained prior to adopting the new guidance, the Company increased its valuation allowances for credit losses to conform to the new requirements which resulted in recognizing a cumulative effect decrease in retained income of $49 million, after-tax, at the date of adoption. The measurement of credit losses for AFS fixed income securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the credit loss adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. Previously these credit loss adjustments were recorded as other-than-temporary impairments and were not reversed once recorded. Pending accounting standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued guidance revising the accounting for certain long-duration insurance contracts. The new guidance introduces material changes to the measurement of the Company’s reserves for traditional life, life-contingent immediate annuities and certain voluntary accident and health insurance products. Under the new guidance, measurement assumptions, including those for mortality, morbidity and policy terminations, will be required to be reviewed and updated at least annually. The effect of updating measurement assumptions other than the discount rate are required to be measured on a retrospective basis and reported in net income. In addition, reserves under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield that is updated through other comprehensive income at each reporting date. Current GAAP requires the measurement of reserves to utilize assumptions set at policy issuance unless updated current assumptions indicate that recorded reserves are deficient. The new guidance also requires DAC and other capitalized balances currently amortized in proportion to premiums or gross profits to be amortized on a constant level basis over the expected term for all long-duration insurance contracts. DAC will not be subject to loss recognition testing but will be reduced when actual lapse experience exceeds expected experience. The new guidance will no longer require adjustments to DAC and DSI related to unrealized gains and losses on investment securities supporting the related business. All market risk benefit product features will be measured at fair value with changes in fair value recorded in net income with the exception of changes in the fair value attributable to changes in the reporting entity’s own credit risk, which are required to be recognized in OCI. Substantially all of the Company’s market risk benefits relate to variable annuities that are reinsured, and therefore these impacts are not expected to be material to the Company. The new guidance is effective for financial statements issued for reporting periods beginning after December 15, 2022 and restatement of prior periods presented is required. Early adoption is permitted and if elected, restatement of only one prior period is required. The new guidance will be applied to affected contracts and DAC on the basis of existing carrying amounts at the earliest period presented or retrospectively using actual historical experience as of contract inception. The new guidance for market risk benefits is required to be adopted retrospectively. The Company is evaluating the anticipated impacts of applying the new guidance to both retained income and AOCI. The requirements of the new guidance represent a material change from existing GAAP, however, the underlying economics of the business and related cash flows are unchanged. The Company anticipates the financial statement impact of adopting the new guidance to be material, largely attributed to the impact of transitioning to a discount rate based on an upper-medium grade fixed income investment yield. The Company expects the most significant impacts will occur in the run-off annuity business. The revised accounting for DAC will be applied prospectively using the new model and any DAC effects existing in AOCI as a result of applying existing GAAP at the date of adoption will be eliminated. Simplifications to the Accounting for Income Taxes In December 2019, the FASB issued amendments to simplify the accounting for income taxes. The amendments eliminate certain exceptions in the existing guidance including those related to intraperiod tax allocation and deferred tax liability recognition when a subsidiary meets the criteria to apply the equity method of accounting. The amendments require recognition of the effect of an enacted change in tax laws or rates in the period that includes the enactment date, provide an option to not |
Fair value measurement | 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. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third-party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy: (1) Specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. (2) Quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including mortgage loans, bank loans, agent loans and policy loans, and these are only included in the fair value hierarchy disclosure when the individual investment is reported at fair value. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant inputs and valuation techniques for Level 2 and Level 3 assets and liabilities measured at fair value on a recurring basis Level 2 measurements • Fixed income securities: U.S. government and agencies, municipal, corporate - public and foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Privately placed are valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Corporate - privately placed also includes redeemable preferred stock that are valued using quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. ABS and MBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Certain ABS are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. ABS and residential MBS include prepayment speeds as a primary input for valuation. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third-party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Corporate - public and privately placed, ABS and MBS: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs for corporate fixed income securities include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Other investments: Certain OTC derivatives, such as interest rate caps and certain credit default swaps, are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. |
General (Tables)
General (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
General | |
Summary of premiums and contract charges by product | The following table summarizes premiums and contract charges by product. ($ in millions) 2020 2019 2018 Premiums Traditional life insurance $ 531 $ 557 $ 582 Accident and health insurance 87 120 122 Total premiums 618 677 704 Contract charges Interest-sensitive life insurance 665 669 680 Fixed annuities 10 13 15 Total contract charges 675 682 695 Total premiums and contract charges $ 1,293 $ 1,359 $ 1,399 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of allowance for credit loss | The Company’s allowance for credit losses is presented in the following table. ($ in millions) December 31, 2020 January 1, 2020 Fixed income securities $ 1 $ — Mortgage loans 59 36 Other investments Bank loans 16 16 Agent loans 5 5 Investments 81 57 Reinsurance recoverables 15 14 Other assets 7 7 Assets 103 78 Commitments to fund mortgage loans, bank loans and agent loans — 1 Liabilities — 1 Total $ 103 $ 79 Rollforward of credit loss allowance for fixed income securities for the year ended December 31, 2020 is as follows: ($ in millions) 2020 Beginning balance $ — Credit losses on securities for which credit losses not previously reported (3) Reduction of allowance related to sales 2 Write-offs — Ending balance (1) $ (1) ____________ (1) Allowance for fixed income securities as of December 31, 2020 comprised $1 million of ABS. The rollforward of credit loss allowance for bank loans for the years ended December 31 is a s follows: ($ in millions) 2020 Beginning balance $ — Cumulative effect of change in accounting principle (16) Net increases related to credit losses (4) Reduction of allowance related to sales 3 Write-offs 1 Ending balance $ (16) |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information from collateralized securities received | The accompanying cash flows are included in cash flows from operating activities in the Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Net change in proceeds managed Net change in fixed income securities $ — $ 28 $ 94 Net change in short-term investments 196 (33) (77) Operating cash flow provided (used) 196 (5) 17 Net change in cash — — — Net change in proceeds managed $ 196 $ (5) $ 17 Net change in liabilities Liabilities for collateral, beginning of year $ (530) $ (525) $ (542) Liabilities for collateral, end of year (334) (530) (525) Operating cash flow (used) provided $ (196) $ 5 $ (17) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of notes due to related parties | Investors in the notes are as follows: ($ in millions) December 31, 2020 December 31, 2019 Class A Notes, Due March 10, 2037 (1) Allstate New Jersey Insurance Company $ 101 $ 83 American Heritage Life Insurance Company 62 59 Allstate Assurance Company — 33 First Colonial Insurance Company 9 9 Allstate Fire & Casualty Insurance Company 10 7 Allstate Property and Casualty Insurance Company 9 6 Allstate Indemnity Company 4 4 Esurance Insurance Company 7 4 North Light Specialty Insurance Company 4 3 Allstate Vehicle and Property Insurance Company 2 2 Allstate New Jersey Property and Casualty Insurance Company 2 2 Esurance Property and Casualty Insurance Company 4 2 Subtotal - Class A 214 214 Class B Deferrable Notes, Due March 10, 2037 Allstate Life Insurance Company 214 214 Class C Deferrable Notes, Due March 10, 2037 Allstate Life Insurance Company 168 168 Subordinated Notes, Due March 10, 2037 Allstate Life Insurance Company 45 45 Total $ 641 $ 641 _______________ (1) As of December 31, 2020 and 2019, $74 million of these notes have an annual interest rate of 3.16% and $140 million have an annual interest rate of 3.36%. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments [Abstract] | |
Schedule of investments | The composition of the investment portfolio is presented as follows: As of December 31, ($ in millions) 2020 2019 Fixed income securities, at fair value $ 23,907 $ 21,725 Mortgage loans, net 3,359 3,988 Equity securities, at fair value 1,536 1,469 Limited partnership interests 3,065 3,250 Short-term investments, at fair value 974 1,191 Policy loans 582 557 Other, net 1,375 1,427 Total $ 34,798 $ 33,607 |
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value | The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows: ($ in millions) Amortized cost, net Gross unrealized Fair value Gains Losses December 31, 2020 U.S. government and agencies $ 1,060 $ 45 $ — $ 1,105 Municipal 1,650 357 — 2,007 Corporate 18,287 2,009 (40) 20,256 Foreign government 91 5 — 96 ABS 420 6 (2) 424 MBS 14 5 — 19 Total fixed income securities $ 21,522 $ 2,427 $ (42) $ 23,907 December 31, 2019 U.S. government and agencies $ 848 $ 34 $ — $ 882 Municipal 1,483 279 (7) 1,755 Corporate 17,301 1,170 (30) 18,441 Foreign government 142 7 — 149 ABS 316 4 (3) 317 MBS 127 55 (1) 181 Total fixed income securities $ 20,217 $ 1,549 $ (41) $ 21,725 |
Schedule for fixed income securities based on contractual maturities | The scheduled maturities for fixed income securities are as follows: ($ in millions) As of December 31, 2020 Amortized Fair Due in one year or less $ 1,625 $ 1,651 Due after one year through five years 6,974 7,423 Due after five years through ten years 8,255 9,197 Due after ten years 4,234 5,193 21,088 23,464 ABS and MBS 434 443 Total $ 21,522 $ 23,907 |
Schedule of net investment income | Net investment income for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Fixed income securities $ 894 $ 963 $ 991 Mortgage loans 184 190 188 Equity securities 19 29 39 Limited partnership interests 99 175 327 Short-term investments 6 31 21 Policy loans 31 34 31 Other 90 93 91 Investment income, before expense 1,323 1,515 1,688 Investment expense (81) (104) (103) Net investment income $ 1,242 $ 1,411 $ 1,585 |
Schedule of realized capital gains and losses by asset type | Realized capital gains (losses) by asset type for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Fixed income securities $ 54 $ 25 $ (40) Mortgage loans (45) — 2 Equity securities 225 276 (124) Limited partnership interests 38 43 (22) Derivatives 5 11 10 Other (11) (14) (1) Realized capital gains (losses) $ 266 $ 341 $ (175) |
Schedule of realized capital gains and losses by transaction type | Realized capital gains (losses) by transaction type for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Sales $ 42 $ 54 $ (27) Credit losses (1) (47) (21) (9) Valuation of equity investments (2) 266 297 (146) Valuation and settlements of derivative instruments 5 11 7 Realized capital gains (losses) $ 266 $ 341 $ (175) _______________ (1) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, prior period other-than-temporary impairment write-downs are now presented as credit losses. |
Schedule of valuation changes | Gross realized gains (losses) on sales of fixed income securities for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Gross realized gains $ 101 $ 65 $ 34 Gross realized losses (44) (35) (66) The following table presents the net pre-tax appreciation (decline) recognized in net income of equity securities and limited partnership interests carried at fair value that are still held as of December 31, 2020 and 2019, respectively. For the years ended December 31, ($ in millions) 2020 2019 Equity securities $ 229 $ 216 Limited partnership interests carried at fair value 100 57 Total $ 329 $ 273 |
Schedule of other-than-temporary impairment losses by asset type | Credit losses recognized in net income (1) for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Fixed income securities: Corporate $ — $ (2) $ (1) ABS (1) (1) (1) MBS (2) (2) (6) Total fixed income securities (3) (5) (8) Mortgage loans (37) — — Limited partnership interests (4) (2) — Other investments Bank loans (4) (13) — Agent loans — (1) (1) Total credit losses by asset type $ (48) $ (21) $ (9) Liabilities Commitments to fund commercial mortgage loans, bank loans and agent loans 1 — — Total $ (47) $ (21) $ (9) _______________ (1) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, realized capital losses previously reported as other-than-temporary impairment write-downs are now presented as credit losses. |
Schedule of unrealized net capital gains and losses included in accumulated other comprehensive income | Unrealized net capital gains and losses included in AOCI are as follows: ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2020 Gains Losses Fixed income securities $ 23,907 $ 2,427 $ (42) $ 2,385 Short-term investments 974 — — — EMA limited partnerships (1) (2) Unrealized net capital gains and losses, pre-tax 2,383 Amounts recognized for: Insurance reserves (2) (496) DAC and DSI (3) (363) Amounts recognized (859) Deferred income taxes (320) Unrealized net capital gains and losses, after-tax $ 1,204 December 31, 2019 Fixed income securities $ 21,725 $ 1,549 $ (41) $ 1,508 Short-term investments 1,191 — — — EMA limited partnerships (2) Unrealized net capital gains and losses, pre-tax 1,506 Amounts recognized for: Insurance reserves (126) DAC and DSI (213) Amounts recognized (339) Deferred income taxes (245) Unrealized net capital gains and losses, after-tax $ 922 ____________ (1) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuity). (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. |
Schedule of change in unrealized net capital gains and losses | The change in unrealized net capital gains and losses for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Fixed income securities $ 877 $ 1,165 $ (914) Short-term investments — — — Derivative instruments — — (2) EMA limited partnerships — (2) (1) Total 877 1,163 (917) Amounts recognized for: Insurance reserves (370) (126) 315 DAC and DSI (150) (178) 154 Amounts recognized (520) (304) 469 Deferred income taxes (75) (180) 94 Increase (decrease) in unrealized net capital gains and losses, after-tax $ 282 $ 679 $ (354) The following table shows the principal geographic distribution of commercial real estate represented in the Company’s mortgage loan portfolio. No other state represented more than 5% of the portfolio as of December 31. (% of mortgage loan portfolio carrying value) 2020 2019 Texas 20.1 % 16.8 % California 14.3 14.1 Illinois 6.9 8.0 Florida 6.3 6.7 North Carolina 5.6 4.9 New Jersey 3.9 6.0 The types of properties collateralizing the mortgage loans as of December 31 are as follows: (% of mortgage loan portfolio carrying value) 2020 2019 Apartment complex 34.1 % 35.6 % Office buildings 23.3 22.4 Retail 15.8 14.3 Warehouse 14.5 16.2 Other 12.3 11.5 Total 100.0 % 100.0 % The contractual maturities of the mortgage loan portfolio as of December 31, 2020 are a s fo llows: ($ in millions) Number Amortized cost, net Percent 2021 28 $ 254 7.6 % 2022 23 291 8.7 2023 41 485 14.4 2024 25 510 15.2 Thereafter 115 1,819 54.1 Total 232 $ 3,359 100.0 % |
Carrying value for limited partnership interests | The carrying value for limited partnership interest as of December 31 is as follows: 2020 2019 ($ in millions) EMA Fair Value Total EMA Fair Value Total Private equity $ 1,768 $ 721 $ 2,489 $ 2,029 $ 723 $ 2,752 Real estate 334 42 376 319 50 369 Other (1) 200 — 200 129 — 129 Total $ 2,302 $ 763 $ 3,065 $ 2,477 $ 773 $ 3,250 ____________ (1) Other consists of certain limited partnership interests where the underlying assets are predominately public equity and debt securities. |
Principal geographic distribution of municipal bond | The following table shows the principal geographic distribution of municipal bond issuers represented in the Company’s portfolio as of December 31. No other state represents more than 5% of the portfolio. (% of municipal bond portfolio carrying value) 2020 2019 Texas 16.8 % 17.8 % California 16.8 15.0 Oregon 11.3 12.6 New Jersey 7.4 6.7 Illinois 6.2 6.3 New York 5.3 7.0 |
Schedule of other investments | The following table summarizes other investments by asset type. As of December 31, ($ in millions) 2020 2019 Agent loans, net $ 631 $ 666 Real estate 315 292 Bank loans, net 245 344 Derivatives and other 184 125 Total $ 1,375 $ 1,427 |
Schedule of allowance for credit loss | The Company’s allowance for credit losses is presented in the following table. ($ in millions) December 31, 2020 January 1, 2020 Fixed income securities $ 1 $ — Mortgage loans 59 36 Other investments Bank loans 16 16 Agent loans 5 5 Investments 81 57 Reinsurance recoverables 15 14 Other assets 7 7 Assets 103 78 Commitments to fund mortgage loans, bank loans and agent loans — 1 Liabilities — 1 Total $ 103 $ 79 Rollforward of credit loss allowance for fixed income securities for the year ended December 31, 2020 is as follows: ($ in millions) 2020 Beginning balance $ — Credit losses on securities for which credit losses not previously reported (3) Reduction of allowance related to sales 2 Write-offs — Ending balance (1) $ (1) ____________ (1) Allowance for fixed income securities as of December 31, 2020 comprised $1 million of ABS. The rollforward of credit loss allowance for bank loans for the years ended December 31 is a s follows: ($ in millions) 2020 Beginning balance $ — Cumulative effect of change in accounting principle (16) Net increases related to credit losses (4) Reduction of allowance related to sales 3 Write-offs 1 Ending balance $ (16) |
Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time | The following table summarizes the gross unrealized losses and fair value of securities by the length of time that individual securities have been in a continuous unrealized loss position. ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number Fair Unrealized losses Number Fair Unrealized losses December 31, 2020 Fixed income securities U.S. government and agencies 10 $ 17 $ — — $ — $ — $ — Municipal 7 31 — — — — — Corporate 114 558 (19) 25 153 (21) (40) ABS 5 2 — 4 5 (2) (2) MBS 3 — — 10 — — — Total fixed income securities 139 $ 608 $ (19) 39 $ 158 $ (23) $ (42) Investment grade fixed income securities 69 $ 388 $ (5) 19 $ 73 $ (17) $ (22) Below investment grade fixed income securities 70 220 (14) 20 85 (6) (20) Total fixed income securities 139 $ 608 $ (19) 39 $ 158 $ (23) $ (42) December 31, 2019 Fixed income securities U.S. government and agencies 6 $ 74 $ — — $ — $ — $ — Municipal 4 22 (5) 1 14 (2) (7) Corporate 92 504 (8) 43 237 (22) (30) ABS 22 61 (1) 5 19 (2) (3) MBS 8 1 — 22 5 (1) (1) Total fixed income securities 132 $ 662 $ (14) 71 $ 275 $ (27) $ (41) Investment grade fixed income securities 85 $ 524 $ (3) 39 $ 152 $ (17) $ (20) Below investment grade fixed income securities 47 138 (11) 32 123 (10) (21) Total fixed income securities 132 $ 662 $ (14) 71 $ 275 $ (27) $ (41) The following table summarizes gross unrealized losses by unrealized loss position and credit quality as of December 31, 2020. ($ in millions) Investment Below investment grade Total Fixed income securities with unrealized loss position less than 20% of amortized cost, net (1) (2) $ (7) $ (12) $ (19) Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net (3) (4) (15) (8) (23) Total unrealized losses $ (22) $ (20) $ (42) _______________ (1) Below investment grade fixed income securities include $7 million that have been in an unrealized loss position for less than twelve months. (2) Related to securities with an unrealized loss position less than 20% of amortized cost, net, the degree of which suggests that these securities do not pose a high risk of having credit losses. (3) No below investment grade fixed income securities have been in an unrealized loss position for a period of twelve or more consecutive months. |
Summary of carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | The following table reflects mortgage loans amortized cost by debt service coverage ratio distribution and year of origination as of December 31. ($ in millions) 2020 2019 2015 and prior 2016 2017 2018 2019 Current Total Total Below 1.0 $ 15 $ — $ — $ — $ — $ — $ 15 $ 40 1.0 - 1.25 130 27 32 57 33 14 293 161 1.26 - 1.50 365 41 134 159 201 6 906 1,066 Above 1.50 963 350 240 279 327 45 2,204 2,724 Amortized cost before allowance $ 1,473 $ 418 $ 406 $ 495 $ 561 $ 65 $ 3,418 $ 3,991 Allowance (1) (59) (3) Amortized cost, net $ 3,359 $ 3,988 ____________ (1) Due to the adoption of the measurement of credit losses on financial instruments accounting standard, prior valuation allowance is now presented as an allowance for expected credit losses. |
Schedule of rollforward of the valuation allowance on impaired mortgage loans | The rollforward of credit loss allowance for mortgage loans for the years ended December 31 is a s follows: ($ in millions) 2020 Beginning balance $ (3) Cumulative effect of change in accounting principle (33) Net increases related to credit losses (37) Reduction of allowance related to sales 15 Loans transferred due to reinsurance agreement with AAC (1) Write-offs — Ending balance $ (59) |
Schedule of bank loans amortized cost by credit quality and year of origination | The bank loans amortized cost by credit rating and year of origination as of December 31 is as follows: ($ in millions) 2020 2015 and Prior 2016 2017 2018 2019 Current Total BBB $ — $ — $ 4 $ — $ — $ 2 $ 6 BB 10 — 1 16 11 5 43 B 5 8 42 37 23 35 150 CCC and below 3 8 15 12 18 6 62 Amortized cost before allowance $ 18 $ 16 $ 62 $ 65 $ 52 $ 48 $ 261 Allowance (16) Amortized cost, net $ 245 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of quantitative information about the significant unobservable inputs used in Level 3 fair value measurements | The following table summarizes the Company’s assets and liabilities measured at fair value as of December 31, 2020. ($ in millions) Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 784 $ 321 $ — $ 1,105 Municipal — 1,958 49 2,007 Corporate - public — 14,535 31 14,566 Corporate - privately placed — 5,622 68 5,690 Foreign government — 96 — 96 ABS — 419 5 424 MBS — 19 — 19 Total fixed income securities 784 22,970 153 23,907 Equity securities 1,408 14 114 1,536 Short-term investments 601 373 — 974 Other investments: Free-standing derivatives — 190 — $ (6) 184 Separate account assets 3,294 — — 3,294 Total recurring basis assets $ 6,087 $ 23,547 $ 267 $ (6) $ 29,895 % of total assets at fair value 20.3 % 78.8 % 0.9 % — % 100.0 % Investments reported at NAV 763 Total $ 30,658 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (516) $ (516) Other liabilities: Free-standing derivatives — (119) — $ 9 (110) Total recurring basis liabilities $ — $ (119) $ (516) $ 9 $ (626) % of total liabilities at fair value — % 19.0 % 82.4 % (1.4) % 100.0 % The following table s ummarizes the Company’s assets and liabilities measured at fair value as of December 31, 2019. ($ in millions) Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Counterparty and cash collateral netting Total Assets Fixed income securities: U.S. government and agencies $ 590 $ 292 $ — $ 882 Municipal — 1,715 40 1,755 Corporate - public — 12,777 25 12,802 Corporate - privately placed — 5,517 122 5,639 Foreign government — 149 — 149 ABS — 301 16 317 MBS — 176 5 181 Total fixed income securities 590 20,927 208 21,725 Equity securities 1,340 13 116 1,469 Short-term investments 493 698 — 1,191 Other investments: Free-standing derivatives — 134 — $ (10) 124 Separate account assets 3,009 — — 3,009 Total recurring basis assets $ 5,432 $ 21,772 $ 324 $ (10) $ 27,518 % of total assets at fair value 19.7 % 79.1 % 1.2 % — % 100 % Investments reported at NAV 773 Total $ 28,291 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (427) $ (427) Other liabilities: Free-standing derivatives — (65) — $ 3 (62) Total recurring basis liabilities $ — $ (65) $ (427) $ 3 $ (489) % of total liabilities at fair value — % 13.3 % 87.3 % (0.6) % 100 % The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. ($ in millions) Fair value Valuation Unobservable Range Weighted December 31, 2020 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (483) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.80 % December 31, 2019 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (395) Stochastic cash flow model Projected option cost 1.0 - 4.2% 2.57 % |
Schedule of rollforward of Level 3 assets and liabilities held at fair value on a recurring basis | The following table presents the rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2020. ($ in millions) Total gains (losses) Balance as of December 31, 2019 Net income OCI Transfers Transfers Purchases Sales Issues Settlements Balance as of December 31, 2020 Assets Fixed income securities: Municipal $ 40 $ 1 $ 2 $ 20 $ (11) $ — $ (1) $ — $ (2) $ 49 Corporate - public 25 — — — — 7 — — (1) 31 Corporate - privately placed 122 2 (7) 32 (32) 8 (55) — (2) 68 ABS 16 — — — — — (10) — (1) 5 MBS 5 1 (2) — — — (3) — (1) — Total fixed income securities 208 4 (7) 52 (43) 15 (69) — (7) 153 Equity securities 116 (3) — — — 9 (8) — — 114 Free-standing derivatives, net — — — — — — — — — — Total recurring Level 3 assets $ 324 $ 1 $ (7) $ 52 $ (43) $ 24 $ (77) $ — $ (7) $ 267 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (427) $ (24) $ — $ (54) $ — $ — $ — $ (34) $ 23 $ (516) Total recurring Level 3 liabilities $ (427) $ (24) $ — $ (54) $ — $ — $ — $ (34) $ 23 $ (516) The following table presents the total Level 3 gains (losses) included in net income for the year ended December 31, 2020. ($ in millions) Net investment income Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total Components of net income $ (8) $ 9 $ (1) $ (23) $ (23) T he following table p resents the rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2019. ($ in millions) Total gains (losses) Balance as of December 31, 2018 Net income OCI Transfers Transfers Purchases Sales Issues Settlements Balance as of December 31, 2019 Assets Fixed income securities: Municipal $ 39 $ — $ 4 $ — $ — $ — $ (1) $ — $ (2) $ 40 Corporate - public 33 — — 5 (38) 32 (2) — (5) 25 Corporate - privately placed 97 (1) 1 43 (1) 4 (13) — (8) 122 ABS 22 1 (1) — (30) 36 (6) — (6) 16 MBS — — (1) 6 — — — — — 5 Total fixed income securities 191 — 3 54 (69) 72 (22) — (21) 208 Equity securities 129 15 — — — 10 (38) — — 116 Free-standing derivatives, net 1 (1) — — — — — — — — Total recurring Level 3 assets $ 321 $ 14 $ 3 $ 54 $ (69) $ 82 $ (60) $ — $ (21) $ 324 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (223) $ (52) $ — $ (154) $ — $ — $ — $ (10) $ 12 $ (427) Total recurring Level 3 liabilities $ (223) $ (52) $ — $ (154) $ — $ — $ — $ (10) $ 12 $ (427) The following table presents the total Level 3 gains (losses) included in net income for the year ended December 31, 2019. ($ in millions) Net investment income Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total Components of net income $ (2) $ 16 $ 7 $ (59) $ (38) The following table presents the rollforward of Level 3 assets and liabilities held at fair value during the year ended December 31, 2018. ($ in millions) Total gains (losses) Balance as of December 31, 2017 Net income OCI Transfers Transfers Purchases Sales Issues Settlements Balance as of December 31, 2018 Assets Fixed income securities: Municipal $ 57 $ — $ (2) $ — $ (16) $ 2 $ (2) $ — $ — $ 39 Corporate - public 49 — (2) 3 (3) — (11) — (3) 33 Corporate - privately placed 220 (2) (2) 10 (101) 12 — — (40) 97 ABS 50 — — 12 (18) 20 (19) — (23) 22 Total fixed income securities 376 (2) (6) 25 (138) 34 (32) — (66) 191 Equity securities 90 16 — — — 30 (7) — — 129 Free-standing derivatives, net 1 — — — — — — — — 1 (1) Total recurring Level 3 assets $ 467 $ 14 $ (6) $ 25 $ (138) $ 64 $ (39) $ — $ (66) $ 321 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (284) $ 57 $ — $ — $ — $ — $ — $ (2) $ 6 $ (223) Total recurring Level 3 liabilities $ (284) $ 57 $ — $ — $ — $ — $ — $ (2) $ 6 $ (223) ____________________ (1) Comprises $1 million of assets. The following table presents the total Level 3 gains (losses) included in net income for the year ended December 31, 2018. ($ in millions) Net investment income Realized capital gains and losses Contract benefits Interest credited to contractholder funds Total Components of net income $ — $ 14 $ (5) $ 62 $ 71 |
Schedule of change in unrealized gains and losses included in net income for Level 3 assets and liabilities held | The table below provides valuation changes included in net income and OCI for Level 3 assets and liabilities held as of December 31. ($ in millions) 2020 2019 2018 Assets Fixed income securities: Municipal $ 1 $ 1 $ — Corporate - public — — — Corporate - privately placed 2 — — Total fixed income securities 3 1 — Equity securities (3) 2 16 Free-standing derivatives, net — (1) — Total recurring Level 3 assets $ — $ 2 $ 16 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (24) $ (52) $ 57 Total recurring Level 3 liabilities $ (24) $ (52) $ 57 Total included in net income $ (24) $ (50) $ 73 Components of net income Net investment income $ (8) $ (2) $ — Realized capital gains (losses) 8 4 16 Contract benefits (1) 7 (5) Interest credited to contractholder funds (23) (59) 62 Total included in net income $ (24) $ (50) $ 73 Assets Municipal $ 2 Corporate - public — Corporate - privately placed (7) Changes in unrealized net capital gains and losses reported in OCI (1) $ (5) ___________________ (1) Effective January 1, 2020, the Company adopted the fair value accounting standard that prospectively requires the disclosure of valuation changes reported in OCI. |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. ($ in millions) December 31, 2020 December 31, 2019 Financial assets Fair value level Amortized cost, net Fair Amortized cost, net Fair Mortgage loans Level 3 $ 3,359 $ 3,587 $ 3,988 $ 4,159 Bank loans Level 3 245 250 344 337 Agent loans Level 3 631 634 666 664 Financial liabilities Fair value level Carrying value (1) Fair Carrying value (1) Fair Contractholder funds on investment contracts Level 3 $ 7,764 $ 9,058 $ 8,403 $ 9,123 Liability for collateral Level 2 334 334 530 530 Notes due to related parties Level 3 214 225 214 215 ____________________ (1) Represents the amounts reported on the Consolidated Statements of Financial Position |
Derivative Financial Instrume_2
Derivative Financial Instruments and Off-balance sheet Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of volume and fair value positions of derivative instruments and reporting location in the condensed consolidated statement of financial position | The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2020. ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional Number Fair Gross Gross Asset derivatives Derivatives designated as fair value accounting hedging instruments Other Other assets $ 3 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments 13 n/a — — — Futures Other assets n/a 312 — — — Equity and index contracts Options Other investments n/a 2,831 184 184 — Futures Other assets n/a 46 — — — Total return index contracts Total return swap agreements - equity index Other investments 8 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other investments 113 n/a 1 4 (3) Embedded derivative financial instruments Other embedded derivative financial instruments Other investments 750 n/a — — — Credit default contracts Credit default swaps - buying protection Other investments 17 n/a (1) — (1) Credit default swaps - selling protection Other investments 4 n/a — — — Subtotal 905 3,189 185 189 (4) Total asset derivatives $ 908 3,189 $ 185 $ 189 $ (4) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 19 n/a $ — $ — $ — Futures Other liabilities & accrued expenses n/a 25 — — — Equity and index contracts Options Other liabilities & accrued expenses n/a 2,712 (110) — (110) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 117 n/a (4) 1 (5) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 128 n/a (18) — (18) Guaranteed withdrawal benefits Contractholder funds 190 n/a (15) — (15) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,785 n/a (483) — (483) Credit default contracts Credit default swaps - selling protection Other liabilities & accrued expenses 1 n/a — — — Total liability derivatives 2,240 2,737 (630) $ 1 $ (631) Total derivatives $ 3,148 5,926 $ (445) _________________________________________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2019. ($ in millions, except number of contracts) Volume Balance sheet location Notional Number Fair Gross Gross Asset derivatives Derivatives designated as accounting hedging instruments Other Other assets $ 2 n/a $ — $ — $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Futures Other assets n/a 476 — — — Equity and index contracts Options Other investments n/a 2,981 124 124 — Futures Other assets n/a 27 — — — Total return index contracts Total return swap agreements - fixed income Other investments 7 n/a — — — Credit default contracts Credit default swaps - buying protection Other investments 1 n/a — — — Subtotal 8 3,484 124 124 — Total asset derivatives $ 10 3,484 $ 124 $ 124 $ — Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 34 n/a $ — $ — $ — Futures Other liabilities & accrued expenses n/a 263 — — — Equity and index contracts Options Other liabilities & accrued expenses n/a 2,844 (60) — (60) Futures Other liabilities & accrued expenses n/a 1 — — Total return index contracts Total return swap agreements - fixed income Other liabilities & accrued expenses 10 n/a — — — Total return swap agreements - equity Other liabilities & accrued expenses 14 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 242 n/a 6 9 (3) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 161 n/a (18) — (18) Guaranteed withdrawal benefits Contractholder funds 205 n/a (14) — (14) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,678 n/a (395) — (395) Credit default contracts Credit default swaps - buying protection Other liabilities & accrued expenses 26 n/a (2) — (2) Credit default swaps - selling protection Other liabilities & accrued expenses 5 n/a — — — Total liability derivatives 2,375 3,108 (482) $ 10 $ (492) Total derivatives $ 2,385 6,592 $ (358) |
Schedule of gross and net amounts about the Company's OTC derivatives subject to enforceable master netting arrangements | The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross Counter- Cash Net Securities Net December 31, 2020 Asset derivatives $ 6 $ (5) $ (1) $ — $ — $ — Liability derivatives (9) 5 4 — — — December 31, 2019 Asset derivatives $ 10 $ (10) $ — $ — $ — $ — Liability derivatives (5) 10 (7) (2) — (2) |
Summary of impacts on operations and AOCI from foreign currency contracts, cash flow hedges | The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships for the years ended December 31. ($ in millions) 2020 2019 2018 Gain recognized in OCI on derivatives during the period $ — $ — $ 1 Gain recognized in OCI on derivatives during the term of the hedging relationship — — — Gain reclassified from AOCI into income (net investment income) — — — Gain reclassified from AOCI into income (realized capital gains and losses) — — 3 |
Schedule of gains and losses from valuation, settlements, and hedge ineffectiveness, fair value hedges and derivatives not designated as hedges | The following tables present gains and losses from valuation and settlements reported on derivatives not designated as accounting hedging instruments in the Consolidated Statements of Operations and Comprehensive Income. ($ in millions) Realized capital gains and losses Contract Interest credited to contractholder funds Total gain (loss) recognized in net income on derivatives 2020 Interest rate contracts $ 4 $ — $ — $ 4 Equity and index contracts 6 — 20 26 Embedded derivative financial instruments — (1) (34) (35) Foreign currency contracts (7) — — (7) Credit default contracts 1 — — 1 Total return swaps - equity index 1 — — 1 Total $ 5 $ (1) $ (14) $ (10) 2019 Equity and index contracts $ 5 $ — $ 58 $ 63 Embedded derivative financial instruments — 7 (57) (50) Foreign currency contracts 3 — — 3 Credit default contracts (1) — — (1) Total return swaps - fixed income 1 — — 1 Total return swaps - equity index 3 — — 3 Total $ 11 $ 7 $ 1 $ 19 2018 Interest rate contracts $ 1 $ — $ — $ 1 Equity and index contracts (4) — (23) (27) Embedded derivative financial instruments — (5) 66 61 Foreign currency contracts 12 — — 12 Total return swaps - fixed income (1) — — (1) Total return swaps - equity index (1) — — (1) Total $ 7 $ (5) $ 43 $ 45 |
Summary of counterparty credit exposure by counterparty credit rating | The following table summarizes the counterparty credit exposure as of December 31 by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) 2020 2019 Rating (1) Number of counter-parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter-parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) A+ 3 $ 94 $ 3 $ — 5 $ 296 $ 7 $ — Total 3 $ 94 $ 3 $ — 5 $ 296 $ 7 $ — _________________________ (1) Allstate uses the lower of S&P’s or Moody’s long-term debt issuer ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. |
Summary of derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability | The following summarizes the fair value of derivative instruments with credit-risk-contingent features that are in a gross liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) 2020 2019 Gross liability fair value of contracts containing credit-risk-contingent features $ 8 $ 4 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (3) (3) Collateral posted under MNAs for contracts containing credit-risk-contingent features (5) (1) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ — |
Schedule of CDS notional amounts by credit rating and fair value of protection sold | The following table show s the CDS notional amounts by credit rating and fair value of protection sold. ($ in millions) Notional amount AA A BBB BB and Total Fair December 31, 2020 Single name Corporate debt $ — $ — $ — $ 5 $ 5 $ — Total $ — $ — $ — $ 5 $ 5 $ — December 31, 2019 Single name Corporate debt $ — $ — $ — $ 5 $ 5 $ — Total $ — $ — $ — $ 5 $ 5 $ — |
Contractual amounts of off-balance-sheet financial instruments | The contractual amounts of off-balance sheet financial instruments as of December 31 are as follows: ($ in millions) 2020 2019 Commitments to invest in limited partnership interests $ 918 $ 1,063 Private placement commitments — 16 Other loan commitments 75 118 |
Reserve for Life-Contingent C_2
Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Reserve for Life-Contingent Contract Benefits and Contractholder Funds | |
Schedule of reserve for life-contingent contract benefits | As of December 31, the reserve for life-contingent contract benefits consists of the following: ($ in millions) 2020 2019 Immediate fixed annuities: Structured settlement annuities $ 7,407 $ 6,840 Other immediate fixed annuities 1,507 1,607 Traditional life insurance 2,650 2,552 Accident and health insurance 169 195 Other 67 78 Total reserve for life-contingent contract benefits $ 11,800 $ 11,272 |
Summary of key assumptions generally used in calculating the reserve for life-contingent contract benefits | The following table highlights the key assumptions generally used in calculating the reserve for life-contingent contract benefits. Product Mortality Interest rate Estimation method Structured settlement annuities Actual company experience with projected calendar year improvements 4.7% Present value of contractually specified future benefits and expenses Other immediate fixed annuities Actual company experience with projected calendar year improvements 4.7% Present value of expected future benefits and expenses Traditional life insurance Actual company experience plus loading Interest rate assumptions range from 2.5% to 11.3% Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims Accident and health insurance Actual company experience plus loading Interest rate assumptions range from 3.0% to 7.0% Unearned premium; additional contract reserves for mortality risk and unpaid claims Other: Variable annuity guaranteed minimum death benefits (1) Annuity 2012 mortality table with internal modifications Interest rate assumptions range from 1.4% to 5.8% Projected benefit ratio applied to cumulative assessments ______________________ |
Schedule of contractholder funds | As of December 31, contractholder funds consist of the following: ($ in millions) 2020 2019 Interest-sensitive life insurance $ 7,794 $ 7,442 Investment contracts: Fixed annuities 8,163 8,811 Other investment contracts 524 458 Total contractholder funds $ 16,481 $ 16,711 |
Schedule of key contract provisions relating to contractholder funds | The following table highlights the key contract provisions relating to contractholder funds. Product Interest rate Withdrawal/surrender charges Interest-sensitive life insurance Interest rates credited range from 0.0% to 9.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products Either a percentage of account balance or dollar amount grading off generally over 20 years Fixed annuities Interest rates credited range from 0.5% to 7.5% for immediate annuities; (8.0)% to 9.0%for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 5.0% for all other products Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 11.0% of fixed annuities are subject to market value adjustment for discretionary withdrawals Other investment contracts: Guaranteed minimum income, accumulation and withdrawal benefits on variable (1) and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities Interest rates used in establishing reserves range from 1.7% to 10.3% Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract ______________________ (1) In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential. |
Schedule of contractholder funds activity | Contractholder funds activity for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Balance, beginning of year $ 16,711 $ 17,470 $ 18,592 Deposits 818 834 863 Interest credited 574 581 597 Benefits (733) (769) (810) Surrenders and partial withdrawals (649) (844) (1,095) Contract charges (643) (637) (645) Net transfers from separate accounts 5 11 7 Reinsurance assumed from AAC 256 — — Other adjustments 142 65 (39) Balance, end of year $ 16,481 $ 16,711 $ 17,470 |
Schedule of variable annuity contracts with guarantees | The table below presents information regarding the Company’s variable annuity contracts with guarantees. The Company’s variable annuity contracts may offer more than one type of guarantee in each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts’ separate accounts with guarantees. ($ in millions) As of December 31, 2020 2019 In the event of death Separate account value $ 3,174 $ 2,908 Net amount at risk (1) $ 308 $ 373 Average attained age of contractholders 72 years 71 years At annuitization (includes income benefit guarantees) Separate account value $ 925 $ 848 Net amount at risk (2) $ 140 $ 173 Weighted average waiting period until annuitization options available None None For cumulative periodic withdrawals Separate account value $ 178 $ 190 Net amount at risk (3) $ 12 $ 13 Accumulation at specified dates Separate account value $ 93 $ 123 Net amount at risk (4) $ 11 $ 15 Weighted average waiting period until guarantee date 3 years 4 years ____________ (1) Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date. (2) Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance. (3) Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date. (4) Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance. |
Schedule of liabilities for guarantees | The following table summarizes the liabilities for guarantees. ($ in millions) Liability for guarantees related to death benefits and interest-sensitive life products Liability for guarantees related to income benefits Liability for guarantees related to accumulation and withdrawal benefits Total Balance, December 31, 2019 $ 292 $ 23 $ 103 $ 418 Less reinsurance recoverables 81 20 32 133 Net balance as of December 31, 2019 211 3 71 285 Incurred guarantee benefits 49 — 17 66 Paid guarantee benefits (2) — — (2) Reinsurance assumed from AAC 2 — — 2 Net change 49 — 17 66 Net balance as of December 31, 2020 260 3 88 351 Plus reinsurance recoverables 69 23 33 125 Balance, December 31, 2020 $ 329 $ 26 $ 121 $ 476 Balance, December 31, 2018 $ 307 $ 38 $ 98 $ 443 Less reinsurance recoverables 111 35 39 185 Net balance as of December 31, 2018 196 3 59 258 Incurred guarantee benefits 18 — 12 30 Paid guarantee benefits (3) — — (3) Net change 15 — 12 27 Net balance as of December 31, 2019 211 3 71 285 Plus reinsurance recoverables 81 20 32 133 Balance, December 31, 2019 $ 292 $ 23 $ 103 $ 418 |
Reserves included in total liability balance for guarantees | The following table summarizes reserves included in total liability balance for guarantees by type of benefit as of December 31. ($ in millions) 2020 2019 2018 Variable annuity Death benefits $ 67 $ 78 $ 109 Income benefits 24 21 36 Accumulation benefits 18 18 25 Withdrawal benefits 15 14 14 Other guarantees 352 287 259 Total $ 476 $ 418 $ 443 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Reinsurance Disclosures [Abstract] | |
Summary of retention limits by period of policy issuance | The following table summarizes those retention limits by period of policy issuance. Period Retention limits April 2015 through current Single life: $2 million per life Joint life: no longer offered April 2011 through March 2015 Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria July 2007 through March 2011 $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria September 1998 through June 2007 $2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met August 1998 and prior Up to $1 million per life |
Schedule of reinsurance premium ceded | The amounts ceded to Prudential for t he years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Premiums and contract charges $ 64 $ 65 $ 72 Contract benefits 46 (4) 87 Interest credited to contractholder funds 20 19 20 Operating costs and expenses 12 12 14 |
Schedule of effects of reinsurance on premiums and contract charges | The effec ts of reinsurance on p remiums and contract charges for t he years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Direct $ 652 $ 748 $ 743 Assumed Affiliate 241 231 241 Non-affiliate 671 699 741 Ceded Affiliate (44) (49) (51) Non-affiliate (227) (270) (275) Premiums and contract charges, net of reinsurance $ 1,293 $ 1,359 $ 1,399 |
Schedule of effects of reinsurance on contract benefits | The effects of reinsurance on contract benefits for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Direct $ 1,238 $ 1,038 $ 1,062 Assumed Affiliate 157 137 149 Non-affiliate 510 493 484 Ceded Affiliate (37) (35) (35) Non-affiliate (139) (152) (214) Contract benefits, net of reinsurance $ 1,729 $ 1,481 $ 1,446 |
Schedule of effects of reinsurance on interest credited to contractholder funds | The effects of reinsurance on interest credited to contractholder funds for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Direct $ 452 $ 463 $ 533 Assumed Affiliate 9 8 8 Non-affiliate 162 154 104 Ceded Affiliate (18) (20) (20) Non-affiliate (26) (20) (24) Interest credited to contractholder funds, net of reinsurance $ 579 $ 585 $ 601 |
Summary of reinsurance recoverables on paid and unpaid benefits | Reinsurance recoverables, net of allowance, as of December 31 are summarized in the following table. ($ in millions) 2020 2019 Annuities $ 1,282 $ 1,293 Life insurance 660 1,145 Other 47 52 Total $ 1,989 $ 2,490 |
Schedule of rollforward of credit loss allowance for reinsurance recoverables | The following table shows the rollforward of the credit loss allowance for reinsurance recoverables for the year ended December 31. ($ in millions) 2020 Beginning balance $ (3) Cumulative effect of change in accounting principle (11) Increase in the provision for credit losses (1) Write-offs — Ending Balance $ (15) |
Deferred Policy Acquisition a_2
Deferred Policy Acquisition and Sales Inducement Costs (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Policy Acquisition and Sales Inducement Costs | |
Schedule of deferred policy acquisition costs | Deferred policy acquisition costs for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Balance, beginning of year $ 947 $ 1,232 $ 1,156 Acquisition costs deferred 51 55 78 Amortization charged to income (147) (180) (146) Effect of unrealized gains and losses (123) (160) 144 Reinsurance assumed from AAC 245 — — Balance, end of year $ 973 $ 947 $ 1,232 |
Schedule of DSI activity for Allstate Financial | DSI activity, which primarily relates to fixed annuities and interest-sensitive life contracts, for the years ended December 31 was as follows: ($ in millions) 2020 2019 2018 Balance, beginning of year $ 27 $ 34 $ 36 Amortization charged to income (5) (5) (4) Effect of unrealized gains and losses 3 (2) 2 Balance, end of year $ 25 $ 27 $ 34 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Components of the deferred income tax assets and liabilities | The components of the deferred income tax assets and liabilities as of December 31 are as fo llows: ($ in millions) 2020 2019 Deferred tax assets Deferred reinsurance gain $ 5 $ 6 Other assets 1 1 Total deferred tax assets 6 7 Deferred tax liabilities Unrealized net capital gains (320) (245) Life and annuity reserves (231) (253) Investments (181) (185) DAC (181) (169) Other liabilities (49) (49) Total deferred tax liabilities (962) (901) Net deferred tax liability $ (956) $ (894) |
Components of income tax expense | The components of income tax expense for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Current $ 26 $ 76 $ 116 Deferred (19) 52 (99) Total income tax expense $ 7 $ 128 $ 17 |
Reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations | A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the years ended December 31 is as follows: ($ in millions) 2020 2019 2018 Statutory federal income tax rate - expense 21.0 % 21.0 % 21.0 % Tax credits (14.9) (1.9) (3.2) Adjustments to prior year tax liabilities (3.1) 0.2 (0.3) Dividends received deduction (1.9) (0.5) (0.7) State income taxes 3.4 0.5 1.5 Non-deductible expenses — 0.1 — Tax Legislation benefit — — (14.0) Other (0.1) — 0.1 Effective income tax rate - expense 4.4 % 19.4 % 4.4 % |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of components of other comprehensive (loss) income on a pre-tax and after-tax basis | The components of other comprehensive income (loss) on a pre-tax and after-tax basis for the years ended December 31 are as follows: ($ in millions) 2020 2019 2018 Pre- Tax After- Pre- Tax After- Pre- Tax After- Unrealized net holding gains and losses arising during the period, net of related offsets $ 405 $ (85) $ 320 $ 878 $ (184) $ 694 $ (483) $ 101 $ (382) Less: reclassification adjustment of realized capital gains and losses 48 (10) 38 19 (4) 15 (35) 7 (28) Unrealized net capital gains and losses 357 (75) 282 859 (180) 679 (448) 94 (354) Unrealized foreign currency translation adjustments 13 (3) 10 (22) 5 (17) — — — Other comprehensive income (loss) $ 370 $ (78) $ 292 $ 837 $ (175) $ 662 $ (448) $ 94 $ (354) |
General (Details)
General (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($)state | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Premiums and contract charges by product | |||
Premiums | $ 618 | $ 677 | $ 704 |
Contract charges | 675 | 682 | 695 |
Total premiums and contract charges | $ 1,293 | 1,359 | 1,399 |
Number of states in which entity is authorized to operate | state | 50 | ||
Minimum percentage of premiums from one jurisdiction to be considered as significant (in percent) | 5.00% | ||
Traditional life insurance | |||
Premiums and contract charges by product | |||
Premiums | $ 531 | 557 | 582 |
Accident and health insurance | |||
Premiums and contract charges by product | |||
Premiums | 87 | 120 | 122 |
Interest-sensitive life insurance | |||
Premiums and contract charges by product | |||
Contract charges | 665 | 669 | 680 |
Fixed annuities | |||
Premiums and contract charges by product | |||
Contract charges | $ 10 | $ 13 | $ 15 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2020 | Dec. 31, 2017 | |
Securities loaned | |||||
Cash collateral received as percentage of fair value of securities loaned (in percent) | 102.00% | ||||
Cash collateral received for securities loaned percentage foreign (in percent) | 105.00% | ||||
Deferred policy acquisition and sales inducement costs | |||||
Present value of future profits | $ 3,000 | $ 3,000 | |||
Amortization expense of future profits | 508 | 357 | $ 249 | ||
Allowance for credit loss | 103,000 | ||||
Retained income, after tax | $ (8,247,000) | (7,809,000) | (6,692,000) | ||
Adjustments for New Accounting Pronouncement | |||||
Deferred policy acquisition and sales inducement costs | |||||
Allowance for credit loss | $ 79,000 | ||||
Minimum | |||||
Deferred policy acquisition and sales inducement costs | |||||
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts (in years) | 15 years | ||||
Maximum | |||||
Securities loaned | |||||
Length of securities lending transaction period (in days) | 30 days | ||||
Deferred policy acquisition and sales inducement costs | |||||
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts (in years) | 30 years | ||||
Interest-sensitive life insurance | Minimum | |||||
Deferred policy acquisition and sales inducement costs | |||||
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts (in years) | 10 years | ||||
Interest-sensitive life insurance | Maximum | |||||
Deferred policy acquisition and sales inducement costs | |||||
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts (in years) | 20 years | ||||
Fixed annuities | Minimum | |||||
Deferred policy acquisition and sales inducement costs | |||||
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts (in years) | 5 years | ||||
Fixed annuities | Maximum | |||||
Deferred policy acquisition and sales inducement costs | |||||
Period for amortization of DAC and DSI for interest-sensitive life, fixed annuities and other investment contracts (in years) | 10 years | ||||
Private equity/debt funds, real estate funds and tax credit funds | |||||
Deferred policy acquisition and sales inducement costs | |||||
Period over which recognition of income on funds is delayed (in month) | 3 months | ||||
Retained income | |||||
Deferred policy acquisition and sales inducement costs | |||||
Retained income, after tax | $ (4,952,000) | (4,865,000) | $ (4,410,000) | $ (3,981,000) | |
Retained income | Adjustments for New Accounting Pronouncement | |||||
Deferred policy acquisition and sales inducement costs | |||||
Retained income, after tax | $ 49,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Allowance for credit losses (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Investments | $ 81 | $ 57 | |
Reinsurance recoverables | 15 | 14 | $ 3 |
Other assets | 7 | 7 | |
Assets | 103 | 78 | |
Commitments to fund mortgage loans, bank loans and agent loans | 0 | 1 | |
Liabilities | 0 | 1 | |
Total | 103 | ||
Fixed income securities | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fixed income securities | 1 | 0 | 0 |
Mortgage loans | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Allowance for credit loss | 59 | 36 | $ 3 |
Bank loans | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Allowance for credit loss | 16 | 16 | |
Agent loans | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Allowance for credit loss | $ 5 | $ 5 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | |||
Transfer from investments | $ 5 | $ 67 | $ 43 |
Liabilities for collateral received | 331 | 522 | 517 |
Obligations to return cash collateral for over-the-counter ("OTC") derivatives reported in other liabilities and accrued expenses or other investments | $ 3 | $ 8 | $ 8 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information - Activities resulting from management of proceeds (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net change in proceeds managed | |||
Net change in fixed income securities | $ 0 | $ 28 | $ 94 |
Net change in short-term investments | 196 | (33) | (77) |
Operating cash flow provided (used) | 196 | (5) | 17 |
Net change in cash | 0 | 0 | 0 |
Net change in proceeds managed | 196 | (5) | 17 |
Change in Liabilities for Collateral [Roll Forward] | |||
Liabilities for collateral, beginning of year | (530) | (525) | (542) |
Liabilities for collateral, end of year | (334) | (530) | (525) |
Operating cash flow (used) provided | $ (196) | $ 5 | $ (17) |
Related Party Transactions - Na
Related Party Transactions - Narrative and Other (Details) - USD ($) | Dec. 01, 2020 | Dec. 02, 2016 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 16, 2019 | Dec. 31, 2017 | Dec. 22, 2016 |
Related Party Transactions | ||||||||
Allocation of operating expenses | $ 191,000,000 | $ 211,000,000 | $ 235,000,000 | |||||
Cash | 36,000,000 | 43,000,000 | 52,000,000 | $ 145,000,000 | ||||
Notes due to related parties | 214,000,000 | 214,000,000 | ||||||
Interest expense | 7,000,000 | 5,000,000 | 5,000,000 | |||||
Total reserve for life-contingent contract benefits | 11,800,000,000 | 11,272,000,000 | ||||||
Surplus note | 5,335,000,000 | 4,406,000,000 | 5,444,000,000 | |||||
Total investments | 34,798,000,000 | 33,607,000,000 | ||||||
Contractholder funds | 16,481,000,000 | 16,711,000,000 | 17,470,000,000 | 18,592,000,000 | ||||
Reinsurance Recoverables, Including Reinsurance Premium Paid | 1,989,000,000 | 2,490,000,000 | ||||||
Deferred policy acquisition costs | 973,000,000 | 947,000,000 | 1,232,000,000 | $ 1,156,000,000 | ||||
Liquidity agreement | ||||||||
Related Party Transactions | ||||||||
Amount of loan outstanding under agreement | 0 | 0 | ||||||
Liquidity agreement | Maximum | ||||||||
Related Party Transactions | ||||||||
Amount available for borrowings under the agreement | $ 1,000,000,000 | |||||||
Advances maturity period (in days) | 364 days | |||||||
Liquidity agreement | Minimum | ||||||||
Related Party Transactions | ||||||||
Notice period for payables on demand (in days) | 10 days | |||||||
Intercompany loan agreement | ||||||||
Related Party Transactions | ||||||||
Amount of loan outstanding under agreement | $ 0 | 0 | ||||||
Intercompany loan agreement | Maximum | ||||||||
Related Party Transactions | ||||||||
Amount available for borrowings under the agreement | 1,000,000,000 | |||||||
Revolving loan credit agreement | ||||||||
Related Party Transactions | ||||||||
Amount of loan outstanding under agreement | 0 | 0 | ||||||
Capital support agreement | ||||||||
Related Party Transactions | ||||||||
Amount of loan outstanding under agreement | $ 0 | 0 | ||||||
Commitment fee as a percentage of the amount of the capital and surplus maximum that remains available at the beginning of the period | 1.00% | |||||||
Capital support agreement | Maximum | ||||||||
Related Party Transactions | ||||||||
Amount available for borrowings under the agreement | $ 1,000,000,000 | |||||||
Capital support agreement | Minimum | ||||||||
Related Party Transactions | ||||||||
Percentage of risk-based capital ratio | 150.00% | |||||||
Minimum risk-based capital ratio at which agreement will be terminated (as a percent) | 300.00% | |||||||
Voting stock to be held as per agreement (as a percent) | 50.00% | |||||||
Structured settlement annuities | AIC | ||||||||
Related Party Transactions | ||||||||
Total reserve for life-contingent contract benefits | $ 4,730,000,000 | 4,570,000,000 | ||||||
Subsidiary of Common Parent | ALIC Reinsurance Company | Hybrid Instrument | ||||||||
Related Party Transactions | ||||||||
Credit derivative, maximum exposure, undiscounted | 1,750,000,000 | |||||||
Affiliate | ||||||||
Related Party Transactions | ||||||||
Fee and commission expenses | 3,000,000 | 3,000,000 | 3,000,000 | |||||
Allstate Financial Services, LLC | ||||||||
Related Party Transactions | ||||||||
Payments of dividends | 0 | 75,000,000 | 250,000,000 | |||||
Allstate Finance Company Agency Loans LLC | Beneficial Owner | ||||||||
Related Party Transactions | ||||||||
Agent loans | 568,000,000 | 612,000,000 | ||||||
Cash | 0 | 1,000,000 | ||||||
Notes due to related parties | 214,000,000 | 214,000,000 | ||||||
Allstate Assurance Company | ||||||||
Related Party Transactions | ||||||||
Total reserve for life-contingent contract benefits | $ 118,000,000 | |||||||
Gain (Loss) on the transaction | (59,000,000) | |||||||
Total investments | 534,000,000 | |||||||
Contractholder funds | 256,000,000 | |||||||
Reinsurance Recoverables, Including Reinsurance Premium Paid | 397,000,000 | |||||||
Deferred policy acquisition costs | $ 245,000,000 | |||||||
Allstate Assurance Company | Subsidiary of Common Parent | ||||||||
Related Party Transactions | ||||||||
Surplus note | $ 40,000,000 | |||||||
Notes payable interest rate (as a percent) | 3.07% | |||||||
Interest income, related party | 1,000,000 | 1,000,000 | $ 1,000,000 | |||||
Collateralized Loan Obligations | ||||||||
Related Party Transactions | ||||||||
Agent loans, fair value | $ 222,000,000 | $ 419,000,000 | ||||||
Collateralized Loan Obligations | Affiliate | ||||||||
Related Party Transactions | ||||||||
Agent loans, fair value | $ 641,000,000 | $ 641,000,000 |
Related Party Transactions - Ag
Related Party Transactions - Agent Loan Sale and Securitization (Details) - Collateralized Loan Obligations - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 16, 2019 | Dec. 22, 2016 |
Related Party Transactions | ||||
Agent loans, fair value | $ 222 | $ 419 | ||
Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | $ 641 | $ 641 | ||
Class B Deferrable Notes | Allstate Life Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 214 | 214 | ||
Class C Deferrable Notes | Allstate Life Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 168 | 168 | ||
Subordinated Notes | Allstate Life Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 45 | 45 | ||
Notes Due March 10, 2037 | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | $ 74 | $ 140 | ||
Notes payable interest rate (as a percent) | 3.16% | 3.36% | ||
Notes Due March 10, 2037 | Class A Notes | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | $ 214 | $ 214 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate New Jersey Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 101 | 83 | ||
Notes Due March 10, 2037 | Class A Notes | American Heritage Life Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 62 | 59 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate Assurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 0 | 33 | ||
Notes Due March 10, 2037 | Class A Notes | First Colonial Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 9 | 9 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate Fire & Casualty Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 10 | 7 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate Property and Casualty Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 9 | 6 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate Indemnity Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 4 | 4 | ||
Notes Due March 10, 2037 | Class A Notes | Esurance Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 7 | 4 | ||
Notes Due March 10, 2037 | Class A Notes | North Light Specialty Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 4 | 3 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate Vehicle and Property Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 2 | 2 | ||
Notes Due March 10, 2037 | Class A Notes | Allstate New Jersey Property and Casualty Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | 2 | 2 | ||
Notes Due March 10, 2037 | Class A Notes | Esurance Property and Casualty Insurance Company | Affiliate | ||||
Related Party Transactions | ||||
Agent loans, fair value | $ 4 | $ 2 |
Investments - Portfolio composi
Investments - Portfolio composition (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Investments [Abstract] | ||
Fixed income securities, at fair value | $ 23,907 | $ 21,725 |
Mortgage loans, net | 3,359 | 3,988 |
Equity securities, at fair value | 1,536 | 1,469 |
Limited partnership interests | 3,065 | 3,250 |
Short-term investments, at fair value | 974 | 1,191 |
Policy loans | 582 | 557 |
Other, net | 1,375 | 1,427 |
Total investments | $ 34,798 | $ 33,607 |
Investments - Fair Values (Deta
Investments - Fair Values (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | $ 21,522 | $ 20,217 |
Gross unrealized, gains | 2,427 | 1,549 |
Gross unrealized, losses | (42) | (41) |
Fair value | 23,907 | 21,725 |
U.S. government and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | 1,060 | 848 |
Gross unrealized, gains | 45 | 34 |
Gross unrealized, losses | 0 | 0 |
Fair value | 1,105 | 882 |
Municipal | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | 1,650 | 1,483 |
Gross unrealized, gains | 357 | 279 |
Gross unrealized, losses | 0 | (7) |
Fair value | 2,007 | 1,755 |
Corporate | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | 18,287 | 17,301 |
Gross unrealized, gains | 2,009 | 1,170 |
Gross unrealized, losses | (40) | (30) |
Fair value | 20,256 | 18,441 |
Foreign government | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | 91 | 142 |
Gross unrealized, gains | 5 | 7 |
Gross unrealized, losses | 0 | 0 |
Fair value | 96 | 149 |
ABS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | 420 | 316 |
Gross unrealized, gains | 6 | 4 |
Gross unrealized, losses | (2) | (3) |
Fair value | 424 | 317 |
MBS | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, net | 14 | 127 |
Gross unrealized, gains | 5 | 55 |
Gross unrealized, losses | 0 | (1) |
Fair value | $ 19 | $ 181 |
Investments - Scheduled maturit
Investments - Scheduled maturities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Amortized cost, net | ||
Due in one year or less | $ 1,625 | |
Due after one year through five years | 6,974 | |
Due after five years through ten years | 8,255 | |
Due after ten years | 4,234 | |
Subtotal | 21,088 | |
ABS and MBS | 434 | |
Amortized cost, net | 21,522 | $ 20,217 |
Fair value | ||
Due in one year or less | 1,651 | |
Due after one year through five years | 7,423 | |
Due after five years through ten years | 9,197 | |
Due after ten years | 5,193 | |
Subtotal | 23,464 | |
ABS and MBS | 443 | |
Total | $ 23,907 | $ 21,725 |
Investments - Net investment in
Investments - Net investment income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net investment income | |||
Investment income, before expense | $ 1,323 | $ 1,515 | $ 1,688 |
Investment expense | (81) | (104) | (103) |
Net investment income | 1,242 | 1,411 | 1,585 |
Fixed income securities | |||
Net investment income | |||
Investment income, before expense | 894 | 963 | 991 |
Mortgage loans | |||
Net investment income | |||
Investment income, before expense | 184 | 190 | 188 |
Equity securities | |||
Net investment income | |||
Investment income, before expense | 19 | 29 | 39 |
Limited partnership interests | |||
Net investment income | |||
Investment income, before expense | 99 | 175 | 327 |
Short-term investments | |||
Net investment income | |||
Investment income, before expense | 6 | 31 | 21 |
Policy loans | |||
Net investment income | |||
Investment income, before expense | 31 | 34 | 31 |
Other | |||
Net investment income | |||
Investment income, before expense | $ 90 | $ 93 | $ 91 |
Investments - Realized capital
Investments - Realized capital gains and losses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Realized capital gains and losses by asset type | ||||
Sales | $ 42 | $ 54 | $ (27) | |
Credit losses | (47) | (21) | (9) | |
Valuation of equity investments | 266 | 297 | (146) | |
Valuation and settlements of derivative instruments | 5 | 11 | 7 | |
Realized capital gains and losses | $ 4 | 266 | 341 | (175) |
Fixed income securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 54 | 25 | (40) | |
Mortgage loans | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | (45) | 0 | 2 | |
Equity securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 225 | 276 | (124) | |
Limited partnership interests | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 38 | 43 | (22) | |
Derivatives | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 5 | 11 | 10 | |
Other | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ (11) | $ (14) | $ (1) |
Investments - Schedule of gain
Investments - Schedule of gain (loss) on investments by transaction type (Details) - Fixed income securities - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||
Gross realized gains | $ 101 | $ 65 | $ 34 |
Gross realized losses | $ (44) | $ (35) | $ (66) |
Investments - Valuation changes
Investments - Valuation changes (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Investments | ||
Total | $ 329 | $ 273 |
Equity securities | ||
Investments | ||
Total | 229 | 216 |
Limited partnership interests | ||
Investments | ||
Total | $ 100 | $ 57 |
Investments - Other-than-tempor
Investments - Other-than-temporary impairment losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other-than-temporary impairment losses by asset type | |||
Fixed income securities | $ (47) | $ (21) | $ (9) |
Total credit losses by asset type | (48) | (21) | (9) |
Commitments to fund commercial mortgage loans, bank loans and agent loans | 1 | 0 | 0 |
Fixed income securities | |||
Other-than-temporary impairment losses by asset type | |||
Fixed income securities | (3) | (5) | (8) |
Corporate | |||
Other-than-temporary impairment losses by asset type | |||
Fixed income securities | 0 | (2) | (1) |
ABS | |||
Other-than-temporary impairment losses by asset type | |||
Fixed income securities | (1) | (1) | (1) |
MBS | |||
Other-than-temporary impairment losses by asset type | |||
Fixed income securities | (2) | (2) | (6) |
Mortgage loans | |||
Other-than-temporary impairment losses by asset type | |||
Net increases related to credit losses | (37) | 0 | 0 |
Limited partnership interests | |||
Other-than-temporary impairment losses by asset type | |||
Limited partnership interests | (4) | (2) | 0 |
Bank loans | |||
Other-than-temporary impairment losses by asset type | |||
Net increases related to credit losses | (4) | (13) | 0 |
Agent loans | |||
Other-than-temporary impairment losses by asset type | |||
Net increases related to credit losses | $ 0 | $ (1) | $ (1) |
Investments - Unrealized net ca
Investments - Unrealized net capital gains and losses (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Fair value | ||
Fair value | $ 23,907 | $ 21,725 |
Short-term investments | 974 | 1,191 |
Gross unrealized Gains | ||
Fixed income securities | 2,427 | 1,549 |
Short-term investments | 0 | 0 |
Gross unrealized Losses | ||
Fixed income securities | (42) | (41) |
Short-term investments | 0 | 0 |
Unrealized net gains (losses) | ||
Fixed income securities | 2,385 | 1,508 |
Short-term investments | 0 | 0 |
EMA limited partnerships | (2) | (2) |
Unrealized net capital gains and losses, pre-tax | 2,383 | 1,506 |
Amounts recognized for: | ||
Amounts recognized for: | (496) | (126) |
DAC and DSI | (363) | (213) |
Amounts recognized | (859) | (339) |
Deferred income taxes | (320) | (245) |
Total unrealized net capital gains and losses | $ 1,204 | $ 922 |
Investments - Change in unreali
Investments - Change in unrealized net capital gains and losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | $ 877 | $ 1,163 | $ (917) |
Amounts recognized for: | |||
Insurance reserves | (370) | (126) | 315 |
DAC and DSI | (150) | (178) | 154 |
Amounts recognized | (520) | (304) | 469 |
Deferred income taxes | (75) | (180) | 94 |
Increase (decrease) in unrealized net capital gains and losses, after-tax | 282 | 679 | (354) |
EMA limited partnerships | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | 0 | (2) | (1) |
Fixed income securities | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | 877 | 1,165 | (914) |
Short-term investments | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | 0 | 0 | 0 |
Derivative instruments | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | $ 0 | $ 0 | $ (2) |
Investments - Mortgage loans (D
Investments - Mortgage loans (Details) $ in Millions | Dec. 31, 2020USD ($)loan | Dec. 31, 2019USD ($) |
Debt Securities, Available-for-sale [Line Items] | ||
Number of loans | loan | 232 | |
Amortized cost, net | $ | $ 3,359 | $ 3,988 |
Mortgage loans on real estate, carrying value (percentage) | 100.00% | 100.00% |
2021 | Mortgage loans | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of loans | loan | 28 | |
Amortized cost, net | $ | $ 254 | |
Mortgage loans on real estate, carrying value (percentage) | 7.60% | |
2022 | Mortgage loans | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of loans | loan | 23 | |
Amortized cost, net | $ | $ 291 | |
Mortgage loans on real estate, carrying value (percentage) | 8.70% | |
2023 | Mortgage loans | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of loans | loan | 41 | |
Amortized cost, net | $ | $ 485 | |
Mortgage loans on real estate, carrying value (percentage) | 14.40% | |
2024 | Mortgage loans | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of loans | loan | 25 | |
Amortized cost, net | $ | $ 510 | |
Mortgage loans on real estate, carrying value (percentage) | 15.20% | |
Thereafter | Mortgage loans | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of loans | loan | 115 | |
Amortized cost, net | $ | $ 1,819 | |
Mortgage loans on real estate, carrying value (percentage) | 54.10% | |
Apartment complex | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 34.10% | 35.60% |
Office buildings | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 23.30% | 22.40% |
Retail | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 15.80% | 14.30% |
Warehouse | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 14.50% | 16.20% |
Other | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 12.30% | 11.50% |
Texas | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 20.10% | 16.80% |
California | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 14.30% | 14.10% |
Illinois | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 6.90% | 8.00% |
Florida | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 6.30% | 6.70% |
North Carolina | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 5.60% | 4.90% |
New Jersey | ||
Debt Securities, Available-for-sale [Line Items] | ||
Mortgage loans on real estate, carrying value (percentage) | 3.90% | 6.00% |
Investments - Carrying value fo
Investments - Carrying value for limited partnership interests (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | $ 3,065 | $ 3,250 |
EMA | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 2,302 | 2,477 |
Fair Value | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 763 | 773 |
Private equity | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 2,489 | 2,752 |
Private equity | EMA | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 1,768 | 2,029 |
Private equity | Fair Value | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 721 | 723 |
Real estate | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 376 | 369 |
Real estate | EMA | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 334 | 319 |
Real estate | Fair Value | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 42 | 50 |
Other investments | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 200 | 129 |
Other investments | EMA | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | 200 | 129 |
Other investments | Fair Value | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Limited partnership interests | $ 0 | $ 0 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net investment income | ||||
Mortgage loans, net | $ 3,359 | $ 3,359 | $ 3,988 | |
Threshold percentage of mortgage loans to total carrying value | 5.00% | 5.00% | ||
Fair value | $ 23,907 | $ 23,907 | 21,725 | |
Threshold percentage of municipal to total carrying value | 5.00% | 5.00% | ||
Short-term investments | $ 974 | $ 974 | 1,191 | |
Policy loans | 582 | 582 | 557 | |
Fixed income and equity securities loaned | 322 | 322 | 506 | |
Interest income on collateral, net of fees | 1 | 1 | $ 1 | |
Below investment grade assets | 2,990 | 2,990 | 2,830 | |
Fixed income securities and short-term investments deposited with regulatory authorities | 21 | 21 | ||
Non-income producing fixed income securities and other investments | 38 | 38 | ||
Accrued investment income | 231 | 231 | 239 | |
Realized capital gains and losses | 4 | 266 | 341 | (175) |
Mortgage loans | ||||
Net investment income | ||||
Payments to acquire investments | 217 | |||
Reduction of allowance related to sales | 15 | |||
Municipal | ||||
Net investment income | ||||
Fair value | 2,007 | 2,007 | 1,755 | |
Fixed income securities | ||||
Net investment income | ||||
Accrued investment income | 198 | 198 | ||
Realized capital gains and losses | 54 | 25 | (40) | |
Mortgage loans | ||||
Net investment income | ||||
Accrued investment income | 13 | 13 | ||
Reduction of allowance related to sales | 15 | |||
Realized capital gains and losses | (45) | $ 0 | $ 2 | |
Agent loans | ||||
Net investment income | ||||
Accrued investment income | $ 2 | $ 2 | ||
Agent loans, high credit quality (in percentage) | 85.00% | 85.00% | ||
Allowance for agent loans | $ (5) | $ (5) | ||
Bank loans | ||||
Net investment income | ||||
Accrued investment income | $ 1 | $ 1 |
Investments - Principal geograp
Investments - Principal geographic distribution of municipal bonds (Details) | Dec. 31, 2020 | Dec. 31, 2019 |
Texas | ||
Municipal Bonds | ||
Percentage of municipal bonds carrying value | 16.80% | 17.80% |
California | ||
Municipal Bonds | ||
Percentage of municipal bonds carrying value | 16.80% | 15.00% |
Oregon | ||
Municipal Bonds | ||
Percentage of municipal bonds carrying value | 11.30% | 12.60% |
New Jersey | ||
Municipal Bonds | ||
Percentage of municipal bonds carrying value | 7.40% | 6.70% |
Illinois | ||
Municipal Bonds | ||
Percentage of municipal bonds carrying value | 6.20% | 6.30% |
New York | ||
Municipal Bonds | ||
Percentage of municipal bonds carrying value | 5.30% | 7.00% |
Investments - Other investments
Investments - Other investments by type (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Net investment income | ||
Other, net | $ 1,375 | $ 1,427 |
Agent loans, net | ||
Net investment income | ||
Other, net | 631 | 666 |
Real estate | ||
Net investment income | ||
Other, net | 315 | 292 |
Bank loans, net | ||
Net investment income | ||
Other, net | 245 | 344 |
Derivatives and other | ||
Net investment income | ||
Other, net | $ 184 | $ 125 |
Investments - Rollforward of cr
Investments - Rollforward of credit loss allowance for fixed income securities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Jan. 01, 2020 | |
Fixed income securities | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 0 | |
Credit losses on securities for which credit losses not previously reported | (3) | |
Reduction of allowance related to sales | 2 | |
Write-offs | 0 | |
Ending balance | (1) | |
Fixed income securities | 1 | $ 0 |
Asset-backed securities | ||
Debt Securities, Available-for-sale, Allowance for Credit Loss [Roll Forward] | ||
Ending balance | (1) | |
Fixed income securities | $ 1 |
Investments - Gross unrealized
Investments - Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position (Details) $ in Millions | Dec. 31, 2020USD ($)security | Dec. 31, 2019USD ($)security |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues | security | 10 | 6 |
Fair value | $ 17 | $ 74 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | security | 0 | 0 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ 0 |
Municipal | ||
Less than 12 months | ||
Number of issues | security | 7 | 4 |
Fair value | $ 31 | $ 22 |
Unrealized losses | $ 0 | $ (5) |
12 months or more | ||
Number of issues | security | 0 | 1 |
Fair value | $ 0 | $ 14 |
Unrealized losses | 0 | (2) |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ (7) |
Corporate | ||
Less than 12 months | ||
Number of issues | security | 114 | 92 |
Fair value | $ 558 | $ 504 |
Unrealized losses | $ (19) | $ (8) |
12 months or more | ||
Number of issues | security | 25 | 43 |
Fair value | $ 153 | $ 237 |
Unrealized losses | (21) | (22) |
Total unrealized losses | ||
Total unrealized losses | $ (40) | $ (30) |
ABS | ||
Less than 12 months | ||
Number of issues | security | 5 | 22 |
Fair value | $ 2 | $ 61 |
Unrealized losses | $ 0 | $ (1) |
12 months or more | ||
Number of issues | security | 4 | 5 |
Fair value | $ 5 | $ 19 |
Unrealized losses | (2) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (2) | $ (3) |
MBS | ||
Less than 12 months | ||
Number of issues | security | 3 | 8 |
Fair value | $ 0 | $ 1 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | security | 10 | 22 |
Fair value | $ 0 | $ 5 |
Unrealized losses | 0 | (1) |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ (1) |
Fixed income securities | ||
Less than 12 months | ||
Number of issues | security | 139 | 132 |
Fair value | $ 608 | $ 662 |
Unrealized losses | $ (19) | $ (14) |
12 months or more | ||
Number of issues | security | 39 | 71 |
Fair value | $ 158 | $ 275 |
Unrealized losses | (23) | (27) |
Total unrealized losses | ||
Total unrealized losses | $ (42) | $ (41) |
Investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | security | 69 | 85 |
Fair value | $ 388 | $ 524 |
Unrealized losses | $ (5) | $ (3) |
12 months or more | ||
Number of issues | security | 19 | 39 |
Fair value | $ 73 | $ 152 |
Unrealized losses | (17) | (17) |
Total unrealized losses | ||
Total unrealized losses | $ (22) | $ (20) |
Below investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | security | 70 | 47 |
Fair value | $ 220 | $ 138 |
Unrealized losses | $ (14) | $ (11) |
12 months or more | ||
Number of issues | security | 20 | 32 |
Fair value | $ 85 | $ 123 |
Unrealized losses | (6) | (10) |
Total unrealized losses | ||
Total unrealized losses | $ (20) | $ (21) |
Investments - Gross unrealize_2
Investments - Gross unrealized losses by unrealized loss position and credit quality (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Available for sale securities, unrealized losses having loss of twenty percent or higher, greater than 12 months | $ 0 | |
Investment grade | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net | (7,000,000) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net | (15,000,000) | |
Total unrealized losses | (22,000,000) | $ (20,000,000) |
Below investment grade | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net | (12,000,000) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net | (8,000,000) | |
Total unrealized losses | (20,000,000) | (21,000,000) |
Available for sale Securities, Unrealized Losses Having Loss of Less than Twenty Percent, Less than 12 Months | (7,000,000) | |
Fixed income securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Fixed income securities with unrealized loss position less than 20% of amortized cost, net | (19,000,000) | |
Fixed income securities with unrealized loss position greater than or equal to 20% of amortized cost, net | (23,000,000) | |
Total unrealized losses | $ (42,000,000) | $ (41,000,000) |
Investments - Mortgage loans am
Investments - Mortgage loans amortized cost by debt service coverage ratio distribution and year of origination (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost, net | $ 3,359 | $ 3,988 |
Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 3,418 | 3,991 |
Allowance | (59) | (3) |
Amortized cost, net | 3,359 | 3,988 |
Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 15 | 40 |
1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 293 | 161 |
1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 906 | 1,066 |
Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 2,204 | $ 2,724 |
2015 and prior | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 1,473 | |
2015 and prior | Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 15 | |
2015 and prior | 1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 130 | |
2015 and prior | 1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 365 | |
2015 and prior | Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 963 | |
2016 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 418 | |
2016 | Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
2016 | 1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 27 | |
2016 | 1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 41 | |
2016 | Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 350 | |
2017 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 406 | |
2017 | Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
2017 | 1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 32 | |
2017 | 1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 134 | |
2017 | Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 240 | |
2018 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 495 | |
2018 | Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
2018 | 1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 57 | |
2018 | 1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 159 | |
2018 | Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 279 | |
2019 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 561 | |
2019 | Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
2019 | 1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 33 | |
2019 | 1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 201 | |
2019 | Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 327 | |
Current | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 65 | |
Current | Below 1.0 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
Current | 1.0 - 1.25 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 14 | |
Current | 1.26 - 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 6 | |
Current | Above 1.50 | Mortgage loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | $ 45 |
Investments - Rollforward of _2
Investments - Rollforward of credit loss allowance for mortgage loans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Bank loans | |||
Rollforward of the valuation allowance on impaired mortgage loans | |||
Beginning balance | $ 0 | ||
Net increases related to credit losses | (4) | ||
Reduction of allowance related to sales | 3 | ||
Write-offs | 1 | ||
Ending balance | (16) | $ 0 | |
Accounting Standards Update 2016-13 | Bank loans | |||
Rollforward of the valuation allowance on impaired mortgage loans | |||
Beginning balance | (16) | ||
Ending balance | (16) | ||
Accounting Standards Update 2016-13 | Mortgage loans | |||
Rollforward of the valuation allowance on impaired mortgage loans | |||
Beginning balance | (33) | ||
Ending balance | (33) | ||
Mortgage loans | |||
Rollforward of the valuation allowance on impaired mortgage loans | |||
Beginning balance | (3) | ||
Net increases related to credit losses | (37) | 0 | $ 0 |
Reduction of allowance related to sales | 15 | ||
Loans transferred due to reinsurance agreement with AAC | (1) | ||
Write-offs | 0 | ||
Ending balance | $ (59) | $ (3) |
Investments - Bank loans amorti
Investments - Bank loans amortized cost by credit rating and year of origination (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost, net | $ 3,359 | $ 3,988 |
Bank loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 261 | |
Allowance | (16) | |
Amortized cost, net | 245 | |
Bank loans | 2015 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 18 | |
Bank loans | 2016 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 16 | |
Bank loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 62 | |
Bank loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 65 | |
Bank loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 52 | |
Bank loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 48 | |
BBB | Bank loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 6 | |
BBB | Bank loans | 2015 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
BBB | Bank loans | 2016 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
BBB | Bank loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 4 | |
BBB | Bank loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
BBB | Bank loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
BBB | Bank loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 2 | |
BB | Bank loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 43 | |
BB | Bank loans | 2015 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 10 | |
BB | Bank loans | 2016 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 0 | |
BB | Bank loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 1 | |
BB | Bank loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 16 | |
BB | Bank loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 11 | |
BB | Bank loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 5 | |
B | Bank loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 150 | |
B | Bank loans | 2015 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 5 | |
B | Bank loans | 2016 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 8 | |
B | Bank loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 42 | |
B | Bank loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 37 | |
B | Bank loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 23 | |
B | Bank loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 35 | |
CCC and below | Bank loans | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 62 | |
CCC and below | Bank loans | 2015 and prior | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 3 | |
CCC and below | Bank loans | 2016 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 8 | |
CCC and below | Bank loans | 2017 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 15 | |
CCC and below | Bank loans | 2018 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 12 | |
CCC and below | Bank loans | 2019 | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | 18 | |
CCC and below | Bank loans | Current | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized cost before allowance | $ 6 |
Investments - Rollforward of _3
Investments - Rollforward of credit loss allowance for bank loans (Details) - Bank loans $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Rollforward of the valuation allowance on impaired mortgage loans | |
Beginning balance | $ 0 |
Net increases related to credit losses | (4) |
Reduction of allowance related to sales | 3 |
Write-offs | 1 |
Ending balance | (16) |
Accounting Standards Update 2016-13 | |
Rollforward of the valuation allowance on impaired mortgage loans | |
Beginning balance | $ (16) |
Ending balance |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Commitments to invest in limited partnership interests | $ 918 | $ 1,063 |
Fair value | 23,907 | 21,725 |
Significant unobservable inputs (Level 3) | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Fair value | 153 | 208 |
Assets at fair value | 267 | 324 |
Limited partnership interests | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Commitments to invest in limited partnership interests | 166 | |
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | Significant unobservable inputs (Level 3) | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Assets at fair value | $ 24 | $ 38 |
Minimum | Limited partnership interests | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Distribution and proceed period (in years) | 4 years | |
Useful life (in years) | 10 years | |
Maximum | Limited partnership interests | ||
Fair value of assets and liabilities measured on recurring and non-recurring basis | ||
Distribution and proceed period (in years) | 9 years | |
Useful life (in years) | 12 years |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Assets and liabilities measured at fair value (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | |||
Fair value | $ 23,907 | $ 21,725 | |
Equity securities, at fair value (cost $1,107 and $1,123) | 1,536 | 1,469 | |
Short-term investments | 974 | 1,191 | |
Other investments: | |||
Other investments: Free-standing derivatives | $ 1 | ||
Counterparty and cash collateral netting | (6) | (10) | |
Separate account assets | 3,294 | 3,009 | |
Derivative asset, fair value | $ (6) | $ (10) | |
% of total assets at fair value | 0.00% | 0.00% | |
Total | $ 30,658 | $ 28,291 | |
Liabilities | |||
Counterparty and cash collateral netting | 9 | 3 | |
Total liabilities at fair value, Counterparty and cash collateral netting | $ 9 | $ 3 | |
Liabilities as percent of liabilities measured at fair value | (1.40%) | (0.60%) | |
Fair value | |||
Assets | |||
Fair value | $ 23,907 | $ 21,725 | |
Equity securities, at fair value (cost $1,107 and $1,123) | 1,536 | 1,469 | |
Short-term investments | 974 | 1,191 | |
Other investments: | |||
Other investments: Free-standing derivatives | 184 | 124 | |
Separate account assets | 3,294 | 3,009 | |
Total assets at fair value | $ 29,895 | $ 27,518 | |
% of total assets at fair value | 100.00% | 100.00% | |
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ (516) | $ (427) | |
Other liabilities: Free-standing derivatives | (110) | (62) | |
Total recurring basis liabilities | $ (626) | $ (489) | |
Liabilities as percent of liabilities measured at fair value | 100.00% | 100.00% | |
U.S. government and agencies | |||
Assets | |||
Fair value | $ 1,105 | $ 882 | |
U.S. government and agencies | Fair value | |||
Assets | |||
Fair value | 1,105 | 882 | |
Municipal | |||
Assets | |||
Fair value | 2,007 | 1,755 | |
Municipal | Fair value | |||
Assets | |||
Fair value | 2,007 | 1,755 | |
Corporate - public | Fair value | |||
Assets | |||
Fair value | 14,566 | 12,802 | |
Corporate - privately placed | Fair value | |||
Assets | |||
Fair value | 5,690 | 5,639 | |
Foreign government | |||
Assets | |||
Fair value | 96 | 149 | |
Foreign government | Fair value | |||
Assets | |||
Fair value | 96 | 149 | |
ABS | |||
Assets | |||
Fair value | 424 | 317 | |
ABS | Fair value | |||
Assets | |||
Fair value | 424 | 317 | |
MBS | |||
Assets | |||
Fair value | 19 | 181 | |
MBS | Fair value | |||
Assets | |||
Fair value | 19 | 181 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Fair value | 784 | 590 | |
Equity securities, at fair value (cost $1,107 and $1,123) | 1,408 | 1,340 | |
Short-term investments | 601 | 493 | |
Other investments: | |||
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 3,294 | 3,009 | |
Total assets at fair value | $ 6,087 | $ 5,432 | |
% of total assets at fair value | 20.30% | 19.70% | |
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ 0 | $ 0 | |
Other liabilities: Free-standing derivatives | 0 | 0 | |
Total recurring basis liabilities | $ 0 | $ 0 | |
Liabilities as percent of liabilities measured at fair value | 0.00% | 0.00% | |
Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | |||
Assets | |||
Fair value | $ 784 | $ 590 | |
Quoted prices in active markets for identical assets (Level 1) | Municipal | |||
Assets | |||
Fair value | 0 | 0 | |
Quoted prices in active markets for identical assets (Level 1) | Corporate - public | |||
Assets | |||
Fair value | 0 | 0 | |
Quoted prices in active markets for identical assets (Level 1) | Corporate - privately placed | |||
Assets | |||
Fair value | 0 | 0 | |
Quoted prices in active markets for identical assets (Level 1) | Foreign government | |||
Assets | |||
Fair value | 0 | 0 | |
Quoted prices in active markets for identical assets (Level 1) | ABS | |||
Assets | |||
Fair value | 0 | 0 | |
Quoted prices in active markets for identical assets (Level 1) | MBS | |||
Assets | |||
Fair value | 0 | 0 | |
Significant other observable inputs (Level 2) | |||
Assets | |||
Fair value | 22,970 | 20,927 | |
Equity securities, at fair value (cost $1,107 and $1,123) | 14 | 13 | |
Short-term investments | 373 | 698 | |
Other investments: | |||
Other investments: Free-standing derivatives | 190 | 134 | |
Separate account assets | 0 | 0 | |
Total assets at fair value | $ 23,547 | $ 21,772 | |
% of total assets at fair value | 78.80% | 79.10% | |
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ 0 | $ 0 | |
Other liabilities: Free-standing derivatives | (119) | (65) | |
Total recurring basis liabilities | $ (119) | $ (65) | |
Liabilities as percent of liabilities measured at fair value | 19.00% | 13.30% | |
Significant other observable inputs (Level 2) | U.S. government and agencies | |||
Assets | |||
Fair value | $ 321 | $ 292 | |
Significant other observable inputs (Level 2) | Municipal | |||
Assets | |||
Fair value | 1,958 | 1,715 | |
Significant other observable inputs (Level 2) | Corporate - public | |||
Assets | |||
Fair value | 14,535 | 12,777 | |
Significant other observable inputs (Level 2) | Corporate - privately placed | |||
Assets | |||
Fair value | 5,622 | 5,517 | |
Significant other observable inputs (Level 2) | Foreign government | |||
Assets | |||
Fair value | 96 | 149 | |
Significant other observable inputs (Level 2) | ABS | |||
Assets | |||
Fair value | 419 | 301 | |
Significant other observable inputs (Level 2) | MBS | |||
Assets | |||
Fair value | 19 | 176 | |
Significant unobservable inputs (Level 3) | |||
Assets | |||
Fair value | 153 | 208 | |
Equity securities, at fair value (cost $1,107 and $1,123) | 114 | 116 | |
Short-term investments | 0 | 0 | |
Other investments: | |||
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 0 | 0 | |
Total assets at fair value | $ 267 | $ 324 | |
% of total assets at fair value | 0.90% | 1.20% | |
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | $ (516) | $ (427) | |
Other liabilities: Free-standing derivatives | 0 | 0 | |
Total recurring basis liabilities | $ (516) | $ (427) | |
Liabilities as percent of liabilities measured at fair value | 82.40% | 87.30% | |
Significant unobservable inputs (Level 3) | U.S. government and agencies | |||
Assets | |||
Fair value | $ 0 | $ 0 | |
Significant unobservable inputs (Level 3) | Municipal | |||
Assets | |||
Fair value | 49 | 40 | |
Significant unobservable inputs (Level 3) | Corporate - public | |||
Assets | |||
Fair value | 31 | 25 | |
Significant unobservable inputs (Level 3) | Corporate - privately placed | |||
Assets | |||
Fair value | 68 | 122 | |
Significant unobservable inputs (Level 3) | Foreign government | |||
Assets | |||
Fair value | 0 | 0 | |
Significant unobservable inputs (Level 3) | ABS | |||
Assets | |||
Fair value | 5 | 16 | |
Significant unobservable inputs (Level 3) | MBS | |||
Assets | |||
Fair value | 0 | 5 | |
Investments reported at NAV | |||
Other investments: | |||
Investments reported at NAV | $ 763 | $ 773 |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Significant unobservable inputs (Details) - Equity-indexed and forward starting options in life and annuity product contracts - Significant unobservable inputs (Level 3) $ in Millions | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Quantitative information about the significant unobservable inputs | ||
Fair value | $ (483) | $ (395) |
Projected option cost | Minimum | ||
Quantitative information about the significant unobservable inputs | ||
Weighted average | 0.010 | 0.010 |
Projected option cost | Maximum | ||
Quantitative information about the significant unobservable inputs | ||
Weighted average | 0.042 | 0.042 |
Projected option cost | Weighted average | ||
Quantitative information about the significant unobservable inputs | ||
Weighted average | 0.0280 | 0.0257 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Rollforward of Level 3 assets and liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | $ 324 | $ 321 | $ 467 |
Total gains (losses) included in: net income | 1 | 14 | 14 |
Total gains (losses) included in: OCI | (7) | 3 | (6) |
Transfers into Level 3 | 52 | 54 | 25 |
Transfers out of Level 3 | (43) | (69) | (138) |
Purchases | 24 | 82 | 64 |
Sales | (77) | (60) | (39) |
Issues | 0 | 0 | 0 |
Settlements | (7) | (21) | (66) |
Balance at end of period | 267 | 324 | 321 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | (427) | (223) | (284) |
Total gains (losses) included in: net income | (24) | (52) | 57 |
Total gains (losses) included in: OCI | 0 | 0 | 0 |
Transfers into Level 3 | (54) | (154) | 0 |
Transfers out of Level 3 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 |
Sales | 0 | 0 | 0 |
Issues | (34) | (10) | (2) |
Settlements | 23 | 12 | 6 |
Balance at end of period | (516) | (427) | (223) |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | |||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | (23) | (38) | 71 |
Other investments: Free-standing derivatives | 1 | ||
Contractholder funds: Derivatives embedded in life and annuity contracts | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance at beginning of period | (427) | (223) | (284) |
Total gains (losses) included in: net income | (24) | (52) | 57 |
Total gains (losses) included in: OCI | 0 | 0 | 0 |
Transfers into Level 3 | (54) | (154) | 0 |
Transfers out of Level 3 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 |
Sales | 0 | 0 | 0 |
Issues | (34) | (10) | (2) |
Settlements | 23 | 12 | 6 |
Balance at end of period | (516) | (427) | (223) |
Net investment income | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Total gains (losses) included in: net income | (8) | (2) | 0 |
Realized capital gains and losses | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Total gains (losses) included in: net income | 9 | 16 | 14 |
Contract benefits | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Total gains (losses) included in: net income | (1) | 7 | (5) |
Interest credited to contractholder funds | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Total gains (losses) included in: net income | (23) | (59) | 62 |
Municipal | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 40 | 39 | 57 |
Total gains (losses) included in: net income | 1 | 0 | 0 |
Total gains (losses) included in: OCI | 2 | 4 | (2) |
Transfers into Level 3 | 20 | 0 | 0 |
Transfers out of Level 3 | (11) | 0 | (16) |
Purchases | 0 | 0 | 2 |
Sales | (1) | (1) | (2) |
Issues | 0 | 0 | 0 |
Settlements | (2) | (2) | 0 |
Balance at end of period | 49 | 40 | 39 |
Corporate - public | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 25 | 33 | 49 |
Total gains (losses) included in: net income | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | (2) |
Transfers into Level 3 | 0 | 5 | 3 |
Transfers out of Level 3 | 0 | (38) | (3) |
Purchases | 7 | 32 | 0 |
Sales | 0 | (2) | (11) |
Issues | 0 | 0 | 0 |
Settlements | (1) | (5) | (3) |
Balance at end of period | 31 | 25 | 33 |
Corporate - privately placed | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 122 | 97 | 220 |
Total gains (losses) included in: net income | 2 | (1) | (2) |
Total gains (losses) included in: OCI | (7) | 1 | (2) |
Transfers into Level 3 | 32 | 43 | 10 |
Transfers out of Level 3 | (32) | (1) | (101) |
Purchases | 8 | 4 | 12 |
Sales | (55) | (13) | 0 |
Issues | 0 | 0 | 0 |
Settlements | (2) | (8) | (40) |
Balance at end of period | 68 | 122 | 97 |
ABS | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 16 | 22 | 50 |
Total gains (losses) included in: net income | 0 | 1 | 0 |
Total gains (losses) included in: OCI | 0 | (1) | 0 |
Transfers into Level 3 | 0 | 0 | 12 |
Transfers out of Level 3 | 0 | (30) | (18) |
Purchases | 0 | 36 | 20 |
Sales | (10) | (6) | (19) |
Issues | 0 | 0 | 0 |
Settlements | (1) | (6) | (23) |
Balance at end of period | 5 | 16 | 22 |
MBS | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 5 | 0 | |
Total gains (losses) included in: net income | 1 | 0 | |
Total gains (losses) included in: OCI | (2) | (1) | |
Transfers into Level 3 | 0 | 6 | |
Transfers out of Level 3 | 0 | 0 | |
Purchases | 0 | 0 | |
Sales | (3) | 0 | |
Issues | 0 | 0 | |
Settlements | (1) | 0 | |
Balance at end of period | 0 | 5 | 0 |
Fixed income securities | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 208 | 191 | 376 |
Total gains (losses) included in: net income | 4 | 0 | (2) |
Total gains (losses) included in: OCI | (7) | 3 | (6) |
Transfers into Level 3 | 52 | 54 | 25 |
Transfers out of Level 3 | (43) | (69) | (138) |
Purchases | 15 | 72 | 34 |
Sales | (69) | (22) | (32) |
Issues | 0 | 0 | 0 |
Settlements | (7) | (21) | (66) |
Balance at end of period | 153 | 208 | 191 |
Equity securities | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 116 | 129 | 90 |
Total gains (losses) included in: net income | (3) | 15 | 16 |
Total gains (losses) included in: OCI | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 |
Purchases | 9 | 10 | 30 |
Sales | (8) | (38) | (7) |
Issues | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Balance at end of period | 114 | 116 | 129 |
Free-standing derivatives, net | |||
Rollforward of Level 3 assets held at fair value on a recurring basis | |||
Balance at beginning of period | 0 | 1 | 1 |
Total gains (losses) included in: net income | 0 | (1) | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 |
Sales | 0 | 0 | 0 |
Issues | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Balance at end of period | $ 0 | $ 0 | $ 1 |
Fair Value of Assets and Liab_7
Fair Value of Assets and Liabilities - Change in unrealized gains and losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | $ 0 | $ 2 | $ 16 |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | (24) | (52) | 57 |
Total included in net income | (24) | (50) | 73 |
Changes in unrealized net capital gains and losses reported in OCI | (5) | ||
Contractholder funds: Derivatives embedded in life and annuity contracts | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | (24) | (52) | 57 |
Net investment income | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (8) | (2) | 0 |
Realized capital gains and losses | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | 8 | 4 | 16 |
Contract benefits | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (1) | 7 | (5) |
Interest credited to contractholder funds | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets and liabilities still held at the balance sheet date | (23) | (59) | 62 |
Municipal | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 1 | 1 | 0 |
Changes in unrealized net capital gains and losses reported in OCI | 2 | ||
Corporate - public | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 0 | 0 | 0 |
Changes in unrealized net capital gains and losses reported in OCI | 0 | ||
Corporate - privately placed | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 2 | 0 | 0 |
Changes in unrealized net capital gains and losses reported in OCI | (7) | ||
Total fixed income securities | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | 3 | 1 | 0 |
Equity securities | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | (3) | 2 | 16 |
Free-standing derivatives, net | |||
Gains (losses) included in net income for Level 3 assets and liabilities: | |||
Gains (losses) for Level 3 assets still held at the balance sheet date, included in earnings | $ 0 | $ (1) | $ 0 |
Fair Value of Assets and Liab_8
Fair Value of Assets and Liabilities - Financial assets and liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Financial assets | ||||
Mortgage loans, net | $ 3,359 | $ 3,988 | ||
Financial liabilities | ||||
Liability for collateral | 334 | 530 | $ 525 | $ 542 |
Notes due to related parties | 214 | 214 | ||
Significant unobservable inputs (Level 3) | Amortized cost, net | ||||
Financial assets | ||||
Mortgage loans, net | 3,359 | 3,988 | ||
Bank loans | 245 | 344 | ||
Agent loans | 631 | 666 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 7,764 | 8,403 | ||
Notes due to related parties | 214 | 214 | ||
Significant unobservable inputs (Level 3) | Fair value | ||||
Financial assets | ||||
Mortgage loans, net | 3,587 | 4,159 | ||
Bank loans | 250 | 337 | ||
Agent loans | 634 | 664 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 9,058 | 9,123 | ||
Notes due to related parties | 225 | 215 | ||
Significant other observable inputs (Level 2) | Amortized cost, net | ||||
Financial liabilities | ||||
Liability for collateral | 334 | 530 | ||
Significant other observable inputs (Level 2) | Fair value | ||||
Financial liabilities | ||||
Liability for collateral | $ 334 | $ 530 |
Derivative Financial Instrume_3
Derivative Financial Instruments and Off-balance sheet Financial Instruments - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($)contractentity | Dec. 31, 2019USD ($)contract | Dec. 31, 2018contract | |
Derivative Instruments, Gain (Loss) | |||
Assumed recoveries under sale of credit protection | $ | $ 0 | ||
Derivative, number of instruments held | contract | 5,926 | 6,592 | |
Cash and securities pledged as collateral by counterparties | $ | $ 3,000,000 | ||
Securities pledged as collateral to counterparties | $ | 6,000,000 | ||
Collateral posted | $ | 5,000,000 | $ 1,000,000 | |
Securities pledged in the form of margin deposits | $ | $ 6,000,000 | ||
Term of credit default swaps (in years) | 5 years | ||
The number of reference entities generally included in a CDX index | entity | 125 | ||
Fair Value Hedging | Derivatives designated as accounting hedging instruments | |||
Derivative Instruments, Gain (Loss) | |||
Derivative, number of instruments held | contract | 1 | 1 | 1 |
Number of foreign currency derivatives held | contract | 0 | 0 | 0 |
Cash Flow Hedging | Derivatives designated as accounting hedging instruments | |||
Derivative Instruments, Gain (Loss) | |||
Derivative, number of instruments held | contract | 0 | 0 | |
Number of foreign currency derivatives held | contract | 1 |
Derivative Financial Instrume_4
Derivative Financial Instruments and Off-balance sheet Financial Instruments - Volume and fair value positions of derivative instruments (Details) | Dec. 31, 2020USD ($)contract | Dec. 31, 2019USD ($)contract |
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | $ 908,000,000 | $ 10,000,000 |
Total liability derivatives, Notional amount | 2,240,000,000 | 2,375,000,000 |
Total derivatives, Notional amount | $ 3,148,000,000 | $ 2,385,000,000 |
Total asset derivatives, Number of contracts | contract | 3,189 | 3,484 |
Total liability derivatives, Number of contracts | contract | 2,737 | 3,108 |
Total derivatives, Number of contracts | contract | 5,926 | 6,592 |
Net amount on balance sheet | $ 185,000,000 | $ 124,000,000 |
Net amount on balance sheet | (630,000,000) | (482,000,000) |
Total derivatives, Fair value, net | (445,000,000) | (358,000,000) |
Asset derivatives, Gross asset | 189,000,000 | 124,000,000 |
Liability derivatives, gross asset | 1,000,000 | 10,000,000 |
Asset derivatives, gross liability | (4,000,000) | 0 |
Liability derivatives, Gross liability | (631,000,000) | (492,000,000) |
Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | $ 905,000,000 | $ 8,000,000 |
Total asset derivatives, Number of contracts | contract | 3,189 | 3,484 |
Net amount on balance sheet | $ 185,000,000 | $ 124,000,000 |
Asset derivatives, Gross asset | 189,000,000 | 124,000,000 |
Asset derivatives, gross liability | (4,000,000) | 0 |
Other | Derivatives designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 3,000,000 | 2,000,000 |
Net amount on balance sheet | 0 | 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, gross liability | 0 | 0 |
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 13,000,000 | |
Net amount on balance sheet | 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, gross liability | 0 | |
Interest rate cap agreements | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 19,000,000 | 34,000,000 |
Net amount on balance sheet | 0 | 0 |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | $ 0 | $ 0 |
Futures | Derivatives not designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total asset derivatives, Number of contracts | contract | 312 | 476 |
Net amount on balance sheet | $ 0 | $ 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, gross liability | $ 0 | $ 0 |
Futures | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Number of contracts | contract | 25 | 263 |
Net amount on balance sheet | $ 0 | $ 0 |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | $ 0 | $ 0 |
Options | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Number of contracts | contract | 2,831 | 2,981 |
Net amount on balance sheet | $ 184,000,000 | $ 124,000,000 |
Asset derivatives, Gross asset | 184,000,000 | 124,000,000 |
Asset derivatives, gross liability | $ 0 | $ 0 |
Options | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Number of contracts | contract | 2,712 | 2,844 |
Net amount on balance sheet | $ (110,000,000) | $ (60,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | $ (110,000,000) | $ (60,000,000) |
Futures | Derivatives not designated as accounting hedging instruments | Other assets | ||
Derivatives, Fair Value | ||
Total asset derivatives, Number of contracts | contract | 46 | 27 |
Net amount on balance sheet | $ 0 | $ 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, gross liability | 0 | $ 0 |
Futures | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Number of contracts | contract | 1 | |
Net amount on balance sheet | $ 0 | |
Liability derivatives, gross asset | 0 | |
Total return swaps - fixed income | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 7,000,000 | |
Net amount on balance sheet | 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, gross liability | 0 | |
Total return swaps - fixed income | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 10,000,000 | |
Net amount on balance sheet | 0 | |
Liability derivatives, gross asset | 0 | |
Liability derivatives, Gross liability | 0 | |
Total return swaps - equity index | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 8,000,000 | |
Net amount on balance sheet | 1,000,000 | |
Asset derivatives, Gross asset | 1,000,000 | |
Asset derivatives, gross liability | 0 | |
Total return swaps - equity index | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 14,000,000 | |
Net amount on balance sheet | 1,000,000 | |
Liability derivatives, gross asset | 1,000,000 | |
Liability derivatives, Gross liability | 0 | |
Foreign currency forwards | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 113,000,000 | |
Net amount on balance sheet | 1,000,000 | |
Asset derivatives, Gross asset | 4,000,000 | |
Asset derivatives, gross liability | (3,000,000) | |
Foreign currency forwards | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 117,000,000 | 242,000,000 |
Net amount on balance sheet | (4,000,000) | 6,000,000 |
Liability derivatives, gross asset | 1,000,000 | 9,000,000 |
Liability derivatives, Gross liability | (5,000,000) | (3,000,000) |
Embedded derivative financial instruments | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 750,000,000 | |
Net amount on balance sheet | 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, gross liability | 0 | |
Guaranteed accumulation benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 128,000,000 | 161,000,000 |
Net amount on balance sheet | (18,000,000) | (18,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | (18,000,000) | (18,000,000) |
Guaranteed withdrawal benefits | Derivatives not designated as accounting hedging instruments | Contractholder funds | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 190,000,000 | 205,000,000 |
Net amount on balance sheet | (15,000,000) | (14,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | (15,000,000) | (14,000,000) |
Equity-indexed and forward starting options in life and annuity product contracts | Derivatives not designated as accounting hedging instruments | Contractholder funds | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 1,785,000,000 | 1,678,000,000 |
Net amount on balance sheet | (483,000,000) | (395,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | (483,000,000) | (395,000,000) |
Credit default swaps - buying protection | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 17,000,000 | 1,000,000 |
Net amount on balance sheet | (1,000,000) | 0 |
Asset derivatives, Gross asset | 0 | 0 |
Asset derivatives, gross liability | (1,000,000) | 0 |
Credit default swaps - buying protection | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 26,000,000 | |
Net amount on balance sheet | (2,000,000) | |
Liability derivatives, gross asset | 0 | |
Liability derivatives, Gross liability | (2,000,000) | |
Credit default swaps - selling protection | Derivatives not designated as accounting hedging instruments | Other investments | ||
Derivatives, Fair Value | ||
Total asset derivatives, Notional amount | 4,000,000 | |
Net amount on balance sheet | 0 | |
Asset derivatives, Gross asset | 0 | |
Asset derivatives, gross liability | 0 | |
Credit default swaps - selling protection | Derivatives not designated as accounting hedging instruments | Other liabilities & accrued expenses | ||
Derivatives, Fair Value | ||
Total liability derivatives, Notional amount | 1,000,000 | 5,000,000 |
Net amount on balance sheet | 0 | 0 |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives, Gross liability | $ 0 | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments and Off-balance sheet Financial Instruments - Gross and net amounts for OTC derivatives (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Asset derivatives | ||
Gross amount | $ 189 | $ 124 |
Derivative asset, counterparty netting | (4) | 0 |
Net amount on balance sheet | 185 | 124 |
Liability derivatives | ||
Gross amount | (631) | (492) |
Derivative liability, counterparty netting | 1 | 10 |
Net amount on balance sheet | (630) | (482) |
OTC derivatives | ||
Asset derivatives | ||
Gross amount | 6 | 10 |
Derivative asset, counterparty netting | (5) | (10) |
Derivative asset, cash collateral (received) pledged | (1) | 0 |
Net amount on balance sheet | 0 | 0 |
Securities collateral (received) pledged | 0 | 0 |
Net amount | 0 | 0 |
Liability derivatives | ||
Gross amount | (9) | (5) |
Derivative liability, counterparty netting | 5 | 10 |
Derivative liability offsets under cash collateral pledged | 4 | (7) |
Net amount on balance sheet | 0 | (2) |
Securities collateral (received) pledged | 0 | 0 |
Net amount | $ 0 | $ (2) |
Derivative Financial Instrume_6
Derivative Financial Instruments and Off-balance sheet Financial Instruments - Foreign currency contracts in cash flow hedging and other (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Instruments, Gain (Loss) | |||
Total gain (loss) recognized in net income on derivatives | $ (10) | $ 19 | $ 45 |
Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Total gain (loss) recognized in net income on derivatives | 5 | 11 | 7 |
Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Total gain (loss) recognized in net income on derivatives | (1) | 7 | (5) |
Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Total gain (loss) recognized in net income on derivatives | (14) | 1 | 43 |
Interest rate contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 4 | 1 | |
Interest rate contracts | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 4 | 1 | |
Interest rate contracts | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | |
Interest rate contracts | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | |
Equity and index contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 26 | 63 | (27) |
Equity and index contracts | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 6 | 5 | (4) |
Equity and index contracts | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 |
Equity and index contracts | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 20 | 58 | (23) |
Embedded derivative financial instruments | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (35) | (50) | 61 |
Embedded derivative financial instruments | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 |
Embedded derivative financial instruments | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1) | 7 | (5) |
Embedded derivative financial instruments | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (34) | (57) | 66 |
Foreign currency contracts | |||
Derivative Instruments, Gain (Loss) | |||
Gain recognized in OCI on derivatives during the period | 0 | 0 | 1 |
Gain recognized in OCI on derivatives during the term of the hedging relationship | 0 | 0 | 0 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (7) | 3 | 12 |
Foreign currency contracts | Net investment income | |||
Derivative Instruments, Gain (Loss) | |||
Gain reclassified from AOCI into income | 0 | 0 | 0 |
Foreign currency contracts | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Gain reclassified from AOCI into income | 0 | 0 | 3 |
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (7) | 3 | 12 |
Foreign currency contracts | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 |
Foreign currency contracts | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 |
Credit default contracts | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | (1) | |
Credit default contracts | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | (1) | |
Credit default contracts | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | |
Credit default contracts | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | |
Total return swaps - fixed income | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | (1) | |
Total return swaps - fixed income | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | (1) | |
Total return swaps - fixed income | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | |
Total return swaps - fixed income | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | |
Total return swaps - equity index | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 3 | (1) |
Total return swaps - equity index | Realized capital gains and losses | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 3 | (1) |
Total return swaps - equity index | Contract benefits | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 |
Total return swaps - equity index | Interest credited to contractholder funds | |||
Derivative Instruments, Gain (Loss) | |||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | $ 0 | $ 0 | $ 0 |
Derivative Financial Instrume_7
Derivative Financial Instruments and Off-balance sheet Financial Instruments - Counterparty credit exposure and other (Details) $ in Millions | Dec. 31, 2020USD ($)counter-party | Dec. 31, 2019USD ($)counter-party |
Credit Derivatives | ||
Number of counter-parties | counter-party | 3 | 5 |
Notional amount | $ 94 | $ 296 |
Credit exposure | 3 | 7 |
Exposure, net of collateral | 0 | 0 |
Gross liability fair value of contracts containing credit-risk-contingent features | 8 | 4 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (3) | (3) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | (5) | (1) |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 0 | $ 0 |
A plus | ||
Credit Derivatives | ||
Number of counter-parties | counter-party | 3 | 5 |
Notional amount | $ 94 | $ 296 |
Credit exposure | 3 | 7 |
Exposure, net of collateral | $ 0 | $ 0 |
Derivative Financial Instrume_8
Derivative Financial Instruments and Off-balance sheet Financial Instruments - CDS notional amounts by credit rating (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Credit Derivatives | ||
Notional amount | $ 3,148 | $ 2,385 |
Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 5 | 5 |
Fair value | 0 | 0 |
Credit default contracts | Single name | ||
Credit Derivatives | ||
Notional amount | 5 | 5 |
Fair value | 0 | 0 |
AA | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
AA | Credit default contracts | Single name | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
A | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
A | Credit default contracts | Single name | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BBB | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BBB | Credit default contracts | Single name | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BB and lower | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 5 | 5 |
BB and lower | Credit default contracts | Single name | ||
Credit Derivatives | ||
Notional amount | $ 5 | $ 5 |
Derivative Financial Instrume_9
Derivative Financial Instruments and Off-balance sheet Financial Instruments - Off-balance sheet financial instruments (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Commitments to invest in limited partnership interests | $ 918 | $ 1,063 |
Private placement commitments | 0 | 16 |
Other loan commitments | $ 75 | $ 118 |
Reserve for Life-Contingent C_3
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Reserve for life-contingent contract benefits (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ||
Total reserve for life-contingent contract benefits | $ 11,800 | $ 11,272 |
Structured settlement annuities | ||
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ||
Total reserve for life-contingent contract benefits | 7,407 | 6,840 |
Other immediate fixed annuities | ||
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ||
Total reserve for life-contingent contract benefits | 1,507 | 1,607 |
Traditional life insurance | ||
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ||
Total reserve for life-contingent contract benefits | 2,650 | 2,552 |
Accident and health insurance | ||
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ||
Total reserve for life-contingent contract benefits | 169 | 195 |
Other | ||
Key assumptions generally used in calculating the reserve for life-contingent contract benefits: | ||
Total reserve for life-contingent contract benefits | $ 67 | $ 78 |
Reserve for Life-Contingent C_4
Reserve for Life-Contingent Contract Benefits and Contractholder Funds- Assumptions (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Structured settlement annuities | Minimum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 4.70% |
Other immediate fixed annuities | Minimum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 4.70% |
Traditional life insurance | Minimum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 2.50% |
Traditional life insurance | Maximum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 11.30% |
Accident and health insurance | Minimum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 3.00% |
Accident and health insurance | Maximum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 7.00% |
Other | Minimum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 1.40% |
Other | Maximum | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |
Life contingent contract benefits, interest rate assumptions (as a percent) | 5.80% |
Reserve for Life-Contingent C_5
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Narrative (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Reserve for life-contingent contract benefits with respect to deficiency | $ 496,000,000 | $ 126,000,000 | |
Life and Annuity Insurance Product Line | Allstate Annuities | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Premium deficiency charge for immediate annuities, after tax | $ 226,000,000 | ||
Variable annuities | |||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | |||
Account balances of separate accounts with guarantees, invested in equity, fixed income and balanced mutual funds | 2,940,000,000 | 2,660,000,000 | |
Account balances of separate accounts with guarantees, invested in money market mutual funds | $ 238,000,000 | $ 252,000,000 |
Reserve for Life-Contingent C_6
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Assumptions generally used in calculating the reserve for life-contingent (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Contractholder funds | ||||
Total contractholder funds | $ 16,481 | $ 16,711 | $ 17,470 | $ 18,592 |
Interest-sensitive life insurance | ||||
Contractholder funds | ||||
Total contractholder funds | 7,794 | 7,442 | ||
Fixed annuities | ||||
Contractholder funds | ||||
Total contractholder funds | $ 8,163 | 8,811 | ||
Key contract provisions relating to contractholder funds: | ||||
Percent of fixed annuities subject to market value adjustment for discretionary withdrawals (as a percent) | 11.00% | |||
Other investment contracts | ||||
Contractholder funds | ||||
Total contractholder funds | $ 524 | $ 458 | ||
Other investment contracts | Minimum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 1.70% | |||
Other investment contracts | Maximum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 10.30% | |||
Other life insurance | Minimum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 1.00% | |||
Other life insurance | Maximum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 6.00% | |||
Equity-indexed life insurance | Minimum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 0.00% | |||
Equity-indexed life insurance | Maximum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 9.00% | |||
Equity indexed fixed annuities | ||||
Key contract provisions relating to contractholder funds: | ||||
Period for withdrawal or surrender charges (in years) | 20 years | |||
Equity indexed fixed annuities | Minimum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | (8.00%) | |||
Equity indexed fixed annuities | Maximum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 9.00% | |||
Immediate fixed annuities | Minimum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 0.50% | |||
Immediate fixed annuities | Maximum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 7.50% | |||
Other fixed annuities | Minimum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 0.10% | |||
Other fixed annuities | Maximum | ||||
Key contract provisions relating to contractholder funds: | ||||
Contractholder funds, interest rate assumptions (as a percent) | 5.00% |
Reserve for Life-Contingent C_7
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Contractholder funds (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Contractholder funds activity | |||
Balance, beginning of year | $ 16,711 | $ 17,470 | $ 18,592 |
Deposits | 818 | 834 | 863 |
Interest credited | 574 | 581 | 597 |
Benefits | (733) | (769) | (810) |
Surrenders and partial withdrawals | (649) | (844) | (1,095) |
Contract charges | (643) | (637) | (645) |
Net transfers from separate accounts | 5 | 11 | 7 |
Reinsurance assumed from AAC | 256 | 0 | 0 |
Other adjustments | 142 | 65 | (39) |
Balance, end of year | $ 16,481 | $ 16,711 | $ 17,470 |
Reserve for Life-Contingent C_8
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Variable annuity contracts with guarantees and other (Details) - Variable annuities - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
In the event of death | ||
Variable annuity contracts with guarantees | ||
Separate account value | $ 3,174 | $ 2,908 |
Net amount at risk | $ 308 | $ 373 |
Average attained age of contractholders (in years) | 72 years | 71 years |
Liability for guarantees related to income benefits | ||
Variable annuity contracts with guarantees | ||
Separate account value | $ 925 | $ 848 |
Net amount at risk | 140 | 173 |
For cumulative periodic withdrawals | ||
Variable annuity contracts with guarantees | ||
Separate account value | 178 | 190 |
Net amount at risk | 12 | 13 |
Guaranteed accumulation benefits | ||
Variable annuity contracts with guarantees | ||
Separate account value | 93 | 123 |
Net amount at risk | $ 11 | $ 15 |
Weighted average waiting period until guarantee date (in years) | 3 years | 4 years |
Reserve for Life-Contingent C_9
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Liabilities for guarantees (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Movement in Liabilities for Guarantees on Long-Duration Contracts, Guaranteed Benefit Liability, Gross [Roll Forward] | ||
Balance at beginning of period | $ 418 | $ 443 |
Less reinsurance recoverables | 133 | 185 |
Net balance at beginning of period | 285 | 258 |
Incurred guarantee benefits | 66 | 30 |
Paid guarantee benefits | (2) | (3) |
Reinsurance assumed from AAC | 2 | |
Net change | 66 | 27 |
Net balance at end of period | 351 | 285 |
Plus reinsurance recoverables | 125 | 133 |
Balance at end of period | 476 | 418 |
Liability for guarantees related to death benefits and interest-sensitive life products | ||
Movement in Liabilities for Guarantees on Long-Duration Contracts, Guaranteed Benefit Liability, Gross [Roll Forward] | ||
Balance at beginning of period | 292 | 307 |
Less reinsurance recoverables | 81 | 111 |
Net balance at beginning of period | 211 | 196 |
Incurred guarantee benefits | 49 | 18 |
Paid guarantee benefits | (2) | (3) |
Reinsurance assumed from AAC | 2 | |
Net change | 49 | 15 |
Net balance at end of period | 260 | 211 |
Plus reinsurance recoverables | 69 | 81 |
Balance at end of period | 329 | 292 |
Liability for guarantees related to income benefits | ||
Movement in Liabilities for Guarantees on Long-Duration Contracts, Guaranteed Benefit Liability, Gross [Roll Forward] | ||
Balance at beginning of period | 23 | 38 |
Less reinsurance recoverables | 20 | 35 |
Net balance at beginning of period | 3 | 3 |
Incurred guarantee benefits | 0 | 0 |
Paid guarantee benefits | 0 | 0 |
Reinsurance assumed from AAC | 0 | |
Net change | 0 | 0 |
Net balance at end of period | 3 | 3 |
Plus reinsurance recoverables | 23 | 20 |
Balance at end of period | 26 | 23 |
Liability for guarantees related to accumulation and withdrawal benefits | ||
Movement in Liabilities for Guarantees on Long-Duration Contracts, Guaranteed Benefit Liability, Gross [Roll Forward] | ||
Balance at beginning of period | 103 | 98 |
Less reinsurance recoverables | 32 | 39 |
Net balance at beginning of period | 71 | 59 |
Incurred guarantee benefits | 17 | 12 |
Paid guarantee benefits | 0 | 0 |
Reinsurance assumed from AAC | 0 | |
Net change | 17 | 12 |
Net balance at end of period | 88 | 71 |
Plus reinsurance recoverables | 33 | 32 |
Balance at end of period | $ 121 | $ 103 |
Reserve for Life-Contingent _10
Reserve for Life-Contingent Contract Benefits and Contractholder Funds - Liabilities for guarantees narrative (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Liabilities for guarantees: | |||
Liability for guarantees | $ 476 | $ 418 | $ 443 |
Variable annuities | |||
Liabilities for guarantees: | |||
Liability for guarantees | 476 | 418 | 443 |
Variable annuities | In the event of death | |||
Liabilities for guarantees: | |||
Liability for guarantees | 67 | 78 | 109 |
Variable annuities | Liability for guarantees related to income benefits | |||
Liabilities for guarantees: | |||
Liability for guarantees | 24 | 21 | 36 |
Variable annuities | Guaranteed accumulation benefits | |||
Liabilities for guarantees: | |||
Liability for guarantees | 18 | 18 | 25 |
Variable annuities | For cumulative periodic withdrawals | |||
Liabilities for guarantees: | |||
Liability for guarantees | 15 | 14 | 14 |
Variable annuities | Other guarantees | |||
Liabilities for guarantees: | |||
Liability for guarantees | $ 352 | $ 287 | $ 259 |
Reinsurance - Reinsurance items
Reinsurance - Reinsurance items (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reinsurance recoverable | |||
Interest credited to contractholder funds | $ 44 | $ 40 | $ 44 |
Prudential | |||
Reinsurance recoverable | |||
Premiums and contract charges | 64 | 65 | 72 |
Contract benefits | 46 | (4) | 87 |
Interest credited to contractholder funds | 20 | 19 | 20 |
Operating costs and expenses | 12 | 12 | 14 |
Affiliate | |||
Reinsurance recoverable | |||
Premiums and contract charges | 44 | 49 | 51 |
Contract benefits | 37 | 35 | 35 |
Interest credited to contractholder funds | 18 | 20 | 20 |
Non-affiliate | |||
Reinsurance recoverable | |||
Premiums and contract charges | 227 | 270 | 275 |
Contract benefits | 139 | 152 | 214 |
Interest credited to contractholder funds | $ 26 | $ 20 | $ 24 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Reinsurance recoverable | |||
Number of unaffiliated reinsurers | item | 13 | ||
Reinsurance recoverable | $ 1,989 | $ 2,490 | |
Investments held by trust | 1,560 | ||
Gross life insurance in force | 435,850 | ||
Life insurance in force ceded to unaffiliated reinsurers | $ 63,697 | $ 75,159 | $ 83,166 |
Maximum | |||
Reinsurance recoverable | |||
Percent of morbidity risk ceded for term-life insurance policies (as a percent) | 90.00% | ||
A- | Reinsurer Concentration Risk | Allstate Financial | |||
Reinsurance recoverable | |||
Concentration risk, percentage | 94.00% | 78.00% | |
Non-affiliate | |||
Reinsurance recoverable | |||
Life insurance in force ceded to unaffiliated reinsurers | $ 63,700 | ||
Lincoln Benefit Life Company | |||
Reinsurance recoverable | |||
Investments held by trust | 6,290 | ||
Prudential | |||
Reinsurance recoverable | |||
Reinsurance recoverable | 1,280 | $ 1,290 | |
Citigroup Subsidiaries and Scottish Re | |||
Reinsurance recoverable | |||
Reinsurance recoverable | 99 | 112 | |
Scottish Re | |||
Reinsurance recoverable | |||
Reinsurance recoverable | $ 66 | $ 73 |
Reinsurance - Ceded to Prudenti
Reinsurance - Ceded to Prudential (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reinsurance | |||
Interest credited to contractholder funds | $ 44 | $ 40 | $ 44 |
Prudential | |||
Reinsurance | |||
Premiums and contract charges | 64 | 65 | 72 |
Contract benefits | 46 | (4) | 87 |
Interest credited to contractholder funds | 20 | 19 | 20 |
Operating costs and expenses | $ 12 | $ 12 | $ 14 |
Reinsurance - Premiums and cont
Reinsurance - Premiums and contract charges (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Effects of reinsurance on revenue | |||
Direct premiums and contract charges | $ 652 | $ 748 | $ 743 |
Total premiums and contract charges | 1,293 | 1,359 | 1,399 |
Direct life and annuity contract benefits | 1,238 | 1,038 | 1,062 |
Contract benefits, net of reinsurance | 1,729 | 1,481 | 1,446 |
Effects of reinsurance on cost and expenses | |||
Direct interest credited to contractholder funds | 452 | 463 | 533 |
Ceded interest credited to contractholder funds | (44) | (40) | (44) |
Interest credited to contractholder funds | 579 | 585 | 601 |
Reinsurance recoverables | |||
Reinsurance recoverable | 1,989 | 2,490 | |
Annuities | |||
Reinsurance recoverables | |||
Reinsurance recoverable | 1,282 | 1,293 | |
Life insurance | |||
Reinsurance recoverables | |||
Reinsurance recoverable | 660 | 1,145 | |
Other | |||
Reinsurance recoverables | |||
Reinsurance recoverable | 47 | 52 | |
Non-affiliate | |||
Effects of reinsurance on revenue | |||
Assumed premiums and contract charges | 671 | 699 | 741 |
Ceded premiums and contract charges | (227) | (270) | (275) |
Assumed life and annuity contract benefits | 510 | 493 | 484 |
Life and annuity contract benefits, reinsurance ceded | (139) | (152) | (214) |
Effects of reinsurance on cost and expenses | |||
Assumed interest credited to contractholder funds | 162 | 154 | 104 |
Ceded interest credited to contractholder funds | (26) | (20) | (24) |
Affiliate | |||
Effects of reinsurance on revenue | |||
Assumed premiums and contract charges | 241 | 231 | 241 |
Ceded premiums and contract charges | (44) | (49) | (51) |
Assumed life and annuity contract benefits | 157 | 137 | 149 |
Life and annuity contract benefits, reinsurance ceded | (37) | (35) | (35) |
Effects of reinsurance on cost and expenses | |||
Assumed interest credited to contractholder funds | 9 | 8 | 8 |
Ceded interest credited to contractholder funds | (18) | (20) | $ (20) |
Reinsurance recoverables | |||
Reinsurance recoverable | $ 0 | $ 408 |
Reinsurance - Rollforward of cr
Reinsurance - Rollforward of credit loss allowance for reinsurance recoverables (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||
Reinsurance recoverable, allowance for credit loss, beginning balance | $ (3) | |
Cumulative effect of change in accounting principle | $ (11) | |
Increase in the provision for credit losses | (1) | |
Write-offs | 0 | |
Reinsurance recoverable, allowance for credit loss, ending balance | $ (15) |
Reinsurance - Retention limits
Reinsurance - Retention limits by period of policy issuance (Details) - USD ($) | 1 Months Ended | 33 Months Ended | 45 Months Ended | 48 Months Ended | 106 Months Ended |
Aug. 31, 1998 | Dec. 31, 2017 | Mar. 31, 2011 | Mar. 31, 2015 | Jun. 30, 2007 | |
Reinsurance | |||||
Reinsurance retention policy, amount retained | $ 1,000,000 | $ 5,000,000 | $ 2,000,000 | ||
Retention level for contracts issued to individuals age 70 and over | 3,000,000 | ||||
Retention level for certain large contracts meeting specific criteria | $ 10,000,000 | $ 5,000,000 | |||
Single life | |||||
Reinsurance | |||||
Reinsurance retention policy, amount retained | $ 2,000,000 | $ 5,000,000 | |||
Retention level for contracts issued to individuals age 70 and over | 3,000,000 | ||||
Retention level for certain large contracts meeting specific criteria | 10,000,000 | ||||
Joint life | |||||
Reinsurance | |||||
Reinsurance retention policy, amount retained | 8,000,000 | ||||
Retention level for certain large contracts meeting specific criteria | $ 10,000,000 |
Deferred Policy Acquisition a_3
Deferred Policy Acquisition and Sales Inducement Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred policy acquisition costs | |||
Balance, beginning of year | $ 947 | $ 1,232 | $ 1,156 |
Acquisition costs deferred | 51 | 55 | 78 |
Amortization charged to income | (147) | (180) | (146) |
Effect of unrealized gains and losses | (123) | (160) | 144 |
Reinsurance assumed from AAC | 245 | 0 | 0 |
Balance, end of year | 973 | 947 | 1,232 |
DSI activity relates to fixed annuities and interest-sensitive life contracts | |||
Balance, beginning of year | 27 | 34 | 36 |
Amortization charged to income | (5) | (5) | (4) |
Effect of unrealized gains and losses | 3 | (2) | 2 |
Balance, end of year | $ 25 | $ 27 | $ 34 |
Guarantees and Contingent Lia_2
Guarantees and Contingent Liabilities (Details) - Guaranty funds - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Guarantees and Contingent Liabilities | ||
Liability for insurance assessments | $ 4 | $ 4 |
Insurance assessments, premium tax offsets | $ 6 | $ 6 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Components of the deferred income tax assets and liabilities | |||
Unrecognized tax benefits | $ 12 | $ 14 | $ 14 |
Unrecognized tax benefits, increase in liability | 12 | ||
Income taxes paid | 30 | 62 | $ 30 |
Current income tax receivable | $ 35 | ||
Current income tax payable | $ 29 |
Income Taxes - Components of th
Income Taxes - Components of the deferred income tax assets and liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||
Deferred reinsurance gain | $ 5 | $ 6 |
Other assets | 1 | 1 |
Total deferred tax assets | 6 | 7 |
Deferred tax liabilities | ||
Unrealized net capital gains | (320) | (245) |
Life and annuity reserves | (231) | (253) |
Investments | (181) | (185) |
DAC | (181) | (169) |
Other liabilities | (49) | (49) |
Total deferred tax liabilities | (962) | (901) |
Net deferred tax liability | $ (956) | $ (894) |
Income Taxes - Components of in
Income Taxes - Components of income tax expense (benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Current | $ 26 | $ 76 | $ 116 |
Deferred | (19) | 52 | (99) |
Total income tax expense | $ 7 | $ 128 | $ 17 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income tax percentage (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax rate - expense | 21.00% | 21.00% | 21.00% |
Tax credits | (14.90%) | (1.90%) | (3.20%) |
Adjustments to prior year tax liabilities | (3.10%) | 0.20% | (0.30%) |
Dividends received deduction | (1.90%) | (0.50%) | (0.70%) |
State income taxes | 3.40% | 0.50% | 1.50% |
Non-deductible expenses | 0.00% | 0.10% | 0.00% |
Tax Legislation benefit | 0.00% | 0.00% | (14.00%) |
Other | (0.10%) | 0.00% | 0.10% |
Effective income tax rate - expense | 4.40% | 19.40% | 4.40% |
Capital Structure (Details)
Capital Structure (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Interest paid | $ 7 | $ 5 | $ 5 |
Other liabilities and accrued expenses | 1,007 | 1,181 | |
Limited Partnership | |||
Debt Instrument [Line Items] | |||
Other liabilities and accrued expenses | $ 85 | $ 61 |
Statutory Financial Informati_2
Statutory Financial Information and Dividend Limitations (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Statutory Accounting Practices [Line Items] | |||
Statutory net income (loss) | $ (125,000,000) | $ 363,000,000 | $ 410,000,000 |
Statutory capital and surplus | 3,930,000,000 | 3,810,000,000 | |
Dividends paid | 0 | 75,000,000 | $ 250,000,000 |
Maximum amount of dividends ALIC able to pay without prior IL DOI approval | 393,000,000 | ||
Deficit position used to determine payment of dividends | $ 864,000,000 | ||
Multiplier of authorized control level RBC to determine action level RBC | 2 | ||
Statutory accounting practices, statutory capital and surplus, adjusted balance | $ 4,440,000,000 | ||
Authorized control level RBC | 622,000,000 | ||
Subsidiaries | |||
Statutory Accounting Practices [Line Items] | |||
Proceeds from dividends | $ 0 | $ 0 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Allstate 401(k) Savings Plan | |||
Cost allocated to Allstate 401(k) Savings Plan | $ 4 | $ 4 | $ 5 |
Pension benefits | |||
Benefit Plans | |||
Allocated Cost (Credit) | $ 2 | $ 3 | $ 2 |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Pre- tax | |||
Other comprehensive income (loss) | $ 370 | $ 837 | $ (448) |
Tax | |||
Other comprehensive income (loss) | (78) | (175) | 94 |
After- tax | |||
Other comprehensive income (loss), after-tax | 292 | 662 | (354) |
Accumulated Net Investment Gain (Loss) | |||
Pre- tax | |||
Unrealized net holding gains and losses arising during the period, net of related offsets | 405 | 878 | (483) |
Less: reclassification adjustment of realized capital gains and losses | 48 | 19 | (35) |
Other comprehensive income (loss) | 357 | 859 | (448) |
Tax | |||
Unrealized net holding gains and losses arising during the period, net of related offsets | (85) | (184) | 101 |
Less: reclassification adjustment of realized capital gains and losses | (10) | (4) | 7 |
Other comprehensive income (loss) | (75) | (180) | 94 |
After- tax | |||
Unrealized net holding gains and losses arising during the period, net of related offsets | 320 | 694 | (382) |
Less: reclassification adjustment of realized capital gains and losses | 38 | 15 | (28) |
Other comprehensive income (loss), after-tax | 282 | 679 | (354) |
Accumulated Foreign Currency Adjustment | |||
Pre- tax | |||
Other comprehensive income (loss) | 13 | (22) | 0 |
Tax | |||
Other comprehensive income (loss) | (3) | 5 | 0 |
After- tax | |||
Other comprehensive income (loss), after-tax | $ 10 | $ (17) | $ 0 |
SCHEDULE I - SUMMARY OF INVES_2
SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) | Dec. 31, 2020USD ($) |
Summary of Investments Other Than Investments in Related Parties | |
Cost/ amortized cost, net | $ 31,984,000,000 |
Amount shown in the Balance Sheet | 34,798,000,000 |
U.S. government and agencies | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 1,105,000,000 |
Cost/ amortized cost, net | 1,060,000,000 |
Amount shown in the Balance Sheet | 1,105,000,000 |
Municipal | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 2,007,000,000 |
Cost/ amortized cost, net | 1,650,000,000 |
Amount shown in the Balance Sheet | 2,007,000,000 |
Foreign government | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 96,000,000 |
Cost/ amortized cost, net | 91,000,000 |
Amount shown in the Balance Sheet | 96,000,000 |
Public utilities | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 3,673,000,000 |
Cost/ amortized cost, net | 3,209,000,000 |
Amount shown in the Balance Sheet | 3,673,000,000 |
All other corporate bonds | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 16,583,000,000 |
Cost/ amortized cost, net | 15,078,000,000 |
Amount shown in the Balance Sheet | 16,583,000,000 |
Asset-backed securities | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 424,000,000 |
Cost/ amortized cost, net | 420,000,000 |
Amount shown in the Balance Sheet | 424,000,000 |
MBS | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 19,000,000 |
Cost/ amortized cost, net | 14,000,000 |
Amount shown in the Balance Sheet | 19,000,000 |
Fixed income securities | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 23,907,000,000 |
Cost/ amortized cost, net | 21,522,000,000 |
Amount shown in the Balance Sheet | 23,907,000,000 |
Public utilities | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 26,000,000 |
Cost/ amortized cost, net | 16,000,000 |
Amount shown in the Balance Sheet | 26,000,000 |
Banks, trusts and insurance companies | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 132,000,000 |
Cost/ amortized cost, net | 82,000,000 |
Amount shown in the Balance Sheet | 132,000,000 |
Industrial, miscellaneous and all other | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 1,348,000,000 |
Cost/ amortized cost, net | 985,000,000 |
Amount shown in the Balance Sheet | 1,348,000,000 |
Nonredeemable preferred stocks | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 30,000,000 |
Cost/ amortized cost, net | 24,000,000 |
Amount shown in the Balance Sheet | 30,000,000 |
Equity securities | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 1,536,000,000 |
Cost/ amortized cost, net | 1,107,000,000 |
Amount shown in the Balance Sheet | 1,536,000,000 |
Mortgage loans | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 3,587,000,000 |
Cost/ amortized cost, net | 3,359,000,000 |
Amount shown in the Balance Sheet | 3,359,000,000 |
Real estate (none acquired in satisfaction of debt) | |
Summary of Investments Other Than Investments in Related Parties | |
Cost/ amortized cost, net | 315,000,000 |
Amount shown in the Balance Sheet | 315,000,000 |
Policy loans | |
Summary of Investments Other Than Investments in Related Parties | |
Cost/ amortized cost, net | 582,000,000 |
Amount shown in the Balance Sheet | 582,000,000 |
Derivatives | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 184,000,000 |
Cost/ amortized cost, net | 184,000,000 |
Amount shown in the Balance Sheet | 184,000,000 |
Limited partnership interests | |
Summary of Investments Other Than Investments in Related Parties | |
Cost/ amortized cost, net | 3,065,000,000 |
Amount shown in the Balance Sheet | 3,065,000,000 |
Other long-term investments | |
Summary of Investments Other Than Investments in Related Parties | |
Cost/ amortized cost, net | 876,000,000 |
Amount shown in the Balance Sheet | 876,000,000 |
Short-term investments | |
Summary of Investments Other Than Investments in Related Parties | |
Fair value (if applicable) | 974,000,000 |
Cost/ amortized cost, net | 974,000,000 |
Amount shown in the Balance Sheet | 974,000,000 |
Real estate acquired in satisfaction of debt | |
Summary of Investments Other Than Investments in Related Parties | |
Cost/ amortized cost, net | 0 |
Amount shown in the Balance Sheet | $ 0 |
SCHEDULE IV - REINSURANCE (Deta
SCHEDULE IV - REINSURANCE (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SEC Schedule, 12-17, Insurance Companies, Reinsurance, Life Insurance in Force, Net [Abstract] | |||
SEC Schedule, 12-17, Insurance Companies, Reinsurance, Life Insurance in Force, Gross | $ 99,351,000,000 | $ 107,014,000,000 | $ 113,202,000,000 |
Life insurance in force ceded to unaffiliated reinsurers | 63,697,000,000 | 75,159,000,000 | 83,166,000,000 |
SEC Schedule, 12-17, Insurance Companies, Reinsurance, Life Insurance in Force, Assumed | 336,500,000,000 | 284,518,000,000 | 301,316,000,000 |
Life insurance in force, Net amount | $ 372,154,000,000 | $ 316,373,000,000 | $ 331,352,000,000 |
SEC Schedule, 12-17, Insurance Companies, Reinsurance, Life Insurance in Force, Percentage Assumed to Net | 90.40% | 89.90% | 90.90% |
Premiums and contract charges: | |||
Premiums and contract charges, Goss amount | $ 652,000,000 | $ 748,000,000 | $ 743,000,000 |
Premiums and contract charges, Ceded to other companies | 271,000,000 | 319,000,000 | 326,000,000 |
Premiums and contract charges, Assumed from other companies | 912,000,000 | 930,000,000 | 982,000,000 |
Premiums and contract charges, Net amount | $ 1,293,000,000 | $ 1,359,000,000 | $ 1,399,000,000 |
Premiums and contract charges, Percentage of amount assumed to net | 70.50% | 68.40% | 70.20% |
Reinsurance or coinsurance income netted against premiums ceded | $ 0 | $ 0 | $ 0 |
Life insurance | |||
Premiums and contract charges: | |||
Premiums and contract charges, Goss amount | 618,000,000 | 683,000,000 | 679,000,000 |
Premiums and contract charges, Ceded to other companies | 256,000,000 | 302,000,000 | 308,000,000 |
Premiums and contract charges, Assumed from other companies | 844,000,000 | 858,000,000 | 906,000,000 |
Premiums and contract charges, Net amount | $ 1,206,000,000 | $ 1,239,000,000 | $ 1,277,000,000 |
Premiums and contract charges, Percentage of amount assumed to net | 70.00% | 69.20% | 70.90% |
Accident and health insurance | |||
Premiums and contract charges: | |||
Premiums and contract charges, Goss amount | $ 34,000,000 | $ 65,000,000 | $ 64,000,000 |
Premiums and contract charges, Ceded to other companies | 15,000,000 | 17,000,000 | 18,000,000 |
Premiums and contract charges, Assumed from other companies | 68,000,000 | 72,000,000 | 76,000,000 |
Premiums and contract charges, Net amount | $ 87,000,000 | $ 120,000,000 | $ 122,000,000 |
Premiums and contract charges, Percentage of amount assumed to net | 78.20% | 60.00% | 62.30% |
SCHEDULE V - VALUATION ALLOWA_2
SCHEDULE V - VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Valuation allowances and qualifying accounts | |||
Cumulative effect of change in accounting principle | $ 11 | ||
Allowance for credit losses on fixed income securities | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | $ 0 | ||
Cumulative effect of change in accounting principle | 0 | ||
Additions charged to costs and expenses | 3 | ||
Additions other additions | 0 | ||
Deductions | 2 | ||
Balance as of end of period | 1 | 0 | |
Allowance for credit losses on mortgage loans | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | 3 | 3 | $ 3 |
Cumulative effect of change in accounting principle | 33 | ||
Additions charged to costs and expenses | 37 | 0 | 0 |
Additions other additions | 1 | 0 | 0 |
Deductions | 15 | 0 | 0 |
Balance as of end of period | 59 | 3 | 3 |
Allowance for credit losses on bank loans | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | 0 | ||
Cumulative effect of change in accounting principle | 16 | ||
Additions charged to costs and expenses | 4 | ||
Additions other additions | 0 | ||
Deductions | 4 | ||
Balance as of end of period | 16 | 0 | |
Allowance for credit losses on agent loans | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | 3 | 2 | 2 |
Cumulative effect of change in accounting principle | 2 | ||
Additions charged to costs and expenses | 0 | 1 | 0 |
Additions other additions | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 |
Balance as of end of period | 5 | 3 | 2 |
Allowance for credit losses on reinsurance recoverables | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | 3 | 0 | |
Cumulative effect of change in accounting principle | 11 | ||
Additions charged to costs and expenses | 1 | 3 | |
Additions other additions | 0 | 0 | |
Deductions | 0 | 0 | |
Balance as of end of period | 15 | 3 | $ 0 |
Allowances for credit losses on other assets | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | 7 | ||
Cumulative effect of change in accounting principle | 0 | ||
Additions charged to costs and expenses | 0 | ||
Additions other additions | 0 | ||
Deductions | 0 | ||
Balance as of end of period | 7 | 7 | |
Allowance for credit losses on commitments to fund mortgage loans, bank loans and agent loans | |||
Valuation allowances and qualifying accounts | |||
Balance as of beginning of period | 0 | ||
Cumulative effect of change in accounting principle | 1 | ||
Additions charged to costs and expenses | 0 | ||
Additions other additions | 0 | ||
Deductions | 1 | ||
Balance as of end of period | $ 0 | $ 0 |