Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2017 | |
Document and Entity Information [Abstract] | |
Document Type | POS AM |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2017 |
Entity Registrant Name | GREAT AMERICAN LIFE INSURANCE CO. |
Entity Central Index Key | 723,258 |
Entity Filer Category | Non-accelerated Filer |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | |||
Cash and cash equivalents | $ 816 | $ 499 | $ 262 |
Investments: | |||
Fixed maturities, available for sale at fair value (amortized cost — $29,612 (unaudited), $27,310 and $24,903) | 30,836 | 28,020 | 25,486 |
Fixed maturities, trading at fair value | 118 | 117 | 114 |
Equity securities, available for sale at fair value (cost — $440 (unaudited), $447 and $489) | 540 | 495 | 486 |
Mortgage loans | 791 | 890 | 880 |
Policy loans | 186 | 192 | 201 |
Real estate and other investments | 941 | 763 | 597 |
Total cash and investments | 34,228 | 30,976 | 28,026 |
Recoverables from reinsurers | 331 | 343 | 355 |
Deferred policy acquisition costs (including the impact of unrealized gains on securities of $465 (unaudited), $273 and $233) | 850 | 997 | 954 |
Accrued investment income | 280 | 262 | 242 |
Variable annuity assets (separate accounts) | 628 | 600 | 608 |
Equity options — fixed-indexed annuities | 629 | 492 | 241 |
Funds held as collateral | 374 | 380 | 211 |
Other assets | 322 | 312 | 191 |
Total assets | 37,642 | 34,362 | 30,828 |
Liabilities and Equity: | |||
Annuity benefits accumulated (including the impact of unrealized gains on securities of $141 (unaudited), $78 and $64) | 32,671 | 29,907 | 26,622 |
Life, accident and health reserves | 667 | 691 | 705 |
Variable annuity liabilities (separate accounts) | 628 | 600 | 608 |
Liability for funds held as collateral | 374 | 380 | 211 |
Net deferred tax liabilities | 72 | 10 | 31 |
Other liabilities | 397 | 207 | 303 |
Total liabilities | 34,809 | 31,795 | 28,480 |
Shareholder’s equity: | |||
Common Stock, par value — $12.50 per share: — 1,200,000 shares authorized — 201,000 shares issued and outstanding | 3 | 3 | 3 |
Capital surplus | 948 | 938 | 892 |
Retained earnings | 1,361 | 1,302 | 1,206 |
Accumulated other comprehensive income, net of tax | 474 | 266 | 192 |
Total shareholder’s equity | 2,786 | 2,509 | 2,293 |
Noncontrolling interests | 47 | 58 | 55 |
Total equity | 2,833 | 2,567 | 2,348 |
Total liabilities and equity | $ 37,642 | $ 34,362 | $ 30,828 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fixed maturities, available for sale at amortized cost | $ 29,612 | $ 27,310 | $ 24,903 |
Equity securities, available for sale at cost | 440 | 447 | 489 |
Unrealized gains (losses) included in Balance Sheet line items related to the impact of unrealized gains on securities | $ 738 | $ 420 | $ 294 |
Common Stock, par value (USD per share) | $ 12.50 | $ 12.50 | $ 12.50 |
Common Stock, shares authorized | 1,200,000 | 1,200,000 | 1,200,000 |
Common Stock, shares issued | 201,000 | 201,000 | 201,000 |
Common Stock, shares outstanding | 201,000 | 201,000 | 201,000 |
Deferred policy acquisition costs | |||
Unrealized gains (losses) included in Balance Sheet line items related to the impact of unrealized gains on securities | $ (465) | $ (273) | $ (233) |
Annuity benefits accumulated | |||
Unrealized gains (losses) included in Balance Sheet line items related to the impact of unrealized gains on securities | $ (141) | $ (78) | $ (64) |
Consolidated Statement of Earni
Consolidated Statement of Earnings - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | |||||
Net investment income | $ 1,098 | $ 1,025 | $ 1,376 | $ 1,230 | $ 1,139 |
Realized gains on securities | 6 | (18) | (9) | (16) | 35 |
Life, accident and health net earned premiums | 17 | 18 | 24 | 21 | 23 |
Policy charges and other income | 85 | 80 | 108 | 105 | 100 |
Total revenues | 1,206 | 1,105 | 1,499 | 1,340 | 1,297 |
Costs and Expenses: | |||||
Annuity benefits | 635 | 640 | 800 | 724 | 641 |
Life, accident and health benefits | 18 | 23 | 29 | 29 | 33 |
Insurance acquisition expenses, net | 156 | 130 | 185 | 166 | 182 |
Other expenses | 96 | 89 | 118 | 102 | 89 |
Total costs and expenses | 905 | 882 | 1,132 | 1,021 | 945 |
Earnings before income taxes | 301 | 223 | 367 | 319 | 352 |
Provision for income taxes | 101 | 77 | 127 | 108 | 120 |
Net earnings, including noncontrolling interests | 200 | 146 | 240 | 211 | 232 |
Less: Net earnings attributable to noncontrolling interests | 6 | 3 | 4 | 6 | 1 |
Net Earnings Attributable to Shareholder | 194 | 143 | 236 | 205 | 231 |
Supplemental disclosure of Realized gains (losses) on securities: | |||||
Realized gains before impairments | 30 | 30 | 42 | 35 | 46 |
Losses on securities with impairment | (26) | (48) | (51) | (51) | (11) |
Non-credit portion recognized in other comprehensive income (loss) | 2 | 0 | 0 | 0 | 0 |
Impairment charges recognized in earnings | (24) | (48) | (51) | (51) | (11) |
Total realized gains (losses) on securities | $ 6 | $ (18) | $ (9) | $ (16) | $ 35 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||||
Net earnings, including noncontrolling interests | $ 200 | $ 146 | $ 240 | $ 211 | $ 232 |
Net unrealized gains (losses) on securities: | |||||
Unrealized holding gains (losses) on securities arising during the period | 210 | 358 | 76 | (286) | 185 |
Reclassification adjustment for realized (gains) losses included in net earnings | (3) | 12 | 6 | 8 | (23) |
Total net unrealized gains (losses) on securities | 207 | 370 | 82 | (278) | 162 |
Net unrealized gains (losses) on cash flow hedges | 1 | 4 | (8) | 1 | 0 |
Other comprehensive income (loss), net of tax | 208 | 374 | 74 | (277) | 162 |
Total comprehensive income (loss), net of tax | 408 | 520 | 314 | (66) | 394 |
Less: Comprehensive income attributable to noncontrolling interests | 6 | 3 | 4 | 6 | 1 |
Comprehensive income (loss) attributable to shareholder | $ 402 | $ 517 | $ 310 | $ (72) | $ 393 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - USD ($) $ in Millions | Total | Total | Common Shares | Common Stock and Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Inc. (Loss) | Noncontrolling Interests |
Beginning Balance, shares at Dec. 31, 2013 | 201,000 | ||||||
Beginning Balance at Dec. 31, 2013 | $ 2,286 | $ 2,246 | $ 859 | $ 1,080 | $ 307 | $ 40 | |
Increase (Decrease) in Stockholder's Equity [Roll Forward] | |||||||
Net earnings | 232 | 231 | 231 | 1 | |||
Other comprehensive income (loss) | 162 | 162 | 162 | 0 | |||
Capital contributions from parent | 10 | 10 | 10 | ||||
Dividends | (200) | (200) | (200) | ||||
Other | 2 | 1 | 1 | 0 | 1 | ||
Ending Balance, shares at Dec. 31, 2014 | 201,000 | ||||||
Ending Balance at Dec. 31, 2014 | 2,492 | 2,450 | 870 | 1,111 | 469 | 42 | |
Increase (Decrease) in Stockholder's Equity [Roll Forward] | |||||||
Net earnings | 211 | 205 | 205 | 6 | |||
Other comprehensive income (loss) | (277) | (277) | (277) | 0 | |||
Capital contributions from parent | 24 | 24 | 24 | ||||
Dividends | (110) | (110) | (110) | ||||
Other | $ 8 | 1 | 1 | 0 | 0 | 7 | |
Ending Balance, shares at Dec. 31, 2015 | 201,000 | 201,000 | |||||
Ending Balance at Dec. 31, 2015 | $ 2,348 | 2,293 | 895 | 1,206 | 192 | 55 | |
Increase (Decrease) in Stockholder's Equity [Roll Forward] | |||||||
Net earnings | 240 | 236 | 236 | 4 | |||
Other comprehensive income (loss) | 74 | 74 | 74 | 0 | |||
Capital contributions from parent | 45 | 45 | 45 | ||||
Dividends | (140) | (140) | (140) | ||||
Other | $ 0 | 1 | 1 | (1) | |||
Ending Balance, shares at Dec. 31, 2016 | 201,000 | 201,000 | |||||
Ending Balance at Dec. 31, 2016 | $ 2,567 | 2,509 | 941 | 1,302 | 266 | 58 | |
Increase (Decrease) in Stockholder's Equity [Roll Forward] | |||||||
Net earnings | 200 | 194 | 194 | 6 | |||
Other comprehensive income (loss) | 208 | 208 | 208 | 0 | |||
Capital contributions from parent | 10 | 10 | 10 | ||||
Dividends | (135) | (135) | (135) | ||||
Other | $ (17) | (17) | |||||
Ending Balance, shares at Sep. 30, 2017 | 201,000 | 201,000 | |||||
Ending Balance at Sep. 30, 2017 | $ 2,833 | $ 2,786 | $ 951 | $ 1,361 | $ 474 | $ 47 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities: | |||||
Net earnings, including noncontrolling interests | $ 200 | $ 146 | $ 240 | $ 211 | $ 232 |
Adjustments: | |||||
Depreciation and amortization | (62) | (56) | (75) | (67) | (85) |
Annuity benefits | 635 | 640 | 800 | 724 | 641 |
Realized (gains) losses on investing activities | (6) | 18 | 9 | 16 | (35) |
Net (purchases) sales of trading securities | 2 | (6) | (2) | 7 | 1 |
Deferred annuity and life policy acquisition costs | (177) | (172) | (229) | (224) | (198) |
Amortization of insurance acquisition costs | 127 | 106 | 152 | 139 | 161 |
Change in: | |||||
Reinsurance recoverable | 12 | 9 | 12 | 13 | 6 |
Accrued investment income | (18) | (10) | (20) | (30) | (17) |
Funds held as collateral | 6 | (89) | (169) | 74 | 0 |
Other assets | (8) | (4) | (57) | 1 | (9) |
Life, accident and health reserves | (24) | (7) | (14) | 15 | (12) |
Liability for funds held as collateral | (6) | 89 | 169 | (74) | 0 |
Other liabilities | (54) | (74) | (83) | 48 | (113) |
Other operating activities, net | (20) | (26) | (34) | 2 | (2) |
Net cash provided by operating activities | 607 | 564 | 699 | 855 | 570 |
Investing Activities: | |||||
Purchases of fixed maturities | (5,354) | (4,632) | (6,186) | (5,450) | (4,419) |
Purchases of equity securities | (43) | (45) | (72) | (266) | (136) |
Purchases of mortgage loans | (84) | (183) | (213) | (197) | (323) |
Purchases of equity options — fixed indexed annuities | (308) | (253) | (358) | (301) | (221) |
Purchases of other investments | (309) | (209) | (320) | (272) | (189) |
Purchases of real estate, property and equipment | (6) | (15) | (16) | (48) | (12) |
Proceeds from maturities and redemptions of fixed maturities | 3,272 | 2,134 | 3,259 | 2,194 | 2,014 |
Proceeds from repayments of mortgage loans | 139 | 159 | 203 | 209 | 98 |
Proceeds from sales of fixed maturities | 109 | 410 | 528 | 281 | 103 |
Proceeds from sales of equity securities | 44 | 69 | 96 | 106 | 45 |
Proceeds from exercise of equity options — fixed indexed annuities | 508 | 129 | 248 | 326 | 352 |
Proceeds from sales of other investments | 111 | 81 | 171 | 146 | 145 |
Proceeds from sales of real estate, property and equipment | 27 | 6 | 14 | 26 | 5 |
Other investing activities, net | 6 | (43) | (41) | 9 | 9 |
Net cash used in investing activities | (1,888) | (2,392) | (2,687) | (3,237) | (2,529) |
Financing Activities: | |||||
Annuity receipts | 3,432 | 3,324 | 4,435 | 4,139 | 3,692 |
Annuity surrenders, benefits and withdrawals | (1,725) | (1,726) | (2,275) | (2,002) | (1,747) |
Net transfers from variable annuity assets | 43 | 29 | 42 | 43 | 43 |
Advances from Federal Home Loan Bank | 0 | 150 | 150 | 345 | 0 |
Capital contributions from parent | 0 | 0 | 15 | 0 | 0 |
Cash dividends paid | (135) | (50) | (140) | (110) | (200) |
Other financing activities, net | (17) | 2 | (2) | 7 | 1 |
Net cash provided by (used in) financing activities | 1,598 | 1,729 | 2,225 | 2,422 | 1,789 |
Net Change in Cash and Cash Equivalents | 317 | (99) | 237 | 40 | (170) |
Cash and cash equivalents at beginning of period | 499 | 262 | 262 | 222 | 392 |
Cash and cash equivalents at end of period | $ 816 | $ 163 | $ 499 | $ 262 | $ 222 |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of Great American Life Insurance Company and its subsidiaries (“GALIC” or the “Company”). GALIC is a direct wholly-owned subsidiary of Great American Financial Resources, Inc. (“GAFRI”), a financial services holding company wholly-owned by American Financial Group, Inc. (“AFG”). Certain reclassifications have been made to prior years to conform to the current year’s presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. The financial statements also include costs paid on behalf of GALIC by GAFRI. These costs are recorded as expense in the period incurred and shown as an increase in capital surplus. Events or transactions occurring subsequent to the audited consolidated financial statements as of and for the year ended December 31, 2016 , and prior to April 17, 2017 , have been evaluated for potential recognition or disclosure herein. The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. Unaudited Interim Consolidated Financial Information The accompanying interim consolidated balance sheet as of September 30, 2017, and the consolidated statements of earnings, comprehensive income, and cash flows for the nine months ended September 30, 2017 and 2016 and the consolidated statement of changes in equity for the nine months ended September 30, 2017 and the related footnote disclosures are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with GAAP. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of GALIC’s statement of financial position as of September 30, 2017 and GALIC’s consolidated results of operations and GALIC’s cash flows for the nine months ended September 30, 2017 and 2016. Events or transactions occurring subsequent to September 30, 2017, and prior to the filing of these unaudited interim consolidated financial statements, have been evaluated for potential recognition or disclosure herein. The results for the nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full fiscal year. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect GALIC’s assumptions about the assumptions market participants would use in pricing the asset or liability. GALIC did not have any significant nonrecurring fair value measurements of nonfinancial assets and liabilities in the first nine months ended September 30, 2017 or in 2016 or 2015 . Investments Fixed maturity and equity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) in GALIC’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage and policy loans are carried primarily at the aggregate unpaid balance. In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, which, among other things, will require all equity securities currently classified as “available for sale” to be reported at fair value, with holding gains and losses recognized in net income, instead of AOCI. GALIC will be required to adopt this guidance effective January 1, 2018. At the date of adoption, the net unrealized gain on equity securities included in AOCI will be reclassified to retained earnings in the balance sheet as the cumulative effect of an accounting change. Premiums and discounts on fixed maturity securities are amortized using the interest method. Mortgage-backed securities (“MBS”) are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. Gains or losses on securities are determined on the specific identification basis. When a decline in the value of a specific investment is considered to be other-than-temporary at the balance sheet date, a provision for impairment is charged to earnings (included in realized gains (losses) on securities) and the cost basis of that investment is reduced. If management can assert that it does not intend to sell an impaired fixed maturity security and it is not more likely than not that it will have to sell the security before recovery of its amortized cost basis, then the other-than-temporary impairment is separated into two components: (i) the amount related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion of an other-than-temporary impairment is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the impairment charge. Both components are shown in the statement of earnings. If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment charge to earnings is recorded to reduce the amortized cost of that security to fair value. Derivatives Derivatives included in GALIC’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings, unless the derivatives are designated and qualify as highly effective cash flow hedges. Derivatives that do not qualify for hedge accounting under GAAP consist primarily of (i) components of certain fixed maturity securities (primarily interest-only MBS) and (ii) the equity-based component of certain annuity products (included in annuity benefits accumulated) and related equity index call options designed to be consistent with the characteristics of the liabilities and used to mitigate the risk embedded in those annuity products. To qualify for hedge accounting, at the inception of a derivative contract, GALIC formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness and ineffectiveness will be measured on a retrospective and prospective basis. Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. Any hedge ineffectiveness is immediately recorded in current period earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. GALIC uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in GALIC’s portfolio of fixed maturity securities. Funds Held as Collateral GALIC receives collateral from its counterparties to support its purchased equity index call option assets. The fair value of this collateral is recorded as an asset and the offsetting obligation to return the collateral is recorded as a liability. Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. A GALIC subsidiary cedes life insurance policies to a third party on a funds withheld basis whereby the subsidiary retains the assets (securities) associated with the reinsurance contract. Interest is credited to the reinsurer based on the actual investment performance of the retained assets. This reinsurance contract is considered to contain an embedded derivative (that must be adjusted to fair value) because the yield on the payable is based on a specific block of the ceding company’s assets, rather than the overall creditworthiness of the ceding company. GALIC determined that changes in the fair value of the underlying portfolio of fixed maturity securities is an appropriate measure of the value of the embedded derivative. The securities related to this contract are classified as “trading.” The adjustment to fair value on the embedded derivative offsets the investment income recorded on the adjustment to fair value of the related trading portfolio. Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC also includes capitalized costs associated with sales inducements offered to fixed annuity policyholders such as enhanced interest rates and premium and persistency bonuses. DPAC related to annuities is deferred to the extent deemed recoverable and amortized, with interest, in relation to the present value of actual and expected gross profits on the policies. Expected gross profits consist principally of estimated future investment margin (estimated future net investment income less interest credited on policyholder funds) and surrender, mortality, and other life and annuity policy charges, less death, annuitization and guaranteed withdrawal benefits in excess of account balances and estimated future policy administration expenses. To the extent that realized gains and losses result in adjustments to the amortization of DPAC related to annuities, such adjustments are reflected as components of realized gains (losses) on securities. DPAC related to traditional life and health insurance is amortized over the expected premium paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. See “ Life, Accident and Health Reserves ” below for details on the impact of loss recognition on the accounting for traditional life and health insurance contracts. DPAC includes the present value of future profits on business in force of annuity and life, accident and health insurance companies acquired (“PVFP”). PVFP represents the portion of the costs to acquire companies that is allocated to the value of the right to receive future cash flows from insurance contracts existing at the date of acquisition. PVFP is amortized with interest in relation to expected gross profits of the acquired policies for annuities and universal life products and in relation to the premium paying period for traditional life and health insurance products. DPAC and certain other balance sheet amounts related to annuity and life businesses are also adjusted, net of tax, for the change in expense that would have been recorded if the unrealized gains (losses) from securities had actually been realized. These adjustments are included in unrealized gains (losses) on marketable securities, a component of AOCI in GALIC’s Balance Sheet. Annuity Benefits Accumulated Annuity receipts and benefit payments are recorded as increases or decreases in annuity benefits accumulated rather than as revenue and expense. Increases in this liability for interest credited are charged to annuity benefits expense and decreases for policy charges are recorded as annuity policy charges revenues. For certain products, annuity benefits accumulated also includes reserves for accrued persistency and premium bonuses, guaranteed withdrawals and excess benefits expected to be paid on future deaths and annuitizations (“EDAR”). The liabilities for EDAR and guaranteed withdrawals are accrued for and modified using assumptions consistent with those used in determining DPAC and DPAC amortization, except that amounts are determined in relation to the present value of total expected assessments. Total expected assessments consist principally of estimated future investment margin, surrender, mortality, and other life and annuity policy charges, and unearned revenues once they are recognized as income. Reserves for traditional fixed annuities are generally recorded at the stated account value. Reserves for indexed annuities are recorded at a value reflecting the fixed guarantees in the product plus the fair value of equity participation in the contract. Annuity benefits accumulated also includes amounts advanced from the Federal Home Loan Bank of Cincinnati. Unearned Revenue Certain upfront policy charges on annuities are deferred as unearned revenue (included in other liabilities) and recognized in net earnings (included in policy charges and other income) using the same assumptions and estimated gross profits used to amortize DPAC. Life, Accident and Health Reserves Liabilities for future policy benefits under traditional life, accident and health policies are computed using the net level premium method. Computations are based on the original projections of investment yields, mortality, morbidity and surrenders and include provisions for unfavorable deviations unless a loss recognition event (premium deficiency) occurs. Claim reserves and liabilities established for accident and health claims are modified as necessary to reflect actual experience and developing trends. For long-duration contracts (such as traditional life policies), loss recognition occurs when, based on current expectations as of the measurement date, existing contract liabilities plus the present value of future premiums (including reasonably expected rate increases) are not expected to cover the present value of future claims payments and related settlement and maintenance costs (excluding overhead) as well as unamortized acquisition costs. If a block of business is determined to be in loss recognition, a charge is recorded in earnings in an amount equal to the excess of the present value of expected future claims costs and unamortized acquisition costs over existing reserves plus the present value of expected future premiums (with no provision for adverse deviation). The charge is recorded first to reduce unamortized acquisition costs and then as an additional reserve (if unamortized acquisition costs have been reduced to zero). In addition, reserves for traditional life policies are subject to adjustment for loss recognition charges that would have been recorded if the unrealized gains from securities had actually been realized. This adjustment is included in unrealized gains (losses) on marketable securities, a component of AOCI in GALIC’s Balance Sheet. Variable Annuity Assets and Liabilities Separate accounts related to variable annuities represent the fair value of deposits invested in underlying investment funds on which GALIC earns a fee. Investment funds are selected and may be changed only by the policyholder, who retains all investment risk. GALIC’s variable annuity contracts contain a guaranteed minimum death benefit (“GMDB”) to be paid if the policyholder dies before the annuity payout period commences. In periods of declining equity markets, the GMDB may exceed the value of the policyholder’s account. A GMDB liability is established for future excess death benefits using assumptions together with a range of reasonably possible scenarios for investment fund performance that are consistent with DPAC capitalization and amortization assumptions. Premium Recognition For traditional life, accident and health products, premiums are recognized as revenue when legally collectible from policyholders. For interest-sensitive life and universal life products, premiums are recorded in a policyholder account, which is reflected as a liability. Revenue is recognized as amounts are assessed against the policyholder account for mortality coverage and contract expenses. Noncontrolling Interests For balance sheet purposes, noncontrolling interests represents the interests of shareholders other than GALIC in consolidated entities. In the statement of earnings, net earnings and losses attributable to noncontrolling interests represents such shareholders’ interest in the earnings and losses of those entities. Income Taxes GALIC and its subsidiaries have an intercompany tax allocation agreement with AFG. Pursuant to the agreement, each company’s tax expense is determined based upon its inclusion in the consolidated tax return of AFG and its includable subsidiaries. Estimated payments are made quarterly during the year. Following year-end, additional settlements are made on the original due date of the return and, when extended, at the time the return is filed. The method of allocation among the companies under the agreement is based upon separate return calculations with current credit for losses to the extent the losses provide a benefit in the consolidated return. Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. GALIC recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on GALIC’s reserve for uncertain tax positions are recognized as a component of tax expense. Benefit Plans GALIC provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG and its subsidiaries make all contributions to the retirement fund portion of the plan and match a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments and property and equipment. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. Annuity receipts, surrenders, benefits and withdrawals are also reflected as financing activities. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. Effective October 1, 2016, GALIC early adopted (on a retrospective basis) ASU 2016-15, which addresses the diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. Among other things, this guidance requires proceeds received from the settlement of corporate-owned life insurance policies to be classified as cash inflows from investing activities and allows premiums paid for policies to be reported as cash outflows either from investing activities or operating activities. GALIC has elected to show all corporate-owned life insurance activity in investing activities. Prior to adoption of this guidance, GALIC accounted for these transactions as operating activities. In addition, ASU 2016-15 clarifies when distributions received from investees accounted under the equity method should be accounted for as a cash inflow from operating activities or as a cash inflow from investing activities. GALIC had previously accounted for all distributions from investments accounted for under the equity method as investing activities. The new guidance solely related to the presentation of certain transactions in the statement of cash flows. Accordingly, adoption of this guidance did not impact GALIC’s results of operations or financial position. Revenue Recognition Guidance Effective in 2018 In May 2014, the FASB issued ASU 2014-09, which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized when (or as) the entity satisfies a performance obligation under the contract. The new guidance also updates the accounting for certain costs associated with obtaining and fulfilling contracts with customers and requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Revenue recognition for insurance contracts and financial instruments, which are GALIC’s primary sources of revenue, is excluded from the scope of the new guidance. GALIC will adopt the new guidance effective January 1, 2018. Because the new guidance does not apply to the vast majority of GALIC’s business, management does not expect the adoption of this guidance to have a material impact on GALIC’s results of operations or financial position. Based on implementation efforts to date, management believes that the new standard would have applied to less than 3% of GALIC’s 2016 consolidated revenues. |
Segments of Operations
Segments of Operations | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segments of Operations | Segments of Operations GALIC manages its business as two segments: (i) Annuity and (ii) Run-off life. GALIC’s annuity business markets traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets. GALIC’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. The following tables (in millions) show GALIC’s assets, revenues and earnings before income taxes by segment. December 31, 2016 2015 2014 Assets Annuity $ 33,607 $ 30,055 $ 27,218 Run-off life 755 773 794 Total assets $ 34,362 $ 30,828 $ 28,012 Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Revenues Annuity: Net investment income $ 1,083 $ 1,010 $ 1,355 $ 1,211 $ 1,120 Other income 82 77 104 100 94 Total annuity 1,165 1,087 1,459 1,311 1,214 Run-off life 35 36 49 45 48 Total revenues before realized gains (losses) 1,200 1,123 1,508 1,356 1,262 Realized gains (losses) on securities 6 (18 ) (9 ) (16 ) 35 Total revenues $ 1,206 $ 1,105 $ 1,499 $ 1,340 $ 1,297 Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Earnings Before Income Taxes Annuity $ 289 $ 239 $ 371 $ 333 $ 318 Run-off life 6 2 5 2 (1 ) Total earnings before realized gains (losses) and income taxes 295 241 376 335 317 Realized gains (losses) on securities 6 (18 ) (9 ) (16 ) 35 Total earnings before income taxes $ 301 $ 223 $ 367 $ 319 $ 352 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows: Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). GALIC’s Level 1 financial instruments consist primarily of publicly traded equity securities and highly liquid government bonds for which quoted market prices in active markets are available. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. GALIC’s Level 2 financial instruments include separate account assets, corporate and municipal fixed maturity securities, asset-backed securities, mortgage-backed securities (“MBS”), non-affiliated common stocks and equity index call options priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2. Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. GALIC’s Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information. GALIC’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. The Company's internal investment professionals are a group of approximately 25 analysts whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, the Company communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total September 30, 2017 (unaudited) Assets: Available for sale (“AFS”) fixed maturities: U.S. Government and government agencies $ 8 $ 31 $ 8 $ 47 States, municipalities and political subdivisions — 4,261 75 4,336 Foreign government — 13 — 13 Residential MBS — 2,303 118 2,421 Commercial MBS — 877 33 910 Asset-backed securities (“ABS”) — 5,377 394 5,771 Corporate and other 16 16,370 952 17,338 Total AFS fixed maturities 24 29,232 1,580 30,836 Trading fixed maturities — 118 — 118 Equity securities 398 38 104 540 Variable annuity assets (separate accounts) (*) — 628 — 628 Equity options — fixed-indexed annuities — 629 — 629 Other assets — derivatives — 1 — 1 Total assets accounted for at fair value $ 422 $ 30,646 $ 1,684 $ 32,752 Liabilities: Derivatives in annuity benefits accumulated $ — $ — $ 2,293 $ 2,293 Other liabilities — derivatives — 31 — 31 Total liabilities accounted for at fair value $ — $ 31 $ 2,293 $ 2,324 (*) Variable annuity liabilities equal the fair value of variable annuity assets. Level 1 Level 2 Level 3 Total December 31, 2016 Assets: Available for sale fixed maturities: U.S. Government and government agencies $ 10 $ 32 $ 8 $ 50 States, municipalities and political subdivisions — 4,101 75 4,176 Foreign government — 13 — 13 Residential MBS — 2,449 148 2,597 Commercial MBS — 1,324 25 1,349 Asset-backed securities — 4,160 359 4,519 Corporate and other 15 14,649 652 15,316 Total AFS fixed maturities 25 26,728 1,267 28,020 Trading fixed maturities — 117 — 117 Equity securities 360 25 110 495 Variable annuity assets (separate accounts) (*) — 600 — 600 Equity options — fixed-indexed annuities — 492 — 492 Other assets — derivatives — 1 — 1 Total assets accounted for at fair value $ 385 $ 27,963 $ 1,377 $ 29,725 Liabilities: Derivatives in annuity benefits accumulated $ — $ — $ 1,759 $ 1,759 Other liabilities — derivatives — 30 — 30 Total liabilities accounted for at fair value $ — $ 30 $ 1,759 $ 1,789 December 31, 2015 Assets: Available for sale fixed maturities: U.S. Government and government agencies $ 10 $ 35 $ 15 $ 60 States, municipalities and political subdivisions — 3,934 32 3,966 Foreign government — 13 — 13 Residential MBS — 2,400 184 2,584 Commercial MBS — 1,938 36 1,974 Asset-backed securities — 3,159 333 3,492 Corporate and other 16 12,801 580 13,397 Total AFS fixed maturities 26 24,280 1,180 25,486 Trading fixed maturities — 114 — 114 Equity securities 372 31 83 486 Variable annuity assets (separate accounts) (*) — 608 — 608 Equity options — fixed-indexed annuities — 241 — 241 Other assets — derivatives — 2 — 2 Total assets accounted for at fair value $ 398 $ 25,276 $ 1,263 $ 26,937 Liabilities: Derivatives in annuity benefits accumulated $ — $ — $ 1,369 $ 1,369 Other liabilities — derivatives — 8 — 8 Total liabilities accounted for at fair value $ — $ 8 $ 1,369 $ 1,377 (*) Variable annuity liabilities equal the fair value of variable annuity assets. The transfers between Level 1 and Level 2 for the years ended December 31, 2016 , 2015 and 2014 are reflected in the table below at fair value as of the end of the reporting period (dollars in millions): Level 2 To Level 1 Transfers Level 1 To Level 2 Transfers # of Transfers Fair Value # of Transfers Fair Value 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 Perpetual preferred stocks — — 1 $ — $ — $ 4 1 — 3 $ 1 $ — $ 14 Common stocks 2 1 — — — — 2 1 1 — — — During the first nine months of 2017 (unaudited), there was one preferred stock with an aggregate fair value of $1 million that transferred from Level 2 to Level 1. Transfers between Level 1 and Level 2 for all periods presented were a result of increases or decreases in observable trade activity. Approximately 5% of the total assets carried at fair value on September 30, 2017 (unaudited) were Level 3 assets. Approximately 77% ( $1.30 billion ) of the Level 3 assets were priced using non-binding broker quotes, for which there is a lack of transparency as to the inputs used to determine fair value. Details as to the quantitative inputs are neither provided by the brokers nor otherwise reasonably obtainable by GALIC. Since internally developed Level 3 asset fair values represent approximately 1% of the total assets measured at fair value, any justifiable changes in unobservable inputs used to determine internally developed fair values would not have a material impact on GALIC’s financial position. The only significant Level 3 assets or liabilities carried at fair value in the financial statements that were not measured using broker quotes are the derivatives embedded in GALIC’s fixed-indexed annuity liabilities, which are measured using a discounted cash flow approach and had a fair value of $2.29 billion at September 30, 2017 (unaudited) and $1.76 billion at December 31, 2016 . The following table presents information about the unobservable inputs used by management in determining fair value of these embedded derivatives at September 30, 2017 (unaudited). See Note F — “ Derivatives .” Unobservable Input Range Adjustment for credit risk 0.2% – 2.4% over the risk free rate Risk margin for uncertainty in cash flows 0.68% reduction in the discount rate Surrenders 3% – 23% of indexed account value Partial surrenders 2% – 10% of indexed account value Annuitizations 0.1% – 1% of indexed account value Deaths 1.5% – 8.0% of indexed account value Budgeted option costs 2.4% – 3.7% of indexed account value The range of adjustments for credit risk reflects credit spread variations across the yield curve. The range of projected surrender rates reflects the specific surrender charges and other features of GALIC’s individual fixed-indexed annuity products with an expected range of 6% to 10% in the majority of future calendar years ( 3% to 23% over all periods). Increasing the budgeted option cost or risk margin for uncertainty in cash flows assumptions in the table above would increase the fair value of the fixed-indexed annuity embedded derivatives, while increasing any of the other unobservable inputs in the table above would decrease the fair value of the embedded derivatives. Changes in balances of Level 3 financial assets and liabilities carried at fair value during the nine months ended September 30, 2017 (unaudited) and the years ended December 31, 2016 , 2015 and 2014 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized gains (losses) included in Balance at December 31, 2016 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at September 30, 2017 (unaudited) AFS fixed maturities: U.S. government agency $ 8 $ — $ — $ — $ — $ — $ — $ 8 State and municipal 75 — 1 — (1 ) — — 75 Residential MBS 148 — 1 1 (24 ) 25 (33 ) 118 Commercial MBS 25 2 — 12 (10 ) 4 — 33 Asset-backed securities 359 (3 ) 3 86 (41 ) 152 (162 ) 394 Corporate and other 652 (4 ) 9 400 (108 ) 29 (26 ) 952 Total AFS fixed maturities 1,267 (5 ) 14 499 (184 ) 210 (221 ) 1,580 Equity securities 110 (13 ) 6 17 (3 ) — (13 ) 104 Total Level 3 assets $ 1,377 $ (18 ) $ 20 $ 516 $ (187 ) $ 210 $ (234 ) $ 1,684 Embedded derivatives $ (1,759 ) $ (386 ) $ — $ (224 ) $ 76 $ — $ — $ (2,293 ) Total Level 3 liabilities $ (1,759 ) $ (386 ) $ — $ (224 ) $ 76 $ — $ — $ (2,293 ) Total realized/unrealized gains (losses) included in Balance at December 31, 2015 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2016 AFS fixed maturities: U.S. government agency $ 15 $ (7 ) $ — $ — $ — $ — $ — $ 8 State and municipal 32 — (3 ) 47 (1 ) — — 75 Residential MBS 184 (3 ) (2 ) 6 (26 ) 29 (40 ) 148 Commercial MBS 36 (1 ) — — (6 ) — (4 ) 25 Asset-backed securities 333 (1 ) 1 30 (20 ) 49 (33 ) 359 Corporate and other 580 (1 ) (9 ) 134 (58 ) 22 (16 ) 652 Total AFS fixed maturities 1,180 (13 ) (13 ) 217 (111 ) 100 (93 ) 1,267 Equity securities 83 (6 ) 23 28 (15 ) 9 (12 ) 110 Total Level 3 assets $ 1,263 $ (19 ) $ 10 $ 245 $ (126 ) $ 109 $ (105 ) $ 1,377 Embedded derivatives (*) $ (1,369 ) $ (211 ) $ — $ (277 ) $ 98 $ — $ — $ (1,759 ) Total Level 3 liabilities $ (1,369 ) $ (211 ) $ — $ (277 ) $ 98 $ — $ — $ (1,759 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $17 million in 2016 . Total realized/unrealized gains (losses) included in Balance at December 31, 2014 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2015 AFS fixed maturities: U.S. government agency $ 15 $ — $ — $ — $ — $ — $ — $ 15 State and municipal 24 — — 9 (1 ) — — 32 Residential MBS 235 (2 ) (2 ) — (32 ) 48 (63 ) 184 Commercial MBS 37 (1 ) (1 ) — (2 ) 4 (1 ) 36 Asset-backed securities 175 1 (5 ) 184 (40 ) 28 (10 ) 333 Corporate and other 484 (4 ) (9 ) 147 (47 ) 9 — 580 Total AFS fixed maturities 970 (6 ) (17 ) 340 (122 ) 89 (74 ) 1,180 Equity securities 47 (3 ) (6 ) 51 — — (6 ) 83 Total Level 3 assets $ 1,017 $ (9 ) $ (23 ) $ 391 $ (122 ) $ 89 $ (80 ) $ 1,263 Embedded derivatives (*) $ (1,160 ) $ (17 ) $ — $ (257 ) $ 65 $ — $ — $ (1,369 ) Total Level 3 liabilities $ (1,160 ) $ (17 ) $ — $ (257 ) $ 65 $ — $ — $ (1,369 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $28 million in 2015 . Total realized/unrealized gains (losses) included in Balance at December 31, 2013 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2014 AFS fixed maturities: U.S. government agency $ 15 $ — $ — $ — $ — $ — $ — $ 15 State and municipal 20 — 1 — — 3 — 24 Residential MBS 267 4 3 10 (27 ) 62 (84 ) 235 Commercial MBS 24 (1 ) — — — 14 — 37 Asset-backed securities 62 2 (2 ) 88 (17 ) 65 (23 ) 175 Corporate and other 292 3 13 88 (60 ) 151 (3 ) 484 Total AFS fixed maturities 680 8 15 186 (104 ) 295 (110 ) 970 Equity securities 8 1 1 31 — 12 (6 ) 47 Total Level 3 assets $ 688 $ 9 $ 16 $ 217 $ (104 ) $ 307 $ (116 ) $ 1,017 Embedded derivatives (*) $ (804 ) $ (182 ) $ — $ (221 ) $ 47 $ — $ — $ (1,160 ) Total Level 3 liabilities $ (804 ) $ (182 ) $ — $ (221 ) $ 47 $ — $ — $ (1,160 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of $58 million in 2014 . Fair Value of Financial Instruments The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions): Carrying Fair Value Value Total Level 1 Level 2 Level 3 September 30, 2017 (unaudited) Financial assets: Cash and cash equivalents $ 816 $ 816 $ 816 $ — $ — Mortgage loans 791 788 — — 788 Policy loans 186 186 — — 186 Total financial assets not accounted for at fair value $ 1,793 $ 1,790 $ 816 $ — $ 974 Financial liabilities: Annuity benefits accumulated (*) $ 32,464 $ 31,857 $ — $ — $ 31,857 Total financial liabilities not accounted for at fair value $ 32,464 $ 31,857 $ — $ — $ 31,857 December 31, 2016 Financial assets: Cash and cash equivalents $ 499 $ 499 $ 499 $ — $ — Mortgage loans 890 887 — — 887 Policy loans 192 192 — — 192 Total financial assets not accounted for at fair value $ 1,581 $ 1,578 $ 499 $ — $ 1,079 Financial liabilities: Annuity benefits accumulated (*) $ 29,703 $ 28,932 $ — $ — $ 28,932 Total financial liabilities not accounted for at fair value $ 29,703 $ 28,932 $ — $ — $ 28,932 December 31, 2015 Financial assets: Cash and cash equivalents $ 262 $ 262 $ 262 $ — $ — Mortgage loans 880 883 — — 883 Policy loans 201 201 — — 201 Total financial assets not accounted for at fair value $ 1,343 $ 1,346 $ 262 $ — $ 1,084 Financial liabilities: Annuity benefits accumulated (*) $ 26,422 $ 25,488 $ — $ — $ 25,488 Total financial liabilities not accounted for at fair value $ 26,422 $ 25,488 $ — $ — $ 25,488 (*) Excludes $207 million , $204 million and $200 million of life contingent annuities in the payout phase at September 30, 2017 (unaudited), December 31, 2016 and 2015 , respectively. The carrying amount of cash and cash equivalents approximates fair value. Fair values for mortgage loans are estimated by discounting the future contractual cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. The fair value of policy loans is estimated to approximate carrying value; policy loans have no defined maturity dates and are inseparable from insurance contracts. The fair value of annuity benefits was estimated based on expected cash flows discounted using forward interest rates adjusted for the Company’s credit risk and includes the impact of maintenance expenses and capital costs. |
Balance Sheet Impact of Net Unr
Balance Sheet Impact of Net Unrealized Gains on Securities | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Balance Sheet Impact of Net Unrealized Gains on Securities | Balance Sheet Impact of Net Unrealized Gains on Securities In addition to adjusting fixed maturity securities and equity securities classified as “available for sale” to fair value, GAAP requires that deferred policy acquisition costs and certain other balance sheet amounts related to annuity and life businesses be adjusted to the extent that unrealized gains and losses from securities would result in adjustments to those balances had the unrealized gains or losses actually been realized. The following table shows (in millions) the components of the net unrealized gains (losses) on securities that is included in AOCI in GALIC’s Balance Sheet. Asset (Liability) before Net Unrealized Impact of Net Unrealized Gains on Securities Carrying Value of Asset (Liability) September 30, 2017 (unaudited) Fixed maturities $ 29,612 $ 1,224 $ 30,836 Equity securities 440 100 540 Deferred policy acquisition costs 1,315 (465 ) 850 Annuity benefits accumulated (32,530 ) (141 ) (32,671 ) Unearned revenue (included in other liabilities) (31 ) 20 (11 ) Net unrealized gain, pretax 738 Deferred tax on unrealized gain (258 ) Net unrealized gain, after tax (included in AOCI) $ 480 December 31, 2016 Fixed maturities $ 27,310 $ 710 $ 28,020 Equity securities 447 48 495 Deferred policy acquisition costs 1,270 (273 ) 997 Annuity benefits accumulated (29,829 ) (78 ) (29,907 ) Unearned revenue (included in other liabilities) (36 ) 13 (23 ) Net unrealized gain, pretax 420 Deferred tax on unrealized gain (147 ) Net unrealized gain, after tax (included in AOCI) $ 273 December 31, 2015 Fixed maturities $ 24,903 $ 583 $ 25,486 Equity securities 489 (3 ) 486 Deferred policy acquisition costs 1,187 (233 ) 954 Annuity benefits accumulated (26,558 ) (64 ) (26,622 ) Unearned revenue (included in other liabilities) (42 ) 11 (31 ) Net unrealized gain, pretax 294 Deferred tax on unrealized gain (103 ) Net unrealized gain, after tax (included in AOCI) $ 191 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available for sale fixed maturities and equity securities consisted of the following (in millions): September 30, 2017 (unaudited) Amortized Cost Gross Unrealized Net Unrealized Fair Gains Losses Fixed maturities: U.S. Government and government agencies $ 48 $ 2 $ (3 ) $ (1 ) $ 47 States, municipalities and political subdivisions 4,154 197 (15 ) 182 4,336 Foreign government 11 2 — 2 13 Residential MBS 2,169 256 (4 ) 252 2,421 Commercial MBS 870 40 — 40 910 Asset-backed securities 5,655 127 (11 ) 116 5,771 Corporate and other 16,705 668 (35 ) 633 17,338 Total fixed maturities $ 29,612 $ 1,292 $ (68 ) $ 1,224 $ 30,836 Equity securities: Common stocks $ 376 $ 105 $ (12 ) $ 93 $ 469 Perpetual preferred stocks 64 7 — 7 71 Total equity securities $ 440 $ 112 $ (12 ) $ 100 $ 540 December 31, 2016 December 31, 2015 Amortized Cost Gross Unrealized Net Unrealized Fair Amortized Cost Gross Unrealized Net Unrealized Fair Gains Losses Gains Losses Fixed maturities: U.S. Government and government agencies $ 51 $ 2 $ (3 ) $ (1 ) $ 50 $ 61 $ 2 $ (3 ) $ (1 ) $ 60 States, municipalities and political subdivisions 4,063 155 (42 ) 113 4,176 3,836 162 (32 ) 130 3,966 Foreign government 12 1 — 1 13 12 1 — 1 13 Residential MBS 2,388 216 (7 ) 209 2,597 2,344 246 (6 ) 240 2,584 Commercial MBS 1,304 46 (1 ) 45 1,349 1,903 71 — 71 1,974 Asset-backed securities 4,517 37 (35 ) 2 4,519 3,508 21 (37 ) (16 ) 3,492 Corporate and other 14,975 448 (107 ) 341 15,316 13,239 401 (243 ) 158 13,397 Total fixed maturities $ 27,310 $ 905 $ (195 ) $ 710 $ 28,020 $ 24,903 $ 904 $ (321 ) $ 583 $ 25,486 Equity securities: Common stocks $ 391 $ 55 $ (9 ) $ 46 $ 437 $ 439 $ 32 $ (35 ) $ (3 ) $ 436 Perpetual preferred stocks 56 3 (1 ) 2 58 50 — — — 50 Total equity securities $ 447 $ 58 $ (10 ) $ 48 $ 495 $ 489 $ 32 $ (35 ) $ (3 ) $ 486 The non-credit related portion of other-than-temporary impairment charges is included in other comprehensive income. Cumulative non-credit charges taken for securities still owned at September 30, 2017 (unaudited), December 31, 2016 and December 31, 2015 , respectively, were $132 million , $149 million and $160 million . Gross unrealized gains on such securities at September 30, 2017 (unaudited), December 31, 2016 and December 31, 2015 were $106 million , $101 million and $104 million , respectively. Gross unrealized losses on such securities at September 30, 2017 (unaudited), December 31, 2016 and December 31, 2015 were $5 million , $2 million and $5 million , respectively. These amounts represent the non-credit other-than-temporary impairment charges recorded in AOCI adjusted for subsequent changes in fair values and nearly all relate to residential MBS. The following tables show gross unrealized losses (dollars in millions) on fixed maturities and equity securities by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates. Less Than Twelve Months Twelve Months or More Unrealized Loss Fair Value Fair Value as % of Cost Unrealized Loss Fair Value Fair Value as % of Cost September 30, 2017 (unaudited) Fixed maturities: U.S. Government and government agencies $ — $ 3 100 % $ (3 ) $ 8 73 % States, municipalities and political subdivisions (12 ) 640 98 % (3 ) 59 95 % Residential MBS (1 ) 75 99 % (3 ) 91 97 % Commercial MBS — 60 100 % — — — % Asset-backed securities (5 ) 639 99 % (6 ) 157 96 % Corporate and other (23 ) 1,606 99 % (12 ) 279 96 % Total fixed maturities $ (41 ) $ 3,023 99 % $ (27 ) $ 594 96 % Equity securities: Common stocks $ (12 ) $ 58 83 % $ — $ — — % Perpetual preferred stocks — 10 100 % — — — % Total equity securities $ (12 ) $ 68 85 % $ — $ — — % December 31, 2016 Fixed maturities: U.S. Government and government agencies $ — $ 8 100 % $ (3 ) $ 7 70 % States, municipalities and political subdivisions (38 ) 1,288 97 % (4 ) 12 75 % Residential MBS (4 ) 298 99 % (3 ) 91 97 % Commercial MBS (1 ) 93 99 % — — — % Asset-backed securities (18 ) 1,295 99 % (17 ) 551 97 % Corporate and other (87 ) 3,636 98 % (20 ) 340 94 % Total fixed maturities $ (148 ) $ 6,618 98 % $ (47 ) $ 1,001 96 % Equity securities: Common stocks $ (9 ) $ 91 91 % $ — $ 3 100 % Perpetual preferred stocks (1 ) 32 97 % — — — % Total equity securities $ (10 ) $ 123 92 % $ — $ 3 100 % December 31, 2015 Fixed maturities: U.S. Government and government agencies $ — $ 4 100 % $ (3 ) $ 15 83 % States, municipalities and political subdivisions (25 ) 1,031 98 % (7 ) 103 94 % Residential MBS (2 ) 180 99 % (4 ) 99 96 % Commercial MBS — 74 100 % — 13 100 % Asset-backed securities (29 ) 1,849 98 % (8 ) 355 98 % Corporate and other (195 ) 4,229 96 % (48 ) 295 86 % Total fixed maturities $ (251 ) $ 7,367 97 % $ (70 ) $ 880 93 % Equity securities: Common stocks $ (35 ) $ 228 87 % $ — $ — — % Perpetual preferred stocks — 23 100 % — 5 100 % Total equity securities $ (35 ) $ 251 88 % $ — $ 5 100 % At September 30, 2017 (unaudited), the gross unrealized losses on fixed maturities of $68 million relate to 467 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 71% of the gross unrealized loss and 87% of the fair value. At December 31, 2016 , the gross unrealized losses on fixed maturities of $195 million relate to 892 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 83% of the gross unrealized loss and 91% of the fair value. The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors. Factors considered and resources used by management include: a) whether the unrealized loss is credit-driven or a result of changes in market interest rates, b) the extent to which fair value is less than cost basis, c) cash flow projections received from independent sources, d) historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases, e) near-term prospects for improvement in the issuer and/or its industry, f) third party research and communications with industry specialists, g) financial models and forecasts, h) the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments, i) discussions with issuer management, and j) ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value. GALIC analyzes its MBS securities for other-than-temporary impairment each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan to collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data. For the first nine months of 2017 (unaudited) and for the year ended December 31, 2016 , GALIC recorded less than $1 million and $1 million in other-than-temporary impairment charges related to its residential MBS, respectively. In the first nine months of 2017 (unaudited), GALIC recorded $13 million in other-than-temporary impairment charges related to corporate bonds and other fixed maturities. GALIC recorded $19 million in other-than-temporary impairment charges on common stocks in the first nine months of 2017 (unaudited). At September 30, 2017 (unaudited), the gross unrealized losses on common stocks of $12 million relate to 16 securities, none of which has been in an unrealized loss position for more than 12 months. GALIC recorded $5 million in other-than-temporary impairment charges on preferred stocks in the first nine months of 2017 (unaudited). At September 30, 2017 (unaudited), the gross unrealized losses on preferred stocks of less than $1 million relates to one security, which has not been in an unrealized loss position for 12 months or more and is rated investment grade. In 2016 , GALIC recorded approximately $17 million and $7 million in other-than-temporary impairment charges related to corporate bonds and other fixed maturities, respectively. GALIC recorded $41 million in other-than-temporary impairment charges on common stocks in 2016 . At December 31, 2016 , the gross unrealized losses on common stocks of $9 million relate to 20 securities, one of which has been in an unrealized loss position for more than 12 months. Management believes GALIC will recover its cost basis in the securities with unrealized losses and that GALIC has the ability to hold the securities until they recover in value and had no intent to sell them at September 30, 2017 and December 31, 2016 . A progression of the credit portion of other-than-temporary impairments on fixed maturity securities for which the non-credit portion of an impairment has been recognized in other comprehensive income is shown below (in millions): Nine months ended September 30, Year ended December 31, 2017 2016 2015 2014 (unaudited) Balance at beginning of period $ 104 $ 110 $ 115 $ 125 Additional credit impairments on: Previously impaired securities 1 1 — — Securities without prior impairments 2 — 1 — Reductions due to sales or redemptions (6 ) (7 ) (6 ) (10 ) Balance at end of period $ 101 $ 104 $ 110 $ 115 The table below sets forth the scheduled maturities of available for sale fixed maturities (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers. September 30, 2017 December 31, 2016 Amortized Fair Value Amortized Fair Value Cost Amount % Cost Amount % (unaudited) (unaudited) Maturity One year or less $ 563 $ 571 2 % $ 615 $ 626 2 % After one year through five years 4,508 4,745 15 % 3,952 4,185 15 % After five years through ten years 12,124 12,552 41 % 10,922 11,088 40 % After ten years 3,723 3,866 13 % 3,612 3,656 13 % 20,918 21,734 71 % 19,101 19,555 70 % ABS (average life of approximately 5 years) 5,655 5,771 18 % 4,517 4,519 16 % MBS (average life of approximately 4-1/2 years) 3,039 3,331 11 % 3,692 3,946 14 % Total $ 29,612 $ 30,836 100 % $ 27,310 $ 28,020 100 % Certain risks are inherent in fixed maturity securities, including loss upon default, price volatility in reaction to changes in interest rates, and general market factors and risks associated with reinvestment of proceeds due to prepayments or redemptions in a period of declining interest rates. There were no investments in individual issuers that exceeded 10% of shareholder’s equity at September 30, 2017 (unaudited), December 31, 2016 or 2015 . The following table shows (in millions) investment income earned and investment expenses incurred: Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Investment income: Fixed maturities $ 993 $ 929 $ 1,248 $ 1,138 $ 1,047 Equity securities 15 17 24 21 16 Equity in earnings of partnerships and similar investments 28 16 22 16 9 Mortgage loans 37 35 47 45 42 Policy loans 8 9 11 12 12 Real estate and other 23 26 34 7 17 Gross investment income 1,104 1,032 1,386 1,239 1,143 Investment expenses (6 ) (7 ) (10 ) (9 ) (4 ) Net investment income $ 1,098 $ 1,025 $ 1,376 $ 1,230 $ 1,139 GALIC’s investment portfolio is managed by a subsidiary of AFG. Investment expenses included investment management fees charged by this subsidiary of $4 million in both the nine months ended September 30, 2017 and 2016 (unaudited), and $5 million , $6 million and less than $1 million in the years ended December 31, 2016 , 2015 and 2014 , respectively. Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments are summarized as follows (in millions): Nine months ended September 30, 2017 (unaudited) Nine months ended September 30, 2016 (unaudited) Realized gains (losses) Realized gains (losses) Before Impairments Impairments Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 21 $ (13 ) $ 8 $ 514 $ 29 $ (25 ) $ 4 $ 1,007 Equity securities 12 (23 ) (11 ) 52 8 (36 ) (28 ) 41 Mortgage loans and other investments 2 — 2 — — — — — Other (*) (5 ) 12 7 (248 ) (7 ) 13 6 (478 ) Total pretax 30 (24 ) 6 318 30 (48 ) (18 ) 570 Tax effects (11 ) 9 (2 ) (111 ) (11 ) 17 6 (200 ) Net of tax $ 19 $ (15 ) $ 4 $ 207 $ 19 $ (31 ) $ (12 ) $ 370 Year ended December 31, 2016 Year ended December 31, 2015 Realized gains (losses) Realized gains (losses) Before Impairments Impairments Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 32 $ (25 ) $ 7 $ 127 $ 24 $ (28 ) $ (4 ) $ (698 ) Equity securities 17 (41 ) (24 ) 51 17 (36 ) (19 ) (49 ) Mortgage loans and other investments — — — — (1 ) (2 ) (3 ) — Other (*) (7 ) 15 8 (52 ) (5 ) 15 10 320 Total pretax 42 (51 ) (9 ) 126 35 (51 ) (16 ) (427 ) Tax effects (15 ) 18 3 (44 ) (12 ) 18 6 149 Net of tax $ 27 $ (33 ) $ (6 ) $ 82 $ 23 $ (33 ) $ (10 ) $ (278 ) Year ended December 31, 2014 Realized gains (losses) Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 32 $ (8 ) $ 24 $ 465 Equity securities 16 (8 ) 8 6 Mortgage loans and other investments — — — — Other (*) (2 ) 5 3 (222 ) Total pretax 46 (11 ) 35 249 Tax effects (16 ) 4 (12 ) (87 ) Net of tax $ 30 $ (7 ) $ 23 $ 162 (*) Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business. Gross realized gains and losses (excluding impairment write-downs and mark-to-market of derivatives) on available for sale fixed maturity and equity security investment transactions consisted of the following (in millions): Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Fixed maturities: Gross gains $ 27 $ 36 $ 45 $ 31 $ 29 Gross losses (4 ) (5 ) (6 ) (5 ) (1 ) Equity securities: Gross gains 14 10 19 18 16 Gross losses (1 ) (2 ) (2 ) (1 ) — |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives As discussed under “ Derivatives ” in Note A — “ Accounting Policies ,” GALIC uses derivatives in certain areas of its operations. Derivatives That Do Not Qualify for Hedge Accounting The following derivatives that do not qualify for hedge accounting under GAAP are included in GALIC’s Balance Sheet at fair value (in millions): September 30, 2017 December 31, 2016 December 31, 2015 Derivative Balance Sheet Line Asset Liability Asset Liability Asset Liability (unaudited) (unaudited) MBS with embedded derivatives Fixed maturities $ 84 $ — $ 82 $ — $ 100 $ — Public company warrants Equity securities 3 — 4 — 4 — Fixed-indexed annuities (embedded derivative) Annuity benefits accumulated — 2,293 — 1,759 — 1,369 Equity index call options Equity options — fixed-indexed annuities 629 — 492 — 241 — Reinsurance contracts (embedded derivative) Other liabilities — 10 — 8 — 7 $ 716 $ 2,303 $ 578 $ 1,767 $ 345 $ 1,376 The MBS with embedded derivatives consist primarily of interest-only MBS with interest rates that float inversely with short-term rates. GALIC records the entire change in the fair value of these securities in earnings. These investments are part of GALIC’s overall investment strategy and represent a small component of GALIC’s overall investment portfolio. Warrants to purchase shares of publicly traded companies, which represent a small component of GALIC’s overall investment portfolio, are considered to be derivatives that are required to be carried at fair value through earnings. GALIC’s fixed-indexed annuities provide policyholders with a crediting rate tied, in part, to the performance of an existing stock market index. GALIC attempts to mitigate the risk in the index-based component of these products through the purchase of call options on the appropriate index. GALIC receives collateral from its counterparties to support its purchased call option assets. This collateral ( $374 million at September 30, 2017 (unaudited), $380 million at December 31, 2016 and $211 million at December 31, 2015 ) is shown as funds held as collateral in GALIC’s Balance Sheet with an offsetting liability to return the collateral, which is included in liability for funds held as collateral. GALIC’s strategy is designed so that the change in the fair value of the call option assets will generally offset the economic change in the liabilities from the index participation. Both the index-based component of the annuities and the related call options are considered derivatives. Fluctuations in interest rates and the stock market, among other factors, can cause volatility in the periodic measurement of fair value of the embedded derivative that management believes can be inconsistent with the long-term economics of these products. As discussed under “ Reinsurance ” in Note A , certain reinsurance contracts are considered to contain embedded derivatives. The following table summarizes the gain (loss) included in GALIC’s Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting (in millions): Nine months ended September 30, Year ended December 31, Derivative Statement of Earnings Line 2017 2016 2016 2015 2014 (unaudited) (unaudited) MBS with embedded derivatives Realized gains on securities $ (2 ) $ (2 ) $ (7 ) $ (5 ) $ 4 Public company warrants Realized gains on securities (1 ) — — — — Interest rate swaptions Realized gains on securities — — — — (2 ) Fixed-indexed annuities (embedded derivative) (*) Annuity benefits (386 ) (188 ) (211 ) (17 ) (182 ) Equity index call options Annuity benefits 338 81 141 (56 ) 181 Reinsurance contracts (embedded derivative) Net investment income (2 ) (6 ) (1 ) 6 (3 ) $ (53 ) $ (115 ) $ (78 ) $ (72 ) $ (2 ) (*) The change in fair value of the embedded derivative includes losses related to unlocking of actuarial assumptions of $17 million in 2016 compared to losses of $28 million in 2015 and gains related to unlocking of actuarial assumptions of $58 million in 2014 . Derivatives Designated and Qualifying as Cash Flow Hedges As of September 30, 2017 , GALIC has entered into eight interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in GALIC’s portfolio of fixed maturity securities. The purpose of each of these swaps is to effectively convert a portion of GALIC’s floating-rate fixed maturity securities to fixed rates by offsetting the variability in cash flows attributable to changes in short-term LIBOR. Under the terms of the swaps, GALIC receives fixed-rate interest payments in exchange for variable interest payments based on short-term LIBOR. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between August 2019 and June 2030) in anticipation of the expected decline in GALIC’s portfolio of fixed maturity securities with floating interest rates based on short-term LIBOR. The total outstanding notional amount of GALIC’s interest rate swaps was $1.35 billion at September 30, 2017 (unaudited) compared to $1.08 billion at December 31, 2016 and $604 million at December 31, 2015 , reflecting a new swap with a notional amount at issuance of $400 million entered into in the third quarter of 2017 and four new swaps with an aggregate notional amount at issuance of $610 million entered into in 2016, partially offset by the scheduled amortization discussed above. The fair value of the effective portion of the interest rate swaps in an asset position and included in other assets was $1 million at both September 30, 2017 (unaudited) and December 31, 2016 and $2 million at December 31, 2015 . The fair value of the effective portion of interest rate swaps in a liability position and included in other liabilities was $21 million at September 30, 2017 (unaudited), $22 million at December 31, 2016 and less than $1 million at December 31, 2015 . The net unrealized gain or loss on cash flow hedges is included in AOCI, net of DPAC and deferred taxes. Amounts reclassified from AOCI (before DPAC and taxes) to net investment income were $4 million and $5 million in the first nine months of 2017 and 2016 (both unaudited) and $7 million and $6 million in the years ended December 31, 2016 and 2015 , respectively. There was no ineffectiveness recorded in net earnings during these periods. A collateral receivable supporting these swaps of $60 million at both September 30, 2017 (unaudited) and December 31, 2016 and $14 million at December 31, 2015 is included in other assets in GALIC’s Balance Sheet. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs A progression of deferred policy acquisition costs is presented below (in millions): Deferred Costs Sales Inducements PVFP Subtotal Unrealized (*) Total Balance at December 31, 2013 $ 860 $ 147 $ 77 $ 1,084 $ (336 ) $ 748 Additions 198 8 — 206 — 206 Amortization: Periodic amortization (128 ) (26 ) (11 ) (165 ) — (165 ) Annuity unlocking (22 ) (1 ) — (23 ) — (23 ) Included in realized gains 2 1 — 3 — 3 Change in unrealized — — — — (189 ) (189 ) Balance at December 31, 2014 910 129 66 1,105 (525 ) 580 Additions 224 11 — 235 — 235 Amortization: Periodic amortization (159 ) (26 ) (11 ) (196 ) — (196 ) Annuity unlocking 31 4 — 35 — 35 Included in realized gains 8 1 — 9 — 9 Change in unrealized — — — — 291 291 Balance at December 31, 2015 1,014 119 55 1,188 (234 ) 954 Additions 229 9 — 238 — 238 Amortization: Periodic amortization (168 ) (24 ) (9 ) (201 ) — (201 ) Annuity unlocking 25 4 — 29 — 29 Included in realized gains 6 2 — 8 — 8 Change in unrealized — — — — (31 ) (31 ) Balance at December 31, 2016 1,106 110 46 1,262 (265 ) 997 Additions (unaudited) 177 3 — 180 — 180 Amortization: Periodic amortization (unaudited) (121 ) (14 ) (6 ) (141 ) — (141 ) Included in realized gains (unaudited) 6 1 — 7 — 7 Change in unrealized (unaudited) — — — — (193 ) (193 ) Balance at September 30, 2017 (unaudited) $ 1,168 $ 100 $ 40 $ 1,308 $ (458 ) $ 850 (*) Unrealized adjustments to DPAC includes net unrealized gains/losses on securities and net unrealized gains/losses on cash flow hedges. The present value of future profits (“PVFP”) amounts in the table above are net of $140 million , $134 million and $125 million of accumulated amortization at September 30, 2017 (unaudited), December 31, 2016 and 2015 , respectively. During each of the next five years, the PVFP is expected to decrease at a rate of approximately one-sixth of the balance at the beginning of each respective year. |
Shareholder's Equity
Shareholder's Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholder's Equity | Shareholder’s Equity Capital Contributions from Parent In addition to receiving a $15 million cash capital contribution from GAFRI in 2016, which is presented in the statement of cash flows, GALIC received non-cash capital contributions from GAFRI totaling $10 million in the first nine months of 2017 (unaudited), $30 million in 2016 , $24 million in 2015 and $10 million in 2014 . The non-cash capital contributions were investments and other similar assets, as well as GAFRI’s payment of certain overhead expenses on behalf of GALIC. Accumulated Other Comprehensive Income, Net of Tax (“AOCI”) Comprehensive income is defined as all changes in Shareholder’s Equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income, which consists primarily of changes in net unrealized gains or losses on available for sale securities. The progression of the components of accumulated other comprehensive income follows (in millions): Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Tax Net of tax AOCI Ending Balance Nine months ended September 30, 2017 (unaudited) Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 322 $ (112 ) $ 210 Reclassification adjustment for realized (gains) losses included in net earnings (a) (4 ) 1 (3 ) Total net unrealized gains on securities (b) $ 273 318 (111 ) 207 $ 480 Net unrealized gains (losses) on cash flow hedges (7 ) 1 — 1 (6 ) Total $ 266 $ 319 $ (111 ) $ 208 $ 474 Year ended December 31, 2016 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 117 $ (41 ) $ 76 Reclassification adjustment for realized (gains) losses included in net earnings (a) 9 (3 ) 6 Total net unrealized gains on securities (b) $ 191 126 (44 ) 82 $ 273 Net unrealized gains (losses) on cash flow hedges 1 (12 ) 4 (8 ) (7 ) Total $ 192 $ 114 $ (40 ) $ 74 $ 266 Year ended December 31, 2015 Net unrealized gains (losses) on securities: Unrealized holding losses on securities arising during the period $ (440 ) $ 154 $ (286 ) Reclassification adjustment for realized (gains) losses included in net earnings (a) 13 (5 ) 8 Total net unrealized gains (losses) on securities (b) $ 469 (427 ) 149 (278 ) $ 191 Net unrealized gains on cash flow hedges — 1 — 1 1 Total $ 469 $ (426 ) $ 149 $ (277 ) $ 192 Year ended December 31, 2014 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 284 $ (99 ) $ 185 Reclassification adjustment for realized (gains) losses included in net earnings (a) (35 ) 12 (23 ) Total net unrealized gains on securities (b) $ 307 249 (87 ) 162 $ 469 Net unrealized gains on cash flow hedges — — — — — Total $ 307 $ 249 $ (87 ) $ 162 $ 469 (a) The reclassification adjustment out of net unrealized gains on securities affected the following lines in GALIC’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax Realized gains (losses) on securities Tax Provision for income taxes (b) Includes net unrealized gains of $35 million at September 30, 2017 (unaudited) compared to net unrealized gains of $34 million , $33 million and $37 million at December 31, 2016 , 2015 and 2014 , respectively, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following is a reconciliation of income taxes at the statutory rate of 35% to the provision for income taxes as shown in GALIC’s Statement of Earnings (dollars in millions): 2016 2015 2014 Amount % of EBT Amount % of EBT Amount % of EBT Earnings before income taxes (“EBT”) $ 367 $ 319 $ 352 Income taxes at statutory rate $ 128 35 % $ 112 35 % $ 123 35 % Effect of permanent items (1 ) — % (4 ) (1 %) (3 ) (1 %) Provision for income taxes as shown in the statement of earnings $ 127 35 % $ 108 34 % $ 120 34 % GALIC’s 2012 — 2016 tax years remain subject to examination by the IRS. GALIC did not have any earnings or losses subject to tax in a foreign jurisdiction for the years ended December 31, 2016 , 2015 and 2014 . The total income tax provision (credit) consists of (in millions): 2016 2015 2014 Current taxes: Federal $ 185 $ 133 $ 170 State 4 2 4 Deferred taxes: Federal (62 ) (27 ) (54 ) Provision for income taxes $ 127 $ 108 $ 120 Deferred income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The significant components of deferred tax assets and liabilities included in the GALIC’s Balance Sheet at December 31 were as follows (in millions): 2016 2015 Excluding Unrealized Gains Impact of Unrealized Gains Total Excluding Unrealized Gains Impact of Unrealized Gains Total Deferred tax assets: Insurance claims and reserves $ 489 $ 27 $ 516 $ 404 $ 22 $ 426 Other, net 19 (5 ) 14 22 (4 ) 18 Total deferred tax assets 508 22 530 426 18 444 Deferred tax liabilities: Investment securities 4 (265 ) (261 ) (6 ) (203 ) (209 ) Deferred policy acquisition costs (375 ) 96 (279 ) (348 ) 82 (266 ) Total deferred tax liabilities (371 ) (169 ) (540 ) (354 ) (121 ) (475 ) Net deferred tax assets (liabilities) $ 137 $ (147 ) $ (10 ) $ 72 $ (103 ) $ (31 ) The likelihood of realizing deferred tax assets is reviewed periodically. There was no valuation allowance against deferred tax assets as of December 31, 2016 and 2015 . In July 2014, AFG finalized a settlement with the IRS related to tax years 2008 and 2009. As a result, GALIC’s uncertain tax positions were effectively settled, allowing GALIC to reduce its liability for uncertain tax positions by $13 million in the third quarter of 2014. Although GALIC paid $9 million under this settlement, the reduction in this liability resulted in offsetting increases to GALIC’s deferred tax liability and did not impact GALIC’s effective tax rate. The following is a progression of GALIC’s uncertain tax positions, excluding interest and penalties, which all relate to the uncertainty as to the timing of tax return inclusion of investment income of certain debt securities (in millions): 2016 2015 2014 Balance at January 1 $ — $ — $ 13 Reductions for tax positions of prior years — — (4 ) Additions for tax positions of current year — — — Settlements — — (9 ) Balance at December 31 $ — $ — $ — GALIC’s provision for income taxes included a benefit of $1 million in 2014. Cash payments for income taxes, net of refunds, were $236 million , $100 million and $227 million for 2016 , 2015 and 2014 , respectively. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies GALIC and its subsidiaries are involved in litigation from time to time, generally arising in the ordinary course of business. This litigation may include, but is not limited to, general commercial disputes, lawsuits brought by policyholders, employment matters, reinsurance collection matters and actions challenging certain business practices. None of these matters are expected to have a material adverse impact on GALIC’s results of operations or financial condition. |
Insurance
Insurance | 9 Months Ended |
Sep. 30, 2017 | |
Insurance [Abstract] | |
Insurance | Insurance Securities owned by GALIC, having a carrying value of approximately $26 million at December 31, 2016 , were on deposit as required by regulatory authorities. FHLB Funding Agreements GALIC is a member of the Federal Home Loan Bank of Cincinnati (“FHLB”). The FHLB makes advances and provides other banking services to member institutions. Members are required to purchase stock in the FHLB in addition to maintaining collateral deposits that back any funds advanced. GALIC’s $44 million investment in FHLB capital stock at September 30, 2017 (unaudited), is included in other investments at cost. Membership in the FHLB provides the annuity operations with an additional source of liquidity. These advances further the FHLB’s mission of improving access to housing by increasing liquidity in the residential mortgage-backed securities market. In 2016, the FHLB advanced GALIC $150 million , increasing the total amount advanced to $935 million (included in annuity benefits accumulated) at both September 30, 2017 (unaudited) and December 31, 2016 . In the fourth quarter of 2016 , GALIC extended the terms on advances totaling $200 million by four years. Interest rates under the various funding agreements on these advances range from 0.03% to 0.53% over LIBOR (average rate of 1.60% at September 30, 2017 (unaudited) and 1.18% at December 31, 2016 ). While these advances must be repaid between 2018 and 2021 ( $285 million in 2018, $500 million in 2020 and $150 million in 2021 ), GALIC has the option to prepay all or a portion of the advances. The advances on these agreements are collateralized by mortgage-backed securities, which have a total fair value of $1.11 billion and $1.08 billion (included in available for sale fixed maturity securities) at September 30, 2017 (unaudited) and December 31, 2016 , respectively, and which have similar expected lives as the advances. Interest credited on the funding agreements, which is included in annuity benefits, was $10 million and $5 million in the first nine months of 2017 and 2016 (both unaudited), and $8 million , $3 million and $1 million in the years ended December 31, 2016 , 2015 and 2014 , respectively. Statutory Information GALIC and its insurance subsidiaries are required to file financial statements with state insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). Net earnings and capital and surplus on a statutory basis for GALIC and its insurance subsidiaries were as follows (in millions): Net Earnings Capital and Surplus 2016 2015 2014 2016 2015 GALIC consolidated life insurance companies $ 167 $ 399 $ 384 $ 1,976 $ 1,719 The National Association of Insurance Commissioners’ (“NAIC”) model law for risk based capital (“RBC”) applies to life insurance companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. Companies below specific trigger points or ratios are subject to regulatory action. At December 31, 2016 and 2015 , the capital ratios of GALIC and its life insurance companies substantially exceeded the RBC requirements. GALIC did not use any prescribed or permitted statutory accounting practices that differed from the NAIC statutory accounting practices at December 31, 2016 or 2015 . GALIC paid dividends to GAFRI totaling $135 million during the first nine months of 2017 (unaudited) and $140 million , $110 million and $200 million in 2016 , 2015 and 2014 , respectively. The maximum amount of dividends that can be paid to shareholders in 2017 by life insurance companies domiciled in the State of Ohio without prior approval of the Insurance Commissioner is the greater of 10% of statutory surplus as regards to policyholders or statutory net income as of the preceding December 31, but only to the extent of statutory earned surplus as of the preceding December 31. The maximum amount of dividends payable in 2017 by GALIC without prior approval is $197 million , based on policyholder surplus. The maximum amount of dividends receivable from GALIC’s subsidiaries in 2017 without prior approval is $27 million . Reinsurance GALIC has reinsured approximately $10.22 billion of its $13.49 billion in face amount of life insurance at December 31, 2016 compared to $11.19 billion of its $14.67 billion in face amount of life insurance at December 31, 2015 . Life written premiums ceded were $31 million , $34 million and $36 million for 2016 , 2015 and 2014 , respectively. Reinsurance recoveries on ceded life policies were $44 million , $45 million and $55 million for 2016 , 2015 and 2014 , respectively. To the extent that any reinsuring companies are unable to meet obligations under agreements covering reinsurance ceded, GALIC would remain liable. Fixed Annuities For certain products, the liability for “annuity benefits accumulated” includes reserves for excess benefits expected to be paid on future deaths and annuitizations, guaranteed withdrawal benefits and accrued persistency and premium bonuses. The liabilities included in GALIC’s Balance Sheet for these benefits, excluding the impact of unrealized gains on securities, were as follows at December 31 (in millions): 2016 2015 Expected death and annuitization $ 223 $ 214 Guaranteed withdrawal benefits 278 203 Accrued persistency and premium bonuses 6 11 Variable Annuities At December 31, 2016 , the aggregate guaranteed minimum death benefit value (assuming every variable annuity policyholder died on that date) on GALIC’s variable annuity policies exceeded the fair value of the underlying variable annuities by $20 million , compared to $27 million at December 31, 2015 . Death benefits paid in excess of the variable annuity account balances were less than $1 million in each of the last three years ended December 31, 2016 , 2015 and 2014 . |
Additional Information
Additional Information | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Additional Information | Additional Information Related Parties Certain administrative, management, accounting, actuarial, data processing, collection and investment services are provided under agreements between GALIC and its parent, GAFRI, based on actual costs incurred. In 2016 , 2015 and 2014 , GALIC paid GAFRI $32 million , $27 million and $26 million , respectively, for such services. Operating Leases Total rental expense for leases of office space was $4 million in 2016 , 2015 and 2014 . GALIC leases space from AFG. GALIC has no contractual obligations for rent but expects to pay similar amounts in future periods to AFG. Financial Instruments — Unfunded Commitments On occasion, GALIC has entered into financial instrument transactions that may present off-balance-sheet risks of both a credit and market risk nature. These transactions include commitments to fund loans, loan guarantees and commitments to purchase and sell securities or loans. At December 31, 2016 , GALIC had commitments to fund credit facilities and contribute capital to limited partnerships and limited liability corporations of approximately $251 million . Benefit Plans GALIC expensed approximately $2 million in 2016 and $1 million in 2015 and 2014 , respectively, related to the retirement and employee savings plans. |
Supplementary Insurance Informa
Supplementary Insurance Information | 9 Months Ended |
Sep. 30, 2017 | |
Supplementary Insurance Information [Abstract] | |
Supplementary Insurance Information | GREAT AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION THREE YEARS ENDED DECEMBER 31, 2016 (IN MILLIONS) Segment Deferred policy acquisition costs Reserves for future policy benefits and claims Net earned premiums Net investment income Benefits, claims, losses and settlement expenses Amortization of deferred policy acquisition costs Other operating expenses 2016 Annuity $ 977 $ 29,907 $ — $ 1,355 $ 800 $ 147 $ 141 Run-off life 20 691 24 21 29 5 10 Total $ 997 $ 30,598 $ 24 $ 1,376 $ 829 $ 152 $ 151 2015 Annuity $ 930 $ 26,622 $ — $ 1,211 $ 724 $ 134 $ 120 Run-off life 24 705 21 19 29 5 9 Total $ 954 $ 27,327 $ 21 $ 1,230 $ 753 $ 139 $ 129 2014 Annuity $ 553 $ 23,492 $ — $ 1,120 $ 641 $ 156 $ 99 Run-off life 27 690 23 19 33 5 11 Total $ 580 $ 24,182 $ 23 $ 1,139 $ 674 $ 161 $ 110 |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Great American Life Insurance Company and its subsidiaries (“GALIC” or the “Company”). GALIC is a direct wholly-owned subsidiary of Great American Financial Resources, Inc. (“GAFRI”), a financial services holding company wholly-owned by American Financial Group, Inc. (“AFG”). Certain reclassifications have been made to prior years to conform to the current year’s presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. The financial statements also include costs paid on behalf of GALIC by GAFRI. These costs are recorded as expense in the period incurred and shown as an increase in capital surplus. Events or transactions occurring subsequent to the audited consolidated financial statements as of and for the year ended December 31, 2016 , and prior to April 17, 2017 , have been evaluated for potential recognition or disclosure herein. The preparation of the financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. |
Unaudited Interim Consolidated Financial Information | Unaudited Interim Consolidated Financial Information The accompanying interim consolidated balance sheet as of September 30, 2017, and the consolidated statements of earnings, comprehensive income, and cash flows for the nine months ended September 30, 2017 and 2016 and the consolidated statement of changes in equity for the nine months ended September 30, 2017 and the related footnote disclosures are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with GAAP. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of GALIC’s statement of financial position as of September 30, 2017 and GALIC’s consolidated results of operations and GALIC’s cash flows for the nine months ended September 30, 2017 and 2016. Events or transactions occurring subsequent to September 30, 2017, and prior to the filing of these unaudited interim consolidated financial statements, have been evaluated for potential recognition or disclosure herein. The results for the nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full fiscal year. |
Fair Value Measurements | Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect GALIC’s assumptions about the assumptions market participants would use in pricing the asset or liability. GALIC did not have any significant nonrecurring fair value measurements of nonfinancial assets and liabilities in the first nine months ended September 30, 2017 or in 2016 or 2015 . |
Investments | Investments Fixed maturity and equity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) in GALIC’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage and policy loans are carried primarily at the aggregate unpaid balance. In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, which, among other things, will require all equity securities currently classified as “available for sale” to be reported at fair value, with holding gains and losses recognized in net income, instead of AOCI. GALIC will be required to adopt this guidance effective January 1, 2018. At the date of adoption, the net unrealized gain on equity securities included in AOCI will be reclassified to retained earnings in the balance sheet as the cumulative effect of an accounting change. Premiums and discounts on fixed maturity securities are amortized using the interest method. Mortgage-backed securities (“MBS”) are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. Gains or losses on securities are determined on the specific identification basis. When a decline in the value of a specific investment is considered to be other-than-temporary at the balance sheet date, a provision for impairment is charged to earnings (included in realized gains (losses) on securities) and the cost basis of that investment is reduced. If management can assert that it does not intend to sell an impaired fixed maturity security and it is not more likely than not that it will have to sell the security before recovery of its amortized cost basis, then the other-than-temporary impairment is separated into two components: (i) the amount related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion of an other-than-temporary impairment is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the impairment charge. Both components are shown in the statement of earnings. If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment charge to earnings is recorded to reduce the amortized cost of that security to fair value. |
Derivatives | Derivatives Derivatives included in GALIC’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings, unless the derivatives are designated and qualify as highly effective cash flow hedges. Derivatives that do not qualify for hedge accounting under GAAP consist primarily of (i) components of certain fixed maturity securities (primarily interest-only MBS) and (ii) the equity-based component of certain annuity products (included in annuity benefits accumulated) and related equity index call options designed to be consistent with the characteristics of the liabilities and used to mitigate the risk embedded in those annuity products. To qualify for hedge accounting, at the inception of a derivative contract, GALIC formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness and ineffectiveness will be measured on a retrospective and prospective basis. Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. Any hedge ineffectiveness is immediately recorded in current period earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. GALIC uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in GALIC’s portfolio of fixed maturity securities. |
Funds Held as Collateral | Funds Held as Collateral GALIC receives collateral from its counterparties to support its purchased equity index call option assets. The fair value of this collateral is recorded as an asset and the offsetting obligation to return the collateral is recorded as a liability. |
Reinsurance | Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. A GALIC subsidiary cedes life insurance policies to a third party on a funds withheld basis whereby the subsidiary retains the assets (securities) associated with the reinsurance contract. Interest is credited to the reinsurer based on the actual investment performance of the retained assets. This reinsurance contract is considered to contain an embedded derivative (that must be adjusted to fair value) because the yield on the payable is based on a specific block of the ceding company’s assets, rather than the overall creditworthiness of the ceding company. GALIC determined that changes in the fair value of the underlying portfolio of fixed maturity securities is an appropriate measure of the value of the embedded derivative. The securities related to this contract are classified as “trading.” The adjustment to fair value on the embedded derivative offsets the investment income recorded on the adjustment to fair value of the related trading portfolio. |
Deferred Policy Acquisition Costs (''DPAC'') | Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC also includes capitalized costs associated with sales inducements offered to fixed annuity policyholders such as enhanced interest rates and premium and persistency bonuses. DPAC related to annuities is deferred to the extent deemed recoverable and amortized, with interest, in relation to the present value of actual and expected gross profits on the policies. Expected gross profits consist principally of estimated future investment margin (estimated future net investment income less interest credited on policyholder funds) and surrender, mortality, and other life and annuity policy charges, less death, annuitization and guaranteed withdrawal benefits in excess of account balances and estimated future policy administration expenses. To the extent that realized gains and losses result in adjustments to the amortization of DPAC related to annuities, such adjustments are reflected as components of realized gains (losses) on securities. DPAC related to traditional life and health insurance is amortized over the expected premium paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. See “ Life, Accident and Health Reserves ” below for details on the impact of loss recognition on the accounting for traditional life and health insurance contracts. DPAC includes the present value of future profits on business in force of annuity and life, accident and health insurance companies acquired (“PVFP”). PVFP represents the portion of the costs to acquire companies that is allocated to the value of the right to receive future cash flows from insurance contracts existing at the date of acquisition. PVFP is amortized with interest in relation to expected gross profits of the acquired policies for annuities and universal life products and in relation to the premium paying period for traditional life and health insurance products. DPAC and certain other balance sheet amounts related to annuity and life businesses are also adjusted, net of tax, for the change in expense that would have been recorded if the unrealized gains (losses) from securities had actually been realized. These adjustments are included in unrealized gains (losses) on marketable securities, a component of AOCI in GALIC’s Balance Sheet. |
Annuity Benefits Accumulated | Annuity Benefits Accumulated Annuity receipts and benefit payments are recorded as increases or decreases in annuity benefits accumulated rather than as revenue and expense. Increases in this liability for interest credited are charged to annuity benefits expense and decreases for policy charges are recorded as annuity policy charges revenues. For certain products, annuity benefits accumulated also includes reserves for accrued persistency and premium bonuses, guaranteed withdrawals and excess benefits expected to be paid on future deaths and annuitizations (“EDAR”). The liabilities for EDAR and guaranteed withdrawals are accrued for and modified using assumptions consistent with those used in determining DPAC and DPAC amortization, except that amounts are determined in relation to the present value of total expected assessments. Total expected assessments consist principally of estimated future investment margin, surrender, mortality, and other life and annuity policy charges, and unearned revenues once they are recognized as income. Reserves for traditional fixed annuities are generally recorded at the stated account value. Reserves for indexed annuities are recorded at a value reflecting the fixed guarantees in the product plus the fair value of equity participation in the contract. Annuity benefits accumulated also includes amounts advanced from the Federal Home Loan Bank of Cincinnati. |
Unearned Revenue | Unearned Revenue Certain upfront policy charges on annuities are deferred as unearned revenue (included in other liabilities) and recognized in net earnings (included in policy charges and other income) using the same assumptions and estimated gross profits used to amortize DPAC. |
Life, Accident and Health Reserves | Life, Accident and Health Reserves Liabilities for future policy benefits under traditional life, accident and health policies are computed using the net level premium method. Computations are based on the original projections of investment yields, mortality, morbidity and surrenders and include provisions for unfavorable deviations unless a loss recognition event (premium deficiency) occurs. Claim reserves and liabilities established for accident and health claims are modified as necessary to reflect actual experience and developing trends. For long-duration contracts (such as traditional life policies), loss recognition occurs when, based on current expectations as of the measurement date, existing contract liabilities plus the present value of future premiums (including reasonably expected rate increases) are not expected to cover the present value of future claims payments and related settlement and maintenance costs (excluding overhead) as well as unamortized acquisition costs. If a block of business is determined to be in loss recognition, a charge is recorded in earnings in an amount equal to the excess of the present value of expected future claims costs and unamortized acquisition costs over existing reserves plus the present value of expected future premiums (with no provision for adverse deviation). The charge is recorded first to reduce unamortized acquisition costs and then as an additional reserve (if unamortized acquisition costs have been reduced to zero). In addition, reserves for traditional life policies are subject to adjustment for loss recognition charges that would have been recorded if the unrealized gains from securities had actually been realized. This adjustment is included in unrealized gains (losses) on marketable securities, a component of AOCI in GALIC’s Balance Sheet. |
Variable Annuity Assets and Liabilities | Variable Annuity Assets and Liabilities Separate accounts related to variable annuities represent the fair value of deposits invested in underlying investment funds on which GALIC earns a fee. Investment funds are selected and may be changed only by the policyholder, who retains all investment risk. GALIC’s variable annuity contracts contain a guaranteed minimum death benefit (“GMDB”) to be paid if the policyholder dies before the annuity payout period commences. In periods of declining equity markets, the GMDB may exceed the value of the policyholder’s account. A GMDB liability is established for future excess death benefits using assumptions together with a range of reasonably possible scenarios for investment fund performance that are consistent with DPAC capitalization and amortization assumptions. |
Premium Recognition | Premium Recognition For traditional life, accident and health products, premiums are recognized as revenue when legally collectible from policyholders. For interest-sensitive life and universal life products, premiums are recorded in a policyholder account, which is reflected as a liability. Revenue is recognized as amounts are assessed against the policyholder account for mortality coverage and contract expenses. |
Noncontrolling Interests | Noncontrolling Interests For balance sheet purposes, noncontrolling interests represents the interests of shareholders other than GALIC in consolidated entities. In the statement of earnings, net earnings and losses attributable to noncontrolling interests represents such shareholders’ interest in the earnings and losses of those entities. |
Income Taxes | Income Taxes GALIC and its subsidiaries have an intercompany tax allocation agreement with AFG. Pursuant to the agreement, each company’s tax expense is determined based upon its inclusion in the consolidated tax return of AFG and its includable subsidiaries. Estimated payments are made quarterly during the year. Following year-end, additional settlements are made on the original due date of the return and, when extended, at the time the return is filed. The method of allocation among the companies under the agreement is based upon separate return calculations with current credit for losses to the extent the losses provide a benefit in the consolidated return. Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. GALIC recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on GALIC’s reserve for uncertain tax positions are recognized as a component of tax expense. |
Benefit Plans | Benefit Plans GALIC provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG and its subsidiaries make all contributions to the retirement fund portion of the plan and match a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. |
Statement of Cash Flows | Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments and property and equipment. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. Annuity receipts, surrenders, benefits and withdrawals are also reflected as financing activities. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. Effective October 1, 2016, GALIC early adopted (on a retrospective basis) ASU 2016-15, which addresses the diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. Among other things, this guidance requires proceeds received from the settlement of corporate-owned life insurance policies to be classified as cash inflows from investing activities and allows premiums paid for policies to be reported as cash outflows either from investing activities or operating activities. GALIC has elected to show all corporate-owned life insurance activity in investing activities. Prior to adoption of this guidance, GALIC accounted for these transactions as operating activities. In addition, ASU 2016-15 clarifies when distributions received from investees accounted under the equity method should be accounted for as a cash inflow from operating activities or as a cash inflow from investing activities. GALIC had previously accounted for all distributions from investments accounted for under the equity method as investing activities. The new guidance solely related to the presentation of certain transactions in the statement of cash flows. Accordingly, adoption of this guidance did not impact GALIC’s results of operations or financial position. |
Revenue Recognition Guidance Effective in 2018 | Revenue Recognition Guidance Effective in 2018 In May 2014, the FASB issued ASU 2014-09, which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized when (or as) the entity satisfies a performance obligation under the contract. The new guidance also updates the accounting for certain costs associated with obtaining and fulfilling contracts with customers and requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Revenue recognition for insurance contracts and financial instruments, which are GALIC’s primary sources of revenue, is excluded from the scope of the new guidance. GALIC will adopt the new guidance effective January 1, 2018. Because the new guidance does not apply to the vast majority of GALIC’s business, management does not expect the adoption of this guidance to have a material impact on GALIC’s results of operations or financial position. Based on implementation efforts to date, management believes that the new standard would have applied to less than 3% of GALIC’s 2016 consolidated revenues. |
Segments of Operations (Tables)
Segments of Operations (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment reporting information, by segment | The following tables (in millions) show GALIC’s assets, revenues and earnings before income taxes by segment. December 31, 2016 2015 2014 Assets Annuity $ 33,607 $ 30,055 $ 27,218 Run-off life 755 773 794 Total assets $ 34,362 $ 30,828 $ 28,012 Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Revenues Annuity: Net investment income $ 1,083 $ 1,010 $ 1,355 $ 1,211 $ 1,120 Other income 82 77 104 100 94 Total annuity 1,165 1,087 1,459 1,311 1,214 Run-off life 35 36 49 45 48 Total revenues before realized gains (losses) 1,200 1,123 1,508 1,356 1,262 Realized gains (losses) on securities 6 (18 ) (9 ) (16 ) 35 Total revenues $ 1,206 $ 1,105 $ 1,499 $ 1,340 $ 1,297 Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Earnings Before Income Taxes Annuity $ 289 $ 239 $ 371 $ 333 $ 318 Run-off life 6 2 5 2 (1 ) Total earnings before realized gains (losses) and income taxes 295 241 376 335 317 Realized gains (losses) on securities 6 (18 ) (9 ) (16 ) 35 Total earnings before income taxes $ 301 $ 223 $ 367 $ 319 $ 352 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value | Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total September 30, 2017 (unaudited) Assets: Available for sale (“AFS”) fixed maturities: U.S. Government and government agencies $ 8 $ 31 $ 8 $ 47 States, municipalities and political subdivisions — 4,261 75 4,336 Foreign government — 13 — 13 Residential MBS — 2,303 118 2,421 Commercial MBS — 877 33 910 Asset-backed securities (“ABS”) — 5,377 394 5,771 Corporate and other 16 16,370 952 17,338 Total AFS fixed maturities 24 29,232 1,580 30,836 Trading fixed maturities — 118 — 118 Equity securities 398 38 104 540 Variable annuity assets (separate accounts) (*) — 628 — 628 Equity options — fixed-indexed annuities — 629 — 629 Other assets — derivatives — 1 — 1 Total assets accounted for at fair value $ 422 $ 30,646 $ 1,684 $ 32,752 Liabilities: Derivatives in annuity benefits accumulated $ — $ — $ 2,293 $ 2,293 Other liabilities — derivatives — 31 — 31 Total liabilities accounted for at fair value $ — $ 31 $ 2,293 $ 2,324 (*) Variable annuity liabilities equal the fair value of variable annuity assets. Level 1 Level 2 Level 3 Total December 31, 2016 Assets: Available for sale fixed maturities: U.S. Government and government agencies $ 10 $ 32 $ 8 $ 50 States, municipalities and political subdivisions — 4,101 75 4,176 Foreign government — 13 — 13 Residential MBS — 2,449 148 2,597 Commercial MBS — 1,324 25 1,349 Asset-backed securities — 4,160 359 4,519 Corporate and other 15 14,649 652 15,316 Total AFS fixed maturities 25 26,728 1,267 28,020 Trading fixed maturities — 117 — 117 Equity securities 360 25 110 495 Variable annuity assets (separate accounts) (*) — 600 — 600 Equity options — fixed-indexed annuities — 492 — 492 Other assets — derivatives — 1 — 1 Total assets accounted for at fair value $ 385 $ 27,963 $ 1,377 $ 29,725 Liabilities: Derivatives in annuity benefits accumulated $ — $ — $ 1,759 $ 1,759 Other liabilities — derivatives — 30 — 30 Total liabilities accounted for at fair value $ — $ 30 $ 1,759 $ 1,789 December 31, 2015 Assets: Available for sale fixed maturities: U.S. Government and government agencies $ 10 $ 35 $ 15 $ 60 States, municipalities and political subdivisions — 3,934 32 3,966 Foreign government — 13 — 13 Residential MBS — 2,400 184 2,584 Commercial MBS — 1,938 36 1,974 Asset-backed securities — 3,159 333 3,492 Corporate and other 16 12,801 580 13,397 Total AFS fixed maturities 26 24,280 1,180 25,486 Trading fixed maturities — 114 — 114 Equity securities 372 31 83 486 Variable annuity assets (separate accounts) (*) — 608 — 608 Equity options — fixed-indexed annuities — 241 — 241 Other assets — derivatives — 2 — 2 Total assets accounted for at fair value $ 398 $ 25,276 $ 1,263 $ 26,937 Liabilities: Derivatives in annuity benefits accumulated $ — $ — $ 1,369 $ 1,369 Other liabilities — derivatives — 8 — 8 Total liabilities accounted for at fair value $ — $ 8 $ 1,369 $ 1,377 (*) Variable annuity liabilities equal the fair value of variable annuity assets. |
Fair value measurements, Levels 1 and 2 transfers | The transfers between Level 1 and Level 2 for the years ended December 31, 2016 , 2015 and 2014 are reflected in the table below at fair value as of the end of the reporting period (dollars in millions): Level 2 To Level 1 Transfers Level 1 To Level 2 Transfers # of Transfers Fair Value # of Transfers Fair Value 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 Perpetual preferred stocks — — 1 $ — $ — $ 4 1 — 3 $ 1 $ — $ 14 Common stocks 2 1 — — — — 2 1 1 — — — |
Unobservable inputs used by management in determining fair value of embedded derivatives | The following table presents information about the unobservable inputs used by management in determining fair value of these embedded derivatives at September 30, 2017 (unaudited). See Note F — “ Derivatives .” Unobservable Input Range Adjustment for credit risk 0.2% – 2.4% over the risk free rate Risk margin for uncertainty in cash flows 0.68% reduction in the discount rate Surrenders 3% – 23% of indexed account value Partial surrenders 2% – 10% of indexed account value Annuitizations 0.1% – 1% of indexed account value Deaths 1.5% – 8.0% of indexed account value Budgeted option costs 2.4% – 3.7% of indexed account value |
Changes in balances of Level 3 financial assets | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the nine months ended September 30, 2017 (unaudited) and the years ended December 31, 2016 , 2015 and 2014 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized gains (losses) included in Balance at December 31, 2016 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at September 30, 2017 (unaudited) AFS fixed maturities: U.S. government agency $ 8 $ — $ — $ — $ — $ — $ — $ 8 State and municipal 75 — 1 — (1 ) — — 75 Residential MBS 148 — 1 1 (24 ) 25 (33 ) 118 Commercial MBS 25 2 — 12 (10 ) 4 — 33 Asset-backed securities 359 (3 ) 3 86 (41 ) 152 (162 ) 394 Corporate and other 652 (4 ) 9 400 (108 ) 29 (26 ) 952 Total AFS fixed maturities 1,267 (5 ) 14 499 (184 ) 210 (221 ) 1,580 Equity securities 110 (13 ) 6 17 (3 ) — (13 ) 104 Total Level 3 assets $ 1,377 $ (18 ) $ 20 $ 516 $ (187 ) $ 210 $ (234 ) $ 1,684 Embedded derivatives $ (1,759 ) $ (386 ) $ — $ (224 ) $ 76 $ — $ — $ (2,293 ) Total Level 3 liabilities $ (1,759 ) $ (386 ) $ — $ (224 ) $ 76 $ — $ — $ (2,293 ) Total realized/unrealized gains (losses) included in Balance at December 31, 2015 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2016 AFS fixed maturities: U.S. government agency $ 15 $ (7 ) $ — $ — $ — $ — $ — $ 8 State and municipal 32 — (3 ) 47 (1 ) — — 75 Residential MBS 184 (3 ) (2 ) 6 (26 ) 29 (40 ) 148 Commercial MBS 36 (1 ) — — (6 ) — (4 ) 25 Asset-backed securities 333 (1 ) 1 30 (20 ) 49 (33 ) 359 Corporate and other 580 (1 ) (9 ) 134 (58 ) 22 (16 ) 652 Total AFS fixed maturities 1,180 (13 ) (13 ) 217 (111 ) 100 (93 ) 1,267 Equity securities 83 (6 ) 23 28 (15 ) 9 (12 ) 110 Total Level 3 assets $ 1,263 $ (19 ) $ 10 $ 245 $ (126 ) $ 109 $ (105 ) $ 1,377 Embedded derivatives (*) $ (1,369 ) $ (211 ) $ — $ (277 ) $ 98 $ — $ — $ (1,759 ) Total Level 3 liabilities $ (1,369 ) $ (211 ) $ — $ (277 ) $ 98 $ — $ — $ (1,759 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $17 million in 2016 . Total realized/unrealized gains (losses) included in Balance at December 31, 2014 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2015 AFS fixed maturities: U.S. government agency $ 15 $ — $ — $ — $ — $ — $ — $ 15 State and municipal 24 — — 9 (1 ) — — 32 Residential MBS 235 (2 ) (2 ) — (32 ) 48 (63 ) 184 Commercial MBS 37 (1 ) (1 ) — (2 ) 4 (1 ) 36 Asset-backed securities 175 1 (5 ) 184 (40 ) 28 (10 ) 333 Corporate and other 484 (4 ) (9 ) 147 (47 ) 9 — 580 Total AFS fixed maturities 970 (6 ) (17 ) 340 (122 ) 89 (74 ) 1,180 Equity securities 47 (3 ) (6 ) 51 — — (6 ) 83 Total Level 3 assets $ 1,017 $ (9 ) $ (23 ) $ 391 $ (122 ) $ 89 $ (80 ) $ 1,263 Embedded derivatives (*) $ (1,160 ) $ (17 ) $ — $ (257 ) $ 65 $ — $ — $ (1,369 ) Total Level 3 liabilities $ (1,160 ) $ (17 ) $ — $ (257 ) $ 65 $ — $ — $ (1,369 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $28 million in 2015 . Total realized/unrealized gains (losses) included in Balance at December 31, 2013 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2014 AFS fixed maturities: U.S. government agency $ 15 $ — $ — $ — $ — $ — $ — $ 15 State and municipal 20 — 1 — — 3 — 24 Residential MBS 267 4 3 10 (27 ) 62 (84 ) 235 Commercial MBS 24 (1 ) — — — 14 — 37 Asset-backed securities 62 2 (2 ) 88 (17 ) 65 (23 ) 175 Corporate and other 292 3 13 88 (60 ) 151 (3 ) 484 Total AFS fixed maturities 680 8 15 186 (104 ) 295 (110 ) 970 Equity securities 8 1 1 31 — 12 (6 ) 47 Total Level 3 assets $ 688 $ 9 $ 16 $ 217 $ (104 ) $ 307 $ (116 ) $ 1,017 Embedded derivatives (*) $ (804 ) $ (182 ) $ — $ (221 ) $ 47 $ — $ — $ (1,160 ) Total Level 3 liabilities $ (804 ) $ (182 ) $ — $ (221 ) $ 47 $ — $ — $ (1,160 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of $58 million in 2014 . |
Changes in balances of Level 3 financial liabilities | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the nine months ended September 30, 2017 (unaudited) and the years ended December 31, 2016 , 2015 and 2014 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized gains (losses) included in Balance at December 31, 2016 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at September 30, 2017 (unaudited) AFS fixed maturities: U.S. government agency $ 8 $ — $ — $ — $ — $ — $ — $ 8 State and municipal 75 — 1 — (1 ) — — 75 Residential MBS 148 — 1 1 (24 ) 25 (33 ) 118 Commercial MBS 25 2 — 12 (10 ) 4 — 33 Asset-backed securities 359 (3 ) 3 86 (41 ) 152 (162 ) 394 Corporate and other 652 (4 ) 9 400 (108 ) 29 (26 ) 952 Total AFS fixed maturities 1,267 (5 ) 14 499 (184 ) 210 (221 ) 1,580 Equity securities 110 (13 ) 6 17 (3 ) — (13 ) 104 Total Level 3 assets $ 1,377 $ (18 ) $ 20 $ 516 $ (187 ) $ 210 $ (234 ) $ 1,684 Embedded derivatives $ (1,759 ) $ (386 ) $ — $ (224 ) $ 76 $ — $ — $ (2,293 ) Total Level 3 liabilities $ (1,759 ) $ (386 ) $ — $ (224 ) $ 76 $ — $ — $ (2,293 ) Total realized/unrealized gains (losses) included in Balance at December 31, 2015 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2016 AFS fixed maturities: U.S. government agency $ 15 $ (7 ) $ — $ — $ — $ — $ — $ 8 State and municipal 32 — (3 ) 47 (1 ) — — 75 Residential MBS 184 (3 ) (2 ) 6 (26 ) 29 (40 ) 148 Commercial MBS 36 (1 ) — — (6 ) — (4 ) 25 Asset-backed securities 333 (1 ) 1 30 (20 ) 49 (33 ) 359 Corporate and other 580 (1 ) (9 ) 134 (58 ) 22 (16 ) 652 Total AFS fixed maturities 1,180 (13 ) (13 ) 217 (111 ) 100 (93 ) 1,267 Equity securities 83 (6 ) 23 28 (15 ) 9 (12 ) 110 Total Level 3 assets $ 1,263 $ (19 ) $ 10 $ 245 $ (126 ) $ 109 $ (105 ) $ 1,377 Embedded derivatives (*) $ (1,369 ) $ (211 ) $ — $ (277 ) $ 98 $ — $ — $ (1,759 ) Total Level 3 liabilities $ (1,369 ) $ (211 ) $ — $ (277 ) $ 98 $ — $ — $ (1,759 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $17 million in 2016 . Total realized/unrealized gains (losses) included in Balance at December 31, 2014 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2015 AFS fixed maturities: U.S. government agency $ 15 $ — $ — $ — $ — $ — $ — $ 15 State and municipal 24 — — 9 (1 ) — — 32 Residential MBS 235 (2 ) (2 ) — (32 ) 48 (63 ) 184 Commercial MBS 37 (1 ) (1 ) — (2 ) 4 (1 ) 36 Asset-backed securities 175 1 (5 ) 184 (40 ) 28 (10 ) 333 Corporate and other 484 (4 ) (9 ) 147 (47 ) 9 — 580 Total AFS fixed maturities 970 (6 ) (17 ) 340 (122 ) 89 (74 ) 1,180 Equity securities 47 (3 ) (6 ) 51 — — (6 ) 83 Total Level 3 assets $ 1,017 $ (9 ) $ (23 ) $ 391 $ (122 ) $ 89 $ (80 ) $ 1,263 Embedded derivatives (*) $ (1,160 ) $ (17 ) $ — $ (257 ) $ 65 $ — $ — $ (1,369 ) Total Level 3 liabilities $ (1,160 ) $ (17 ) $ — $ (257 ) $ 65 $ — $ — $ (1,369 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $28 million in 2015 . Total realized/unrealized gains (losses) included in Balance at December 31, 2013 Net income Other comprehensive income (loss) Purchases and issuances Sales and settlements Transfer into Level 3 Transfer out of Level 3 Balance at December 31, 2014 AFS fixed maturities: U.S. government agency $ 15 $ — $ — $ — $ — $ — $ — $ 15 State and municipal 20 — 1 — — 3 — 24 Residential MBS 267 4 3 10 (27 ) 62 (84 ) 235 Commercial MBS 24 (1 ) — — — 14 — 37 Asset-backed securities 62 2 (2 ) 88 (17 ) 65 (23 ) 175 Corporate and other 292 3 13 88 (60 ) 151 (3 ) 484 Total AFS fixed maturities 680 8 15 186 (104 ) 295 (110 ) 970 Equity securities 8 1 1 31 — 12 (6 ) 47 Total Level 3 assets $ 688 $ 9 $ 16 $ 217 $ (104 ) $ 307 $ (116 ) $ 1,017 Embedded derivatives (*) $ (804 ) $ (182 ) $ — $ (221 ) $ 47 $ — $ — $ (1,160 ) Total Level 3 liabilities $ (804 ) $ (182 ) $ — $ (221 ) $ 47 $ — $ — $ (1,160 ) (*) Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of $58 million in 2014 . |
Fair value of financial instruments | The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions): Carrying Fair Value Value Total Level 1 Level 2 Level 3 September 30, 2017 (unaudited) Financial assets: Cash and cash equivalents $ 816 $ 816 $ 816 $ — $ — Mortgage loans 791 788 — — 788 Policy loans 186 186 — — 186 Total financial assets not accounted for at fair value $ 1,793 $ 1,790 $ 816 $ — $ 974 Financial liabilities: Annuity benefits accumulated (*) $ 32,464 $ 31,857 $ — $ — $ 31,857 Total financial liabilities not accounted for at fair value $ 32,464 $ 31,857 $ — $ — $ 31,857 December 31, 2016 Financial assets: Cash and cash equivalents $ 499 $ 499 $ 499 $ — $ — Mortgage loans 890 887 — — 887 Policy loans 192 192 — — 192 Total financial assets not accounted for at fair value $ 1,581 $ 1,578 $ 499 $ — $ 1,079 Financial liabilities: Annuity benefits accumulated (*) $ 29,703 $ 28,932 $ — $ — $ 28,932 Total financial liabilities not accounted for at fair value $ 29,703 $ 28,932 $ — $ — $ 28,932 December 31, 2015 Financial assets: Cash and cash equivalents $ 262 $ 262 $ 262 $ — $ — Mortgage loans 880 883 — — 883 Policy loans 201 201 — — 201 Total financial assets not accounted for at fair value $ 1,343 $ 1,346 $ 262 $ — $ 1,084 Financial liabilities: Annuity benefits accumulated (*) $ 26,422 $ 25,488 $ — $ — $ 25,488 Total financial liabilities not accounted for at fair value $ 26,422 $ 25,488 $ — $ — $ 25,488 (*) Excludes $207 million , $204 million and $200 million of life contingent annuities in the payout phase at September 30, 2017 (unaudited), December 31, 2016 and 2015 , respectively. |
Balance Sheet Impact of Net U24
Balance Sheet Impact of Net Unrealized Gains on Securities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | The following table shows (in millions) the components of the net unrealized gains (losses) on securities that is included in AOCI in GALIC’s Balance Sheet. Asset (Liability) before Net Unrealized Impact of Net Unrealized Gains on Securities Carrying Value of Asset (Liability) September 30, 2017 (unaudited) Fixed maturities $ 29,612 $ 1,224 $ 30,836 Equity securities 440 100 540 Deferred policy acquisition costs 1,315 (465 ) 850 Annuity benefits accumulated (32,530 ) (141 ) (32,671 ) Unearned revenue (included in other liabilities) (31 ) 20 (11 ) Net unrealized gain, pretax 738 Deferred tax on unrealized gain (258 ) Net unrealized gain, after tax (included in AOCI) $ 480 December 31, 2016 Fixed maturities $ 27,310 $ 710 $ 28,020 Equity securities 447 48 495 Deferred policy acquisition costs 1,270 (273 ) 997 Annuity benefits accumulated (29,829 ) (78 ) (29,907 ) Unearned revenue (included in other liabilities) (36 ) 13 (23 ) Net unrealized gain, pretax 420 Deferred tax on unrealized gain (147 ) Net unrealized gain, after tax (included in AOCI) $ 273 December 31, 2015 Fixed maturities $ 24,903 $ 583 $ 25,486 Equity securities 489 (3 ) 486 Deferred policy acquisition costs 1,187 (233 ) 954 Annuity benefits accumulated (26,558 ) (64 ) (26,622 ) Unearned revenue (included in other liabilities) (42 ) 11 (31 ) Net unrealized gain, pretax 294 Deferred tax on unrealized gain (103 ) Net unrealized gain, after tax (included in AOCI) $ 191 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Available for sale fixed maturities and equity securities | Available for sale fixed maturities and equity securities consisted of the following (in millions): September 30, 2017 (unaudited) Amortized Cost Gross Unrealized Net Unrealized Fair Gains Losses Fixed maturities: U.S. Government and government agencies $ 48 $ 2 $ (3 ) $ (1 ) $ 47 States, municipalities and political subdivisions 4,154 197 (15 ) 182 4,336 Foreign government 11 2 — 2 13 Residential MBS 2,169 256 (4 ) 252 2,421 Commercial MBS 870 40 — 40 910 Asset-backed securities 5,655 127 (11 ) 116 5,771 Corporate and other 16,705 668 (35 ) 633 17,338 Total fixed maturities $ 29,612 $ 1,292 $ (68 ) $ 1,224 $ 30,836 Equity securities: Common stocks $ 376 $ 105 $ (12 ) $ 93 $ 469 Perpetual preferred stocks 64 7 — 7 71 Total equity securities $ 440 $ 112 $ (12 ) $ 100 $ 540 December 31, 2016 December 31, 2015 Amortized Cost Gross Unrealized Net Unrealized Fair Amortized Cost Gross Unrealized Net Unrealized Fair Gains Losses Gains Losses Fixed maturities: U.S. Government and government agencies $ 51 $ 2 $ (3 ) $ (1 ) $ 50 $ 61 $ 2 $ (3 ) $ (1 ) $ 60 States, municipalities and political subdivisions 4,063 155 (42 ) 113 4,176 3,836 162 (32 ) 130 3,966 Foreign government 12 1 — 1 13 12 1 — 1 13 Residential MBS 2,388 216 (7 ) 209 2,597 2,344 246 (6 ) 240 2,584 Commercial MBS 1,304 46 (1 ) 45 1,349 1,903 71 — 71 1,974 Asset-backed securities 4,517 37 (35 ) 2 4,519 3,508 21 (37 ) (16 ) 3,492 Corporate and other 14,975 448 (107 ) 341 15,316 13,239 401 (243 ) 158 13,397 Total fixed maturities $ 27,310 $ 905 $ (195 ) $ 710 $ 28,020 $ 24,903 $ 904 $ (321 ) $ 583 $ 25,486 Equity securities: Common stocks $ 391 $ 55 $ (9 ) $ 46 $ 437 $ 439 $ 32 $ (35 ) $ (3 ) $ 436 Perpetual preferred stocks 56 3 (1 ) 2 58 50 — — — 50 Total equity securities $ 447 $ 58 $ (10 ) $ 48 $ 495 $ 489 $ 32 $ (35 ) $ (3 ) $ 486 |
Available for sale securities in a continuous unrealized loss position | The following tables show gross unrealized losses (dollars in millions) on fixed maturities and equity securities by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates. Less Than Twelve Months Twelve Months or More Unrealized Loss Fair Value Fair Value as % of Cost Unrealized Loss Fair Value Fair Value as % of Cost September 30, 2017 (unaudited) Fixed maturities: U.S. Government and government agencies $ — $ 3 100 % $ (3 ) $ 8 73 % States, municipalities and political subdivisions (12 ) 640 98 % (3 ) 59 95 % Residential MBS (1 ) 75 99 % (3 ) 91 97 % Commercial MBS — 60 100 % — — — % Asset-backed securities (5 ) 639 99 % (6 ) 157 96 % Corporate and other (23 ) 1,606 99 % (12 ) 279 96 % Total fixed maturities $ (41 ) $ 3,023 99 % $ (27 ) $ 594 96 % Equity securities: Common stocks $ (12 ) $ 58 83 % $ — $ — — % Perpetual preferred stocks — 10 100 % — — — % Total equity securities $ (12 ) $ 68 85 % $ — $ — — % December 31, 2016 Fixed maturities: U.S. Government and government agencies $ — $ 8 100 % $ (3 ) $ 7 70 % States, municipalities and political subdivisions (38 ) 1,288 97 % (4 ) 12 75 % Residential MBS (4 ) 298 99 % (3 ) 91 97 % Commercial MBS (1 ) 93 99 % — — — % Asset-backed securities (18 ) 1,295 99 % (17 ) 551 97 % Corporate and other (87 ) 3,636 98 % (20 ) 340 94 % Total fixed maturities $ (148 ) $ 6,618 98 % $ (47 ) $ 1,001 96 % Equity securities: Common stocks $ (9 ) $ 91 91 % $ — $ 3 100 % Perpetual preferred stocks (1 ) 32 97 % — — — % Total equity securities $ (10 ) $ 123 92 % $ — $ 3 100 % December 31, 2015 Fixed maturities: U.S. Government and government agencies $ — $ 4 100 % $ (3 ) $ 15 83 % States, municipalities and political subdivisions (25 ) 1,031 98 % (7 ) 103 94 % Residential MBS (2 ) 180 99 % (4 ) 99 96 % Commercial MBS — 74 100 % — 13 100 % Asset-backed securities (29 ) 1,849 98 % (8 ) 355 98 % Corporate and other (195 ) 4,229 96 % (48 ) 295 86 % Total fixed maturities $ (251 ) $ 7,367 97 % $ (70 ) $ 880 93 % Equity securities: Common stocks $ (35 ) $ 228 87 % $ — $ — — % Perpetual preferred stocks — 23 100 % — 5 100 % Total equity securities $ (35 ) $ 251 88 % $ — $ 5 100 % |
Roll forward of cumulative credit portion of other-than-temporary impairments on fixed maturity securities | A progression of the credit portion of other-than-temporary impairments on fixed maturity securities for which the non-credit portion of an impairment has been recognized in other comprehensive income is shown below (in millions): Nine months ended September 30, Year ended December 31, 2017 2016 2015 2014 (unaudited) Balance at beginning of period $ 104 $ 110 $ 115 $ 125 Additional credit impairments on: Previously impaired securities 1 1 — — Securities without prior impairments 2 — 1 — Reductions due to sales or redemptions (6 ) (7 ) (6 ) (10 ) Balance at end of period $ 101 $ 104 $ 110 $ 115 |
Available for sale fixed maturity securities by contractual maturity date | The table below sets forth the scheduled maturities of available for sale fixed maturities (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers. September 30, 2017 December 31, 2016 Amortized Fair Value Amortized Fair Value Cost Amount % Cost Amount % (unaudited) (unaudited) Maturity One year or less $ 563 $ 571 2 % $ 615 $ 626 2 % After one year through five years 4,508 4,745 15 % 3,952 4,185 15 % After five years through ten years 12,124 12,552 41 % 10,922 11,088 40 % After ten years 3,723 3,866 13 % 3,612 3,656 13 % 20,918 21,734 71 % 19,101 19,555 70 % ABS (average life of approximately 5 years) 5,655 5,771 18 % 4,517 4,519 16 % MBS (average life of approximately 4-1/2 years) 3,039 3,331 11 % 3,692 3,946 14 % Total $ 29,612 $ 30,836 100 % $ 27,310 $ 28,020 100 % |
Net investment income earned and investment expenses incurred | The following table shows (in millions) investment income earned and investment expenses incurred: Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Investment income: Fixed maturities $ 993 $ 929 $ 1,248 $ 1,138 $ 1,047 Equity securities 15 17 24 21 16 Equity in earnings of partnerships and similar investments 28 16 22 16 9 Mortgage loans 37 35 47 45 42 Policy loans 8 9 11 12 12 Real estate and other 23 26 34 7 17 Gross investment income 1,104 1,032 1,386 1,239 1,143 Investment expenses (6 ) (7 ) (10 ) (9 ) (4 ) Net investment income $ 1,098 $ 1,025 $ 1,376 $ 1,230 $ 1,139 |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments are summarized as follows (in millions): Nine months ended September 30, 2017 (unaudited) Nine months ended September 30, 2016 (unaudited) Realized gains (losses) Realized gains (losses) Before Impairments Impairments Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 21 $ (13 ) $ 8 $ 514 $ 29 $ (25 ) $ 4 $ 1,007 Equity securities 12 (23 ) (11 ) 52 8 (36 ) (28 ) 41 Mortgage loans and other investments 2 — 2 — — — — — Other (*) (5 ) 12 7 (248 ) (7 ) 13 6 (478 ) Total pretax 30 (24 ) 6 318 30 (48 ) (18 ) 570 Tax effects (11 ) 9 (2 ) (111 ) (11 ) 17 6 (200 ) Net of tax $ 19 $ (15 ) $ 4 $ 207 $ 19 $ (31 ) $ (12 ) $ 370 Year ended December 31, 2016 Year ended December 31, 2015 Realized gains (losses) Realized gains (losses) Before Impairments Impairments Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 32 $ (25 ) $ 7 $ 127 $ 24 $ (28 ) $ (4 ) $ (698 ) Equity securities 17 (41 ) (24 ) 51 17 (36 ) (19 ) (49 ) Mortgage loans and other investments — — — — (1 ) (2 ) (3 ) — Other (*) (7 ) 15 8 (52 ) (5 ) 15 10 320 Total pretax 42 (51 ) (9 ) 126 35 (51 ) (16 ) (427 ) Tax effects (15 ) 18 3 (44 ) (12 ) 18 6 149 Net of tax $ 27 $ (33 ) $ (6 ) $ 82 $ 23 $ (33 ) $ (10 ) $ (278 ) Year ended December 31, 2014 Realized gains (losses) Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 32 $ (8 ) $ 24 $ 465 Equity securities 16 (8 ) 8 6 Mortgage loans and other investments — — — — Other (*) (2 ) 5 3 (222 ) Total pretax 46 (11 ) 35 249 Tax effects (16 ) 4 (12 ) (87 ) Net of tax $ 30 $ (7 ) $ 23 $ 162 (*) Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business. |
Gross realized gains and losses on available for sale fixed maturity and equity security investments | Gross realized gains and losses (excluding impairment write-downs and mark-to-market of derivatives) on available for sale fixed maturity and equity security investment transactions consisted of the following (in millions): Nine months ended September 30, Year ended December 31, 2017 2016 2016 2015 2014 (unaudited) (unaudited) Fixed maturities: Gross gains $ 27 $ 36 $ 45 $ 31 $ 29 Gross losses (4 ) (5 ) (6 ) (5 ) (1 ) Equity securities: Gross gains 14 10 19 18 16 Gross losses (1 ) (2 ) (2 ) (1 ) — |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives included in Balance Sheet at fair value | The following derivatives that do not qualify for hedge accounting under GAAP are included in GALIC’s Balance Sheet at fair value (in millions): September 30, 2017 December 31, 2016 December 31, 2015 Derivative Balance Sheet Line Asset Liability Asset Liability Asset Liability (unaudited) (unaudited) MBS with embedded derivatives Fixed maturities $ 84 $ — $ 82 $ — $ 100 $ — Public company warrants Equity securities 3 — 4 — 4 — Fixed-indexed annuities (embedded derivative) Annuity benefits accumulated — 2,293 — 1,759 — 1,369 Equity index call options Equity options — fixed-indexed annuities 629 — 492 — 241 — Reinsurance contracts (embedded derivative) Other liabilities — 10 — 8 — 7 $ 716 $ 2,303 $ 578 $ 1,767 $ 345 $ 1,376 |
Summary of gain (loss) included in the Statement of Earnings for changes in the fair value of derivatives | The following table summarizes the gain (loss) included in GALIC’s Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting (in millions): Nine months ended September 30, Year ended December 31, Derivative Statement of Earnings Line 2017 2016 2016 2015 2014 (unaudited) (unaudited) MBS with embedded derivatives Realized gains on securities $ (2 ) $ (2 ) $ (7 ) $ (5 ) $ 4 Public company warrants Realized gains on securities (1 ) — — — — Interest rate swaptions Realized gains on securities — — — — (2 ) Fixed-indexed annuities (embedded derivative) (*) Annuity benefits (386 ) (188 ) (211 ) (17 ) (182 ) Equity index call options Annuity benefits 338 81 141 (56 ) 181 Reinsurance contracts (embedded derivative) Net investment income (2 ) (6 ) (1 ) 6 (3 ) $ (53 ) $ (115 ) $ (78 ) $ (72 ) $ (2 ) (*) The change in fair value of the embedded derivative includes losses related to unlocking of actuarial assumptions of $17 million in 2016 compared to losses of $28 million in 2015 and gains related to unlocking of actuarial assumptions of $58 million in 2014 . |
Deferred Policy Acquisition C27
Deferred Policy Acquisition Costs (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred policy acquisition costs details | A progression of deferred policy acquisition costs is presented below (in millions): Deferred Costs Sales Inducements PVFP Subtotal Unrealized (*) Total Balance at December 31, 2013 $ 860 $ 147 $ 77 $ 1,084 $ (336 ) $ 748 Additions 198 8 — 206 — 206 Amortization: Periodic amortization (128 ) (26 ) (11 ) (165 ) — (165 ) Annuity unlocking (22 ) (1 ) — (23 ) — (23 ) Included in realized gains 2 1 — 3 — 3 Change in unrealized — — — — (189 ) (189 ) Balance at December 31, 2014 910 129 66 1,105 (525 ) 580 Additions 224 11 — 235 — 235 Amortization: Periodic amortization (159 ) (26 ) (11 ) (196 ) — (196 ) Annuity unlocking 31 4 — 35 — 35 Included in realized gains 8 1 — 9 — 9 Change in unrealized — — — — 291 291 Balance at December 31, 2015 1,014 119 55 1,188 (234 ) 954 Additions 229 9 — 238 — 238 Amortization: Periodic amortization (168 ) (24 ) (9 ) (201 ) — (201 ) Annuity unlocking 25 4 — 29 — 29 Included in realized gains 6 2 — 8 — 8 Change in unrealized — — — — (31 ) (31 ) Balance at December 31, 2016 1,106 110 46 1,262 (265 ) 997 Additions (unaudited) 177 3 — 180 — 180 Amortization: Periodic amortization (unaudited) (121 ) (14 ) (6 ) (141 ) — (141 ) Included in realized gains (unaudited) 6 1 — 7 — 7 Change in unrealized (unaudited) — — — — (193 ) (193 ) Balance at September 30, 2017 (unaudited) $ 1,168 $ 100 $ 40 $ 1,308 $ (458 ) $ 850 (*) Unrealized adjustments to DPAC includes net unrealized gains/losses on securities and net unrealized gains/losses on cash flow hedges. |
Shareholder's Equity (Tables)
Shareholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Components of accumulated other comprehensive income (loss) | The progression of the components of accumulated other comprehensive income follows (in millions): Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Tax Net of tax AOCI Ending Balance Nine months ended September 30, 2017 (unaudited) Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 322 $ (112 ) $ 210 Reclassification adjustment for realized (gains) losses included in net earnings (a) (4 ) 1 (3 ) Total net unrealized gains on securities (b) $ 273 318 (111 ) 207 $ 480 Net unrealized gains (losses) on cash flow hedges (7 ) 1 — 1 (6 ) Total $ 266 $ 319 $ (111 ) $ 208 $ 474 Year ended December 31, 2016 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 117 $ (41 ) $ 76 Reclassification adjustment for realized (gains) losses included in net earnings (a) 9 (3 ) 6 Total net unrealized gains on securities (b) $ 191 126 (44 ) 82 $ 273 Net unrealized gains (losses) on cash flow hedges 1 (12 ) 4 (8 ) (7 ) Total $ 192 $ 114 $ (40 ) $ 74 $ 266 Year ended December 31, 2015 Net unrealized gains (losses) on securities: Unrealized holding losses on securities arising during the period $ (440 ) $ 154 $ (286 ) Reclassification adjustment for realized (gains) losses included in net earnings (a) 13 (5 ) 8 Total net unrealized gains (losses) on securities (b) $ 469 (427 ) 149 (278 ) $ 191 Net unrealized gains on cash flow hedges — 1 — 1 1 Total $ 469 $ (426 ) $ 149 $ (277 ) $ 192 Year ended December 31, 2014 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 284 $ (99 ) $ 185 Reclassification adjustment for realized (gains) losses included in net earnings (a) (35 ) 12 (23 ) Total net unrealized gains on securities (b) $ 307 249 (87 ) 162 $ 469 Net unrealized gains on cash flow hedges — — — — — Total $ 307 $ 249 $ (87 ) $ 162 $ 469 (a) The reclassification adjustment out of net unrealized gains on securities affected the following lines in GALIC’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax Realized gains (losses) on securities Tax Provision for income taxes (b) Includes net unrealized gains of $35 million at September 30, 2017 (unaudited) compared to net unrealized gains of $34 million , $33 million and $37 million at December 31, 2016 , 2015 and 2014 , respectively, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income taxes at the statutory rate and income taxes shown in the Statement of Earnings | The following is a reconciliation of income taxes at the statutory rate of 35% to the provision for income taxes as shown in GALIC’s Statement of Earnings (dollars in millions): 2016 2015 2014 Amount % of EBT Amount % of EBT Amount % of EBT Earnings before income taxes (“EBT”) $ 367 $ 319 $ 352 Income taxes at statutory rate $ 128 35 % $ 112 35 % $ 123 35 % Effect of permanent items (1 ) — % (4 ) (1 %) (3 ) (1 %) Provision for income taxes as shown in the statement of earnings $ 127 35 % $ 108 34 % $ 120 34 % |
Components of income tax provision (credit) | The total income tax provision (credit) consists of (in millions): 2016 2015 2014 Current taxes: Federal $ 185 $ 133 $ 170 State 4 2 4 Deferred taxes: Federal (62 ) (27 ) (54 ) Provision for income taxes $ 127 $ 108 $ 120 |
Components of deferred tax assets and liabilities | Deferred income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The significant components of deferred tax assets and liabilities included in the GALIC’s Balance Sheet at December 31 were as follows (in millions): 2016 2015 Excluding Unrealized Gains Impact of Unrealized Gains Total Excluding Unrealized Gains Impact of Unrealized Gains Total Deferred tax assets: Insurance claims and reserves $ 489 $ 27 $ 516 $ 404 $ 22 $ 426 Other, net 19 (5 ) 14 22 (4 ) 18 Total deferred tax assets 508 22 530 426 18 444 Deferred tax liabilities: Investment securities 4 (265 ) (261 ) (6 ) (203 ) (209 ) Deferred policy acquisition costs (375 ) 96 (279 ) (348 ) 82 (266 ) Total deferred tax liabilities (371 ) (169 ) (540 ) (354 ) (121 ) (475 ) Net deferred tax assets (liabilities) $ 137 $ (147 ) $ (10 ) $ 72 $ (103 ) $ (31 ) |
Progression of the liability for uncertain tax positions, excluding interest and penalties | The following is a progression of GALIC’s uncertain tax positions, excluding interest and penalties, which all relate to the uncertainty as to the timing of tax return inclusion of investment income of certain debt securities (in millions): 2016 2015 2014 Balance at January 1 $ — $ — $ 13 Reductions for tax positions of prior years — — (4 ) Additions for tax positions of current year — — — Settlements — — (9 ) Balance at December 31 $ — $ — $ — |
Insurance (Tables)
Insurance (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Insurance [Abstract] | |
Statutory information | Net earnings and capital and surplus on a statutory basis for GALIC and its insurance subsidiaries were as follows (in millions): Net Earnings Capital and Surplus 2016 2015 2014 2016 2015 GALIC consolidated life insurance companies $ 167 $ 399 $ 384 $ 1,976 $ 1,719 |
Schedule of reserve liabilities for annuity benefits accumulated | For certain products, the liability for “annuity benefits accumulated” includes reserves for excess benefits expected to be paid on future deaths and annuitizations, guaranteed withdrawal benefits and accrued persistency and premium bonuses. The liabilities included in GALIC’s Balance Sheet for these benefits, excluding the impact of unrealized gains on securities, were as follows at December 31 (in millions): 2016 2015 Expected death and annuitization $ 223 $ 214 Guaranteed withdrawal benefits 278 203 Accrued persistency and premium bonuses 6 11 |
Accounting Policies - Narrative
Accounting Policies - Narrative (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Maturities of short term investments | 3 months |
Accounting Policies - Narrati32
Accounting Policies - Narrative on Revenue Recognition Guidance (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Maximum | Accounting Standards Update 2014-09 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Expected effect on consolidated revenues under new revenue recognition guidance effective in 2018 | 3.00% |
Segments of Operations - Narrat
Segments of Operations - Narrative (Details) | 9 Months Ended |
Sep. 30, 2017segment | |
Segment Reporting [Abstract] | |
Number of segments | 2 |
Segments of Operations - Assets
Segments of Operations - Assets by segment (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Segment Reporting Information [Line Items] | ||||
Total assets | $ 37,642 | $ 34,362 | $ 30,828 | $ 28,012 |
Annuity | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 33,607 | 30,055 | 27,218 | |
Run-off Life | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | $ 755 | $ 773 | $ 794 |
Segments of Operations - Revenu
Segments of Operations - Revenues by segment (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||
Net investment income | $ 1,098 | $ 1,025 | $ 1,376 | $ 1,230 | $ 1,139 |
Other income | 85 | 80 | 108 | 105 | 100 |
Revenues before realized gains | 1,200 | 1,123 | 1,508 | 1,356 | 1,262 |
Realized gains (losses) on securities | 6 | (18) | (9) | (16) | 35 |
Total revenues | 1,206 | 1,105 | 1,499 | 1,340 | 1,297 |
Annuity | |||||
Segment Reporting Information [Line Items] | |||||
Net investment income | 1,083 | 1,010 | 1,355 | 1,211 | 1,120 |
Other income | 82 | 77 | 104 | 100 | 94 |
Revenues before realized gains | 1,165 | 1,087 | 1,459 | 1,311 | 1,214 |
Run-off Life | |||||
Segment Reporting Information [Line Items] | |||||
Revenues before realized gains | $ 35 | $ 36 | $ 49 | $ 45 | $ 48 |
Segments of Operations - Earnin
Segments of Operations - Earnings before income taxes by segment (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||
Earnings before realized gains and income taxes | $ 295 | $ 241 | $ 376 | $ 335 | $ 317 |
Realized gains (losses) on securities | 6 | (18) | (9) | (16) | 35 |
Earnings before income taxes | 301 | 223 | 367 | 319 | 352 |
Annuity | |||||
Segment Reporting Information [Line Items] | |||||
Earnings before realized gains and income taxes | 289 | 239 | 371 | 333 | 318 |
Run-off Life | |||||
Segment Reporting Information [Line Items] | |||||
Earnings before realized gains and income taxes | $ 6 | $ 2 | $ 5 | $ 2 | $ (1) |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)stockprofessional | Dec. 31, 2016USD ($)stock | Dec. 31, 2015USD ($)stock | Dec. 31, 2014USD ($)stock | |
Fair Value Measurements (Textual) [Abstract] | ||||
AFG's internal investment professionals | professional | 25 | |||
Level 3 assets as a percentage of total assets measured at fair value | 5.00% | |||
Percentage of level 3 assets that were priced using non-binding broker quotes | 77.00% | |||
Level 3 assets that were priced using non-binding broker quotes | $ 1,300 | |||
Percentage of internally developed Level 3 asset fair values to total assets (approximately) | 1.00% | |||
Life contingent annuities | $ 207 | $ 204 | $ 200 | |
Fixed-indexed annuities (embedded derivative), majority of future years | Minimum | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Unobservable input surrenders used in Level 3 fair value determination | 6.00% | |||
Fixed-indexed annuities (embedded derivative), majority of future years | Maximum | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Unobservable input surrenders used in Level 3 fair value determination | 10.00% | |||
Fixed-indexed annuities (embedded derivative) | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Fair value of derivatives in annuity benefits accumulated measured using a discounted cash flow approach | $ 2,290 | 1,760 | ||
Fixed-indexed annuities (embedded derivative) | Minimum | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Unobservable input surrenders used in Level 3 fair value determination | 3.00% | |||
Fixed-indexed annuities (embedded derivative) | Maximum | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Unobservable input surrenders used in Level 3 fair value determination | 23.00% | |||
Not Designated as Hedging Instrument | Annuity benefits | Fixed-indexed annuities (embedded derivative) | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Total realized/unrealized gains (losses) included in net income for the embedded derivatives related to the unlocking of actuarial assumptions | $ (17) | $ (28) | $ 58 | |
Perpetual preferred stocks | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Number of stocks transferred from Level 2 to Level 1 | stock | 0 | 0 | 1 | |
Number of stocks transferred from Level 1 to Level 2 | stock | 1 | 0 | 3 | |
Number of stocks transferred from Level 2 to Level 1 during the first nine months | stock | 1 | |||
Fair value of assets transferred from Level 2 to Level 1 | $ 1 | $ 0 | $ 0 | $ 4 |
Fair value of assets transferred from Level 1 to Level 2 | $ 1 | $ 0 | $ 14 | |
Common stocks | ||||
Fair Value Measurements (Textual) [Abstract] | ||||
Number of stocks transferred from Level 2 to Level 1 | stock | 2 | 1 | 0 | |
Number of stocks transferred from Level 1 to Level 2 | stock | 2 | 1 | 1 | |
Fair value of assets transferred from Level 2 to Level 1 | $ 0 | $ 0 | $ 0 | |
Fair value of assets transferred from Level 1 to Level 2 | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and liabilities measured and carried at fair value in the financial statements (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | $ 30,836 | $ 28,020 | $ 25,486 | |
Fixed maturities, Trading, Fair Value | 118 | 117 | 114 | |
Equity securities, Available for sale, Fair Value | 540 | 495 | 486 | |
Variable annuity assets (separate accounts) | [1] | 628 | 600 | 608 |
Other assets — derivatives | 629 | 492 | 241 | |
Total assets accounted for at fair value | 32,752 | 29,725 | 26,937 | |
Liabilities: | ||||
Total liabilities accounted for at fair value | 2,324 | 1,789 | 1,377 | |
Annuity benefits accumulated | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 2,293 | 1,759 | 1,369 | |
Other liabilities | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 31 | 30 | 8 | |
Fixed maturities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 30,836 | 28,020 | 25,486 | |
Fixed maturities, Trading, Fair Value | 118 | 117 | 114 | |
U.S. Government and government agencies | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 47 | 50 | 60 | |
States, municipalities and political subdivisions | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 4,336 | 4,176 | 3,966 | |
Foreign government | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 13 | 13 | 13 | |
Residential MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 2,421 | 2,597 | 2,584 | |
Commercial MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 910 | 1,349 | 1,974 | |
Asset-backed securities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 5,771 | 4,519 | 3,492 | |
Corporate and other | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 17,338 | 15,316 | 13,397 | |
Equity securities | ||||
Assets: | ||||
Equity securities, Available for sale, Fair Value | 540 | 495 | 486 | |
Other assets — derivatives | ||||
Assets: | ||||
Other assets — derivatives | 1 | 1 | 2 | |
Level 1 | ||||
Assets: | ||||
Variable annuity assets (separate accounts) | [1] | 0 | 0 | 0 |
Total assets accounted for at fair value | 422 | 385 | 398 | |
Liabilities: | ||||
Total liabilities accounted for at fair value | 0 | 0 | 0 | |
Level 1 | Annuity benefits accumulated | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 0 | 0 | 0 | |
Level 1 | Other liabilities | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 0 | 0 | 0 | |
Level 1 | Fixed maturities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 24 | 25 | 26 | |
Fixed maturities, Trading, Fair Value | 0 | 0 | 0 | |
Level 1 | U.S. Government and government agencies | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 8 | 10 | 10 | |
Level 1 | States, municipalities and political subdivisions | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 0 | 0 | 0 | |
Level 1 | Foreign government | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 0 | 0 | 0 | |
Level 1 | Residential MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 0 | 0 | 0 | |
Level 1 | Commercial MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 0 | 0 | 0 | |
Level 1 | Asset-backed securities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 0 | 0 | 0 | |
Level 1 | Corporate and other | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 16 | 15 | 16 | |
Level 1 | Equity securities | ||||
Assets: | ||||
Equity securities, Available for sale, Fair Value | 398 | 360 | 372 | |
Level 1 | Other assets — derivatives | ||||
Assets: | ||||
Other assets — derivatives | 0 | 0 | 0 | |
Level 2 | ||||
Assets: | ||||
Variable annuity assets (separate accounts) | [1] | 628 | 600 | 608 |
Total assets accounted for at fair value | 30,646 | 27,963 | 25,276 | |
Liabilities: | ||||
Total liabilities accounted for at fair value | 31 | 30 | 8 | |
Level 2 | Annuity benefits accumulated | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 0 | 0 | 0 | |
Level 2 | Other liabilities | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 31 | 30 | 8 | |
Level 2 | Fixed maturities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 29,232 | 26,728 | 24,280 | |
Fixed maturities, Trading, Fair Value | 118 | 117 | 114 | |
Level 2 | U.S. Government and government agencies | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 31 | 32 | 35 | |
Level 2 | States, municipalities and political subdivisions | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 4,261 | 4,101 | 3,934 | |
Level 2 | Foreign government | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 13 | 13 | 13 | |
Level 2 | Residential MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 2,303 | 2,449 | 2,400 | |
Level 2 | Commercial MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 877 | 1,324 | 1,938 | |
Level 2 | Asset-backed securities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 5,377 | 4,160 | 3,159 | |
Level 2 | Corporate and other | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 16,370 | 14,649 | 12,801 | |
Level 2 | Equity securities | ||||
Assets: | ||||
Equity securities, Available for sale, Fair Value | 38 | 25 | 31 | |
Level 2 | Other assets — derivatives | ||||
Assets: | ||||
Other assets — derivatives | 1 | 1 | 2 | |
Level 3 | ||||
Assets: | ||||
Variable annuity assets (separate accounts) | [1] | 0 | 0 | 0 |
Total assets accounted for at fair value | 1,684 | 1,377 | 1,263 | |
Liabilities: | ||||
Total liabilities accounted for at fair value | 2,293 | 1,759 | 1,369 | |
Level 3 | Annuity benefits accumulated | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 2,293 | 1,759 | 1,369 | |
Level 3 | Other liabilities | ||||
Liabilities: | ||||
Derivatives included in annuity benefits accumulated and other liabilities | 0 | 0 | 0 | |
Level 3 | Fixed maturities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 1,580 | 1,267 | 1,180 | |
Fixed maturities, Trading, Fair Value | 0 | 0 | 0 | |
Level 3 | U.S. Government and government agencies | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 8 | 8 | 15 | |
Level 3 | States, municipalities and political subdivisions | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 75 | 75 | 32 | |
Level 3 | Foreign government | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 0 | 0 | 0 | |
Level 3 | Residential MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 118 | 148 | 184 | |
Level 3 | Commercial MBS | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 33 | 25 | 36 | |
Level 3 | Asset-backed securities | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 394 | 359 | 333 | |
Level 3 | Corporate and other | ||||
Assets: | ||||
Fixed maturities, Available for sale, Fair Value | 952 | 652 | 580 | |
Level 3 | Equity securities | ||||
Assets: | ||||
Equity securities, Available for sale, Fair Value | 104 | 110 | 83 | |
Level 3 | Other assets — derivatives | ||||
Assets: | ||||
Other assets — derivatives | 0 | 0 | 0 | |
Equity index call options | Other investments | ||||
Assets: | ||||
Other assets — derivatives | 629 | 492 | 241 | |
Equity index call options | Level 1 | Other investments | ||||
Assets: | ||||
Other assets — derivatives | 0 | 0 | 0 | |
Equity index call options | Level 2 | Other investments | ||||
Assets: | ||||
Other assets — derivatives | 629 | 492 | 241 | |
Equity index call options | Level 3 | Other investments | ||||
Assets: | ||||
Other assets — derivatives | $ 0 | $ 0 | $ 0 | |
[1] | Variable annuity liabilities equal the fair value of variable annuity assets. |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers between Level 1 and Level 2 (Details) $ in Millions | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($)stock | Dec. 31, 2015USD ($)stock | Dec. 31, 2014USD ($)stock |
Perpetual preferred stocks | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of stocks transferred from Level 2 to Level 1 | stock | 0 | 0 | 1 | |
Fair value of assets transferred from Level 2 to Level 1 | $ | $ 1 | $ 0 | $ 0 | $ 4 |
Number of stocks transferred from Level 1 to Level 2 | stock | 1 | 0 | 3 | |
Fair value of assets transferred from Level 1 to Level 2 | $ | $ 1 | $ 0 | $ 14 | |
Common stocks | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Number of stocks transferred from Level 2 to Level 1 | stock | 2 | 1 | 0 | |
Fair value of assets transferred from Level 2 to Level 1 | $ | $ 0 | $ 0 | $ 0 | |
Number of stocks transferred from Level 1 to Level 2 | stock | 2 | 1 | 1 | |
Fair value of assets transferred from Level 1 to Level 2 | $ | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Unobs
Fair Value Measurements - Unobservable inputs used in determining fair value of embedded derivatives (Details) - Embedded derivatives | 9 Months Ended |
Sep. 30, 2017 | |
Unobservable inputs used by management in determining fair value of embedded derivatives | |
Risk margin for uncertainty in cash flows | 0.68% |
Minimum | |
Unobservable inputs used by management in determining fair value of embedded derivatives | |
Adjustment for insurance subsidiary's credit risk | 0.20% |
Surrenders | 3.00% |
Partial surrenders | 2.00% |
Annuitizations | 0.10% |
Deaths | 1.50% |
Budgeted option costs | 2.40% |
Maximum | |
Unobservable inputs used by management in determining fair value of embedded derivatives | |
Adjustment for insurance subsidiary's credit risk | 2.40% |
Surrenders | 23.00% |
Partial surrenders | 10.00% |
Annuitizations | 1.00% |
Deaths | 8.00% |
Budgeted option costs | 3.70% |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in balances of Level 3 financial assets carried at fair value (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | $ 1,377 | $ 1,263 | $ 1,017 | $ 688 |
Total realized/unrealized gains (losses) included in Net income | (18) | (19) | (9) | 9 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 20 | 10 | (23) | 16 |
Purchases and issuances | 516 | 245 | 391 | 217 |
Sales and settlements | (187) | (126) | (122) | (104) |
Transfer into Level 3 | 210 | 109 | 89 | 307 |
Transfer out of Level 3 | (234) | (105) | (80) | (116) |
Financial assets, Ending Balance | 1,684 | 1,377 | 1,263 | 1,017 |
Total fixed maturities | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 1,267 | 1,180 | 970 | 680 |
Total realized/unrealized gains (losses) included in Net income | (5) | (13) | (6) | 8 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 14 | (13) | (17) | 15 |
Purchases and issuances | 499 | 217 | 340 | 186 |
Sales and settlements | (184) | (111) | (122) | (104) |
Transfer into Level 3 | 210 | 100 | 89 | 295 |
Transfer out of Level 3 | (221) | (93) | (74) | (110) |
Financial assets, Ending Balance | 1,580 | 1,267 | 1,180 | 970 |
U.S. government agency | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 8 | 15 | 15 | 15 |
Total realized/unrealized gains (losses) included in Net income | 0 | (7) | 0 | 0 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Purchases and issuances | 0 | 0 | 0 | 0 |
Sales and settlements | 0 | 0 | 0 | 0 |
Transfer into Level 3 | 0 | 0 | 0 | 0 |
Transfer out of Level 3 | 0 | 0 | 0 | 0 |
Financial assets, Ending Balance | 8 | 8 | 15 | 15 |
States, municipalities and political subdivisions | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 75 | 32 | 24 | 20 |
Total realized/unrealized gains (losses) included in Net income | 0 | 0 | 0 | 0 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 1 | (3) | 0 | 1 |
Purchases and issuances | 0 | 47 | 9 | 0 |
Sales and settlements | (1) | (1) | (1) | 0 |
Transfer into Level 3 | 0 | 0 | 0 | 3 |
Transfer out of Level 3 | 0 | 0 | 0 | 0 |
Financial assets, Ending Balance | 75 | 75 | 32 | 24 |
Residential MBS | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 148 | 184 | 235 | 267 |
Total realized/unrealized gains (losses) included in Net income | 0 | (3) | (2) | 4 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 1 | (2) | (2) | 3 |
Purchases and issuances | 1 | 6 | 0 | 10 |
Sales and settlements | (24) | (26) | (32) | (27) |
Transfer into Level 3 | 25 | 29 | 48 | 62 |
Transfer out of Level 3 | (33) | (40) | (63) | (84) |
Financial assets, Ending Balance | 118 | 148 | 184 | 235 |
Commercial MBS | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 25 | 36 | 37 | 24 |
Total realized/unrealized gains (losses) included in Net income | 2 | (1) | (1) | (1) |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | (1) | 0 |
Purchases and issuances | 12 | 0 | 0 | 0 |
Sales and settlements | (10) | (6) | (2) | 0 |
Transfer into Level 3 | 4 | 0 | 4 | 14 |
Transfer out of Level 3 | 0 | (4) | (1) | 0 |
Financial assets, Ending Balance | 33 | 25 | 36 | 37 |
Asset-backed securities | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 359 | 333 | 175 | 62 |
Total realized/unrealized gains (losses) included in Net income | (3) | (1) | 1 | 2 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 3 | 1 | (5) | (2) |
Purchases and issuances | 86 | 30 | 184 | 88 |
Sales and settlements | (41) | (20) | (40) | (17) |
Transfer into Level 3 | 152 | 49 | 28 | 65 |
Transfer out of Level 3 | (162) | (33) | (10) | (23) |
Financial assets, Ending Balance | 394 | 359 | 333 | 175 |
Corporate and other | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 652 | 580 | 484 | 292 |
Total realized/unrealized gains (losses) included in Net income | (4) | (1) | (4) | 3 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 9 | (9) | (9) | 13 |
Purchases and issuances | 400 | 134 | 147 | 88 |
Sales and settlements | (108) | (58) | (47) | (60) |
Transfer into Level 3 | 29 | 22 | 9 | 151 |
Transfer out of Level 3 | (26) | (16) | 0 | (3) |
Financial assets, Ending Balance | 952 | 652 | 580 | 484 |
Equity securities | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 110 | 83 | 47 | 8 |
Total realized/unrealized gains (losses) included in Net income | (13) | (6) | (3) | 1 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 6 | 23 | (6) | 1 |
Purchases and issuances | 17 | 28 | 51 | 31 |
Sales and settlements | (3) | (15) | 0 | 0 |
Transfer into Level 3 | 0 | 9 | 0 | 12 |
Transfer out of Level 3 | (13) | (12) | (6) | (6) |
Financial assets, Ending Balance | $ 104 | $ 110 | $ 83 | $ 47 |
Fair Value Measurements - Cha42
Fair Value Measurements - Changes in balances of Level 3 financial liabilities carried at fair value (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||
Financial liabilities, Beginning Balance | $ (1,759) | $ (1,369) | $ (1,160) | $ (804) | |||
Total realized/unrealized gains (losses) included in Net income | (386) | (211) | (17) | (182) | |||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | |||
Purchases and issuances | (224) | (277) | (257) | (221) | |||
Sales and settlements | 76 | 98 | 65 | 47 | |||
Transfers into Level 3 | 0 | 0 | 0 | 0 | |||
Transfers out of Level 3 | 0 | 0 | 0 | 0 | |||
Financial liabilities, Ending Balance | (2,293) | (1,759) | (1,369) | (1,160) | |||
Embedded derivatives | |||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||||
Financial liabilities, Beginning Balance | (1,759) | (1,369) | (1,160) | (804) | |||
Total realized/unrealized gains (losses) included in Net income | (386) | (211) | [1] | (17) | [2] | (182) | [3] |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | |||
Purchases and issuances | (224) | (277) | (257) | (221) | |||
Sales and settlements | 76 | 98 | 65 | 47 | |||
Transfers into Level 3 | 0 | 0 | 0 | 0 | |||
Transfers out of Level 3 | 0 | 0 | 0 | 0 | |||
Financial liabilities, Ending Balance | $ (2,293) | $ (1,759) | $ (1,369) | $ (1,160) | |||
[1] | Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $17 million in 2016. | ||||||
[2] | Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of $28 million in 2015. | ||||||
[3] | Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of $58 million in 2014. |
Fair Value Measurements - The c
Fair Value Measurements - The carrying value and fair value of financial instruments (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Financial assets: | ||||
Mortgage loans | $ 791 | $ 890 | $ 880 | |
Policy loans | 186 | 192 | 201 | |
Level 1 | ||||
Financial assets: | ||||
Cash and cash equivalents | 816 | 499 | 262 | |
Mortgage loans | 0 | 0 | 0 | |
Policy loans | 0 | 0 | 0 | |
Total financial assets not accounted for at fair value | 816 | 499 | 262 | |
Financial liabilities: | ||||
Annuity benefits accumulated | [1] | 0 | 0 | 0 |
Total financial liabilities not accounted for at fair value | 0 | 0 | 0 | |
Level 2 | ||||
Financial assets: | ||||
Cash and cash equivalents | 0 | 0 | 0 | |
Mortgage loans | 0 | 0 | 0 | |
Policy loans | 0 | 0 | 0 | |
Total financial assets not accounted for at fair value | 0 | 0 | 0 | |
Financial liabilities: | ||||
Annuity benefits accumulated | [1] | 0 | 0 | 0 |
Total financial liabilities not accounted for at fair value | 0 | 0 | 0 | |
Level 3 | ||||
Financial assets: | ||||
Cash and cash equivalents | 0 | 0 | 0 | |
Mortgage loans | 788 | 887 | 883 | |
Policy loans | 186 | 192 | 201 | |
Total financial assets not accounted for at fair value | 974 | 1,079 | 1,084 | |
Financial liabilities: | ||||
Annuity benefits accumulated | [1] | 31,857 | 28,932 | 25,488 |
Total financial liabilities not accounted for at fair value | 31,857 | 28,932 | 25,488 | |
Carrying Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 816 | 499 | 262 | |
Mortgage loans | 791 | 890 | 880 | |
Policy loans | 186 | 192 | 201 | |
Total financial assets not accounted for at fair value | 1,793 | 1,581 | 1,343 | |
Financial liabilities: | ||||
Annuity benefits accumulated | [1] | 32,464 | 29,703 | 26,422 |
Total financial liabilities not accounted for at fair value | 32,464 | 29,703 | 26,422 | |
Fair Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 816 | 499 | 262 | |
Mortgage loans | 788 | 887 | 883 | |
Policy loans | 186 | 192 | 201 | |
Total financial assets not accounted for at fair value | 1,790 | 1,578 | 1,346 | |
Financial liabilities: | ||||
Annuity benefits accumulated | [1] | 31,857 | 28,932 | 25,488 |
Total financial liabilities not accounted for at fair value | $ 31,857 | $ 28,932 | $ 25,488 | |
[1] | Excludes $207 million, $204 million and $200 million of life contingent annuities in the payout phase at September 30, 2017 (unaudited), December 31, 2016 and 2015, respectively. |
Balance Sheet Impact of Net U44
Balance Sheet Impact of Net Unrealized Gains on Securities - Components of the net unrealized gain on securities included in AOCI (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Available-for-sale Securities [Abstract] | |||||
Fixed maturities, Available for sale, Amortized Cost | $ 29,612 | $ 27,310 | $ 24,903 | ||
Equity securities, Available for sale, Amortized Cost | 440 | 447 | 489 | ||
Fixed maturities, Available for sale, Fair Value | 30,836 | 28,020 | 25,486 | ||
Equity securities, Available for sale, Fair Value | 540 | 495 | 486 | ||
Deferred policy acquisition costs | 850 | 997 | 954 | $ 580 | $ 748 |
Annuity benefits accumulated | (32,671) | (29,907) | (26,622) | ||
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | |||||
Net unrealized gain, pretax | 738 | 420 | 294 | ||
Deferred tax on unrealized gain | (258) | (147) | (103) | ||
Net unrealized gain, after tax (included in AOCI) | 480 | 273 | 191 | ||
Fixed maturities | |||||
Available-for-sale Securities [Abstract] | |||||
Fixed maturities, Available for sale, Amortized Cost | 29,612 | 27,310 | 24,903 | ||
Fixed maturities, Available for sale, Fair Value | 30,836 | 28,020 | 25,486 | ||
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | |||||
Net unrealized gain, pretax | 1,224 | 710 | 583 | ||
Equity securities | |||||
Available-for-sale Securities [Abstract] | |||||
Equity securities, Available for sale, Amortized Cost | 440 | 447 | 489 | ||
Equity securities, Available for sale, Fair Value | 540 | 495 | 486 | ||
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | |||||
Net unrealized gain, pretax | 100 | 48 | (3) | ||
Deferred policy acquisition costs | |||||
Available-for-sale Securities [Abstract] | |||||
Deferred policy acquisition costs | 850 | 997 | 954 | ||
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | |||||
Net unrealized gain, pretax | (465) | (273) | (233) | ||
Annuity benefits accumulated | |||||
Available-for-sale Securities [Abstract] | |||||
Annuity benefits accumulated | (32,671) | (29,907) | (26,622) | ||
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | |||||
Net unrealized gain, pretax | (141) | (78) | (64) | ||
Unearned revenue (included in other liabilities) | |||||
Available-for-sale Securities [Abstract] | |||||
Unearned revenue (included in other liabilities) | (11) | (23) | (31) | ||
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | |||||
Net unrealized gain, pretax | 20 | 13 | 11 | ||
Excluding Unrealized Gains | |||||
Available-for-sale Securities [Abstract] | |||||
Deferred policy acquisition costs | 1,308 | 1,262 | 1,188 | $ 1,105 | $ 1,084 |
Excluding Unrealized Gains | Fixed maturities | |||||
Available-for-sale Securities [Abstract] | |||||
Fixed maturities, Available for sale, Amortized Cost | 29,612 | 27,310 | 24,903 | ||
Excluding Unrealized Gains | Equity securities | |||||
Available-for-sale Securities [Abstract] | |||||
Equity securities, Available for sale, Amortized Cost | 440 | 447 | 489 | ||
Excluding Unrealized Gains | Deferred policy acquisition costs | |||||
Available-for-sale Securities [Abstract] | |||||
Deferred policy acquisition costs | 1,315 | 1,270 | 1,187 | ||
Excluding Unrealized Gains | Annuity benefits accumulated | |||||
Available-for-sale Securities [Abstract] | |||||
Annuity benefits accumulated | (32,530) | (29,829) | (26,558) | ||
Excluding Unrealized Gains | Unearned revenue (included in other liabilities) | |||||
Available-for-sale Securities [Abstract] | |||||
Unearned revenue (included in other liabilities) | $ (31) | $ (36) | $ (42) |
Investments - Narrative (Detail
Investments - Narrative (Details) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017USD ($)security | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)security | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Investment [Line Items] | |||||
Percentage (based on amount of unrealized loss) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 71.00% | 83.00% | |||
Percentage (based on fair value) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 87.00% | 91.00% | |||
Other than temporary impairment charges | $ 24 | $ 48 | $ 51 | $ 51 | $ 11 |
Average life of ABS | 5 years | ||||
Average life of MBS | 4 years 6 months | ||||
Investment management charges (are less than in 2014) | 4 | 4 | $ 5 | 6 | |
Residential MBS | |||||
Investment [Line Items] | |||||
Non-credit related portion of other-than-temporary impairment charges taken for securities still owned | 132 | 149 | 160 | ||
Fixed maturities, Gross Unrealized, Losses | (4) | (7) | (6) | ||
Other than temporary impairment charges | 1 | ||||
Corporate bonds | |||||
Investment [Line Items] | |||||
Other than temporary impairment charges | 13 | 17 | |||
Fixed maturities - all other | |||||
Investment [Line Items] | |||||
Other than temporary impairment charges | 7 | ||||
Securities with non-credit other-than-temporary impairment charges | |||||
Investment [Line Items] | |||||
Gross Unrealized, Gains | 106 | 101 | 104 | ||
Gross Unrealized, Losses | (5) | (2) | (5) | ||
Fixed maturities | |||||
Investment [Line Items] | |||||
Fixed maturities, Gross Unrealized, Losses | $ (68) | $ (195) | (321) | ||
Number of available for sale securities in an unrealized loss position | security | 467 | 892 | |||
Other than temporary impairment charges | $ 13 | $ 25 | $ 25 | 28 | 8 |
Common stocks | |||||
Investment [Line Items] | |||||
Number of available for sale securities in an unrealized loss position | security | 16 | 20 | |||
Other than temporary impairment charges | $ 19 | $ 41 | |||
Equity securities, Gross Unrealized, Losses | $ (12) | (9) | (35) | ||
Preferred stocks | |||||
Investment [Line Items] | |||||
Number of available for sale securities in an unrealized loss position | security | 1 | ||||
Other than temporary impairment charges | $ 5 | ||||
Equity securities, Gross Unrealized, Losses | 0 | $ (1) | $ 0 | ||
Maximum | |||||
Investment [Line Items] | |||||
Investment management charges (are less than in 2014) | $ 1 | ||||
Maximum | Residential MBS | |||||
Investment [Line Items] | |||||
Other than temporary impairment charges | 1 | ||||
Maximum | Preferred stocks | |||||
Investment [Line Items] | |||||
Equity securities, Gross Unrealized, Losses | $ (1) | ||||
Number of available for sale securities in an unrealized loss position for twelve months or longer | Common stocks | |||||
Investment [Line Items] | |||||
Number of available for sale securities in an unrealized loss position | security | 0 | 1 |
Investments - Available for sal
Investments - Available for sale fixed maturities and equity securities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | $ 29,612 | $ 27,310 | $ 24,903 |
Fixed maturities, Available for sale, Fair Value | 30,836 | 28,020 | 25,486 |
Equity securities, Available for sale, Amortized Cost | 440 | 447 | 489 |
Equity securities, Available for sale, Fair Value | 540 | 495 | 486 |
Total fixed maturities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 29,612 | 27,310 | 24,903 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 1,292 | 905 | 904 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | (68) | (195) | (321) |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 1,224 | 710 | 583 |
Fixed maturities, Available for sale, Fair Value | 30,836 | 28,020 | 25,486 |
U.S. Government and government agencies | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 48 | 51 | 61 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 2 | 2 | 2 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | (3) | (3) | (3) |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | (1) | (1) | (1) |
Fixed maturities, Available for sale, Fair Value | 47 | 50 | 60 |
States, municipalities and political subdivisions | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 4,154 | 4,063 | 3,836 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 197 | 155 | 162 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | (15) | (42) | (32) |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 182 | 113 | 130 |
Fixed maturities, Available for sale, Fair Value | 4,336 | 4,176 | 3,966 |
Foreign government | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 11 | 12 | 12 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 2 | 1 | 1 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | 0 | 0 | 0 |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 2 | 1 | 1 |
Fixed maturities, Available for sale, Fair Value | 13 | 13 | 13 |
Residential MBS | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 2,169 | 2,388 | 2,344 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 256 | 216 | 246 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | (4) | (7) | (6) |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 252 | 209 | 240 |
Fixed maturities, Available for sale, Fair Value | 2,421 | 2,597 | 2,584 |
Commercial MBS | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 870 | 1,304 | 1,903 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 40 | 46 | 71 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | 0 | (1) | 0 |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 40 | 45 | 71 |
Fixed maturities, Available for sale, Fair Value | 910 | 1,349 | 1,974 |
Asset-backed securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 5,655 | 4,517 | 3,508 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 127 | 37 | 21 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | (11) | (35) | (37) |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 116 | 2 | (16) |
Fixed maturities, Available for sale, Fair Value | 5,771 | 4,519 | 3,492 |
Corporate and other | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturities, Available for sale, Amortized Cost | 16,705 | 14,975 | 13,239 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 668 | 448 | 401 |
Fixed maturities, Available for sale, Gross Unrealized, Losses | (35) | (107) | (243) |
Fixed maturities, Available for sale, Net Unrealized, Gains (Losses) | 633 | 341 | 158 |
Fixed maturities, Available for sale, Fair Value | 17,338 | 15,316 | 13,397 |
Total equity securities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Equity securities, Available for sale, Amortized Cost | 440 | 447 | 489 |
Equity securities, Available for sale, Gross Unrealized, Gains | 112 | 58 | 32 |
Equity securities, Available for sale, Gross Unrealized, Losses | (12) | (10) | (35) |
Equity securities, Available for sale, Net Unrealized, Gains (Losses) | 100 | 48 | (3) |
Equity securities, Available for sale, Fair Value | 540 | 495 | 486 |
Common stocks | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Equity securities, Available for sale, Amortized Cost | 376 | 391 | 439 |
Equity securities, Available for sale, Gross Unrealized, Gains | 105 | 55 | 32 |
Equity securities, Available for sale, Gross Unrealized, Losses | (12) | (9) | (35) |
Equity securities, Available for sale, Net Unrealized, Gains (Losses) | 93 | 46 | (3) |
Equity securities, Available for sale, Fair Value | 469 | 437 | 436 |
Perpetual preferred stocks | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Equity securities, Available for sale, Amortized Cost | 64 | 56 | 50 |
Equity securities, Available for sale, Gross Unrealized, Gains | 7 | 3 | 0 |
Equity securities, Available for sale, Gross Unrealized, Losses | 0 | (1) | 0 |
Equity securities, Available for sale, Net Unrealized, Gains (Losses) | 7 | 2 | 0 |
Equity securities, Available for sale, Fair Value | $ 71 | $ 58 | $ 50 |
Investments - Gross unrealized
Investments - Gross unrealized losses on securities by investment category and length of time that have been in a continuous unrealized loss position (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Total fixed maturities | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (41) | $ (148) | $ (251) |
Fair Value - Less than twelve months | $ 3,023 | $ 6,618 | $ 7,367 |
Fair Value as % of Cost - Less than twelve months | 99.00% | 98.00% | 97.00% |
Unrealized Loss - Twelve months or more | $ (27) | $ (47) | $ (70) |
Fair Value - Twelve months or more | $ 594 | $ 1,001 | $ 880 |
Fair Value as % of Cost - Twelve months or more | 96.00% | 96.00% | 93.00% |
U.S. Government and government agencies | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ 0 | $ 0 | $ 0 |
Fair Value - Less than twelve months | $ 3 | $ 8 | $ 4 |
Fair Value as % of Cost - Less than twelve months | 100.00% | 100.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ (3) | $ (3) | $ (3) |
Fair Value - Twelve months or more | $ 8 | $ 7 | $ 15 |
Fair Value as % of Cost - Twelve months or more | 73.00% | 70.00% | 83.00% |
States, municipalities and political subdivisions | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (12) | $ (38) | $ (25) |
Fair Value - Less than twelve months | $ 640 | $ 1,288 | $ 1,031 |
Fair Value as % of Cost - Less than twelve months | 98.00% | 97.00% | 98.00% |
Unrealized Loss - Twelve months or more | $ (3) | $ (4) | $ (7) |
Fair Value - Twelve months or more | $ 59 | $ 12 | $ 103 |
Fair Value as % of Cost - Twelve months or more | 95.00% | 75.00% | 94.00% |
Residential MBS | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (1) | $ (4) | $ (2) |
Fair Value - Less than twelve months | $ 75 | $ 298 | $ 180 |
Fair Value as % of Cost - Less than twelve months | 99.00% | 99.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (3) | $ (3) | $ (4) |
Fair Value - Twelve months or more | $ 91 | $ 91 | $ 99 |
Fair Value as % of Cost - Twelve months or more | 97.00% | 97.00% | 96.00% |
Commercial MBS | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ 0 | $ (1) | $ 0 |
Fair Value - Less than twelve months | $ 60 | $ 93 | $ 74 |
Fair Value as % of Cost - Less than twelve months | 100.00% | 99.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 0 | $ 13 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 0.00% | 100.00% |
Asset-backed securities | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (5) | $ (18) | $ (29) |
Fair Value - Less than twelve months | $ 639 | $ 1,295 | $ 1,849 |
Fair Value as % of Cost - Less than twelve months | 99.00% | 99.00% | 98.00% |
Unrealized Loss - Twelve months or more | $ (6) | $ (17) | $ (8) |
Fair Value - Twelve months or more | $ 157 | $ 551 | $ 355 |
Fair Value as % of Cost - Twelve months or more | 96.00% | 97.00% | 98.00% |
Corporate and other | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (23) | $ (87) | $ (195) |
Fair Value - Less than twelve months | $ 1,606 | $ 3,636 | $ 4,229 |
Fair Value as % of Cost - Less than twelve months | 99.00% | 98.00% | 96.00% |
Unrealized Loss - Twelve months or more | $ (12) | $ (20) | $ (48) |
Fair Value - Twelve months or more | $ 279 | $ 340 | $ 295 |
Fair Value as % of Cost - Twelve months or more | 96.00% | 94.00% | 86.00% |
Total equity securities | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (12) | $ (10) | $ (35) |
Fair Value - Less than twelve months | $ 68 | $ 123 | $ 251 |
Fair Value as % of Cost - Less than twelve months | 85.00% | 92.00% | 88.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 3 | $ 5 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 100.00% | 100.00% |
Common stocks | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ (12) | $ (9) | $ (35) |
Fair Value - Less than twelve months | $ 58 | $ 91 | $ 228 |
Fair Value as % of Cost - Less than twelve months | 83.00% | 91.00% | 87.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 3 | $ 0 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 100.00% | 0.00% |
Perpetual preferred stocks | |||
Available-for-sale securities in a continuous unrealized loss position | |||
Unrealized Loss - Less than twelve months | $ 0 | $ (1) | $ 0 |
Fair Value - Less than twelve months | $ 10 | $ 32 | $ 23 |
Fair Value as % of Cost - Less than twelve months | 100.00% | 97.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 0 | $ 5 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 0.00% | 100.00% |
Investments - Credit portion of
Investments - Credit portion of other-than-temporary impairments on fixed maturities for which the non-credit portion of an impairment has been recognized in OCI (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||||
Balance at beginning of period | $ 104 | $ 110 | $ 115 | $ 125 |
Additional credit impairments on: | ||||
Previously impaired securities | 1 | 1 | 0 | 0 |
Securities without prior impairments | 2 | 0 | 1 | 0 |
Reductions due to sales or redemptions | (6) | (7) | (6) | (10) |
Balance at end of period | $ 101 | $ 104 | $ 110 | $ 115 |
Investments - Scheduled maturit
Investments - Scheduled maturities of available for sale fixed maturities (Details) - Fixed maturities - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Amortized Cost Basis, Fiscal Year Maturity [Abstract] | ||
One year or less | $ 563 | $ 615 |
After one year through five years | 4,508 | 3,952 |
After five years through ten years | 12,124 | 10,922 |
After ten years | 3,723 | 3,612 |
Fixed maturities amortized cost, Subtotal | 20,918 | 19,101 |
ABS (average life of approximately 5 years) | 5,655 | 4,517 |
MBS (average life of approximately 4-1/2 years) | 3,039 | 3,692 |
Amortized Cost | 29,612 | 27,310 |
Fair Value, Fiscal Year Maturity [Abstract] | ||
One year or less | 571 | 626 |
After one year through five years | 4,745 | 4,185 |
After five years through ten years | 12,552 | 11,088 |
After ten years | 3,866 | 3,656 |
Fixed maturities fair value, Subtotal | 21,734 | 19,555 |
ABS (average life of approximately 5 years) | 5,771 | 4,519 |
MBS (average life of approximately 4-1/2 years) | 3,331 | 3,946 |
Fair Value | $ 30,836 | $ 28,020 |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
One year or less | 2.00% | 2.00% |
After one year through five years | 15.00% | 15.00% |
After five years through ten years | 41.00% | 40.00% |
After ten years | 13.00% | 13.00% |
Fixed maturities fair value, Subtotal, Percent | 71.00% | 70.00% |
ABS (average life of approximately 5 years) | 18.00% | 16.00% |
MBS (average life of approximately 4-1/2 years) | 11.00% | 14.00% |
Fair value, Total, Percent | 100.00% | 100.00% |
Investments - Investment income
Investments - Investment income earned and investment expenses incurred (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net Investment Income [Line Items] | |||||
Gross investment income | $ 1,104 | $ 1,032 | $ 1,386 | $ 1,239 | $ 1,143 |
Investment expenses | (6) | (7) | (10) | (9) | (4) |
Net investment income | 1,098 | 1,025 | 1,376 | 1,230 | 1,139 |
Fixed maturities | |||||
Net Investment Income [Line Items] | |||||
Gross investment income | 993 | 929 | 1,248 | 1,138 | 1,047 |
Equity securities | |||||
Net Investment Income [Line Items] | |||||
Gross investment income | 15 | 17 | 24 | 21 | 16 |
Equity in earnings of partnerships and similar investments | |||||
Net Investment Income [Line Items] | |||||
Gross investment income | 28 | 16 | 22 | 16 | 9 |
Mortgage loans | |||||
Net Investment Income [Line Items] | |||||
Gross investment income | 37 | 35 | 47 | 45 | 42 |
Policy loans | |||||
Net Investment Income [Line Items] | |||||
Gross investment income | 8 | 9 | 11 | 12 | 12 |
Real estate and other | |||||
Net Investment Income [Line Items] | |||||
Gross investment income | $ 23 | $ 26 | $ 34 | $ 7 | $ 17 |
Investments - Realized gains (l
Investments - Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | $ 30 | $ 30 | $ 42 | $ 35 | $ 46 |
Realized - impairments | (24) | (48) | (51) | (51) | (11) |
Realized gains (losses) on securities | 6 | (18) | (9) | (16) | 35 |
Net of tax | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | 19 | 19 | 27 | 23 | 30 |
Realized - impairments | (15) | (31) | (33) | (33) | (7) |
Realized gains (losses) on securities | 4 | (12) | (6) | (10) | 23 |
Change in Unrealized | 207 | 370 | 82 | (278) | 162 |
Total pretax | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | 30 | 30 | 42 | 35 | 46 |
Realized - impairments | (24) | (48) | (51) | (51) | (11) |
Realized gains (losses) on securities | 6 | (18) | (9) | (16) | 35 |
Change in Unrealized | 318 | 570 | 126 | (427) | 249 |
Fixed maturities | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | 21 | 29 | 32 | 24 | 32 |
Realized - impairments | (13) | (25) | (25) | (28) | (8) |
Realized gains (losses) on securities | 8 | 4 | 7 | (4) | 24 |
Change in Unrealized | 514 | 1,007 | 127 | (698) | 465 |
Equity securities | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | 12 | 8 | 17 | 17 | 16 |
Realized - impairments | (23) | (36) | (41) | (36) | (8) |
Realized gains (losses) on securities | (11) | (28) | (24) | (19) | 8 |
Change in Unrealized | 52 | 41 | 51 | (49) | 6 |
Mortgage loans and other investments | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | 2 | 0 | 0 | (1) | 0 |
Realized - impairments | 0 | 0 | 0 | (2) | 0 |
Realized gains (losses) on securities | 2 | 0 | 0 | (3) | 0 |
Change in Unrealized | 0 | 0 | 0 | 0 | 0 |
Other, Including DPAC and reserves on annuity and long-term care | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | (5) | (7) | (7) | (5) | (2) |
Realized - impairments | 12 | 13 | 15 | 15 | 5 |
Realized gains (losses) on securities | 7 | 6 | 8 | 10 | 3 |
Change in Unrealized | (248) | (478) | (52) | 320 | (222) |
Tax effects | |||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | |||||
Realized before impairments | (11) | (11) | (15) | (12) | (16) |
Realized - impairments | 9 | 17 | 18 | 18 | 4 |
Realized gains (losses) on securities | (2) | 6 | 3 | 6 | (12) |
Change in Unrealized | $ (111) | $ (200) | $ (44) | $ 149 | $ (87) |
Investments - Gross realized ga
Investments - Gross realized gains and losses on available for sale fixed maturity and equity security investment transactions (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fixed maturities | |||||
Gross realized gains and losses on the sale of available for sale fixed maturity and equity security investments | |||||
Gross gains | $ 27 | $ 36 | $ 45 | $ 31 | $ 29 |
Gross losses | (4) | (5) | (6) | (5) | (1) |
Equity securities | |||||
Gross realized gains and losses on the sale of available for sale fixed maturity and equity security investments | |||||
Gross gains | 14 | 10 | 19 | 18 | 16 |
Gross losses | $ (1) | $ (2) | $ (2) | $ (1) | $ 0 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017USD ($)swap | Sep. 30, 2017USD ($)swap | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)swap | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Carrying value of collateral received to support purchased call options | $ 374,000,000 | $ 374,000,000 | $ 380,000,000 | $ 211,000,000 | ||
Not Designated as Hedging Instrument | Annuity benefits | Fixed-indexed annuities (embedded derivative) | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
The portion of the change in fair value of the embedded derivative related to the unlocking of actuarial assumptions | (17,000,000) | (28,000,000) | $ 58,000,000 | |||
Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Number of Interest Rate Derivatives Held | swap | 8 | 8 | ||||
Notional amount of derivative instrument outstanding | $ 1,350,000,000 | $ 1,350,000,000 | 1,080,000,000 | 604,000,000 | ||
Gain (loss) reclassified from AOCI into net investment income | 4,000,000 | $ 5,000,000 | 7,000,000 | 6,000,000 | ||
Gain (loss) on cash flow hedge ineffectiveness recorded in Net Earnings | 0 | $ 0 | 0 | 0 | ||
Collateral receivable supporting interest rate swaps | 60,000,000 | 60,000,000 | 60,000,000 | 14,000,000 | ||
New interest rate swaps entered into during the period | Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Notional amount of derivative instrument outstanding | $ 400,000,000 | 400,000,000 | $ 610,000,000 | |||
Number Of Interest Rate Swaps Entered During The Period | swap | 1 | 4 | ||||
Other assets — derivatives | Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Net derivatives, at fair value | $ 1,000,000 | 1,000,000 | $ 1,000,000 | 2,000,000 | ||
Other liabilities | Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Net derivatives, at fair value | $ (21,000,000) | $ (21,000,000) | $ (22,000,000) | |||
Other liabilities | Maximum | Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Net derivatives, at fair value | $ (1,000,000) |
Derivatives - Derivatives that
Derivatives - Derivatives that do not qualify for hedge accounting under GAAP included in the Balance Sheet at fair value (Details) - Not Designated as Hedging Instrument - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Derivatives included in AFG' s Balance Sheet at fair value | |||
Derivative asset, at fair value | $ 716 | $ 578 | $ 345 |
Derivative liability, at fair value | 2,303 | 1,767 | 1,376 |
MBS with embedded derivatives | Fixed maturities | |||
Derivatives included in AFG' s Balance Sheet at fair value | |||
Derivative asset, at fair value | 84 | 82 | 100 |
Public company warrants | Equity securities | |||
Derivatives included in AFG' s Balance Sheet at fair value | |||
Derivative asset, at fair value | 3 | 4 | 4 |
Fixed-indexed annuities (embedded derivative) | Annuity benefits accumulated | |||
Derivatives included in AFG' s Balance Sheet at fair value | |||
Derivative liability, at fair value | 2,293 | 1,759 | 1,369 |
Equity index call options | Equity options — fixed-indexed annuities | |||
Derivatives included in AFG' s Balance Sheet at fair value | |||
Derivative asset, at fair value | 629 | 492 | 241 |
Reinsurance contracts (embedded derivative) | Other liabilities | |||
Derivatives included in AFG' s Balance Sheet at fair value | |||
Derivative liability, at fair value | $ 10 | $ 8 | $ 7 |
Derivatives - Gain (loss) inclu
Derivatives - Gain (loss) included in the Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting (Details) - Not Designated as Hedging Instrument - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (53) | $ (115) | $ (78) | $ (72) | $ (2) | |
MBS with embedded derivatives | Realized gains on securities | ||||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | (2) | (2) | (7) | (5) | 4 | |
Public company warrants | Realized gains on securities | ||||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | (1) | 0 | 0 | 0 | 0 | |
Interest rate swaptions | Realized gains on securities | ||||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | 0 | 0 | 0 | 0 | (2) | |
Fixed-indexed annuities (embedded derivative) | Annuity benefits | ||||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | [1] | (386) | (188) | (211) | (17) | (182) |
Equity index call options | Annuity benefits | ||||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | 338 | 81 | 141 | (56) | 181 | |
Reinsurance contracts (embedded derivative) | Net investment income | ||||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (2) | $ (6) | $ (1) | $ 6 | $ (3) | |
[1] | The change in fair value of the embedded derivative includes losses related to unlocking of actuarial assumptions of $17 million in 2016 compared to losses of $28 million in 2015 and gains related to unlocking of actuarial assumptions of $58 million in 2014. |
Deferred Policy Acquisition C56
Deferred Policy Acquisition Costs - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |||
Accumulated amortization of present value of future profits | $ 140 | $ 134 | $ 125 |
Approximate annual rate of decrease in present value of future profits during next five years | 16.70% |
Deferred Policy Acquisition C57
Deferred Policy Acquisition Costs - Progression of deferred policy acquisition costs (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | |||||
Deferred policy acquisition costs, beginning balance | $ 1,106 | $ 1,014 | $ 910 | $ 860 | |
Deferred policy acquisition costs, additions | 177 | 229 | 224 | 198 | |
Deferred policy acquisition costs, periodic amortization | (121) | (168) | (159) | (128) | |
Deferred policy acquisition costs, annuity unlocking | 25 | 31 | (22) | ||
Deferred policy acquisition costs, change included in realized gains | 6 | 6 | 8 | 2 | |
Deferred policy acquisition costs, ending balance | 1,168 | 1,106 | 1,014 | 910 | |
Movement in Deferred Sales Inducements [Roll Forward] | |||||
Deferred sales inducements, beginning balance | 110 | 119 | 129 | 147 | |
Deferred sales inducements, additions | 3 | 9 | 11 | 8 | |
Deferred sales inducements, periodic amortization | (14) | (24) | (26) | (26) | |
Deferred sales inducements, annuity unlocking | 4 | 4 | (1) | ||
Deferred sales inducements, change included in realized gains | 1 | 2 | 1 | 1 | |
Deferred sales inducements, ending balance | 100 | 110 | 119 | 129 | |
Movement in Present Value of Future Insurance Profits [Roll Forward] | |||||
Present value of future profits, beginning balance | 46 | 55 | 66 | 77 | |
Present value of future profits, periodic amortization | (6) | (9) | (11) | (11) | |
Present value of future profits, annuity unlocking | 0 | 0 | 0 | ||
Present value of future profits, ending balance | 40 | 46 | 55 | 66 | |
Movement in Unrealized Gains (Losses) Related to Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | |||||
Unrealized investment gains (losses), beginning balance | [1] | (265) | (234) | (525) | (336) |
Unrealized investment gains (losses), change in unrealized | [1] | (193) | (31) | 291 | (189) |
Unrealized investment gains (losses), ending balance | [1] | (458) | (265) | (234) | (525) |
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | |||||
Deferred policy acquisition costs and present value of future profits, beginning balance | 997 | 954 | 580 | 748 | |
Deferred policy acquisition costs and present value of future profits, additions | 180 | 238 | 235 | 206 | |
Deferred policy acquisition costs and present value of future profits, periodic amortization | (141) | (201) | (196) | (165) | |
Deferred policy acquisition costs and present value of future profits, annuity unlocking | 29 | 35 | (23) | ||
Deferred policy acquisition costs and present value of future profits, change included in realized gains | 7 | 8 | 9 | 3 | |
Deferred policy acquisition costs and present value of future profits, change in unrealized | (193) | (31) | 291 | (189) | |
Deferred policy acquisition costs and present value of future profits, ending balance | 850 | 997 | 954 | 580 | |
Excluding Unrealized Gains | |||||
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | |||||
Deferred policy acquisition costs and present value of future profits, beginning balance | 1,262 | 1,188 | 1,105 | 1,084 | |
Deferred policy acquisition costs and present value of future profits, ending balance | $ 1,308 | $ 1,262 | $ 1,188 | $ 1,105 | |
[1] | Unrealized adjustments to DPAC includes net unrealized gains/losses on securities and net unrealized gains/losses on cash flow hedges. |
Shareholder's Equity - Narrativ
Shareholder's Equity - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components of accumulated other comprehensive income | |||||
Cash capital contributions from parent | $ 0 | $ 0 | $ 15 | $ 0 | $ 0 |
Non-cash capital contributions from parent | 10 | 30 | 24 | 10 | |
Net of tax unrealized gains (losses) related to credit-only impaired securities | $ 35 | $ 34 | $ 33 | $ 37 |
Shareholder's Equity - Progress
Shareholder's Equity - Progression of the components of accumulated other comprehensive income (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
AOCI beginning balance | $ 266 | $ 192 | $ 192 | |||
Other comprehensive income (loss), net of tax | 208 | 374 | 74 | $ (277) | $ 162 | |
AOCI ending balance | 474 | 266 | 192 | |||
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, Pretax | 322 | 117 | (440) | 284 | ||
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, tax | (112) | (41) | 154 | (99) | ||
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, net of tax | 210 | 76 | (286) | 185 | ||
Reclassification from accumulated other comprehensive income, pretax | [1] | (4) | 9 | 13 | (35) | |
Reclassification from accumulated other comprehensive income, tax | [1] | 1 | (3) | (5) | 12 | |
Reclassification from accumulated other comprehensive income, net of tax | (3) | 6 | 8 | (23) | ||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
Other comprehensive income (loss), pretax | 318 | 126 | (427) | 249 | ||
Other comprehensive income (loss), tax | (111) | (44) | 149 | (87) | ||
Other comprehensive income (loss), net of tax | 207 | 82 | (278) | 162 | ||
Accumulated Net Investment Gain (Loss) Attributable to Parent | ||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
AOCI beginning balance | [2] | 273 | 191 | 191 | 469 | 307 |
AOCI ending balance | [2] | 480 | 273 | 191 | 469 | |
Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest | ||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
Other comprehensive income (loss), pretax | 1 | (12) | 1 | 0 | ||
Other comprehensive income (loss), tax | 0 | 4 | 0 | 0 | ||
Other comprehensive income (loss), net of tax | 1 | (8) | 1 | 0 | ||
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent | ||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
AOCI beginning balance | (7) | 1 | 1 | 0 | 0 | |
AOCI ending balance | (6) | (7) | 1 | 0 | ||
AOCI Including Portion Attributable to Noncontrolling Interest | ||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
Other comprehensive income (loss), pretax | 319 | 114 | (426) | 249 | ||
Other comprehensive income (loss), tax | (111) | (40) | 149 | (87) | ||
Other comprehensive income (loss), net of tax | 208 | 74 | (277) | 162 | ||
AOCI Attributable to Parent | ||||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||||
AOCI beginning balance | 266 | $ 192 | 192 | 469 | 307 | |
Other comprehensive income (loss), net of tax | 208 | 74 | (277) | 162 | ||
AOCI ending balance | $ 474 | $ 266 | $ 192 | $ 469 | ||
[1] | The reclassification adjustment out of net unrealized gains on securities affected the following lines in GALIC’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax Realized gains (losses) on securities Tax Provision for income taxes | |||||
[2] | Includes net unrealized gains of $35 million at September 30, 2017 (unaudited) compared to net unrealized gains of $34 million, $33 million and $37 million at December 31, 2016, 2015 and 2014, respectively, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings. |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Reconciliation [Line Items] | |||||
Statutory rate of income taxes | 35.00% | 35.00% | 35.00% | 35.00% | |
Decrease in AFG's liability for uncertain tax positions | $ (13,000,000) | ||||
Decrease in AFG's liability for uncertain tax positions, settlements | $ (9,000,000) | $ 0 | $ 0 | $ (9,000,000) | |
Change in AFG's liability for uncertain tax positions of prior year | 0 | 0 | (4,000,000) | ||
Interest included in tax provision | (1,000,000) | ||||
Cash payments for income taxes | 236,000,000 | 100,000,000 | $ 227,000,000 | ||
Charge for valuation allowance | |||||
Income Tax Reconciliation [Line Items] | |||||
Charge for valuation allowance against deferred tax assets | $ 0 | $ 0 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income taxes at the statutory rate to the provision for income taxes (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||
Earnings before income taxes (“EBT”) | $ 367 | $ 319 | $ 352 | ||
Income taxes at statutory rate | 128 | 112 | 123 | ||
Effect of other income tax reconciliation | (1) | (4) | (3) | ||
Provision for income taxes as shown in the statement of earnings | $ 101 | $ 77 | $ 127 | $ 108 | $ 120 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||||
Income taxes at statutory rate as a percentage of EBT | 35.00% | 35.00% | 35.00% | 35.00% | |
Effect of other income tax reconciliation as a percentage of EBT | 0.00% | (1.00%) | (1.00%) | ||
Provision for income taxes as shown in the Statement of Earnings as a percentage of EBT | 35.00% | 34.00% | 34.00% |
Income Taxes - Total income tax
Income Taxes - Total income tax provision (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current taxes: | |||||
Federal | $ 185 | $ 133 | $ 170 | ||
State | 4 | 2 | 4 | ||
Deferred taxes: | |||||
Federal | (62) | (27) | (54) | ||
Provision for income taxes as shown in the statement of earnings | $ 101 | $ 77 | $ 127 | $ 108 | $ 120 |
Income Taxes - Significant comp
Income Taxes - Significant components of deferred tax assets and liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | |||
Insurance claims and reserves | $ 516 | $ 426 | |
Other, net | 14 | 18 | |
Total deferred tax assets | 530 | 444 | |
Deferred tax liabilities: | |||
Investment securities | (261) | (209) | |
Deferred policy acquisition costs | (279) | (266) | |
Total deferred tax liabilities | (540) | (475) | |
Net deferred tax assets (liabilities) | $ (72) | (10) | (31) |
Excluding Unrealized Gains | |||
Deferred tax assets: | |||
Insurance claims and reserves | 489 | 404 | |
Other, net | 19 | 22 | |
Total deferred tax assets | 508 | 426 | |
Deferred tax liabilities: | |||
Investment securities | 4 | (6) | |
Deferred policy acquisition costs | (375) | (348) | |
Total deferred tax liabilities | (371) | (354) | |
Net deferred tax assets (liabilities) | 137 | 72 | |
Impact of Unrealized Gains | |||
Deferred tax assets: | |||
Insurance claims and reserves | 27 | 22 | |
Other, net | (5) | (4) | |
Total deferred tax assets | 22 | 18 | |
Deferred tax liabilities: | |||
Investment securities | (265) | (203) | |
Deferred policy acquisition costs | 96 | 82 | |
Total deferred tax liabilities | (169) | (121) | |
Net deferred tax assets (liabilities) | $ (147) | $ (103) |
Income Taxes - Progression of t
Income Taxes - Progression of the liability for uncertain tax positions, excluding interest and penalties (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Progression of the liability for uncertain tax positions, excluding interest and penalties | ||||
Balance at January 1 | $ 0 | $ 0 | $ 13 | |
Reductions for tax positions of prior years | 0 | 0 | (4) | |
Additions for tax positions of current year | 0 | 0 | 0 | |
Settlements | $ (9) | 0 | 0 | (9) |
Balance at December 31 | $ 0 | $ 0 | $ 0 |
Insurance - Narrative (Details)
Insurance - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Insurance [Line Items] | ||||||
Carrying value of securities owned by U.S.-based insurance subsidiaries on deposit | $ 26 | $ 26 | ||||
Investment in Federal Home Loan Bank capital stock | $ 44 | |||||
Proceeds received under funding agreements with the Federal Home Loan Bank | 200 | 0 | $ 150 | 150 | $ 345 | $ 0 |
Advances from Federal Home Loan Bank | 935 | $ 935 | 935 | |||
Description of variable rate basis | LIBOR | |||||
Repayments of advances from Federal Home Loan Bank due in year two | 285 | 285 | ||||
Repayments of advances from Federal Home Loan Bank due in year four | 500 | 500 | ||||
Repayments of advances from Federal Home Loan Bank due in year five | 150 | 150 | ||||
Fair value of mortgage-backed securities held as collateral by the Federal Home Loan Bank | 1,080 | $ 1,110 | 1,080 | |||
Interest on advances from Federal Home Loan Bank | 10 | $ 5 | 8 | 3 | 1 | |
Dividends | $ (135) | $ (140) | (110) | (200) | ||
Statutory restrictions on dividends | The maximum amount of dividends that can be paid to shareholders in 2017 by life insurance companies domiciled in the State of Ohio without prior approval of the Insurance Commissioner is the greater of 10% of statutory surplus as regards to policyholders or statutory net income as of the preceding December 31, but only to the extent of statutory earned surplus as of the preceding December 31. | |||||
Percentage threshold of dividends paid in previous twelve months to earned statutory surplus of prior year end, requiring approval of payment of dividends if exceeded | 10.00% | |||||
Maximum amount of dividends available to be paid by insurance subsidiaries to parent without prior approval of regulatory authorities | $ 197 | |||||
Maximum amount of dividends available to be received by parent from insurance subsidiaries without prior approval of regulatory authorities | $ 27 | |||||
Aggregate guaranteed minimum death benefit value on variable annuity polices in force | 20 | $ 20 | 27 | |||
Minimum | LIBOR | ||||||
Insurance [Line Items] | ||||||
FHLB advances, basis spread on variable rate | 0.03% | |||||
Maximum | LIBOR | ||||||
Insurance [Line Items] | ||||||
FHLB advances, basis spread on variable rate | 0.53% | |||||
Average | LIBOR | ||||||
Insurance [Line Items] | ||||||
FHLB advances, basis spread on variable rate | 1.60% | 1.18% | ||||
Life insurance | ||||||
Insurance [Line Items] | ||||||
Life insurance in force, ceded premiums | 10,220 | $ 10,220 | 11,190 | |||
Life insurance in force, direct premiums | $ 13,490 | 13,490 | 14,670 | |||
Life written premiums ceded | 31 | 34 | 36 | |||
Reinsurance recoveries | 44 | 45 | 55 | |||
Variable annuities | Maximum | ||||||
Insurance [Line Items] | ||||||
Death benefits paid in excess of the variable annuity account balances (are less than in 2014, 2015 and 2016) | 1 | 1 | 1 | |||
Retained Earnings | ||||||
Insurance [Line Items] | ||||||
Dividends | $ (135) | $ (140) | $ (110) | $ (200) |
Insurance - Net earnings and ca
Insurance - Net earnings and capital and surplus on a statutory basis for the insurance subsidiaries (Details) - GALIC consolidated life insurance companies - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statutory information | |||
Net Earnings | $ 167 | $ 399 | $ 384 |
Capital and Surplus | $ 1,976 | $ 1,719 |
Insurance - Liabilities for exc
Insurance - Liabilities for excess benefits expected to be paid on future deaths and annuitizations, guaranteed withdrawal benefits and accrued persistency and premium bonuses (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Insurance [Abstract] | ||
Expected death and annuitization | $ 223 | $ 214 |
Guaranteed withdrawal benefits | 278 | 203 |
Accrued persistency and premium bonuses | $ 6 | $ 11 |
Additional Information - Narrat
Additional Information - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Additional Information [Abstract] | |||
General and administrative costs paid to parent | $ 32 | $ 27 | $ 26 |
Total rental expense | 4 | 4 | 4 |
Commitments to fund limited partnerships | 251 | ||
Retirement and employee savings plan expense | $ 2 | $ 1 | $ 1 |
Supplementary Insurance Infor69
Supplementary Insurance Information - Table (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred policy acquisition costs | $ 997 | $ 954 | $ 580 |
Reserves for future policy benefits and claims | 30,598 | 27,327 | 24,182 |
Net earned premiums | 24 | 21 | 23 |
Net investment income | 1,376 | 1,230 | 1,139 |
Benefits, claims, losses and settlement expenses | 829 | 753 | 674 |
Amortization of deferred policy acquisition costs | 152 | 139 | 161 |
Other operating expenses | 151 | 129 | 110 |
Annuity | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred policy acquisition costs | 977 | 930 | 553 |
Reserves for future policy benefits and claims | 29,907 | 26,622 | 23,492 |
Net investment income | 1,355 | 1,211 | 1,120 |
Benefits, claims, losses and settlement expenses | 800 | 724 | 641 |
Amortization of deferred policy acquisition costs | 147 | 134 | 156 |
Other operating expenses | 141 | 120 | 99 |
Run-off Life | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred policy acquisition costs | 20 | 24 | 27 |
Reserves for future policy benefits and claims | 691 | 705 | 690 |
Net earned premiums | 24 | 21 | 23 |
Net investment income | 21 | 19 | 19 |
Benefits, claims, losses and settlement expenses | 29 | 29 | 33 |
Amortization of deferred policy acquisition costs | 5 | 5 | 5 |
Other operating expenses | $ 10 | $ 9 | $ 11 |