DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 24, 2018 | Jun. 30, 2017 | |
Document And Entity Information [Abstract] | |||
Document Type | S-1/A | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Amendment Flag | true | ||
Entity Registrant Name | MONY LIFE INSURANCE CO OF AMERICA | ||
Entity Central Index Key | 835,357 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding | 2,500,000 | ||
Entity Public Float | $ 0 | ||
Amendment Description | This Amendment No.1 to Form S-1 is being filed to register an additional dollar amount of interests in the MLOA MSO and to carry forward the total dollar amount of unsold interests under the MSO previously registered |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Investments: | ||
Fixed maturities available for sale, at fair value (amortized cost $1,425 and $1,099) | $ 1,451 | $ 1,109 |
Mortgage loans on real estate | 17 | 17 |
Policy loans | 185 | 176 |
Other invested assets | 63 | 68 |
Total investments | 1,716 | 1,370 |
Cash and cash equivalents | 44 | 138 |
Amounts due from reinsurers | 1,325 | 1,390 |
Deferred policy acquisition costs | 383 | 353 |
Deferred cost of reinsurance | 50 | 57 |
Current and deferred income tax receivables | 22 | 24 |
Other assets | 29 | 29 |
Separate Accounts assets | 2,015 | 1,747 |
Total Assets | 5,584 | 5,108 |
LIABILITIES | ||
Policyholders’ account balances | 2,631 | 2,377 |
Future policy benefits and other policyholders’ liabilities | 358 | 347 |
Amounts due to reinsurers | 132 | 131 |
Other liabilities | 72 | 77 |
Separate Accounts liabilities | 2,015 | 1,747 |
Total liabilities | 5,208 | 4,679 |
Commitments and contingent liabilities (Note 2, 5, 8, 9 and 12) | ||
SHAREHOLDER’S EQUITY | ||
Common stock, $1.00 par value, 5.0 million shares authorized, 2.5 million issued and outstanding | 2 | 2 |
Capital in excess of par value | 326 | 323 |
Retained earnings | 36 | 97 |
Accumulated other comprehensive income (loss) | 12 | 7 |
Total shareholder's equity | 376 | 429 |
Total Liabilities and Shareholder’s Equity | $ 5,584 | $ 5,108 |
BALANCE SHEETS (PARENTHETICALS)
BALANCE SHEETS (PARENTHETICALS) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Common stock, par value (in usd per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common stock, shares issued (in shares) | 2,500,000 | 2,500,000 |
Common stock, shares outstanding (in shares) | 2,500,000 | 2,500,000 |
Fixed Maturities | ||
Fixed maturities available for sale, amortized cost | $ 1,425 | $ 1,099 |
STATEMENTS OF INCOME (LOSS)
STATEMENTS OF INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUES | |||
Policy charges and fee income | $ 180 | $ 188 | $ 153 |
Premiums | 23 | 4 | 1 |
Net derivative gains (losses) | (6) | (2) | (3) |
Net Investment Income (Loss) | 48 | 42 | 38 |
Investment gains (losses), net: | |||
Total other-than-temporary impairment losses | 0 | (3) | (1) |
Other investment gains (losses), net | 0 | (1) | 0 |
Total investment gains (losses), net | 0 | (4) | (1) |
Equity in income (loss) of AllianceBernstein | 6 | 6 | 5 |
Other income (loss) | 7 | 8 | 9 |
Total revenues | 258 | 242 | 202 |
BENEFITS AND OTHER DEDUCTIONS | |||
Policyholders’ benefits | 54 | 29 | 41 |
Interest credited to policyholders’ account balances | 41 | 43 | 35 |
Compensation and benefits | 51 | 59 | 36 |
Commissions | 120 | 114 | 121 |
Amortization of deferred policy acquisition costs, net | (38) | (2) | (76) |
Amortization of deferred cost of reinsurance | 7 | 7 | 8 |
Other operating costs and expenses | 91 | 86 | 58 |
Total benefits and other deductions | 326 | 336 | 223 |
Income (loss) from operations, before income taxes | (68) | (94) | (21) |
Income tax (expense) benefit | 7 | 35 | 10 |
Net Income (Loss) | $ (61) | $ (59) | $ (11) |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
COMPREHENSIVE INCOME (LOSS) | |||
Net Income (Loss) | $ (61) | $ (59) | $ (11) |
Other comprehensive income (loss), net of income taxes: | |||
Change in unrealized gains (losses), net of reclassification adjustments (Note 11) | 5 | 2 | (12) |
Total other comprehensive income (loss), net of income taxes | 5 | 2 | (12) |
Comprehensive Income (Loss) | $ (56) | $ (57) | $ (23) |
STATEMENTS OF SHAREHOLDER_S EQU
STATEMENTS OF SHAREHOLDER’S EQUITY - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Balance, beginning of year at Dec. 31, 2014 | $ 2 | $ 317 | $ 167 | $ 17 | |
Changes in capital in excess of par value | 3 | ||||
Net Income (Loss) | $ (11) | (11) | |||
Other comprehensive income (loss) | (12) | (12) | |||
Balance, end of year at Dec. 31, 2015 | 483 | 2 | 320 | 156 | 5 |
Changes in capital in excess of par value | 3 | ||||
Net Income (Loss) | (59) | (59) | |||
Other comprehensive income (loss) | 2 | 2 | |||
Balance, end of year at Dec. 31, 2016 | 429 | $ 2 | 323 | 97 | 7 |
Changes in capital in excess of par value | 3 | ||||
Net Income (Loss) | (61) | (61) | |||
Other comprehensive income (loss) | 5 | 5 | |||
Balance, end of year at Dec. 31, 2017 | $ 376 | $ 326 | $ 36 | $ 12 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Cash Flows [Abstract] | |||
Net income (loss) | $ (61) | $ (59) | $ (11) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Interest credited to policyholders’ account balances | 41 | 43 | 35 |
Policy charges and fee income | (180) | (188) | (153) |
Net derivative gains (losses) | 6 | 2 | 3 |
Investment (gains) losses, net | 0 | 4 | 1 |
Dividends from AB Units | 6 | 5 | 5 |
Equity in (income ) loss from AB | (6) | (6) | (5) |
Amortization of deferred reinsurance costs | 7 | 7 | 8 |
Changes in: | |||
Deferred policy acquisition costs, net | (38) | (2) | (76) |
Future policy benefits | 10 | (9) | 12 |
Current and deferred income taxes | 2 | (28) | (10) |
Other, net | 67 | 40 | 0 |
Net cash provided by (used in) operating activities | (146) | (191) | (191) |
Proceeds from the sale/maturity/prepayment of: | |||
Fixed maturities, available for sale | 388 | 128 | 105 |
Payment for the purchase/origination of: | |||
Fixed maturities, available for sale | (714) | (333) | (153) |
Mortgage loans on real estate | 0 | (17) | 0 |
Cash settlement related to derivative instruments | 28 | (13) | (7) |
Change in policy loans | (9) | (17) | (9) |
Other, net | 0 | (3) | (3) |
Net cash provided by (used in) investing activities | (307) | (255) | (67) |
Policyholders’ account balances: | |||
Deposits | 599 | 455 | 445 |
Withdrawals | (199) | (59) | (20) |
Transfers (to) from Separate Accounts | (80) | (20) | (38) |
Change in collateralized pledged liabilities | 39 | 32 | 0 |
Net cash provided by (used in) financing activities | 359 | 408 | 387 |
Change in cash and cash equivalents | (94) | (38) | 129 |
Cash and cash equivalents, beginning of year | 138 | 176 | 47 |
Cash and Cash Equivalents, End of Year | 44 | 138 | 176 |
Schedule of non-cash financing activities: | |||
Non-cash asset acquisition | 0 | 7 | 0 |
Share-based Programs (Note 9) | 3 | 3 | 3 |
Income taxes refunded (paid) | $ 8 | $ 7 | $ (1) |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION MONY Life Insurance Company of America (“MLOA”) is an Arizona stock life insurance corporation. MLOA’s primary business is providing life insurance and employee benefit products to both individuals and businesses. MLOA is a direct, wholly-owned subsidiary of AXA Equitable Financial Services, LLC (“AEFS”). AEFS is a direct, wholly-owned subsidiary of AXA Financial, Inc. (“AXA Financial,” and collectively with its consolidated subsidiaries, “AXA Financial Group”). AXA Financial is a direct wholly-owned subsidiary of AXA Equitable Holdings, Inc. ("Holdings"). Holdings is an indirect wholly-owned subsidiary of AXA S.A. (“AXA”), a French holding company for the AXA Group, a worldwide leader in life, property and casualty and health insurance and asset management. On May 10, 2017, AXA announced its intention to pursue the sale of a minority stake in our indirect parent, Holdings, through a proposed initial public offering (the "Holdings IPO") in the first half of 2018. On November 13, 2017, Holdings filed a Form S-1 registration statement with the Securities and Exchange Commission (the "SEC"). The completion of the proposed Holdings IPO will depend on, among other things, the SEC filing and review process and customary regulatory approvals, as well as market conditions. There can be no assurance that the proposed Holdings IPO will occur on the anticipated timeline or at all. Revision of Prior Period Financial Statements In 2017, management identified errors in its previous financial statements. These errors primarily related to the calculation of policyholders’ benefit reserves, interest credited to policyholders' account balances and deferred policy acquisition costs ("DAC") amortization for certain variable and interest sensitive life products and misclassification of an intangible asset for business acquired from a third party. Management evaluated the impact of these errors and concluded they were not material to any previously reported annual financial statements. In order to improve the consistency and comparability of the financial statements, management revised the balance sheet as of December 31, 2016 and the related statements of income (loss), comprehensive income (loss), shareholder's equity and cash flows for the years ended December 31, 2016 and 2015 to include the revisions presented below. As Previously Reported Impact of Revisions As Revised December 31, December 31, December 31, 2016 2016 2016 (in millions) ASSETS Investments: Other invested assets $ 75 $ (7 ) $ 68 Total investments 1,377 (7 ) 1,370 Deferred policy acquisition costs 374 (21 ) 353 Current and deferred income tax receivables 27 (3 ) 24 Other assets 22 7 29 Total Assets $ 5,132 $ (24 ) $ 5,108 Liabilities: Policyholders’ account balances $ 2,403 $ (26 ) $ 2,377 Future policy benefits and other policyholders ’ liabilities 351 (4 ) 347 Total Liabilities 4,709 (30 ) 4,679 Equity: Retained earnings 91 6 97 Total shareholder's equity 423 6 429 Total Liabilities and Shareholder’s Equity $ 5,132 $ (24 ) $ 5,108 As Previously Reported Impact of Revisions As Revised Year Ended December 31, Year Ended December 31, Year Ended December 31, 2016 2015 2016 2015 2016 2015 (in millions) Statements of Income (Loss): Revenues: Policy charges and fee income $ 196 $ 152 $ (8 ) $ 1 $ 188 $ 153 Total revenues 250 201 (8 ) 1 242 202 Benefits and other deductions: Policyholders’ benefits 34 39 (5 ) 2 29 41 Interest credited to policyholders’ account balances 49 42 (6 ) (7 ) 43 35 Amortization of deferred policy acquisition costs, net (10 ) (73 ) 8 (3 ) (2 ) (76 ) Total benefits and other deductions 339 231 (3 ) (8 ) 336 223 Income (loss) from operations, before income taxes (89 ) (30 ) (5 ) 9 (94 ) (21 ) Income tax (expense) benefit 33 13 2 (3 ) 35 10 Net Income (Loss) $ (56 ) $ (17 ) $ (3 ) $ 6 $ (59 ) $ (11 ) Statements of Comprehensive Income (Loss): Net Income (loss) $ (56 ) $ (17 ) $ (3 ) $ 6 $ (59 ) $ (11 ) Comprehensive Income (Loss) $ (54 ) $ (29 ) $ (3 ) $ 6 $ (57 ) $ (23 ) As Previously Reported Impact of Revisions As Revised Year Ended December 31, Year Ended December 31, Year Ended December 31, 2016 2015 2016 2015 2016 2015 (in millions) Statements of Shareholder's Equity: Retained earnings, beginning of year $ 147 $ 164 $ 9 $ 3 $ 156 $ 167 Net income (loss) (56 ) (17 ) (3 ) 6 (59 ) (11 ) Retained earnings, end of year 91 147 6 9 97 156 Total Shareholder’s Equity, End of Year $ 423 $ 474 $ 6 $ 9 $ 429 $ 483 Statements of Cash flows: Cash flow from operating activities: Net income (loss) $ (56 ) $ (17 ) $ (3 ) $ 6 $ (59 ) $ (11 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Interest credited to policyholders’ account balances 49 42 (6 ) (7 ) 43 35 Policy charges and fee income (196 ) (152 ) 8 (1 ) (188 ) (153 ) Changes in: Deferred policy acquisition costs, net (10 ) (73 ) 8 (3 ) (2 ) (76 ) Future policy benefits (4 ) 10 (5 ) 2 (9 ) 12 Current and deferred income taxes (26 ) (13 ) (2 ) 3 (28 ) (10 ) Net cash provided by (used in) operating activities $ (191 ) $ (191 ) $ — $ — $ (191 ) $ (191 ) |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The accompanying financial statements reflect all adjustments necessary in the opinion of management for a fair presentation of the financial position of MLOA and its results of operations and cash flows for the periods presented. The years “ 2017 ”, “ 2016 ” and “ 2015 ” refer to the years ended December 31, 2017 , 2016 and 2015 , respectively. Certain reclassifications have been made in the amounts presented for prior periods to conform those periods to the current presentation. Reclassifications primarily relate to our presentation of embedded derivatives, value of business acquired ("VOBA") and ceded policy loan balances. The reclassifications impacted the Net derivative gains (losses), Interest credited to policyholders' account balances, Amortization of DAC, net and Other operating costs and expenses on the statements of income (loss) and Amounts due from reinsurers and Amounts due to reinsurers on the balance sheets. Adoption of New Accounting Pronouncements In January 2017, the Financial Accounting Standard Board (“FASB”) issued new guidance that amends the definition of a business to provide a more robust framework for determining when a set of assets and activities is a business. The definition primarily adds clarity for evaluating whether certain transactions should be accounted for as acquisitions/dispositions of assets or businesses, the latter subject to guidance on business combinations, but also may interact with other areas of accounting where the defined term is used, such as in the application of guidance on consolidation and goodwill impairment. The new guidance is effective for fiscal years ended December 31, 2018. MLOA elected to early adopt the new guidance for the year ended December 31, 2016. Adoption of this guidance did not have a material impact on MLOA’s financial statements. In October 2016, the FASB issued updated guidance on consolidation of interests held through related parties that are under common control, which alters how a decision maker needs to consider indirect interests in a VIE held through an entity under common control. The guidance amends the recently adopted consolidation guidance analysis. Under the new guidance, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. MLOA adopted the revised guidance effective January 1, 2017. Adoption of this guidance did not have a material impact on the MLOA’s financial statements. In March 2016, the FASB issued new guidance simplifying the transition to the equity method of accounting. The amendment eliminates the requirement for an investor to retroactively adjust the basis of a previously held interest in an investment that subsequently qualifies for use of the equity method. Additionally, the amendment requires any unrealized holding gain or loss recognized in Accumulated Other Comprehensive Income ("AOCI") to be realized in earnings at the date an available-for-sale ("AFS") security qualifies for use of the equity method. MLOA adopted the revised guidance effective January 1, 2017. Adoption of this guidance did not have a material impact on MLOA’s financial statements. In March 2016, the FASB issued new guidance on improvements to employee share-based payment accounting. The amendment includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including income tax effects of share-based payments, minimum statutory tax withholding requirements and forfeitures. MLOA adopted the revised guidance effective January 1, 2017. Adoption of this guidance did not have a material impact on MLOA's financial statements. In February 2015, the FASB issued a new consolidation standard that makes targeted amendments to the VIE assessment, including guidance specific to the analysis of fee arrangements and related party relationships, modifies the guidance for the evaluation of limited partnerships and similar entities for consolidation to eliminate the presumption of general partner control, and ends the deferral that had been granted to certain investment companies for applying previous VIE guidance. MLOA adopted this guidance beginning January 1, 2016 and continuously updates its analysis as circumstances change or new entities are formed. Adoption of this guidance did not have a material impact on MLOA’s financial statements. In August 2014, the FASB issued new guidance which requires management to evaluate whether there is “substantial doubt” about the reporting entity’s ability to continue as a going concern and provide related footnote disclosures about those uncertainties, if they exist. The new guidance was effective for annual periods, ending after December 15, 2016 and interim periods thereafter. MLOA adopted the guidance effective December 31, 2016. Adoption of this guidance did not have a material impact on MLOA’s financial statements. Future Adoption of New Accounting Pronouncements In February 2018, the FASB issued new guidance that will permit, but not require, entities to reclassify to retained earnings tax effects “stranded” in AOCI resulting from the change in federal tax rate enacted by the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. An entity that elects this option must reclassify these stranded tax effects for all items in AOCI, including, but not limited to, AFS securities and employee benefits. Tax effects stranded in AOCI for other reasons, such as prior changes in tax law, may not be reclassified. While the new guidance provides entities the option to reclassify these amounts, new disclosures are required regardless of whether entities elect to do so. The new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for periods for which financial statements have not yet been issued or made available for issuance, including in the period the Act was signed into law (i.e., the reporting period including December 22, 2017). Election can be made either to apply the new guidance retrospectively to each period in which the effect of the Act is recognized or in the period of adoption. Management currently is evaluating the options provided for adopting this guidance and the potential impacts on MLOA’s financial statements. In August 2017, the FASB issued new guidance on accounting for hedging activities, intended to more closely align the financial statement reporting of hedging relationships to the economic results of an entity’s risk management activities. In addition, the new guidance makes certain targeted modifications to simplify the application of current hedge accounting guidance. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early application permitted. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date). All transition requirements and elections should be applied to derivatives positions and hedging relationships existing on the date of adoption. Management currently is evaluating the impact that adoption of this guidance will have on MLOA’s financial statements. In May 2017, the FASB issued guidance on share-based payments. The amendment provides clarity intended to reduce diversity in practice and the cost and complexity of accounting for changes to the terms or conditions of share-based payment awards. The new guidance is effective for interim and annual periods beginning after December 15, 2017, requires prospective application to awards modified on or after the date of adoption, and permits early adoption. This amendment is not expected to have a material impact on MLOA's financial statements. In March 2017, the FASB issued guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date and is intended to better align interest income recognition with the manner in which market participants price these instruments. The new guidance is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted and is to be applied on a modified retrospective basis. Management currently is evaluating the impact that adoption of this guidance will have on MLOA’s financial statements. In March 2017, the FASB issued new guidance on the presentation of net periodic pension and post-retirement benefit costs that requires disaggregation of the service cost component from the other components of net benefit costs on the income statement. The service cost component will be presented with other employee compensation costs in "income from operations," and the remaining components will be reported separately outside of income from operations. While this standard does not change the rules for how benefits costs are measured, it limits the amount eligible for capitalization to the service cost component and, therefore, may require insurers and other entities that establish deferred assets related to the acquisition of new contracts to align its capitalization policies/practices with that limitation. The new guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted and is to be applied retrospectively for changes in the income statement presentation of net benefit cost and prospectively for changes in capitalization eligibility. The guidance permits the use of amounts previously disclosed for the various components of net benefits cost as the basis for the retrospective change in the income statement presentation, and use of that approach must be disclosed as a "practical expedient" to determining how much of the various components of net benefits costs actually was reflected in historical income statements a result of capitalization and subsequent amortization. MLOA expects to utilize the practical expedient for adopting the retrospective change in its income statement presentation of net benefits costs. Based on the assessments performed to-date, adoption of this new guidance in first quarter 2018 is not expected to have a material impact on MLOA's financial statements. In August 2016, the FASB issued new guidance to simplify elements of cash flow classification. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied using a retrospective transition method. Adoption of this new guidance in first quarter 2018 is not expected to have a material impact on MLOA’s financial condition or results of operations. In June 2016, the FASB issued new guidance related to the accounting for credit losses on financial instruments. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted for annual periods beginning after December 15, 2018. Management is currently evaluating the impact that adoption of this guidance will have on the MLOA’s financial statements. In January 2016, the FASB issued new guidance related to the recognition and measurement of financial assets and financial liabilities. The new guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on AFS debt securities. The new guidance will require equity investments in unconsolidated entities, except those accounted for under the equity method, to be measured at fair value through earnings, thereby eliminating the AFS classification for equity securities with readily determinable fair values for which changes in fair value currently are reported in AOCI. Adoption of this new guidance is required in interim and annual periods beginning after December 15, 2017 and is to be applied on a modified retrospective basis. At December 31, 2017, MLOA has no common stock securities designated as AFS for which a cumulative effect adjustment to opening retained earnings would be required at January 1, 2018 to reclassify from AOCI the related net unrealized investment gains/(losses), net of income tax. MLOA’s investment assets held in the form of equity interests in unconsolidated entities, such as limited partnerships and limited liability companies, including hedge funds, private equity funds, and real estate-related funds, generally are accounted for under the equity method and will not be impacted by this new guidance. MLOA does not currently report any of its financial liabilities under the fair value option. Adoption of this new guidance in first quarter 2018 is not expected to have a material impact on MLOA’s financial condition or results of operations. In May 2014, the FASB issued new guidance that revises the recognition criteria for revenue arising from contracts with customers to provide goods or services, except when those revenue streams are from insurance contracts, leases, rights and obligations that are in the scope of certain financial instruments (i.e., derivative contracts) and guarantees other than product or service warranties. The new standard’s core principle is that revenue should be recognized when “control” of promised goods or services is transferred to customers and in an amount that reflects the consideration to which it expects to be entitled in exchange. Applying the new revenue recognition criteria generally will require more judgments and estimates than under current guidance in order to identify contractual performance obligations to customers, assess the roles of intermediaries in fulfilling those obligations, determine the amount of variable consideration to include in the transaction price, and allocate the transaction price to distinct performance obligations in bundled contracts. The new guidance is effective for interim and annual periods, beginning after December 15, 2017, with early adoption permitted. Transition to the new standard requires a retrospective approach but application is permitted either on a full or modified basis, the latter by recognition of a cumulative-effect adjustment to opening equity in the period of initial adoption. Revenues within the scope of this standard and subject to MLOA’s analysis largely relate to ceded commission and fees from the business reinsured with Protective Life. MLOA will adopt the new revenue recognition guidance on a modified retrospective basis beginning January 1, 2018, and its future financial statements will include required additional disclosures. Based on the assessments performed to-date, MLOA does not expect adoption of this new guidance to have a material impact on its financial condition or results of operations. Investments The carrying values of fixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in Other comprehensive income ("OCI"). The amortized cost of fixed maturities is adjusted for impairments in value deemed to be other than temporary which are recognized in Investment gains (losses), net. The redeemable preferred stock investments that are reported in fixed maturities include real estate investment trusts (“REIT”), perpetual preferred stock and redeemable preferred stock. These securities may not have a stated maturity, may not be cumulative and do not provide for mandatory redemption by the issuer. MLOA determines the fair values of fixed maturities and equity securities based upon quoted prices in active markets, when available, or through the use of alternative approaches when market quotes are not readily accessible or available. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. MLOA’s management, with the assistance of its investment advisors, monitors the investment performance of its portfolio and reviews AFS securities with unrealized losses for other-than-temporary impairments (“OTTI”). Integral to this review is an assessment made each quarter, on a security-by-security basis, by the Investments Under Surveillance (“IUS”) Committee, of various indicators of credit deterioration to determine whether the investment security is expected to recover. This assessment includes, but is not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity, and continued viability of the issuer and, for equity securities only, the intent and ability to hold the investment until recovery, and results in identification of specific securities for which OTTI is recognized. If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting OTTI is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage- and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value. Policy loans represent funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to MLOA from the policyholders. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies. Equity securities, are carried at fair value and are included in Other invested assets with changes in fair value reported in OCI. Units in AllianceBernstein L.P. (“AB”), a subsidiary of Holdings, are carried on the equity method and reported in Other invested assets. Short-term investments are reported at amortized cost that approximates fair value and would be included in Other invested assets. All securities owned, including United States government and agency securities and mortgage-backed securities, are reported in the financial statements on a trade date basis. Cash and cash equivalents includes cash on hand, amounts due from banks and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the recorded value is deemed to approximate fair value. Derivatives Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by MLOA include equity options and may be exchange-traded or contracted in the over-the-counter market. All derivative positions are carried in the balance sheets at fair value, generally by obtaining quoted market prices or through the use of valuation models. Freestanding derivative contracts are reported in the balance sheets either as assets within Other invested assets or as liabilities within Other liabilities. MLOA nets the fair value of all derivative financial instruments with counterparties for which a standardized “ISDA Master Agreement” and related Credit Support Annex (“CSA”) have been executed. MLOA uses derivatives to manage asset/liability risk but has not designated those economic relationships under the criteria to qualify for hedge accounting treatment. All changes in the fair value of MLOA freestanding derivative positions, including net receipts and payments, are included in Net derivative gains (losses) without considering changes in the fair value of the economically associated assets or liabilities. MLOA is a party to financial instruments and other contracts that contain “embedded” derivative instruments. At inception, MLOA assesses whether the economic characteristics of the embedded instrument are “clearly and closely related” to the economic characteristics of the remaining component of the “host contract” and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When those criteria are satisfied, the resulting embedded derivative is bifurcated from the host contract, carried in the balance sheets at fair value, and changes in its fair value are recognized immediately and captioned in the statements of income (loss) according to the nature of the related host contract. For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, MLOA instead may elect to carry the entire instrument at fair value. Commercial Mortgage Loans on Real Estate: Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and valuation allowances. Valuation allowances are based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value if the loan is collateral dependent. However, if foreclosure is or becomes probable, the collateral value measurement method is used. For commercial mortgage loans, an allowance for credit loss is typically recommended when management believes it is probable that principal and interest will not be collected according to the contractual terms. Factors that influence management’s judgment in determining allowance for credit losses include the following: • Loan-to-value ratio - Derived from current loan balance divided by the fair market value of the property. An allowance for credit loss is typically recommended when the loan-to-value ratio is in excess of 100% . In the case where the loan-to-value is in excess of 100% , the allowance for credit loss is derived by taking the difference between the fair market value (less cost of sale) and the current loan balance. • Debt service coverage ratio - Derived from actual operating earnings divided by annual debt service. If the ratio is below 1.0 x, then the income from the property does not support the debt. • Occupancy - Criteria varies by property type but low or below market occupancy is an indicator of sub-par property performance. • Lease expirations - The percentage of leases expiring in the upcoming 12 to 36 months are monitored as a decline in rent and/or occupancy may negatively impact the debt service coverage ratio. In the case of single-tenant properties or properties with large tenant exposure, the lease expiration is a material risk factor. • Maturity - Mortgage loans that are not fully amortizing and have upcoming maturities within the next 12 to 24 months are monitored in conjunction with the capital markets to determine the borrower’s ability to refinance the debt and/or pay off the balloon balance. • Borrower/tenant related issues - Financial concerns, potential bankruptcy, or words or actions that indicate imminent default or abandonment of property. • Payment status (current vs. delinquent) - A history of delinquent payments may be a cause for concern. • Property condition - Significant deferred maintenance observed during lenders annual site inspections. • Other - Any other factors such as current economic conditions may call into question the performance of the loan. Mortgage loans also are individually evaluated quarterly by MLOA’s IUS Committee for impairment, including an assessment of related collateral value. Commercial mortgages 60 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages. Based on its monthly monitoring of mortgages, a class of potential problem mortgages are also identified, consisting of mortgage loans not currently classified as problem mortgages but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured. The decision whether to classify a performing mortgage loan as a potential problem involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property. For problem mortgage loans, a valuation allowance is established to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for mortgage loans determined to be non-performing as a result of the loan review process. A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan-specific portion of the loss allowance is based on MLOA’s assessment as to ultimate collectability of loan principal and interest. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors. Impaired mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses. Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is doubtful. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan has been restructured to where the collection of interest is considered likely. Net Investment Income (Loss), Investment Gains (Losses), Net and Unrealized Investment Gains (Losses) Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the valuation allowances are included in Investment gains (losses), net. Unrealized investment gains (losses) on fixed maturities and equity securities designated as AFS held by MLOA are accounted for as a separate component of AOCI, net of related deferred income taxes and amounts attributable to DAC and VOBA related to variable life and investment-type products. Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities classified as AFS and do not reflect any changes in fair value of policyholders’ account balances and future policy benefits. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance established a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and identifies three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data. Level 3 Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability. MLOA defines fair value as the unadjusted quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are measured using present value or other valuation techniques. The fair value determinations are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such adjustments do not reflect any premium or discount that could result from offering for sale at one time MLOA’s entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value cannot be substantiated by direct comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument. Management is responsible for the determination of the value of investments carried at fair value and the supporting methodologies and assumptions. Under the terms of various service agreements, MLOA often utilizes independent valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual securities. These independent valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through t |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS Fixed Maturities The following table provides information relating to fixed maturities classified as AFS: Available-for-Sale Securities by Classification Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value OTTI in AOCI (1) (in millions) December 31, 2017: Fixed Maturity Securities: Public corporate $ 888 $ 21 $ 2 $ 907 $ — Private corporate 284 8 1 291 — U.S. Treasury, government and agency 232 1 1 232 — States and political subdivisions 5 — — 5 — Commercial mortgage-backed — — — — — Residential mortgage-backed — — — — Asset-backed (2) 12 — — 12 Redeemable preferred stock 4 — — 4 — Total at December 31, 2017 $ 1,425 $ 30 $ 4 $ 1,451 $ — December 31, 2016: Fixed Maturity Securities: Public corporate $ 819 $ 16 $ 8 $ 827 $ — Private corporate 205 5 2 208 — U.S. Treasury, government and agency 36 — 1 35 — States and political subdivisions 6 — — 6 — Commercial mortgage-backed 24 7 7 24 1 Redeemable preferred stock 9 — — 9 — Total at December 31, 2016 $ 1,099 $ 28 $ 18 $ 1,109 $ 1 (1) Amounts represent OTTI losses in AOCI, which were not included in income (loss) in accordance with current accounting guidance. (2) Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans. The contractual maturities of AFS fixed maturities at December 31, 2017 are shown in the table below. Bonds not due at a single maturity date have been included in the table in the final year of maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Available-for-Sale Fixed Maturity Securities Contractual Maturities at December 31, 2017 Amortized Cost Fair Value (in millions) Due in one year or less $ 19 $ 19 Due in years two through five 228 235 Due in years six through ten 798 813 Due after ten years 364 368 Subtotal 1,409 1,435 Asset-backed 12 12 Redeemable preferred stock 4 4 Total $ 1,425 $ 1,451 The following table shows proceeds from sales, gross gains (losses) from sales and OTTI for AFS fixed maturities during 2017 , 2016 and 2015 : December 31, 2017 2016 2015 (in millions) Proceeds from sales $ 325 $ 49 $ 19 Gross gains on sales $ 10 $ 1 $ — Gross losses on sales $ (7 ) $ — $ — Total OTTI $ — $ (3 ) $ (1 ) Credit losses recognized in net income (loss) $ — $ (3 ) $ (1 ) The following table sets forth the amount of credit loss impairments on fixed maturity securities held by MLOA at the dates indicated and the corresponding changes in such amounts. Fixed Maturity Securities - Credit Loss Impairments 2017 2016 (in millions) Balances at January 1, $ (32 ) $ (42 ) Previously recognized impairments on securities that matured, paid, prepaid or sold 28 13 Impairments recognized this period on securities not previously impaired — (3 ) Balances at December 31, $ (4 ) $ (32 ) Net unrealized investment gains (losses) on fixed maturities and equity securities classified as AFS are included in the balance sheets as a component of AOCI. The table below presents these amounts as of the dates indicated: December 31, 2017 2016 (in millions) AFS Securities: Fixed maturity securities: With OTTI loss $ — $ 4 All other 26 6 Net Unrealized (Gains) Losses $ 26 $ 10 Changes in net unrealized investment gains (losses) recognized in AOCI include reclassification adjustments to reflect amounts realized in Net income (loss) for the current period that had been part of OCI in earlier periods. The tables that follow below present a rollforward of net unrealized investment gains (losses) recognized in AOCI, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other: Net Unrealized Gains (Losses) on Fixed Maturity Securities with OTTI Losses Net Unrealized Gains (Losses) on Investments Deferred Income Tax Asset (Liability) AOCI Gain (Loss) Related to Net Unrealized Investment Gains(Losses) (in millions) Balance, January 1, 2017 $ 4 $ (2 ) $ 2 Net investment gains (losses) arising during the period (4 ) — (4 ) Reclassification adjustment for OTTI losses: Included in Net income (loss) — — — Impact of net unrealized investment gains (losses) on: Deferred income taxes — — — Balance, December 31, 2017 $ — $ (2 ) $ (2 ) Balance, January 1, 2016 $ 4 $ (2 ) $ 2 Net investment gains (losses) arising during the period (1 ) — (1 ) Reclassification adjustment for OTTI losses: Included in Net income (loss) 1 — 1 Impact of net unrealized investment gains (losses) on: Deferred income taxes — — — Balance, December 31, 2016 $ 4 $ (2 ) $ 2 All Other Net Unrealized Investment Gains (Losses) in AOCI Net Unrealized Gains (Losses) on Investments DAC Deferred Income Tax Asset(Liability) AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses) (in millions) Balance, January 1, 2017 $ 6 $ — $ (1 ) $ 5 Net investment gains (losses) arising during the period 20 — — 20 Reclassification adjustment for OTTI losses: Included in Net income (loss) — — — — Impact of net unrealized investment gains (losses) on: DAC — (8 ) — (8 ) Deferred income taxes — — (4 ) (4 ) Balance, December 31, 2017 $ 26 $ (8 ) $ (5 ) $ 13 Balance, January 1, 2016 $ 4 $ (2 ) $ — $ 2 Net investment gains (losses) arising during the period (1 ) — — (1 ) Reclassification adjustment for OTTI losses: Included in Net income (loss) 3 — — 3 Impact of net unrealized investment gains (losses) on: DAC — 2 — 2 Deferred income taxes — — (1 ) (1 ) Balance, December 31, 2016 $ 6 $ — $ (1 ) $ 5 The following tables disclose the fair values and gross unrealized losses of the 112 issues at December 31, 2017 and the 168 issues at December 31, 2016 of fixed maturities that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the specified periods at the dates indicated: Less Than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (in millions) December 31, 2017 Fixed Maturity Securities: Public corporate $ 135 $ 1 $ 29 $ 1 $ 164 $ 2 Private corporate 45 — 23 1 68 1 U.S. Treasury, government and agency 50 1 6 — 56 1 Asset-backed 7 — — — 7 — Redeemable preferred stock 2 — — — 2 — Total $ 239 $ 2 $ 58 $ 2 $ 297 $ 4 December 31, 2016 Fixed Maturity Securities: Public corporate $ 292 $ 8 $ 12 $ — $ 304 $ 8 Private corporate 61 2 — — 61 2 U.S. Treasury, government and agency 21 1 — — 21 1 Commercial mortgage-backed 1 — 10 7 11 7 Redeemable preferred stock 9 — — — 9 — Total $ 384 $ 11 $ 22 $ 7 $ 406 $ 18 MLOA’s investments in fixed maturity securities do not include concentrations of credit risk of any single issuer greater than 10% of the shareholder’s equity of MLOA, other than securities of the U.S. government, U.S. government agencies and certain securities guaranteed by the U.S. government. MLOA maintains a diversified portfolio of corporate securities across industries and issuers and does not have exposure to any single issuer in excess of 2.1 % of total investments. The largest exposures to a single issuer of corporate securities held at December 31, 2017 and 2016 were $ 25 million and $15 million , respectively. Corporate high yield securities, consisting primarily of public high yield bonds, are classified as other than investment grade by the various rating agencies, i.e., a rating below Baa3/BBB- or the National Association of Insurance Commissioners (“NAIC”) designation of 3 (medium grade), 4 or 5 (below investment grade) or 6 (in or near default). At December 31, 2017 and 2016 , respectively, approximately $ 20 million and $37 million , or 1.4 % and 3.4 %, of the $ 1,425 million and $1,099 million aggregate amortized cost of fixed maturities held by MLOA were considered to be other than investment grade. These securities had net unrealized losses of $ 0 million and $0 million at December 31, 2017 and 2016 , respectively. At December 31, 2017 and 2016 , respectively, the $ 2 million and $7 million of gross unrealized losses of twelve months or more were concentrated in corporate and commercial mortgage-backed securities. In accordance with the policy described in Note 2, MLOA concluded that an adjustment to income for OTTI for these securities was not warranted at either December 31, 2017 or 2016 . At December 31, 2017 , MLOA did not intend to sell the securities nor will it likely be required to dispose of the securities before the anticipated recovery of their remaining amortized cost basis. At December 31, 2017 , the carrying value of fixed maturities that were non-income producing for the twelve months preceding that date was $ 0 million. Mortgage Loans In 2016 , MLOA issued $17 million of commercial mortgage loans, representing approximately 1.0% of 2017 invested assets. These mortgage loans were issued for apartment complex properties located in the Mid-Atlantic region. At December 31, 2017 these mortgage loans had an outstanding value of $17 million with a loan to value ratio between 0% - 50% and a debt coverage service ratio greater than 2.0 x. There are no valuation allowances for commercial mortgage loans for 2017 , 2016 , and 2015 . Equity Method Investments The following table presents MLOA’s investment in 2.6 million units of AB (approximately 0.95% ownership) with a fair value of $ 65 million and $61 million at December 31, 2017 and 2016 , respectively. MLOA’s investment in AB, an affiliate, is included in Other invested assets: 2017 2016 (in millions) Balance at January 1, $ 64 $ 63 Equity in net income (loss) 6 6 Dividends received (6 ) (5 ) Balance at December 31, $ 64 $ 64 The tables below detail the condensed balance sheets and statements of income (loss) of AB and MLOA’s equity investment and equity in income (loss) of AB. December 31, 2017 2016 (in millions) Balance Sheets: Total Assets $ 9,295 $ 8,740 Total Liabilities 4,630 4,279 Redeemable non-controlling interest 602 393 Total Partners’ Capital 4,063 4,068 Total Liabilities and Partners’ Capital $ 9,295 $ 8,740 MLOA’s Equity investment in AB $ 64 $ 64 2017 2016 2015 (in millions) Statements of Income (Loss): Total Revenues $ 3,299 $ 3,029 $ 3,021 Total Expenses 2,525 2,306 2,390 Net Income (Loss) $ 721 $ 695 $ 587 MLOA’s Equity in income (loss) of AB $ 6 $ 6 $ 5 Derivatives and Offsetting Assets and Liabilities MLOA hedges crediting rates in the Market Stabilizer Option® (“MSO”) in the variable life insurance products and in the Indexed Universal Life (“IUL”) insurance products. The MSO and IUL products permit the contract owner to participate in the performance of an index, up to a cap for a set period of time, while MLOA absorbs, up to a certain percentage, the loss of value in an index, which varies by product segment. In order to support the returns associated with these products and features, MLOA enters into derivative contracts whose payouts, in combination with fixed income investments, emulate those of the index, subject to caps and buffers. The tables below present quantitative disclosures about MLOA’s derivative instruments, including those embedded in other contracts though required to be accounted for as derivative instruments. Derivative Instruments by Category Fair Value Notional Amount Asset Derivatives Liability Derivatives Gains (Losses) Reported In Income (Loss) (in millions) At or For the Year Ended, December 31, 2017: Freestanding derivatives: Equity contracts: (1) Options $ 1,058 $ 119 $ 30 $ 66 Collateral — — 90 — Net investment income (loss) 66 Embedded derivatives: MSO and IUL indexed features (2) (3) — — 88 (72 ) Balances, December 31, 2017 $ 1,058 $ 119 $ 208 $ (6 ) At or For the Year Ended, December 31, 2016: Freestanding derivatives: Equity contracts: (1) Options $ 776 $ 76 $ 20 $ 18 Collateral — — 58 — Net investment income (loss) 18 Embedded derivatives: MSO and IUL indexed features (2) (3) — — 53 (20 ) Balances, December 31, 2016 $ 776 $ 76 $ 131 $ (2 ) (1) Reported in Other invested assets in MLOA’s balance sheets. (2) MSO and IUL are reported in Future policyholders’ benefits and other policyholders’ liabilities in the balance sheets. (3) Reported in Net derivative gains (losses) in the statements of income (loss) For 2017 , 2016 and 2015 Net derivative gains (losses) included $ 42 million, $(2) million and $6 million of realized gains (losses) on contracts closed during those periods and $ 24 million, $20 million and $(15) million of unrealized gains (losses) on derivative positions at year end. Credit Risk Although notional amount is the most commonly used measure of volume in the derivatives market, it is not used as a measure of credit risk. A derivative with positive fair value (a derivative asset) indicates existence of credit risk because the counterparty would owe money to MLOA if the contract were closed at the reporting date. Alternatively, a derivative contract with negative fair value (a derivative liability) indicates MLOA would owe money to the counterparty if the contract were closed at the reporting date. To reduce credit exposures in OTC derivative transactions MLOA generally enters into master agreements that provide for a netting of financial exposures with the counterparty and allow for collateral arrangements as further described below under “ISDA Master Agreements.” MLOA further controls and minimizes its counterparty exposure through a credit appraisal and approval process. ISDA Master Agreements Netting Provisions. The standardized “ISDA Master Agreement” under which MLOA conducts its OTC derivative transactions includes provisions for payment netting. In the normal course of business activities, if there is more than one derivative transaction with a single counterparty, MLOA will set-off the cash flows of those derivatives into a single amount to be exchanged in settlement of the resulting net payable or receivable with that counterparty. In the event of default, insolvency, or other similar event pre-defined under the ISDA Master Agreement that would result in termination of OTC derivatives transactions before their maturity, netting procedures would be applied to calculate a single net payable or receivable with the counterparty. Collateral Arrangements. MLOA generally has executed a CSA under the ISDA Master Agreement it maintains with each of its OTC derivative counterparties that requires both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities or those issued by government agencies. These CSAs are bilateral agreements that require collateral postings by the party “out-of-the-money” or in a net derivative liability position. Various thresholds for the amount and timing of collateralization of net liability positions are applicable. Consequently, the credit exposure of MLOA’s OTC derivative contracts is limited to the net positive estimated fair value of those contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received pursuant to CSAs. Derivatives are recognized at fair value in the balance sheets and are reported either as assets in Other invested assets, except for embedded insurance-related derivatives as described above. MLOA nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related CSA have been executed. At December 31, 2017 and 2016 , respectively, MLOA held $ 90 million and $58 million in cash and securities collateral delivered by trade counterparties, representing the fair value of the related derivative agreements. This unrestricted cash collateral is reported in Cash and cash equivalents. The aggregate fair value of all collateralized derivative transactions that were in a liability position at December 31, 2017 and 2016 was not material. The following table presents information about MLOA’s offsetting of financial assets and liabilities and derivative instruments at December 31, 2017 . Offsetting of Financial Assets and Liabilities and Derivative Instruments At December 31, 2017 Gross Amounts Recognized Gross Amounts Offset in the Balance Sheets Net Amounts Presented in the Balance Sheets (in millions) ASSETS Description Derivatives: Equity contracts $ 119 $ 30 $ 89 Collateral — 90 (90 ) Total Derivatives, subject to an ISDA Master Agreement (1) 119 120 (1 ) Other financial assets 64 — 64 Other invested assets $ 183 $ 120 $ 63 LIABILITIES Description Derivatives: Equity contracts $ 30 $ 30 $ — Collateral 90 90 — Total Derivatives, subject to an ISDA Master Agreement (1) 120 120 — Other financial liabilities 72 — 72 Other liabilities $ 192 $ 120 $ 72 (1) All derivatives were subject to ISDA Master Agreements at December 31, 2017 . The following table presents information about MLOA’s gross collateral amounts that are not offset in the balance sheets at December 31, 2017 . Collateral Amounts Offset in the Balance Sheets At December 31, 2017 Fair Value of Assets Collateral (Received)/Held Financial Instruments Cash Net Amounts (in millions) ASSETS Total derivatives $ 89 $ — $ (90 ) $ (1 ) Other financial assets 64 — — 64 Other invested assets $ 153 $ — $ (90 ) $ 63 The following table presents information about MLOA’s offsetting of financial assets and liabilities and derivative instruments at December 31, 2016 . Offsetting of Financial Assets and Liabilities and Derivative Instruments At December 31, 2016 Gross Amounts Recognized Gross Amounts Offset in the Balance Sheets Net Amounts Presented in the Balance Sheets (in millions) ASSETS Description Derivatives: Equity contracts $ 76 $ 20 $ 56 Collateral — 58 (58 ) Total Derivatives, subject to an ISDA Master Agreement (1) 76 78 (2 ) Other financial instruments 70 — 70 Other invested assets $ 146 $ 78 $ 68 LIABILITIES Description Derivatives: Equity contracts $ 20 $ 20 $ — Total Derivatives, subject to an ISDA Master Agreement (1) 78 78 — Other financial liabilities 77 — 77 Other liabilities $ 155 $ 78 $ 77 (1) All derivatives were subject to ISDA Master Agreements at December 31, 2016 . The following table presents information about MLOA’s gross collateral amounts that are not offset in the balance sheets at December 31, 2016 . Gross Collateral Amounts Not Offset in the Balance Sheets At December 31, 2016 Fair Value of Assets Collateral (Received)/Held Financial Instruments Cash Net Amounts (in millions) ASSETS Total derivatives $ 56 $ — $ (58 ) $ (2 ) Other financial assets 70 — — 70 Other invested assets $ 126 $ — $ (58 ) $ 68 Net Investment Income (Loss) The following table breaks out Net investment income (loss) by asset category: 2017 2016 2015 (in millions) Fixed maturities $ 49 $ 43 $ 40 Mortgage loans on real estate 1 1 — Policy loans 1 1 1 Gross investment income (loss) 51 45 41 Investment expenses (3 ) (3 ) (3 ) Net Investment Income (Loss) $ 48 $ 42 $ 38 Investment Gains (Losses), Net Investment gains (losses), net including changes in the valuation allowances and OTTI are as follows: 2017 2016 2015 (in millions) Fixed maturities $ — $ (4 ) $ (1 ) Investment Gains (Losses), Net $ — $ (4 ) $ (1 ) |
DEFERRED POLICY ACQUISITION COS
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED | DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED DAC Changes in deferred policy acquisition costs at December 31, 2017 and 2016 were as follows: December 31, 2017 2016 (in millions) Balance, beginning of year $ 353 $ 351 Capitalization of commissions, sales and issue expenses 109 103 Amortization (71 ) (101 ) Change in unrealized investment gains and losses (8 ) — Balance, End of Year $ 383 $ 353 VOBA MLOA’s VOBA asset amortized to $ 0 million in 2016 . For 2017 , 2016 and 2015 , amortization expense related to VOBA was $0 million , $ 9 million and $0 million, respectively and reported in Other operating costs and expenses. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES Assets and liabilities measured at fair value on a recurring basis are summarized below. At December 31, 2017 and 2016 , no assets were required to be measured at fair value on a non-recurring basis. Fair value measurements are required on a non-recurring basis for certain assets, including goodwill and mortgage loans on real estate, only when an OTTI or other event occurs. When such fair value measurements are recorded, they must be classified and disclosed within the fair value hierarchy. MLOA recognizes transfers between valuation levels at the beginning of the reporting period. Fair Value Measurements Level 1 Level 2 Level 3 Total (in millions) December 31, 2017 Assets: Investments: Fixed maturity securities, available-for-sale: Public corporate $ — $ 907 $ — $ 907 Private corporate — 285 6 291 U.S. Treasury, government and agency — 232 — 232 States and political subdivisions — 5 — 5 Asset-backed — 12 — 12 Redeemable preferred stock 4 — — 4 Subtotal 4 1,441 6 1,451 Trading securities 1 — — 1 Options — 89 — 89 Cash equivalents 44 — — 44 Separate Accounts assets 1,999 14 — 2,013 Total Assets $ 2,048 $ 1,544 $ 6 $ 3,598 Liabilities: Contingent payment arrangements $ — $ — $ 4 $ 4 MSO and IUL indexed features’ liability — 88 — 88 Total Liabilities $ — $ 88 $ 4 $ 92 Fair Value Measurements Level 1 Level 2 Level 3 Total (in millions) December 31, 2016 Assets: Investments: Fixed maturity securities, available-for-sale: Public corporate $ — $ 827 $ — $ 827 Private corporate — 201 7 208 U.S. Treasury, government and agency — 35 — 35 States and political subdivisions — 6 — 6 Commercial mortgage-backed — — 24 24 Redeemable preferred stock 9 — — 9 Subtotal 9 1,069 31 1,109 Trading securities 1 — — 1 Options — 56 — 56 Cash equivalents 109 — — 109 Separate Accounts assets 1,732 14 — 1,746 Total Assets $ 1,851 $ 1,139 $ 31 $ 3,021 Liabilities: Contingent payment arrangements $ — $ — $ 7 $ 7 MSO and IUL indexed features’ liability — 53 — 53 Total Liabilities $ — $ 53 $ 7 $ 60 At December 31, 2017 and 2016 , respectively, the fair value of public fixed maturities is approximately $ 1,149 million and $ 888 million or approximately 31.9 % and 29.4% of MLOA’s total assets measured at fair value on a recurring basis. The fair values of MLOA’s public fixed maturity securities are generally based on prices obtained from independent valuation service providers and for which MLOA maintains a vendor hierarchy by asset type based on historical pricing experience and vendor expertise. Although each security generally is priced by multiple independent valuation service providers, MLOA ultimately uses the price received from the independent valuation service provider highest in the vendor hierarchy based on the respective asset type, with limited exception. To validate reasonableness, prices also are internally reviewed by those with relevant expertise through comparison with directly observed recent market trades. Consistent with the fair value hierarchy, public fixed maturity securities validated in this manner generally are reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the pricing information received from independent valuation service providers is not reflective of market activity or other inputs observable in the market, MLOA may challenge the price through a formal process in accordance with the terms of the respective independent valuation service provider agreement. If, as a result, it is determined that the independent valuation service provider is able to reprice the security in a manner agreed as more consistent with current market observations, the security remains within Level 2. Alternatively, a Level 3 classification may result if the pricing information then is sourced from another vendor, non-binding broker quotes, or internally-developed valuations for which MLOA’s own assumptions about market-participant inputs would be used in pricing the security. At December 31, 2017 and 2016 , respectively, the fair value of private fixed maturities is approximately $ 302 million and $ 221 million or approximately 8.4 % and 7.3% of MLOA’s total assets measured at fair value on a recurring basis. The fair values of MLOA’s private fixed maturities, which primarily are comprised of investments in private placement securities generally are determined using a discounted cash flow model. In certain cases, these models use observable inputs with a discount rate based upon the average of spread surveys collected from private market intermediaries who are active in both primary and secondary transactions, taking into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Generally, these securities have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may also incorporate unobservable inputs, which reflect MLOA’s own assumptions about the inputs market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the fair value measurement of a security, a Level 3 classification generally is made. At December 31, 2017 and 2016 , respectively, investments classified as Level 1 comprise approximately 56.9 % and 61.3% of assets measured at fair value on a recurring basis and primarily include redeemable preferred stock, cash equivalents and Separate Account assets. Fair value measurements classified as Level 1 include exchange-traded prices of fixed maturities, equity securities, and net asset values for transacting subscriptions and redemptions of mutual fund shares held by Separate Accounts. Cash equivalents classified as Level 1 include money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less, and are carried at cost as a proxy for fair value measurement due to their short-term nature. At December 31, 2017 and 2016 , respectively, investments classified as Level 2 comprise approximately 42.9 % and 37.7% of assets measured at fair value on a recurring basis and primarily include U.S. government and agency securities and certain corporate debt securities, such as public and private fixed maturities. As market quotes generally are not readily available or accessible for these securities, their fair value measures are determined utilizing relevant information generated by market transactions involving comparable securities and often are based on model pricing techniques that effectively discount prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity. MLOA’s IUL product and in the MSO investment option available in some life contracts offer investment options which permit the contract owner to participate in the performance of an index. These investment options, which depending on the product and on the index selected can currently have 1 or 3 year terms, provide for participation in the performance of specified indices, price movements up to a segment-specific declared maximum rate. Under certain conditions that vary by product, e.g. holding these segments for the full term, these segments also shield policyholders from some or all negative investment performance associated with these indices. These investment options have defined formulaic liability amounts, and the current values of the option component of these segment reserves are accounted for as Level 2 embedded derivatives. The fair values of these embedded derivatives are based on prices obtained from independent valuation service providers. At December 31, 2017 and 2016 , respectively, investments classified as Level 3 comprise approximately 0.2 % and 1.0% of assets measured at fair value on a recurring basis and primarily include commercial mortgage-backed securities (“CMBS”) and corporate debt securities. Determinations to classify fair value measures within Level 3 of the valuation hierarchy generally are based upon the significance of the unobservable factors to the overall fair value measurement. At December 31, 2017 and 2016 , MLOA did not hold any fixed maturities, included in the Level 3 classification, with indicative pricing obtained from brokers that otherwise could not be corroborated to market observable data. MLOA applies various due-diligence procedures, as considered appropriate, to validate these non-binding broker quotes for reasonableness, based on its understanding of the markets, including use of internally-developed assumptions about inputs a market participant would use to price the security. In addition, approximately $ 0 million and $24 million of mortgage- and asset-backed securities, including CMBS, are classified as Level 3 at December 31, 2017 and 2016 , respectively. MLOA utilizes prices obtained from an independent valuation service vendor to measure fair value of CMBS securities. MLOA's Level 3 liabilities include contingent payment arrangements associated with a Renewal Rights Agreement (the “Renewal Rights Agreement”) that transitions certain group employee benefits policies beginning January 1, 2017 from an insurer exiting such business to MLOA. The fair value of the contingent payments liability associated with this transaction is measured and adjusted each reporting period through final settlement using projected premiums from these policies, net of potential surrenders and terminations, and applying a risk-adjusted discount factor ( 7 % at December 31, 2017 ) to the resulting cash flows. In 2017 and 2016, there were no AFS fixed maturities were transferred from Level 2 into the Level 3 classification. The table below presents a reconciliation for all Level 3 assets and liabilities at December 31, 2017 , 2016 and 2015 respectively. Level 3 Instruments Fair Value Measurements Corporate Commercial Mortgage- backed Contingent Payment Arrangement (in millions) Balance, January 1, 2017 $ 7 $ 24 $ 7 Total gains (losses), realized and unrealized included in: Income (loss) as: Investment gains (losses), net — 1 — Other comprehensive income (loss) — — — Purchases — — — Sales (1 ) (25 ) — Change in estimate — — (3 ) Balance, December 31, 2017 $ 6 $ — $ 4 Balance, January 1, 2016 $ 8 $ 31 $ — Total gains (losses), realized and unrealized included in: Income (loss) as: Investment gains (losses), net — (4 ) — Other comprehensive income (loss) — 1 — Purchases — — 7 Sales (1 ) (4 ) — Balance, December 31, 2016 $ 7 $ 24 $ 7 Balance, January 1, 2015 $ 8 $ 26 $ — Total gains (losses), realized and unrealized included in: Income (loss) as: Investment gains (losses), net — (2 ) — Other comprehensive income (loss) — 8 — Sales (1 ) (1 ) — Transfers into Level 3 (1) 1 — — Balance, December 31, 2015 $ 8 $ 31 $ — (1) Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values. The table below details changes in unrealized gains (losses) for 2017 , 2016 and 2015 by category for Level 3 assets still held at December 31, 2017 , 2016 and 2015, respectively. OCI (in millions) Held as of December 31, 2017: Change in unrealized gains (losses): Fixed maturity securities, available-for-sale: Commercial mortgage-backed $ — Total $ — Held as of December 31, 2016: Change in unrealized gains (losses): Fixed maturity securities, available-for-sale: Commercial mortgage-backed $ 1 Total $ 1 Held as of December 31, 2015: Change in unrealized gains (losses): Fixed maturity securities, available-for-sale: Corporate $ (1 ) Commercial mortgage-backed 8 Total $ 7 At December 31, 2017 and 2016 , MLOA had $ 6 million and $31 million , respectively, of investments classified as Level 3. The underlying quantitative inputs to measure the fair value of these investments are not developed by MLOA and are not readily available. These investments primarily consist of certain privately placed debt securities with limited trading activity, including asset-backed instruments, and their fair values generally reflect unadjusted prices obtained from independent valuation service providers and indicative, non-binding quotes obtained from third-party broker-dealers recognized as market participants. Significant increases or decreases in the fair value amounts received from these pricing sources may result in MLOA’s reporting significantly higher or lower fair value measurements for these Level 3 investments. The carrying values and fair values at December 31, 2017 and 2016 for financial instruments not otherwise disclosed in Note 3 are presented in the table below. Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guarantees and investment contracts and pension and other postretirement obligations. Carrying Value Fair Value Level 1 Level 2 Level 3 Total (in millions) December 31, 2017 Mortgage loans on real estate $ 17 $ — $ — $ 17 $ 17 Policy Loans 185 — — 224 224 Policyholders liabilities: Investment contracts 153 — — 156 156 December 31, 2016 Mortgage loans on real estate $ 17 $ — $ — $ 16 $ 16 Policy Loans 176 — — 210 210 Policyholders liabilities: Investment contracts 168 — — 170 170 Fair values for commercial mortgage loans on real estate are measured by discounting future contractual cash flows to be received on the mortgage loan using interest rates at which loans with similar characteristics and credit quality would be made. The discount rate is derived from taking the appropriate U.S. Treasury rate with a like term to the remaining term of the loan and adding a spread reflective of the risk premium associated with the specific loan. Fair values for mortgage loans anticipated to be foreclosed and problem mortgage loans are limited to the fair value of the underlying collateral, if lower. The fair value of policy loans is calculated by discounting expected cash flows based upon the U.S. Treasury yield curve and historical loan repayment patterns. The fair values for MLOA’s supplementary contracts not involving life contingencies and deferred annuities and certain annuities, which are included in Policyholder’s account balances, are estimated using projected cash flows discounted at rates reflecting current market rates. Significant unobservable inputs reflected in the cash flows include lapse rates and withdrawal rates. Incremental adjustments may be made to the fair value to reflect non-performance risk. |
LIABILITIES FOR UNPAID CLAIMS A
LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
Insurance [Abstract] | |
LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES | LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES The liability for unpaid claims and claim expenses as of December 31, 2017 is as follows, the liability for unpaid claims and claim expenses as of December 31, 2016 was not material. The liability for unpaid claims and claim expenses is recorded in Future policy benefits and other policyholders’ liabilities in MLOA's balance sheet: 2017 (in millions) Group Employee Benefits $ 9.9 The following table shows a rollforward of the liability for unpaid claims and claim expenses: 2017 (in millions) Gross Balance at January 1, 2017 $ 1.1 Less Reinsurance 0.1 Net Balance at January 1, 2017 $ 1.0 Incurred Claims (net) Related to: Current Year $ 18.5 Prior Year (0.7 ) Total Incurred $ 17.8 Paid Claims (net) Related to: Current Year $ 12.1 Prior Year 0.2 Total Paid $ 12.3 Net Balance at December 31, 2017 $ 6.5 Add Reinsurance 3.4 Gross Balance at December 31, 2017 $ 9.9 Reinsurance in the table above reflects amounts due from reinsurer for the long-term and short-term disability unpaid claims and claim expenses liabilities. Long-Term Disability Development Tables The table below presents information about incurred and paid claims development as of December 31, 2017, net of reinsurance, cumulative claims frequency, and total incurred but not reported liabilities (“IBNR”) for MLOA’s long-term disability business. Cumulative Paid Claims, Net of Reinsurance 2017 Incurral Year (in millions) 2017 $ 0.1 Cumulative long-term disability paid claims $ 0.1 Incurred Claims (undiscounted runout, net of reinsurance) 2017 IBNR Claim Frequency Incurral Year (in millions) 2017 $ 2.1 $ 0.7 56 Cumulative long-term disability incurred claims $ 2.1 $ 0.7 The claim frequency for long-term disability represents the number of unique claim events for which benefit payments have been made. Claim events are identified using a unique claimant identifier and incurral date (claim event date). Thus, if an individual has multiple claims for different disabling events (and thus different disability dates), each will be reported as a unique claim event. However, if an individual receives multiple benefits under more than one policy (for example, supplementary disability benefits in addition to the base policy), we treat it as a single claim occurrence because they are related to a single claim event. Claim frequency is expected to be lower for the most recent incurral year because claimants have to satisfy elimination period before being eligible for benefits. The historical claim payout pattern for the long-term disability for the years presented in the development table is not available because this is a relatively new line of business. MLOA discounts long-term disability liabilities as benefit payments are made over extended periods. Discount rate assumptions for these liabilities are based on projected investment returns for the asset portfolios. The discount rate is 3.6% . The following table reconciles the long-term disability net incurred and paid claims development table to the liability for unpaid claims and claim expenses in MLOA’s balance sheet as of December 31, 2017. 2017 (in millions) Long-Term Disability Claim Development Table, net of reinsurance Undiscounted Incurred Claims, net of reinsurance $ 2.1 Subtract Cumulative Paid Claims, net of reinsurance (0.1 ) Subtract Impact of Discounting, net of reinsurance (0.3 ) Liabilities for unpaid claim and claim expense, net of reinsurance $ 1.7 Unpaid Claims and Claim Expenses, net of reinsurance Liabilities for unpaid claim and claim expense, net of reinsurance $ 1.7 Other short-duration contracts, net of reinsurance 4.8 Total liabilities for unpaid claim and claim expense, net of reinsurance $ 6.5 Reinsurance Recoverable on unpaid claims Long-term disability $ 2.1 Other short-duration contracts 1.3 Total Reinsurance Recoverable $ 3.4 Total liability for unpaid claim and claim expense $ 9.9 The other short duration contracts include group life, short-term disability, dental, and vision. Liabilities for these products are typically complete within one year. Claim development on these liabilities are largely driven by completion factors and loss ratio assumptions. |
REINSURANCE
REINSURANCE | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
REINSURANCE | REINSURANCE MLOA cedes and assumes reinsurance with other insurance companies. Since ceded reinsurance does not relieve the originating insurer of liability, MLOA evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The following table summarizes the effect of reinsurance: 2017 2016 2015 (in millions) Direct policy charges and fee income $ 243 $ 249 $ 207 Reinsurance assumed — — — Reinsurance ceded (63 ) (61 ) (54 ) Policy charges and fee income $ 180 $ 188 $ 153 Direct premiums $ 59 $ 38 $ 39 Reinsurance assumed 3 3 1 Reinsurance ceded (39 ) (37) (39) Premiums $ 23 $ 4 $ 1 Direct policyholders' benefits $ 163 $ 139 $ 189 Reinsurance assumed 1 2 1 Reinsurance ceded (110 ) (112 ) (149 ) Policyholders' benefits $ 54 $ 29 $ 41 On October 1, 2013, MLOA entered into an agreement with Protective Life to reinsure an in-force book of life insurance and annuity policies, written primarily prior to 2004. As of December 31, 2017 and 2016 included in MLOA’s balance sheet were Amounts due from reinsurers of $ 1,287 million and $1,157 million , respectively, including $ 1,041 million and $1,092 million of Policyholder’s account balances relating to the reinsurance agreement with Protective Life. During 2017 , 2016 and 2015 , respectively, total premiums ceded to Protective Life were $ 21 million, $20 million and $21 million and policyholder benefits ceded were $ 82 million, $79 million and $102 million . As of December 31, 2017 , Protective Life is rated AA-. Included in the reinsured business to Protective Life were policies with GMDB and GMIB features which had a reserve balance of $ 5 million and $ 1 million at December 31, 2017 , respectively and $6 million and $2 million at December 31, 2016 , respectively. As a result of the reinsurance agreement Protective Life will receive all the benefits from and assumes all the risks from other reinsurance contracts to which MLOA was a party for the block of business reinsured. For business not reinsured with Protective Life, MLOA generally reinsures its variable life, UL and term life insurance policies on an excess of retention basis. MLOA generally retains up to a maximum of $ 4 million of mortality risk on single-life policies and up to a maximum of $ 6 million of mortality risk on second-to-die policies. For amounts applied for in excess of those limits, reinsurance is ceded to AXA Equitable Life Insurance Company (“AXA Equitable”), an affiliate and indirect wholly-owned subsidiary of Holdings, up to a combined maximum of $ 20 million of risk on single-life policies and up to a maximum of $ 25 million on second-to-die policies. For amounts issued in excess of those limits MLOA typically obtains reinsurance from unaffiliated third parties. The reinsurance arrangements obligate the reinsurer to pay a portion of any death claim in excess of the amount MLOA retained in exchange for an agreed-upon premium. At December 31, 2017 and 2016 , respectively, amounts due from reinsurers related to insurance contracts amounted to $ 1,325 million and $1,390 million , of which $ 22 million and $27 million (not including Protective Life) related to one specific reinsurer, which is rated AA- with the remainder of the reinsurers rated AA- or not rated. A contingent liability exists with respect to reinsurance should the reinsurers be unable to meet their obligations. At December 31, 2017 and 2016, respectively, amounts due to reinsurers related to insurance contracts amounted to $ 132 million and $ 131 million , all related to ceded policy loans to Protective Life. For affiliated reinsurance agreements see Note 8, “Related Party Transactions.” |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Under its service agreement with AXA Equitable, personnel services, employee benefits, facilities, supplies and equipment are provided to MLOA to conduct its business. The associated costs related to the service agreement are allocated to MLOA based on methods that management believes are reasonable, including a review of the nature of such costs and activities performed to support MLOA. As a result of such allocations, MLOA incurred costs of $ 131 million, $129 million and $88 million for 2017 , 2016 and 2015 , respectively. At December 31, 2017 , 2016 , and 2015 , respectively, MLOA reported a $ 42 million, $21 million , and $15 million payable to AXA Equitable in connection with its service agreement, recorded in other liabilities on the MLOA balance sheet. Various AXA affiliates cede a portion of their life, health and catastrophic insurance business through reinsurance agreements to AXA Global Life, an affiliate. In 2008, AXA Global Life in turn, began retroceding a quota share portion of these risks to MLOA on a one -year term basis. Premiums assumed by MLOA from this reinsurance transaction d uring 2017 , 2016 and 2015 , were $ 2 million, $2 million and $1 million , respectively. Claims and expenses assumed under these agreements d uring 2017 , 2016 and 2015 were $ 1 million, $2 million and $1 million , respectively. MLOA cedes a portion of its life business through excess of retention treaties to AXA Equitable on a yearly renewable term basis, and, through April 10, 2018, reinsured the no lapse guarantee riders through AXA RE Arizona Company, an affiliate ("AXA RE Arizona"). On April 11, 2018, all of the business MLOA reinsured to AXA RE Arizona was novated to EQ AZ Life Re Company ("EQ AZ Life Re"), a newly formed captive insurance company organized under the laws of Arizona. EQ AZ Life Re is an indirect, wholly owned subsidiary of Holdings. Premiums earned from the above mentioned affiliated reinsurance transactions d uring 2017 , 2016 and 2015 , were $ 3 million, $3 million and $2 million , respectively. There were no Claims and expenses assumed under these agreements d uring 2017 , 2016 and 2015 . In 2017 , 2016 and 2015 , respectively, MLOA paid AXA Distribution Holding Corporation (“AXA Distribution”) and its subsidiaries $103 million, $93 million and $84 million of commissions and fees for sales of insurance products. MLOA paid $ 43 million, $43 million and $57 million in commissions and fees for the sale of its insurance products to AXA Distributors, LLC (“AXA Distributors”) a broker-dealer and insurance general agency affiliate, in 2017 , 2016 and 2015 , respectively. Variable life products offer purchasers the opportunity to direct the investment of their account values into various Separate Account investment options. The investment options available to MLOA’s variable life policyholders are comprised of the proprietary fund families of EQ Advisors Trust (“EQAT”), AXA Premier VIP Trust (“VIP Trust”), each of which are mutual funds for which MLOA’s affiliate, AXA Equitable Funds Management Group, LLC, serves as the investment manager and administrator. In addition to the AXA Equitable service agreement, MLOA has various other service and investment advisory agreements with affiliates. The amount of expenses incurred by MLOA related to these agreements were $ 2 million, $2 million and $1 million for 2017 , 2016 and 2015 , respectively. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
Share-based Compensation [Abstract] | |
SHARE BASED COMPENSATION | SHARE-BASED COMPENSATION Certain employees of AXA Equitable who perform services for MLOA participate in various share-based payment arrangements sponsored by AXA Financial or AXA. MLOA was allocated $ 3 million of compensation costs, included in Compensation and benefits in the statement of income (loss), for share-based payment arrangements during each year 2017 , 2016 and 2015 . |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES A summary of the income tax (expense) benefit in the statements of income (loss) follows: 2017 2016 2015 (in millions) Income tax (expense) benefit: Current (expense) benefit $ (1 ) $ 9 $ 5 Deferred (expense) benefit 8 26 5 Total $ 7 $ 35 $ 10 At December 31, 2017 and 2016 , MLOA had current taxes payable of $ 8 million and current taxes receivable of $ 1 million , respectively. The Federal income taxes attributable to operations are different from the amounts determined by multiplying the Income (loss) from operations, before income taxes by the expected Federal income tax rate of 35%. The sources of the difference and their tax effects are as follows: 2017 2016 2015 (in millions) Expected income tax (expense) benefit $ 23 $ 33 $ 9 Dividends received deduction 2 2 1 Change in tax law (18 ) — — Income Tax (Expense) Benefit $ 7 $ 35 $ 10 The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The SEC issued SAB 118 to address the application of U.S. GAAP in situations where a company does not have the necessary information available to complete its accounting for certain income tax effects of the Tax Reform Act. In accordance with SAB 118, MLOA determined reasonable estimates for certain effects of the Tax Reform Act and recorded those estimates as provisional amounts in the 2017 financial statements due to the need for further analysis, collection and preparation of the relevant data necessary to complete the accounting. These amounts are subject to change as the information necessary to complete the calculations is obtained and as tax authorities issue further guidance. The following provisional amounts related to the impact of the Tax Reform Act are included in MLOA’s financial statements: • An income tax expense of $18 million from the reduction of deferred tax assets due to lower corporate tax rates. MLOA will recognize changes to this estimate as the calculation of cumulative temporary differences is refined. • An income tax expense of $0.2 million to account for the deemed repatriation of foreign earnings. The determination of this tax requires further analysis regarding the amount and composition of historical foreign earnings. The components of the net deferred income taxes are as follows: December 31, 2017 December 31, 2016 Assets Liabilities Assets Liabilities (in millions) Reserves and reinsurance $ 64 $ — $ 101 $ — DAC — 49 — 81 Investments 5 — — 11 Other 9 — 13 — Total $ 78 $ 49 $ 114 $ 92 As of December 31, 2017 , MLOA had $ 2 million of AMT credits which do not expire. At December 31, 2017 and 2016 of the total amount of unrecognized tax benefits, $ 4 million and $ 4 million respectively, would affect the effective tax rate. MLOA recognizes accrued interest and penalties related to unrecognized tax benefits in tax (expense) benefit. Interest and penalties included in the amounts of unrecognized tax benefits at December 31, 2017 and 2016 were $ 0.3 million and $0.3 million respectively. Tax expense for 2017 reflected a benefit of $ 0.0 million in interest expense related to unrecognized tax benefits. A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows: 2017 2016 2015 (in millions) Balance, beginning of year $ 4 $ 7 $ 6 Additions/(Subtraction) for tax positions of prior years — (3 ) 1 Balance, End of Year $ 4 $ 4 $ 7 It is reasonably possible that the total amounts of unrecognized tax benefits will change within the next 12 months. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time. During the first quarter of 2016, MLOA agreed to the Internal Revenue Service’s Revenue Agent’s Reports for MONY Life’s consolidated amended Federal 2004-2007 and consolidated Federal 2008 and 2009 corporate income tax returns. The impact on MLOA’s 2016 statement of income (loss) is an income tax benefit of $0.2 million . In 2017, the IRS commenced their examination of the 2010 through 2013 tax years. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) AOCI represents cumulative gains (losses) on investments that are not reflected in income (loss). The balances for the past three years follow: December 31, 2017 2016 2015 (in millions) Unrealized gains (losses) on investments, net of adjustments $ 12 $ 7 $ 5 Total Accumulated Other Comprehensive Income (Loss) $ 12 $ 7 $ 5 The components of OCI for the past three years follow: December 31, 2017 2016 2015 (in millions) Change in net unrealized gains (losses) on investments: Net unrealized gains (losses) arising during the year $ 12 $ (1 ) $ (13 ) (Gains) losses reclassified into net income (loss) during the year (1) — 3 — Change in net unrealized gains (losses) on investments 12 2 (13 ) Adjustments for DAC and Other (7 ) — 1 Other Comprehensive Income (Loss), net of adjustments and (net of deferred income tax expense (benefit) of $1, $1 and $(6) $ 5 $ 2 $ (12 ) (1) See “Reclassification adjustments” in Note 3. Reclassification amounts presented net of income tax expense (benefit) of $ 0 million, $1 million and $0 million for 2017 , 2016 and 2015 , respectively. Investment gains and losses reclassified from AOCI to net income (loss) primarily consist of realized gains (losses) on sales and OTTI of AFS securities and are included in Total investment gains (losses), net on the statements of income (loss). Amounts presented in the table above are net of tax. |
LITIGATION
LITIGATION | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | LITIGATION A number of lawsuits, claims, assessments and regulatory inquiries have been filed or commenced against life insurers in the jurisdictions in which MLOA does business. These actions and proceedings involve, among other things, insurers’ sales practices, alleged agent misconduct, alleged failure to properly supervise agents, contract administration, product design, features and accompanying disclosure, cost of insurance increases, the use of captive reinsurers, payments of death benefits and the reporting and escheatment of unclaimed property, alleged breach of fiduciary duties, alleged mismanagement of client funds and other matters. Some of the matters have resulted in the award of substantial fines and judgments against other insurers, including punitive damages, or in substantial settlements. Courts, juries and regulators often have substantial discretion in awarding damage awards and fines, including punitive damages. MLOA, from time to time, is involved in such actions and proceedings. While the ultimate outcome of such matters cannot be predicted with certainty, in the opinion of management no such matter is likely to have a material adverse effect on MLOA’s financial position or results of operations. However, it should be noted that the frequency of large damage awards, including large punitive damage awards and regulatory fines that bear little or no relation to actual economic damages incurred, continues to create the potential for an unpredictable judgment in any given matter. |
STATUTORY FINANCIAL INFORMATION
STATUTORY FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Statutory Financial Information [Abstract] | |
STATUTORY FINANCIAL INFORMATION | STATUTORY FINANCIAL INFORMATION MLOA is restricted as to the amounts it may pay as dividends to AEFS. Under Arizona Insurance Law, a domestic life insurer may not, without prior approval of the Director of Insurance, pay a dividend to its shareholder exceeding an amount calculated based on a statutory formula. This formula would not permit MLOA to pay shareholder dividends during 2017. For 2017 , 2016 and 2015 , MLOA’s statutory net income (loss) was $ (12) million, $(14) million and $(4) million , respectively. Statutory surplus, capital stock and Asset Valuation Reserve (“AVR”) totaled $ 318 million and $331 million at December 31, 2017 and 2016 , respectively. There were no shareholder dividends paid to its parent by MLOA in 2017 , 2016 and 2015 . At December 31, 2017 , MLOA, in accordance with various government and state regulations, had $ 7 million of securities on deposit with such government or state agencies. At December 31, 2017 and for the year then ended, there were no differences in net income (loss) and capital and surplus resulting from practices prescribed and permitted by the Arizona Department of Insurance and those prescribed by NAIC Accounting Practices and Procedures effective at December 31, 2017 . Accounting practices used to prepare statutory financial statements for regulatory filings of stock life insurance companies differ in certain instances from U.S. GAAP. The differences between statutory surplus and capital stock determined in accordance with Statutory Accounting Principles (“SAP”) and total shareholder’s equity under U.S. GAAP are primarily: (a) the inclusion in SAP of an AVR intended to stabilize surplus from fluctuations in the value of the investment portfolio; (b) future policy benefits and policyholders’ account balances under SAP differ from U.S. GAAP due to differences between actuarial assumptions and reserving methodologies; (c) certain policy acquisition costs are expensed under SAP but deferred under U.S. GAAP and amortized over future periods to achieve a matching of revenues and expenses; (d) under SAP, Federal income taxes are provided on the basis of amounts currently payable with limited recognition of deferred tax assets while under U.S. GAAP, deferred taxes are recorded for temporary differences between the financial statements and tax basis of assets and liabilities where the probability of realization is reasonably assured; (e) the valuation of assets under SAP and U.S. GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral of interest-related realized capital gains and losses on fixed income investments; (f) the valuation of the investment in AB Units under SAP reflects a portion of the market value appreciation rather than the equity in the underlying net assets as required under U.S. GAAP; (g) certain assets, primarily pre-paid assets, are not admissible under SAP but are admissible under U.S. GAAP (h) the fair valuing of all acquired assets and liabilities including VOBA assets required for U.S. GAAP purchase accounting and (i) cost of reinsurance is recognized as expense under SAP and amortized over the life of the underlying reinsured policies under U.S. GAAP. MLOA holds approximately $ 600,000 of liabilities for the estimated portion of future assessments related to insolvent insurers, primarily Executive Life Ins. Co. and Lincoln Memorial Life Insurance Company. These assessments are expected to be paid over an extended period. MLOA also holds approximately $ 500,000 of assets for premium tax offsets that are expected to be realized with respect to these assessments and an additional $ 100,000 asset for premium tax offsets for assessments already paid. MLOA has not received notifications in 2017 of any other new insolvency material to MLOA’s financial results of operations or financial condition. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On April 11, 2018, all of the business MLOA reinsured to AXA RE Arizona was novated to EQ AZ Life Re, a newly formed captive insurance company organized under the laws of Arizona. EQ AZ Life Re is an indirect, wholly owned subsidiary of Holdings. In February 2018, MLOA joined the membership for Federal Home Loan Bank of San Francisco ("FHLBSF"), which provides us with access to collateralized borrowings and other FHLBSF products. MLOA currently does no t have any outstanding borrowing amount from FHLBSF. |
SCHEDULE I - SUMMARY OF INVESTM
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Investments, Other than Investments in Related Parties [Abstract] | |
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES | SCHEDULE I SUMMARY OF INVESTMENTS—OTHER THAN INVESTMENTS IN RELATED PARTIES AS OF DECEMBER 31, 2017 Cost (1) Fair Value Carrying Value (in millions) Fixed Maturities U.S. government, agencies and authorities 232 232 232 State, municipalities and political subdivisions 5 5 5 Public utilities 209 212 212 All other corporate bonds 963 986 986 Asset-backed 12 12 12 Redeemable preferred stocks 4 4 4 Total fixed maturities 1,425 1,451 1,451 Mortgage loans on real estate 17 17 17 Policy loans 185 224 185 Other invested assets 63 63 63 Total Investments 1,690 1,755 1,716 (1) Cost for fixed maturities represents original cost, reduced by repayments and writedowns and adjusted for amortization of premiums or accretion of discount. |
SCHEDULE IV - REINSURANCE
SCHEDULE IV - REINSURANCE | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | |
Schedule IV - Reinsurance | SCHEDULE IV REINSURANCE AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2017 , 2016 AND 2015 Gross Amount Ceded to Other Companies Assumed from Other Companies Net Amount Percentage of Amount Assumed to Net (in millions) 2017 Life Insurance In-Force $ 59,722 $ 26,880 $ 1,194 $ 34,036 3.5 % Premiums: Life insurance and annuities $ 48 $ 36 $ 3 $ 15 20.0 % Accident and health 11 3 — 8 — % Total Premiums $ 59 $ 39 $ 3 $ 23 13.0 % 2016 Life Insurance In-Force $ 53,508 $ 27,802 $ 637 $ 26,343 2.4 % Premiums: Life insurance and annuities $ 37 $ 37 $ 3 $ 3 100.0 % Accident and health 1 — — 1 — % Total Premiums $ 38 $ 37 $ 3 $ 4 75.0 % 2015 Life Insurance In-Force $ 49,744 $ 28,474 $ 661 $ 21,931 3.0 % Premiums: Life insurance and annuities $ 39 $ 39 $ 1 $ 1 100.0 % Accident and health — — — — — % Total Premiums $ 39 $ 39 $ 1 $ 1 100.0 % |
SIGNIFICANT ACCOUNTING POLICI24
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. The accompanying financial statements reflect all adjustments necessary in the opinion of management for a fair presentation of the financial position of MLOA and its results of operations and cash flows for the periods presented. The years “ 2017 ”, “ 2016 ” and “ 2015 ” refer to the years ended December 31, 2017 , 2016 and 2015 , respectively. Certain reclassifications have been made in the amounts presented for prior periods to conform those periods to the current presentation. Reclassifications primarily relate to our presentation of embedded derivatives, value of business acquired ("VOBA") and ceded policy loan balances. The reclassifications impacted the Net derivative gains (losses), Interest credited to policyholders' account balances, Amortization of DAC, net and Other operating costs and expenses on the statements of income (loss) and Amounts due from reinsurers and Amounts due to reinsurers on the balance sheets. |
Adoption of New and Future Adoption of Accounting Pronouncements | Adoption of New Accounting Pronouncements In January 2017, the Financial Accounting Standard Board (“FASB”) issued new guidance that amends the definition of a business to provide a more robust framework for determining when a set of assets and activities is a business. The definition primarily adds clarity for evaluating whether certain transactions should be accounted for as acquisitions/dispositions of assets or businesses, the latter subject to guidance on business combinations, but also may interact with other areas of accounting where the defined term is used, such as in the application of guidance on consolidation and goodwill impairment. The new guidance is effective for fiscal years ended December 31, 2018. MLOA elected to early adopt the new guidance for the year ended December 31, 2016. Adoption of this guidance did not have a material impact on MLOA’s financial statements. In October 2016, the FASB issued updated guidance on consolidation of interests held through related parties that are under common control, which alters how a decision maker needs to consider indirect interests in a VIE held through an entity under common control. The guidance amends the recently adopted consolidation guidance analysis. Under the new guidance, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. MLOA adopted the revised guidance effective January 1, 2017. Adoption of this guidance did not have a material impact on the MLOA’s financial statements. In March 2016, the FASB issued new guidance simplifying the transition to the equity method of accounting. The amendment eliminates the requirement for an investor to retroactively adjust the basis of a previously held interest in an investment that subsequently qualifies for use of the equity method. Additionally, the amendment requires any unrealized holding gain or loss recognized in Accumulated Other Comprehensive Income ("AOCI") to be realized in earnings at the date an available-for-sale ("AFS") security qualifies for use of the equity method. MLOA adopted the revised guidance effective January 1, 2017. Adoption of this guidance did not have a material impact on MLOA’s financial statements. In March 2016, the FASB issued new guidance on improvements to employee share-based payment accounting. The amendment includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including income tax effects of share-based payments, minimum statutory tax withholding requirements and forfeitures. MLOA adopted the revised guidance effective January 1, 2017. Adoption of this guidance did not have a material impact on MLOA's financial statements. In February 2015, the FASB issued a new consolidation standard that makes targeted amendments to the VIE assessment, including guidance specific to the analysis of fee arrangements and related party relationships, modifies the guidance for the evaluation of limited partnerships and similar entities for consolidation to eliminate the presumption of general partner control, and ends the deferral that had been granted to certain investment companies for applying previous VIE guidance. MLOA adopted this guidance beginning January 1, 2016 and continuously updates its analysis as circumstances change or new entities are formed. Adoption of this guidance did not have a material impact on MLOA’s financial statements. In August 2014, the FASB issued new guidance which requires management to evaluate whether there is “substantial doubt” about the reporting entity’s ability to continue as a going concern and provide related footnote disclosures about those uncertainties, if they exist. The new guidance was effective for annual periods, ending after December 15, 2016 and interim periods thereafter. MLOA adopted the guidance effective December 31, 2016. Adoption of this guidance did not have a material impact on MLOA’s financial statements. Future Adoption of New Accounting Pronouncements In February 2018, the FASB issued new guidance that will permit, but not require, entities to reclassify to retained earnings tax effects “stranded” in AOCI resulting from the change in federal tax rate enacted by the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. An entity that elects this option must reclassify these stranded tax effects for all items in AOCI, including, but not limited to, AFS securities and employee benefits. Tax effects stranded in AOCI for other reasons, such as prior changes in tax law, may not be reclassified. While the new guidance provides entities the option to reclassify these amounts, new disclosures are required regardless of whether entities elect to do so. The new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for periods for which financial statements have not yet been issued or made available for issuance, including in the period the Act was signed into law (i.e., the reporting period including December 22, 2017). Election can be made either to apply the new guidance retrospectively to each period in which the effect of the Act is recognized or in the period of adoption. Management currently is evaluating the options provided for adopting this guidance and the potential impacts on MLOA’s financial statements. In August 2017, the FASB issued new guidance on accounting for hedging activities, intended to more closely align the financial statement reporting of hedging relationships to the economic results of an entity’s risk management activities. In addition, the new guidance makes certain targeted modifications to simplify the application of current hedge accounting guidance. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early application permitted. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date). All transition requirements and elections should be applied to derivatives positions and hedging relationships existing on the date of adoption. Management currently is evaluating the impact that adoption of this guidance will have on MLOA’s financial statements. In May 2017, the FASB issued guidance on share-based payments. The amendment provides clarity intended to reduce diversity in practice and the cost and complexity of accounting for changes to the terms or conditions of share-based payment awards. The new guidance is effective for interim and annual periods beginning after December 15, 2017, requires prospective application to awards modified on or after the date of adoption, and permits early adoption. This amendment is not expected to have a material impact on MLOA's financial statements. In March 2017, the FASB issued guidance that requires certain premiums on callable debt securities to be amortized to the earliest call date and is intended to better align interest income recognition with the manner in which market participants price these instruments. The new guidance is effective for interim and annual periods beginning after December 15, 2018 with early adoption permitted and is to be applied on a modified retrospective basis. Management currently is evaluating the impact that adoption of this guidance will have on MLOA’s financial statements. In March 2017, the FASB issued new guidance on the presentation of net periodic pension and post-retirement benefit costs that requires disaggregation of the service cost component from the other components of net benefit costs on the income statement. The service cost component will be presented with other employee compensation costs in "income from operations," and the remaining components will be reported separately outside of income from operations. While this standard does not change the rules for how benefits costs are measured, it limits the amount eligible for capitalization to the service cost component and, therefore, may require insurers and other entities that establish deferred assets related to the acquisition of new contracts to align its capitalization policies/practices with that limitation. The new guidance is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted and is to be applied retrospectively for changes in the income statement presentation of net benefit cost and prospectively for changes in capitalization eligibility. The guidance permits the use of amounts previously disclosed for the various components of net benefits cost as the basis for the retrospective change in the income statement presentation, and use of that approach must be disclosed as a "practical expedient" to determining how much of the various components of net benefits costs actually was reflected in historical income statements a result of capitalization and subsequent amortization. MLOA expects to utilize the practical expedient for adopting the retrospective change in its income statement presentation of net benefits costs. Based on the assessments performed to-date, adoption of this new guidance in first quarter 2018 is not expected to have a material impact on MLOA's financial statements. In August 2016, the FASB issued new guidance to simplify elements of cash flow classification. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied using a retrospective transition method. Adoption of this new guidance in first quarter 2018 is not expected to have a material impact on MLOA’s financial condition or results of operations. In June 2016, the FASB issued new guidance related to the accounting for credit losses on financial instruments. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted for annual periods beginning after December 15, 2018. Management is currently evaluating the impact that adoption of this guidance will have on the MLOA’s financial statements. In January 2016, the FASB issued new guidance related to the recognition and measurement of financial assets and financial liabilities. The new guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on AFS debt securities. The new guidance will require equity investments in unconsolidated entities, except those accounted for under the equity method, to be measured at fair value through earnings, thereby eliminating the AFS classification for equity securities with readily determinable fair values for which changes in fair value currently are reported in AOCI. Adoption of this new guidance is required in interim and annual periods beginning after December 15, 2017 and is to be applied on a modified retrospective basis. At December 31, 2017, MLOA has no common stock securities designated as AFS for which a cumulative effect adjustment to opening retained earnings would be required at January 1, 2018 to reclassify from AOCI the related net unrealized investment gains/(losses), net of income tax. MLOA’s investment assets held in the form of equity interests in unconsolidated entities, such as limited partnerships and limited liability companies, including hedge funds, private equity funds, and real estate-related funds, generally are accounted for under the equity method and will not be impacted by this new guidance. MLOA does not currently report any of its financial liabilities under the fair value option. Adoption of this new guidance in first quarter 2018 is not expected to have a material impact on MLOA’s financial condition or results of operations. In May 2014, the FASB issued new guidance that revises the recognition criteria for revenue arising from contracts with customers to provide goods or services, except when those revenue streams are from insurance contracts, leases, rights and obligations that are in the scope of certain financial instruments (i.e., derivative contracts) and guarantees other than product or service warranties. The new standard’s core principle is that revenue should be recognized when “control” of promised goods or services is transferred to customers and in an amount that reflects the consideration to which it expects to be entitled in exchange. Applying the new revenue recognition criteria generally will require more judgments and estimates than under current guidance in order to identify contractual performance obligations to customers, assess the roles of intermediaries in fulfilling those obligations, determine the amount of variable consideration to include in the transaction price, and allocate the transaction price to distinct performance obligations in bundled contracts. The new guidance is effective for interim and annual periods, beginning after December 15, 2017, with early adoption permitted. Transition to the new standard requires a retrospective approach but application is permitted either on a full or modified basis, the latter by recognition of a cumulative-effect adjustment to opening equity in the period of initial adoption. Revenues within the scope of this standard and subject to MLOA’s analysis largely relate to ceded commission and fees from the business reinsured with Protective Life. MLOA will adopt the new revenue recognition guidance on a modified retrospective basis beginning January 1, 2018, and its future financial statements will include required additional disclosures. Based on the assessments performed to-date, MLOA does not expect adoption of this new guidance to have a material impact on its financial condition or results of operations. |
Investments | Investments The carrying values of fixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in Other comprehensive income ("OCI"). The amortized cost of fixed maturities is adjusted for impairments in value deemed to be other than temporary which are recognized in Investment gains (losses), net. The redeemable preferred stock investments that are reported in fixed maturities include real estate investment trusts (“REIT”), perpetual preferred stock and redeemable preferred stock. These securities may not have a stated maturity, may not be cumulative and do not provide for mandatory redemption by the issuer. MLOA determines the fair values of fixed maturities and equity securities based upon quoted prices in active markets, when available, or through the use of alternative approaches when market quotes are not readily accessible or available. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. MLOA’s management, with the assistance of its investment advisors, monitors the investment performance of its portfolio and reviews AFS securities with unrealized losses for other-than-temporary impairments (“OTTI”). Integral to this review is an assessment made each quarter, on a security-by-security basis, by the Investments Under Surveillance (“IUS”) Committee, of various indicators of credit deterioration to determine whether the investment security is expected to recover. This assessment includes, but is not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity, and continued viability of the issuer and, for equity securities only, the intent and ability to hold the investment until recovery, and results in identification of specific securities for which OTTI is recognized. If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting OTTI is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage- and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value. Policy loans represent funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to MLOA from the policyholders. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies. Equity securities, are carried at fair value and are included in Other invested assets with changes in fair value reported in OCI. Units in AllianceBernstein L.P. (“AB”), a subsidiary of Holdings, are carried on the equity method and reported in Other invested assets. Short-term investments are reported at amortized cost that approximates fair value and would be included in Other invested assets. All securities owned, including United States government and agency securities and mortgage-backed securities, are reported in the financial statements on a trade date basis. Cash and cash equivalents includes cash on hand, amounts due from banks and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the recorded value is deemed to approximate fair value. |
Derivatives | Derivatives Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns, and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by MLOA include equity options and may be exchange-traded or contracted in the over-the-counter market. All derivative positions are carried in the balance sheets at fair value, generally by obtaining quoted market prices or through the use of valuation models. Freestanding derivative contracts are reported in the balance sheets either as assets within Other invested assets or as liabilities within Other liabilities. MLOA nets the fair value of all derivative financial instruments with counterparties for which a standardized “ISDA Master Agreement” and related Credit Support Annex (“CSA”) have been executed. MLOA uses derivatives to manage asset/liability risk but has not designated those economic relationships under the criteria to qualify for hedge accounting treatment. All changes in the fair value of MLOA freestanding derivative positions, including net receipts and payments, are included in Net derivative gains (losses) without considering changes in the fair value of the economically associated assets or liabilities. MLOA is a party to financial instruments and other contracts that contain “embedded” derivative instruments. At inception, MLOA assesses whether the economic characteristics of the embedded instrument are “clearly and closely related” to the economic characteristics of the remaining component of the “host contract” and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When those criteria are satisfied, the resulting embedded derivative is bifurcated from the host contract, carried in the balance sheets at fair value, and changes in its fair value are recognized immediately and captioned in the statements of income (loss) according to the nature of the related host contract. For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, MLOA instead may elect to carry the entire instrument at fair value. |
Commercial Mortgage Loans on Real Estate | Commercial Mortgage Loans on Real Estate: Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and valuation allowances. Valuation allowances are based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value if the loan is collateral dependent. However, if foreclosure is or becomes probable, the collateral value measurement method is used. For commercial mortgage loans, an allowance for credit loss is typically recommended when management believes it is probable that principal and interest will not be collected according to the contractual terms. Factors that influence management’s judgment in determining allowance for credit losses include the following: • Loan-to-value ratio - Derived from current loan balance divided by the fair market value of the property. An allowance for credit loss is typically recommended when the loan-to-value ratio is in excess of 100% . In the case where the loan-to-value is in excess of 100% , the allowance for credit loss is derived by taking the difference between the fair market value (less cost of sale) and the current loan balance. • Debt service coverage ratio - Derived from actual operating earnings divided by annual debt service. If the ratio is below 1.0 x, then the income from the property does not support the debt. • Occupancy - Criteria varies by property type but low or below market occupancy is an indicator of sub-par property performance. • Lease expirations - The percentage of leases expiring in the upcoming 12 to 36 months are monitored as a decline in rent and/or occupancy may negatively impact the debt service coverage ratio. In the case of single-tenant properties or properties with large tenant exposure, the lease expiration is a material risk factor. • Maturity - Mortgage loans that are not fully amortizing and have upcoming maturities within the next 12 to 24 months are monitored in conjunction with the capital markets to determine the borrower’s ability to refinance the debt and/or pay off the balloon balance. • Borrower/tenant related issues - Financial concerns, potential bankruptcy, or words or actions that indicate imminent default or abandonment of property. • Payment status (current vs. delinquent) - A history of delinquent payments may be a cause for concern. • Property condition - Significant deferred maintenance observed during lenders annual site inspections. • Other - Any other factors such as current economic conditions may call into question the performance of the loan. Mortgage loans also are individually evaluated quarterly by MLOA’s IUS Committee for impairment, including an assessment of related collateral value. Commercial mortgages 60 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages. Based on its monthly monitoring of mortgages, a class of potential problem mortgages are also identified, consisting of mortgage loans not currently classified as problem mortgages but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured. The decision whether to classify a performing mortgage loan as a potential problem involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property. For problem mortgage loans, a valuation allowance is established to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for mortgage loans determined to be non-performing as a result of the loan review process. A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan-specific portion of the loss allowance is based on MLOA’s assessment as to ultimate collectability of loan principal and interest. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors. Impaired mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses. Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is doubtful. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan has been restructured to where the collection of interest is considered likely. |
Net Investment Income (Loss), Investment Gains (Losses), Net and Unrealized Investment Gains (Losses) | Net Investment Income (Loss), Investment Gains (Losses), Net and Unrealized Investment Gains (Losses) Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the valuation allowances are included in Investment gains (losses), net. Unrealized investment gains (losses) on fixed maturities and equity securities designated as AFS held by MLOA are accounted for as a separate component of AOCI, net of related deferred income taxes and amounts attributable to DAC and VOBA related to variable life and investment-type products. Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities classified as AFS and do not reflect any changes in fair value of policyholders’ account balances and future policy benefits. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance established a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and identifies three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data. Level 3 Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability. MLOA defines fair value as the unadjusted quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are measured using present value or other valuation techniques. The fair value determinations are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such adjustments do not reflect any premium or discount that could result from offering for sale at one time MLOA’s entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value cannot be substantiated by direct comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument. Management is responsible for the determination of the value of investments carried at fair value and the supporting methodologies and assumptions. Under the terms of various service agreements, MLOA often utilizes independent valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual securities. These independent valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested. As further described below with respect to specific asset classes, these inputs include, but are not limited to, market prices for recent trades and transactions in comparable securities, benchmark yields, interest rate yield curves, credit spreads, quoted prices for similar securities, and other market-observable information, as applicable. Specific attributes of the security being valued also are considered, including its term, interest rate, credit rating, industry sector, and when applicable, collateral quality and other security- or issuer-specific information. When insufficient market observable information is available upon which to measure fair value, MLOA either will request brokers knowledgeable about these securities to provide a non-binding quote or will employ widely accepted internal valuation models. Fair values received from independent valuation service providers and brokers and those internally modeled or otherwise estimated are assessed for reasonableness. To validate reasonableness, prices also are internally reviewed by those with relevant expertise through comparison with directly observed recent market trades. |
Recognition of Insurance Income and Related Expenses | Recognition of Insurance Income and Related Expenses Deposits related to universal life ("UL"), variable universal life and investment-type contracts are reported as increases to policyholders’ account balances. Revenues from these contracts consist of fees assessed during the period against policyholders’ account balances for mortality charges, policy administration charges and surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policyholders’ account balances. Premiums from non-participating traditional life and annuity policies with life contingencies generally are recognized in income when due. Benefits and expenses are matched with such income so as to result in the recognition of profits over the life of the contracts. This match is accomplished by means of the provision for liabilities for future policy benefits and the deferral and subsequent amortization of DAC. For contracts with a single premium or a limited number of premium payments due over a significantly shorter period than the total period over which benefits are provided, premiums are recorded as revenue when due with any excess profit deferred and recognized in income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments. Premiums from individual health contracts are recognized as income over the period to which the premiums relate in proportion to the amount of insurance protection provided. |
DAC and VOBA | DAC and VOBA DAC. Acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business, reflecting incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation, including payroll fringe benefits and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts including commissions, underwriting, agency and policy issue expenses, are deferred. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to income. VOBA. VOBA, which arose from MLOA’s 2004 acquisition by AXA Financial, was established in accordance with purchase accounting guidance for business combinations. VOBA is the actuarially determined present value of estimated future gross profits from insurance contracts in force at the date of the acquisition. VOBA was amortized over the expected life of the contracts (up to 50 years from the date of issue) according to the type of contract using the methods described below as applicable. Amortization of VOBA is reported in Other operating costs and expenses in the statements of income (loss). Amortization Policy. For UL and investment type products, DAC and VOBA are amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Account fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC and VOBA are amortized using the present value of estimated assessments. The effect on the amortization of DAC and VOBA of updates to estimated gross profits or assessments is reflected in net income (loss) in the period such estimated gross profits or assessments are updated. A decrease in expected gross profits or assessments would accelerate DAC and VOBA amortization. Conversely, an increase in expected gross profits or assessments would slow DAC and VOBA amortization. The effect on the DAC asset that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in shareholder's equity as of the balance sheet dates. A significant assumption in the amortization of DAC and VOBA on variable and interest-sensitive life insurance relates to projected future Separate Account performance. Management sets estimated future gross profit or assessment assumptions related to Separate Account performance using a long-term view of expected average market returns by applying a reversion to the mean ("RTM") approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned resulting in higher expected future gross profits and lower DAC and VOBA amortization for the period. The opposite occurs when returns are lower than expected. In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. Based upon management’s current expectations of interest rates and future fund growth, MLOA updated its RTM assumption from 9.0% to 7.0% . The average gross long term return measurement start date was also updated to December 31, 2014. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. At December 31, 2017 , the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance was 7.0 % ( 5.63 % net of product weighted average Separate Account fees), and the gross maximum and minimum short-term annual rate of return limitations were 15.0 % ( 13.63 %, net of product weighted average Separate Account fees) and 0.0 % ( (1.37) %, net of product weighted average Separate Account fees), respectively. The maximum duration over which these rate limitations may be applied is 5 years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions. If actual market returns continue at levels that would result in assuming future market returns of 15.0 % for more than 5 years in order to reach the average gross long-term return estimate, the application of the 5 year maximum duration limitation would result in an acceleration of DAC amortization. Conversely, actual market returns resulting in assumed future market returns of 0.0% for more than 5 years would result in a required deceleration of DAC amortization. In addition, projections of future mortality assumptions related to variable and interest-sensitive life products are based on a long-term average of actual experience. This assumption is updated quarterly to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization. Other significant assumptions underlying gross profit estimates for UL and investment-type products relate to contract persistency and General Account investment spread. For some products, policyholders can elect to modify product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. These transactions are known as internal replacements. If such modification substantially changes the contract, the associated DAC is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. |
Deferred Cost of or Gain on Reinsurance | Deferred Cost of or Gain on Reinsurance MLOA currently cedes an in-force book of life insurance and annuity policies written primarily prior to 2004 to Protective Life Insurance Company (“Protective Life”). As a result of the reinsurance agreement MLOA recorded a deferred cost of reinsurance asset. The cost of or gain on reinsurance at the inception of a coinsurance treaty, defined as the difference between the initial coinsurance premium paid and the amount of the net liabilities relating to the underlying reinsured policies in accordance with the reinsurance agreement, net of the ceded commission received is deferred and amortized over the lives of the underlying policies. |
Policyholders' Account Balances and Future Policy Benefits | Policyholders’ Account Balances and Future Policy Benefits MLOA uses actuarial methods and assumptions that are consistently applied each reporting period and recognizes the best estimate of the ultimate liability. Policyholders’ account balances for variable life and investment-type contracts are equal to the policy account values. The policy account values represent an accumulation of gross premium payments plus credited interest less expense and mortality charges and withdrawals. MLOA had issued certain variable annuity products with a guaranteed minimum death benefit (“GMDB”) feature. MLOA also had issued certain variable annuity products that contained a guaranteed minimum income benefit (“GMIB”) feature which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase at then-current annuity purchase rates. This minimum lifetime annuity is based on predetermined annuity purchase rates applied to a GMIB base. Reserves for GMDB and GMIB obligations are calculated on the basis of actuarial assumptions related to projected benefits and related contract charges generally over the lives of the contracts using assumptions consistent with those used in estimating gross profits for purposes of amortizing DAC and VOBA. The determination of this estimated liability is based on models that involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Assumptions regarding Separate Account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a RTM approach, consistent with that used for DAC and VOBA amortization. There can be no assurance that actual experience will be consistent with management’s estimates. MLOA’s variable annuity contracts with GMDB and GMIB features in-force that guarantee one of the following: • Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals); • Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals); • Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages; or • Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit which may include a five -year or an annual reset. In connection with the reinsurance agreement with Protective Life, MLOA has reinsured 100% of the risk associated with variable annuity products with GMDB and GMIB features. Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Reinsurance recoverable balances were calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities. For non-participating traditional life insurance policies, future policy benefit liabilities are estimated using a net level premium method on the basis of actuarial assumptions as to mortality, persistency and interest established at policy issue. Assumptions established at policy issue as to mortality and persistency are based on MLOA’s experience that, together with interest and expense assumptions, includes a margin for adverse deviation. Benefit liabilities for traditional annuities during the accumulation period are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments. When the liabilities for future policy benefits plus the present value of expected future gross premiums for a product are insufficient to provide for expected future policy benefits and expenses for that product, DAC and VOBA are written off and thereafter, if required, a premium deficiency reserve is established by a charge to income. |
Liabilities for Unpaid Claims and Claim Expenses | Liabilities for unpaid claims and claim adjustment expenses are established for MLOA's employee benefits products which includes the following Group products: long-term and short-term disability, life insurance, vision, and dental. Unpaid claim and claim adjustment expenses consist of (1) claim reserves for known claims that are unpaid as of the balance sheet date; (2) Incurred But Not Reported reserves for claims where the insured event occurred but has not yet been reported to MLOA or the insured has not yet satisfied elimination period to be eligible for the benefits; and (3) claim adjustment expense reserves for settling these claims. MLOA determines Incurred But Not Reported reserves using loss ratio and completion factors methods. The claim reserves for the long-term disability claims are provided by a third party managing the claims on MLOA’s behalf and the claim reserves methodology is a present value of future benefits over the expected disability period determined using actuarial assumptions. The claim adjustment expense reserves are set based on the anticipated cost associated with claim administration expenses on the run-out of business. Interest is accreted and recognized in Policyholders' benefits in MLOA's statement of income. • For long-term disability ("LTD") the claim reserves for the reported claims are calculated as the present value of the net monthly LTD benefits (Social Security and other offsets may be estimated if unknown) and the best estimate probabilities of the claimant remaining disabled for a given benefit payment which are based on a termination rates table adjusted for experience. Should the offsets be estimated, they are estimated using the claimant’s salary, duration of disability and the probability of the offset award. The disability termination rates vary based on the insured’s age at disability, gender, elimination period, the duration of disability, social security status and the number of months remaining in the benefit period. The rates account for the probabilities of both recovery and death. The reserves vary with plan provisions such as monthly benefit, offsets, own occupation period, benefit duration, cost of living adjustment ("COLA"), and minimum and maximum benefits. The discount rate assumptions for these liabilities are set annually and are based on projected investment returns for the asset portfolios. The interest rate is locked in for each claimant based on the year of disability. • For short-term and long-term disability and group life liabilities the incurred but not reported reserves are determined using the expected loss ratio method, where the expected loss ratio is applied to the underwritten premiums to determine ultimate liabilities. • For dental and vision this liability is primarily calculated using completion factors, where these factors complete paid-to-date claims to the ultimate liability based on past experience. For short-term and long-term disability and group life liabilities the incurred but not reported reserves are determined using the expected loss ratio method, where the expected loss ratio is applied to the underwritten premiums to determine ultimate liabilities. |
Separate Accounts | Separate Accounts Generally, Separate Accounts established under Arizona State Insurance Law are not chargeable with liabilities that arise from any other business of MLOA. Separate Accounts assets are subject to General Account claims only to the extent Separate Accounts assets exceed Separate Accounts liabilities. Assets and liabilities of the Separate Accounts represent the net deposits and accumulated net investment income (loss) less fees, held primarily for the benefit of policyholders, and for which MLOA does not bear the investment risk. Separate Accounts’ assets and liabilities are shown on separate lines in the balance sheets. Assets held in Separate Accounts are reported at quoted market values or, where quoted values are not readily available or accessible for these securities, their fair value measures most often are determined through the use of model pricing that effectively discounts prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to policyholders of such Separate Accounts are offset within the same line in the statements of income (loss). For 2017 , 2016 and 2015 , investment results of such Separate Accounts were gains (losses) of $ 308 million, $ 52 million and $ (12) million, respectively. Deposits to Separate Accounts are reported as increases in Separate Accounts assets and liabilities and are not reported in revenues. Mortality, policy administration and surrender charges on all policies including those funded by Separate Accounts are included in revenues. MLOA reports the General Account’s interests in Separate Accounts as Other invested assets in the balance sheets. |
Income Taxes | Income Taxes AXA Financial and certain of its consolidated subsidiaries and affiliates, including MLOA, file a consolidated federal income tax return. MLOA provides for federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income tax assets and liabilities are recognized based on the difference between financial statement carrying amounts and income tax bases of assets and liabilities using enacted income tax rates and laws. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized. Under accounting for uncertainty in income taxes guidance, MLOA determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. Tax positions are then measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. As required under accounting for income taxes, MLOA determined reasonable estimates for certain effects of the Tax Cuts and Jobs Act enacted on December 22, 2017 and recorded those estimates as provisional amounts in the 2017 MLOA financial statements. In accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”), MLOA may make additional adjustments during 2018 (the measurement period) to the income tax balance sheet and income statement accounts as the U.S. Department of the Treasury issues further guidance and interpretations. |
ORGANIZATION (Tables)
ORGANIZATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revision of Prior Period Financial Statements | Revision of Prior Period Financial Statements In 2017, management identified errors in its previous financial statements. These errors primarily related to the calculation of policyholders’ benefit reserves, interest credited to policyholders' account balances and deferred policy acquisition costs ("DAC") amortization for certain variable and interest sensitive life products and misclassification of an intangible asset for business acquired from a third party. Management evaluated the impact of these errors and concluded they were not material to any previously reported annual financial statements. In order to improve the consistency and comparability of the financial statements, management revised the balance sheet as of December 31, 2016 and the related statements of income (loss), comprehensive income (loss), shareholder's equity and cash flows for the years ended December 31, 2016 and 2015 to include the revisions presented below. As Previously Reported Impact of Revisions As Revised December 31, December 31, December 31, 2016 2016 2016 (in millions) ASSETS Investments: Other invested assets $ 75 $ (7 ) $ 68 Total investments 1,377 (7 ) 1,370 Deferred policy acquisition costs 374 (21 ) 353 Current and deferred income tax receivables 27 (3 ) 24 Other assets 22 7 29 Total Assets $ 5,132 $ (24 ) $ 5,108 Liabilities: Policyholders’ account balances $ 2,403 $ (26 ) $ 2,377 Future policy benefits and other policyholders ’ liabilities 351 (4 ) 347 Total Liabilities 4,709 (30 ) 4,679 Equity: Retained earnings 91 6 97 Total shareholder's equity 423 6 429 Total Liabilities and Shareholder’s Equity $ 5,132 $ (24 ) $ 5,108 As Previously Reported Impact of Revisions As Revised Year Ended December 31, Year Ended December 31, Year Ended December 31, 2016 2015 2016 2015 2016 2015 (in millions) Statements of Income (Loss): Revenues: Policy charges and fee income $ 196 $ 152 $ (8 ) $ 1 $ 188 $ 153 Total revenues 250 201 (8 ) 1 242 202 Benefits and other deductions: Policyholders’ benefits 34 39 (5 ) 2 29 41 Interest credited to policyholders’ account balances 49 42 (6 ) (7 ) 43 35 Amortization of deferred policy acquisition costs, net (10 ) (73 ) 8 (3 ) (2 ) (76 ) Total benefits and other deductions 339 231 (3 ) (8 ) 336 223 Income (loss) from operations, before income taxes (89 ) (30 ) (5 ) 9 (94 ) (21 ) Income tax (expense) benefit 33 13 2 (3 ) 35 10 Net Income (Loss) $ (56 ) $ (17 ) $ (3 ) $ 6 $ (59 ) $ (11 ) Statements of Comprehensive Income (Loss): Net Income (loss) $ (56 ) $ (17 ) $ (3 ) $ 6 $ (59 ) $ (11 ) Comprehensive Income (Loss) $ (54 ) $ (29 ) $ (3 ) $ 6 $ (57 ) $ (23 ) As Previously Reported Impact of Revisions As Revised Year Ended December 31, Year Ended December 31, Year Ended December 31, 2016 2015 2016 2015 2016 2015 (in millions) Statements of Shareholder's Equity: Retained earnings, beginning of year $ 147 $ 164 $ 9 $ 3 $ 156 $ 167 Net income (loss) (56 ) (17 ) (3 ) 6 (59 ) (11 ) Retained earnings, end of year 91 147 6 9 97 156 Total Shareholder’s Equity, End of Year $ 423 $ 474 $ 6 $ 9 $ 429 $ 483 Statements of Cash flows: Cash flow from operating activities: Net income (loss) $ (56 ) $ (17 ) $ (3 ) $ 6 $ (59 ) $ (11 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Interest credited to policyholders’ account balances 49 42 (6 ) (7 ) 43 35 Policy charges and fee income (196 ) (152 ) 8 (1 ) (188 ) (153 ) Changes in: Deferred policy acquisition costs, net (10 ) (73 ) 8 (3 ) (2 ) (76 ) Future policy benefits (4 ) 10 (5 ) 2 (9 ) 12 Current and deferred income taxes (26 ) (13 ) (2 ) 3 (28 ) (10 ) Net cash provided by (used in) operating activities $ (191 ) $ (191 ) $ — $ — $ (191 ) $ (191 ) |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale Securities | The following table provides information relating to fixed maturities classified as AFS: Available-for-Sale Securities by Classification Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value OTTI in AOCI (1) (in millions) December 31, 2017: Fixed Maturity Securities: Public corporate $ 888 $ 21 $ 2 $ 907 $ — Private corporate 284 8 1 291 — U.S. Treasury, government and agency 232 1 1 232 — States and political subdivisions 5 — — 5 — Commercial mortgage-backed — — — — — Residential mortgage-backed — — — — Asset-backed (2) 12 — — 12 Redeemable preferred stock 4 — — 4 — Total at December 31, 2017 $ 1,425 $ 30 $ 4 $ 1,451 $ — December 31, 2016: Fixed Maturity Securities: Public corporate $ 819 $ 16 $ 8 $ 827 $ — Private corporate 205 5 2 208 — U.S. Treasury, government and agency 36 — 1 35 — States and political subdivisions 6 — — 6 — Commercial mortgage-backed 24 7 7 24 1 Redeemable preferred stock 9 — — 9 — Total at December 31, 2016 $ 1,099 $ 28 $ 18 $ 1,109 $ 1 (1) Amounts represent OTTI losses in AOCI, which were not included in income (loss) in accordance with current accounting guidance. (2) Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans. |
Investments Classified by Contractual Maturity Date | The contractual maturities of AFS fixed maturities at December 31, 2017 are shown in the table below. Bonds not due at a single maturity date have been included in the table in the final year of maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Available-for-Sale Fixed Maturity Securities Contractual Maturities at December 31, 2017 Amortized Cost Fair Value (in millions) Due in one year or less $ 19 $ 19 Due in years two through five 228 235 Due in years six through ten 798 813 Due after ten years 364 368 Subtotal 1,409 1,435 Asset-backed 12 12 Redeemable preferred stock 4 4 Total $ 1,425 $ 1,451 |
Available For Sale Fixed Maturities Proceeds Gross Gains And Gross Losses From Sales And Other Than Temporary Impairments | The following table shows proceeds from sales, gross gains (losses) from sales and OTTI for AFS fixed maturities during 2017 , 2016 and 2015 : December 31, 2017 2016 2015 (in millions) Proceeds from sales $ 325 $ 49 $ 19 Gross gains on sales $ 10 $ 1 $ — Gross losses on sales $ (7 ) $ — $ — Total OTTI $ — $ (3 ) $ (1 ) Credit losses recognized in net income (loss) $ — $ (3 ) $ (1 ) |
Fixed Maturities Credit Losses Impairments | The following table sets forth the amount of credit loss impairments on fixed maturity securities held by MLOA at the dates indicated and the corresponding changes in such amounts. Fixed Maturity Securities - Credit Loss Impairments 2017 2016 (in millions) Balances at January 1, $ (32 ) $ (42 ) Previously recognized impairments on securities that matured, paid, prepaid or sold 28 13 Impairments recognized this period on securities not previously impaired — (3 ) Balances at December 31, $ (4 ) $ (32 ) |
Unrealized Gain (Loss) on Investments | Net unrealized investment gains (losses) on fixed maturities and equity securities classified as AFS are included in the balance sheets as a component of AOCI. The table below presents these amounts as of the dates indicated: December 31, 2017 2016 (in millions) AFS Securities: Fixed maturity securities: With OTTI loss $ — $ 4 All other 26 6 Net Unrealized (Gains) Losses $ 26 $ 10 |
Unrealized Gain Loss On Investments With Other Than Temporary Impairment | The tables that follow below present a rollforward of net unrealized investment gains (losses) recognized in AOCI, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other: Net Unrealized Gains (Losses) on Fixed Maturity Securities with OTTI Losses Net Unrealized Gains (Losses) on Investments Deferred Income Tax Asset (Liability) AOCI Gain (Loss) Related to Net Unrealized Investment Gains(Losses) (in millions) Balance, January 1, 2017 $ 4 $ (2 ) $ 2 Net investment gains (losses) arising during the period (4 ) — (4 ) Reclassification adjustment for OTTI losses: Included in Net income (loss) — — — Impact of net unrealized investment gains (losses) on: Deferred income taxes — — — Balance, December 31, 2017 $ — $ (2 ) $ (2 ) Balance, January 1, 2016 $ 4 $ (2 ) $ 2 Net investment gains (losses) arising during the period (1 ) — (1 ) Reclassification adjustment for OTTI losses: Included in Net income (loss) 1 — 1 Impact of net unrealized investment gains (losses) on: Deferred income taxes — — — Balance, December 31, 2016 $ 4 $ (2 ) $ 2 |
Other Net Unrealized Investment Gains Losses In Accumulated Other Comprehensive Income | All Other Net Unrealized Investment Gains (Losses) in AOCI Net Unrealized Gains (Losses) on Investments DAC Deferred Income Tax Asset(Liability) AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses) (in millions) Balance, January 1, 2017 $ 6 $ — $ (1 ) $ 5 Net investment gains (losses) arising during the period 20 — — 20 Reclassification adjustment for OTTI losses: Included in Net income (loss) — — — — Impact of net unrealized investment gains (losses) on: DAC — (8 ) — (8 ) Deferred income taxes — — (4 ) (4 ) Balance, December 31, 2017 $ 26 $ (8 ) $ (5 ) $ 13 Balance, January 1, 2016 $ 4 $ (2 ) $ — $ 2 Net investment gains (losses) arising during the period (1 ) — — (1 ) Reclassification adjustment for OTTI losses: Included in Net income (loss) 3 — — 3 Impact of net unrealized investment gains (losses) on: DAC — 2 — 2 Deferred income taxes — — (1 ) (1 ) Balance, December 31, 2016 $ 6 $ — $ (1 ) $ 5 |
Schedule of Unrealized Loss on Investments | The following tables disclose the fair values and gross unrealized losses of the 112 issues at December 31, 2017 and the 168 issues at December 31, 2016 of fixed maturities that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the specified periods at the dates indicated: Less Than 12 Months 12 Months or Longer Total Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses (in millions) December 31, 2017 Fixed Maturity Securities: Public corporate $ 135 $ 1 $ 29 $ 1 $ 164 $ 2 Private corporate 45 — 23 1 68 1 U.S. Treasury, government and agency 50 1 6 — 56 1 Asset-backed 7 — — — 7 — Redeemable preferred stock 2 — — — 2 — Total $ 239 $ 2 $ 58 $ 2 $ 297 $ 4 December 31, 2016 Fixed Maturity Securities: Public corporate $ 292 $ 8 $ 12 $ — $ 304 $ 8 Private corporate 61 2 — — 61 2 U.S. Treasury, government and agency 21 1 — — 21 1 Commercial mortgage-backed 1 — 10 7 11 7 Redeemable preferred stock 9 — — — 9 — Total $ 384 $ 11 $ 22 $ 7 $ 406 $ 18 |
Investments in and Advances to Affiliates | The following table presents MLOA’s investment in 2.6 million units of AB (approximately 0.95% ownership) with a fair value of $ 65 million and $61 million at December 31, 2017 and 2016 , respectively. MLOA’s investment in AB, an affiliate, is included in Other invested assets: 2017 2016 (in millions) Balance at January 1, $ 64 $ 63 Equity in net income (loss) 6 6 Dividends received (6 ) (5 ) Balance at December 31, $ 64 $ 64 |
Equity Method Investments | The tables below detail the condensed balance sheets and statements of income (loss) of AB and MLOA’s equity investment and equity in income (loss) of AB. December 31, 2017 2016 (in millions) Balance Sheets: Total Assets $ 9,295 $ 8,740 Total Liabilities 4,630 4,279 Redeemable non-controlling interest 602 393 Total Partners’ Capital 4,063 4,068 Total Liabilities and Partners’ Capital $ 9,295 $ 8,740 MLOA’s Equity investment in AB $ 64 $ 64 2017 2016 2015 (in millions) Statements of Income (Loss): Total Revenues $ 3,299 $ 3,029 $ 3,021 Total Expenses 2,525 2,306 2,390 Net Income (Loss) $ 721 $ 695 $ 587 MLOA’s Equity in income (loss) of AB $ 6 $ 6 $ 5 |
Schedule of Derivative Instruments | The tables below present quantitative disclosures about MLOA’s derivative instruments, including those embedded in other contracts though required to be accounted for as derivative instruments. Derivative Instruments by Category Fair Value Notional Amount Asset Derivatives Liability Derivatives Gains (Losses) Reported In Income (Loss) (in millions) At or For the Year Ended, December 31, 2017: Freestanding derivatives: Equity contracts: (1) Options $ 1,058 $ 119 $ 30 $ 66 Collateral — — 90 — Net investment income (loss) 66 Embedded derivatives: MSO and IUL indexed features (2) (3) — — 88 (72 ) Balances, December 31, 2017 $ 1,058 $ 119 $ 208 $ (6 ) At or For the Year Ended, December 31, 2016: Freestanding derivatives: Equity contracts: (1) Options $ 776 $ 76 $ 20 $ 18 Collateral — — 58 — Net investment income (loss) 18 Embedded derivatives: MSO and IUL indexed features (2) (3) — — 53 (20 ) Balances, December 31, 2016 $ 776 $ 76 $ 131 $ (2 ) (1) Reported in Other invested assets in MLOA’s balance sheets. (2) MSO and IUL are reported in Future policyholders’ benefits and other policyholders’ liabilities in the balance sheets. (3) Reported in Net derivative gains (losses) in the statements of income (loss) |
Offsetting Assets And Liabilities | The following table presents information about MLOA’s offsetting of financial assets and liabilities and derivative instruments at December 31, 2017 . Offsetting of Financial Assets and Liabilities and Derivative Instruments At December 31, 2017 Gross Amounts Recognized Gross Amounts Offset in the Balance Sheets Net Amounts Presented in the Balance Sheets (in millions) ASSETS Description Derivatives: Equity contracts $ 119 $ 30 $ 89 Collateral — 90 (90 ) Total Derivatives, subject to an ISDA Master Agreement (1) 119 120 (1 ) Other financial assets 64 — 64 Other invested assets $ 183 $ 120 $ 63 LIABILITIES Description Derivatives: Equity contracts $ 30 $ 30 $ — Collateral 90 90 — Total Derivatives, subject to an ISDA Master Agreement (1) 120 120 — Other financial liabilities 72 — 72 Other liabilities $ 192 $ 120 $ 72 (1) All derivatives were subject to ISDA Master Agreements at December 31, 2017 . The following table presents information about MLOA’s offsetting of financial assets and liabilities and derivative instruments at December 31, 2016 . Offsetting of Financial Assets and Liabilities and Derivative Instruments At December 31, 2016 Gross Amounts Recognized Gross Amounts Offset in the Balance Sheets Net Amounts Presented in the Balance Sheets (in millions) ASSETS Description Derivatives: Equity contracts $ 76 $ 20 $ 56 Collateral — 58 (58 ) Total Derivatives, subject to an ISDA Master Agreement (1) 76 78 (2 ) Other financial instruments 70 — 70 Other invested assets $ 146 $ 78 $ 68 LIABILITIES Description Derivatives: Equity contracts $ 20 $ 20 $ — Total Derivatives, subject to an ISDA Master Agreement (1) 78 78 — Other financial liabilities 77 — 77 Other liabilities $ 155 $ 78 $ 77 (1) All derivatives were subject to ISDA Master Agreements at December 31, 2016 . |
Collateral Arrangements By Counterparty Not Offset In Consolidated Balance Sheets | The following table presents information about MLOA’s gross collateral amounts that are not offset in the balance sheets at December 31, 2017 . Collateral Amounts Offset in the Balance Sheets At December 31, 2017 Fair Value of Assets Collateral (Received)/Held Financial Instruments Cash Net Amounts (in millions) ASSETS Total derivatives $ 89 $ — $ (90 ) $ (1 ) Other financial assets 64 — — 64 Other invested assets $ 153 $ — $ (90 ) $ 63 The following table presents information about MLOA’s gross collateral amounts that are not offset in the balance sheets at December 31, 2016 . Gross Collateral Amounts Not Offset in the Balance Sheets At December 31, 2016 Fair Value of Assets Collateral (Received)/Held Financial Instruments Cash Net Amounts (in millions) ASSETS Total derivatives $ 56 $ — $ (58 ) $ (2 ) Other financial assets 70 — — 70 Other invested assets $ 126 $ — $ (58 ) $ 68 |
Investment Income | The following table breaks out Net investment income (loss) by asset category: 2017 2016 2015 (in millions) Fixed maturities $ 49 $ 43 $ 40 Mortgage loans on real estate 1 1 — Policy loans 1 1 1 Gross investment income (loss) 51 45 41 Investment expenses (3 ) (3 ) (3 ) Net Investment Income (Loss) $ 48 $ 42 $ 38 |
Realized Gain (Loss) on Investments | Investment gains (losses), net including changes in the valuation allowances and OTTI are as follows: 2017 2016 2015 (in millions) Fixed maturities $ — $ (4 ) $ (1 ) Investment Gains (Losses), Net $ — $ (4 ) $ (1 ) |
DEFERRED POLICY ACQUISITION C27
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Changes in deferred policy acquisition costs | Changes in deferred policy acquisition costs at December 31, 2017 and 2016 were as follows: December 31, 2017 2016 (in millions) Balance, beginning of year $ 353 $ 351 Capitalization of commissions, sales and issue expenses 109 103 Amortization (71 ) (101 ) Change in unrealized investment gains and losses (8 ) — Balance, End of Year $ 383 $ 353 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | Assets and liabilities measured at fair value on a recurring basis are summarized below. At December 31, 2017 and 2016 , no assets were required to be measured at fair value on a non-recurring basis. Fair value measurements are required on a non-recurring basis for certain assets, including goodwill and mortgage loans on real estate, only when an OTTI or other event occurs. When such fair value measurements are recorded, they must be classified and disclosed within the fair value hierarchy. MLOA recognizes transfers between valuation levels at the beginning of the reporting period. Fair Value Measurements Level 1 Level 2 Level 3 Total (in millions) December 31, 2017 Assets: Investments: Fixed maturity securities, available-for-sale: Public corporate $ — $ 907 $ — $ 907 Private corporate — 285 6 291 U.S. Treasury, government and agency — 232 — 232 States and political subdivisions — 5 — 5 Asset-backed — 12 — 12 Redeemable preferred stock 4 — — 4 Subtotal 4 1,441 6 1,451 Trading securities 1 — — 1 Options — 89 — 89 Cash equivalents 44 — — 44 Separate Accounts assets 1,999 14 — 2,013 Total Assets $ 2,048 $ 1,544 $ 6 $ 3,598 Liabilities: Contingent payment arrangements $ — $ — $ 4 $ 4 MSO and IUL indexed features’ liability — 88 — 88 Total Liabilities $ — $ 88 $ 4 $ 92 Fair Value Measurements Level 1 Level 2 Level 3 Total (in millions) December 31, 2016 Assets: Investments: Fixed maturity securities, available-for-sale: Public corporate $ — $ 827 $ — $ 827 Private corporate — 201 7 208 U.S. Treasury, government and agency — 35 — 35 States and political subdivisions — 6 — 6 Commercial mortgage-backed — — 24 24 Redeemable preferred stock 9 — — 9 Subtotal 9 1,069 31 1,109 Trading securities 1 — — 1 Options — 56 — 56 Cash equivalents 109 — — 109 Separate Accounts assets 1,732 14 — 1,746 Total Assets $ 1,851 $ 1,139 $ 31 $ 3,021 Liabilities: Contingent payment arrangements $ — $ — $ 7 $ 7 MSO and IUL indexed features’ liability — 53 — 53 Total Liabilities $ — $ 53 $ 7 $ 60 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The table below presents a reconciliation for all Level 3 assets and liabilities at December 31, 2017 , 2016 and 2015 respectively. Level 3 Instruments Fair Value Measurements Corporate Commercial Mortgage- backed Contingent Payment Arrangement (in millions) Balance, January 1, 2017 $ 7 $ 24 $ 7 Total gains (losses), realized and unrealized included in: Income (loss) as: Investment gains (losses), net — 1 — Other comprehensive income (loss) — — — Purchases — — — Sales (1 ) (25 ) — Change in estimate — — (3 ) Balance, December 31, 2017 $ 6 $ — $ 4 Balance, January 1, 2016 $ 8 $ 31 $ — Total gains (losses), realized and unrealized included in: Income (loss) as: Investment gains (losses), net — (4 ) — Other comprehensive income (loss) — 1 — Purchases — — 7 Sales (1 ) (4 ) — Balance, December 31, 2016 $ 7 $ 24 $ 7 Balance, January 1, 2015 $ 8 $ 26 $ — Total gains (losses), realized and unrealized included in: Income (loss) as: Investment gains (losses), net — (2 ) — Other comprehensive income (loss) — 8 — Sales (1 ) (1 ) — Transfers into Level 3 (1) 1 — — Balance, December 31, 2015 $ 8 $ 31 $ — (1) Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values. |
Fair Value Assets Unrealized Gains Losses By Category For Level 3 Assets And Liabilities Still Held | The table below details changes in unrealized gains (losses) for 2017 , 2016 and 2015 by category for Level 3 assets still held at December 31, 2017 , 2016 and 2015, respectively. OCI (in millions) Held as of December 31, 2017: Change in unrealized gains (losses): Fixed maturity securities, available-for-sale: Commercial mortgage-backed $ — Total $ — Held as of December 31, 2016: Change in unrealized gains (losses): Fixed maturity securities, available-for-sale: Commercial mortgage-backed $ 1 Total $ 1 Held as of December 31, 2015: Change in unrealized gains (losses): Fixed maturity securities, available-for-sale: Corporate $ (1 ) Commercial mortgage-backed 8 Total $ 7 |
Fair Value Disclosure Financial Instruments Not Carried At Fair Value | The carrying values and fair values at December 31, 2017 and 2016 for financial instruments not otherwise disclosed in Note 3 are presented in the table below. Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guarantees and investment contracts and pension and other postretirement obligations. Carrying Value Fair Value Level 1 Level 2 Level 3 Total (in millions) December 31, 2017 Mortgage loans on real estate $ 17 $ — $ — $ 17 $ 17 Policy Loans 185 — — 224 224 Policyholders liabilities: Investment contracts 153 — — 156 156 December 31, 2016 Mortgage loans on real estate $ 17 $ — $ — $ 16 $ 16 Policy Loans 176 — — 210 210 Policyholders liabilities: Investment contracts 168 — — 170 170 |
LIABILITIES FOR UNPAID CLAIMS29
LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Insurance [Abstract] | |
Long-Term Disability Development Tables | The table below presents information about incurred and paid claims development as of December 31, 2017, net of reinsurance, cumulative claims frequency, and total incurred but not reported liabilities (“IBNR”) for MLOA’s long-term disability business. Cumulative Paid Claims, Net of Reinsurance 2017 Incurral Year (in millions) 2017 $ 0.1 Cumulative long-term disability paid claims $ 0.1 Incurred Claims (undiscounted runout, net of reinsurance) 2017 IBNR Claim Frequency Incurral Year (in millions) 2017 $ 2.1 $ 0.7 56 Cumulative long-term disability incurred claims $ 2.1 $ 0.7 |
Schedules of Liability for Unpaid Claims and Claims Adjustment Expense | The following table reconciles the long-term disability net incurred and paid claims development table to the liability for unpaid claims and claim expenses in MLOA’s balance sheet as of December 31, 2017. 2017 (in millions) Long-Term Disability Claim Development Table, net of reinsurance Undiscounted Incurred Claims, net of reinsurance $ 2.1 Subtract Cumulative Paid Claims, net of reinsurance (0.1 ) Subtract Impact of Discounting, net of reinsurance (0.3 ) Liabilities for unpaid claim and claim expense, net of reinsurance $ 1.7 Unpaid Claims and Claim Expenses, net of reinsurance Liabilities for unpaid claim and claim expense, net of reinsurance $ 1.7 Other short-duration contracts, net of reinsurance 4.8 Total liabilities for unpaid claim and claim expense, net of reinsurance $ 6.5 Reinsurance Recoverable on unpaid claims Long-term disability $ 2.1 Other short-duration contracts 1.3 Total Reinsurance Recoverable $ 3.4 Total liability for unpaid claim and claim expense $ 9.9 The liability for unpaid claims and claim expenses as of December 31, 2017 is as follows, the liability for unpaid claims and claim expenses as of December 31, 2016 was not material. The liability for unpaid claims and claim expenses is recorded in Future policy benefits and other policyholders’ liabilities in MLOA's balance sheet: 2017 (in millions) Group Employee Benefits $ 9.9 The following table shows a rollforward of the liability for unpaid claims and claim expenses: 2017 (in millions) Gross Balance at January 1, 2017 $ 1.1 Less Reinsurance 0.1 Net Balance at January 1, 2017 $ 1.0 Incurred Claims (net) Related to: Current Year $ 18.5 Prior Year (0.7 ) Total Incurred $ 17.8 Paid Claims (net) Related to: Current Year $ 12.1 Prior Year 0.2 Total Paid $ 12.3 Net Balance at December 31, 2017 $ 6.5 Add Reinsurance 3.4 Gross Balance at December 31, 2017 $ 9.9 |
REINSURANCE (Tables)
REINSURANCE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Schedule Of Effect Of Reinsurance | The following table summarizes the effect of reinsurance: 2017 2016 2015 (in millions) Direct policy charges and fee income $ 243 $ 249 $ 207 Reinsurance assumed — — — Reinsurance ceded (63 ) (61 ) (54 ) Policy charges and fee income $ 180 $ 188 $ 153 Direct premiums $ 59 $ 38 $ 39 Reinsurance assumed 3 3 1 Reinsurance ceded (39 ) (37) (39) Premiums $ 23 $ 4 $ 1 Direct policyholders' benefits $ 163 $ 139 $ 189 Reinsurance assumed 1 2 1 Reinsurance ceded (110 ) (112 ) (149 ) Policyholders' benefits $ 54 $ 29 $ 41 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Summary Of Income Tax Expense Benefit | A summary of the income tax (expense) benefit in the statements of income (loss) follows: 2017 2016 2015 (in millions) Income tax (expense) benefit: Current (expense) benefit $ (1 ) $ 9 $ 5 Deferred (expense) benefit 8 26 5 Total $ 7 $ 35 $ 10 |
Schedule of Components of Income Tax Expense (Benefit) | The sources of the difference and their tax effects are as follows: 2017 2016 2015 (in millions) Expected income tax (expense) benefit $ 23 $ 33 $ 9 Dividends received deduction 2 2 1 Change in tax law (18 ) — — Income Tax (Expense) Benefit $ 7 $ 35 $ 10 |
Schedule of Deferred Tax Assets and Liabilities | The components of the net deferred income taxes are as follows: December 31, 2017 December 31, 2016 Assets Liabilities Assets Liabilities (in millions) Reserves and reinsurance $ 64 $ — $ 101 $ — DAC — 49 — 81 Investments 5 — — 11 Other 9 — 13 — Total $ 78 $ 49 $ 114 $ 92 |
Unrecognized Tax Benefits Reconciliation | A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows: 2017 2016 2015 (in millions) Balance, beginning of year $ 4 $ 7 $ 6 Additions/(Subtraction) for tax positions of prior years — (3 ) 1 Balance, End of Year $ 4 $ 4 $ 7 |
ACCUMULATED OTHER COMPREHENSI32
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The balances for the past three years follow: December 31, 2017 2016 2015 (in millions) Unrealized gains (losses) on investments, net of adjustments $ 12 $ 7 $ 5 Total Accumulated Other Comprehensive Income (Loss) $ 12 $ 7 $ 5 |
Comprehensive Income (Loss) | The components of OCI for the past three years follow: December 31, 2017 2016 2015 (in millions) Change in net unrealized gains (losses) on investments: Net unrealized gains (losses) arising during the year $ 12 $ (1 ) $ (13 ) (Gains) losses reclassified into net income (loss) during the year (1) — 3 — Change in net unrealized gains (losses) on investments 12 2 (13 ) Adjustments for DAC and Other (7 ) — 1 Other Comprehensive Income (Loss), net of adjustments and (net of deferred income tax expense (benefit) of $1, $1 and $(6) $ 5 $ 2 $ (12 ) (1) See “Reclassification adjustments” in Note 3. Reclassification amounts presented net of income tax expense (benefit) of $ 0 million, $1 million and $0 million for 2017 , 2016 and 2015 , respectively. |
ORGANIZATION - REVISION OF PRIO
ORGANIZATION - REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS - BALANCE SHEET (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Investments: | |||
Other invested assets | $ 63 | $ 68 | |
Total investments | 1,716 | 1,370 | |
Deferred policy acquisition costs | 383 | 353 | $ 351 |
Current and deferred income tax receivables | 22 | 24 | |
Other assets | 29 | 29 | |
Total Assets | 5,584 | 5,108 | |
LIABILITIES | |||
Policyholders’ account balances | 2,631 | 2,377 | |
Future policy benefits and other policyholders’ liabilities | 358 | 347 | |
Total liabilities | 5,208 | 4,679 | |
Equity: | |||
Retained earnings | 36 | 97 | |
Total shareholder's equity | 376 | 429 | 483 |
Total Liabilities and Shareholder’s Equity | $ 5,584 | 5,108 | |
Scenario, Previously Reported | |||
Investments: | |||
Other invested assets | 75 | ||
Total investments | 1,377 | ||
Deferred policy acquisition costs | 374 | ||
Current and deferred income tax receivables | 27 | ||
Other assets | 22 | ||
Total Assets | 5,132 | ||
LIABILITIES | |||
Policyholders’ account balances | 2,403 | ||
Future policy benefits and other policyholders’ liabilities | 351 | ||
Total liabilities | 4,709 | ||
Equity: | |||
Retained earnings | 91 | ||
Total shareholder's equity | 423 | 474 | |
Total Liabilities and Shareholder’s Equity | 5,132 | ||
Restatement Adjustment | |||
Investments: | |||
Other invested assets | (7) | ||
Total investments | (7) | ||
Deferred policy acquisition costs | (21) | ||
Current and deferred income tax receivables | (3) | ||
Other assets | 7 | ||
Total Assets | (24) | ||
LIABILITIES | |||
Policyholders’ account balances | (26) | ||
Future policy benefits and other policyholders’ liabilities | (4) | ||
Total liabilities | (30) | ||
Equity: | |||
Retained earnings | 6 | ||
Total shareholder's equity | 6 | $ 9 | |
Total Liabilities and Shareholder’s Equity | $ (24) |
ORGANIZATION - REVISION OF PR34
ORGANIZATION - REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS - STATEMENTS OF INCOME (LOSS) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
REVENUES | |||
Policy charges and fee income | $ 180 | $ 188 | $ 153 |
Total revenues | 258 | 242 | 202 |
BENEFITS AND OTHER DEDUCTIONS | |||
Policyholders’ benefits | 54 | 29 | 41 |
Interest credited to policyholders’ account balances | 41 | 43 | 35 |
Amortization of deferred policy acquisition costs, net | (38) | (2) | (76) |
Total benefits and other deductions | 326 | 336 | 223 |
Income (loss) from operations, before income taxes | (68) | (94) | (21) |
Income tax (expense) benefit | 7 | 35 | 10 |
Net Income (Loss) | (61) | (59) | (11) |
Statements of Comprehensive Income (Loss): | |||
Comprehensive Income (Loss) | $ (56) | (57) | (23) |
Scenario, Previously Reported | |||
REVENUES | |||
Policy charges and fee income | 196 | 152 | |
Total revenues | 250 | 201 | |
BENEFITS AND OTHER DEDUCTIONS | |||
Policyholders’ benefits | 34 | 39 | |
Interest credited to policyholders’ account balances | 49 | 42 | |
Amortization of deferred policy acquisition costs, net | (10) | (73) | |
Total benefits and other deductions | 339 | 231 | |
Income (loss) from operations, before income taxes | (89) | (30) | |
Income tax (expense) benefit | 33 | 13 | |
Net Income (Loss) | (56) | (17) | |
Statements of Comprehensive Income (Loss): | |||
Comprehensive Income (Loss) | (54) | (29) | |
Restatement Adjustment | |||
REVENUES | |||
Policy charges and fee income | (8) | 1 | |
Total revenues | (8) | 1 | |
BENEFITS AND OTHER DEDUCTIONS | |||
Policyholders’ benefits | (5) | 2 | |
Interest credited to policyholders’ account balances | (6) | (7) | |
Amortization of deferred policy acquisition costs, net | 8 | (3) | |
Total benefits and other deductions | (3) | (8) | |
Income (loss) from operations, before income taxes | (5) | 9 | |
Income tax (expense) benefit | 2 | (3) | |
Net Income (Loss) | (3) | 6 | |
Statements of Comprehensive Income (Loss): | |||
Comprehensive Income (Loss) | $ (3) | $ 6 |
ORGANIZATION - REVISION OF PR35
ORGANIZATION - REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS - STATEMENTS OF EQUITY AND STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Stockholders' Equity [Abstract] | ||||
Shareholder's equity | $ 376 | $ 429 | $ 483 | |
Net Income (Loss) | (61) | (59) | (11) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||
Interest credited to policyholders’ account balances | 41 | 43 | 35 | |
Policy charges and fee income | (180) | (188) | (153) | |
Changes in: | ||||
Deferred policy acquisition costs, net | (38) | (2) | (76) | |
Future policy benefits | 10 | (9) | 12 | |
Current and deferred income taxes | 2 | (28) | (10) | |
Net cash provided by (used in) operating activities | (146) | (191) | (191) | |
Scenario, Previously Reported | ||||
Statement of Stockholders' Equity [Abstract] | ||||
Shareholder's equity | 423 | 474 | ||
Net Income (Loss) | (56) | (17) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||
Interest credited to policyholders’ account balances | 49 | 42 | ||
Policy charges and fee income | (196) | (152) | ||
Changes in: | ||||
Deferred policy acquisition costs, net | (10) | (73) | ||
Future policy benefits | (4) | 10 | ||
Current and deferred income taxes | (26) | (13) | ||
Net cash provided by (used in) operating activities | (191) | (191) | ||
Restatement Adjustment | ||||
Statement of Stockholders' Equity [Abstract] | ||||
Shareholder's equity | 6 | 9 | ||
Net Income (Loss) | (3) | 6 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||
Interest credited to policyholders’ account balances | (6) | (7) | ||
Policy charges and fee income | 8 | (1) | ||
Changes in: | ||||
Deferred policy acquisition costs, net | 8 | (3) | ||
Future policy benefits | (5) | 2 | ||
Current and deferred income taxes | (2) | 3 | ||
Net cash provided by (used in) operating activities | 0 | 0 | ||
Retained Earnings | ||||
Statement of Stockholders' Equity [Abstract] | ||||
Shareholder's equity | 36 | 97 | 156 | $ 167 |
Net Income (Loss) | $ (61) | (59) | (11) | |
Retained Earnings | Scenario, Previously Reported | ||||
Statement of Stockholders' Equity [Abstract] | ||||
Shareholder's equity | 91 | 147 | 164 | |
Net Income (Loss) | (56) | (17) | ||
Retained Earnings | Restatement Adjustment | ||||
Statement of Stockholders' Equity [Abstract] | ||||
Shareholder's equity | 6 | 9 | $ 3 | |
Net Income (Loss) | $ (3) | $ 6 |
SIGNIFICANT ACCOUNTING POLICI36
SIGNIFICANT ACCOUNTING POLICIES SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale securities | $ 1,451,000,000 | $ 1,109,000,000 | |
Variable annuity contracts, roll-up benefit period | 5 years | ||
Percentage of reinsured risk associated with variable annuity products | 100.00% | ||
Gain (loss) recognized on assets transferred to separate account | $ 308,000,000 | $ 52,000,000 | $ (12,000,000) |
Common Stock | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale securities | $ 0 |
SIGNIFICANT ACCOUNTING POLICI37
SIGNIFICANT ACCOUNTING POLICIES - COMMERCIAL MORTGAGE LOANS ON REAL ESTATE (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Mortgage Loans on Real Estate, Write-down or Reserve, Management Judgment Factor [Line Items] | |
Loan-to-value ratio for allowance to be recommended | 100.00% |
Debt service coverage ratio threshold | 1 |
Mortgage loans, number of days past due for a mortgage to be identified as a problem mortgage | 60 days |
Minimum | |
Mortgage Loans on Real Estate, Write-down or Reserve, Management Judgment Factor [Line Items] | |
Lease expiration period | 12 months |
Mortgage loan maturity period for monitoring | 12 months |
Maximum | |
Mortgage Loans on Real Estate, Write-down or Reserve, Management Judgment Factor [Line Items] | |
Lease expiration period | 36 months |
Mortgage loan maturity period for monitoring | 24 months |
SIGNIFICANT ACCOUNTING POLICI38
SIGNIFICANT ACCOUNTING POLICIES - DAC AND VOBA (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2014 | Dec. 31, 2013 | |
DAC [Abstract] | |||
VOBA amortization period maximum (in years) | 50 years | ||
Mean (RTM) assumption (as a percent) | 7.00% | 9.00% | |
Average gross short-term and long-term annual return estimate (as a percent) | 7.00% | ||
Average net short-term and long-term annual return estimate (as a percent) | 5.63% | ||
Gross maximum short-term annual rate of return limitations (as a percent) | 15.00% | ||
Net maximum short-term annual rate of return limitations (as a percent) | 13.63% | ||
Gross minimum short-term annual rate of return limitations (as a percent) | 0.00% | ||
Net minimum short-term annual rate of return limitations (as a percent) | (1.37%) | ||
Term of rate limitations (in years) | 5 years |
SIGNIFICANT ACCOUNTING POLICI39
SIGNIFICANT ACCOUNTING POLICIES - ASSUMPTIONS UPDATES AND MODEL CHANGES (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||
Policyholders’ benefits | $ (54) | $ (29) | $ (41) | ||
Amortization of deferred policy acquisition costs | 71 | 101 | |||
Policy charges and fee income | 180 | 188 | 153 | ||
Income (loss), before income taxes | (68) | (94) | (21) | ||
Net income (loss) | (61) | $ (59) | (11) | ||
Mean (RTM) assumption (as a percent) | 7.00% | 9.00% | |||
2017 Assumption Updates | |||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||
Policyholders’ benefits | 7 | ||||
Amortization of deferred policy acquisition costs | 21 | ||||
Policy charges and fee income | 4 | ||||
Income (loss), before income taxes | (10) | ||||
Net income (loss) | (7) | ||||
2016 Assumption Updates | |||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||
Policyholders’ benefits | 15 | ||||
Amortization of deferred policy acquisition costs | 67 | ||||
Policy charges and fee income | 30 | ||||
Income (loss), before income taxes | (22) | ||||
Net income (loss) | $ (14) | ||||
Update RTM Assumptions | |||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||
Amortization of deferred policy acquisition costs | 8 | ||||
Income (loss), before income taxes | (12) | ||||
Net income (loss) | $ (8) | ||||
Mean (RTM) assumption (as a percent) | 7.00% | 9.00% | |||
VISL | Update RTM Assumptions | |||||
Quantifying Misstatement in Current Year Financial Statements [Line Items] | |||||
Policyholders’ benefits | $ (4) |
INVESTMENTS (AVAILABLE-FOR-SALE
INVESTMENTS (AVAILABLE-FOR-SALE SECURITIES) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Fixed maturity securities, fair value | $ 1,451 | $ 1,109 | |
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
Due in one year or less, Amortized Cost | 19 | ||
Due in years two through five, Amortized Cost | 228 | ||
Due in years six through ten, Amortized Cost | 798 | ||
Due after ten years, Amortized Cost | 364 | ||
Subtotal | 1,409 | ||
Debt Maturities, Amortized Cost Basis | 1,425 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
Due in one year or less, Fair Value | 19 | ||
Due in years two through five, Fair Value | 235 | ||
Due in years six through ten, Fair Value | 813 | ||
Due after ten years, Fair Value | 368 | ||
Subtotal | 1,435 | ||
Available For Sale Securities, Debt Maturities, Fair Value | 1,451 | ||
Available For Sale Fixed Maturities Proceeds Gross Gains And Gross Losses From Sales And Other Than Temporary Impairments [Abstract] | |||
Proceeds from sales | 325 | 49 | $ 19 |
Gross gains on sales | 10 | 1 | 0 |
Gross losses on sales | (7) | 0 | 0 |
Total OTTI | 0 | (3) | (1) |
Credit losses recognized in net income (loss) | 0 | (3) | (1) |
Fixed Maturities - Credit Loss Impairments | |||
Balance at January 1, | (32) | (42) | |
Previously recognized impairments on securities that matured, paid, prepaid or sold | 28 | 13 | |
Impairments recognized this period on securities not previously impaired | 0 | (3) | |
Balances at December 31, | (4) | (32) | $ (42) |
Public corporate | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 888 | 819 | |
Gross Unrealized Gains | 21 | 16 | |
Gross Unrealized Losses | 2 | 8 | |
Fixed maturity securities, fair value | 907 | 827 | |
OTTI in AOCI | 0 | 0 | |
Private corporate | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 284 | 205 | |
Gross Unrealized Gains | 8 | 5 | |
Gross Unrealized Losses | 1 | 2 | |
Fixed maturity securities, fair value | 291 | 208 | |
OTTI in AOCI | 0 | 0 | |
U.S. Treasury, government and agency | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 232 | 36 | |
Gross Unrealized Gains | 1 | 0 | |
Gross Unrealized Losses | 1 | 1 | |
Fixed maturity securities, fair value | 232 | 35 | |
OTTI in AOCI | 0 | 0 | |
States and political subdivisions | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 5 | 6 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | |
Fixed maturity securities, fair value | 5 | 6 | |
OTTI in AOCI | 0 | 0 | |
Commercial mortgage-backed | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 0 | 24 | |
Gross Unrealized Gains | 0 | 7 | |
Gross Unrealized Losses | 0 | 7 | |
Fixed maturity securities, fair value | 0 | 24 | |
OTTI in AOCI | 0 | 1 | |
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
AFS without a single maturity date, amortized cost | 12 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
AFS without a single maturity date, Fair Value | 12 | ||
Residential mortgage-backed | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 0 | ||
Gross Unrealized Gains | 0 | ||
Gross Unrealized Losses | 0 | ||
Fixed maturity securities, fair value | 0 | ||
OTTI in AOCI | |||
Asset-backed | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 12 | ||
Gross Unrealized Gains | 0 | ||
Gross Unrealized Losses | 0 | ||
Fixed maturity securities, fair value | 12 | ||
OTTI in AOCI | |||
Redeemable preferred stock | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 4 | 9 | |
Gross Unrealized Gains | 0 | 0 | |
Gross Unrealized Losses | 0 | 0 | |
Fixed maturity securities, fair value | 4 | 9 | |
OTTI in AOCI | 0 | 0 | |
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |||
AFS without a single maturity date, amortized cost | 4 | ||
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |||
AFS without a single maturity date, Fair Value | 4 | ||
Fixed Maturities | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 1,425 | 1,099 | |
Gross Unrealized Gains | 30 | 28 | |
Gross Unrealized Losses | 4 | 18 | |
Fixed maturity securities, fair value | 1,451 | 1,109 | |
OTTI in AOCI | 0 | 1 | |
Fixed Maturities - Credit Loss Impairments | |||
Unrealized investment gains (losses) | 26 | 10 | |
With OTTI loss | Fixed Maturities | |||
Fixed Maturities - Credit Loss Impairments | |||
Unrealized investment gains (losses) | 0 | 4 | |
All other | Fixed Maturities | |||
Fixed Maturities - Credit Loss Impairments | |||
Unrealized investment gains (losses) | $ 26 | $ 6 |
INVESTMENTS (NET UNREALIZED GAI
INVESTMENTS (NET UNREALIZED GAINS (LOSSES) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | $ 429 | $ 483 |
Balance, end of year | 376 | 429 |
AOCI | Net Unrealized Gains (Losses) on Investments | With OTTI loss | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | 4 | 4 |
Balance, end of year | 0 | 4 |
AOCI | Net Unrealized Gains (Losses) on Investments | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | 6 | 4 |
Balance, end of year | 26 | 6 |
AOCI | DAC | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | 0 | (2) |
Balance, end of year | (8) | 0 |
AOCI | Deferred Income Tax Asset (Liability) | With OTTI loss | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | (2) | (2) |
Balance, end of year | (2) | (2) |
AOCI | Deferred Income Tax Asset (Liability) | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | (1) | 0 |
Balance, end of year | (5) | (1) |
AOCI | AOCI Gain (Loss) Related to Net Unrealized Investment Gains(Losses) | With OTTI loss | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | 2 | 2 |
Balance, end of year | (2) | 2 |
AOCI | AOCI Gain (Loss) Related to Net Unrealized Investment Gains(Losses) | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Balance, beginning of year | 5 | 2 |
Balance, end of year | 13 | 5 |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | Net Unrealized Gains (Losses) on Investments | With OTTI loss | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Net investment gains (losses) arising during the period | (4) | (1) |
Reclassification adjustment included in Net income (loss) | 0 | 1 |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | Net Unrealized Gains (Losses) on Investments | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Net investment gains (losses) arising during the period | 20 | (1) |
Reclassification adjustment included in Net income (loss) | 0 | 3 |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | DAC | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Impact of net unrealized investment gains (losses) on DAC and VOBA | (8) | 2 |
Impact of net unrealized investment gains (losses) | 0 | |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | Deferred Income Tax Asset (Liability) | With OTTI loss | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Impact of net unrealized investment gains (losses) | 0 | 0 |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | Deferred Income Tax Asset (Liability) | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Impact of net unrealized investment gains (losses) | (4) | (1) |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | AOCI Gain (Loss) Related to Net Unrealized Investment Gains(Losses) | With OTTI loss | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Net investment gains (losses) arising during the period | (4) | (1) |
Reclassification adjustment included in Net income (loss) | 0 | 1 |
Impact of net unrealized investment gains (losses) | 0 | 0 |
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | AOCI Gain (Loss) Related to Net Unrealized Investment Gains(Losses) | All other | ||
Net Unrealized Investment Gains Losses Recognized In Aoci Roll Forward [Abstract] | ||
Net investment gains (losses) arising during the period | 20 | (1) |
Reclassification adjustment included in Net income (loss) | 0 | 3 |
Impact of net unrealized investment gains (losses) on DAC and VOBA | (8) | 2 |
Impact of net unrealized investment gains (losses) | $ (4) | $ (1) |
INVESTMENTS (CONTINUOUS UNREALI
INVESTMENTS (CONTINUOUS UNREALIZED LOSS POSITION) (Details) $ in Millions | Dec. 31, 2017USD ($)security | Dec. 31, 2016USD ($)security |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Number of fixed maturities | security | 112 | 168 |
The carrying value of fixed maturities non-income producing | $ 0 | |
Public corporate | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 135 | $ 292 |
Less than 12 Months, Gross Unrealized Losses | 1 | 8 |
12 Months or Longer, Fair Value | 29 | 12 |
12 Months or Longer, Gross Unrealized Losses | 1 | 0 |
Total Fair Value | 164 | 304 |
Total, Gross Unrealized Losses | 2 | 8 |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Amortized cost | 888 | 819 |
Private corporate | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 45 | 61 |
Less than 12 Months, Gross Unrealized Losses | 0 | 2 |
12 Months or Longer, Fair Value | 23 | 0 |
12 Months or Longer, Gross Unrealized Losses | 1 | 0 |
Total Fair Value | 68 | 61 |
Total, Gross Unrealized Losses | 1 | 2 |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Amortized cost | 284 | 205 |
U.S. Treasury, government and agency | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 50 | 21 |
Less than 12 Months, Gross Unrealized Losses | 1 | 1 |
12 Months or Longer, Fair Value | 6 | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 | 0 |
Total Fair Value | 56 | 21 |
Total, Gross Unrealized Losses | 1 | 1 |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Amortized cost | 232 | 36 |
Commercial mortgage-backed | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 1 | |
Less than 12 Months, Gross Unrealized Losses | 0 | |
12 Months or Longer, Fair Value | 10 | |
12 Months or Longer, Gross Unrealized Losses | 7 | |
Total Fair Value | 11 | |
Total, Gross Unrealized Losses | 7 | |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Amortized cost | 0 | 24 |
Asset-backed | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 7 | |
Less than 12 Months, Gross Unrealized Losses | 0 | |
12 Months or Longer, Fair Value | 0 | |
12 Months or Longer, Gross Unrealized Losses | 0 | |
Total Fair Value | 7 | |
Total, Gross Unrealized Losses | 0 | |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Amortized cost | 12 | |
Redeemable preferred stock | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 2 | 9 |
Less than 12 Months, Gross Unrealized Losses | 0 | 0 |
12 Months or Longer, Fair Value | 0 | 0 |
12 Months or Longer, Gross Unrealized Losses | 0 | 0 |
Total Fair Value | 2 | 9 |
Total, Gross Unrealized Losses | 0 | 0 |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Amortized cost | 4 | 9 |
Fixed Maturities | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
Less than 12 Months, Fair Value | 239 | 384 |
Less than 12 Months, Gross Unrealized Losses | 2 | 11 |
12 Months or Longer, Fair Value | 58 | 22 |
12 Months or Longer, Gross Unrealized Losses | 2 | 7 |
Total Fair Value | 297 | 406 |
Total, Gross Unrealized Losses | $ 4 | 18 |
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Debt securities exposure in single issuer greater than stated percentage of total investments | 2.10% | |
Debt securities exposure in single issuer of total investments | $ 25 | 15 |
Amortized cost | 1,425 | 1,099 |
Unrealized investment gains (losses) | 26 | 10 |
Fixed Maturities | Other Than Investment Grade | ||
Investments In Fixed Maturity Securities Other Disclosure [Abstract] | ||
Available-for-sale securities, amortized cost basis other than investment grade | $ 20 | $ 37 |
Percentage of available for sale securities | 1.40% | 3.40% |
Unrealized investment gains (losses) | $ 0 | $ 0 |
Corporate And Commercial Mortgage Backed Securities | ||
Available For Sale Securities Continuous Unrealized Loss Position [Line Items] | ||
12 Months or Longer, Gross Unrealized Losses | $ 2 | $ 7 |
INVESTMENTS INVESTMENTS (LOANS)
INVESTMENTS INVESTMENTS (LOANS) (Details) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Mortgage Loans on Real Estate [Line Items] | |||
Mortgage loans on real estate | $ 17,000,000 | $ 17,000,000 | |
Mortgage loans on real estate, percentage of invested assets | 1.00% | ||
Valuation allowances balance | $ 0 | 0 | $ 0 |
Commercial Real Estate Portfolio Segment | |||
Mortgage Loans on Real Estate [Line Items] | |||
Mortgage loans on real estate | $ 17,000,000 | ||
Commercial Real Estate Portfolio Segment | Greater than 2.0x | |||
Mortgage Loans on Real Estate [Line Items] | |||
Mortgage loans on real estate | $ 17,000,000 | ||
Minimum | |||
Mortgage Loans on Real Estate [Line Items] | |||
Debt covenant, loan to value ratio | 0 | ||
Maximum | |||
Mortgage Loans on Real Estate [Line Items] | |||
Debt covenant, loan to value ratio | 0.5 |
INVESTMENTS (EQUITY METHOD INVE
INVESTMENTS (EQUITY METHOD INVESTMENTS) (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investments in and Advances to Affiliates, at Fair Value [Roll Forward] | |||||
Balance at January 1, | $ 64 | $ 63 | |||
Equity in income (loss) of AllianceBernstein | 6 | 6 | $ 5 | ||
Dividends received | (6) | (5) | |||
Balance at December 31, | 64 | 64 | 63 | ||
Equity Method Investment, Summarized Financial Information [Abstract] | |||||
Total Assets | $ 9,295 | $ 8,740 | |||
Total Liabilities | 4,630 | 4,279 | |||
Redeemable non-controlling interest | 602 | 393 | |||
Total Partners’ Capital | 4,063 | 4,068 | |||
Total Liabilities and Partners’ Capital | 9,295 | 8,740 | |||
MLOA’s Equity investment in AB | 64 | 63 | 63 | $ 64 | 64 |
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | |||||
Total Revenues | 3,299 | 3,029 | 3,021 | ||
Total Expenses | 2,525 | 2,306 | 2,390 | ||
Net Income (Loss) | 721 | 695 | 587 | ||
Equity in income (loss) of AllianceBernstein | $ 6 | $ 6 | $ 5 | ||
AB Investment | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investments units in Alliance Bernstein (in shares) | 2.6 | ||||
Equity method investment, ownership percentage | 0.95% | ||||
Equity method investments, fair value | $ 65 | $ 61 |
INVESTMENTS (DERIVATIVES) (Deta
INVESTMENTS (DERIVATIVES) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivatives, Fair Value [Line Items] | |||
Derivative, Notional Amount | $ 1,058 | $ 776 | |
Derivative Asset, Fair Value, Net | 119 | 76 | |
Derivative Liability, Fair Value, Net | 208 | 131 | |
Gain (losses) reported in net earnings (losses) | (6) | (2) | |
Derivative Instrument Detail [Abstract] | |||
Cash and securities collateral for derivative contract | 90 | 58 | |
Equity Contracts Options | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, Notional Amount | 1,058 | 776 | |
Derivative Asset, Fair Value, Net | 119 | 76 | |
Derivative Liability, Fair Value, Net | 30 | 20 | |
Gain (losses) reported in net earnings (losses) | 66 | 18 | |
Collateral | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, Notional Amount | 0 | 0 | |
Derivative Asset, Fair Value, Net | 0 | 0 | |
Derivative Liability, Fair Value, Net | 90 | 58 | |
Gain (losses) reported in net earnings (losses) | 0 | 0 | |
Net Investment Income (Loss) | |||
Derivatives, Fair Value [Line Items] | |||
Gain (losses) reported in net earnings (losses) | 66 | 18 | |
MSO and IUL indexed features’ liability | |||
Derivatives, Fair Value [Line Items] | |||
Derivative, Notional Amount | 0 | 0 | |
Derivative Asset, Fair Value, Net | 0 | 0 | |
Derivative Liability, Fair Value, Net | 88 | 53 | |
Gain (losses) reported in net earnings (losses) | (72) | (20) | |
Derivative | |||
Derivative Instrument Detail [Abstract] | |||
Gain (loss) on sale of derivatives | 42 | (2) | $ 6 |
Unrealized gain (loss) on derivatives | $ 24 | $ 20 | $ (15) |
INVESTMENTS (OFFSETTING FINANCI
INVESTMENTS (OFFSETTING FINANCIAL ASSETS) (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Offsetting Assets [Line Items] | ||
Net amounts presented in the balance sheets | $ 153 | $ 126 |
Equity contracts | ||
Offsetting Assets [Line Items] | ||
Gross amounts recognized | 119 | 76 |
Gross amounts offset in the balance sheets | 30 | 20 |
Net amounts presented in the balance sheets | 89 | 56 |
Collateral | ||
Offsetting Assets [Line Items] | ||
Gross amounts recognized | 0 | 0 |
Gross amounts offset in the balance sheets | 90 | 58 |
Net amounts presented in the balance sheets | (90) | (58) |
Derivatives Subject to an ISDA Master Agreements | ||
Offsetting Assets [Line Items] | ||
Gross amounts recognized | 119 | 76 |
Gross amounts offset in the balance sheets | 120 | 78 |
Net amounts presented in the balance sheets | (1) | (2) |
Other financial assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts recognized | 64 | 70 |
Gross amounts offset in the balance sheets | 0 | 0 |
Net amounts presented in the balance sheets | 64 | 70 |
Other invested assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts recognized | 183 | 146 |
Gross amounts offset in the balance sheets | 120 | 78 |
Net amounts presented in the balance sheets | $ 63 | $ 68 |
INVESTMENTS (OFFSETTING FINAN47
INVESTMENTS (OFFSETTING FINANCIAL LIABILITIES) (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Equity contracts | ||
Offsetting Liabilities [Line Items] | ||
Gross amount recognized | $ 30 | $ 20 |
Gross amounts offset in the balance sheets | 30 | 20 |
Net amounts presented in the balance sheets | 0 | 0 |
Collateral | ||
Offsetting Liabilities [Line Items] | ||
Gross amount recognized | 90 | |
Gross amounts offset in the balance sheets | 90 | |
Net amounts presented in the balance sheets | 0 | |
Derivatives Subject to an ISDA Master Agreements | ||
Offsetting Liabilities [Line Items] | ||
Gross amount recognized | 120 | 78 |
Gross amounts offset in the balance sheets | 120 | 78 |
Net amounts presented in the balance sheets | 0 | 0 |
Other financial liabilities | ||
Offsetting Liabilities [Line Items] | ||
Gross amount recognized | 72 | 77 |
Gross amounts offset in the balance sheets | 0 | 0 |
Net amounts presented in the balance sheets | 72 | 77 |
Other liabilities | ||
Offsetting Liabilities [Line Items] | ||
Gross amount recognized | 192 | 155 |
Gross amounts offset in the balance sheets | 120 | 78 |
Net amounts presented in the balance sheets | $ 72 | $ 77 |
INVESTMENTS (OFFSETTING COLLATE
INVESTMENTS (OFFSETTING COLLATERAL) (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Offsetting Assets [Line Items] | ||
Net amounts presented in the balance sheets | $ 153 | $ 126 |
Collateral (Received) Securities | 0 | 0 |
Collateral (Received) Cash | (90) | (58) |
Net Amounts | 63 | 68 |
Derivative | ||
Offsetting Assets [Line Items] | ||
Net amounts presented in the balance sheets | 89 | 56 |
Collateral (Received) Securities | 0 | 0 |
Collateral (Received) Cash | (90) | (58) |
Net Amounts | (1) | (2) |
Other financial assets | ||
Offsetting Assets [Line Items] | ||
Net amounts presented in the balance sheets | 64 | 70 |
Collateral (Received) Securities | 0 | 0 |
Collateral (Received) Cash | 0 | 0 |
Net Amounts | $ 64 | $ 70 |
INVESTMENTS (NET INVESTMENT INC
INVESTMENTS (NET INVESTMENT INCOME) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Investment Income [Line Items] | |||
Gross investment income (loss) | $ 51 | $ 45 | $ 41 |
Investment expenses | (3) | (3) | (3) |
Net Investment Income (Loss) | 48 | 42 | 38 |
Investment Gains (Losses), Net | 0 | (4) | (1) |
Fixed Maturities | |||
Net Investment Income [Line Items] | |||
Gross investment income (loss) | 49 | 43 | 40 |
Investment Gains (Losses), Net | 0 | (4) | (1) |
Mortgage loans on real estate | |||
Net Investment Income [Line Items] | |||
Gross investment income (loss) | 1 | 1 | 0 |
Policy Loans | |||
Net Investment Income [Line Items] | |||
Gross investment income (loss) | $ 1 | $ 1 | $ 1 |
DEFERRED POLICY ACQUISITION C50
DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | |||
Balance, beginning of year | $ 353 | $ 351 | |
Capitalization of commissions, sales and issue expenses | 109 | 103 | |
Amortization | (71) | (101) | |
Change in unrealized investment gains and losses | (8) | 0 | |
Balance, end of year | 383 | 353 | $ 351 |
Asset Amortization | 0 | ||
Amortization of value of business acquired | $ 0 | $ 9 | $ 0 |
FAIR VALUE DISCLOSURES - FAIR V
FAIR VALUE DISCLOSURES - FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | $ 1,451 | $ 1,109 |
Trading securities | 1 | 1 |
Options | 89 | 56 |
Cash equivalents | 44 | 109 |
Separate Accounts assets | 2,013 | 1,746 |
Total Assets | 3,598 | 3,021 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 92 | 60 |
Public corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 907 | 827 |
Private corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 291 | 208 |
U.S. Treasury, government and agency | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 232 | 35 |
States and political subdivisions | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 5 | 6 |
Commercial mortgage-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 24 | |
Asset-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 12 | |
Redeemable preferred stock | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 4 | 9 |
Contingent payment arrangements | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 4 | 7 |
MSO and IUL indexed features’ liability | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 88 | 53 |
Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 4 | 9 |
Trading securities | 1 | 1 |
Options | 0 | 0 |
Cash equivalents | 44 | 109 |
Separate Accounts assets | 1,999 | 1,732 |
Total Assets | 2,048 | 1,851 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 0 | 0 |
Level 1 | Public corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 1 | Private corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 1 | U.S. Treasury, government and agency | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 1 | States and political subdivisions | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 1 | Commercial mortgage-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | |
Level 1 | Asset-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | |
Level 1 | Redeemable preferred stock | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 4 | 9 |
Level 1 | Contingent payment arrangements | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 0 | 0 |
Level 1 | MSO and IUL indexed features’ liability | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 0 | 0 |
Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 1,441 | 1,069 |
Trading securities | 0 | 0 |
Options | 89 | 56 |
Cash equivalents | 0 | 0 |
Separate Accounts assets | 14 | 14 |
Total Assets | 1,544 | 1,139 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 88 | 53 |
Level 2 | Public corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 907 | 827 |
Level 2 | Private corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 285 | 201 |
Level 2 | U.S. Treasury, government and agency | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 232 | 35 |
Level 2 | States and political subdivisions | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 5 | 6 |
Level 2 | Commercial mortgage-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | |
Level 2 | Asset-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 12 | |
Level 2 | Redeemable preferred stock | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 2 | Contingent payment arrangements | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 0 | 0 |
Level 2 | MSO and IUL indexed features’ liability | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 88 | 53 |
Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 6 | 31 |
Trading securities | 0 | 0 |
Options | 0 | 0 |
Cash equivalents | 0 | 0 |
Separate Accounts assets | 0 | 0 |
Total Assets | 6 | 31 |
Liabilities, Fair Value Disclosure [Abstract] | ||
Total liabilities | 4 | 7 |
Level 3 | Public corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 3 | Private corporate | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 6 | 7 |
Level 3 | U.S. Treasury, government and agency | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 3 | States and political subdivisions | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 3 | Commercial mortgage-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 24 | |
Level 3 | Asset-backed | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | |
Level 3 | Redeemable preferred stock | ||
Assets, Fair Value Disclosure [Abstract] | ||
Fixed maturity securities, fair value | 0 | 0 |
Level 3 | Contingent payment arrangements | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | 4 | 7 |
Level 3 | MSO and IUL indexed features’ liability | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Guarantees | $ 0 | $ 0 |
FAIR VALUE DISCLOSURES (Details
FAIR VALUE DISCLOSURES (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Financial Instruments [Line Items] | ||
Fixed maturity securities, fair value | $ 1,451 | $ 1,109 |
Risk-adjusted discount factor | 7.00% | |
Level 1 | ||
Fair Value Financial Instruments [Line Items] | ||
Fixed maturity securities, fair value | $ 4 | $ 9 |
Percentage of assets measured at fair value on recurring basis | 56.90% | 61.30% |
Level 2 | ||
Fair Value Financial Instruments [Line Items] | ||
Fixed maturity securities, fair value | $ 1,441 | $ 1,069 |
Percentage of assets measured at fair value on recurring basis | 42.90% | 37.70% |
Level 3 | ||
Fair Value Financial Instruments [Line Items] | ||
Fixed maturity securities, fair value | $ 6 | $ 31 |
Percentage of assets measured at fair value on recurring basis | 0.20% | 1.00% |
Mortgage, asset-backed securities and CBMS measured at fair value | $ 0 | $ 24 |
Public Fixed Maturities | ||
Fair Value Financial Instruments [Line Items] | ||
Fixed maturity securities, fair value | $ 1,149 | $ 888 |
Percentage of available-for-sale, fixed maturity measured at fair value | 31.90% | 29.40% |
Private Fixed Maturities | ||
Fair Value Financial Instruments [Line Items] | ||
Fixed maturity securities, fair value | $ 302 | $ 221 |
Percentage of available-for-sale, fixed maturity measured at fair value | 8.40% | 7.30% |
Minimum | ||
Fair Value Financial Instruments [Line Items] | ||
Investment term | 1 year | |
Maximum | ||
Fair Value Financial Instruments [Line Items] | ||
Investment term | 3 years |
FAIR VALUE DISCLOSURES - LEVEL
FAIR VALUE DISCLOSURES - LEVEL 3 INSTRUMENTS FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Total Gains Losses Realized Unrealized Included In [Abstract] | |||
Investment Gains (Losses), Net | $ 0 | $ (4) | $ (1) |
Level 3 | |||
Total Gains Losses Realized Unrealized Included In [Abstract] | |||
Other comprehensive income (loss) for assets still held at period end | 0 | 1 | 7 |
Corporate | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Opening Balance | 7 | 8 | 8 |
Total Gains Losses Realized Unrealized Included In [Abstract] | |||
Investment Gains (Losses), Net | 0 | 0 | 0 |
Other comprehensive income (loss) | 0 | 0 | 0 |
Purchases | 0 | 0 | |
Sales | (1) | (1) | (1) |
Change in estimate | 0 | ||
Transfers into Level 3 | 1 | ||
Closing Balance | 6 | 7 | 8 |
Other comprehensive income (loss) for assets still held at period end | (1) | ||
Commercial mortgage-backed | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Opening Balance | 24 | 31 | 26 |
Total Gains Losses Realized Unrealized Included In [Abstract] | |||
Investment Gains (Losses), Net | 1 | (4) | (2) |
Other comprehensive income (loss) | 0 | 1 | 8 |
Purchases | 0 | 0 | |
Sales | (25) | (4) | (1) |
Change in estimate | 0 | ||
Transfers into Level 3 | 0 | ||
Closing Balance | 0 | 24 | 31 |
Other comprehensive income (loss) for assets still held at period end | 0 | 1 | 8 |
Contingent payment arrangements | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Opening Balance | 7 | 0 | 0 |
Total Gains Losses Realized Unrealized Included In [Abstract] | |||
Investment Gains (Losses), Net | 0 | 0 | 0 |
Other comprehensive income (loss) | 0 | 0 | 0 |
Purchases | 0 | 7 | |
Sales | 0 | 0 | 0 |
Change in estimate | (3) | ||
Transfers into Level 3 | 0 | ||
Closing Balance | $ 4 | $ 7 | $ 0 |
FAIR VALUE DISCLOSURES - CARRYI
FAIR VALUE DISCLOSURES - CARRYING VALUES AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments classified as Level 3 | $ 6 | $ 31 |
Financial Instruments [Abstract] | ||
Mortgage loans on real estate | 17 | 17 |
Policy loans | 185 | 176 |
Policyholders' liabilities: Investment contracts | 2,631 | 2,377 |
Reported Value Measurement | ||
Financial Instruments [Abstract] | ||
Mortgage loans on real estate | 17 | 17 |
Policy loans | 185 | 176 |
Policyholders' liabilities: Investment contracts | 153 | 168 |
Estimate of Fair Value Measurement | ||
Financial Instruments [Abstract] | ||
Mortgage loans on real estate | 16 | |
Policy loans | 210 | |
Policyholders' liabilities: Investment contracts | 156 | 170 |
Estimate of Fair Value Measurement | Level 1 | ||
Financial Instruments [Abstract] | ||
Mortgage loans on real estate | 0 | 0 |
Policy loans | 0 | 0 |
Policyholders' liabilities: Investment contracts | 0 | 0 |
Estimate of Fair Value Measurement | Level 2 | ||
Financial Instruments [Abstract] | ||
Mortgage loans on real estate | 0 | 0 |
Policy loans | 0 | 0 |
Policyholders' liabilities: Investment contracts | 0 | 0 |
Estimate of Fair Value Measurement | Level 3 | ||
Financial Instruments [Abstract] | ||
Mortgage loans on real estate | 17 | 16 |
Policy loans | 224 | 210 |
Policyholders' liabilities: Investment contracts | $ 156 | $ 170 |
LIABILITIES FOR UNPAID AND CLAI
LIABILITIES FOR UNPAID AND CLAIM EXPENSES (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Group Employee Benefits | $ 9.9 | $ 1.1 |
Discount rate assumptions for long-term disability liabilities | 3.60% | |
Short-duration contracts period | 1 year | |
Group Insurance Policies | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Group Employee Benefits | $ 9.9 |
LIABILITIES FOR UNPAID AND CL56
LIABILITIES FOR UNPAID AND CLAIM EXPENSES - ROLLFORWARD OF THE UNPAID CLAIMS AND CLAIM EXPENSES (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Liability for Unpaid Claims and Claims Adjustment Expense, [Roll Forward] | |
Gross Balance at January 1, 2017 | $ 1.1 |
Less Reinsurance | 0.1 |
Net Balance at January 1, 2017 | 1 |
Incurred Claims (net) Related to: | |
Current Year | 18.5 |
Prior Year | (0.7) |
Total Incurred | 17.8 |
Paid Claims (net) Related to: | |
Current Year | 12.1 |
Prior Year | 0.2 |
Total Paid | 12.3 |
Net Balance at December 31, 2017 | 6.5 |
Add Reinsurance | 3.4 |
Gross Balance at December 31, 2017 | $ 9.9 |
LIABILITIES FOR UNPAID CLAIMS57
LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES - CUMULATIVE CLAIMS PAID AND INCURRED CLAIMS (Details) $ in Millions | Dec. 31, 2017USD ($)insurance_claim |
Claims Development [Line Items] | |
Cumulative long-term disability paid claims | $ 0.1 |
Cumulative long-term disability incurred claims | 2.1 |
IBNR | 0.7 |
2,017 | |
Claims Development [Line Items] | |
Cumulative long-term disability paid claims | 0.1 |
Cumulative long-term disability incurred claims | 2.1 |
IBNR | $ 0.7 |
Claim Frequency | insurance_claim | 56 |
LIABILITIES FOR UNPAID CLAIMS58
LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES LIABILITIES FOR UNPAID CLAIMS AND CLAIMS EXPENSES - NET LIABILITY (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Undiscounted Incurred Claims, net of reinsurance | $ 17.8 | |
Subtract Cumulative Paid Claims, net of reinsurance | (12.3) | |
Liability for unpaid claims and claims adjustment expense, net | 6.5 | $ 1 |
Reinsurance Recoverable on unpaid claims | 3.4 | 0.1 |
Total liability for unpaid claim and claim expense | 9.9 | $ 1.1 |
Long-Term Disability | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Undiscounted Incurred Claims, net of reinsurance | 2.1 | |
Subtract Cumulative Paid Claims, net of reinsurance | (0.1) | |
Subtract Impact of Discounting, net of reinsurance | (0.3) | |
Liability for unpaid claims and claims adjustment expense, net | 1.7 | |
Reinsurance Recoverable on unpaid claims | 2.1 | |
Other short-duration contracts | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Liability for unpaid claims and claims adjustment expense, net | 4.8 | |
Reinsurance Recoverable on unpaid claims | $ 1.3 |
REINSURANCE - SCHEDULE OF EFFEC
REINSURANCE - SCHEDULE OF EFFECT OF REINSURANCE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reinsurance Disclosures [Abstract] | |||
Direct policy charges and fee income | $ 243 | $ 249 | $ 207 |
Reinsurance assumed | 0 | 0 | 0 |
Reinsurance ceded | (63) | (61) | (54) |
Policy charges and fee income | 180 | 188 | 153 |
Direct premiums | 59 | 38 | 39 |
Reinsurance assumed | 3 | 3 | 1 |
Reinsurance ceded | (39) | (37) | (39) |
Premiums | 23 | 4 | 1 |
Direct policyholders' benefits | 163 | 139 | 189 |
Reinsurance assumed | 1 | 2 | 1 |
Reinsurance ceded | (110) | (112) | (149) |
Policyholders' benefits | $ 54 | $ 29 | $ 41 |
REINSURANCE (Details)
REINSURANCE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Amounts due from reinsurers | $ 1,325 | $ 1,390 | |
Total premiums ceded | 39 | 37 | $ 39 |
Policyholder benefits ceded | 110 | 112 | 149 |
Amounts due to reinsurers | 132 | 131 | |
Reinsurer Concentration Risk | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Amounts due from reinsurers | 22 | 27 | |
Variable Universal Term Life Insurance Single Life | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Maximum amount of mortality risk retained | 4 | ||
Variable Universal Term Life Insurance Second To Die Life | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Maximum amount of mortality risk retained | 6 | ||
Protective Life | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Amounts due from reinsurers | 1,287 | 1,157 | |
Ceded policyholders' account balances | 1,041 | 1,092 | |
Total premiums ceded | 21 | 20 | 21 |
Policyholder benefits ceded | 82 | 79 | $ 102 |
Protective Life | Guaranteed Minimum Death Benefit | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Amounts due from reinsurers | 5 | 6 | |
Protective Life | Guaranteed Minimum Income Benefit | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Amounts due from reinsurers | 1 | $ 2 | |
AXA Equitable | Variable Universal Term Life Insurance Single Life | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Maximum amount of mortality risk retained | 20 | ||
AXA Equitable | Variable Universal Term Life Insurance Second To Die Life | |||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | |||
Maximum amount of mortality risk retained | $ 25 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Expenses from related party transactions | $ 2,000,000 | $ 2,000,000 | $ 1,000,000 |
Reinsurance assumed | 3,000,000 | 3,000,000 | 1,000,000 |
Commissions and fees paid for the sale of insurance products | 180,000,000 | 188,000,000 | 153,000,000 |
AXA Equitable | |||
Related Party Transaction [Line Items] | |||
Expenses from related party transactions | 131,000,000 | 129,000,000 | 88,000,000 |
Accounts payable to related parties | $ 42,000,000 | 21,000,000 | 15,000,000 |
AXA Global Life | |||
Related Party Transaction [Line Items] | |||
Reinsurance term | 1 year | ||
Reinsurance assumed | $ 2,000,000 | 2,000,000 | 1,000,000 |
Claims and expenses assumed | 1,000,000 | 2,000,000 | 1,000,000 |
AXA Arizona | |||
Related Party Transaction [Line Items] | |||
Claims and expenses assumed | 0 | 0 | 0 |
Premiums earned | 3,000,000 | 3,000,000 | 2,000,000 |
AXA Distribution | |||
Related Party Transaction [Line Items] | |||
Expenses from related party transactions | 103,000,000 | 93,000,000 | 84,000,000 |
Commissions and fees paid for the sale of insurance products | $ 43,000,000 | $ 43,000,000 | $ 57,000,000 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation [Abstract] | |||
Allocated compensation costs | $ 3 | $ 3 | $ 3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Taxes payable, current | $ 8 | ||
Taxes receivable, current | $ 1 | ||
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||
Current (expense) benefit | (1) | 9 | $ 5 |
Deferred (expense) benefit | 8 | 26 | 5 |
Income tax (expense) benefit | 7 | 35 | 10 |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Expected income tax (expense) benefit | 23 | 33 | 9 |
Dividends received deduction | 2 | 2 | 1 |
Change in tax law | (18) | 0 | 0 |
Income tax (expense) benefit | 7 | $ 35 | $ 10 |
Tax Cuts And Jobs Act Of 2017, incomplete accounting, change in tax rate, deferred tax asset, provisional income tax expense | 18 | ||
Tax Cuts and Jobs Act of 2017, incomplete accounting, transition tax for accumulated foreign earnings, provisional income tax expense | $ 0.2 |
INCOME TAXES - NET DEFERRED INC
INCOME TAXES - NET DEFERRED INCOME TAXES AND URECOGNIZED TAX BENEFITS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of Deferred Tax Assets [Abstract] | |||
Reserves and reinsurance | $ 64 | $ 101 | |
Investments | 5 | 0 | |
Other | 9 | 13 | |
Total deferred tax assets | 78 | 114 | |
Components of Deferred Tax Liabilities [Abstract] | |||
DAC | 49 | 81 | |
Investments | 0 | 11 | |
Total deferred tax liabilities | 49 | 92 | |
Income Tax Uncertainties [Abstract] | |||
Alternative minimum tax credit that do not expire | 2 | ||
Unrecognized tax benefits that would impact the effective tax rate | 4 | 4 | |
Interest and penalties included in unrecognized tax benefits | 0.3 | 0.3 | |
Interest expense related to unrecognized tax benefits | 0 | ||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance, beginning of year | 4 | 7 | $ 6 |
Additions for tax positions of prior years | 0 | 1 | |
Subtraction for tax positions of prior years | (3) | ||
Balance, End of Year | $ 4 | 4 | $ 7 |
Internal Revenue Service (IRS) | |||
Income Tax Examination [Line Items] | |||
Expected impact on income tax benefit of amended corporate income tax returns | $ (0.2) |
ACCUMULATED OTHER COMPREHENSI65
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Unrealized gains (losses) on investments, net of adjustments | $ 12 | $ 7 | $ 5 |
Total Accumulated Other Comprehensive Income (Loss) | 12 | 7 | 5 |
Net unrealized gains (losses) arising during the year | 12 | (1) | (13) |
(Gains) losses reclassified into net earnings (loss) during the year | 0 | 3 | 0 |
Change in net unrealized gains (losses) on investments | 12 | 2 | (13) |
Adjustments for DAC and Other | (7) | 0 | 1 |
Total other comprehensive income (loss), net of income taxes | 5 | 2 | (12) |
Other Comprehensive Income (Loss), Tax, Parenthetical Disclosures [Abstract] | |||
Deferred income tax expense (benefit) | 1 | 1 | (6) |
Income tax expense (benefit) | $ 0 | $ 1 | $ 0 |
STATUTORY FINANCIAL INFORMATI66
STATUTORY FINANCIAL INFORMATION (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statutory Financial Information [Abstract] | |||
Statutory net income (loss) | $ (12,000,000) | $ (14,000,000) | $ (4,000,000) |
Statutory surplus, capital stock and Asset Valuation Reserve | 318,000,000 | 331,000,000 | |
Payments of shareholder dividends | 0 | $ 0 | $ 0 |
Securities on deposit with such government or state agencies | 7,000,000 | ||
Liabilities for estimated portion of future assessments | 600,000 | ||
Assets for premium tax offsets that are expected to be realized | 500,000 | ||
Asset for premium tax offsets for assessments already paid | $ 100,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Feb. 28, 2018USD ($) |
Subsequent Event | |
Subsequent Event [Line Items] | |
Federal Home Loan Bank of San Francisco, outstanding borrowings | $ 0 |
SCHEDULE I - SUMMARY OF INVES68
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES (Details) $ in Millions | Dec. 31, 2017USD ($) |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | $ 1,690 |
Fair Value | 1,755 |
Carrying Value | 1,716 |
U.S. Treasury, government and agency | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 232 |
Fair Value | 232 |
Carrying Value | 232 |
States and political subdivisions | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 5 |
Fair Value | 5 |
Carrying Value | 5 |
Public utilities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 209 |
Fair Value | 212 |
Carrying Value | 212 |
All other corporate bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 963 |
Fair Value | 986 |
Carrying Value | 986 |
Asset-backed | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 12 |
Fair Value | 12 |
Carrying Value | 12 |
Redeemable preferred stock | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 4 |
Fair Value | 4 |
Carrying Value | 4 |
Fixed Maturities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 1,425 |
Fair Value | 1,451 |
Carrying Value | 1,451 |
Mortgage loans on real estate | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 17 |
Fair Value | 17 |
Carrying Value | 17 |
Policy Loans | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 185 |
Fair Value | 224 |
Carrying Value | 185 |
Other Invested Assets | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 63 |
Fair Value | 63 |
Carrying Value | $ 63 |
SCHEDULE IV - REINSURANCE (Deta
SCHEDULE IV - REINSURANCE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Life Insurance in Force, Net [Abstract] | |||
Gross Amount | $ 59,722 | $ 53,508 | $ 49,744 |
Ceded to Other Companies | 26,880 | 27,802 | 28,474 |
Assumed from Other Companies | 1,194 | 637 | 661 |
Net Amount | 34,036 | 26,343 | 21,931 |
Premiums Earned, Net [Abstract] | |||
Gross Amount | 59 | 38 | 39 |
Ceded to Other Companies | 39 | 37 | 39 |
Assumed from Other Companies | 3 | 3 | 1 |
Premiums | $ 23 | $ 4 | $ 1 |
Life Insurance In-Force, Percentage of Amount Assumed to Net | 3.50% | 2.40% | 3.00% |
Premiums, Percentage of Amount Assumed to Net | 13.00% | 75.00% | 100.00% |
Life insurance and annuities | |||
Premiums Earned, Net [Abstract] | |||
Gross Amount | $ 48 | $ 37 | $ 39 |
Ceded to Other Companies | 36 | 37 | 39 |
Assumed from Other Companies | 3 | 3 | 1 |
Premiums | $ 15 | $ 3 | $ 1 |
Premiums, Percentage of Amount Assumed to Net | 20.00% | 100.00% | 100.00% |
Accident and health | |||
Premiums Earned, Net [Abstract] | |||
Gross Amount | $ 11 | $ 1 | $ 0 |
Ceded to Other Companies | 3 | 0 | 0 |
Assumed from Other Companies | 0 | 0 | 0 |
Premiums | $ 8 | $ 1 | $ 0 |
Premiums, Percentage of Amount Assumed to Net | 0.00% | 0.00% | 0.00% |