Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 17, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | ALLSTATE CORP | |
Entity Central Index Key | 899,051 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 361,359,566 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues | ||||
Property-liability insurance premiums | $ 8,018 | $ 7,814 | $ 15,977 | $ 15,537 |
Life and annuity premiums and contract charges | 591 | 564 | 1,184 | 1,130 |
Net investment income | 897 | 762 | 1,645 | 1,493 |
Realized capital gains and losses: | ||||
Total other-than-temporary impairment (“OTTI”) losses | (47) | (77) | (109) | (168) |
OTTI losses reclassified to (from) other comprehensive income | (3) | (2) | 0 | 8 |
Net OTTI losses recognized in earnings | (50) | (79) | (109) | (160) |
Sales and other realized capital gains and losses | 131 | 103 | 324 | 35 |
Total realized capital gains and losses | 81 | 24 | 215 | (125) |
Total revenues | 9,587 | 9,164 | 19,021 | 18,035 |
Costs and expenses | ||||
Property-liability insurance claims and claims expense | 5,689 | 5,901 | 11,105 | 11,585 |
Life and annuity contract benefits | 486 | 454 | 960 | 909 |
Interest credited to contractholder funds | 175 | 185 | 348 | 375 |
Amortization of deferred policy acquisition costs | 1,176 | 1,126 | 2,345 | 2,255 |
Operating costs and expenses | 1,086 | 1,040 | 2,183 | 2,022 |
Restructuring and related charges | 53 | 11 | 63 | 16 |
Interest expense | 83 | 72 | 168 | 145 |
Costs and expenses | 8,748 | 8,789 | 17,172 | 17,307 |
Gain on disposition of operations | 12 | 1 | 14 | 3 |
Income from operations before income tax expense | 851 | 376 | 1,863 | 731 |
Income tax expense | 272 | 105 | 589 | 214 |
Net income | 579 | 271 | 1,274 | 517 |
Preferred stock dividends | 29 | 29 | 58 | 58 |
Net income applicable to common shareholders | $ 550 | $ 242 | $ 1,216 | $ 459 |
Earnings per common share: | ||||
Net income available to common shareholders per common share - Basic (in dollars per share) | $ 1.51 | $ 0.65 | $ 3.34 | $ 1.22 |
Weighted average common shares - Basic (in shares) | 363.6 | 373.6 | 364.6 | 375.8 |
Net income available to common shareholders per common share - Diluted (in dollars per share) | $ 1.49 | $ 0.64 | $ 3.29 | $ 1.21 |
Weighted average common shares - Diluted (in shares) | 369 | 378.1 | 370.1 | 380.5 |
Cash dividends declared per common share (in dollars per share) | $ 0.37 | $ 0.33 | $ 0.74 | $ 0.66 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 579 | $ 271 | $ 1,274 | $ 517 |
Changes in: | ||||
Unrealized net capital gains and losses | 270 | 424 | 473 | 1,004 |
Unrealized foreign currency translation adjustments | 11 | 5 | 8 | 19 |
Unrecognized pension and other postretirement benefit cost | 18 | 16 | 37 | 27 |
Other comprehensive income, after-tax | 299 | 445 | 518 | 1,050 |
Comprehensive income | $ 878 | $ 716 | $ 1,792 | $ 1,567 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Financial Position - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Investments | ||
Fixed income securities, at fair value (amortized cost $56,901 and $56,576) | $ 58,656 | $ 57,839 |
Equity securities, at fair value (cost $5,321 and $5,157) | 6,117 | 5,666 |
Mortgage loans | 4,336 | 4,486 |
Limited partnership interests | 6,206 | 5,814 |
Short-term, at fair value (amortized cost $2,175 and $4,288) | 2,175 | 4,288 |
Other | 3,815 | 3,706 |
Total investments | 81,305 | 81,799 |
Cash | 482 | 436 |
Premium installment receivables, net | 5,693 | 5,597 |
Deferred policy acquisition costs | 4,037 | 3,954 |
Reinsurance recoverables, net | 8,722 | 8,745 |
Accrued investment income | 573 | 567 |
Property and equipment, net | 1,072 | 1,065 |
Goodwill | 2,309 | 1,219 |
Other assets | 3,256 | 1,835 |
Separate Accounts | 3,416 | 3,393 |
Total assets | 110,865 | 108,610 |
Liabilities | ||
Reserve for property-liability insurance claims and claims expense | 25,884 | 25,250 |
Reserve for life-contingent contract benefits | 12,234 | 12,239 |
Contractholder funds | 19,832 | 20,260 |
Unearned premiums | 13,024 | 12,583 |
Claim payments outstanding | 939 | 879 |
Deferred income taxes | 1,104 | 487 |
Other liabilities and accrued expenses | 6,583 | 6,599 |
Long-term debt | 6,348 | 6,347 |
Separate Accounts | 3,416 | 3,393 |
Total liabilities | 89,364 | 88,037 |
Commitments and Contingent Liabilities (Note 11) | ||
Shareholders’ equity | ||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 72.2 thousand shares issued and outstanding, and $1,805 aggregate liquidation preference | 1,746 | 1,746 |
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 361 million and 366 million shares outstanding | 9 | 9 |
Additional capital paid-in | 3,269 | 3,303 |
Retained income | 41,622 | 40,678 |
Deferred ESOP expense | (6) | (6) |
Treasury stock, at cost (539 million and 534 million shares) | (25,241) | (24,741) |
Unrealized net capital gains and losses: | ||
Unrealized net capital gains and losses on fixed income securities with OTTI | 65 | 57 |
Other unrealized net capital gains and losses | 1,590 | 1,091 |
Unrealized adjustment to DAC, DSI and insurance reserves | (129) | (95) |
Total unrealized net capital gains and losses | 1,526 | 1,053 |
Unrealized foreign currency translation adjustments | (42) | (50) |
Unrecognized pension and other postretirement benefit cost | (1,382) | (1,419) |
Total accumulated other comprehensive income (loss) | 102 | (416) |
Total shareholders’ equity | 21,501 | 20,573 |
Total liabilities and shareholders’ equity | $ 110,865 | $ 108,610 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Fixed income securities, at fair value, amortized cost (in dollars) | $ 56,901 | $ 56,576 |
Equity securities, at fair value, cost (in dollars) | 5,321 | 5,157 |
Short-term, at fair value, amortized cost (in dollars) | $ 2,175 | $ 4,288 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 72,200 | 72,200 |
Preferred stock, shares outstanding (in shares) | 72,200 | 72,200 |
Preferred stock, shares aggregate liquidation preference (in shares) | $ 1,805 | $ 1,805 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 900,000,000 | 900,000,000 |
Common stock, shares outstanding (in shares) | 361,000,000 | 366,000,000 |
Treasury Stock, shares (in shares) | 539,000,000 | 534,000,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Shareholders’ Equity - USD ($) $ in Millions | Total | Preferred Stock | Preferred stock additional capital paid-in | Common stock | Additional capital paid-in | Retained income | Deferred ESOP expense | Treasury stock | Accumulated other comprehensive (loss) income |
Balance, beginning of period at Dec. 31, 2015 | $ 3,245 | $ 39,413 | $ (23,620) | $ (755) | |||||
Increase (decrease) in equity | |||||||||
Forward contract on accelerated share repurchase agreement | (52) | ||||||||
Equity incentive plans activity | 10 | ||||||||
Net income | $ 517 | 517 | |||||||
Dividends on common stock | (249) | ||||||||
Dividends on preferred stock | (58) | ||||||||
Shares acquired | (829) | ||||||||
Shares reissued under equity incentive plans, net | 139 | ||||||||
Change in unrealized net capital gains and losses | 1,004 | 1,004 | |||||||
Change in unrealized foreign currency translation adjustments | 19 | 19 | |||||||
Change in unrecognized pension and other postretirement benefit cost | 27 | 27 | |||||||
Balance, end of period at Jun. 30, 2016 | $ 20,553 | $ 1,746 | $ 9 | 3,203 | 39,623 | $ (13) | (24,310) | 295 | |
Preferred stock, par value (in dollars per share) | $ 0 | ||||||||
Preferred stock, par value (in dollars per share) | $ 1 | ||||||||
Balance, beginning of period at Dec. 31, 2016 | 3,303 | 40,678 | (24,741) | (416) | |||||
Increase (decrease) in equity | |||||||||
Forward contract on accelerated share repurchase agreement | (38) | ||||||||
Equity incentive plans activity | 4 | ||||||||
Net income | $ 1,274 | 1,274 | |||||||
Dividends on common stock | (272) | ||||||||
Dividends on preferred stock | (58) | ||||||||
Shares acquired | (646) | ||||||||
Shares reissued under equity incentive plans, net | 146 | ||||||||
Change in unrealized net capital gains and losses | 473 | 473 | |||||||
Change in unrealized foreign currency translation adjustments | 8 | 8 | |||||||
Change in unrecognized pension and other postretirement benefit cost | 37 | 37 | |||||||
Balance, end of period at Jun. 30, 2017 | $ 21,501 | $ 1,746 | $ 9 | $ 3,269 | $ 41,622 | $ (6) | $ (25,241) | $ 102 | |
Preferred stock, par value (in dollars per share) | $ 1 | $ 0 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities | ||
Net income | $ 1,274 | $ 517 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and other non-cash items | 238 | 188 |
Realized capital gains and losses | (215) | 125 |
Gain on disposition of operations | (14) | (3) |
Interest credited to contractholder funds | 348 | 375 |
Changes in: | ||
Policy benefits and other insurance reserves | 228 | 577 |
Unearned premiums | 34 | 62 |
Deferred policy acquisition costs | (65) | (72) |
Premium installment receivables, net | (51) | (27) |
Reinsurance recoverables, net | 6 | (120) |
Income taxes | (42) | (176) |
Other operating assets and liabilities | (393) | (88) |
Net cash provided by operating activities | 1,348 | 1,358 |
Proceeds from sales | ||
Fixed income securities | 14,521 | 12,589 |
Equity securities | 3,430 | 2,487 |
Limited partnership interests | 481 | 363 |
Other investments | 118 | 144 |
Investment collections | ||
Fixed income securities | 2,063 | 2,138 |
Mortgage loans | 305 | 150 |
Other investments | 337 | 168 |
Investment purchases | ||
Fixed income securities | (17,214) | (12,947) |
Equity securities | (3,473) | (2,672) |
Limited partnership interests | (578) | (703) |
Mortgage loans | (148) | (264) |
Other investments | (532) | (449) |
Change in short-term investments, net | 2,142 | (669) |
Change in other investments, net | 107 | (39) |
Purchases of property and equipment, net | (146) | (120) |
Acquisition of operations | (1,356) | 0 |
Net cash provided by investing activities | 57 | 176 |
Cash flows from financing activities | ||
Repayments of long-term debt | 0 | (16) |
Contractholder fund deposits | 515 | 522 |
Contractholder fund withdrawals | (957) | (1,013) |
Dividends paid on common stock | (257) | (240) |
Dividends paid on preferred stock | (58) | (58) |
Treasury stock purchases | (657) | (904) |
Shares reissued under equity incentive plans, net | 108 | 72 |
Excess tax benefits on share-based payment arrangements | 0 | 20 |
Other | (53) | 34 |
Net cash used in financing activities | (1,359) | (1,583) |
Net increase (decrease) in cash | 46 | (49) |
Cash at beginning of period | 436 | 495 |
Cash at end of period | $ 482 | $ 446 |
General
General | 6 Months Ended |
Jun. 30, 2017 | |
General [Abstract] | |
General | General Basis of presentation The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property-liability insurance company with various property-liability and life and investment subsidiaries, including Allstate Life Insurance Company (“ALIC”) (collectively referred to as the “Company” or “Allstate”). These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements and notes as of June 30, 2017 and for the three-month and six -month periods ended June 30, 2017 and 2016 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated. Adopted accounting standards Employee Share-Based Payment Accounting Effective January 1, 2017, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance that amends the accounting for share-based payments on a prospective basis. Under the new guidance, reporting entities are required to recognize all tax effects related to share-based payments at settlement or expiration through the income statement and the requirement to delay recognition of certain tax benefits until they reduce current taxes payable is eliminated. The new guidance also permits employers to withhold shares issued in connection with an employee’s exercise of options or the settlement of stock awards, up to the employee’s maximum individual statutory tax rate, to meet tax withholding requirements without causing liability classification of the award. In addition, all tax-related cash flows resulting from share-based payments are reported as operating activities on the statement of cash flows whereas cash payments made to taxing authorities on an employee’s behalf for withheld shares are presented as financing activities. The adoption of this guidance had no impact on the Company’s results of operations or financial position on the date of adoption. Transition to Equity Method Accounting Effective January 1, 2017, the Company adopted new FASB guidance amending the accounting requirements for transitioning to the equity method of accounting (“EMA”), including a transition from the cost method. The guidance requires the cost of acquiring an additional interest in an investee to be added to the existing carrying value to establish the initial basis of the EMA investment. Under the new guidance, no retroactive adjustment is required when an investment initially qualifies for EMA treatment. The guidance is applied prospectively to investments that qualify for EMA after application of the cost method of accounting. Accordingly, the adoption of this guidance had no impact on the Company’s results of operations or financial position. Pending accounting standards Revenue from Contracts with Customers In May 2014, the FASB issued guidance which revises the criteria for revenue recognition. Insurance contracts are excluded from the scope of the new guidance. Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies the performance obligations and transfers control of a good or service to the customer. Incremental costs of obtaining a contract may be capitalized to the extent the entity expects to recover those costs. The guidance is effective for reporting periods beginning after December 15, 2017 and is to be applied retrospectively. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations or financial position. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance requiring equity investments, including equity securities and limited partnership interests, that are not accounted for under the equity method of accounting or result in consolidation to be measured at fair value with changes in fair value recognized in net income. Equity investments without readily determinable fair values may be measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. When a qualitative assessment of equity investments without readily determinable fair values indicates that impairment exists, the carrying value is required to be adjusted to fair value, if lower. The guidance clarifies that an entity should evaluate the realizability of a deferred tax asset related to available-for-sale fixed income securities in combination with the entity’s other deferred tax assets. The guidance also changes certain disclosure requirements. The guidance is effective for interim and annual periods beginning after December 15, 2017, and is to be applied through a cumulative-effect adjustment to beginning retained income as of the date of adoption. The new guidance related to equity investments without readily determinable fair values is applied prospectively as of the date of adoption. The most significant anticipated impacts, using values as of June 30, 2017 , relate to the change in accounting for equity securities, where $796 million of pre-tax unrealized net capital gains would be reclassified from accumulated other comprehensive income to retained income, and cost method limited partnership interests (excluding limited partnership interests accounted for on a cost recovery basis), where the carrying value would increase by approximately $202 million , pre-tax, with the offsetting adjustment recognized in retained income. Accounting for Leases In February 2016, the FASB issued guidance that revises the accounting for leases. Under the new guidance, lessees will be required to recognize a right-of-use asset and lease liability for all leases other than those that meet the definition of a short-term lease. The lease liability will be equal to the present value of lease payments. A right-of-use asset will be based on the lease liability adjusted for qualifying initial direct costs. The expense of operating leases under the new guidance will be recognized in the income statement on a straight-line basis after combining the lease expense components (interest expense on the lease liability and amortization of the right-of-use asset) over the term of the lease. For finance leases, the expense components are computed separately and produce greater up-front expense compared to operating leases as interest expense on the lease liability is higher in early years and the right-of-use asset is amortized on a straight-line basis consistent with operating leases. Lease classification will be based on criteria similar to those currently applied. The accounting model for lessors will be similar to the current model with modifications to reflect definition changes for components such as initial direct costs. Lessors will continue to classify leases as operating, direct financing, or sales-type. The guidance is effective for reporting periods beginning after December 15, 2018 using a modified retrospective approach applied at the beginning of the earliest period presented. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations or financial position. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for the reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. The reporting entity must consider all available relevant information when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance and not as a direct write-down. The guidance is effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained income. The Company is in the process of evaluating the impact of adoption. Goodwill Impairment In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Under the new guidance, goodwill impairment will be measured and recognized as the amount by which a reporting unit’s carrying value, including goodwill, exceeds its fair value, not to exceed the carrying amount of goodwill allocated to the reporting unit. The revised guidance does not affect a reporting entity’s ability to first assess qualitative factors by reporting unit to determine whether to perform the quantitative goodwill impairment test. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The guidance is to be applied on a prospective basis, with the effects, if any, recognized in net income in the period of adoption. The impact to the Company upon adoption is dependent upon the excess, if any, of carrying value of the Company’s reporting units, including goodwill, over their respective fair values, a measure that is not currently determinable. Presentation of Net Periodic Pension and Postretirement Benefits Costs In March 2017, the FASB issued guidance to improve the presentation of net periodic pension and postretirement benefits costs that requires the service cost component to be reported in operating expenses together with other employee compensation costs and all other components of net periodic pension and postretirement benefits costs reported in non-operating expenses. If the reporting entity does not separately report operating and non-operating expenses on the statement of operations it is required to identify, on the statement of operations or in disclosures, the line items in which the components of net periodic pension and postretirement benefits costs are presented. The new guidance permits only the service cost component to be eligible for capitalization where applicable. The guidance is effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods. The guidance is to be applied on a prospective basis for capitalization of service costs where applicable and on a retrospective basis for the presentation of the service cost and other components of net periodic pension benefit costs in the statements of operations or in disclosures. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. |
Earnings per Common Share
Earnings per Common Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Common Share | Earnings per Common Share Basic earnings per common share is computed using the weighted average number of common shares outstanding, including vested unissued participating restricted stock units. Diluted earnings per common share is computed using the weighted average number of common and dilutive potential common shares outstanding. For the Company, dilutive potential common shares consist of outstanding stock options and unvested non-participating restricted stock units and contingently issuable performance stock awards. The computation of basic and diluted earnings per common share is presented in the following table. ($ in millions, except per share data) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Numerator: Net income $ 579 $ 271 $ 1,274 $ 517 Less: Preferred stock dividends 29 29 58 58 Net income applicable to common shareholders (1) $ 550 $ 242 $ 1,216 $ 459 Denominator: Weighted average common shares outstanding 363.6 373.6 364.6 375.8 Effect of dilutive potential common shares: Stock options 4.3 3.4 4.2 3.4 Restricted stock units (non-participating) and performance stock awards 1.1 1.1 1.3 1.3 Weighted average common and dilutive potential common shares outstanding 369.0 378.1 370.1 380.5 Earnings per common share - Basic $ 1.51 $ 0.65 $ 3.34 $ 1.22 Earnings per common share - Diluted $ 1.49 $ 0.64 $ 3.29 $ 1.21 _____________________________ (1) Net income applicable to common shareholders is net income less preferred stock dividends. The effect of dilutive potential common shares does not include the effect of options with an anti-dilutive effect on earnings per common share because their exercise prices exceed the average market price of Allstate common shares during the period or for which the unrecognized compensation cost would have an anti-dilutive effect. Options to purchase 2.5 million and 4.8 million Allstate common shares, with exercise prices ranging from $74.03 to $86.61 and $57.29 to $71.29 , were outstanding for the three-month periods ended June 30, 2017 and 2016 , respectively, but were not included in the computation of diluted earnings per common share in those periods. Options to purchase 2.6 million and 4.8 million Allstate common shares, with exercise prices ranging from $69.95 to $86.61 and $57.29 to $71.29 , were outstanding for the six -month periods ended June 30, 2017 and 2016 , respectively, but were not included in the computation of diluted earnings per common share in those periods. |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On January 3, 2017, the Company acquired SquareTrade Holding Company, Inc. (“SquareTrade”), a consumer product protection plan provider that distributes through many of America’s major retailers and Europe’s mobile operators, for $1.4 billion in cash. SquareTrade provides protection plans primarily covering consumer appliances and electronics, such as TVs, smartphones and computers. This acquisition broadens Allstate’s unique product offerings to better meet consumers’ needs. In connection with the acquisition, the Company recorded goodwill of $1.08 billion , commissions paid to retailers (reported in deferred policy acquisition costs) of $70 million , other intangible assets (reported in other assets) of $555 million , contractual liability insurance policy premium expenses (reported in other assets) of $201 million , unearned premiums of $373 million and net deferred income tax liability of $140 million . The Company increased goodwill in the second quarter of 2017 by $14 million related to an adjustment to the fair value of the opening balance sheet liabilities. As of June 30, 2017, the Company has $30 million of restricted cash related to an escrow account in connection with the acquisition that is recorded in other assets. |
Reporting Segments
Reporting Segments | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Reporting Segments | Reporting Segments Summarized revenue data for each of the Company’s reportable segments are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-Liability Property-liability insurance premiums Auto $ 5,437 $ 5,306 $ 10,825 $ 10,526 Homeowners 1,815 1,815 3,630 3,625 Other personal lines 436 424 867 845 Commercial lines 118 127 243 256 Other business lines 142 142 283 285 SquareTrade 70 — 129 — Allstate Protection 8,018 7,814 15,977 15,537 Discontinued Lines and Coverages — — — — Total property-liability insurance premiums 8,018 7,814 15,977 15,537 Net investment income 391 316 702 618 Realized capital gains and losses 85 26 220 (73 ) Total Property-Liability 8,494 8,156 16,899 16,082 Allstate Financial Life and annuity premiums and contract charges Premiums Traditional life insurance 148 139 297 277 Accident and health insurance 233 214 465 430 Total premiums 381 353 762 707 Contract charges Interest-sensitive life insurance 207 208 416 417 Fixed annuities 3 3 6 6 Total contract charges 210 211 422 423 Total life and annuity premiums and contract charges 591 564 1,184 1,130 Net investment income 496 435 922 854 Realized capital gains and losses (4 ) — (5 ) (49 ) Total Allstate Financial 1,083 999 2,101 1,935 Corporate and Other Net investment income 10 11 21 21 Realized capital gains and losses — (2 ) — (3 ) Total Corporate and Other 10 9 21 18 Consolidated revenues $ 9,587 $ 9,164 $ 19,021 $ 18,035 Summarized financial performance data for each of the Company’s reportable segments are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-Liability Underwriting income Allstate Protection $ 232 $ (64 ) $ 741 $ 63 Discontinued Lines and Coverages (5 ) (2 ) (7 ) (4 ) Total underwriting income (loss) 227 (66 ) 734 59 Net investment income 391 316 702 618 Income tax expense on operations (196 ) (70 ) (451 ) (211 ) Realized capital gains and losses, after-tax 56 18 145 (46 ) Gain on disposition of operations, after-tax 6 — 6 — Property-Liability net income applicable to common shareholders 484 198 1,136 420 Allstate Financial Life and annuity premiums and contract charges 591 564 1,184 1,130 Net investment income 496 435 922 854 Contract benefits and interest credited to contractholder funds (659 ) (633 ) (1,306 ) (1,272 ) Operating costs and expenses and amortization of deferred policy acquisition costs (199 ) (189 ) (409 ) (383 ) Restructuring and related charges (1 ) (1 ) (1 ) (1 ) Income tax expense on operations (75 ) (56 ) (127 ) (104 ) Operating income 153 120 263 224 Realized capital gains and losses, after-tax (3 ) — (4 ) (32 ) Valuation changes on embedded derivatives that are not hedged, after-tax (1 ) (4 ) (1 ) (8 ) DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax (3 ) (1 ) (6 ) (2 ) Gain on disposition of operations, after-tax — 1 2 2 Allstate Financial net income applicable to common shareholders 146 116 254 184 Corporate and Other Net investment income 10 11 21 21 Operating costs and expenses (92 ) (79 ) (185 ) (158 ) Income tax benefit on operations 31 26 61 51 Preferred stock dividends (29 ) (29 ) (58 ) (58 ) Operating loss (80 ) (71 ) (161 ) (144 ) Realized capital gains and losses, after-tax — (1 ) — (1 ) Business combination expenses, after-tax — — (13 ) — Corporate and Other net loss applicable to common shareholders (80 ) (72 ) (174 ) (145 ) Consolidated net income applicable to common shareholders $ 550 $ 242 $ 1,216 $ 459 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2017 | |
Investments [Abstract] | |
Investments | Investments Fair values The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows: ($ in millions) Amortized cost Gross unrealized Fair value Gains Losses June 30, 2017 U.S. government and agencies $ 3,363 $ 70 $ (7 ) $ 3,426 Municipal 7,543 336 (24 ) 7,855 Corporate 43,007 1,394 (150 ) 44,251 Foreign government 1,019 34 (6 ) 1,047 Asset-backed securities (“ABS”) 1,237 16 (10 ) 1,243 Residential mortgage-backed securities (“RMBS”) 549 96 (4 ) 641 Commercial mortgage-backed securities (“CMBS”) 163 14 (7 ) 170 Redeemable preferred stock 20 3 — 23 Total fixed income securities $ 56,901 $ 1,963 $ (208 ) $ 58,656 December 31, 2016 U.S. government and agencies $ 3,572 $ 74 $ (9 ) $ 3,637 Municipal 7,116 304 (87 ) 7,333 Corporate 42,742 1,178 (319 ) 43,601 Foreign government 1,043 36 (4 ) 1,075 ABS 1,169 13 (11 ) 1,171 RMBS 651 85 (8 ) 728 CMBS 262 17 (9 ) 270 Redeemable preferred stock 21 3 — 24 Total fixed income securities $ 56,576 $ 1,710 $ (447 ) $ 57,839 Scheduled maturities The scheduled maturities for fixed income securities are as follows as of June 30, 2017 : ($ in millions) Amortized cost Fair value Due in one year or less $ 4,226 $ 4,247 Due after one year through five years 28,770 29,347 Due after five years through ten years 16,870 17,293 Due after ten years 5,086 5,715 54,952 56,602 ABS, RMBS and CMBS 1,949 2,054 Total $ 56,901 $ 58,656 Actual maturities may differ from those scheduled as a result of calls and make-whole payments by the issuers. ABS, RMBS and CMBS are shown separately because of the potential for prepayment of principal prior to contractual maturity dates. Net investment income Net investment income is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Fixed income securities $ 527 $ 520 $ 1,045 $ 1,038 Equity securities 49 44 93 72 Mortgage loans 50 53 105 106 Limited partnership interests 253 126 373 247 Short-term investments 6 3 12 7 Other 60 57 116 108 Investment income, before expense 945 803 1,744 1,578 Investment expense (48 ) (41 ) (99 ) (85 ) Net investment income $ 897 $ 762 $ 1,645 $ 1,493 Realized capital gains and losses Realized capital gains and losses by asset type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Fixed income securities $ 32 $ 24 $ 37 $ (47 ) Equity securities 19 11 125 (79 ) Mortgage loans — 1 — 1 Limited partnership interests 31 (13 ) 71 13 Derivatives (8 ) 2 (23 ) (7 ) Other 7 (1 ) 5 (6 ) Realized capital gains and losses $ 81 $ 24 $ 215 $ (125 ) Realized capital gains and losses by transaction type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Impairment write-downs $ (28 ) $ (63 ) $ (71 ) $ (122 ) Change in intent write-downs (22 ) (16 ) (38 ) (38 ) Net other-than-temporary impairment losses recognized in earnings (50 ) (79 ) (109 ) (160 ) Sales and other 139 104 347 45 Valuation and settlements of derivative instruments (8 ) (1 ) (23 ) (10 ) Realized capital gains and losses $ 81 $ 24 $ 215 $ (125 ) Gross gains of $141 million and $163 million and gross losses of $50 million and $74 million were realized on sales of fixed income and equity securities during the three months ended June 30, 2017 and 2016 , respectively. Gross gains of $376 million and $306 million and gross losses of $125 million and $285 million were realized on sales of fixed income and equity securities during the six months ended June 30, 2017 and 2016 , respectively. Other-than-temporary impairment losses by asset type are as follows: ($ in millions) Three months ended June 30, 2017 Three months ended June 30, 2016 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ (1 ) $ (2 ) $ (3 ) $ — $ — $ — Corporate — — — (1 ) — (1 ) ABS (1 ) — (1 ) — (1 ) (1 ) CMBS (2 ) (1 ) (3 ) — (1 ) (1 ) Total fixed income securities (4 ) (3 ) (7 ) (1 ) (2 ) (3 ) Equity securities (32 ) — (32 ) (51 ) — (51 ) Limited partnership interests (9 ) — (9 ) (24 ) — (24 ) Other (2 ) — (2 ) (1 ) — (1 ) Other-than-temporary impairment losses $ (47 ) $ (3 ) $ (50 ) $ (77 ) $ (2 ) $ (79 ) Six months ended June 30, 2017 Six months ended June 30, 2016 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ (1 ) $ (2 ) $ (3 ) $ — $ — $ — Corporate (9 ) 3 (6 ) (17 ) 7 (10 ) ABS (1 ) — (1 ) (6 ) — (6 ) RMBS (1 ) (3 ) (4 ) — — — CMBS (8 ) 2 (6 ) (4 ) 1 (3 ) Total fixed income securities (20 ) — (20 ) (27 ) 8 (19 ) Equity securities (68 ) — (68 ) (128 ) — (128 ) Limited partnership interests (16 ) — (16 ) (11 ) — (11 ) Other (5 ) — (5 ) (2 ) — (2 ) Other-than-temporary impairment losses $ (109 ) $ — $ (109 ) $ (168 ) $ 8 $ (160 ) The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $231 million and $221 million as of June 30, 2017 and December 31, 2016 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. ($ in millions) June 30, 2017 December 31, 2016 Municipal $ (5 ) $ (8 ) Corporate (3 ) (7 ) ABS (16 ) (21 ) RMBS (99 ) (90 ) CMBS (8 ) (7 ) Total $ (131 ) $ (133 ) Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of the end of the period are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Beginning balance $ (294 ) $ (350 ) $ (318 ) $ (392 ) Additional credit loss for securities previously other-than-temporarily impaired (6 ) (3 ) (13 ) (11 ) Additional credit loss for securities not previously other-than-temporarily impaired (1 ) — (7 ) (8 ) Reduction in credit loss for securities disposed or collected 19 22 56 80 Change in credit loss due to accretion of increase in cash flows 1 — 1 — Ending balance $ (281 ) $ (331 ) $ (281 ) $ (331 ) The Company uses its best estimate of future cash flows expected to be collected from the fixed income security, discounted at the security’s original or current effective rate, as appropriate, to calculate a recovery value and determine whether a credit loss exists. The determination of cash flow estimates is inherently subjective and methodologies may vary depending on facts and circumstances specific to the security. All reasonably available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable assumptions and forecasts, are considered when developing the estimate of cash flows expected to be collected. That information generally includes, but is not limited to, the remaining payment terms of the security, prepayment speeds, foreign exchange rates, the financial condition and future earnings potential of the issue or issuer, expected defaults, expected recoveries, the value of underlying collateral, vintage, geographic concentration of underlying collateral, available reserves or escrows, current subordination levels, third party guarantees and other credit enhancements. Other information, such as industry analyst reports and forecasts, sector credit ratings, financial condition of the bond insurer for insured fixed income securities, and other market data relevant to the realizability of contractual cash flows, may also be considered. The estimated fair value of collateral will be used to estimate recovery value if the Company determines that the security is dependent on the liquidation of collateral for ultimate settlement. If the estimated recovery value is less than the amortized cost of the security, a credit loss exists and an other-than-temporary impairment for the difference between the estimated recovery value and amortized cost is recorded in earnings. The portion of the unrealized loss related to factors other than credit remains classified in accumulated other comprehensive income. If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings. Unrealized net capital gains and losses Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows: ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2017 Gains Losses Fixed income securities $ 58,656 $ 1,963 $ (208 ) $ 1,755 Equity securities 6,117 837 (41 ) 796 Short-term investments 2,175 — — — Derivative instruments (1) 3 3 (4 ) (1 ) Equity method (“EMA”) limited partnerships (2) (1 ) Unrealized net capital gains and losses, pre-tax 2,549 Amounts recognized for: Insurance reserves (3) — DAC and DSI (4) (198 ) Amounts recognized (198 ) Deferred income taxes (825 ) Unrealized net capital gains and losses, after-tax $ 1,526 _______________ (1) Included in the fair value of derivative instruments is $(3) million classified as liabilities. (2) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable. (3) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment, if any, primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies. (4) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2016 Gains Losses Fixed income securities $ 57,839 $ 1,710 $ (447 ) $ 1,263 Equity securities 5,666 594 (85 ) 509 Short-term investments 4,288 — — — Derivative instruments (1) 5 5 (3 ) 2 EMA limited partnerships (4 ) Unrealized net capital gains and losses, pre-tax 1,770 Amounts recognized for: Insurance reserves — DAC and DSI (146 ) Amounts recognized (146 ) Deferred income taxes (571 ) Unrealized net capital gains and losses, after-tax $ 1,053 _______________ (1) Included in the fair value of derivative instruments is $5 million classified as assets. Change in unrealized net capital gains and losses The change in unrealized net capital gains and losses for the six months ended June 30, 2017 is as follows: ($ in millions) Fixed income securities $ 492 Equity securities 287 Derivative instruments (3 ) EMA limited partnerships 3 Total 779 Amounts recognized for: Insurance reserves — DAC and DSI (52 ) Amounts recognized (52 ) Deferred income taxes (254 ) Increase in unrealized net capital gains and losses, after-tax $ 473 Portfolio monitoring The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income and equity security whose carrying value may be other-than-temporarily impaired . For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made the decision to sell or whether it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets either of these criteria, the security’s decline in fair value is considered other than temporary and is recorded in earnings. If the Company has not made the decision to sell the fixed income security and it is not more likely than not the Company will be required to sell the fixed income security before recovery of its amortized cost basis, the Company evaluates whether it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security. The Company calculates the estimated recovery value by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, and compares this to the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss related to other factors recognized in other comprehensive income. For equity securities, the Company considers various factors, including whether it has the intent and ability to hold the equity security for a period of time sufficient to recover its cost basis. Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the equity security’s decline in fair value is considered other than temporary and is recorded in earnings. For fixed income and equity securities managed by third parties, either the Company has contractually retained its decision making authority as it pertains to selling securities that are in an unrealized loss position or it recognizes any unrealized loss at the end of the period through a charge to earnings. The Company’s portfolio monitoring process includes a quarterly review of all securities to identify instances where the fair value of a security compared to its amortized cost (for fixed income securities) or cost (for equity securities) is below established thresholds. The process also includes the monitoring of other impairment indicators such as ratings, ratings downgrades and payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed income and equity securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value is other than temporary are: 1) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; 2) the specific reasons that a security is in an unrealized loss position, including overall market conditions which could affect liquidity; and 3) the length of time and extent to which the fair value has been less than amortized cost or cost. The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position. ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number of issues Fair value Unrealized losses Number of issues Fair value Unrealized losses June 30, 2017 Fixed income securities U.S. government and agencies 62 $ 1,840 $ (7 ) — $ — $ — $ (7 ) Municipal 903 1,842 (20 ) 4 14 (4 ) (24 ) Corporate 615 8,649 (109 ) 44 358 (41 ) (150 ) Foreign government 57 625 (6 ) — — — (6 ) ABS 35 242 (1 ) 10 39 (9 ) (10 ) RMBS 79 41 (1 ) 179 66 (3 ) (4 ) CMBS 6 23 (2 ) 5 14 (5 ) (7 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 1,758 13,262 (146 ) 242 491 (62 ) (208 ) Equity securities 137 547 (34 ) 13 43 (7 ) (41 ) Total fixed income and equity securities 1,895 $ 13,809 $ (180 ) 255 $ 534 $ (69 ) $ (249 ) Investment grade fixed income securities 1,655 $ 12,373 $ (124 ) 183 $ 295 $ (31 ) $ (155 ) Below investment grade fixed income securities 103 889 (22 ) 59 196 (31 ) (53 ) Total fixed income securities 1,758 $ 13,262 $ (146 ) 242 $ 491 $ (62 ) $ (208 ) December 31, 2016 Fixed income securities U.S. government and agencies 46 $ 943 $ (9 ) — $ — $ — $ (9 ) Municipal 1,310 3,073 (76 ) 8 29 (11 ) (87 ) Corporate 862 13,343 (256 ) 83 678 (63 ) (319 ) Foreign government 41 225 (4 ) — — — (4 ) ABS 31 222 (1 ) 14 109 (10 ) (11 ) RMBS 89 53 (1 ) 179 91 (7 ) (8 ) CMBS 15 59 (4 ) 4 15 (5 ) (9 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 2,395 17,918 (351 ) 288 922 (96 ) (447 ) Equity securities 195 654 (56 ) 46 165 (29 ) (85 ) Total fixed income and equity securities 2,590 $ 18,572 $ (407 ) 334 $ 1,087 $ (125 ) $ (532 ) Investment grade fixed income securities 2,202 $ 15,678 $ (293 ) 201 $ 493 $ (51 ) $ (344 ) Below investment grade fixed income securities 193 2,240 (58 ) 87 429 (45 ) (103 ) Total fixed income securities 2,395 $ 17,918 $ (351 ) 288 $ 922 $ (96 ) $ (447 ) As of June 30, 2017 , $207 million of the $249 million unrealized losses are related to securities with an unrealized loss position less than 20% of amortized cost or cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired. Of the $ 207 million , $ 139 million are related to unrealized losses on investment grade fixed income securities and $34 million are related to equity securities. Of the remaining $34 million , $19 million have been in an unrealized loss position for less than 12 months. Investment grade is defined as a security having a rating of Aaa, Aa, A or Baa from Moody’s, a rating of AAA, AA, A or BBB from S&P Global Ratings (“S&P”), a comparable rating from another nationally recognized rating agency, or a comparable internal rating if an externally provided rating is not available. Market prices for certain securities may have credit spreads which imply higher or lower credit quality than the current third party rating. Unrealized losses on investment grade securities are principally related to an increase in market yields which may include increased risk-free interest rates and/or wider credit spreads since the time of initial purchase. As of June 30, 2017 , the remaining $ 42 million of unrealized losses are related to securities in unrealized loss positions greater than or equal to 20% of amortized cost or cost. Investment grade fixed income securities comprising $ 16 million of these unrealized losses were evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. Of the $ 42 million , $ 19 million are related to below investment grade fixed income securities and $ 7 million are related to equity securities. Of these amounts, $7 million are related to below investment grade fixed income securities that had been in an unrealized loss position greater than or equal to 20% of amortized cost for a period of twelve or more consecutive months as of June 30, 2017 . ABS, RMBS and CMBS in an unrealized loss position were evaluated based on actual and projected collateral losses relative to the securities’ positions in the respective securitization trusts, security specific expectations of cash flows, and credit ratings. This evaluation also takes into consideration credit enhancement, measured in terms of (i) subordination from other classes of securities in the trust that are contractually obligated to absorb losses before the class of security the Company owns, and (ii) the expected impact of other structural features embedded in the securitization trust beneficial to the class of securities the Company owns, such as overcollateralization and excess spread. Municipal bonds in an unrealized loss position were evaluated based on the underlying credit quality of the primary obligor, obligation type and quality of the underlying assets. Unrealized losses on equity securities are primarily related to temporary equity market fluctuations of securities that are expected to recover. As of June 30, 2017 , the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed income securities with unrealized losses before recovery of the amortized cost basis. As of June 30, 2017 , the Company had the intent and ability to hold equity securities with unrealized losses for a period of time sufficient for them to recover. Limited partnerships As of June 30, 2017 and December 31, 2016 , the carrying value of equity method limited partnerships totaled $4.94 billion and $4.53 billion , respectively. The Company recognizes an impairment loss for equity method limited partnerships when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. As of June 30, 2017 and December 31, 2016 , the carrying value for cost method limited partnerships was $1.27 billion and $1.28 billion , respectively. To determine if an other-than-temporary impairment has occurred, the Company evaluates whether an impairment indicator has occurred in the period that may have a significant adverse effect on the carrying value of the investment. Impairment indicators may include: significantly reduced valuations of the investments held by the limited partnerships; actual recent cash flows received being significantly less than expected cash flows; reduced valuations based on financing completed at a lower value; completed sale of a material underlying investment at a price significantly lower than expected; or any other adverse events since the last financial statements received that might affect the fair value of the investee’s capital. Additionally, the Company’s portfolio monitoring process includes a quarterly review of all cost method limited partnerships to identify instances where the net asset value is below established thresholds for certain periods of time, as well as investments that are performing below expectations, for further impairment consideration. If a cost method limited partnership is other-than-temporarily impaired, the carrying value is written down to fair value, generally estimated to be equivalent to the reported net asset value. Mortgage loans Mortgage loans are evaluated for impairment on a specific loan basis through a quarterly credit monitoring process and review of key credit quality indicators. Mortgage loans are considered impaired when it is probable that the Company will not collect the contractual principal and interest. Valuation allowances are established for impaired loans to reduce the carrying value to the fair value of the collateral less costs to sell or the present value of the loan’s expected future repayment cash flows discounted at the loan’s original effective interest rate. Impaired mortgage loans may not have a valuation allowance when the fair value of the collateral less costs to sell is higher than the carrying value. Valuation allowances are adjusted for subsequent changes in the fair value of the collateral less costs to sell or present value of the loan’s expected future repayment cash flows. Mortgage loans are charged off against their corresponding valuation allowances when there is no reasonable expectation of recovery. The impairment evaluation is non-statistical in respect to the aggregate portfolio but considers facts and circumstances attributable to each loan. It is not considered probable that additional impairment losses, beyond those identified on a specific loan basis, have been incurred as of June 30, 2017 . Accrual of income is suspended for mortgage loans that are in default or when full and timely collection of principal and interest payments is not probable. Cash receipts on mortgage loans on nonaccrual status are generally recorded as a reduction of carrying value. Debt service coverage ratio is considered a key credit quality indicator when mortgage loans are evaluated for impairment. Debt service coverage ratio represents the amount of estimated cash flows from the property available to the borrower to meet principal and interest payment obligations. Debt service coverage ratio estimates are updated annually or more frequently if conditions are warranted based on the Company’s credit monitoring process. The following table reflects the carrying value of non-impaired fixed rate and variable rate mortgage loans summarized by debt service coverage ratio distribution. ($ in millions) June 30, 2017 December 31, 2016 Debt service coverage ratio distribution Fixed rate mortgage loans Variable rate mortgage loans Total Fixed rate mortgage loans Variable rate mortgage loans Total Below 1.0 $ 18 $ — $ 18 $ 60 $ — $ 60 1.0 - 1.25 329 — 329 324 — 324 1.26 - 1.50 1,245 — 1,245 1,293 — 1,293 Above 1.50 2,700 39 2,739 2,765 39 2,804 Total non-impaired mortgage loans $ 4,292 $ 39 $ 4,331 $ 4,442 $ 39 $ 4,481 Mortgage loans with a debt service coverage ratio below 1.0 that are not considered impaired primarily relate to instances where the borrower has the financial capacity to fund the revenue shortfalls from the properties for the foreseeable term, the decrease in cash flows from the properties is considered temporary, or there are other risk mitigating circumstances such as additional collateral, escrow balances or borrower guarantees. The net carrying value of impaired mortgage loans is as follows: ($ in millions) June 30, 2017 December 31, 2016 Impaired mortgage loans with a valuation allowance $ 5 $ 5 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 5 $ 5 Valuation allowance on impaired mortgage loans $ 3 $ 3 The average balance of impaired loans was $5 million and $6 million for the six months ended June 30, 2017 and 2016 , respectively. The rollforward of the valuation allowance on impaired mortgage loans is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Beginning balance $ 3 $ 3 $ 3 $ 3 Charge offs — — — — Ending balance $ 3 $ 3 $ 3 $ 3 Payments on all mortgage loans were current as of June 30, 2017 and December 31, 2016 . |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy. The first is where specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. The second situation where the Company classifies securities in Level 3 is where quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans, limited partnership interests, bank loans, agent loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to remeasurement at fair value after initial recognition and the resulting remeasurement is reflected in the condensed consolidated financial statements. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Level 1 measurements • Fixed income securities: Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Equity securities: Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Short-term: Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. • Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers. Level 2 measurements • Fixed income securities: U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - public: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. ABS - collateralized debt obligations (“CDO”) and ABS - consumer and other: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. Certain ABS - CDO and ABS - consumer and other are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Redeemable preferred stock: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows. Corporate - public and Corporate - privately placed: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. ABS - CDO, ABS - consumer and other, RMBS and CMBS: Valued based on non-binding broker quotes received from brokers who are familiar with the investments and where the inputs have not been corroborated to be market observable. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. Assets and liabilities measured at fair value on a non-recurring basis Mortgage loans written-down to fair value in connection with recognizing impairments are valued based on the fair value of the underlying collateral less costs to sell. Limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments are generally valued using net asset values. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2017 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of June 30, 2017 Assets Fixed income securities: U.S. government and agencies $ 2,773 $ 653 $ — $ 3,426 Municipal — 7,741 114 7,855 Corporate - public — 32,079 60 32,139 Corporate - privately placed — 11,846 266 12,112 Foreign government — 1,047 — 1,047 ABS - CDO — 520 91 611 ABS - consumer and other — 512 120 632 RMBS — 641 — 641 CMBS — 146 24 170 Redeemable preferred stock — 23 — 23 Total fixed income securities 2,773 55,208 675 58,656 Equity securities 5,643 308 166 6,117 Short-term investments 315 1,860 — 2,175 Other investments: Free-standing derivatives — 126 1 $ (19 ) 108 Separate account assets 3,416 — — 3,416 Other assets — — — — Total recurring basis assets 12,147 57,502 842 (19 ) 70,472 Non-recurring basis (1) — — 16 16 Total assets at fair value $ 12,147 $ 57,502 $ 858 $ (19 ) $ 70,488 % of total assets at fair value 17.2 % 81.6 % 1.2 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (285 ) $ (285 ) Other liabilities: Free-standing derivatives (1 ) (70 ) — $ 21 (50 ) Total liabilities at fair value $ (1 ) $ (70 ) $ (285 ) $ 21 $ (335 ) % of total liabilities at fair value 0.3 % 20.9 % 85.1 % (6.3 )% 100 % _______________ (1) Includes $15 million of limited partnership interests and $ 1 million of other investments written-down to fair value in connection with recognizing other-than-temporary impairments. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2016 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of December 31, 2016 Assets Fixed income securities: U.S. government and agencies $ 2,918 $ 719 $ — $ 3,637 Municipal — 7,208 125 7,333 Corporate - public — 31,414 78 31,492 Corporate - privately placed — 11,846 263 12,109 Foreign government — 1,075 — 1,075 ABS - CDO — 650 27 677 ABS - consumer and other — 452 42 494 RMBS — 727 1 728 CMBS — 248 22 270 Redeemable preferred stock — 24 — 24 Total fixed income securities 2,918 54,363 558 57,839 Equity securities 5,247 256 163 5,666 Short-term investments 850 3,423 15 4,288 Other investments: Free-standing derivatives — 119 1 $ (9 ) 111 Separate account assets 3,393 — — 3,393 Other assets — — 1 1 Total recurring basis assets 12,408 58,161 738 (9 ) 71,298 Non-recurring basis (1) — — 24 24 Total assets at fair value $ 12,408 $ 58,161 $ 762 $ (9 ) $ 71,322 % of total assets at fair value 17.4 % 81.5 % 1.1 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (290 ) $ (290 ) Other liabilities: Free-standing derivatives (1 ) (68 ) (3 ) $ 28 (44 ) Total liabilities at fair value $ (1 ) $ (68 ) $ (293 ) $ 28 $ (334 ) % of total liabilities at fair value 0.3 % 20.4 % 87.7 % (8.4 )% 100 % _______________ (1) Includes $24 million of limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments. The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average June 30, 2017 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (250 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% December 31, 2016 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (247 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.75% The embedded derivatives are equity-indexed and forward starting options in certain life and annuity products that provide customers with interest crediting rates based on the performance of the S&P 500. If the projected option cost increased (decreased), it would result in a higher (lower) liability fair value. As of June 30, 2017 and December 31, 2016 , Level 3 fair value measurements of fixed income securities total $675 million and $558 million , respectively, and include $367 million and $307 million , respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $68 million and $80 million , respectively, of municipal fixed income securities that are not rated by third party credit rating agencies. The Company does not develop the unobservable inputs used in measuring fair value; therefore, these are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third party credit rating agencies would result in a higher (lower) fair value. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2017 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 124 $ (2 ) $ 5 $ — $ — Corporate - public 60 — — — — Corporate - privately placed 263 6 (7 ) 30 — ABS - CDO 147 — — 3 (122 ) ABS - consumer and other 80 — — — (5 ) CMBS 25 — — — — Total fixed income securities 699 4 (2 ) 33 (127 ) Equity securities 170 3 3 — — Short-term investments 35 — — — — Free-standing derivatives, net (1 ) 2 — — — Total recurring Level 3 assets $ 903 $ 9 $ 1 $ 33 $ (127 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (286 ) $ — $ — $ — $ — Total recurring Level 3 liabilities $ (286 ) $ — $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ 5 $ (18 ) $ — $ — $ 114 Corporate - public (1 ) 1 — — 60 Corporate - privately placed 4 (29 ) — (1 ) 266 ABS - CDO 65 — — (2 ) 91 ABS - consumer and other 48 — — (3 ) 120 CMBS — — — (1 ) 24 Total fixed income securities 121 (46 ) — (7 ) 675 Equity securities 2 (12 ) — — 166 Short-term investments 5 (40 ) — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 128 $ (98 ) $ — $ (7 ) $ 842 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (285 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (285 ) _____________ (1) The effect to net income totals $9 million and is reported in the Condensed Consolidated Statements of Operations as follows: $5 million in realized capital gains and losses, $4 million in net investment income, $(1) million in interest credited to contractholder funds and $1 million in life and annuity contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2016 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 125 $ (1 ) $ 6 $ — $ (1 ) Corporate - public 78 — — — (16 ) Corporate - privately placed 263 6 (2 ) 30 — ABS - CDO 27 — 2 30 (122 ) ABS - consumer and other 42 — — — (7 ) RMBS 1 — — — — CMBS 22 — — — — Total fixed income securities 558 5 6 60 (146 ) Equity securities 163 13 3 — (3 ) Short-term investments 15 — — — — Free-standing derivatives, net (2 ) 3 — — — Other assets 1 (1 ) — — — Total recurring Level 3 assets $ 735 $ 20 $ 9 $ 60 $ (149 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (290 ) $ 3 $ — $ — $ — Total recurring Level 3 liabilities $ (290 ) $ 3 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ 5 $ (20 ) $ — $ — $ 114 Corporate - public (1 ) 1 — (2 ) 60 Corporate - privately placed 4 (29 ) — (6 ) 266 ABS - CDO 160 — — (6 ) 91 ABS - consumer and other 89 — — (4 ) 120 RMBS — — — (1 ) — CMBS 3 — — (1 ) 24 Total fixed income securities 260 (48 ) — (20 ) 675 Equity securities 3 (13 ) — — 166 Short-term investments 25 (40 ) — — — Free-standing derivatives, net — — — — 1 (2) Other assets — — — — — Total recurring Level 3 assets $ 288 $ (101 ) $ — $ (20 ) $ 842 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (285 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (285 ) _____________ (1) The effect to net income totals $23 million and is reported in the Condensed Consolidated Statements of Operations as follows: $7 million in realized capital gains and losses, $14 million in net investment income, $(6) million in interest credited to contractholder funds and $8 million in life and annuity contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2016 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2016 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: U.S. government and agencies $ 4 $ — $ — $ — $ (4 ) Municipal 146 — 3 6 — Corporate - public 63 — — — — Corporate - privately placed 549 3 8 16 (69 ) ABS - CDO 58 — 3 6 (3 ) ABS - consumer and other 44 — (1 ) 3 — RMBS 1 — — — — CMBS 20 — — — — Total fixed income securities 885 3 13 31 (76 ) Equity securities 125 (8 ) 1 — — Free-standing derivatives, net (8 ) 1 — — — Other assets 1 — — — — Total recurring Level 3 assets $ 1,003 $ (4 ) $ 14 $ 31 $ (76 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (313 ) $ 7 $ — $ — $ — Total recurring Level 3 liabilities $ (313 ) $ 7 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2016 Assets Fixed income securities: U.S. government and agencies $ — $ — $ — $ — $ — Municipal — (6 ) — — 149 Corporate - public 7 4 — — 74 Corporate - privately placed 80 — — (2 ) 585 ABS - CDO — — — (31 ) 33 ABS - consumer and other — — — (1 ) 45 RMBS — — — — 1 CMBS — — — — 20 Total fixed income securities 87 (2 ) — (34 ) 907 Equity securities — — — — 118 Free-standing derivatives, net — — — — (7 ) (2) Other assets — — — — 1 Total recurring Level 3 assets $ 87 $ (2 ) $ — $ (34 ) $ 1,019 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 2 $ (304 ) Total recurring Level 3 liabilities $ — $ — $ — $ 2 $ (304 ) _____________________ (1) The effect to net income totals $3 million and is reported in the Condensed Consolidated Statements of Operations as follows: $(9) million in realized capital gains and losses, $5 million in net investment income, $(7) million in interest credited to contractholder funds and $14 million in life and annuity contract benefits. (2) Comprises $1 million of assets and $8 million of liabilities. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2016 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2015 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: U.S. government and agencies $ 5 $ — $ — $ — $ (4 ) Municipal 161 10 (5 ) 6 — Corporate - public 46 — 1 25 (7 ) Corporate - privately placed 502 4 13 16 (83 ) ABS - CDO 61 — 2 10 (3 ) ABS - consumer and other 50 — (2 ) 3 — RMBS 1 — — — — CMBS 20 — — — — Total fixed income securities 846 14 9 60 (97 ) Equity securities 133 (32 ) 8 — — Free-standing derivatives, net (7 ) — — — — Other assets 1 — — — — Total recurring Level 3 assets $ 973 $ (18 ) $ 17 $ 60 $ (97 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (299 ) $ (8 ) $ — $ — $ — Total recurring Level 3 liabilities $ (299 ) $ (8 ) $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2016 Assets Fixed income securities: U.S. government and agencies $ — $ — $ — $ (1 ) $ — Municipal — (22 ) — (1 ) 149 Corporate - public 7 4 — (2 ) 74 Corporate - privately placed 143 — — (10 ) 585 ABS - CDO — (2 ) — (35 ) 33 ABS - consumer and other — (5 ) — (1 ) 45 RMBS — — — — 1 CMBS 2 — — (2 ) 20 Total fixed income securities 152 (25 ) — (52 ) 907 Equity securities 9 — — — 118 Free-standing derivatives, net — — — — (7 ) (2) Other assets — — — — 1 Total recurring Level 3 assets $ 161 $ (25 ) $ — $ (52 ) $ 1,019 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 4 $ (304 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 4 $ (304 ) _____________________ (1) The effect to net income totals $(26) million and is reported in the Condensed Consolidated Statements of Operations as follows: $(25) million in realized capital gains and losses, $7 million in net investment income, $(6) million in interest credited to contractholder funds and $(2) million in life and annuity contract benefits. (2) Comprises $1 million of assets and $8 million of liabilities. Transfers between level categorizations may occur due to changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask spreads. Transfers between level categorizations may also occur due to changes in the valuation source. For example, in situations where a fair value quote is not provided by the Company’s independent third-party valuation service provider and as a result the price is stale or has been replaced with a broker quote whose inputs have not been corroborated to be market observable, the security is transferred into Level 3. Transfers in and out of level categorizations are reported as having occurred at the beginning of the quarter in which the transfer occurred. Therefore, for all transfers into Level 3, all realized and changes in unrealized gains and losses in the quarter of transfer are reflected in the Level 3 rollforward table. There were no transfers between Level 1 and Level 2 during the three months and six months ended June 30, 2017 or 2016 . Transfers into Level 3 during the three months and six months ended June 30, 2017 and 2016 included situations where a fair value quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers out of Level 3 during the three months and six months ended June 30, 2017 and 2016 included situations where a broker quote was used in the prior period and a fair value quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant. The following table provides the change in unrealized gains and losses included in net income for Level 3 assets and liabilities held as of June 30 . ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Assets Fixed income securities: Municipal $ (3 ) $ 1 $ (3 ) $ 1 Corporate — 3 — 1 Total fixed income securities (3 ) 4 (3 ) 2 Equity securities 4 (8 ) 14 (32 ) Free-standing derivatives, net 2 1 3 — Other assets — — (1 ) — Total recurring Level 3 assets $ 3 $ (3 ) $ 13 $ (30 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ 7 $ 3 $ (8 ) Total recurring Level 3 liabilities $ — $ 7 $ 3 $ (8 ) The amounts in the table above represent the change in unrealized gains and losses included in net income for the period of time that the asset or liability was determined to be in Level 3. These gains and losses total $3 million for the three months ended June 30, 2017 and are reported as follows: $(1) million in realized capital gains and losses, $4 million in net investment income, $(1) million in interest credited to contractholder funds and $1 million in life and annuity contract benefits. These gains and losses total $4 million for the three months ended June 30, 2016 and are reported as follows: $(9) million in realized capital gains and losses, $6 million in net investment income, $(7) million in interest credited to contractholder funds and $14 million in life and annuity contract benefits. These gains and losses total $16 million for the six months ended June 30, 2017 and are reported as follows: $14 million in net investment income, $(6) million in interest credited to contractholder funds and $8 million in life and annuity contract benefits. These gains and losses total $(38) million for the six months ended June 30, 2016 and are reported as follows: $(38) million in realized capital gains and losses, $8 million in net investment income, $(6) million in interest credited to contractholder funds and $(2) million in life and annuity contract benefits. Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. Financial assets ($ in millions) June 30, 2017 December 31, 2016 Carrying value Fair value Carrying value Fair value Mortgage loans $ 4,336 $ 4,483 $ 4,486 $ 4,514 Cost method limited partnerships 1,269 1,511 1,282 1,493 Bank loans 1,754 1,759 1,669 1,677 Agent loans 499 495 467 467 The fair value of mortgage loans is based on discounted contractual cash flows or, if the loans are impaired due to credit reasons, the fair value of collateral less costs to sell. Risk adjusted discount rates are selected using current rates at which similar loans would be made to borrowers with similar characteristics, using sim |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company uses derivatives for risk reduction and to increase investment portfolio returns through asset replication. Risk reduction activity is focused on managing the risks with certain assets and liabilities arising from the potential adverse impacts from changes in risk-free interest rates, changes in equity market valuations, increases in credit spreads and foreign currency fluctuations. Asset replication refers to the “synthetic” creation of assets through the use of derivatives. The Company replicates fixed income securities using a combination of a credit default swap or a foreign currency forward contract and one or more highly rated fixed income securities, primarily investment grade host bonds, to synthetically replicate the economic characteristics of one or more cash market securities. The Company replicates equity securities using futures and options to increase equity exposure. Property-Liability may use interest rate swaps, swaptions, futures and options to manage the interest rate risks of existing investments. These instruments are utilized to change the duration of the portfolio in order to offset the economic effect that interest rates would otherwise have on the fair value of its fixed income securities. Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio. Equity index futures and options are used by Property-Liability to offset valuation losses in the equity portfolio during periods of declining equity market values. In addition, equity futures are used to hedge the market risk related to deferred compensation liability contracts. Forward contracts are primarily used by Property-Liability to hedge foreign currency risk associated with holding foreign currency denominated investments and foreign operations. Allstate Financial utilizes several derivative strategies to manage risk. Asset-liability management is a risk management strategy that is principally employed by Allstate Financial to balance the respective interest-rate sensitivities of its assets and liabilities. Depending upon the attributes of the assets acquired and liabilities issued, derivative instruments such as interest rate swaps, caps, swaptions and futures are utilized to change the interest rate characteristics of existing assets and liabilities to ensure the relationship is maintained within specified ranges and to reduce exposure to rising or falling interest rates. Credit default swaps are typically used to mitigate the credit risk within the Allstate Financial fixed income portfolio. Futures and options are used for hedging the equity exposure contained in Allstate Financial’s equity indexed life and annuity product contracts that offer equity returns to contractholders. In addition, Allstate Financial uses equity index futures and options to offset valuation losses in the equity portfolio during periods of declining equity market values. Foreign currency swaps and forwards are primarily used by Allstate Financial to reduce the foreign currency risk associated with holding foreign currency denominated investments. The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income. The Company’s primary embedded derivatives are equity options in life and annuity product contracts, which provide equity returns to contractholders. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. Allstate Financial designates certain investment risk transfer reinsurance agreements as fair value hedges when the hedging instrument is highly effective in offsetting the risk of changes in the fair value of the hedged item. Allstate Financial designates certain of its foreign currency swap contracts as cash flow hedges when the hedging instrument is highly effective in offsetting the exposure of variations in cash flows for the hedged risk that could affect net income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged item affects net income. The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Condensed Consolidated Statements of Financial Position. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of June 30, 2017 , the Company pledged $23 million in the form of margin deposits. For those derivatives which qualify for fair value hedge accounting, net income includes the changes in the fair value of both the derivative instrument and the hedged risk, and therefore reflects any hedging ineffectiveness. For cash flow hedges, gains and losses are amortized from accumulated other comprehensive income and are reported in net income in the same period the forecasted transactions being hedged impact net income. Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Condensed Consolidated Statement of Financial Position as of June 30, 2017 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 22 n/a $ — $ — $ — Equity and index contracts Options Other investments 585 6,798 110 113 (3 ) Financial futures contracts Other assets — 519 — — — Foreign currency contracts Foreign currency forwards Other investments 344 n/a (7 ) 2 (9 ) Credit default contracts Credit default swaps – buying protection Other investments 49 n/a (2 ) — (2 ) Credit default swaps – selling protection Other investments 80 n/a 1 1 — Other contracts Other contracts Other assets 3 n/a — — — Total asset derivatives $ 1,083 7,317 $ 102 $ 116 $ (14 ) Liability derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other liabilities & accrued expenses $ 49 n/a $ 2 $ 2 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses 37 n/a 1 1 — Equity and index contracts Options and futures Other liabilities & accrued expenses — 8,896 (42 ) — (42 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 621 n/a (2 ) 8 (10 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 246 n/a (28 ) — (28 ) Guaranteed withdrawal benefits Contractholder funds 282 n/a (7 ) — (7 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,753 n/a (250 ) — (250 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 173 n/a (5 ) — (5 ) Credit default swaps – selling protection Other liabilities & accrued expenses 130 n/a — — — Subtotal 3,242 8,896 (333 ) 9 (342 ) Total liability derivatives 3,291 8,896 (331 ) $ 11 $ (342 ) Total derivatives $ 4,374 16,213 $ (229 ) __________________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2016 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other investments $ 49 n/a $ 5 $ 5 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments 65 n/a 1 1 — Equity and index contracts Options Other investments — 3,972 88 88 — Financial futures contracts Other assets — 261 — — — Foreign currency contracts Foreign currency forwards Other investments 759 n/a — 24 (24 ) Credit default contracts Credit default swaps – buying protection Other investments 87 n/a (4 ) — (4 ) Credit default swaps – selling protection Other investments 140 n/a 2 2 — Other contracts Other contracts Other assets 3 n/a 1 1 — Subtotal 1,054 4,233 88 116 (28 ) Total asset derivatives $ 1,103 4,233 $ 93 $ 121 $ (28 ) Liability derivatives Derivatives not designated as accounting hedging instruments Equity and index contracts Options and futures Other liabilities & accrued expenses $ — 4,848 $ (39 ) $ — $ (39 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 391 n/a (34 ) — (34 ) Guaranteed withdrawal benefits Contractholder funds 290 n/a (9 ) — (9 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,751 n/a (247 ) — (247 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 136 n/a (2 ) — (2 ) Credit default swaps – selling protection Other liabilities & accrued expenses 105 n/a (3 ) — (3 ) Subtotal 2,673 4,848 (334 ) — (334 ) Total liability derivatives 2,673 4,848 (334 ) $ — $ (334 ) Total derivatives $ 3,776 9,081 $ (241 ) __________________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross amount Counter-party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount June 30, 2017 Asset derivatives $ 20 $ (25 ) $ 6 $ 1 $ — $ 1 Liability derivatives (29 ) 25 (4 ) (8 ) 3 (5 ) December 31, 2016 Asset derivatives $ 31 $ (28 ) $ 19 $ 22 $ (9 ) $ 13 Liability derivatives (33 ) 28 — (5 ) 4 (1 ) The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships. Amortization of net gains from accumulated other comprehensive income related to cash flow hedges is expected to be a gain of $3 million during the next twelve months. There was no hedge ineffectiveness reported in realized gains and losses for the three months and six months ended June 30, 2017 or 2016 . ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Gain (loss) recognized in OCI on derivatives during the period $ — $ 1 $ (2 ) $ (1 ) (Loss) gain recognized in OCI on derivatives during the term of the hedging relationship (1 ) 2 (1 ) 2 Gain reclassified from AOCI into income (net investment income) 1 — 1 — Gain reclassified from AOCI into income (realized capital gains and losses) — 3 — 3 The following tables present gains and losses from valuation and settlements reported on derivatives not designated as accounting hedging instruments in the Condensed Consolidated Statements of Operations. For the three months and six months ended June 30, 2017 and 2016 , the Company had no derivatives used in fair value hedging relationships. ($ in millions) Realized capital gains and losses Life and annuity contract benefits Interest credited to contractholder funds Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended June 30, 2017 Equity and index contracts $ — $ — $ 9 $ 5 $ 14 Embedded derivative financial instruments — 1 — — 1 Foreign currency contracts (8 ) — — 4 (4 ) Total $ (8 ) $ 1 $ 9 $ 9 $ 11 Six months ended June 30, 2017 Equity and index contracts $ (7 ) $ — $ 22 $ 12 $ 27 Embedded derivative financial instruments — 8 (4 ) — 4 Foreign currency contracts (15 ) — — 5 (10 ) Credit default contracts (1 ) — — — (1 ) Total $ (23 ) $ 8 $ 18 $ 17 $ 20 Three months ended June 30, 2016 Interest rate contracts $ (1 ) $ — $ — $ — $ (1 ) Equity and index contracts (5 ) — 2 4 1 Embedded derivative financial instruments — 14 (5 ) — 9 Foreign currency contracts 6 — — (16 ) (10 ) Credit default contracts (1 ) — — — (1 ) Total $ (1 ) $ 14 $ (3 ) $ (12 ) $ (2 ) Six months ended June 30, 2016 Interest rate contracts $ (1 ) $ — $ — $ — $ (1 ) Equity and index contracts (5 ) — (5 ) 4 (6 ) Embedded derivative financial instruments — (2 ) (3 ) — (5 ) Foreign currency contracts 1 — — (21 ) (20 ) Credit default contracts (5 ) — — — (5 ) Total $ (10 ) $ (2 ) $ (8 ) $ (17 ) $ (37 ) The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements (“MNAs”) and obtaining collateral where appropriate. The Company uses MNAs for OTC derivative transactions that permit either party to net payments due for transactions and collateral is either pledged or obtained when certain predetermined exposure limits are exceeded. As of June 30, 2017 , counterparties pledged $7 million in cash to the Company, and the Company pledged $12 million in cash and securities to counterparties which includes $3 million of collateral posted under MNAs for contracts containing credit-risk-contingent provisions that are in a liability position and $9 million of collateral posted under MNAs for contracts without credit-risk-contingent features. The Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Other derivatives, including futures and certain option contracts, are traded on organized exchanges which require margin deposits and guarantee the execution of trades, thereby mitigating any potential credit risk. Counterparty credit exposure represents the Company’s potential loss if all of the counterparties concurrently fail to perform under the contractual terms of the contracts and all collateral, if any, becomes worthless. This exposure is measured by the fair value of OTC derivative contracts with a positive fair value at the reporting date reduced by the effect, if any, of legally enforceable master netting agreements. The following table summarizes the counterparty credit exposure by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) June 30, 2017 December 31, 2016 Rating (1) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) AA- 2 $ 140 $ 1 $ — 2 $ 80 $ 2 $ 2 A+ 4 775 6 1 5 698 20 9 A- — — — — 1 110 1 1 Total 6 $ 915 $ 7 $ 1 8 $ 888 $ 23 $ 12 _______________ (1) Rating is the lower of S&P or Moody’s ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. To limit this risk, the Company’s senior management has established risk control limits. In addition, changes in fair value of the derivative financial instruments that the Company uses for risk management purposes are generally offset by the change in the fair value or cash flows of the hedged risk component of the related assets, liabilities or forecasted transactions. Certain of the Company’s derivative instruments contain credit-risk-contingent termination events, cross-default provisions and credit support annex agreements. Credit-risk-contingent termination events allow the counterparties to terminate the derivative agreement or a specific trade on certain dates if AIC’s, ALIC’s or Allstate Life Insurance Company of New York’s (“ALNY”) financial strength credit ratings by Moody’s or S&P fall below a certain level. Credit-risk-contingent cross-default provisions allow the counterparties to terminate the derivative agreement if the Company defaults by pre-determined threshold amounts on certain debt instruments. Credit-risk-contingent credit support annex agreements specify the amount of collateral the Company must post to counterparties based on AIC’s, ALIC’s or ALNY’s financial strength credit ratings by Moody’s or S&P, or in the event AIC, ALIC or ALNY are no longer rated by either Moody’s or S&P. The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) June 30, 2017 December 31, 2016 Gross liability fair value of contracts containing credit-risk-contingent features $ 20 $ 9 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (12 ) (7 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features (3 ) — Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ 5 $ 2 Credit derivatives - selling protection A credit default swap (“CDS”) is a derivative instrument, representing an agreement between two parties to exchange the credit risk of a specified entity (or a group of entities), or an index based on the credit risk of a group of entities (all commonly referred to as the “reference entity” or a portfolio of “reference entities”), in return for a periodic premium. In selling protection, CDS are used to replicate fixed income securities and to complement the cash market when credit exposure to certain issuers is not available or when the derivative alternative is less expensive than the cash market alternative. CDS typically have a five -year term. The following table shows the CDS notional amounts by credit rating and fair value of protection sold. ($ in millions) Notional amount AA A BBB BB and lower Total Fair value June 30, 2017 Single name Corporate debt $ — $ — $ 25 $ 5 $ 30 $ — First-to-default Basket Municipal — — 100 — 100 — Index Corporate debt 1 17 49 13 80 1 Total $ 1 $ 17 $ 174 $ 18 $ 210 $ 1 December 31, 2016 Single name Corporate debt $ 20 $ 10 $ 35 $ — $ 65 $ 1 First-to-default Basket Municipal — — 100 — 100 (3 ) Index Corporate debt 1 19 50 10 80 1 Total $ 21 $ 29 $ 185 $ 10 $ 245 $ (1 ) In selling protection with CDS, the Company sells credit protection on an identified single name, a basket of names in a first-to-default (“FTD”) structure or credit derivative index (“CDX”) that is generally investment grade, and in return receives periodic premiums through expiration or termination of the agreement. With single name CDS, this premium or credit spread generally corresponds to the difference between the yield on the reference entity’s public fixed maturity cash instruments and swap rates at the time the agreement is executed. With a FTD basket, because of the additional credit risk inherent in a basket of named reference entities, the premium generally corresponds to a high proportion of the sum of the credit spreads of the names in the basket and the correlation between the names. CDX is utilized to take a position on multiple (generally 125 ) reference entities. Credit events are typically defined as bankruptcy, failure to pay, or restructuring, depending on the nature of the reference entities. If a credit event occurs, the Company settles with the counterparty, either through physical settlement or cash settlement. In a physical settlement, a reference asset is delivered by the buyer of protection to the Company, in exchange for cash payment at par, whereas in a cash settlement, the Company pays the difference between par and the prescribed value of the reference asset. When a credit event occurs in a single name or FTD basket (for FTD, the first credit event occurring for any one name in the basket), the contract terminates at the time of settlement. For CDX, the reference entity’s name incurring the credit event is removed from the index while the contract continues until expiration. The maximum payout on a CDS is the contract notional amount. A physical settlement may afford the Company with recovery rights as the new owner of the asset. The Company monitors risk associated with credit derivatives through individual name credit limits at both a credit derivative and a combined cash instrument/credit derivative level. The ratings of individual names for which protection has been sold are also monitored. |
Reserve for Property-Liability
Reserve for Property-Liability Insurance Claims and Claims Expense | 6 Months Ended |
Jun. 30, 2017 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Reserve for Property-Liability Insurance Claims and Claims Expense | Reserve for Property-Liability Insurance Claims and Claims Expense The Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. Because reserves are estimates of unpaid portions of losses that have occurred, including incurred but not reported (“IBNR”) losses, the establishment of appropriate reserves, including reserves for catastrophes and reserves and reinsurance recoverables for the Discontinued Lines and Coverages, is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in prior year reserve estimates, which may be material, are reported in property-liability insurance claims and claims expense in the Condensed Consolidated Statements of Operations in the period such changes are determined. Management believes that the reserve for property-liability insurance claims and claims expense, net of reinsurance recoverables, is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the Condensed Consolidated Statements of Financial Position based on available facts, technology, laws and regulations. Activity in the reserve for property-liability insurance claims and claims expense is summarized as follows: ($ in millions) Six months ended June 30, 2017 2016 Balance as of January 1 $ 25,250 $ 23,869 Less reinsurance recoverables 6,184 5,892 Net balance as of January 1 19,066 17,977 SquareTrade acquisition as of January 3, 2017 17 — Incurred claims and claims expense related to: Current year 11,291 11,564 Prior years (186 ) 21 Total incurred 11,105 11,585 Claims and claims expense paid related to: Current year 6,060 6,138 Prior years 4,450 4,553 Total paid 10,510 10,691 Net balance as of June 30 19,678 18,871 Plus reinsurance recoverables 6,206 6,033 Balance as of June 30 $ 25,884 $ 24,904 Incurred claims and claims expense represents the sum of paid losses and reserve changes in the period. This expense includes losses from catastrophes of $1.75 billion and $1.79 billion in the six months ended June 30, 2017 and 2016 , respectively, net of reinsurance and other recoveries. Catastrophes are an inherent risk of the property-liability insurance business that have contributed to, and will continue to contribute to, material year-to-year fluctuations in the Company’s results of operations and financial position. During the six months ended June 30, 2017 , incurred claims and claims expense related to prior years was primarily composed of net decreases in auto reserves of $147 million primarily due to injury coverages claim severity development that was better than expected, net decreases in homeowners reserves of $44 million due to favorable non-catastrophe reserve reestimates, and net increases in Discontinued Lines and Coverages of $5 million . Incurred claims and claims expense includes favorable catastrophe loss reestimates of $3 million , net of reinsurance and other recoveries. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance Property-liability insurance premiums earned and life and annuity premiums and contract charges have been reduced by reinsurance ceded amounts shown in the following table. ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-liability insurance premiums earned $ 254 $ 248 $ 500 $ 497 Life and annuity premiums and contract charges 75 78 150 152 Property-liability insurance claims and claims expense, life and annuity contract benefits and interest credited to contractholder funds have been reduced by the reinsurance ceded amounts shown in the following table. ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-liability insurance claims and claims expense $ 124 $ 241 $ 255 $ 402 Life and annuity contract benefits 70 80 117 147 Interest credited to contractholder funds 6 6 11 11 |
Company Restructuring
Company Restructuring | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Company Restructuring | Company Restructuring The Company undertakes various programs to reduce expenses. These programs generally involve a reduction in staffing levels, and in certain cases, office closures. Restructuring and related charges primarily include employee termination and relocation benefits, and post-exit rent expenses in connection with these programs, and non-cash charges resulting from pension benefit payments made to agents and certain legal expenses incurred in connection with the 1999 reorganization of Allstate’s multiple agency programs to a single exclusive agency program. The expenses related to these activities are included in the Condensed Consolidated Statements of Operations as restructuring and related charges, and totaled $53 million and $11 million during the three months ended June 30, 2017 and 2016 , respectively, and $63 million and $16 million during the six months ended June 30, 2017 and 2016 , respectively. Restructuring expenses in 2017 primarily related to Allstate brand claims process changes and office closures due to increased efficiencies and improvements in technology, including the expansion of virtual estimating capabilities through QuickFoto Claim ® and video chat technology, a voluntary termination program extended to certain employees, and exiting of certain operations and realigning certain departments for the Esurance and Encompass brand operations. The following table presents changes in the restructuring liability during the six months ended June 30, 2017 . ($ in millions) Employee costs Exit costs Total liability Balance as of December 31, 2016 $ — $ 2 $ 2 Expense incurred 36 16 52 Payments applied against liability (2 ) (4 ) (6 ) Balance as of June 30, 2017 $ 34 $ 14 $ 48 The payments applied against the liability for employee costs primarily reflect severance costs, and the payments for exit costs generally consist of post-exit rent expenses and contract termination penalties. As of June 30, 2017 , the cumulative amount incurred to date for active programs totaled $95 million for employee costs and $77 million for exit costs. |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Guarantees and Contingent Liabilities | |
Guarantees and Contingent Liabilities | Guarantees and Contingent Liabilities Shared markets and state facility assessments The Company is required to participate in assigned risk plans, reinsurance facilities and joint underwriting associations in various states that provide insurance coverage to individuals or entities that otherwise are unable to purchase such coverage from private insurers. Underwriting results related to these arrangements, which tend to be adverse, have been immaterial to the Company’s results of operations. Because of the Company’s participation, it may be exposed to losses that surpass the capitalization of these facilities and/or assessments from these facilities. Guarantees The Company provides residual value guarantees on Company leased automobiles. If all outstanding leases were terminated effective June 30, 2017 , the Company’s maximum obligation pursuant to these guarantees, assuming the automobiles have no residual value, would be $40 million as of June 30, 2017 . The remaining term of each residual value guarantee is equal to the term of the underlying lease that ranges from less than one year to four years . Historically, the Company has not made any material payments pursuant to these guarantees. Related to the sale of LBL on April 1, 2014, ALIC agreed to indemnify Resolution Life Holdings, Inc. in connection with certain representations, warranties and covenants of ALIC, and certain liabilities specifically excluded from the transaction, subject to specific contractual limitations regarding ALIC’s maximum obligation. Management does not believe these indemnifications will have a material effect on results of operations, cash flows or financial position of the Company. Related to the disposal through reinsurance of substantially all of Allstate Financial’s variable annuity business to Prudential in 2006, the Company and its consolidated subsidiaries, ALIC and ALNY, have agreed to indemnify Prudential for certain pre-closing contingent liabilities (including extra-contractual liabilities of ALIC and ALNY and liabilities specifically excluded from the transaction) that ALIC and ALNY have agreed to retain. In addition, the Company, ALIC and ALNY will each indemnify Prudential for certain post-closing liabilities that may arise from the acts of ALIC, ALNY and their agents, including certain liabilities arising from ALIC’s and ALNY’s provision of transition services. The reinsurance agreements contain no limitations or indemnifications with regard to insurance risk transfer and transferred all of the future risks and responsibilities for performance on the underlying variable annuity contracts to Prudential, including those related to benefit guarantees. Management does not believe this agreement will have a material effect on results of operations, cash flows or financial position of the Company. In the normal course of business, the Company provides standard indemnifications to contractual counterparties in connection with numerous transactions, including acquisitions and divestitures. The types of indemnifications typically provided include indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Consequently, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material payments pursuant to these obligations. The aggregate liability balance related to all guarantees was not material as of June 30, 2017 . Regulation and Compliance The Company is subject to extensive laws, regulations, administrative directives, and regulatory actions. From time to time, regulatory authorities or legislative bodies seek to influence and restrict premium rates, require premium refunds to policyholders, require reinstatement of terminated policies, prescribe rules or guidelines on how affiliates compete in the marketplace, restrict the ability of insurers to cancel or non-renew policies, require insurers to continue to write new policies or limit their ability to write new policies, limit insurers’ ability to change coverage terms or to impose underwriting standards, impose additional regulations regarding agent and broker compensation, regulate the nature of and amount of investments, impose fines and penalties for unintended errors or mistakes, and otherwise expand overall regulation of insurance products and the insurance industry. In addition, the Company is subject to laws and regulations administered and enforced by federal agencies and other organizations, including but not limited to the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Department of Labor, the U.S. Equal Employment Opportunity Commission, and the U.S. Department of Justice. The Company has established procedures and policies to facilitate compliance with laws and regulations, to foster prudent business operations, and to support financial reporting. The Company routinely reviews its practices to validate compliance with laws and regulations and with internal procedures and policies. As a result of these reviews, from time to time the Company may decide to modify some of its procedures and policies. Such modifications, and the reviews that led to them, may be accompanied by payments being made and costs being incurred. The ultimate changes and eventual effects of these actions on the Company’s business, if any, are uncertain. Legal and regulatory proceedings and inquiries The Company and certain subsidiaries are involved in a number of lawsuits, regulatory inquiries, and other legal proceedings arising out of various aspects of its business. Background These matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including the underlying facts of each matter; novel legal issues; variations between jurisdictions in which matters are being litigated, heard, or investigated; changes in assigned judges; differences or developments in applicable laws and judicial interpretations; judges reconsidering prior rulings; the length of time before many of these matters might be resolved by settlement, through litigation, or otherwise; adjustments with respect to anticipated trial schedules and other proceedings; developments in similar actions against other companies; the fact that some of the lawsuits are putative class actions in which a class has not been certified and in which the purported class may not be clearly defined; the fact that some of the lawsuits involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute and therefore unclear; and the current challenging legal environment faced by corporations and insurance companies. The outcome of these matters may be affected by decisions, verdicts, and settlements, and the timing of such decisions, verdicts, and settlements, in other individual and class action lawsuits that involve the Company, other insurers, or other entities and by other legal, governmental, and regulatory actions that involve the Company, other insurers, or other entities. The outcome may also be affected by future state or federal legislation, the timing or substance of which cannot be predicted. In the lawsuits, plaintiffs seek a variety of remedies which may include equitable relief in the form of injunctive and other remedies and monetary relief in the form of contractual and extra-contractual damages. In some cases, the monetary damages sought may include punitive or treble damages. Often specific information about the relief sought, such as the amount of damages, is not available because plaintiffs have not requested specific relief in their pleadings. When specific monetary demands are made, they are often set just below a state court jurisdictional limit in order to seek the maximum amount available in state court, regardless of the specifics of the case, while still avoiding the risk of removal to federal court. In Allstate’s experience, monetary demands in pleadings bear little relation to the ultimate loss, if any, to the Company. In connection with regulatory examinations and proceedings, government authorities may seek various forms of relief, including penalties, restitution, and changes in business practices. The Company may not be advised of the nature and extent of relief sought until the final stages of the examination or proceeding. Accrual and disclosure policy The Company reviews its lawsuits, regulatory inquiries, and other legal proceedings on an ongoing basis and follows appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for such matters at management’s best estimate when the Company assesses that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company does not establish accruals for such matters when the Company does not believe both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company’s assessment of whether a loss is reasonably possible or probable is based on its assessment of the ultimate outcome of the matter following all appeals. The Company does not include potential recoveries in its estimates of reasonably possible or probable losses. Legal fees are expensed as incurred. The Company continues to monitor its lawsuits, regulatory inquiries, and other legal proceedings for further developments that would make the loss contingency both probable and estimable, and accordingly accruable, or that could affect the amount of accruals that have been previously established. There may continue to be exposure to loss in excess of any amount accrued. Disclosure of the nature and amount of an accrual is made when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the amount of accrual. When the Company assesses it is reasonably possible or probable that a loss has been incurred, it discloses the matter. When it is possible to estimate the reasonably possible loss or range of loss above the amount accrued, if any, for the matters disclosed, that estimate is aggregated and disclosed. Disclosure is not required when an estimate of the reasonably possible loss or range of loss cannot be made. For certain of the matters described below in the “Claims related proceedings” and “Other proceedings” subsections, the Company is able to estimate the reasonably possible loss or range of loss above the amount accrued, if any. In determining whether it is possible to estimate the reasonably possible loss or range of loss, the Company reviews and evaluates the disclosed matters, in conjunction with counsel, in light of potentially relevant factual and legal developments. These developments may include information learned through the discovery process, rulings on dispositive motions, settlement discussions, information obtained from other sources, experience from managing these and other matters, and other rulings by courts, arbitrators or others. When the Company possesses sufficient appropriate information to develop an estimate of the reasonably possible loss or range of loss above the amount accrued, if any, that estimate is aggregated and disclosed below. There may be other disclosed matters for which a loss is probable or reasonably possible but such an estimate is not possible. Disclosure of the estimate of the reasonably possible loss or range of loss above the amount accrued, if any, for any individual matter would only be considered when there have been sufficient legal and factual developments such that the Company’s ability to resolve the matter would not be impaired by the disclosure of the individual estimate. The Company currently estimates that the aggregate range of reasonably possible loss in excess of the amount accrued, if any, for the disclosed matters where such an estimate is possible is zero to $425 million , pre-tax. This disclosure is not an indication of expected loss, if any. Under accounting guidance, an event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely” and an event is “remote” if “the chance of the future event or events occurring is slight.” This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. The estimate does not include matters or losses for which an estimate is not possible. Therefore, this estimate represents an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum possible loss exposure. Information is provided below regarding the nature of all of the disclosed matters and, where specified, the amount, if any, of plaintiff claims associated with these loss contingencies. Due to the complexity and scope of the matters disclosed in the “Claims related proceedings” and “Other proceedings” subsections below and the many uncertainties that exist, the ultimate outcome of these matters cannot be predicted and in the Company’s judgment, a loss, in excess of amounts accrued, if any, is not probable. In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters described below, as they are resolved over time, is not likely to have a material effect on the financial position of the Company. Claims related proceedings The Company is litigating two class action cases in California in which the plaintiffs allege off-the-clock wage and hour claims. Plaintiffs in both cases seek recovery of unpaid compensation, liquidated damages, penalties, and attorneys’ fees and costs. The first case is Christopher Williams, et al. v. Allstate Insurance Company . The Williams case is pending in Los Angeles Superior Court and was filed in December 2007. The case involves two classes. The first class includes auto field physical damage adjusters employed in the state of California from January 1, 2005 to the date of final judgment, to the extent the Company failed to pay for off-the-clock work to those adjusters who performed certain duties prior to their first assignments. The other class includes all non-exempt employees in California from December 19, 2006 until June 2011 who received pay statements from Allstate which allegedly did not comply with California law. On April 13, 2016, the court granted the Company’s motion to decertify both classes; both classes are thus dissolved unless and until the appellate court orders the classes recertified. On May 17, 2016, plaintiffs filed their notice of appeal. Plaintiff’s opening brief was filed on November 22, 2016. Allstate’s response was filed on May 16, 2017. Plaintiff’s reply brief was filed on July 6, 2017. Oral argument is likely, but has not been scheduled by the appellate court. The second case is Jack Jimenez, et al. v. Allstate Insurance Company . Jimenez was filed in the U.S. District Court for the Central District of California in September 2010. The plaintiffs allege that they worked off-the-clock; they also allege other California Labor Code violations resulting from purported unpaid overtime. In April 2012, the court certified a class that includes all adjusters in the state of California, except auto field adjusters, from September 29, 2006 to final judgment. Allstate appealed the court’s decision to certify the class, first to the Ninth Circuit Court of Appeals and then to the U.S. Supreme Court. On June 15, 2015, the U.S. Supreme Court denied Allstate’s petition for a writ of certiorari. The case was scheduled for trial on September 27, 2016. On May 4, 2016, the court vacated that trial date in part because the court had not approved a trial plan. No trial date has been scheduled because the parties continue to wait for the court’s approval of a trial plan. In addition to the California class actions, the case of Maria Victoria Perez and Kaela Brown, et al. v. Allstate Insurance Company was filed in the U.S. District Court for the Eastern District of New York. Plaintiffs allege that no-fault claim adjusters have been improperly classified as exempt employees under New York Labor Law and the Fair Labor Standards Act. The case was filed in April 2011, and the plaintiffs are seeking unpaid wages, liquidated damages, injunctive relief, compensatory and punitive damages, and attorneys’ fees. On September 16, 2014, the court certified a class of no-fault adjusters under New York Labor Law and refused to decertify a Fair Labor Standards Act class of no-fault adjusters. There are 105 members of the Fair Labor Standards Act class and 137 members of the New York Labor Law class. The parties are currently engaged in discovery. The Company has been involved in litigation challenging whether the Company’s personal injury protection policies include sufficient language providing notice of the Company’s election to apply the fee schedules. The Florida personal injury protection statute permits insurers to pay personal injury protection benefits for reasonable medical expenses based on certain benefit reimbursement limitations which are authorized by the personal injury protection statute (generally referred to as “fee schedules”) resulting from automobile accidents. On January 26, 2017, the Florida Supreme Court issued its decision in Allstate Insurance Company v. Orthopedic Specialists, et al. , holding that Allstate’s language was clear and unambiguous and provided adequate notice of its intent to use the fee schedules. On February 7, 2017, Orthopedic Specialists filed a motion for rehearing, which the Florida Supreme Court denied on March 27, 2017. Thus, the Florida Supreme Court’s decision is final. In light of this ruling, the fee schedule issue is expected to be resolved favorably to Allstate in other pending cases. There were three other cases with petitions for leave to appeal to the Florida Supreme Court pending. In those cases, three District Courts of Appeal had previously ruled in favor of Allstate. The Florida Supreme Court issued “show cause” orders in each of those appeals directing the providers to file a response explaining why the Orthopedic Specialists decision is not controlling and why the Florida Supreme Court should not decline to exercise jurisdiction. In one appeal, the provider has acknowledged that Orthopedic Specialists governs and the court has declined jurisdiction in that appeal. In the other two appeals, the providers assert that their petitions to appeal should be granted because Orthopedic Specialists was wrongly decided, repeating the arguments previously asserted. Allstate’s responses were filed on May 8, 2017. The parties await the Florida Supreme Court’s decision as to whether it will exercise jurisdiction in those appeals. This fee schedule issue has also been the subject of thousands of individual lawsuits filed against Allstate in Florida. The decision by the Florida Supreme Court has established Florida law on the sufficiency of Allstate’s fee schedule policy language that is binding on all Florida courts. Allstate intends to seek final resolution in its favor of all fee schedule claims currently in litigation as well as those not in litigation. Allstate may seek restitution from some plaintiffs for attorneys’ fees and costs. Other proceedings The Company is defending a consolidated proceeding relating to the reorganization of its agent sales force in 2000, when the Company discontinued employee agent programs, terminated the contracts of its employee agents, and offered those agents the opportunity to become Allstate Exclusive Agent independent contractors or to take severance benefits in exchange for a release of claims. The consolidated proceeding, captioned Gene Romero, et al. v. Allstate Insurance Company, et al. , is pending in the United States District Court for the Eastern District of Pennsylvania. This matter has a long and complex history, only relevant portions of which are summarized here. The case began in 2001 as two separate putative class actions filed by approximately 32 former employee agents. In one case, plaintiffs challenged the reorganization alleging claims of age discrimination under the Age Discrimination in Employment Act (“ADEA”), interference with benefits under ERISA, breach of contract, and breach of fiduciary duty. Plaintiffs also challenged the release of claims on various grounds including alleging that the release was retaliatory under the ADEA and ERISA. In the other case, plaintiffs challenged certain amendments to the Agents Pension Plan and sought to have service as Exclusive Agent independent contractors count toward eligibility for benefits. Plaintiffs sought various relief, including back pay, compensatory and punitive damages, liquidated damages, lost investment capital, loss of benefits as a result of their conversion to Exclusive Agent or retirement from the Company, repeal of the challenged plan amendments with all attendant benefits revised and recalculated, and attorneys’ fees. Allstate, among other defenses, asserted that the release bars all of the asserted claims. In February, 2014, the court addressed motions for summary judgment filed by both the plaintiffs and the Company regarding the validity and enforceability of the release and determined that the question of whether the releases were knowingly and voluntarily signed raised disputed issues of fact to be resolved at trial. The court also held that the release, if valid, would bar all claims . In late 2014, the court denied plaintiffs’ motion to certify a class for purposes of determining whether the releases were signed knowingly and voluntarily. The court also ordered that all statutes of limitations would resume running on March 2, 2015, after which approximately 460 additional individual plaintiffs filed separate similar lawsuits or sought to intervene. A jury trial was held in June, 2015, to determine whether the releases of ten plaintiffs were knowingly and voluntarily signed. Additionally, plaintiffs asserted two equitable defenses to the release which were to be determined by the court and not the jury. The jury found that two plaintiffs signed their releases knowingly and voluntarily and eight plaintiffs did not. Subsequently, the court ruled in the Company’s favor on the two equitable defenses to the release with respect to all ten plaintiffs. The result affecting these ten plaintiffs is final in the trial court. On May 2, 2016, the court entered an order consolidating the original and intervening plaintiffs’ claims, and ordering plaintiffs to file a consolidated amended complaint. A consolidated amended complaint was filed on behalf of 498 plaintiffs, most of whom had previously filed separate lawsuits or intervened in the earlier proceedings. The consolidated complaint alleged the claims asserted in the previously filed complaints. The Company asserted defenses, including the release. On July 6, 2016, the court denied the Company’s motion to dismiss plaintiffs’ state law breach of contract and fiduciary duty claims, but granted dismissal of plaintiffs’ retaliation claims under the ADEA and ERISA challenging the release of claims. The court separated the case into two phases to address “common issues” in plaintiffs’ claims: (a) “Phase I” addressing claims by 118 plaintiffs alleging that certain plan amendments violated ERISA’s anti-cutback provision by eliminating an accrued benefit and (b) “Phase II” addressing all plaintiffs’ claims for alleged interference with employee benefits under ERISA and disparate impact under the ADEA. Regarding Phase I, the court granted in part, and denied in part, the Company’s summary judgment motion on plaintiffs’ claims challenging certain Plan amendments. The court granted the motion with respect to one plaintiff whose claim was barred by the statute of limitations. The court also dismissed plaintiffs’ claim that a 1993 Plan amendment resulted in an unlawful cutback of benefits and plaintiffs’ claim for breach of fiduciary duty. A bench trial on the remaining Phase I claims was held in December, 2016. On April 27, 2017, the court issued its Phase I opinion and ruled that (i) the Company’s 1991 amendments to the Plan did not violate ERISA by improperly cutting back on plaintiffs’ benefits, and (ii) with respect to only 118 plaintiffs, the Company’s interpretation of the Plan’s definition of “retire” violated ERISA’s anti-cutback rule. The court required the parties to provide further information, in the form of an accounting, to determine whether any plaintiffs suffered a loss based on any such cutback. Plaintiffs submitted their Phase I accounting to the court, alleging that only two of the 118 plaintiffs asserting this cutback claim suffered a loss as a result of the court’s order. The Company then submitted its objections to plaintiffs’ accounting on May 26, 2017, arguing that no plaintiff suffered a compensable loss and that judgment should be entered in favor of the Company. We await a final ruling by the court. Regarding Phase II, the court granted the Company’s motion for summary judgment on both the ADEA disparate impact and ERISA interference with benefits claims and denied plaintiffs’ cross-motion. This resolves these claims in the trial court as to all plaintiffs. In June and July 2017, the Company and 41 plaintiffs reached agreements in principle to settle all claims of those plaintiffs on a confidential basis, subject to negotiating and executing appropriate written settlement agreements. In June, 2017, the court entered an order establishing Phases III and IV of the litigation. In Phase III, the remaining claims of the eight individual plaintiffs who reside in the Eastern District of Pennsylvania will be litigated, possibly culminating in two separate jury trials each addressing the claims of four plaintiffs. Those claims are ADEA disparate treatment (asserted by six of the eight plaintiffs), breach of contract, breach of fiduciary duty and challenges to the release. The trials are scheduled for January and March, 2018. In Phase IV, which runs concurrently with Phase III, the parties will engage in further written discovery relating to the claims of all other plaintiffs (those residing outside the Eastern District of Pennsylvania) until the court determines the proper venue for depositions, dispositive motions, and trials of those claims. In March, 2018, the parties are to submit further briefing setting forth their positions on resolving the non-resident plaintiffs’ remaining individual claims, including whether to transfer those claims to each plaintiff’s home jurisdiction. Regarding Phase III, the Company filed a motion for summary judgment as to the six Phase III plaintiffs asserting ADEA disparate treatment claims arguing that none of those plaintiffs filed timely age discrimination charges with the EEOC and thus those claims must be dismissed. The Company is also seeking summary judgment on all eight of the Phase III plaintiffs’ remaining state law claims (breach of contract and breach of fiduciary duty) asserting that plaintiffs ratified the release by failing to return the consideration the Company gave them in exchange for signing the release. The final resolution of these matters is subject to various uncertainties and complexities including how trials, post-trial motions, possible appeals with respect to the validity of the release, and any rulings on the merits will be resolved. Asbestos and environmental Allstate’s reserves for asbestos claims were $867 million and $912 million , net of reinsurance recoverables of $419 million and $444 million , as of June 30, 2017 and December 31, 2016 , respectively. Reserves for environmental claims were $166 million and $179 million , net of reinsurance recoverables of $36 million and $40 million , as of June 30, 2017 and December 31, 2016 , respectively. Management believes its net loss reserves for asbestos, environmental and other discontinued lines exposures are appropriately established based on available facts, technology, laws and regulations. However, establishing net loss reserves for asbestos, environmental and other discontinued lines claims is subject to uncertainties that are much greater than those presented by other types of claims. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimate. Among the complications are lack of historical data, long reporting delays, uncertainty as to the number and identity of insureds with potential exposure and unresolved legal issues regarding policy coverage; unresolved legal issues regarding the determination, availability and timing of exhaustion of policy limits; plaintiffs’ evolving and expanding theories of liability; availability and collectability of recoveries from reinsurance; retrospectively determined premiums and other contractual agreements; estimates of the extent and timing of any contractual liability; the impact of bankruptcy protection sought by various asbestos producers and other asbestos defendants; and other uncertainties. There are also complex legal issues concerning the interpretation of various insurance policy provisions and whether those losses are covered, or were ever intended to be covered, and could be recoverable through retrospectively determined premium, reinsurance or other contractual agreements. Courts have reached different and sometimes inconsistent conclusions as to when losses are deemed to have occurred and which policies provide coverage; what types of losses are covered; whether there is an insurer obligation to defend; how policy limits are determined; how policy exclusions and conditions are applied and interpreted; and whether clean-up costs represent insured property damage. Further, insurers and claims administrators acting on behalf of insurers are increasingly pursuing evolving and expanding theories of reinsurance coverage for asbestos and environmental losses. Adjudication of reinsurance coverage is predominately decided in confidential arbitration proceedings which may have limited precedential or predictive value further complicating management’s ability to estimate probable loss for reinsured asbestos and environmental claims. Management believes these issues are not likely to be resolved in the near future, and the ultimate costs may vary materially from the amounts currently recorded resulting in material changes in loss reserves. In addition, while the Company believes that improved actuarial techniques and databases have assisted in its ability to estimate asbestos, environmental, and other discontinued lines net loss reserves, these refinements may subsequently prove to be inadequate indicators of the extent of probable losses. Due to the uncertainties and factors described above, management believes it is not practicable to develop a meaningful range for any such additional net loss reserves that may be required. |
Benefit Plans
Benefit Plans | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans The components of net periodic cost for the Company’s pension and postretirement benefit plans are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Pension benefits Service cost $ 28 $ 28 $ 57 $ 56 Interest cost 66 72 132 143 Expected return on plan assets (102 ) (100 ) (204 ) (199 ) Amortization of: Prior service credit (14 ) (14 ) (28 ) (28 ) Net actuarial loss 47 44 94 87 Settlement loss 8 8 16 16 Net periodic pension cost $ 33 $ 38 $ 67 $ 75 Postretirement benefits Service cost $ 2 $ 3 $ 4 $ 5 Interest cost 3 5 7 9 Amortization of: Prior service credit (6 ) (6 ) (12 ) (11 ) Net actuarial gain (6 ) (8 ) (12 ) (16 ) Net periodic postretirement credit $ (7 ) $ (6 ) $ (13 ) $ (13 ) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Non-cash investing activities include $9 million and $270 million related to mergers and exchanges completed with equity securities, and modifications of certain mortgage loans and other investments for the six months ended June 30, 2017 and 2016 , respectively. Non-cash financing activities include $42 million and $39 million related to the issuance of Allstate common shares for vested equity awards for the six months ended June 30, 2017 and 2016 , respectively. Non-cash financing activities also included $34 million related to debt acquired in conjunction with the purchase of an investment for the six months ended June 30 , 2016. Liabilities for collateral received in conjunction with the Company’s securities lending program and over-the-counter and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows: ($ in millions) Six months ended June 30, 2017 2016 Net change in proceeds managed Net change in fixed income securities $ 10 $ — Net change in short-term investments (7 ) (56 ) Operating cash flow provided (used) $ 3 $ (56 ) Net change in liabilities Liabilities for collateral, beginning of period $ (1,129 ) $ (840 ) Liabilities for collateral, end of period (1,126 ) (896 ) Operating cash flow (used) provided $ (3 ) $ 56 |
Other Comprehensive Income
Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income The components of other comprehensive income on a pre-tax and after-tax basis are as follows: ($ in millions) Three months ended June 30, 2017 2016 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 479 $ (167 ) $ 312 $ 663 $ (232 ) $ 431 Less: reclassification adjustment of realized capital gains and losses 64 (22 ) 42 11 (4 ) 7 Unrealized net capital gains and losses 415 (145 ) 270 652 (228 ) 424 Unrealized foreign currency translation adjustments 17 (6 ) 11 7 (2 ) 5 Unrecognized pension and other postretirement benefit cost arising during the period (3 ) 2 (1 ) 1 — 1 Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (29 ) 10 (19 ) (24 ) 9 (15 ) Unrecognized pension and other postretirement benefit cost 26 (8 ) 18 25 (9 ) 16 Other comprehensive income $ 458 $ (159 ) $ 299 $ 684 $ (239 ) $ 445 Six months ended June 30, 2017 2016 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 901 $ (315 ) $ 586 $ 1,381 $ (483 ) $ 898 Less: reclassification adjustment of realized capital gains and losses 174 (61 ) 113 (163 ) 57 (106 ) Unrealized net capital gains and losses 727 (254 ) 473 1,544 (540 ) 1,004 Unrealized foreign currency translation adjustments 12 (4 ) 8 29 (10 ) 19 Unrecognized pension and other postretirement benefit cost arising during the period (3 ) 2 (1 ) (7 ) 3 (4 ) Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (58 ) 20 (38 ) (48 ) 17 (31 ) Unrecognized pension and other postretirement benefit cost 55 (18 ) 37 41 (14 ) 27 Other comprehensive income $ 794 $ (276 ) $ 518 $ 1,614 $ (564 ) $ 1,050 |
General (Policies)
General (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
General [Abstract] | |
Basis of presentation | Basis of presentation The accompanying condensed consolidated financial statements include the accounts of The Allstate Corporation (the “Corporation”) and its wholly owned subsidiaries, primarily Allstate Insurance Company (“AIC”), a property-liability insurance company with various property-liability and life and investment subsidiaries, including Allstate Life Insurance Company (“ALIC”) (collectively referred to as the “Company” or “Allstate”). These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements and notes as of June 30, 2017 and for the three-month and six -month periods ended June 30, 2017 and 2016 are unaudited. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. All significant intercompany accounts and transactions have been eliminated. |
New Accounting Pronouncements | Adopted accounting standards Employee Share-Based Payment Accounting Effective January 1, 2017, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance that amends the accounting for share-based payments on a prospective basis. Under the new guidance, reporting entities are required to recognize all tax effects related to share-based payments at settlement or expiration through the income statement and the requirement to delay recognition of certain tax benefits until they reduce current taxes payable is eliminated. The new guidance also permits employers to withhold shares issued in connection with an employee’s exercise of options or the settlement of stock awards, up to the employee’s maximum individual statutory tax rate, to meet tax withholding requirements without causing liability classification of the award. In addition, all tax-related cash flows resulting from share-based payments are reported as operating activities on the statement of cash flows whereas cash payments made to taxing authorities on an employee’s behalf for withheld shares are presented as financing activities. The adoption of this guidance had no impact on the Company’s results of operations or financial position on the date of adoption. Transition to Equity Method Accounting Effective January 1, 2017, the Company adopted new FASB guidance amending the accounting requirements for transitioning to the equity method of accounting (“EMA”), including a transition from the cost method. The guidance requires the cost of acquiring an additional interest in an investee to be added to the existing carrying value to establish the initial basis of the EMA investment. Under the new guidance, no retroactive adjustment is required when an investment initially qualifies for EMA treatment. The guidance is applied prospectively to investments that qualify for EMA after application of the cost method of accounting. Accordingly, the adoption of this guidance had no impact on the Company’s results of operations or financial position. Pending accounting standards Revenue from Contracts with Customers In May 2014, the FASB issued guidance which revises the criteria for revenue recognition. Insurance contracts are excluded from the scope of the new guidance. Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies the performance obligations and transfers control of a good or service to the customer. Incremental costs of obtaining a contract may be capitalized to the extent the entity expects to recover those costs. The guidance is effective for reporting periods beginning after December 15, 2017 and is to be applied retrospectively. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations or financial position. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued guidance requiring equity investments, including equity securities and limited partnership interests, that are not accounted for under the equity method of accounting or result in consolidation to be measured at fair value with changes in fair value recognized in net income. Equity investments without readily determinable fair values may be measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. When a qualitative assessment of equity investments without readily determinable fair values indicates that impairment exists, the carrying value is required to be adjusted to fair value, if lower. The guidance clarifies that an entity should evaluate the realizability of a deferred tax asset related to available-for-sale fixed income securities in combination with the entity’s other deferred tax assets. The guidance also changes certain disclosure requirements. The guidance is effective for interim and annual periods beginning after December 15, 2017, and is to be applied through a cumulative-effect adjustment to beginning retained income as of the date of adoption. The new guidance related to equity investments without readily determinable fair values is applied prospectively as of the date of adoption. The most significant anticipated impacts, using values as of June 30, 2017 , relate to the change in accounting for equity securities, where $796 million of pre-tax unrealized net capital gains would be reclassified from accumulated other comprehensive income to retained income, and cost method limited partnership interests (excluding limited partnership interests accounted for on a cost recovery basis), where the carrying value would increase by approximately $202 million , pre-tax, with the offsetting adjustment recognized in retained income. Accounting for Leases In February 2016, the FASB issued guidance that revises the accounting for leases. Under the new guidance, lessees will be required to recognize a right-of-use asset and lease liability for all leases other than those that meet the definition of a short-term lease. The lease liability will be equal to the present value of lease payments. A right-of-use asset will be based on the lease liability adjusted for qualifying initial direct costs. The expense of operating leases under the new guidance will be recognized in the income statement on a straight-line basis after combining the lease expense components (interest expense on the lease liability and amortization of the right-of-use asset) over the term of the lease. For finance leases, the expense components are computed separately and produce greater up-front expense compared to operating leases as interest expense on the lease liability is higher in early years and the right-of-use asset is amortized on a straight-line basis consistent with operating leases. Lease classification will be based on criteria similar to those currently applied. The accounting model for lessors will be similar to the current model with modifications to reflect definition changes for components such as initial direct costs. Lessors will continue to classify leases as operating, direct financing, or sales-type. The guidance is effective for reporting periods beginning after December 15, 2018 using a modified retrospective approach applied at the beginning of the earliest period presented. The Company is in the process of evaluating the impact of adoption, which is not expected to be material to the Company’s results of operations or financial position. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for the reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. The reporting entity must consider all available relevant information when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available-for-sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance and not as a direct write-down. The guidance is effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained income. The Company is in the process of evaluating the impact of adoption. Goodwill Impairment In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. Under the new guidance, goodwill impairment will be measured and recognized as the amount by which a reporting unit’s carrying value, including goodwill, exceeds its fair value, not to exceed the carrying amount of goodwill allocated to the reporting unit. The revised guidance does not affect a reporting entity’s ability to first assess qualitative factors by reporting unit to determine whether to perform the quantitative goodwill impairment test. The guidance is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The guidance is to be applied on a prospective basis, with the effects, if any, recognized in net income in the period of adoption. The impact to the Company upon adoption is dependent upon the excess, if any, of carrying value of the Company’s reporting units, including goodwill, over their respective fair values, a measure that is not currently determinable. Presentation of Net Periodic Pension and Postretirement Benefits Costs In March 2017, the FASB issued guidance to improve the presentation of net periodic pension and postretirement benefits costs that requires the service cost component to be reported in operating expenses together with other employee compensation costs and all other components of net periodic pension and postretirement benefits costs reported in non-operating expenses. If the reporting entity does not separately report operating and non-operating expenses on the statement of operations it is required to identify, on the statement of operations or in disclosures, the line items in which the components of net periodic pension and postretirement benefits costs are presented. The new guidance permits only the service cost component to be eligible for capitalization where applicable. The guidance is effective for annual periods beginning after December 15, 2017 and for interim periods within those annual periods. The guidance is to be applied on a prospective basis for capitalization of service costs where applicable and on a retrospective basis for the presentation of the service cost and other components of net periodic pension benefit costs in the statements of operations or in disclosures. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. |
Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows: Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access. Level 2: Assets and liabilities whose values are based on the following: (a) Quoted prices for similar assets or liabilities in active markets; (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or (c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities. The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments. The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers. In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions. The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy. The first is where specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs. The second situation where the Company classifies securities in Level 3 is where quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans, limited partnership interests, bank loans, agent loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to remeasurement at fair value after initial recognition and the resulting remeasurement is reflected in the condensed consolidated financial statements. In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used. Summary of significant valuation techniques for assets and liabilities measured at fair value on a recurring basis Level 1 measurements • Fixed income securities: Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Equity securities: Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. • Short-term: Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the Company can access. • Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers. Level 2 measurements • Fixed income securities: U.S. government and agencies: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Municipal: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - public: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. Corporate - privately placed: Valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer. Foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. ABS - collateralized debt obligations (“CDO”) and ABS - consumer and other: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. Certain ABS - CDO and ABS - consumer and other are valued based on non-binding broker quotes whose inputs have been corroborated to be market observable. RMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, prepayment speeds, collateral performance and credit spreads. CMBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Redeemable preferred stock: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. • Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads. For certain short-term investments, amortized cost is used as the best estimate of fair value. • Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows. Corporate - public and Corporate - privately placed: Primarily valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable. Other inputs include an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer. ABS - CDO, ABS - consumer and other, RMBS and CMBS: Valued based on non-binding broker quotes received from brokers who are familiar with the investments and where the inputs have not been corroborated to be market observable. • Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. • Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options (including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. • Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. Assets and liabilities measured at fair value on a non-recurring basis Mortgage loans written-down to fair value in connection with recognizing impairments are valued based on the fair value of the underlying collateral less costs to sell. Limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments are generally valued using net asset values. |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per common share | The computation of basic and diluted earnings per common share is presented in the following table. ($ in millions, except per share data) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Numerator: Net income $ 579 $ 271 $ 1,274 $ 517 Less: Preferred stock dividends 29 29 58 58 Net income applicable to common shareholders (1) $ 550 $ 242 $ 1,216 $ 459 Denominator: Weighted average common shares outstanding 363.6 373.6 364.6 375.8 Effect of dilutive potential common shares: Stock options 4.3 3.4 4.2 3.4 Restricted stock units (non-participating) and performance stock awards 1.1 1.1 1.3 1.3 Weighted average common and dilutive potential common shares outstanding 369.0 378.1 370.1 380.5 Earnings per common share - Basic $ 1.51 $ 0.65 $ 3.34 $ 1.22 Earnings per common share - Diluted $ 1.49 $ 0.64 $ 3.29 $ 1.21 _____________________________ (1) Net income applicable to common shareholders is net income less preferred stock dividends. |
Reporting Segments (Tables)
Reporting Segments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of business segments revenue disclosures | Summarized revenue data for each of the Company’s reportable segments are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-Liability Property-liability insurance premiums Auto $ 5,437 $ 5,306 $ 10,825 $ 10,526 Homeowners 1,815 1,815 3,630 3,625 Other personal lines 436 424 867 845 Commercial lines 118 127 243 256 Other business lines 142 142 283 285 SquareTrade 70 — 129 — Allstate Protection 8,018 7,814 15,977 15,537 Discontinued Lines and Coverages — — — — Total property-liability insurance premiums 8,018 7,814 15,977 15,537 Net investment income 391 316 702 618 Realized capital gains and losses 85 26 220 (73 ) Total Property-Liability 8,494 8,156 16,899 16,082 Allstate Financial Life and annuity premiums and contract charges Premiums Traditional life insurance 148 139 297 277 Accident and health insurance 233 214 465 430 Total premiums 381 353 762 707 Contract charges Interest-sensitive life insurance 207 208 416 417 Fixed annuities 3 3 6 6 Total contract charges 210 211 422 423 Total life and annuity premiums and contract charges 591 564 1,184 1,130 Net investment income 496 435 922 854 Realized capital gains and losses (4 ) — (5 ) (49 ) Total Allstate Financial 1,083 999 2,101 1,935 Corporate and Other Net investment income 10 11 21 21 Realized capital gains and losses — (2 ) — (3 ) Total Corporate and Other 10 9 21 18 Consolidated revenues $ 9,587 $ 9,164 $ 19,021 $ 18,035 |
Schedule of business segments net income disclosures | Summarized financial performance data for each of the Company’s reportable segments are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-Liability Underwriting income Allstate Protection $ 232 $ (64 ) $ 741 $ 63 Discontinued Lines and Coverages (5 ) (2 ) (7 ) (4 ) Total underwriting income (loss) 227 (66 ) 734 59 Net investment income 391 316 702 618 Income tax expense on operations (196 ) (70 ) (451 ) (211 ) Realized capital gains and losses, after-tax 56 18 145 (46 ) Gain on disposition of operations, after-tax 6 — 6 — Property-Liability net income applicable to common shareholders 484 198 1,136 420 Allstate Financial Life and annuity premiums and contract charges 591 564 1,184 1,130 Net investment income 496 435 922 854 Contract benefits and interest credited to contractholder funds (659 ) (633 ) (1,306 ) (1,272 ) Operating costs and expenses and amortization of deferred policy acquisition costs (199 ) (189 ) (409 ) (383 ) Restructuring and related charges (1 ) (1 ) (1 ) (1 ) Income tax expense on operations (75 ) (56 ) (127 ) (104 ) Operating income 153 120 263 224 Realized capital gains and losses, after-tax (3 ) — (4 ) (32 ) Valuation changes on embedded derivatives that are not hedged, after-tax (1 ) (4 ) (1 ) (8 ) DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax (3 ) (1 ) (6 ) (2 ) Gain on disposition of operations, after-tax — 1 2 2 Allstate Financial net income applicable to common shareholders 146 116 254 184 Corporate and Other Net investment income 10 11 21 21 Operating costs and expenses (92 ) (79 ) (185 ) (158 ) Income tax benefit on operations 31 26 61 51 Preferred stock dividends (29 ) (29 ) (58 ) (58 ) Operating loss (80 ) (71 ) (161 ) (144 ) Realized capital gains and losses, after-tax — (1 ) — (1 ) Business combination expenses, after-tax — — (13 ) — Corporate and Other net loss applicable to common shareholders (80 ) (72 ) (174 ) (145 ) Consolidated net income applicable to common shareholders $ 550 $ 242 $ 1,216 $ 459 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments [Abstract] | |
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value | The amortized cost, gross unrealized gains and losses and fair value for fixed income securities are as follows: ($ in millions) Amortized cost Gross unrealized Fair value Gains Losses June 30, 2017 U.S. government and agencies $ 3,363 $ 70 $ (7 ) $ 3,426 Municipal 7,543 336 (24 ) 7,855 Corporate 43,007 1,394 (150 ) 44,251 Foreign government 1,019 34 (6 ) 1,047 Asset-backed securities (“ABS”) 1,237 16 (10 ) 1,243 Residential mortgage-backed securities (“RMBS”) 549 96 (4 ) 641 Commercial mortgage-backed securities (“CMBS”) 163 14 (7 ) 170 Redeemable preferred stock 20 3 — 23 Total fixed income securities $ 56,901 $ 1,963 $ (208 ) $ 58,656 December 31, 2016 U.S. government and agencies $ 3,572 $ 74 $ (9 ) $ 3,637 Municipal 7,116 304 (87 ) 7,333 Corporate 42,742 1,178 (319 ) 43,601 Foreign government 1,043 36 (4 ) 1,075 ABS 1,169 13 (11 ) 1,171 RMBS 651 85 (8 ) 728 CMBS 262 17 (9 ) 270 Redeemable preferred stock 21 3 — 24 Total fixed income securities $ 56,576 $ 1,710 $ (447 ) $ 57,839 |
Schedule for fixed income securities based on contractual maturities | The scheduled maturities for fixed income securities are as follows as of June 30, 2017 : ($ in millions) Amortized cost Fair value Due in one year or less $ 4,226 $ 4,247 Due after one year through five years 28,770 29,347 Due after five years through ten years 16,870 17,293 Due after ten years 5,086 5,715 54,952 56,602 ABS, RMBS and CMBS 1,949 2,054 Total $ 56,901 $ 58,656 |
Schedule of net investment income | Net investment income is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Fixed income securities $ 527 $ 520 $ 1,045 $ 1,038 Equity securities 49 44 93 72 Mortgage loans 50 53 105 106 Limited partnership interests 253 126 373 247 Short-term investments 6 3 12 7 Other 60 57 116 108 Investment income, before expense 945 803 1,744 1,578 Investment expense (48 ) (41 ) (99 ) (85 ) Net investment income $ 897 $ 762 $ 1,645 $ 1,493 |
Schedule of realized capital gains and losses by asset type | Realized capital gains and losses by asset type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Fixed income securities $ 32 $ 24 $ 37 $ (47 ) Equity securities 19 11 125 (79 ) Mortgage loans — 1 — 1 Limited partnership interests 31 (13 ) 71 13 Derivatives (8 ) 2 (23 ) (7 ) Other 7 (1 ) 5 (6 ) Realized capital gains and losses $ 81 $ 24 $ 215 $ (125 ) |
Schedule of realized capital gains and losses by transaction type | Realized capital gains and losses by transaction type are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Impairment write-downs $ (28 ) $ (63 ) $ (71 ) $ (122 ) Change in intent write-downs (22 ) (16 ) (38 ) (38 ) Net other-than-temporary impairment losses recognized in earnings (50 ) (79 ) (109 ) (160 ) Sales and other 139 104 347 45 Valuation and settlements of derivative instruments (8 ) (1 ) (23 ) (10 ) Realized capital gains and losses $ 81 $ 24 $ 215 $ (125 ) |
Schedule of other-than-temporary impairment losses by asset type | Other-than-temporary impairment losses by asset type are as follows: ($ in millions) Three months ended June 30, 2017 Three months ended June 30, 2016 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ (1 ) $ (2 ) $ (3 ) $ — $ — $ — Corporate — — — (1 ) — (1 ) ABS (1 ) — (1 ) — (1 ) (1 ) CMBS (2 ) (1 ) (3 ) — (1 ) (1 ) Total fixed income securities (4 ) (3 ) (7 ) (1 ) (2 ) (3 ) Equity securities (32 ) — (32 ) (51 ) — (51 ) Limited partnership interests (9 ) — (9 ) (24 ) — (24 ) Other (2 ) — (2 ) (1 ) — (1 ) Other-than-temporary impairment losses $ (47 ) $ (3 ) $ (50 ) $ (77 ) $ (2 ) $ (79 ) Six months ended June 30, 2017 Six months ended June 30, 2016 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ (1 ) $ (2 ) $ (3 ) $ — $ — $ — Corporate (9 ) 3 (6 ) (17 ) 7 (10 ) ABS (1 ) — (1 ) (6 ) — (6 ) RMBS (1 ) (3 ) (4 ) — — — CMBS (8 ) 2 (6 ) (4 ) 1 (3 ) Total fixed income securities (20 ) — (20 ) (27 ) 8 (19 ) Equity securities (68 ) — (68 ) (128 ) — (128 ) Limited partnership interests (16 ) — (16 ) (11 ) — (11 ) Other (5 ) — (5 ) (2 ) — (2 ) Other-than-temporary impairment losses $ (109 ) $ — $ (109 ) $ (168 ) $ 8 $ (160 ) |
Schedule of other-than-temporary impairment losses on fixed income securities included in Accumulated Other Comprehensive Income | The total amount of other-than-temporary impairment losses included in accumulated other comprehensive income at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $231 million and $221 million as of June 30, 2017 and December 31, 2016 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. ($ in millions) June 30, 2017 December 31, 2016 Municipal $ (5 ) $ (8 ) Corporate (3 ) (7 ) ABS (16 ) (21 ) RMBS (99 ) (90 ) CMBS (8 ) (7 ) Total $ (131 ) $ (133 ) |
Schedule of credit losses on fixed income securities recognized in earnings | Rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held as of the end of the period are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Beginning balance $ (294 ) $ (350 ) $ (318 ) $ (392 ) Additional credit loss for securities previously other-than-temporarily impaired (6 ) (3 ) (13 ) (11 ) Additional credit loss for securities not previously other-than-temporarily impaired (1 ) — (7 ) (8 ) Reduction in credit loss for securities disposed or collected 19 22 56 80 Change in credit loss due to accretion of increase in cash flows 1 — 1 — Ending balance $ (281 ) $ (331 ) $ (281 ) $ (331 ) |
Schedule of unrealized net capital gains and losses | Unrealized net capital gains and losses included in accumulated other comprehensive income are as follows: ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2017 Gains Losses Fixed income securities $ 58,656 $ 1,963 $ (208 ) $ 1,755 Equity securities 6,117 837 (41 ) 796 Short-term investments 2,175 — — — Derivative instruments (1) 3 3 (4 ) (1 ) Equity method (“EMA”) limited partnerships (2) (1 ) Unrealized net capital gains and losses, pre-tax 2,549 Amounts recognized for: Insurance reserves (3) — DAC and DSI (4) (198 ) Amounts recognized (198 ) Deferred income taxes (825 ) Unrealized net capital gains and losses, after-tax $ 1,526 _______________ (1) Included in the fair value of derivative instruments is $(3) million classified as liabilities. (2) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross unrealized gains and losses are not applicable. (3) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment, if any, primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies. (4) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2016 Gains Losses Fixed income securities $ 57,839 $ 1,710 $ (447 ) $ 1,263 Equity securities 5,666 594 (85 ) 509 Short-term investments 4,288 — — — Derivative instruments (1) 5 5 (3 ) 2 EMA limited partnerships (4 ) Unrealized net capital gains and losses, pre-tax 1,770 Amounts recognized for: Insurance reserves — DAC and DSI (146 ) Amounts recognized (146 ) Deferred income taxes (571 ) Unrealized net capital gains and losses, after-tax $ 1,053 _______________ (1) Included in the fair value of derivative instruments is $5 million classified as assets. |
Schedule of change in unrealized net capital gains and losses | The change in unrealized net capital gains and losses for the six months ended June 30, 2017 is as follows: ($ in millions) Fixed income securities $ 492 Equity securities 287 Derivative instruments (3 ) EMA limited partnerships 3 Total 779 Amounts recognized for: Insurance reserves — DAC and DSI (52 ) Amounts recognized (52 ) Deferred income taxes (254 ) Increase in unrealized net capital gains and losses, after-tax $ 473 |
Schedule of gross unrealized losses and fair value of available for sale securities by length of time | The following table summarizes the gross unrealized losses and fair value of fixed income and equity securities by the length of time that individual securities have been in a continuous unrealized loss position. ($ in millions) Less than 12 months 12 months or more Total unrealized losses Number of issues Fair value Unrealized losses Number of issues Fair value Unrealized losses June 30, 2017 Fixed income securities U.S. government and agencies 62 $ 1,840 $ (7 ) — $ — $ — $ (7 ) Municipal 903 1,842 (20 ) 4 14 (4 ) (24 ) Corporate 615 8,649 (109 ) 44 358 (41 ) (150 ) Foreign government 57 625 (6 ) — — — (6 ) ABS 35 242 (1 ) 10 39 (9 ) (10 ) RMBS 79 41 (1 ) 179 66 (3 ) (4 ) CMBS 6 23 (2 ) 5 14 (5 ) (7 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 1,758 13,262 (146 ) 242 491 (62 ) (208 ) Equity securities 137 547 (34 ) 13 43 (7 ) (41 ) Total fixed income and equity securities 1,895 $ 13,809 $ (180 ) 255 $ 534 $ (69 ) $ (249 ) Investment grade fixed income securities 1,655 $ 12,373 $ (124 ) 183 $ 295 $ (31 ) $ (155 ) Below investment grade fixed income securities 103 889 (22 ) 59 196 (31 ) (53 ) Total fixed income securities 1,758 $ 13,262 $ (146 ) 242 $ 491 $ (62 ) $ (208 ) December 31, 2016 Fixed income securities U.S. government and agencies 46 $ 943 $ (9 ) — $ — $ — $ (9 ) Municipal 1,310 3,073 (76 ) 8 29 (11 ) (87 ) Corporate 862 13,343 (256 ) 83 678 (63 ) (319 ) Foreign government 41 225 (4 ) — — — (4 ) ABS 31 222 (1 ) 14 109 (10 ) (11 ) RMBS 89 53 (1 ) 179 91 (7 ) (8 ) CMBS 15 59 (4 ) 4 15 (5 ) (9 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 2,395 17,918 (351 ) 288 922 (96 ) (447 ) Equity securities 195 654 (56 ) 46 165 (29 ) (85 ) Total fixed income and equity securities 2,590 $ 18,572 $ (407 ) 334 $ 1,087 $ (125 ) $ (532 ) Investment grade fixed income securities 2,202 $ 15,678 $ (293 ) 201 $ 493 $ (51 ) $ (344 ) Below investment grade fixed income securities 193 2,240 (58 ) 87 429 (45 ) (103 ) Total fixed income securities 2,395 $ 17,918 $ (351 ) 288 $ 922 $ (96 ) $ (447 ) |
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | The following table reflects the carrying value of non-impaired fixed rate and variable rate mortgage loans summarized by debt service coverage ratio distribution. ($ in millions) June 30, 2017 December 31, 2016 Debt service coverage ratio distribution Fixed rate mortgage loans Variable rate mortgage loans Total Fixed rate mortgage loans Variable rate mortgage loans Total Below 1.0 $ 18 $ — $ 18 $ 60 $ — $ 60 1.0 - 1.25 329 — 329 324 — 324 1.26 - 1.50 1,245 — 1,245 1,293 — 1,293 Above 1.50 2,700 39 2,739 2,765 39 2,804 Total non-impaired mortgage loans $ 4,292 $ 39 $ 4,331 $ 4,442 $ 39 $ 4,481 |
Net carrying value of impaired mortgage loans | The net carrying value of impaired mortgage loans is as follows: ($ in millions) June 30, 2017 December 31, 2016 Impaired mortgage loans with a valuation allowance $ 5 $ 5 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 5 $ 5 Valuation allowance on impaired mortgage loans $ 3 $ 3 |
Valuation allowance on impaired mortgage loans | The rollforward of the valuation allowance on impaired mortgage loans is as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Beginning balance $ 3 $ 3 $ 3 $ 3 Charge offs — — — — Ending balance $ 3 $ 3 $ 3 $ 3 |
Fair Value of Assets and Liab26
Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities that are measured at fair value on a recurring and non-recurring basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2017 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of June 30, 2017 Assets Fixed income securities: U.S. government and agencies $ 2,773 $ 653 $ — $ 3,426 Municipal — 7,741 114 7,855 Corporate - public — 32,079 60 32,139 Corporate - privately placed — 11,846 266 12,112 Foreign government — 1,047 — 1,047 ABS - CDO — 520 91 611 ABS - consumer and other — 512 120 632 RMBS — 641 — 641 CMBS — 146 24 170 Redeemable preferred stock — 23 — 23 Total fixed income securities 2,773 55,208 675 58,656 Equity securities 5,643 308 166 6,117 Short-term investments 315 1,860 — 2,175 Other investments: Free-standing derivatives — 126 1 $ (19 ) 108 Separate account assets 3,416 — — 3,416 Other assets — — — — Total recurring basis assets 12,147 57,502 842 (19 ) 70,472 Non-recurring basis (1) — — 16 16 Total assets at fair value $ 12,147 $ 57,502 $ 858 $ (19 ) $ 70,488 % of total assets at fair value 17.2 % 81.6 % 1.2 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (285 ) $ (285 ) Other liabilities: Free-standing derivatives (1 ) (70 ) — $ 21 (50 ) Total liabilities at fair value $ (1 ) $ (70 ) $ (285 ) $ 21 $ (335 ) % of total liabilities at fair value 0.3 % 20.9 % 85.1 % (6.3 )% 100 % _______________ (1) Includes $15 million of limited partnership interests and $ 1 million of other investments written-down to fair value in connection with recognizing other-than-temporary impairments. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2016 . ($ in millions) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Counterparty and cash collateral netting Balance as of December 31, 2016 Assets Fixed income securities: U.S. government and agencies $ 2,918 $ 719 $ — $ 3,637 Municipal — 7,208 125 7,333 Corporate - public — 31,414 78 31,492 Corporate - privately placed — 11,846 263 12,109 Foreign government — 1,075 — 1,075 ABS - CDO — 650 27 677 ABS - consumer and other — 452 42 494 RMBS — 727 1 728 CMBS — 248 22 270 Redeemable preferred stock — 24 — 24 Total fixed income securities 2,918 54,363 558 57,839 Equity securities 5,247 256 163 5,666 Short-term investments 850 3,423 15 4,288 Other investments: Free-standing derivatives — 119 1 $ (9 ) 111 Separate account assets 3,393 — — 3,393 Other assets — — 1 1 Total recurring basis assets 12,408 58,161 738 (9 ) 71,298 Non-recurring basis (1) — — 24 24 Total assets at fair value $ 12,408 $ 58,161 $ 762 $ (9 ) $ 71,322 % of total assets at fair value 17.4 % 81.5 % 1.1 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (290 ) $ (290 ) Other liabilities: Free-standing derivatives (1 ) (68 ) (3 ) $ 28 (44 ) Total liabilities at fair value $ (1 ) $ (68 ) $ (293 ) $ 28 $ (334 ) % of total liabilities at fair value 0.3 % 20.4 % 87.7 % (8.4 )% 100 % _______________ (1) Includes $24 million of limited partnership interests written-down to fair value in connection with recognizing other-than-temporary impairments. |
Summary of quantitative information about the significant unobservable inputs | The following table summarizes quantitative information about the significant unobservable inputs used in Level 3 fair value measurements. ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average June 30, 2017 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (250 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% December 31, 2016 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (247 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.75% |
Schedule of the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis | The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2017 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 124 $ (2 ) $ 5 $ — $ — Corporate - public 60 — — — — Corporate - privately placed 263 6 (7 ) 30 — ABS - CDO 147 — — 3 (122 ) ABS - consumer and other 80 — — — (5 ) CMBS 25 — — — — Total fixed income securities 699 4 (2 ) 33 (127 ) Equity securities 170 3 3 — — Short-term investments 35 — — — — Free-standing derivatives, net (1 ) 2 — — — Total recurring Level 3 assets $ 903 $ 9 $ 1 $ 33 $ (127 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (286 ) $ — $ — $ — $ — Total recurring Level 3 liabilities $ (286 ) $ — $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ 5 $ (18 ) $ — $ — $ 114 Corporate - public (1 ) 1 — — 60 Corporate - privately placed 4 (29 ) — (1 ) 266 ABS - CDO 65 — — (2 ) 91 ABS - consumer and other 48 — — (3 ) 120 CMBS — — — (1 ) 24 Total fixed income securities 121 (46 ) — (7 ) 675 Equity securities 2 (12 ) — — 166 Short-term investments 5 (40 ) — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 128 $ (98 ) $ — $ (7 ) $ 842 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (285 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (285 ) _____________ (1) The effect to net income totals $9 million and is reported in the Condensed Consolidated Statements of Operations as follows: $5 million in realized capital gains and losses, $4 million in net investment income, $(1) million in interest credited to contractholder funds and $1 million in life and annuity contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2017 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2016 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: Municipal $ 125 $ (1 ) $ 6 $ — $ (1 ) Corporate - public 78 — — — (16 ) Corporate - privately placed 263 6 (2 ) 30 — ABS - CDO 27 — 2 30 (122 ) ABS - consumer and other 42 — — — (7 ) RMBS 1 — — — — CMBS 22 — — — — Total fixed income securities 558 5 6 60 (146 ) Equity securities 163 13 3 — (3 ) Short-term investments 15 — — — — Free-standing derivatives, net (2 ) 3 — — — Other assets 1 (1 ) — — — Total recurring Level 3 assets $ 735 $ 20 $ 9 $ 60 $ (149 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (290 ) $ 3 $ — $ — $ — Total recurring Level 3 liabilities $ (290 ) $ 3 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2017 Assets Fixed income securities: Municipal $ 5 $ (20 ) $ — $ — $ 114 Corporate - public (1 ) 1 — (2 ) 60 Corporate - privately placed 4 (29 ) — (6 ) 266 ABS - CDO 160 — — (6 ) 91 ABS - consumer and other 89 — — (4 ) 120 RMBS — — — (1 ) — CMBS 3 — — (1 ) 24 Total fixed income securities 260 (48 ) — (20 ) 675 Equity securities 3 (13 ) — — 166 Short-term investments 25 (40 ) — — — Free-standing derivatives, net — — — — 1 (2) Other assets — — — — — Total recurring Level 3 assets $ 288 $ (101 ) $ — $ (20 ) $ 842 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (285 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (285 ) _____________ (1) The effect to net income totals $23 million and is reported in the Condensed Consolidated Statements of Operations as follows: $7 million in realized capital gains and losses, $14 million in net investment income, $(6) million in interest credited to contractholder funds and $8 million in life and annuity contract benefits. (2) Comprises $1 million of assets. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the three months ended June 30, 2016 . ($ in millions) Total gains (losses) included in: Balance as of March 31, 2016 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: U.S. government and agencies $ 4 $ — $ — $ — $ (4 ) Municipal 146 — 3 6 — Corporate - public 63 — — — — Corporate - privately placed 549 3 8 16 (69 ) ABS - CDO 58 — 3 6 (3 ) ABS - consumer and other 44 — (1 ) 3 — RMBS 1 — — — — CMBS 20 — — — — Total fixed income securities 885 3 13 31 (76 ) Equity securities 125 (8 ) 1 — — Free-standing derivatives, net (8 ) 1 — — — Other assets 1 — — — — Total recurring Level 3 assets $ 1,003 $ (4 ) $ 14 $ 31 $ (76 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (313 ) $ 7 $ — $ — $ — Total recurring Level 3 liabilities $ (313 ) $ 7 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2016 Assets Fixed income securities: U.S. government and agencies $ — $ — $ — $ — $ — Municipal — (6 ) — — 149 Corporate - public 7 4 — — 74 Corporate - privately placed 80 — — (2 ) 585 ABS - CDO — — — (31 ) 33 ABS - consumer and other — — — (1 ) 45 RMBS — — — — 1 CMBS — — — — 20 Total fixed income securities 87 (2 ) — (34 ) 907 Equity securities — — — — 118 Free-standing derivatives, net — — — — (7 ) (2) Other assets — — — — 1 Total recurring Level 3 assets $ 87 $ (2 ) $ — $ (34 ) $ 1,019 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 2 $ (304 ) Total recurring Level 3 liabilities $ — $ — $ — $ 2 $ (304 ) _____________________ (1) The effect to net income totals $3 million and is reported in the Condensed Consolidated Statements of Operations as follows: $(9) million in realized capital gains and losses, $5 million in net investment income, $(7) million in interest credited to contractholder funds and $14 million in life and annuity contract benefits. (2) Comprises $1 million of assets and $8 million of liabilities. The following table presents the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis during the six months ended June 30, 2016 . ($ in millions) Total gains (losses) included in: Balance as of December 31, 2015 Net income (1) OCI Transfers into Level 3 Transfers out of Level 3 Assets Fixed income securities: U.S. government and agencies $ 5 $ — $ — $ — $ (4 ) Municipal 161 10 (5 ) 6 — Corporate - public 46 — 1 25 (7 ) Corporate - privately placed 502 4 13 16 (83 ) ABS - CDO 61 — 2 10 (3 ) ABS - consumer and other 50 — (2 ) 3 — RMBS 1 — — — — CMBS 20 — — — — Total fixed income securities 846 14 9 60 (97 ) Equity securities 133 (32 ) 8 — — Free-standing derivatives, net (7 ) — — — — Other assets 1 — — — — Total recurring Level 3 assets $ 973 $ (18 ) $ 17 $ 60 $ (97 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (299 ) $ (8 ) $ — $ — $ — Total recurring Level 3 liabilities $ (299 ) $ (8 ) $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2016 Assets Fixed income securities: U.S. government and agencies $ — $ — $ — $ (1 ) $ — Municipal — (22 ) — (1 ) 149 Corporate - public 7 4 — (2 ) 74 Corporate - privately placed 143 — — (10 ) 585 ABS - CDO — (2 ) — (35 ) 33 ABS - consumer and other — (5 ) — (1 ) 45 RMBS — — — — 1 CMBS 2 — — (2 ) 20 Total fixed income securities 152 (25 ) — (52 ) 907 Equity securities 9 — — — 118 Free-standing derivatives, net — — — — (7 ) (2) Other assets — — — — 1 Total recurring Level 3 assets $ 161 $ (25 ) $ — $ (52 ) $ 1,019 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 4 $ (304 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 4 $ (304 ) _____________________ (1) The effect to net income totals $(26) million and is reported in the Condensed Consolidated Statements of Operations as follows: $(25) million in realized capital gains and losses, $7 million in net investment income, $(6) million in interest credited to contractholder funds and $(2) million in life and annuity contract benefits. (2) Comprises $1 million of assets and $8 million of liabilities. |
Schedule of gains and losses included in net income for Level 3 assets and liabilities still held at the balance sheet date | The following table provides the change in unrealized gains and losses included in net income for Level 3 assets and liabilities held as of June 30 . ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Assets Fixed income securities: Municipal $ (3 ) $ 1 $ (3 ) $ 1 Corporate — 3 — 1 Total fixed income securities (3 ) 4 (3 ) 2 Equity securities 4 (8 ) 14 (32 ) Free-standing derivatives, net 2 1 3 — Other assets — — (1 ) — Total recurring Level 3 assets $ 3 $ (3 ) $ 13 $ (30 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ 7 $ 3 $ (8 ) Total recurring Level 3 liabilities $ — $ 7 $ 3 $ (8 ) |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Financial liabilities ($ in millions) June 30, 2017 December 31, 2016 Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts $ 10,846 $ 11,441 $ 11,313 $ 12,009 Long-term debt 6,348 7,118 6,347 6,920 Liability for collateral 1,126 1,126 1,129 1,129 Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value. Financial assets ($ in millions) June 30, 2017 December 31, 2016 Carrying value Fair value Carrying value Fair value Mortgage loans $ 4,336 $ 4,483 $ 4,486 $ 4,514 Cost method limited partnerships 1,269 1,511 1,282 1,493 Bank loans 1,754 1,759 1,669 1,677 Agent loans 499 495 467 467 |
Derivative Financial Instrume27
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Volume and fair value positions of derivative instruments and location in the Consolidated Statement of Financial Position | The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Condensed Consolidated Statement of Financial Position as of June 30, 2017 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments $ 22 n/a $ — $ — $ — Equity and index contracts Options Other investments 585 6,798 110 113 (3 ) Financial futures contracts Other assets — 519 — — — Foreign currency contracts Foreign currency forwards Other investments 344 n/a (7 ) 2 (9 ) Credit default contracts Credit default swaps – buying protection Other investments 49 n/a (2 ) — (2 ) Credit default swaps – selling protection Other investments 80 n/a 1 1 — Other contracts Other contracts Other assets 3 n/a — — — Total asset derivatives $ 1,083 7,317 $ 102 $ 116 $ (14 ) Liability derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other liabilities & accrued expenses $ 49 n/a $ 2 $ 2 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses 37 n/a 1 1 — Equity and index contracts Options and futures Other liabilities & accrued expenses — 8,896 (42 ) — (42 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 621 n/a (2 ) 8 (10 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 246 n/a (28 ) — (28 ) Guaranteed withdrawal benefits Contractholder funds 282 n/a (7 ) — (7 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,753 n/a (250 ) — (250 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 173 n/a (5 ) — (5 ) Credit default swaps – selling protection Other liabilities & accrued expenses 130 n/a — — — Subtotal 3,242 8,896 (333 ) 9 (342 ) Total liability derivatives 3,291 8,896 (331 ) $ 11 $ (342 ) Total derivatives $ 4,374 16,213 $ (229 ) __________________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2016 . ($ in millions, except number of contracts) Volume (1) Balance sheet location Notional amount Number of contracts Fair value, net Gross asset Gross liability Asset derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other investments $ 49 n/a $ 5 $ 5 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other investments 65 n/a 1 1 — Equity and index contracts Options Other investments — 3,972 88 88 — Financial futures contracts Other assets — 261 — — — Foreign currency contracts Foreign currency forwards Other investments 759 n/a — 24 (24 ) Credit default contracts Credit default swaps – buying protection Other investments 87 n/a (4 ) — (4 ) Credit default swaps – selling protection Other investments 140 n/a 2 2 — Other contracts Other contracts Other assets 3 n/a 1 1 — Subtotal 1,054 4,233 88 116 (28 ) Total asset derivatives $ 1,103 4,233 $ 93 $ 121 $ (28 ) Liability derivatives Derivatives not designated as accounting hedging instruments Equity and index contracts Options and futures Other liabilities & accrued expenses $ — 4,848 $ (39 ) $ — $ (39 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 391 n/a (34 ) — (34 ) Guaranteed withdrawal benefits Contractholder funds 290 n/a (9 ) — (9 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,751 n/a (247 ) — (247 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 136 n/a (2 ) — (2 ) Credit default swaps – selling protection Other liabilities & accrued expenses 105 n/a (3 ) — (3 ) Subtotal 2,673 4,848 (334 ) — (334 ) Total liability derivatives 2,673 4,848 (334 ) $ — $ (334 ) Total derivatives $ 3,776 9,081 $ (241 ) __________________ (1) Volume for OTC and cleared derivative contracts is represented by their notional amounts. Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded. (n/a = not applicable) |
Schedule of gross and net amount for the Company's OTC derivatives subject to enforceable master netting arrangements | The following table provides gross and net amounts for the Company’s OTC derivatives, all of which are subject to enforceable master netting agreements. ($ in millions) Offsets Gross amount Counter-party netting Cash collateral (received) pledged Net amount on balance sheet Securities collateral (received) pledged Net amount June 30, 2017 Asset derivatives $ 20 $ (25 ) $ 6 $ 1 $ — $ 1 Liability derivatives (29 ) 25 (4 ) (8 ) 3 (5 ) December 31, 2016 Asset derivatives $ 31 $ (28 ) $ 19 $ 22 $ (9 ) $ 13 Liability derivatives (33 ) 28 — (5 ) 4 (1 ) |
Impacts on operations and AOCI from foreign currency contracts, cash flow hedges | The following table provides a summary of the impacts of the Company’s foreign currency contracts in cash flow hedging relationships. Amortization of net gains from accumulated other comprehensive income related to cash flow hedges is expected to be a gain of $3 million during the next twelve months. There was no hedge ineffectiveness reported in realized gains and losses for the three months and six months ended June 30, 2017 or 2016 . ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Gain (loss) recognized in OCI on derivatives during the period $ — $ 1 $ (2 ) $ (1 ) (Loss) gain recognized in OCI on derivatives during the term of the hedging relationship (1 ) 2 (1 ) 2 Gain reclassified from AOCI into income (net investment income) 1 — 1 — Gain reclassified from AOCI into income (realized capital gains and losses) — 3 — 3 |
Gains and losses from valuation, settlements, and hedge ineffectiveness, fair value hedges and derivatives not designated as hedges | The following tables present gains and losses from valuation and settlements reported on derivatives not designated as accounting hedging instruments in the Condensed Consolidated Statements of Operations. For the three months and six months ended June 30, 2017 and 2016 , the Company had no derivatives used in fair value hedging relationships. ($ in millions) Realized capital gains and losses Life and annuity contract benefits Interest credited to contractholder funds Operating costs and expenses Total gain (loss) recognized in net income on derivatives Three months ended June 30, 2017 Equity and index contracts $ — $ — $ 9 $ 5 $ 14 Embedded derivative financial instruments — 1 — — 1 Foreign currency contracts (8 ) — — 4 (4 ) Total $ (8 ) $ 1 $ 9 $ 9 $ 11 Six months ended June 30, 2017 Equity and index contracts $ (7 ) $ — $ 22 $ 12 $ 27 Embedded derivative financial instruments — 8 (4 ) — 4 Foreign currency contracts (15 ) — — 5 (10 ) Credit default contracts (1 ) — — — (1 ) Total $ (23 ) $ 8 $ 18 $ 17 $ 20 Three months ended June 30, 2016 Interest rate contracts $ (1 ) $ — $ — $ — $ (1 ) Equity and index contracts (5 ) — 2 4 1 Embedded derivative financial instruments — 14 (5 ) — 9 Foreign currency contracts 6 — — (16 ) (10 ) Credit default contracts (1 ) — — — (1 ) Total $ (1 ) $ 14 $ (3 ) $ (12 ) $ (2 ) Six months ended June 30, 2016 Interest rate contracts $ (1 ) $ — $ — $ — $ (1 ) Equity and index contracts (5 ) — (5 ) 4 (6 ) Embedded derivative financial instruments — (2 ) (3 ) — (5 ) Foreign currency contracts 1 — — (21 ) (20 ) Credit default contracts (5 ) — — — (5 ) Total $ (10 ) $ (2 ) $ (8 ) $ (17 ) $ (37 ) |
Counterparty credit exposure by counterparty credit rating | The following table summarizes the counterparty credit exposure by counterparty credit rating as it relates to the Company’s OTC derivatives. ($ in millions) June 30, 2017 December 31, 2016 Rating (1) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) Number of counter- parties Notional amount (2) Credit exposure (2) Exposure, net of collateral (2) AA- 2 $ 140 $ 1 $ — 2 $ 80 $ 2 $ 2 A+ 4 775 6 1 5 698 20 9 A- — — — — 1 110 1 1 Total 6 $ 915 $ 7 $ 1 8 $ 888 $ 23 $ 12 _______________ (1) Rating is the lower of S&P or Moody’s ratings. (2) Only OTC derivatives with a net positive fair value are included for each counterparty. |
Derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability | The following summarizes the fair value of derivative instruments with termination, cross-default or collateral credit-risk-contingent features that are in a liability position, as well as the fair value of assets and collateral that are netted against the liability in accordance with provisions within legally enforceable MNAs. ($ in millions) June 30, 2017 December 31, 2016 Gross liability fair value of contracts containing credit-risk-contingent features $ 20 $ 9 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (12 ) (7 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features (3 ) — Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ 5 $ 2 |
CDS notional amounts by credit rating and fair value of protection sold | The following table shows the CDS notional amounts by credit rating and fair value of protection sold. ($ in millions) Notional amount AA A BBB BB and lower Total Fair value June 30, 2017 Single name Corporate debt $ — $ — $ 25 $ 5 $ 30 $ — First-to-default Basket Municipal — — 100 — 100 — Index Corporate debt 1 17 49 13 80 1 Total $ 1 $ 17 $ 174 $ 18 $ 210 $ 1 December 31, 2016 Single name Corporate debt $ 20 $ 10 $ 35 $ — $ 65 $ 1 First-to-default Basket Municipal — — 100 — 100 (3 ) Index Corporate debt 1 19 50 10 80 1 Total $ 21 $ 29 $ 185 $ 10 $ 245 $ (1 ) |
Reserve for Property-Liabilit28
Reserve for Property-Liability Insurance Claims and Claims Expense (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Schedule of liability for unpaid claims and claims adjustment expense | Activity in the reserve for property-liability insurance claims and claims expense is summarized as follows: ($ in millions) Six months ended June 30, 2017 2016 Balance as of January 1 $ 25,250 $ 23,869 Less reinsurance recoverables 6,184 5,892 Net balance as of January 1 19,066 17,977 SquareTrade acquisition as of January 3, 2017 17 — Incurred claims and claims expense related to: Current year 11,291 11,564 Prior years (186 ) 21 Total incurred 11,105 11,585 Claims and claims expense paid related to: Current year 6,060 6,138 Prior years 4,450 4,553 Total paid 10,510 10,691 Net balance as of June 30 19,678 18,871 Plus reinsurance recoverables 6,206 6,033 Balance as of June 30 $ 25,884 $ 24,904 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Reinsurance Disclosures [Abstract] | |
Schedule of reductions to premiums and contract charges due to reinsurance premium ceded amounts | Property-liability insurance premiums earned and life and annuity premiums and contract charges have been reduced by reinsurance ceded amounts shown in the following table. ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-liability insurance premiums earned $ 254 $ 248 $ 500 $ 497 Life and annuity premiums and contract charges 75 78 150 152 |
Schedule of reductions to costs and expenses due to reinsurance ceded amounts | Property-liability insurance claims and claims expense, life and annuity contract benefits and interest credited to contractholder funds have been reduced by the reinsurance ceded amounts shown in the following table. ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Property-liability insurance claims and claims expense $ 124 $ 241 $ 255 $ 402 Life and annuity contract benefits 70 80 117 147 Interest credited to contractholder funds 6 6 11 11 |
Company Restructuring (Tables)
Company Restructuring (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of changes in the restructuring liability | The following table presents changes in the restructuring liability during the six months ended June 30, 2017 . ($ in millions) Employee costs Exit costs Total liability Balance as of December 31, 2016 $ — $ 2 $ 2 Expense incurred 36 16 52 Payments applied against liability (2 ) (4 ) (6 ) Balance as of June 30, 2017 $ 34 $ 14 $ 48 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
Company's pension and postretirement benefit plans | The components of net periodic cost for the Company’s pension and postretirement benefit plans are as follows: ($ in millions) Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Pension benefits Service cost $ 28 $ 28 $ 57 $ 56 Interest cost 66 72 132 143 Expected return on plan assets (102 ) (100 ) (204 ) (199 ) Amortization of: Prior service credit (14 ) (14 ) (28 ) (28 ) Net actuarial loss 47 44 94 87 Settlement loss 8 8 16 16 Net periodic pension cost $ 33 $ 38 $ 67 $ 75 Postretirement benefits Service cost $ 2 $ 3 $ 4 $ 5 Interest cost 3 5 7 9 Amortization of: Prior service credit (6 ) (6 ) (12 ) (11 ) Net actuarial gain (6 ) (8 ) (12 ) (16 ) Net periodic postretirement credit $ (7 ) $ (6 ) $ (13 ) $ (13 ) |
Supplemental Cash Flow Inform32
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplemental cash flow information from collateralized securities received | The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows: ($ in millions) Six months ended June 30, 2017 2016 Net change in proceeds managed Net change in fixed income securities $ 10 $ — Net change in short-term investments (7 ) (56 ) Operating cash flow provided (used) $ 3 $ (56 ) Net change in liabilities Liabilities for collateral, beginning of period $ (1,129 ) $ (840 ) Liabilities for collateral, end of period (1,126 ) (896 ) Operating cash flow (used) provided $ (3 ) $ 56 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other comprehensive income (loss) on a pre-tax and after-tax basis | The components of other comprehensive income on a pre-tax and after-tax basis are as follows: ($ in millions) Three months ended June 30, 2017 2016 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 479 $ (167 ) $ 312 $ 663 $ (232 ) $ 431 Less: reclassification adjustment of realized capital gains and losses 64 (22 ) 42 11 (4 ) 7 Unrealized net capital gains and losses 415 (145 ) 270 652 (228 ) 424 Unrealized foreign currency translation adjustments 17 (6 ) 11 7 (2 ) 5 Unrecognized pension and other postretirement benefit cost arising during the period (3 ) 2 (1 ) 1 — 1 Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (29 ) 10 (19 ) (24 ) 9 (15 ) Unrecognized pension and other postretirement benefit cost 26 (8 ) 18 25 (9 ) 16 Other comprehensive income $ 458 $ (159 ) $ 299 $ 684 $ (239 ) $ 445 Six months ended June 30, 2017 2016 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ 901 $ (315 ) $ 586 $ 1,381 $ (483 ) $ 898 Less: reclassification adjustment of realized capital gains and losses 174 (61 ) 113 (163 ) 57 (106 ) Unrealized net capital gains and losses 727 (254 ) 473 1,544 (540 ) 1,004 Unrealized foreign currency translation adjustments 12 (4 ) 8 29 (10 ) 19 Unrecognized pension and other postretirement benefit cost arising during the period (3 ) 2 (1 ) (7 ) 3 (4 ) Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (58 ) 20 (38 ) (48 ) 17 (31 ) Unrecognized pension and other postretirement benefit cost 55 (18 ) 37 41 (14 ) 27 Other comprehensive income $ 794 $ (276 ) $ 518 $ 1,614 $ (564 ) $ 1,050 |
General (Details)
General (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Available for sale equity securities, included in other comprehensive income | $ 796 | $ 509 |
Limited partnership interests | 6,206 | 5,814 |
Accounting Standards Update 2016-01 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Available for sale equity securities, included in other comprehensive income | 796 | |
EMA limited partnerships | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Limited partnership interests | 4,940 | $ 4,530 |
EMA limited partnerships | Accounting Standards Update 2016-01 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Limited partnership interests | $ 202 |
Earnings per Common Share (Deta
Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net income | $ 579 | $ 271 | $ 1,274 | $ 517 |
Less: Preferred stock dividends | 29 | 29 | 58 | 58 |
Net income applicable to common shareholders | $ 550 | $ 242 | $ 1,216 | $ 459 |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 363.6 | 373.6 | 364.6 | 375.8 |
Effect of dilutive potential common shares: | ||||
Stock options (in shares) | 4.3 | 3.4 | 4.2 | 3.4 |
Restricted stock units(non-participating) and performance stock awards (in shares) | 1.1 | 1.1 | 1.3 | 1.3 |
Weighted average common and dilutive potential common shares outstanding (in shares) | 369 | 378.1 | 370.1 | 380.5 |
Earnings per common share - Basic (in dollars per share) | $ 1.51 | $ 0.65 | $ 3.34 | $ 1.22 |
Earnings per common share - Diluted (in dollars per share) | $ 1.49 | $ 0.64 | $ 3.29 | $ 1.21 |
Other Earnings Per Share Disclosures | ||||
Antidilutive stock options, exercise price exceeds market price (in shares) | 2.5 | 4.8 | 2.6 | 4.8 |
Antidilutive stock options, exercise price exceeds market price, exercise price range, low end of range (in dollars per share) | $ 74.03 | $ 57.29 | $ 69.95 | $ 57.29 |
Antidilutive stock options, exercise price exceeds market price, exercise price range, high end of range (in dollars per share) | $ 86.61 | $ 71.29 | $ 86.61 | $ 71.29 |
Acquisition (Details)
Acquisition (Details) - USD ($) $ in Millions | Jan. 03, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Goodwill | $ 2,309 | $ 1,219 | |
SquareTrade | |||
Business Acquisition [Line Items] | |||
Consideration transferred | $ 1,400 | ||
Goodwill | 1,080 | ||
Commissions paid to retailers | 70 | ||
Intangible assets | 555 | ||
Prepaid contractual liability insurance policy premium expenses | 201 | ||
Unearned premiums | 373 | ||
Net deferred income tax liability | $ 140 | ||
Goodwill, period increase | 14 | ||
Restricted cash | $ 30 |
Reporting Segments (Details)
Reporting Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Reporting Information | ||||
Property-liability insurance premiums | $ 8,018 | $ 7,814 | $ 15,977 | $ 15,537 |
Net investment income | 897 | 762 | 1,645 | 1,493 |
Realized capital gains and losses | 81 | 24 | 215 | (125) |
Life and annuity premiums and contract charges | 591 | 564 | 1,184 | 1,130 |
Total revenues | 9,587 | 9,164 | 19,021 | 18,035 |
Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 8,018 | 7,814 | 15,977 | 15,537 |
Net investment income | 391 | 316 | 702 | 618 |
Realized capital gains and losses | 85 | 26 | 220 | (73) |
Total revenues | 8,494 | 8,156 | 16,899 | 16,082 |
Allstate Protection | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 8,018 | 7,814 | 15,977 | 15,537 |
Discontinued Lines and Coverages | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 0 | 0 | 0 | 0 |
Allstate Financial | ||||
Segment Reporting Information | ||||
Net investment income | 496 | 435 | 922 | 854 |
Realized capital gains and losses | (4) | 0 | (5) | (49) |
Life and annuity premiums and contract charges | 591 | 564 | 1,184 | 1,130 |
Total revenues | 1,083 | 999 | 2,101 | 1,935 |
Corporate and Other | ||||
Segment Reporting Information | ||||
Net investment income | 10 | 11 | 21 | 21 |
Realized capital gains and losses | 0 | (2) | 0 | (3) |
Total revenues | 10 | 9 | 21 | 18 |
Auto | Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 5,437 | 5,306 | 10,825 | 10,526 |
Homeowners | Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 1,815 | 1,815 | 3,630 | 3,625 |
Other personal lines | Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 436 | 424 | 867 | 845 |
Commercial lines | Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 118 | 127 | 243 | 256 |
Other business lines | Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 142 | 142 | 283 | 285 |
SquareTrade | Property-Liability | ||||
Segment Reporting Information | ||||
Property-liability insurance premiums | 70 | 0 | 129 | 0 |
Traditional life insurance | Allstate Financial | ||||
Segment Reporting Information | ||||
Life and annuity premiums and contract charges | 148 | 139 | 297 | 277 |
Accident and health insurance | Allstate Financial | ||||
Segment Reporting Information | ||||
Life and annuity premiums and contract charges | 233 | 214 | 465 | 430 |
Total life and annuity premiums | Allstate Financial | ||||
Segment Reporting Information | ||||
Life and annuity premiums and contract charges | 381 | 353 | 762 | 707 |
Interest-sensitive life insurance | Allstate Financial | ||||
Segment Reporting Information | ||||
Life and annuity premiums and contract charges | 207 | 208 | 416 | 417 |
Fixed annuities | Allstate Financial | ||||
Segment Reporting Information | ||||
Life and annuity premiums and contract charges | 3 | 3 | 6 | 6 |
Total contract charges | Allstate Financial | ||||
Segment Reporting Information | ||||
Life and annuity premiums and contract charges | $ 210 | $ 211 | $ 422 | $ 423 |
Reporting Segments (Details 2)
Reporting Segments (Details 2) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property-Liability | ||||
Net investment income | $ 897 | $ 762 | $ 1,645 | $ 1,493 |
Restructuring and related charges | (53) | (11) | (63) | (16) |
Allstate Financial | ||||
Life and annuity premiums and contract charges | 591 | 564 | 1,184 | 1,130 |
Corporate and Other | ||||
Net income applicable to common shareholders | 550 | 242 | 1,216 | 459 |
Allstate Protection | ||||
Property-Liability | ||||
Underwriting income (loss) | 232 | (64) | 741 | 63 |
Discontinued Lines and Coverages | ||||
Property-Liability | ||||
Underwriting income (loss) | (5) | (2) | (7) | (4) |
Property-Liability | ||||
Property-Liability | ||||
Underwriting income (loss) | 227 | (66) | 734 | 59 |
Net investment income | 391 | 316 | 702 | 618 |
Income tax (expense) benefit on operations | (196) | (70) | (451) | (211) |
Realized capital gains and losses, after-tax | 56 | 18 | 145 | (46) |
Allstate Financial | ||||
Realized capital gains and losses, after-tax | 56 | 18 | 145 | (46) |
Gain on disposition of operations, after-tax | 6 | 0 | 6 | 0 |
Corporate and Other | ||||
Realized capital gains and losses, after-tax | 56 | 18 | 145 | (46) |
Net income applicable to common shareholders | 484 | 198 | 1,136 | 420 |
Allstate Financial | ||||
Property-Liability | ||||
Net investment income | 496 | 435 | 922 | 854 |
Restructuring and related charges | (1) | (1) | (1) | (1) |
Income tax (expense) benefit on operations | (75) | (56) | (127) | (104) |
Realized capital gains and losses, after-tax | (3) | 0 | (4) | (32) |
Allstate Financial | ||||
Life and annuity premiums and contract charges | 591 | 564 | 1,184 | 1,130 |
Contract benefits and interest credited to contractholder funds | (659) | (633) | (1,306) | (1,272) |
Operating costs and expenses and amortization of deferred policy acquisition costs | (199) | (189) | (409) | (383) |
Operating income (loss) | 153 | 120 | 263 | 224 |
Realized capital gains and losses, after-tax | (3) | 0 | (4) | (32) |
Valuation changes on embedded derivatives that are not hedged, after-tax | (1) | (4) | (1) | (8) |
DAC and DSI amortization related to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax | (3) | (1) | (6) | (2) |
Gain on disposition of operations, after-tax | 0 | 1 | 2 | 2 |
Corporate and Other | ||||
Operating income (loss) | 153 | 120 | 263 | 224 |
Realized capital gains and losses, after-tax | (3) | 0 | (4) | (32) |
Net income applicable to common shareholders | 146 | 116 | 254 | 184 |
Corporate and Other | ||||
Property-Liability | ||||
Net investment income | 10 | 11 | 21 | 21 |
Income tax (expense) benefit on operations | 31 | 26 | 61 | 51 |
Realized capital gains and losses, after-tax | 0 | (1) | 0 | (1) |
Allstate Financial | ||||
Operating income (loss) | (80) | (71) | (161) | (144) |
Realized capital gains and losses, after-tax | 0 | (1) | 0 | (1) |
Corporate and Other | ||||
Operating costs and expenses | (92) | (79) | (185) | (158) |
Preferred stock dividends | (29) | (29) | (58) | (58) |
Operating income (loss) | (80) | (71) | (161) | (144) |
Realized capital gains and losses, after-tax | 0 | (1) | 0 | (1) |
Business combination expenses, after-tax | 0 | 0 | (13) | 0 |
Net income applicable to common shareholders | $ (80) | $ (72) | $ (174) | $ (145) |
Investments (Details)
Investments (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available for Sale Securities | ||
Amortized cost | $ 56,901 | $ 56,576 |
Gross unrealized gains | 1,963 | 1,710 |
Gross unrealized losses | (208) | (447) |
Fair value | 58,656 | 57,839 |
U.S. government and agencies | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 3,363 | 3,572 |
Gross unrealized gains | 70 | 74 |
Gross unrealized losses | (7) | (9) |
Fair value | 3,426 | 3,637 |
Municipal | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 7,543 | 7,116 |
Gross unrealized gains | 336 | 304 |
Gross unrealized losses | (24) | (87) |
Fair value | 7,855 | 7,333 |
Corporate | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 43,007 | 42,742 |
Gross unrealized gains | 1,394 | 1,178 |
Gross unrealized losses | (150) | (319) |
Fair value | 44,251 | 43,601 |
Foreign government | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 1,019 | 1,043 |
Gross unrealized gains | 34 | 36 |
Gross unrealized losses | (6) | (4) |
Fair value | 1,047 | 1,075 |
Asset-backed securities (“ABS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 1,237 | 1,169 |
Gross unrealized gains | 16 | 13 |
Gross unrealized losses | (10) | (11) |
Fair value | 1,243 | 1,171 |
Residential mortgage-backed securities (“RMBS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 549 | 651 |
Gross unrealized gains | 96 | 85 |
Gross unrealized losses | (4) | (8) |
Fair value | 641 | 728 |
Commercial mortgage-backed securities (“CMBS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 163 | 262 |
Gross unrealized gains | 14 | 17 |
Gross unrealized losses | (7) | (9) |
Fair value | 170 | 270 |
Redeemable preferred stock | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 20 | 21 |
Gross unrealized gains | 3 | 3 |
Gross unrealized losses | 0 | 0 |
Fair value | $ 23 | $ 24 |
Investments (Details 2)
Investments (Details 2) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Amortized cost | ||
Due in one year or less | $ 4,226 | |
Due after one year through five years | 28,770 | |
Due after five years through ten years | 16,870 | |
Due after ten years | 5,086 | |
Subtotal | 54,952 | |
ABS, RMBS and CMBS | 1,949 | |
Amortized cost | 56,901 | $ 56,576 |
Fair value | ||
Due in one year or less | 4,247 | |
Due after one year through five years | 29,347 | |
Due after five years through ten years | 17,293 | |
Due after ten years | 5,715 | |
Subtotal | 56,602 | |
ABS, RMBS and CMBS | 2,054 | |
Total fixed income securities | $ 58,656 | $ 57,839 |
Investments (Details 3)
Investments (Details 3) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Investment Income: | ||||
Investment income, before expense | $ 945 | $ 803 | $ 1,744 | $ 1,578 |
Investment expense | (48) | (41) | (99) | (85) |
Net investment income | 897 | 762 | 1,645 | 1,493 |
Fixed income securities | ||||
Net Investment Income: | ||||
Investment income, before expense | 527 | 520 | 1,045 | 1,038 |
Equity securities | ||||
Net Investment Income: | ||||
Investment income, before expense | 49 | 44 | 93 | 72 |
Mortgage loans | ||||
Net Investment Income: | ||||
Investment income, before expense | 50 | 53 | 105 | 106 |
Limited partnership interests | ||||
Net Investment Income: | ||||
Investment income, before expense | 253 | 126 | 373 | 247 |
Short-term investments | ||||
Net Investment Income: | ||||
Investment income, before expense | 6 | 3 | 12 | 7 |
Other | ||||
Net Investment Income: | ||||
Investment income, before expense | $ 60 | $ 57 | $ 116 | $ 108 |
Investments (Details 4)
Investments (Details 4) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ 81 | $ 24 | $ 215 | $ (125) |
Fixed income securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 32 | 24 | 37 | (47) |
Equity securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 19 | 11 | 125 | (79) |
Mortgage loans | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 0 | 1 | 0 | 1 |
Limited partnership interests | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 31 | (13) | 71 | 13 |
Derivatives | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | (8) | 2 | (23) | (7) |
Other | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ 7 | $ (1) | $ 5 | $ (6) |
Investments (Details 5)
Investments (Details 5) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Investments [Abstract] | ||||
Impairment write-downs | $ (28) | $ (63) | $ (71) | $ (122) |
Change in intent write-downs | (22) | (16) | (38) | (38) |
Net OTTI losses recognized in earnings | (50) | (79) | (109) | (160) |
Sales and other | 139 | 104 | 347 | 45 |
Valuation and settlements of derivative instruments | (8) | (1) | (23) | (10) |
Total realized capital gains and losses | 81 | 24 | 215 | (125) |
Fixed income and equity securities | ||||
Schedule of Available for Sale Securities | ||||
Gross gains on sales of fixed income securities | 141 | 163 | 376 | 306 |
Gross loss on sales of fixed income securities | $ 50 | $ 74 | $ 125 | $ 285 |
Investments (Details 6)
Investments (Details 6) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | $ (47) | $ (77) | $ (109) | $ (168) |
Included in OCI | (3) | (2) | 0 | 8 |
Net OTTI losses recognized in earnings | (50) | (79) | (109) | (160) |
Fixed income securities | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (4) | (1) | (20) | (27) |
Included in OCI | (3) | (2) | 0 | 8 |
Net OTTI losses recognized in earnings | (7) | (3) | (20) | (19) |
Municipal | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (1) | 0 |
Included in OCI | (2) | 0 | (2) | 0 |
Net OTTI losses recognized in earnings | (3) | 0 | (3) | 0 |
Corporate | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | 0 | (1) | (9) | (17) |
Included in OCI | 0 | 0 | 3 | 7 |
Net OTTI losses recognized in earnings | 0 | (1) | (6) | (10) |
Asset-backed securities (“ABS”) | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | (1) | (6) |
Included in OCI | 0 | (1) | 0 | 0 |
Net OTTI losses recognized in earnings | (1) | (1) | (1) | (6) |
Residential mortgage-backed securities (“RMBS”) | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (1) | 0 | ||
Included in OCI | (3) | 0 | ||
Net OTTI losses recognized in earnings | (4) | 0 | ||
Commercial mortgage-backed securities (“CMBS”) | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (2) | 0 | (8) | (4) |
Included in OCI | (1) | (1) | 2 | 1 |
Net OTTI losses recognized in earnings | (3) | (1) | (6) | (3) |
Equity securities | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (32) | (51) | (68) | (128) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | (32) | (51) | (68) | (128) |
Limited partnership interests | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (9) | (24) | (16) | (11) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | (9) | (24) | (16) | (11) |
Other | ||||
Other-than-temporary impairment losses by asset type | ||||
Total other-than-temporary impairment (“OTTI”) losses | (2) | (1) | (5) | (2) |
Included in OCI | 0 | 0 | 0 | 0 |
Net OTTI losses recognized in earnings | $ (2) | $ (1) | $ (5) | $ (2) |
Investments (Details 7)
Investments (Details 7) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Investments [Abstract] | ||
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | $ 231 | $ 221 |
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (131) | (133) |
Municipal | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (5) | (8) |
Corporate | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (3) | (7) |
Asset-backed securities (“ABS”) | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (16) | (21) |
Residential mortgage-backed securities (“RMBS”) | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | (99) | (90) |
Commercial mortgage-backed securities (“CMBS”) | ||
Other-than Impairment Losses Included in Accumulated Other Comprehensive Income | ||
Amount of other-than-temporary impairment losses included in accumulated other comprehensive income for fixed income securities, not included in earnings | $ (8) | $ (7) |
Investments (Details 8)
Investments (Details 8) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Credit Losses on Fixed Income Securities | ||||
Beginning balance | $ (294) | $ (350) | $ (318) | $ (392) |
Additional credit loss for securities previously other-than-temporarily impaired | (6) | (3) | (13) | (11) |
Additional credit loss for securities not previously other-than-temporarily impaired | (1) | 0 | (7) | (8) |
Reduction in credit loss for securities disposed or collected | 19 | 22 | 56 | 80 |
Change in credit loss due to accretion of increase in cash flows | 1 | 0 | 1 | 0 |
Ending balance | $ (281) | $ (331) | $ (281) | $ (331) |
Investments (Details 9)
Investments (Details 9) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Fair value | ||
Fixed income securities: | $ 58,656 | $ 57,839 |
Equity securities | 6,117 | 5,666 |
Short-term investments | 2,175 | 4,288 |
Derivative instruments | 3 | 5 |
Gross unrealized Gains | ||
Fixed income securities | 1,963 | 1,710 |
Equity securities | 837 | 594 |
Short-term investments | 0 | 0 |
Derivative instruments | 3 | 5 |
Gross unrealized Losses | ||
Fixed income securities | (208) | (447) |
Equity securities | (41) | (85) |
Short-term investments | 0 | 0 |
Derivative instruments | (4) | (3) |
Unrealized net gains (losses) | ||
Fixed income securities | 1,755 | 1,263 |
Equity securities | 796 | 509 |
Short-term investments | 0 | 0 |
Derivative instruments | (1) | 2 |
EMA limited partnerships | (1) | (4) |
Unrealized net capital gains and losses, pre-tax | 2,549 | 1,770 |
Amount recognized for: | ||
Insurance reserves | 0 | 0 |
DAC and DSI | (198) | (146) |
Amounts recognized | (198) | (146) |
Deferred income taxes | (825) | (571) |
Total unrealized net capital gains and losses | 1,526 | 1,053 |
Fair value of derivative securities classified as liabilities, with unrealized net gains (losses) in AOCI | $ (3) | |
Fair value of derivative securities classified as assets, with unrealized net gains (losses) in AOCI | $ 5 |
Investments (Details 10)
Investments (Details 10) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ 779 |
Amount recognized for: | |
Insurance reserves | 0 |
DAC and DSI | (52) |
Amounts recognized | (52) |
Deferred income taxes | (254) |
Increase in unrealized net capital gains and losses, after-tax | 473 |
EMA limited partnerships | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 3 |
Fixed income securities | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 492 |
Equity securities | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | 287 |
Derivatives | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |
Change in unrealized net capital gains and losses | $ (3) |
Investments (Details 11)
Investments (Details 11) $ in Millions | Jun. 30, 2017USD ($)securitycontract | Dec. 31, 2016USD ($)securitycontract |
Fixed income and equity securities | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 1,895 | 2,590 |
Fair value, continuous unrealized loss position for less than 12 months | $ 13,809 | $ 18,572 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (180) | $ (407) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 255 | 334 |
Fair value, continuous unrealized loss position for 12 months or more | $ 534 | $ 1,087 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (69) | (125) |
Total unrealized losses | ||
Total unrealized losses | $ (249) | $ (532) |
Fixed income securities | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 1,758 | 2,395 |
Fair value, continuous unrealized loss position for less than 12 months | $ 13,262 | $ 17,918 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (146) | $ (351) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 242 | 288 |
Fair value, continuous unrealized loss position for 12 months or more | $ 491 | $ 922 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (62) | (96) |
Total unrealized losses | ||
Total unrealized losses | $ (208) | $ (447) |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 62 | 46 |
Fair value, continuous unrealized loss position for less than 12 months | $ 1,840 | $ 943 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (7) | $ (9) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 0 | 0 |
Fair value, continuous unrealized loss position for 12 months or more | $ 0 | $ 0 |
Unrealized losses, continuous unrealized loss position for 12 months or more | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (7) | $ (9) |
Municipal | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 903 | 1,310 |
Fair value, continuous unrealized loss position for less than 12 months | $ 1,842 | $ 3,073 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (20) | $ (76) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 4 | 8 |
Fair value, continuous unrealized loss position for 12 months or more | $ 14 | $ 29 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (4) | (11) |
Total unrealized losses | ||
Total unrealized losses | $ (24) | $ (87) |
Corporate | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 615 | 862 |
Fair value, continuous unrealized loss position for less than 12 months | $ 8,649 | $ 13,343 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (109) | $ (256) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 44 | 83 |
Fair value, continuous unrealized loss position for 12 months or more | $ 358 | $ 678 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (41) | (63) |
Total unrealized losses | ||
Total unrealized losses | $ (150) | $ (319) |
Foreign government | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 57 | 41 |
Fair value, continuous unrealized loss position for less than 12 months | $ 625 | $ 225 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (6) | $ (4) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 0 | 0 |
Fair value, continuous unrealized loss position for 12 months or more | $ 0 | $ 0 |
Unrealized losses, continuous unrealized loss position for 12 months or more | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ (6) | $ (4) |
Asset-backed securities (“ABS”) | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 35 | 31 |
Fair value, continuous unrealized loss position for less than 12 months | $ 242 | $ 222 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (1) | $ (1) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 10 | 14 |
Fair value, continuous unrealized loss position for 12 months or more | $ 39 | $ 109 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (9) | (10) |
Total unrealized losses | ||
Total unrealized losses | $ (10) | $ (11) |
Residential mortgage-backed securities (“RMBS”) | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 79 | 89 |
Fair value, continuous unrealized loss position for less than 12 months | $ 41 | $ 53 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (1) | $ (1) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 179 | 179 |
Fair value, continuous unrealized loss position for 12 months or more | $ 66 | $ 91 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (3) | (7) |
Total unrealized losses | ||
Total unrealized losses | $ (4) | $ (8) |
Commercial mortgage-backed securities (“CMBS”) | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 6 | 15 |
Fair value, continuous unrealized loss position for less than 12 months | $ 23 | $ 59 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (2) | $ (4) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 5 | 4 |
Fair value, continuous unrealized loss position for 12 months or more | $ 14 | $ 15 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (5) | (5) |
Total unrealized losses | ||
Total unrealized losses | $ (7) | $ (9) |
Redeemable preferred stock | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | security | 1 | 1 |
Fair value, continuous unrealized loss position for less than 12 months | $ 0 | $ 0 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ 0 | $ 0 |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | security | 0 | 0 |
Fair value, continuous unrealized loss position for 12 months or more | $ 0 | $ 0 |
Unrealized losses, continuous unrealized loss position for 12 months or more | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ 0 |
Investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 1,655 | 2,202 |
Fair value, continuous unrealized loss position for less than 12 months | $ 12,373 | $ 15,678 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (124) | $ (293) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 183 | 201 |
Fair value, continuous unrealized loss position for 12 months or more | $ 295 | $ 493 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (31) | (51) |
Total unrealized losses | ||
Total unrealized losses | $ (155) | $ (344) |
Below investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 103 | 193 |
Fair value, continuous unrealized loss position for less than 12 months | $ 889 | $ 2,240 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (22) | $ (58) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 59 | 87 |
Fair value, continuous unrealized loss position for 12 months or more | $ 196 | $ 429 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (31) | (45) |
Total unrealized losses | ||
Total unrealized losses | $ (53) | $ (103) |
Equity securities | ||
Less than 12 months | ||
Number of issues, continuous unrealized loss position for less than 12 months | contract | 137 | 195 |
Fair value, continuous unrealized loss position for less than 12 months | $ 547 | $ 654 |
Unrealized losses, continuous unrealized loss position for less than 12 months | $ (34) | $ (56) |
12 months or more | ||
Number of issues, continuous unrealized loss position for 12 months or more | contract | 13 | 46 |
Fair value, continuous unrealized loss position for 12 months or more | $ 43 | $ 165 |
Unrealized losses, continuous unrealized loss position for 12 months or more | (7) | (29) |
Total unrealized losses | ||
Total unrealized losses | $ (41) | $ (85) |
Investments (Details 12)
Investments (Details 12) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Other details of unrealized loss | ||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | $ 207 | |
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 42 | |
Limited partnership interests | 6,206 | $ 5,814 |
Fixed income and equity securities | ||
Other details of unrealized loss | ||
Unrealized losses | 249 | 532 |
Investment grade fixed income securities | ||
Other details of unrealized loss | ||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | 139 | |
Unrealized losses | 155 | 344 |
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 16 | |
Equity securities | ||
Other details of unrealized loss | ||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | 34 | |
Unrealized losses | 41 | 85 |
Below investment grade fixed income securities | ||
Other details of unrealized loss | ||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | 34 | |
Unrealized losses | 53 | 103 |
Unrealized losses having loss of less than twenty percent, less than 12 months | 19 | |
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 19 | |
Unrealized losses related to securities with unrealized loss position greater than 20% of cost or amortized cost, unrealized loss position of 12 or more consecutive months | 7 | |
Below Investment Grade Equity Securities | ||
Other details of unrealized loss | ||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 7 | |
Equity-method limited partnerships | ||
Other details of unrealized loss | ||
Limited partnership interests | 4,940 | 4,530 |
Carrying value | ||
Other details of unrealized loss | ||
Cost method limited partnerships | 1,269 | 1,282 |
Carrying value | Cost-method Investments | ||
Other details of unrealized loss | ||
Cost method limited partnerships | $ 1,270 | $ 1,280 |
Investments (Details 13)
Investments (Details 13) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Financing Receivable, Impaired [Line Items] | ||
Mortgage Loans on Real Estate, Commercial and Consumer, Net | $ 4,336 | $ 4,486 |
Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 4,292 | 4,442 |
Variable rate mortgage loans | 39 | 39 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 4,331 | 4,481 |
Below 1.0 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 18 | 60 |
Variable rate mortgage loans | 0 | 0 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 18 | 60 |
1.0 - 1.25 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 329 | 324 |
Variable rate mortgage loans | 0 | 0 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 329 | 324 |
1.26 - 1.50 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 1,245 | 1,293 |
Variable rate mortgage loans | 0 | 0 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 1,245 | 1,293 |
Above 1.50 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 2,700 | 2,765 |
Variable rate mortgage loans | 39 | 39 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | $ 2,739 | $ 2,804 |
Investments (Details 14)
Investments (Details 14) - Mortgage loans, non-impaired - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | |
Net carrying value of impaired mortgage loans | ||||||
Impaired mortgage loans with a valuation allowance | $ 5 | $ 5 | ||||
Impaired mortgage loans without a valuation allowance | 0 | 0 | ||||
Total impaired mortgage loans | 5 | 5 | ||||
Valuation allowance on impaired mortgage loans | $ 3 | $ 3 | $ 3 | $ 3 | $ 3 | $ 3 |
Average carrying value and interest income recognized on impaired mortgage loans | ||||||
Average impaired mortgage loans | 5 | 6 | ||||
Rollforward of the valuation allowance on impaired mortgage loans | ||||||
Beginning balance | 3 | 3 | 3 | 3 | ||
Charge offs | 0 | 0 | 0 | 0 | ||
Ending balance | $ 3 | $ 3 | $ 3 | $ 3 |
Fair Value of Assets and Liab53
Fair Value of Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Assets | |||
Fixed income securities: | $ 58,656 | $ 57,839 | |
Equity securities | 6,117 | 5,666 | |
Short-term investments | 2,175 | 4,288 | |
Other investments: Free-standing derivatives | 1 | $ 1 | |
Separate account assets | 3,416 | 3,393 | |
Counterparty and cash collateral netting | $ (19) | $ (9) | |
% of total assets at fair value | 0.00% | 0.00% | |
Liabilities | |||
Other liabilities: Free-standing derivatives | $ (8) | ||
Counterparty and cash collateral netting | $ 21 | $ 28 | |
Counterparty and cash collateral netting as a percent of liabilities measured at fair value | (6.30%) | (8.40%) | |
U.S. government and agencies | |||
Assets | |||
Fixed income securities: | $ 3,426 | $ 3,637 | |
Municipal | |||
Assets | |||
Fixed income securities: | 7,855 | 7,333 | |
Foreign government | |||
Assets | |||
Fixed income securities: | 1,047 | 1,075 | |
Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 641 | 728 | |
Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 170 | 270 | |
Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 23 | 24 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | $ 12,147 | $ 12,408 | |
% of total assets at fair value | 17.20% | 17.40% | |
Liabilities | |||
Total liabilities at fair value | $ (1) | $ (1) | |
Liabilities as a percent of liabilities measured at fair value | 0.30% | 0.30% | |
Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | $ 57,502 | $ 58,161 | |
% of total assets at fair value | 81.60% | 81.50% | |
Liabilities | |||
Total liabilities at fair value | $ (70) | $ (68) | |
Liabilities as a percent of liabilities measured at fair value | 20.90% | 20.40% | |
Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | $ 858 | $ 762 | |
% of total assets at fair value | 1.20% | 1.10% | |
Liabilities | |||
Total liabilities at fair value | $ (285) | $ (293) | |
Liabilities as a percent of liabilities measured at fair value | 85.10% | 87.70% | |
Recurring | |||
Assets | |||
Other investments: Free-standing derivatives, Counterparty and cash collateral netting | $ (19) | $ (9) | |
Liabilities | |||
Counterparty and cash collateral netting | 21 | 28 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Fixed income securities: | 2,773 | 2,918 | |
Equity securities | 5,643 | 5,247 | |
Short-term investments | 315 | 850 | |
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 3,416 | 3,393 | |
Other assets | 0 | 0 | |
Total assets at fair value | 12,147 | 12,408 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (1) | (1) | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 2,773 | 2,918 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Municipal | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Corporate - public | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Foreign government | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Fixed income securities: | 55,208 | 54,363 | |
Equity securities | 308 | 256 | |
Short-term investments | 1,860 | 3,423 | |
Other investments: Free-standing derivatives | 126 | 119 | |
Separate account assets | 0 | 0 | |
Other assets | 0 | 0 | |
Total assets at fair value | 57,502 | 58,161 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (70) | (68) | |
Recurring | Significant other observable inputs (Level 2) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 653 | 719 | |
Recurring | Significant other observable inputs (Level 2) | Municipal | |||
Assets | |||
Fixed income securities: | 7,741 | 7,208 | |
Recurring | Significant other observable inputs (Level 2) | Corporate - public | |||
Assets | |||
Fixed income securities: | 32,079 | 31,414 | |
Recurring | Significant other observable inputs (Level 2) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 11,846 | 11,846 | |
Recurring | Significant other observable inputs (Level 2) | Foreign government | |||
Assets | |||
Fixed income securities: | 1,047 | 1,075 | |
Recurring | Significant other observable inputs (Level 2) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 520 | 650 | |
Recurring | Significant other observable inputs (Level 2) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 512 | 452 | |
Recurring | Significant other observable inputs (Level 2) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 641 | 727 | |
Recurring | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 146 | 248 | |
Recurring | Significant other observable inputs (Level 2) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 23 | 24 | |
Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Fixed income securities: | 675 | 558 | |
Equity securities | 166 | 163 | |
Short-term investments | 0 | 15 | |
Other investments: Free-standing derivatives | 1 | 1 | |
Separate account assets | 0 | 0 | |
Other assets | 0 | 1 | |
Total assets at fair value | 842 | 738 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | 0 | (3) | |
Recurring | Significant unobservable inputs (Level 3) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | Municipal | |||
Assets | |||
Fixed income securities: | 114 | 125 | |
Recurring | Significant unobservable inputs (Level 3) | Corporate - public | |||
Assets | |||
Fixed income securities: | 60 | 78 | |
Recurring | Significant unobservable inputs (Level 3) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 266 | 263 | |
Recurring | Significant unobservable inputs (Level 3) | Foreign government | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 91 | 27 | |
Recurring | Significant unobservable inputs (Level 3) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 120 | 42 | |
Recurring | Significant unobservable inputs (Level 3) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 1 | |
Recurring | Significant unobservable inputs (Level 3) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 24 | 22 | |
Recurring | Significant unobservable inputs (Level 3) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Non-recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | 0 | 0 | |
Non-recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | 0 | 0 | |
Non-recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | 16 | 24 | |
Derivatives embedded in life and annuity contracts | Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | 0 | 0 | |
Derivatives embedded in life and annuity contracts | Recurring | Significant other observable inputs (Level 2) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | 0 | 0 | |
Derivatives embedded in life and annuity contracts | Recurring | Significant unobservable inputs (Level 3) | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | (285) | (290) | |
Fair value | |||
Assets | |||
Total assets at fair value | $ 70,488 | $ 71,322 | |
% of total assets at fair value | 100.00% | 100.00% | |
Liabilities | |||
Total liabilities at fair value | $ (335) | $ (334) | |
Liabilities as a percent of liabilities measured at fair value | 100.00% | 100.00% | |
Limited partnership interests | $ 15 | $ 24 | |
Other investments | 1 | ||
Fair value | Recurring | |||
Assets | |||
Fixed income securities: | 58,656 | 57,839 | |
Equity securities | 6,117 | 5,666 | |
Short-term investments | 2,175 | 4,288 | |
Other investments: Free-standing derivatives | 108 | 111 | |
Separate account assets | 3,416 | 3,393 | |
Other assets | 0 | 1 | |
Total assets at fair value | 70,472 | 71,298 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (50) | (44) | |
Fair value | Recurring | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 3,426 | 3,637 | |
Fair value | Recurring | Municipal | |||
Assets | |||
Fixed income securities: | 7,855 | 7,333 | |
Fair value | Recurring | Corporate - public | |||
Assets | |||
Fixed income securities: | 32,139 | 31,492 | |
Fair value | Recurring | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 12,112 | 12,109 | |
Fair value | Recurring | Foreign government | |||
Assets | |||
Fixed income securities: | 1,047 | 1,075 | |
Fair value | Recurring | ABS - CDO | |||
Assets | |||
Fixed income securities: | 611 | 677 | |
Fair value | Recurring | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 632 | 494 | |
Fair value | Recurring | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 641 | 728 | |
Fair value | Recurring | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 170 | 270 | |
Fair value | Recurring | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 23 | 24 | |
Fair value | Non-recurring | |||
Assets | |||
Total assets at fair value | 16 | 24 | |
Fair value | Derivatives embedded in life and annuity contracts | Recurring | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | (285) | (290) | |
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | |||
Assets | |||
Total assets at fair value | 367 | 307 | |
Municipal Not Rated by Third Party Credit Rating Agencies | |||
Assets | |||
Total assets at fair value | $ 68 | $ 80 |
Fair Value of Assets and Liab54
Fair Value of Assets and Liabilities (Details 2) - Derivatives embedded in life and annuity contracts - Equity-indexed and forward starting options - Stochastic cash flow model - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Quantitative information about the significant unobservable inputs | ||
Liabilities, fair value | $ (250) | $ (247) |
Weighted average projected option cost (as a percent) | 1.74% | 1.75% |
Minimum | ||
Quantitative information about the significant unobservable inputs | ||
Projected option cost (as a percent) | 1.00% | 1.00% |
Maximum | ||
Quantitative information about the significant unobservable inputs | ||
Projected option cost (as a percent) | 2.20% | 2.20% |
Fair Value of Assets and Liab55
Fair Value of Assets and Liabilities (Details 3) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | $ 903 | $ 1,003 | $ 735 | $ 973 |
Total gains (losses) included in: net income | 9 | (4) | 20 | (18) |
Total gains (losses) included in: OCI | 1 | 14 | 9 | 17 |
Transfers into Level 3 | 33 | 31 | 60 | 60 |
Transfers out of Level 3 | (127) | (76) | (149) | (97) |
Purchases | 128 | 87 | 288 | 161 |
Sales | (98) | (2) | (101) | (25) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (7) | (34) | (20) | (52) |
Balance at end of period | 842 | 1,019 | 842 | 1,019 |
Fair Value Liabilities Measured on Recurring Basis Unobservable Input Reconciliation Calculation | ||||
Balance at the beginning of the period | (286) | (313) | (290) | (299) |
Total gains (losses) included in: net income | 0 | (7) | (3) | 8 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | (1) | (1) |
Settlements | 1 | 2 | 3 | 4 |
Balance at the end of the period | (285) | (304) | (285) | (304) |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 9 | 3 | 23 | (26) |
Free-standing derivatives | 1 | 1 | 1 | 1 |
Free-standing derivatives, liabilities | 8 | 8 | ||
Realized capital gains and losses | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Total gains (losses) included in: net income | 5 | (9) | 7 | (25) |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | (1) | (9) | (38) | |
Gain reclassified from AOCI into income (net investment income) | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Total gains (losses) included in: net income | 4 | 5 | 14 | 7 |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | 4 | 6 | 14 | 8 |
Interest credited to contractholder funds | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Total gains (losses) included in: net income | (1) | (7) | (6) | (6) |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | (1) | (7) | (6) | (6) |
Life and annuity contract benefits | ||||
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | 1 | 14 | 8 | (2) |
Fixed income securities | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 699 | 885 | 558 | 846 |
Total gains (losses) included in: net income | 4 | 3 | 5 | 14 |
Total gains (losses) included in: OCI | (2) | 13 | 6 | 9 |
Transfers into Level 3 | 33 | 31 | 60 | 60 |
Transfers out of Level 3 | (127) | (76) | (146) | (97) |
Purchases | 121 | 87 | 260 | 152 |
Sales | (46) | (2) | (48) | (25) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (7) | (34) | (20) | (52) |
Balance at end of period | 675 | 907 | 675 | 907 |
U.S. government and agencies | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 4 | 5 | ||
Total gains (losses) included in: net income | 0 | 0 | ||
Total gains (losses) included in: OCI | 0 | 0 | ||
Transfers into Level 3 | 0 | 0 | ||
Transfers out of Level 3 | (4) | (4) | ||
Purchases | 0 | 0 | ||
Sales | 0 | 0 | ||
Issues | 0 | 0 | ||
Settlements | 0 | (1) | ||
Balance at end of period | 0 | 0 | ||
Municipal | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 124 | 146 | 125 | 161 |
Total gains (losses) included in: net income | (2) | 0 | (1) | 10 |
Total gains (losses) included in: OCI | 5 | 3 | 6 | (5) |
Transfers into Level 3 | 0 | 6 | 0 | 6 |
Transfers out of Level 3 | 0 | 0 | (1) | 0 |
Purchases | 5 | 0 | 5 | 0 |
Sales | (18) | (6) | (20) | (22) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | (1) |
Balance at end of period | 114 | 149 | 114 | 149 |
Corporate - public | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 60 | 63 | 78 | 46 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 1 |
Transfers into Level 3 | 0 | 0 | 0 | 25 |
Transfers out of Level 3 | 0 | 0 | (16) | (7) |
Purchases | (1) | 7 | (1) | 7 |
Sales | 1 | 4 | 1 | 4 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (2) | (2) |
Balance at end of period | 60 | 74 | 60 | 74 |
Corporate - privately placed | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 263 | 549 | 263 | 502 |
Total gains (losses) included in: net income | 6 | 3 | 6 | 4 |
Total gains (losses) included in: OCI | (7) | 8 | (2) | 13 |
Transfers into Level 3 | 30 | 16 | 30 | 16 |
Transfers out of Level 3 | 0 | (69) | 0 | (83) |
Purchases | 4 | 80 | 4 | 143 |
Sales | (29) | 0 | (29) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (2) | (6) | (10) |
Balance at end of period | 266 | 585 | 266 | 585 |
ABS - CDO | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 147 | 58 | 27 | 61 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 3 | 2 | 2 |
Transfers into Level 3 | 3 | 6 | 30 | 10 |
Transfers out of Level 3 | (122) | (3) | (122) | (3) |
Purchases | 65 | 0 | 160 | 0 |
Sales | 0 | 0 | 0 | (2) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (2) | (31) | (6) | (35) |
Balance at end of period | 91 | 33 | 91 | 33 |
ABS - consumer and other | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 80 | 44 | 42 | 50 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | (1) | 0 | (2) |
Transfers into Level 3 | 0 | 3 | 0 | 3 |
Transfers out of Level 3 | (5) | 0 | (7) | 0 |
Purchases | 48 | 0 | 89 | 0 |
Sales | 0 | 0 | 0 | (5) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (3) | (1) | (4) | (1) |
Balance at end of period | 120 | 45 | 120 | 45 |
Residential mortgage-backed securities (“RMBS”) | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 1 | 1 | 1 | |
Total gains (losses) included in: net income | 0 | 0 | 0 | |
Total gains (losses) included in: OCI | 0 | 0 | 0 | |
Transfers into Level 3 | 0 | 0 | 0 | |
Transfers out of Level 3 | 0 | 0 | 0 | |
Purchases | 0 | 0 | 0 | |
Sales | 0 | 0 | 0 | |
Issues | 0 | 0 | 0 | |
Settlements | 0 | (1) | 0 | |
Balance at end of period | 0 | 1 | 0 | 1 |
Commercial mortgage-backed securities (“CMBS”) | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 25 | 20 | 22 | 20 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 3 | 2 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | 0 | (1) | (2) |
Balance at end of period | 24 | 20 | 24 | 20 |
Equity securities | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 170 | 125 | 163 | 133 |
Total gains (losses) included in: net income | 3 | (8) | 13 | (32) |
Total gains (losses) included in: OCI | 3 | 1 | 3 | 8 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | (3) | 0 |
Purchases | 2 | 0 | 3 | 9 |
Sales | (12) | 0 | (13) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 166 | 118 | 166 | 118 |
Short-term investments | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 35 | 15 | ||
Total gains (losses) included in: net income | 0 | 0 | ||
Total gains (losses) included in: OCI | 0 | 0 | ||
Transfers into Level 3 | 0 | 0 | ||
Transfers out of Level 3 | 0 | 0 | ||
Purchases | 5 | 25 | ||
Sales | (40) | (40) | ||
Issues | 0 | 0 | ||
Settlements | 0 | 0 | ||
Balance at end of period | 0 | 0 | ||
Free-standing derivatives, net | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | (1) | (8) | (2) | (7) |
Total gains (losses) included in: net income | 2 | 1 | 3 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 1 | (7) | 1 | (7) |
Other assets | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 1 | 1 | 1 | |
Total gains (losses) included in: net income | 0 | (1) | 0 | |
Total gains (losses) included in: OCI | 0 | 0 | 0 | |
Transfers into Level 3 | 0 | 0 | 0 | |
Transfers out of Level 3 | 0 | 0 | 0 | |
Purchases | 0 | 0 | 0 | |
Sales | 0 | 0 | 0 | |
Issues | 0 | 0 | 0 | |
Settlements | 0 | 0 | 0 | |
Balance at end of period | 0 | 1 | 0 | 1 |
Derivatives embedded in life and annuity contracts | ||||
Fair Value Liabilities Measured on Recurring Basis Unobservable Input Reconciliation Calculation | ||||
Balance at the beginning of the period | (286) | (313) | (290) | (299) |
Total gains (losses) included in: net income | 0 | (7) | (3) | 8 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 0 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | 0 |
Purchases | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | (1) | (1) |
Settlements | 1 | 2 | 3 | 4 |
Balance at the end of the period | $ (285) | $ (304) | $ (285) | $ (304) |
Fair Value of Assets and Liab56
Fair Value of Assets and Liabilities (Details 4) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | $ 3 | $ (3) | $ 13 | $ (30) |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 0 | 7 | 3 | (8) |
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 9 | 3 | 23 | (26) |
Gain (Loss) on Investments | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 3 | 4 | 16 | (38) |
Realized capital gains and losses | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Change in unrealized gain (loss) | (1) | (9) | (38) | |
Gain reclassified from AOCI into income (net investment income) | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Change in unrealized gain (loss) | 4 | 6 | 14 | 8 |
Interest credited to contractholder funds | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Change in unrealized gain (loss) | (1) | (7) | (6) | (6) |
Life and annuity contract benefits | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Change in unrealized gain (loss) | 1 | 14 | 8 | (2) |
Derivatives embedded in life and annuity contracts | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 0 | 7 | 3 | (8) |
Municipal | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | (3) | 1 | (3) | 1 |
Corporate | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | 0 | 3 | 0 | 1 |
Fixed income securities | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | (3) | 4 | (3) | 2 |
Equity securities | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | 4 | (8) | 14 | (32) |
Free-standing derivatives, net | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | 2 | 1 | 3 | 0 |
Other assets | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | $ 0 | $ 0 | $ (1) | $ 0 |
Fair Value of Assets and Liab57
Fair Value of Assets and Liabilities (Details 5) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Financial assets | ||||
Mortgage loans | $ 4,336 | $ 4,486 | ||
Financial liabilities | ||||
Long-term debt | 6,348 | 6,347 | ||
Liability for collateral | 1,126 | 1,129 | $ 896 | $ 840 |
Carrying value | ||||
Financial assets | ||||
Mortgage loans | 4,336 | 4,486 | ||
Cost method limited partnerships | 1,269 | 1,282 | ||
Bank loans | 1,754 | 1,669 | ||
Agent loans | 499 | 467 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 10,846 | 11,313 | ||
Long-term debt | 6,348 | 6,347 | ||
Liability for collateral | 1,126 | 1,129 | ||
Fair value | ||||
Financial assets | ||||
Mortgage loans | 4,483 | 4,514 | ||
Cost method limited partnerships | 1,511 | 1,493 | ||
Bank loans | 1,759 | 1,677 | ||
Agent loans | 495 | 467 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 11,441 | 12,009 | ||
Long-term debt | 7,118 | 6,920 | ||
Liability for collateral | $ 1,126 | $ 1,129 |
Derivative Financial Instrume58
Derivative Financial Instruments (Details) | 6 Months Ended | |
Jun. 30, 2017USD ($)contract | Dec. 31, 2016USD ($)contract | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Assumed recoveries under sale of credit protection | $ 0 | |
Cash and securities pledged in the form of margin deposits | 23,000,000 | |
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 1,083,000,000 | $ 1,103,000,000 |
Total liability derivatives, notional amount | 3,291,000,000 | 2,673,000,000 |
Total derivatives, notional amount | $ 4,374,000,000 | $ 3,776,000,000 |
Total asset derivatives, number of contracts | contract | 7,317 | 4,233 |
Total liability derivatives, number of contracts | contract | 8,896 | 4,848 |
Total derivatives, Number of contracts | contract | 16,213 | 9,081 |
Derivative assets net amount on balance sheet | $ 102,000,000 | $ 93,000,000 |
Asset derivatives gross amount | 116,000,000 | 121,000,000 |
Asset derivatives, gross liability | (14,000,000) | (28,000,000) |
Derivative liabilities net amount on balance sheet | (331,000,000) | (334,000,000) |
Total derivatives, fair value, net | (229,000,000) | (241,000,000) |
Liability derivatives, gross asset | 11,000,000 | 0 |
Liability derivatives gross amount | (342,000,000) | (334,000,000) |
Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 1,054,000,000 | |
Total liability derivatives, notional amount | $ 3,242,000,000 | $ 2,673,000,000 |
Total asset derivatives, number of contracts | contract | 4,233 | |
Total liability derivatives, number of contracts | contract | 8,896 | 4,848 |
Derivative assets net amount on balance sheet | $ 88,000,000 | |
Asset derivatives gross amount | 116,000,000 | |
Asset derivatives, gross liability | (28,000,000) | |
Derivative liabilities net amount on balance sheet | $ (333,000,000) | (334,000,000) |
Liability derivatives, gross asset | 9,000,000 | 0 |
Liability derivatives gross amount | (342,000,000) | (334,000,000) |
Foreign currency swap agreements | Other investments | Derivatives designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 49,000,000 | |
Derivative assets net amount on balance sheet | 5,000,000 | |
Asset derivatives gross amount | 5,000,000 | |
Asset derivatives, gross liability | 0 | |
Foreign currency swap agreements | Other liabilities & accrued expenses | Derivatives designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 49,000,000 | |
Derivative liabilities net amount on balance sheet | 2,000,000 | |
Liability derivatives, gross asset | 2,000,000 | |
Liability derivatives gross amount | 0 | |
Interest rate cap agreements | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 22,000,000 | 65,000,000 |
Derivative assets net amount on balance sheet | 0 | 1,000,000 |
Asset derivatives gross amount | 0 | 1,000,000 |
Asset derivatives, gross liability | 0 | 0 |
Interest rate cap agreements | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 37,000,000 | |
Derivative liabilities net amount on balance sheet | 1,000,000 | |
Liability derivatives, gross asset | 1,000,000 | |
Liability derivatives gross amount | 0 | |
Options | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | $ 585,000,000 | $ 0 |
Total asset derivatives, number of contracts | contract | 6,798 | 3,972 |
Derivative assets net amount on balance sheet | $ 110,000,000 | $ 88,000,000 |
Asset derivatives gross amount | 113,000,000 | 88,000,000 |
Asset derivatives, gross liability | (3,000,000) | 0 |
Financial futures contracts | Other assets | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | $ 0 | $ 0 |
Total asset derivatives, number of contracts | contract | 519 | 261 |
Derivative assets net amount on balance sheet | $ 0 | $ 0 |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | 0 | 0 |
Options and futures | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | $ 0 | $ 0 |
Total liability derivatives, number of contracts | contract | 8,896 | 4,848 |
Derivative liabilities net amount on balance sheet | $ (42,000,000) | $ (39,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (42,000,000) | (39,000,000) |
Foreign currency forwards | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 344,000,000 | 759,000,000 |
Derivative assets net amount on balance sheet | (7,000,000) | 0 |
Asset derivatives gross amount | 2,000,000 | 24,000,000 |
Asset derivatives, gross liability | (9,000,000) | (24,000,000) |
Foreign currency forwards | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 621,000,000 | |
Derivative liabilities net amount on balance sheet | (2,000,000) | |
Liability derivatives, gross asset | 8,000,000 | |
Liability derivatives gross amount | (10,000,000) | |
Guaranteed accumulation benefits | Contractholder funds | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 246,000,000 | 391,000,000 |
Derivative liabilities net amount on balance sheet | (28,000,000) | (34,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (28,000,000) | (34,000,000) |
Guaranteed withdrawal benefits | Contractholder funds | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 282,000,000 | 290,000,000 |
Derivative liabilities net amount on balance sheet | (7,000,000) | (9,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (7,000,000) | (9,000,000) |
Equity-indexed and forward starting options in life and annuity product contracts | Contractholder funds | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 1,753,000,000 | 1,751,000,000 |
Derivative liabilities net amount on balance sheet | (250,000,000) | (247,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (250,000,000) | (247,000,000) |
Credit default swaps – buying protection | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 49,000,000 | 87,000,000 |
Derivative assets net amount on balance sheet | (2,000,000) | (4,000,000) |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | (2,000,000) | (4,000,000) |
Credit default swaps – buying protection | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 173,000,000 | 136,000,000 |
Derivative liabilities net amount on balance sheet | (5,000,000) | (2,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (5,000,000) | (2,000,000) |
Credit default swaps – selling protection | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 80,000,000 | 140,000,000 |
Derivative assets net amount on balance sheet | 1,000,000 | 2,000,000 |
Asset derivatives gross amount | 1,000,000 | 2,000,000 |
Asset derivatives, gross liability | 0 | 0 |
Credit default swaps – selling protection | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 130,000,000 | 105,000,000 |
Derivative liabilities net amount on balance sheet | 0 | (3,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | 0 | (3,000,000) |
Other contracts | Other assets | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 3,000,000 | 3,000,000 |
Derivative assets net amount on balance sheet | 0 | 1,000,000 |
Asset derivatives gross amount | 0 | 1,000,000 |
Asset derivatives, gross liability | $ 0 | $ 0 |
Derivative Financial Instrume59
Derivative Financial Instruments (Details 2) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Asset derivatives | ||
Asset derivatives gross amount | $ 116 | $ 121 |
Asset derivatives, gross liability | (14) | (28) |
Derivative assets net amount on balance sheet | 102 | 93 |
Liability derivatives | ||
Liability derivatives gross amount | (342) | (334) |
Liability derivatives, gross asset | 11 | 0 |
Derivative liabilities net amount on balance sheet | (331) | (334) |
OTC derivatives | ||
Asset derivatives | ||
Asset derivatives gross amount | 20 | 31 |
Asset derivatives, gross liability | (25) | (28) |
Derivative, collateral, right to reclaim cash | 6 | 19 |
Derivative assets net amount on balance sheet | 1 | 22 |
Derivative assets received under securities collateral | 0 | (9) |
Derivative asset, fair value, amount offset against collateral | 1 | 13 |
Liability derivatives | ||
Liability derivatives gross amount | (29) | (33) |
Liability derivatives, gross asset | 25 | 28 |
Derivative liability offsets under cash collateral pledged | (4) | 0 |
Derivative liabilities net amount on balance sheet | (8) | (5) |
Derivative liabilities received under securities collateral | 3 | 4 |
Derivative liability, fair value, amount offset against collateral | $ (5) | $ (1) |
Derivative Financial Instrume60
Derivative Financial Instruments (Details 3) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Cash flow hedge losses to be reclassified from AOCI during the next twelve months | $ 3,000,000 | $ 3,000,000 | ||
Net gain (loss) recognized in earnings during the reporting period representing the amount of the fair value of the hedges' ineffectiveness. | 0 | $ 0 | 0 | $ 0 |
Effective portion | ||||
Gain (loss) recognized in OCI on derivatives during the period | 0 | 1,000,000 | (2,000,000) | (1,000,000) |
(Loss) gain recognized in OCI on derivatives during the term of the hedging relationship | (1,000,000) | 2,000,000 | (1,000,000) | 2,000,000 |
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 11,000,000 | (2,000,000) | 20,000,000 | (37,000,000) |
Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (8,000,000) | (1,000,000) | (23,000,000) | (10,000,000) |
Life and annuity contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1,000,000 | 14,000,000 | 8,000,000 | (2,000,000) |
Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 9,000,000 | (3,000,000) | 18,000,000 | (8,000,000) |
Operating costs and expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 9,000,000 | (12,000,000) | 17,000,000 | (17,000,000) |
Interest rate contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1,000,000) | (1,000,000) | ||
Interest rate contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1,000,000) | (1,000,000) | ||
Interest rate contracts | Life and annuity contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Interest rate contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Interest rate contracts | Operating costs and expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Equity and index contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 14,000,000 | 1,000,000 | 27,000,000 | (6,000,000) |
Equity and index contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | (5,000,000) | (7,000,000) | (5,000,000) |
Equity and index contracts | Life and annuity contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Equity and index contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 9,000,000 | 2,000,000 | 22,000,000 | (5,000,000) |
Equity and index contracts | Operating costs and expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 5,000,000 | 4,000,000 | 12,000,000 | 4,000,000 |
Embedded derivative financial instruments | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1,000,000 | 9,000,000 | 4,000,000 | (5,000,000) |
Embedded derivative financial instruments | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Embedded derivative financial instruments | Life and annuity contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1,000,000 | 14,000,000 | 8,000,000 | (2,000,000) |
Embedded derivative financial instruments | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | (5,000,000) | (4,000,000) | (3,000,000) |
Embedded derivative financial instruments | Operating costs and expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (4,000,000) | (10,000,000) | (10,000,000) | (20,000,000) |
Foreign currency contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (8,000,000) | 6,000,000 | (15,000,000) | 1,000,000 |
Foreign currency contracts | Life and annuity contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Foreign currency contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | 0 |
Foreign currency contracts | Operating costs and expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 4,000,000 | (16,000,000) | 5,000,000 | (21,000,000) |
Credit default contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1,000,000) | (1,000,000) | (5,000,000) | |
Credit default contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1,000,000) | (1,000,000) | (5,000,000) | |
Credit default contracts | Life and annuity contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | |
Credit default contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | |
Credit default contracts | Operating costs and expenses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | 0 | |
Accumulated net gain (loss) from cash flow hedges attributable to parent | Reclassification out of accumulated other comprehensive income | Gain reclassified from AOCI into income (net investment income) | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain reclassified from AOCI into income (realized capital gains and losses) | 1,000,000 | 0 | 1,000,000 | 0 |
Accumulated net gain (loss) from cash flow hedges attributable to parent | Reclassification out of accumulated other comprehensive income | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Gain reclassified from AOCI into income (realized capital gains and losses) | $ 0 | $ 3,000,000 | $ 0 | $ 3,000,000 |
Derivative Financial Instrume61
Derivative Financial Instruments (Details 4) $ in Millions | Jun. 30, 2017USD ($)counter-party | Dec. 31, 2016USD ($)counter-party |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Cash and securities pledged as collateral by counterparties | $ 7 | |
Securities pledged as collateral to counterparties | 12 | |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | 3 | $ 0 |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 9 | |
Credit Derivatives | ||
Number of counter- parties | counter-party | 6 | 8 |
Notional amount | $ 915 | $ 888 |
Credit exposure | 7 | 23 |
Exposure, net of collateral | 1 | 12 |
Gross liability fair value of contracts containing credit-risk-contingent features | 20 | 9 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (12) | (7) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | (3) | 0 |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 5 | $ 2 |
AA- | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 2 | 2 |
Notional amount | $ 140 | $ 80 |
Credit exposure | 1 | 2 |
Exposure, net of collateral | $ 0 | $ 2 |
A plus | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 4 | 5 |
Notional amount | $ 775 | $ 698 |
Credit exposure | 6 | 20 |
Exposure, net of collateral | $ 1 | $ 9 |
A- | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 0 | 1 |
Notional amount | $ 0 | $ 110 |
Credit exposure | 0 | 1 |
Exposure, net of collateral | $ 0 | $ 1 |
Derivative Financial Instrume62
Derivative Financial Instruments (Details 5) $ in Millions | 6 Months Ended | |
Jun. 30, 2017USD ($)entity | Dec. 31, 2016USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Term of credit default swaps (in years) | 5 years | |
Credit Derivatives | ||
Notional amount | $ 4,374 | $ 3,776 |
The number of reference entities generally included in a CDX index | entity | 125 | |
Credit default contracts | ||
Credit Derivatives | ||
Notional amount | $ 210 | 245 |
Fair value | 1 | (1) |
Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 30 | 65 |
Fair value | 0 | 1 |
Credit default contracts | First-to-default Basket | Municipal | ||
Credit Derivatives | ||
Notional amount | 100 | 100 |
Fair value | 0 | (3) |
Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 80 | 80 |
Fair value | 1 | 1 |
AA | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 1 | 21 |
AA | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 20 |
AA | Credit default contracts | First-to-default Basket | Municipal | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
AA | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 1 | 1 |
A | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 17 | 29 |
A | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 10 |
A | Credit default contracts | First-to-default Basket | Municipal | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
A | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 17 | 19 |
BBB | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 174 | 185 |
BBB | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 25 | 35 |
BBB | Credit default contracts | First-to-default Basket | Municipal | ||
Credit Derivatives | ||
Notional amount | 100 | 100 |
BBB | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 49 | 50 |
BB and lower | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 18 | 10 |
BB and lower | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 5 | 0 |
BB and lower | Credit default contracts | First-to-default Basket | Municipal | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
BB and lower | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | $ 13 | $ 10 |
Reserve for Property-Liabilit63
Reserve for Property-Liability Insurance Claims and Claims Expense (Details) - Property-Liability - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Activity in the reserve for property-liability insurance claims and claims expense: | ||
Balance as of January 1 | $ 25,250 | $ 23,869 |
Less reinsurance recoverables | 6,184 | 5,892 |
Net balance as of January 1 | 19,066 | 17,977 |
Incurred claims and claims expense related to: | ||
Current year | 11,291 | 11,564 |
Prior years | (186) | 21 |
Total incurred | 11,105 | 11,585 |
Claims and claims expense paid related to: | ||
Current year | 6,060 | 6,138 |
Prior years | 4,450 | 4,553 |
Total paid | 10,510 | 10,691 |
Net balance as of June 30 | 19,678 | 18,871 |
Plus reinsurance recoverables | 6,206 | 6,033 |
Balance as of June 30 | 25,884 | 24,904 |
SquareTrade | ||
Activity in the reserve for property-liability insurance claims and claims expense: | ||
Net balance as of January 1 | $ 17 | $ 0 |
Reserve for Property-Liabilit64
Reserve for Property-Liability Insurance Claims and Claims Expense (Details 2) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Auto | ||
Increase (decrease) in claims and claims expense | ||
Prior years claims and claims adjust expense, favorable | $ 147 | |
Catastrophe | ||
Increase (decrease) in claims and claims expense | ||
Total incurred | 1,750 | $ 1,790 |
Non Catastrophe Reestimates | Homeowners | ||
Increase (decrease) in claims and claims expense | ||
Prior years claims and claims adjust expense, favorable | 44 | |
Reserve Adjustments | Discontinued Lines and Coverages Product Line | ||
Increase (decrease) in claims and claims expense | ||
Prior years claims and claims adjust expense, favorable | 5 | |
Catastrophe Loss Re-estimates | ||
Increase (decrease) in claims and claims expense | ||
Prior years claims and claims adjust expense, favorable | $ 3 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property-liability insurance claims and claims expense | ||||
Reductions to costs and expenses due to reinsurance ceded amounts | ||||
Ceded losses incurred | $ 124 | $ 241 | $ 255 | $ 402 |
Life and annuity contract benefits | ||||
Reductions to costs and expenses due to reinsurance ceded amounts | ||||
Ceded losses incurred | 70 | 80 | 117 | 147 |
Interest credited to contractholder funds | ||||
Reductions to costs and expenses due to reinsurance ceded amounts | ||||
Ceded losses incurred | 6 | 6 | 11 | 11 |
Property-liability insurance premiums earned | ||||
Reductions to premiums and contract charges due to reinsurance premium ceded amounts | ||||
Property-liability insurance premiums earned | 254 | 248 | 500 | 497 |
Life and annuity premiums and contract charges | ||||
Reductions to premiums and contract charges due to reinsurance premium ceded amounts | ||||
Life and annuity premiums and contract charges | $ 75 | $ 78 | $ 150 | $ 152 |
Company Restructuring (Details)
Company Restructuring (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | ||||
Restructuring and related charges | $ 53 | $ 11 | $ 63 | $ 16 |
Company Restructuring (Details
Company Restructuring (Details 2) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Restructuring Reserve | |
Balance as of December 31, 2016 | $ 2 |
Expense incurred | 52 |
Payments applied against liability | (6) |
Balance as of June 30, 2017 | 48 |
Employee costs | |
Restructuring Reserve | |
Balance as of December 31, 2016 | 0 |
Expense incurred | 36 |
Payments applied against liability | (2) |
Balance as of June 30, 2017 | 34 |
Cumulative amount incurred to date for active programs | 95 |
Exit costs | |
Restructuring Reserve | |
Balance as of December 31, 2016 | 2 |
Expense incurred | 16 |
Payments applied against liability | (4) |
Balance as of June 30, 2017 | 14 |
Cumulative amount incurred to date for active programs | $ 77 |
Guarantees and Contingent Lia68
Guarantees and Contingent Liabilities (Details) | May 16, 2017plaintiff | Apr. 27, 2017plaintiff | Jan. 27, 2017appealcase | Nov. 22, 2016plaintiff | Jul. 06, 2016plaintiff | May 02, 2016plaintiff | Jan. 01, 2015plaintiff | Jun. 30, 2017USD ($)trialplaintiff | Jun. 30, 2015plaintiffdefense | Dec. 31, 2007claim | Jun. 30, 2017USD ($)claimtrial | Dec. 31, 2001employeecase | Jun. 30, 2017USD ($)trialplaintiffdefense | Dec. 31, 2016USD ($) | Sep. 16, 2014adjuster |
Guarantees: | |||||||||||||||
Limitations or indemnifications of reinsurance agreements | $ 0 | $ 0 | $ 0 | ||||||||||||
Proceedings: | |||||||||||||||
Number of class action cases | 2 | 2 | 2 | ||||||||||||
Loss contingency, number of plaintiffs | 2 | 118 | 3 | 1 | 118 | 498 | 460 | 4 | 10 | 32 | 10 | ||||
Number of defenses | defense | 2 | 2 | |||||||||||||
Loss contingency, number of trials | trial | 2 | 2 | 2 | ||||||||||||
Reserves for asbestos claims | $ 867,000,000 | $ 867,000,000 | $ 867,000,000 | $ 912,000,000 | |||||||||||
Reinsurance recoverables for asbestos claims | 419,000,000 | 419,000,000 | 419,000,000 | 444,000,000 | |||||||||||
Reserves for environmental claims | 166,000,000 | 166,000,000 | 166,000,000 | 179,000,000 | |||||||||||
Reinsurance recoverables for environmental claims | 36,000,000 | 36,000,000 | 36,000,000 | $ 40,000,000 | |||||||||||
Minimum | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingencies, reasonably possible pretax loss exposure in excess of the amount accrued | 0 | ||||||||||||||
Maximum | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingencies, reasonably possible pretax loss exposure in excess of the amount accrued | 425,000,000 | ||||||||||||||
Residual guarantee | |||||||||||||||
Guarantees: | |||||||||||||||
Potential leased automobiles residual value | $ 40,000,000 | $ 40,000,000 | $ 40,000,000 | ||||||||||||
Guarantee obligations term, low end of range | 1 year | ||||||||||||||
Guarantee obligations term, high end of range | 4 years | ||||||||||||||
Settled Litigation | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of plaintiffs | plaintiff | 41 | ||||||||||||||
Pending Litigation | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of plaintiffs | plaintiff | 8 | ||||||||||||||
Fair Labor Standards Act | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, pending claims, number | adjuster | 105 | ||||||||||||||
New York Labor Law | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, pending claims, number | adjuster | 137 | ||||||||||||||
Appeal Denied | Judicial Ruling | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of appeals | appeal | 1 | ||||||||||||||
Appeal Granted | Judicial Ruling | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of appeals | appeal | 2 | ||||||||||||||
Signed Releases Knowingly and Voluntarily | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of plaintiffs | plaintiff | 2 | ||||||||||||||
Did Not Sign Releases Knowingly and Voluntarily | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of plaintiffs | plaintiff | 8 | ||||||||||||||
Age Discrimination In Employment Act | Pending Litigation | |||||||||||||||
Proceedings: | |||||||||||||||
Loss contingency, number of plaintiffs | plaintiff | 6 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pension benefits | ||||
Components of net periodic cost | ||||
Service cost | $ 28 | $ 28 | $ 57 | $ 56 |
Interest cost | 66 | 72 | 132 | 143 |
Expected return on plan assets | (102) | (100) | (204) | (199) |
Amortization of prior service credit | (14) | (14) | (28) | (28) |
Amortization of net actuarial loss (gain) | 47 | 44 | 94 | 87 |
Settlement loss | 8 | 8 | 16 | 16 |
Net periodic postretirement credit | 33 | 38 | 67 | 75 |
Postretirement benefits | ||||
Components of net periodic cost | ||||
Service cost | 2 | 3 | 4 | 5 |
Interest cost | 3 | 5 | 7 | 9 |
Amortization of prior service credit | (6) | (6) | (12) | (11) |
Amortization of net actuarial loss (gain) | (6) | (8) | (12) | (16) |
Net periodic postretirement credit | $ (7) | $ (6) | $ (13) | $ (13) |
Supplemental Cash Flow Inform70
Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental Cash Flow Information [Abstract] | ||
Non-cash modifications of certain mortgage loans, fixed income securities, limited partnership interests and other investments, as well as mergers completed with equity securities | $ 9 | $ 270 |
Non-cash financing activities related to the issuance of shares for vested restricted stock units | 42 | 39 |
Debt acquired | 34 | |
Net change in proceeds managed | ||
Net change in fixed income securities | 10 | 0 |
Net change in short-term investments | (7) | (56) |
Operating cash flow provided (used) | 3 | (56) |
Change in Liabilities for Collateral [Roll Forward] | ||
Liabilities for collateral, beginning of period | (1,129) | (840) |
Liabilities for collateral, end of period | (1,126) | (896) |
Operating cash flow (used) provided | $ (3) | $ 56 |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pre-tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | $ 479 | $ 663 | $ 901 | $ 1,381 |
Less: reclassification adjustment of realized capital gains and losses | 64 | 11 | 174 | (163) |
Unrealized net capital gains and losses | 415 | 652 | 727 | 1,544 |
Unrealized foreign currency translation adjustments | 17 | 7 | 12 | 29 |
Unrecognized pension and other postretirement benefit cost arising during the period | (3) | 1 | (3) | (7) |
Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses | (29) | (24) | (58) | (48) |
Unrecognized pension and other postretirement benefit cost | 26 | 25 | 55 | 41 |
Other comprehensive income | 458 | 684 | 794 | 1,614 |
Tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | (167) | (232) | (315) | (483) |
Less: reclassification adjustment of realized capital gains and losses | (22) | (4) | (61) | 57 |
Unrealized net capital gains and losses | (145) | (228) | (254) | (540) |
Unrealized foreign currency translation adjustments | (6) | (2) | (4) | (10) |
Unrecognized pension and other postretirement benefit cost arising during the period | 2 | 0 | 2 | 3 |
Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses | 10 | 9 | 20 | 17 |
Unrecognized pension and other postretirement benefit cost | (8) | (9) | (18) | (14) |
Other comprehensive income (loss), Tax | (159) | (239) | (276) | (564) |
After-tax | ||||
Unrealized net holding gains and losses arising during the period, net of related offsets | 312 | 431 | 586 | 898 |
Less: reclassification adjustment of realized capital gains and losses | 42 | 7 | 113 | (106) |
Unrealized net capital gains and losses | 270 | 424 | 473 | 1,004 |
Unrealized foreign currency translation adjustments | 11 | 5 | 8 | 19 |
Unrecognized pension and other postretirement benefit cost arising during the period | (1) | 1 | (1) | (4) |
Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses | (19) | (15) | (38) | (31) |
Unrecognized pension and other postretirement benefit cost | 18 | 16 | 37 | 27 |
Other comprehensive income, after-tax | $ 299 | $ 445 | $ 518 | $ 1,050 |