Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 17, 2018 | |
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, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 346,232,355 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues | ||||
Net investment income | $ 824 | $ 897 | $ 1,610 | $ 1,645 |
Realized capital gains and losses: | ||||
Total other-than-temporary impairment (“OTTI”) losses | (4) | (47) | (4) | (109) |
OTTI losses reclassified (from) to other comprehensive income | 0 | (3) | (1) | 0 |
Net OTTI losses recognized in earnings | (4) | (50) | (5) | (109) |
Sales and valuation changes on equity investments and derivatives | (21) | 131 | (154) | 324 |
Total realized capital gains and losses | (25) | 81 | (159) | 215 |
Total revenues | 10,099 | 9,813 | 19,869 | 19,457 |
Costs and expenses | ||||
Property and casualty insurance claims and claims expense | 5,792 | 5,689 | 10,941 | 11,105 |
Life contract benefits | 483 | 486 | 987 | 960 |
Interest credited to contractholder funds | 165 | 175 | 326 | 348 |
Amortization of deferred policy acquisition costs | 1,296 | 1,176 | 2,569 | 2,345 |
Operating costs and expenses | 1,407 | 1,312 | 2,762 | 2,619 |
Restructuring and related charges | 27 | 53 | 49 | 63 |
Interest expense | 86 | 83 | 169 | 168 |
Total costs and expenses | 9,256 | 8,974 | 17,803 | 17,608 |
Gain on disposition of operations | 2 | 12 | 3 | 14 |
Income from operations before income tax expense | 845 | 851 | 2,069 | 1,863 |
Income tax expense | 169 | 272 | 418 | 589 |
Net income | 676 | 579 | 1,651 | 1,274 |
Preferred stock dividends | 39 | 29 | 68 | 58 |
Net income applicable to common shareholders | $ 637 | $ 550 | $ 1,583 | $ 1,216 |
Earnings per common share: | ||||
Net income available to common shareholders per common share - Basic (in dollars per share) | $ 1.82 | $ 1.51 | $ 4.50 | $ 3.34 |
Weighted average common shares - Basic (in shares) | 349.2 | 363.6 | 351.6 | 364.6 |
Net income available to common shareholders per common share - Diluted (in dollars per share) | $ 1.80 | $ 1.49 | $ 4.43 | $ 3.29 |
Weighted average common shares - Diluted (in shares) | 354.6 | 369 | 357.2 | 370.1 |
Cash dividends declared per common share (in dollars per share) | $ 0.46 | $ 0.37 | $ 0.92 | $ 0.74 |
Property and casualty insurance premiums | ||||
Revenues | ||||
Other revenue | $ 8,460 | $ 8,018 | $ 16,746 | $ 15,977 |
Life premiums and contract charges | ||||
Revenues | ||||
Other revenue | 612 | 591 | 1,228 | 1,184 |
Other revenue | ||||
Revenues | ||||
Other revenue | $ 228 | $ 226 | $ 444 | $ 436 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 676 | $ 579 | $ 1,651 | $ 1,274 |
Changes in: | ||||
Unrealized net capital gains and losses | (133) | 270 | (698) | 473 |
Unrealized foreign currency translation adjustments | (7) | 11 | (11) | 8 |
Unrecognized pension and other postretirement benefit cost | 22 | 18 | 45 | 37 |
Other comprehensive (loss) income, after-tax | (118) | 299 | (664) | 518 |
Comprehensive income | $ 558 | $ 878 | $ 987 | $ 1,792 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Financial Position - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Fixed income securities, at fair value (amortized cost $56,750 and $57,525) | $ 56,891 | $ 58,992 |
Equity securities, at fair value (cost $5,846 and $5,461) | 6,888 | 6,621 |
Mortgage loans | 4,535 | 4,534 |
Limited partnership interests | 7,679 | 6,740 |
Short-term, at fair value (amortized cost $3,123 and $1,944) | 3,123 | 1,944 |
Other | 4,125 | 3,972 |
Total investments | 83,241 | 82,803 |
Cash | 489 | 617 |
Premium installment receivables, net | 5,953 | 5,786 |
Deferred policy acquisition costs | 4,533 | 4,191 |
Reinsurance recoverables, net | 8,910 | 8,921 |
Accrued investment income | 589 | 569 |
Property and equipment, net | 1,040 | 1,072 |
Goodwill | 2,189 | 2,181 |
Other assets | 3,154 | 2,838 |
Separate Accounts | 3,271 | 3,444 |
Total assets | 113,369 | 112,422 |
Liabilities | ||
Reserve for property and casualty insurance claims and claims expense | 26,623 | 26,325 |
Reserve for life-contingent contract benefits | 12,213 | 12,549 |
Contractholder funds | 18,888 | 19,434 |
Unearned premiums | 13,824 | 13,473 |
Claim payments outstanding | 894 | 875 |
Deferred income taxes | 723 | 782 |
Other liabilities and accrued expenses | 7,363 | 6,639 |
Long-term debt | 6,448 | 6,350 |
Separate Accounts | 3,271 | 3,444 |
Total liabilities | 90,247 | 89,871 |
Commitments and Contingent Liabilities (Note 12) | ||
Shareholders’ equity | ||
Preferred stock and additional capital paid-in, $1 par value, 25 million shares authorized, 95.2 thousand and 72.2 thousand shares issued and outstanding, $2,380 and $1,805 aggregate liquidation preference | 2,303 | 1,746 |
Common stock, $.01 par value, 2.0 billion shares authorized and 900 million issued, 347 million and 355 million shares outstanding | 9 | 9 |
Additional capital paid-in | 3,391 | 3,313 |
Retained income | 45,508 | 43,162 |
Deferred ESOP expense | (3) | (3) |
Treasury stock, at cost (553 million and 545 million shares) | (26,818) | (25,982) |
Unrealized net capital gains and losses: | ||
Unrealized net capital gains and losses on fixed income securities with OTTI | 83 | 85 |
Other unrealized net capital gains and losses | 28 | 1,981 |
Unrealized adjustment to DAC, DSI and insurance reserves | (57) | (404) |
Total unrealized net capital gains and losses | 54 | 1,662 |
Unrealized foreign currency translation adjustments | (20) | (9) |
Unrecognized pension and other postretirement benefit cost | (1,302) | (1,347) |
Total accumulated other comprehensive income (“AOCI”) | (1,268) | 306 |
Total shareholders’ equity | 23,122 | 22,551 |
Total liabilities and shareholders’ equity | $ 113,369 | $ 112,422 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Fixed income securities, at fair value, amortized cost (in dollars) | $ 56,750 | $ 57,525 |
Equity securities, at fair value, cost (in dollars) | 5,846 | 5,461 |
Short-term, at fair value, amortized cost (in dollars) | $ 3,123 | $ 1,944 |
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) | 95,200 | 72,200 |
Preferred stock, shares outstanding (in shares) | 95,200 | 72,200 |
Preferred stock, shares aggregate liquidation preference (in shares) | $ 2,380 | $ 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) | 347,000,000 | 355,000,000 |
Treasury Stock, shares (in shares) | 553,000,000 | 545,000,000 |
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 income |
Increase (decrease) in equity | |||||||||
Cumulative effect of change in accounting principle | $ 0 | $ 0 | |||||||
Balance, beginning of period at Dec. 31, 2016 | $ 1,746 | $ 3,303 | 40,678 | $ (24,741) | (416) | ||||
Increase (decrease) in equity | |||||||||
Preferred stock issuance | 0 | ||||||||
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 | $ 0 | 1,746 | $ 9 | 3,269 | 41,622 | $ (6) | (25,241) | 102 |
Increase (decrease) in equity | |||||||||
Cumulative effect of change in accounting principle | 1,088 | (910) | |||||||
Balance, beginning of period at Dec. 31, 2017 | 22,551 | 1,746 | 3,313 | 43,162 | (25,982) | 306 | |||
Increase (decrease) in equity | |||||||||
Preferred stock issuance | 557 | ||||||||
Forward contract on accelerated share repurchase agreement | 45 | ||||||||
Equity incentive plans activity | 33 | ||||||||
Net income | 1,651 | 1,651 | |||||||
Dividends on common stock | (325) | ||||||||
Dividends on preferred stock | (68) | ||||||||
Shares acquired | (892) | ||||||||
Shares reissued under equity incentive plans, net | 56 | ||||||||
Change in unrealized net capital gains and losses | (698) | (698) | |||||||
Change in unrealized foreign currency translation adjustments | (11) | (11) | |||||||
Change in unrecognized pension and other postretirement benefit cost | 45 | 45 | |||||||
Balance, end of period at Jun. 30, 2018 | $ 23,122 | $ 0 | $ 2,303 | $ 9 | $ 3,391 | $ 45,508 | $ (3) | $ (26,818) | $ (1,268) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Net income | $ 1,651 | $ 1,274 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization and other non-cash items | 248 | 238 |
Realized capital gains and losses | 159 | (215) |
Gain on disposition of operations | (3) | (14) |
Interest credited to contractholder funds | 326 | 348 |
Changes in: | ||
Policy benefits and other insurance reserves | (22) | 228 |
Unearned premiums | 211 | 34 |
Deferred policy acquisition costs | (80) | (65) |
Premium installment receivables, net | (185) | (51) |
Reinsurance recoverables, net | (9) | 6 |
Income taxes | (257) | (42) |
Other operating assets and liabilities | 51 | (393) |
Net cash provided by operating activities | 2,090 | 1,348 |
Proceeds from sales | ||
Fixed income securities | 19,515 | 14,521 |
Equity securities | 3,576 | 3,430 |
Limited partnership interests | 182 | 481 |
Other investments | 135 | 118 |
Investment collections | ||
Fixed income securities | 1,442 | 2,063 |
Mortgage loans | 315 | 305 |
Other investments | 235 | 337 |
Investment purchases | ||
Fixed income securities | (20,401) | (17,214) |
Equity securities | (3,901) | (3,473) |
Limited partnership interests | (873) | (578) |
Mortgage loans | (316) | (148) |
Other investments | (535) | (532) |
Change in short-term investments, net | (512) | 2,142 |
Change in other investments, net | (35) | 107 |
Purchases of property and equipment, net | (128) | (146) |
Acquisition of operations | (10) | (1,356) |
Net cash (used in) provided by investing activities | (1,311) | 57 |
Cash flows from financing activities | ||
Proceeds from issuance of long-term debt | 498 | 0 |
Redemption and repayment of long-term debt | (401) | 0 |
Proceeds from issuance of preferred stock | 557 | 0 |
Contractholder fund deposits | 506 | 515 |
Contractholder fund withdrawals | (997) | (957) |
Dividends paid on common stock | (295) | (257) |
Dividends paid on preferred stock | (58) | (58) |
Treasury stock purchases | (838) | (657) |
Shares reissued under equity incentive plans, net | 28 | 108 |
Other | 93 | (53) |
Net cash used in financing activities | (907) | (1,359) |
Net (decrease) increase in cash | (128) | 46 |
Cash at beginning of period | 617 | 436 |
Cash at end of period | $ 489 | $ 482 |
General
General | 6 Months Ended |
Jun. 30, 2018 | |
General [Abstract] | |
General | Note 1 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 and casualty insurance company with various property and casualty 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, 2018 and for the three month and six month periods ended June 30, 2018 and 2017 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, 2017 . 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 Recognition and Measurement of Financial Assets and Financial Liabilities Effective January 1, 2018, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance requiring equity investments, including equity securities and limited partnership interests not accounted for under the equity method of accounting or that do not result in consolidation to be measured at fair value with changes in fair value recognized in net income. The guidance clarifies that an entity should evaluate the realizability of deferred tax assets related to available-for-sale fixed income securities in combination with the entity’s other deferred tax assets. The Company’s adoption of the new FASB guidance included adoption of the relevant elements of Technical Corrections and Improvements to Financial Instruments, issued in February 2018. Upon adoption of the new guidance on January 1, 2018, $1.16 billion of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. The after-tax change in accounting for equity securities did not affect the Company’s total shareholders’ equity and the unrealized net capital gains of $910 million , reclassified to retained income will never be recognized in net income. Upon adoption of the new guidance on January 1, 2018, the carrying value of cost method limited partnership interests increased $224 million , pre-tax, to fair value. The after-tax cumulative-effect increase in retained income of $177 million increased the Company’s shareholders’ equity but will never be recognized in net income thereby negatively impacting calculations of returns on equity. Revenue from Contracts with Customers Effective January 1, 2018, the Company adopted new FASB guidance which revises the criteria for revenue recognition. Insurance contracts are excluded from the scope of the new guidance. The Company’s principal activities impacted by the new guidance are those related to the issuance of protection plans for consumer products and automobiles and service contracts that provide roadside assistance. Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies 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. Adoption of the guidance on January 1, 2018 under the modified retrospective approach resulted in the recognition of an immaterial after-tax net cumulative effect increase to the beginning balance of retained income. In addition to the net cumulative effect, the Company also recorded in the statement of financial position an increase of approximately $160 million pre-tax in unearned premiums with a corresponding $160 million pre-tax increase in DAC for protection plans sold directly to retailers for which SquareTrade Holding Company, Inc. (“SquareTrade”) is deemed to be the principal in the transaction. This impact offsets fully and did not impact retained income at the date of adoption. Presentation of Net Periodic Pension and Postretirement Benefits Costs Effective January 1, 2018, the Company adopted new FASB guidance requiring identification, 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 adoption had no impact on the Company’s results of operations or financial position. 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 to be applied on a prospective basis, with the effects, if any, recognized in net income in the period of adoption. The Company elected to early adopt the new guidance as of January 1, 2018. The adoption had no impact on the Company’s results of operations or financial position. Changes to significant accounting policies Investments Changes were made to the Company’s Significant Accounting Policies upon adoption of new FASB guidance related to the recognition and measurement of financial assets. Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Equity securities are carried at fair value. Equity securities without readily determinable or estimable fair values are measured using the measurement alternative which is cost less impairment, if any, and adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The periodic change in fair value of equity securities is recognized within realized capital gains and losses on the Condensed Consolidated Statements of Operations effective January 1, 2018. Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. Where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies, investments in limited partnership interests purchased prior to January 1, 2018 are accounted for at fair value primarily utilizing the net asset value as a practical expedient (“NAV”) to determine fair value. All other investments in limited partnership interests, including those purchased subsequent to January 1, 2018, are accounted for in accordance with the equity method of accounting (“EMA”). Investment income from limited partnership interests carried at fair value is recognized based upon the changes in fair value of the investee’s equity primarily determined using NAV. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ earnings. Income from EMA limited partnership interests is generally recognized on a three month delay due to the availability of the related financial statements. Recognition of Revenue Revenues related to protection plans, other contracts (primarily finance and insurance products) and roadside assistance are deferred and earned over the term of the contract in a manner that recognizes revenue as obligations under the contracts are performed. Revenues from these products are classified as premiums as the products are backed by insurance. Protection plans and finance and insurance premiums are recognized using a cost-based incurrence method. Roadside assistance premiums are recognized evenly over the term of the contract as performance obligations are fulfilled . Tax Reform On December 22, 2017, Public Law 115-97, known as the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”) became effective, permanently reducing the U.S. corporate income tax rate from 35% to 21% beginning January 1, 2018. As a result, the corporate tax rate is not comparable between periods. During 2017, the Company revalued its deferred tax assets and liabilities and recorded liabilities related to the transition to the modified territorial system for international taxation. The impact of the Tax Legislation may differ from the Company’s preliminary estimates due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued and actions the Company may take as a result of the Tax Legislation. During the period ended June 30, 2018, the Company has not recorded any material adjustments to these provisional amounts. The Company continues to refine the analysis and calculations, which could impact the provisional estimates previously recorded. Accordingly, as of June 30, 2018, the Company has not fully completed the accounting for the Tax Legislation. Pending accounting standards Accounting for Leases In February 2016, the FASB issued guidance revising the accounting for leases. Under the new guidance, lessees will be required to recognize a right-of-use (“ROU”) asset and lease liability for all leases other than those that are less than one year. The lease liability will be equal to the present value of lease payments. A ROU asset will be based on the lease liability adjusted for qualifying initial direct costs. The Company currently estimates that the recognition of the ROU asset and lease liability will result in an increase in both total assets and liabilities in the Condensed Consolidated Statement of Financial Position of approximately $500 million . The new guidance requires sellers in a sale-leaseback transaction to recognize the entire gain from the sale of an underlying asset at the time the sale is recognized rather than over the leaseback term. The carrying value of unrecognized gains on sale-leaseback transactions prior to January 1, 2019 are approximately $20 million , after-tax, and will be recorded as an increase to retained income. The expense of operating leases under the new guidance will be recognized in the income statement on a straight-line basis by adjusting the amortization of the ROU asset to produce a straight-line expense when combined with the interest expense on the lease liability. 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 ROU asset is amortized on a straight-line basis. 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, and will be implemented using the optional transition method that allows application of the transition provisions at the adoption date instead of the earliest date presented. 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 relevant information available 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 reporting 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. Accounting for Hedging Activities In August 2017, the FASB issued amendments intended to better align hedge accounting with an organization’s risk management activities. The amendments expand hedge accounting for nonfinancial and financial risk components and revise the measurement methodologies to better align with an organization’s risk management activities. Separate presentation of hedge ineffectiveness is eliminated to provide greater transparency of the full impact of hedging by requiring presentation of the results of the hedged item and hedging instrument in a single financial statement line item. In addition, the amendments reduce complexity by simplifying the manner in which assessments of hedge effectiveness may be performed. The guidance is effective for reporting periods beginning after December 15, 2018. The presentation and disclosure guidance is effective on a prospective basis. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. Other revenue presentation Concurrent with the adoption of new FASB guidance on revenue from contracts with customers and the Company’s objective of providing more information related to revenues for our Service Businesses, the Company revised the presentation of total revenue to include other revenue. Previously, components of other revenue were presented within operating costs and expenses and primarily represent fees collected from policyholders relating to premium installment payments, commissions on sales of non-proprietary products, fee-based services and other revenue transactions. Other revenue is recognized when performance obligations are fulfilled. Prior periods have been reclassified to conform to current separate presentation of other revenue. |
Earnings per Common Share
Earnings per Common Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings per Common Share | Note 2 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. Computation of basic and diluted earnings per common share ($ in millions, except per share data) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Numerator: Net income $ 676 $ 579 $ 1,651 $ 1,274 Less: Preferred stock dividends 39 29 68 58 Net income applicable to common shareholders (1) $ 637 $ 550 $ 1,583 $ 1,216 Denominator: Weighted average common shares outstanding 349.2 363.6 351.6 364.6 Effect of dilutive potential common shares: Stock options 3.8 4.3 3.9 4.2 Restricted stock units (non-participating) and performance stock awards 1.6 1.1 1.7 1.3 Weighted average common and dilutive potential common shares outstanding 354.6 369.0 357.2 370.1 Earnings per common share - Basic $ 1.82 $ 1.51 $ 4.50 $ 3.34 Earnings per common share - Diluted $ 1.80 $ 1.49 $ 4.43 $ 3.29 (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 2.3 million and 2.5 million Allstate common shares, with exercise prices ranging from $81.42 to $102.84 and $74.03 to $86.61 , were outstanding for the three month periods ended June 30, 2018 and 2017 , respectively, but were not included in the computation of diluted earnings per common share in those periods. Options to purchase 1.7 million and 2.6 million Allstate common shares, with exercise prices ranging from $81.42 to $102.84 and $69.95 to $86.61 , were outstanding for the six month periods ended June 30, 2018 and 2017 , respectively, but were not included in the computation of diluted earnings per common share in those periods. |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition | Note 3 Acquisition On January 3, 2017, the Company acquired 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 covering a variety of consumer electronics and appliances. This acquisition broadens Allstate’s unique product offerings to better meet consumers’ needs. In connection with the acquisition, the Company recorded goodwill of $1.10 billion , commissions paid to retailers (reported in deferred policy acquisition costs) of $66 million , other intangible assets (reported in other assets) of $555 million , contractual liability insurance policy premium expenses (reported in other assets) of $205 million , unearned premiums of $389 million and net deferred income tax liability of $138 million . These amounts reflect re-measurement adjustments to the fair value of the opening balance sheet assets and liabilities. Of the $555 million assigned to other intangible assets, $465 million was attributable to acquired customer relationships and $69 million was assigned to the SquareTrade trade name which is considered to have an indefinite useful life. The amortization expense of intangible assets was $20 million and $23 million for the three months ended June 30, 2018 and 2017, respectively, and was $41 million and $46 million for the six months ended June 30, 2018 and 2017, respectively. |
Reportable Segments
Reportable Segments | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segments | Note 4 Reportable Segments Reportable segments revenue information ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Property-Liability Insurance premiums Auto $ 5,705 $ 5,438 $ 11,296 $ 10,826 Homeowners 1,864 1,815 3,712 3,630 Other personal lines 455 436 899 867 Commercial lines 165 118 301 243 Allstate Protection 8,189 7,807 16,208 15,566 Discontinued Lines and Coverages — — — — Total property-liability insurance premiums 8,189 7,807 16,208 15,566 Other revenue 184 181 358 348 Net investment income 353 387 690 695 Realized capital gains and losses (15 ) 85 (110 ) 220 Total Property-Liability 8,711 8,460 17,146 16,829 Service Businesses Consumer product protection plans 121 70 244 129 Roadside assistance 68 67 132 135 Finance and insurance products 82 74 162 147 Intersegment premiums and service fees (1) 29 28 58 56 Other revenue 16 17 32 33 Net investment income 6 4 11 7 Realized capital gains and losses (2 ) — (6 ) — Total Service Businesses 320 260 633 507 Allstate Life Traditional life insurance premiums 148 139 294 279 Accident and health insurance premiums 1 1 1 1 Interest-sensitive life insurance contract charges 177 179 358 360 Other revenue 28 28 54 55 Net investment income 130 123 252 243 Realized capital gains and losses (3 ) 1 (6 ) 2 Total Allstate Life 481 471 953 940 Allstate Benefits Traditional life insurance premiums 10 9 19 18 Accident and health insurance premiums 245 232 493 464 Interest-sensitive life insurance contract charges 28 28 57 56 Net investment income 19 19 38 36 Realized capital gains and losses — — (2 ) — Total Allstate Benefits 302 288 605 574 Allstate Annuities Fixed annuities contract charges 3 3 6 6 Net investment income 293 354 583 643 Realized capital gains and losses 6 (5 ) (23 ) (7 ) Total Allstate Annuities 302 352 566 642 Corporate and Other Net investment income 23 10 36 21 Realized capital gains and losses (11 ) — (12 ) — Total Corporate and Other 12 10 24 21 Intersegment eliminations (1) (29 ) (28 ) (58 ) (56 ) Consolidated revenues $ 10,099 $ 9,813 $ 19,869 $ 19,457 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the condensed consolidated financial statements. Reportable segments financial performance Three months ended June 30, Six months ended June 30, ($ in millions) 2018 2017 2018 2017 Property-Liability Allstate Protection $ 419 $ 270 $ 1,381 $ 820 Discontinued Lines and Coverages (3 ) (5 ) (6 ) (7 ) Total underwriting income 416 265 1,375 813 Net investment income 353 387 690 695 Income tax expense on operations (157 ) (207 ) (425 ) (475 ) Realized capital gains and losses, after-tax (12 ) 56 (87 ) 145 Gain on disposition of operations, after-tax — 6 — 6 Property-Liability net income applicable to common shareholders 600 507 1,553 1,184 Service Businesses Adjusted net income (loss) 1 (8 ) (4 ) (18 ) Realized capital gains and losses, after-tax (1 ) — (4 ) — Amortization of purchased intangible assets, after-tax (16 ) (15 ) (32 ) (30 ) Service Businesses net loss applicable to common shareholders (16 ) (23 ) (40 ) (48 ) Allstate Life Adjusted net income 78 63 147 122 Realized capital gains and losses, after-tax (2 ) — (4 ) 1 DAC and DSI amortization related to realized capital gains and losses, after-tax (3 ) (3 ) (5 ) (6 ) Allstate Life net income applicable to common shareholders 73 60 138 117 Allstate Benefits Adjusted net income 34 25 62 47 Realized capital gains and losses, after-tax — — (2 ) — Allstate Benefits net income applicable to common shareholders 34 25 60 47 Allstate Annuities Adjusted net income 44 65 79 94 Realized capital gains and losses, after-tax 5 (3 ) (18 ) (5 ) Valuation changes on embedded derivatives not hedged, after-tax — (1 ) 4 (1 ) Gain on disposition of operations, after-tax 1 — 2 2 Allstate Annuities net income applicable to common shareholders 50 61 67 90 Corporate and Other Adjusted net loss (95 ) (80 ) (185 ) (161 ) Realized capital gains and losses, after-tax (9 ) — (10 ) — Business combination expenses, after-tax — — — (13 ) Corporate and Other net loss applicable to common shareholders (104 ) (80 ) (195 ) (174 ) Consolidated net income applicable to common shareholders $ 637 $ 550 $ 1,583 $ 1,216 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Investments | Note 5 Investments Amortized cost, gross unrealized gains and losses and fair value for fixed income securities ($ in millions) Amortized cost Gross unrealized Fair value Gains Losses June 30, 2018 U.S. government and agencies $ 3,182 $ 40 $ (16 ) $ 3,206 Municipal 9,454 245 (71 ) 9,628 Corporate 41,584 590 (759 ) 41,415 Foreign government 917 18 (9 ) 926 Asset-backed securities (“ABS”) 1,084 9 (8 ) 1,085 Residential mortgage-backed securities (“RMBS”) 424 98 (2 ) 520 Commercial mortgage-backed securities (“CMBS”) 84 6 (2 ) 88 Redeemable preferred stock 21 2 — 23 Total fixed income securities $ 56,750 $ 1,008 $ (867 ) $ 56,891 December 31, 2017 U.S. government and agencies $ 3,580 $ 56 $ (20 ) $ 3,616 Municipal 8,053 311 (36 ) 8,328 Corporate 42,996 1,234 (204 ) 44,026 Foreign government 1,005 27 (11 ) 1,021 ABS 1,266 13 (7 ) 1,272 RMBS 480 101 (3 ) 578 CMBS 124 6 (2 ) 128 Redeemable preferred stock 21 2 — 23 Total fixed income securities $ 57,525 $ 1,750 $ (283 ) $ 58,992 Scheduled maturities for fixed income securities ($ in millions) As of June 30, 2018 Amortized cost Fair value Due in one year or less $ 4,289 $ 4,293 Due after one year through five years 28,481 28,384 Due after five years through ten years 15,933 15,673 Due after ten years 6,455 6,848 55,158 55,198 ABS, RMBS and CMBS 1,592 1,693 Total $ 56,750 $ 56,891 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 ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ 509 $ 527 $ 1,017 $ 1,045 Equity securities 61 49 95 93 Mortgage loans 60 50 111 105 Limited partnership interests (1)(2) 173 253 353 373 Short-term investments 19 6 31 12 Other 68 60 134 116 Investment income, before expense 890 945 1,741 1,744 Investment expense (66 ) (48 ) (131 ) (99 ) Net investment income $ 824 $ 897 $ 1,610 $ 1,645 (1) Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income . (2) Includes net investment income of $143 million and $246 million for EMA limited partnership interests and $30 million and $107 million for limited partnership interests carried at fair value for the three and six months ended June 30, 2018 , respectively. Realized capital gains and losses by asset type ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ (80 ) $ 32 $ (123 ) $ 37 Equity securities 74 19 (19 ) 125 Mortgage loans 2 — 2 — Limited partnership interests (43 ) 31 (33 ) 71 Derivatives 23 (8 ) 15 (23 ) Other (1 ) 7 (1 ) 5 Realized capital gains and losses $ (25 ) $ 81 $ (159 ) $ 215 Realized capital gains and losses by transaction type ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Impairment write-downs (1) $ (4 ) $ (28 ) $ (5 ) $ (71 ) Change in intent write-downs (1) — (22 ) — (38 ) Net OTTI losses recognized in earnings (4 ) (50 ) (5 ) (109 ) Sales (1) (75 ) 139 (117 ) 347 Valuation of equity investments (1) 34 — (49 ) — Valuation and settlements of derivative instruments 20 (8 ) 12 (23 ) Realized capital gains and losses $ (25 ) $ 81 $ (159 ) $ 215 (1) Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales. Gross gains of $29 million and gross losses of $107 million were realized on sales of fixed income securities during the three months ended June 30, 2018 . Gross gains of $141 million and gross losses of $50 million were realized on sales of fixed income and equity securities during the three months ended June 30, 2017 . Gross gains of $74 million and gross losses of $194 million were realized on sales of fixed income securities during the six months ended June 30, 2018 . Gross gains of $376 million and gross losses of $125 million were realized on sales of fixed income and equity securities during the six months ended June 30, 2017 . Valuation changes included in net income for investments still held as of June 30, 2018 ($ in millions) Three months ended Six months ended Equity securities (1) $ 94 $ 71 Limited partnership interests carried at fair value (1) 28 106 Total valuation changes $ 122 $ 177 (1) Investments held at the end of a prior quarter that were sold in the current quarter are not included in the year-to-date amounts shown in the table above; therefore, the sum of the quarterly amounts may not equal the year-to-date amount. OTTI losses by asset type ($ in millions) Three months ended June 30, 2018 Three months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ (2 ) $ (3 ) ABS (1 ) — (1 ) (1 ) — (1 ) RMBS (1 ) — (1 ) — — — CMBS — — — (2 ) (1 ) (3 ) Total fixed income securities (2 ) — (2 ) (4 ) (3 ) (7 ) Equity securities (1) — — — (32 ) — (32 ) Limited partnership interests (1) (1 ) — (1 ) (9 ) — (9 ) Other (1 ) — (1 ) (2 ) — (2 ) OTTI losses $ (4 ) $ — $ (4 ) $ (47 ) $ (3 ) $ (50 ) Six months ended June 30, 2018 Six months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ (2 ) $ (3 ) Corporate — — — (9 ) 3 (6 ) ABS (1 ) — (1 ) (1 ) — (1 ) RMBS (1 ) — (1 ) (1 ) (3 ) (4 ) CMBS — (1 ) (1 ) (8 ) 2 (6 ) Total fixed income securities (2 ) (1 ) (3 ) (20 ) — (20 ) Equity securities (1) — — — (68 ) — (68 ) Limited partnership interests (1) (1 ) — (1 ) (16 ) — (16 ) Other (1 ) — (1 ) (5 ) — (5 ) OTTI losses $ (4 ) $ (1 ) $ (5 ) $ (109 ) $ — $ (109 ) (1) Due to the adopti on of the recognition and measurement accounting standard, equity securities and limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net income and are no longer included in the table above. The total amount of OTTI losses included in AOCI at the time of impairment for fixed income securities, which were not included in earnings, are presented in the following table. The amounts exclude $197 million and $208 million as of June 30, 2018 and December 31, 2017 , respectively, of net unrealized gains related to changes in valuation of the fixed income securities subsequent to the impairment measurement date. OTTI losses included in AOCI at the time of impairment for fixed income securities ($ in millions) June 30, 2018 December 31, 2017 Municipal $ (5 ) $ (5 ) ABS (12 ) (15 ) RMBS (71 ) (77 ) CMBS (4 ) (4 ) Total $ (92 ) $ (101 ) Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held as of June 30, ($ in millions) Three months ended Six months ended June 30, 2018 2017 2018 2017 Beginning balance $ (212 ) $ (294 ) $ (226 ) $ (318 ) Additional credit loss for securities previously other-than-temporarily impaired (1 ) (6 ) (2 ) (13 ) Additional credit loss for securities not previously other-than-temporarily impaired (1 ) (1 ) (1 ) (7 ) Reduction in credit loss for securities disposed or collected 7 19 22 56 Change in credit loss due to accretion of increase in cash flows 1 1 1 1 Ending balance $ (206 ) $ (281 ) $ (206 ) $ (281 ) 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 OTTI 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 AOCI. If the Company determines that the fixed income security does not have sufficient cash flow or other information to estimate a recovery value for the security, the Company may conclude that the entire decline in fair value is deemed to be credit related and the loss is recorded in earnings. Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2018 Gains Losses Fixed income securities $ 56,891 $ 1,008 $ (867 ) $ 141 Short-term investments 3,123 — — — Derivative instruments — — (3 ) (3 ) EMA limited partnerships (1) 3 Unrealized net capital gains and losses, pre-tax 141 Amounts recognized for: Insurance reserves (2) — DAC and DSI (3) (72 ) Amounts recognized (72 ) Deferred income taxes (15 ) Unrealized net capital gains and losses, after-tax $ 54 (1) 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. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2017 Gains Losses Fixed income securities $ 58,992 $ 1,750 $ (283 ) $ 1,467 Equity securities 6,621 1,172 (12 ) 1,160 Short-term investments 1,944 — — — Derivative instruments (1) 2 2 (3 ) (1 ) EMA limited partnerships 1 Unrealized net capital gains and losses, pre-tax 2,627 Amounts recognized for: Insurance reserves (315 ) DAC and DSI (196 ) Amounts recognized (511 ) Deferred income taxes (454 ) Unrealized net capital gains and losses, after-tax $ 1,662 (1) Included in the fair value of derivative instruments is $2 million classified as liabilities. Change in unrealized net capital gains and losses ($ in millions) Six months ended June 30, 2018 Fixed income securities $ (1,326 ) Equity securities (1) — Derivative instruments (2 ) EMA limited partnerships 2 Total (1,326 ) Amounts recognized for: Insurance reserves 315 DAC and DSI 124 Amounts recognized 439 Deferred income taxes 189 Decrease in unrealized net capital gains and losses, after-tax $ (698 ) (1) Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $1.16 billion of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. See Note 1 of the condensed consolidated financial statements. Portfolio monitoring The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income 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 fixed income 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 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 OTTI using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of OTTI for these securities are assumptions and estimates about the financial condition and future earnings potential of the issue or issuer. Some of the factors that may be considered in evaluating whether a decline in fair value 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. Gross unrealized losses and fair value by type and length of time held 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, 2018 Fixed income securities U.S. government and agencies 67 $ 2,022 $ (15 ) 11 $ 55 $ (1 ) $ (16 ) Municipal 2,456 4,039 (57 ) 151 268 (14 ) (71 ) Corporate 1,888 24,450 (603 ) 240 2,878 (156 ) (759 ) Foreign government 15 84 — 27 448 (9 ) (9 ) ABS 76 505 (5 ) 8 13 (3 ) (8 ) RMBS 143 35 (1 ) 181 40 (1 ) (2 ) CMBS 2 11 — 5 10 (2 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 4,648 $ 31,146 $ (681 ) 623 $ 3,712 $ (186 ) $ (867 ) Investment grade fixed income securities 4,218 $ 27,970 $ (573 ) 575 $ 3,537 $ (168 ) $ (741 ) Below investment grade fixed income securities 430 3,176 (108 ) 48 175 (18 ) (126 ) Total fixed income securities 4,648 $ 31,146 $ (681 ) 623 $ 3,712 $ (186 ) $ (867 ) December 31, 2017 Fixed income securities U.S. government and agencies 66 $ 2,829 $ (18 ) 18 $ 182 $ (2 ) $ (20 ) Municipal 1,756 3,143 (24 ) 165 349 (12 ) (36 ) Corporate 781 11,616 (102 ) 208 3,289 (102 ) (204 ) Foreign government 45 580 (10 ) 5 44 (1 ) (11 ) ABS 57 476 (3 ) 9 34 (4 ) (7 ) RMBS 118 35 (1 ) 181 50 (2 ) (3 ) CMBS 2 1 — 6 23 (2 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 2,826 18,680 (158 ) 592 3,971 (125 ) (283 ) Equity securities 127 369 (12 ) 2 — — (12 ) Total fixed income and equity securities 2,953 $ 19,049 $ (170 ) 594 $ 3,971 $ (125 ) $ (295 ) Investment grade fixed income securities 2,706 $ 17,668 $ (134 ) 535 $ 3,751 $ (98 ) $ (232 ) Below investment grade fixed income securities 120 1,012 (24 ) 57 220 (27 ) (51 ) Total fixed income securities 2,826 $ 18,680 $ (158 ) 592 $ 3,971 $ (125 ) $ (283 ) As of June 30, 2018 , $851 million of the $867 million unrealized losses are related to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impai red. Of the $ 851 million , $ 730 million are related to unrea lized losses on investment grade fixed income securities. Of the remaining $121 million , $107 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. T he unrealized losses are expected to reverse as the securities approach maturity . As of June 30, 2018 , the remaining $ 16 million of unrealized losses are related to securities in unrealized loss positions greater than or equal to 20% of amortized cost. Investment grade fixed income securities comprising $ 11 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 $ 16 million , $ 5 million are related to below investment grade fixed income securities. Of these amounts, $3 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, 2018 . 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. As of June 30, 2018 , 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. Limited partnerships Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. As of June 30, 2018 and December 31, 2017 , the carrying value of EMA limited partnerships totaled $6.03 billion and $5.41 billion , respectively, and limited partnerships carried at fair value as of June 30, 2018 , while at cost method as of December 31, 2017, totaled $1.65 billion and $1.33 billion , respectively. 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, 2018 . 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. Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution ($ in millions) June 30, 2018 December 31, 2017 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 $ 3 $ 30 $ 33 $ 3 $ — $ 3 1.0 - 1.25 324 — 324 345 — 345 1.26 - 1.50 1,164 — 1,164 1,141 30 1,171 Above 1.50 2,909 101 3,010 2,949 62 3,011 Total non-impaired mortgage loans $ 4,400 $ 131 $ 4,531 $ 4,438 $ 92 $ 4,530 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. Net carrying value of impaired mortgage loans ($ in millions) June 30, 2018 December 31, 2017 Impaired mortgage loans with a valuation allowance $ 4 $ 4 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 4 $ 4 Valuation allowance on impaired mortgage loans $ 3 $ 3 The valuation allowance on impaired loans had no activity for the three months and six months ended June 30, 2018 and 2017. The average balance of impaired loans was $4 million and $5 million for the six months ended June 30, 2018 and 2017 , respectively. Payments on all mortgage loans were current as of June 30, 2018 and December 31, 2017 . Short-term investments Short-term investments, including commercial paper, U.S. Treasury bills, money market funds and other short-term investments, are carried at fair value. As of June 30, 2018 and December 31, 2017 , the fair value of short-term investments totaled $3.12 billion and $1.94 billion , respectively. Other investments Other investments primarily consist of bank loans, policy loans, real estate, agent loans and derivatives. Bank loans are primarily senior secured corporate loans and are carried at amortized cost. Policy loans are carried at unpaid principal balances. Real estate is carried at cost less accumulated depreciation. Agent loans are loans issued to exclusive Allstate agents and are carried at unpaid principal balances, net of valuation allowances and unamortized deferred fees or costs. Derivatives are carried at fair value. Other investments by asset type ($ in millions) June 30, 2018 December 31, 2017 Bank loans $ 1,702 $ 1,702 Policy loans 894 905 Real estate 769 632 Agent loans 570 538 Other 190 195 Total $ 4,125 $ 3,972 |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Note 6 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, 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 that are readily determinable 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, total return 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, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable 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. EMA limited partnership interests written-down to fair value in connection with recognizing OTTI losses are generally valued using net asset values. Investments excluded from the fair value hierarchy Limited partnerships carried at fair value , which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold withou t approval of the general partner. We receive distributions of income and from liquidation of the underlying assets of the investees over the life of these investments, typically 10 - 12 years. As of June 30, 2018 , the Company has commitments to invest $866 million in these limited partnership interests. Assets and liabilities measured at fair value As of June 30, 2018 ($ 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 Total Assets Fixed income securities: U.S. government and agencies $ 2,725 $ 481 $ — $ 3,206 Municipal — 9,522 106 9,628 Corporate - public — 30,594 76 30,670 Corporate - privately placed — 10,550 195 10,745 Foreign government — 926 — 926 ABS - CDO — 378 9 387 ABS - consumer and other — 625 73 698 RMBS — 520 — 520 CMBS — 62 26 88 Redeemable preferred stock — 23 — 23 Total fixed income securities 2,725 53,681 485 56,891 Equity securities 6,240 357 291 6,888 Short-term investments 1,276 1,847 — 3,123 Other investments: Free-standing derivatives — 126 1 $ (23 ) 104 Separate account assets 3,271 — — 3,271 Total recurring basis assets 13,512 56,011 777 (23 ) 70,277 Non-recurring basis (1) — — 8 8 Total assets at fair value $ 13,512 $ 56,011 $ 785 $ (23 ) $ 70,285 % of total assets at fair value 19.2 % 79.7 % 1.1 % — % 100 % Investments reported at NAV 1,650 Total $ 71,935 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (260 ) $ (260 ) Other liabilities: Free-standing derivatives — (46 ) — $ 2 (44 ) Total liabilities at fair value $ — $ (46 ) $ (260 ) $ 2 $ (304 ) % of total liabilities at fair value — % 15.1 % 85.5 % (0.6 )% 100 % (1) Includes $2 million of limited partnership interests and $6 million of other assets written-down to fair value in connection with recognizing OTTI losses. Assets and liabilities measured at fair value As of December 31, 2017 ($ 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 Total Assets Fixed income securities: U.S. government and agencies $ 3,079 $ 537 $ — $ 3,616 Municipal — 8,227 101 8,328 Corporate - public — 31,963 108 32,071 Corporate - privately placed — 11,731 224 11,955 Foreign government — 1,021 — 1,021 ABS - CDO — 480 99 579 ABS - consumer and other — 645 48 693 RMBS — 578 — 578 CMBS — 102 26 128 Redeemable preferred stock — 23 — 23 Total fixed income securities 3,079 55,307 606 58,992 Equity securities 6,032 379 210 6,621 Short-term investments 264 1,660 20 1,944 Other investments: Free-standing derivatives — 132 1 $ (6 ) 127 Separate account assets 3,444 — — 3,444 Total recurring basis assets 12,819 57,478 837 (6 ) 71,128 Non-recurring basis (1) — — 3 3 Total assets at fair value $ 12,819 $ 57,478 $ 840 $ (6 ) $ 71,131 % of total assets at fair value 18.0 % 80.8 % 1.2 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (286 ) $ (286 ) Other liabilities: Free-standing derivatives (1 ) (83 ) — $ 14 (70 ) Total liabilities at fair value $ (1 ) $ (83 ) $ (286 ) $ 14 $ (356 ) % of total liabilities at fair value 0.3 % 23.3 % 80.3 % (3.9 )% 100 % (1) Includes $3 million of limited partnership interests written-down to fair value in connection with recognizing OTTI losses. Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average June 30, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (231 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% December 31, 2017 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (252 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% 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, 2018 and December 31, 2017 , Level 3 fair value measurements of fixed income securities total $485 million and $606 million , respectively, and include $251 million and $271 million , respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $57 million and $58 million , respectively, of municipal fixed income securities that are not rated by third party credit rating agencies. The Company does not develop the unobservable inputs used in measuring fair value; therefore, these are not included in the table above. However, an increase (decrease) in credit spreads for fixed income securities valued based on non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third party credit rating agencies would result in a higher (lower) fair value. Rollforward of Level 3 assets and liabilities held at fair value during the three months period June 30, 2018 Balance as of March 31, 2018 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 96 $ — $ — $ — $ — Corporate - public 77 — (1 ) — — Corporate - privately placed 215 (2 ) — 20 (10 ) ABS - CDO 10 — — — — ABS - consumer and other 62 — — 5 (16 ) CMBS 27 — — — — Total fixed income securities 487 (2 ) (1 ) 25 (26 ) Equity securities 242 13 — — — Short-term investments — — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 730 $ 11 $ (1 ) $ 25 $ (26 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (262 ) $ 1 $ — $ — $ — Total recurring Level 3 liabilities $ (262 ) $ 1 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 10 $ — $ — $ — $ 106 Corporate - public — — — — 76 Corporate - privately placed 2 (3 ) — (27 ) 195 ABS - CDO — — — (1 ) 9 ABS - consumer and other 30 (7 ) — (1 ) 73 CMBS — — — (1 ) 26 Total fixed income securities 42 (10 ) — (30 ) 485 Equity securities 49 (13 ) — — 291 Short-term investments — — — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 91 $ (23 ) $ — $ (30 ) $ 777 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (260 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (260 ) (1) The effect to net income totals $12 million and is reported in the Condensed Consolidated Statements of Operations as follows: $11 million in realized capital gains and losses and $1 million in life contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities held at fair value during the six months period June 30, 2018 Balance as of December 31, 2017 Total gains (losses) included in: Transfers Transfers ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 101 $ 1 $ (1 ) $ — $ (2 ) Corporate - public 108 — (2 ) 4 (5 ) Corporate - privately placed 224 (2 ) (1 ) 20 (29 ) ABS - CDO 99 — — — (89 ) ABS - consumer and other 48 — 1 10 (16 ) CMBS 26 — — — — Total fixed income securities 606 (1 ) (3 ) 34 (141 ) Equity securities 210 16 — — — Short-term investments 20 — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 837 $ 15 $ (3 ) $ 34 $ (141 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (286 ) $ 24 $ — $ — $ — Total recurring Level 3 liabilities $ (286 ) $ 24 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 10 $ (2 ) $ — $ (1 ) $ 106 Corporate - public — (26 ) — (3 ) 76 Corporate - privately placed 15 (3 ) — (29 ) 195 ABS - CDO — — — (1 ) 9 ABS - consumer and other 75 (42 ) — (3 ) 73 CMBS 1 — — (1 ) 26 Total fixed income securities 101 (73 ) — (38 ) 485 Equity securities 79 (14 ) — — 291 Short-term investments 25 (45 ) — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 205 $ (132 ) $ — $ (38 ) $ 777 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (260 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (260 ) (1) The effect to net income totals $39 million and is reported in the Condensed Consolidated Statements of Operations as follows: $15 million in realized capital gains and losses, $19 million in interest credited to contractholder funds and $5 million in life contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities held at fair value during the three months period June 30, 2017 Balance as of March 31, 2017 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI 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 contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities held at fair value during the six months period June 30, 2017 Balance as of December 31, 2016 Total gains (losses) included in: Transfers Transfers ($ in millions) Net income (1) (1) OCI 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 contract benefits. (2) Comprises $1 million of assets. Transfers between level categorizations may occur due to changes in the availability of market observable inputs, which generally are caused by changes in market conditions such as liquidity, trading volume or bid-ask spreads. Transfers between level categorizations may also occur due to changes in the valuation source. Transfers in and out of level categorizations are reported as having occurred at the beginning of the quarter in which the transfer occurred. Therefore, for all transfers into Level 3, all realized and changes in unrealized gains and losses in the quarter of transfer are reflected in the Level 3 rollforward table. There were no transfers between Level 1 and Level 2 during the three months and six months ended June 30, 2018 or 2017 . Transfers into Level 3 during the three months and six months ended June 30, 2018 and 2017 included situations where a fair value quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. Transfers out of Level 3 during the three months and six months ended June 30, 2018 and 2017 included situations where a broker quote was used in the prior period and a fair value quote became available from the Company’s independent third-party valuation service provider in the current period. A quote utilizing the new pricing source was not available as of the prior period, and any gains or losses related to the change in valuation source for individual securities were not significant. Valuation changes included in net income for Level 3 assets and liabilities held as of ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Assets Fixed income securities: Municipal $ — $ (3 ) $ — $ (3 ) Equity securities 13 4 15 14 Free-standing derivatives, net — 2 — 3 Other assets — — — (1 ) Total recurring Level 3 assets $ 13 $ 3 $ 15 $ 13 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ 1 $ — $ 24 $ 3 Total recurring Level 3 liabilities $ 1 $ — $ 24 $ 3 The amounts in the table above represent gains and losses related to valuation changes included in net income for the period of time that the asset or liability was held and determined to be in Level 3. These gains and losses total $14 million for the three months ended June 30, 2018 and are reported as follows: $13 million in realized capital gains and losses and $1 million in life contract benefits. 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 contract benefits. These gains and losses total $39 million for the six months ended June 30, 2018 and are reported as follows: $15 million in realized capital gains and losses, $19 million in interest credited to contractholder funds and $5 million in life 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 $8 million in life contract benefits. Financial assets Carrying values and fair value estimates of financial instruments not carried at fair value as of ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Mortgage loans $ 4,535 $ 4,582 $ 4,534 $ 4,732 Bank loans 1,702 1,704 1,702 1,704 Agent loans 570 562 538 536 The fair value measurements for mortgage loans, bank loans and agent loans are categorized as Level 3. Financial liabilities Carrying values and fair value estimates of financial instruments not carried at fair value as of ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts $ 9,806 $ 10,238 $ 10,367 $ 11,071 Long-term debt 6,448 6,890 6,350 7,199 Liability for collateral 1,665 1,665 1,124 1,124 The fair value measurement is Level 3 for contractholder funds on investment contracts and Level 2 for long-term debt and liability for collateral. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 7 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, index total return 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, index total return swaps, 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. Fixed income index total return swaps are used to offset valuation losses in the fixed income portfolio during periods of declining fixed income market values. Credit default swaps are typically used to mitigate the credit risk within the Property-Liability fixed income portfolio. Equity index total return swaps, 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. Asset-liability management is a risk management strategy that is principally employed by Allstate Life and Allstate Annuities 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. Fixed income index total return swaps are used to offset valuation losses in the portfolio during periods of declining market values. Credit default swaps are typically used to mitigate the credit risk within the Allstate Life and Allstate Annuities fixed income portfolios. Futures and options are used for hedging the equity exposure contained in equity indexed life and annuity product contracts that offer equity returns to contractholders. In addition, the Company uses equity index total return swaps, options and futures to offset valuation losses in the equity portfolio during periods of declining equity market values. Foreign currency swaps and forwards are primarily used to reduce the foreign currency risk associated with holding foreign currency denominated investments. The Company also has derivatives embedded in non-derivative host contracts that are required to be separated from the host contracts and accounted for at fair value with changes in fair value of embedded derivatives reported in net income. The Company’s primary embedded derivatives are equity options in life and annuity product contracts, which provide returns linked to equity values to contractholders. When derivatives meet specific criteria, they may be designated as accounting hedges and accounted for as fair value, cash flow, foreign currency fair value or foreign currency cash flow hedges. The Company designates certain investment risk transfer reinsurance agreements as fair value hedges when the hedging instrument is highly effective in offsetting the risk of changes in the fair value of the hedged item. The Company designates certain of its foreign currency swap contracts as cash flow hedges when the hedging instrument is highly effective in offsetting the exposure of variations in cash flows for the hedged risk that could affect net income. Amounts are reclassified to net investment income or realized capital gains and losses as the hedged item affects net income. The notional amounts specified in the contracts are used to calculate the exchange of contractual payments under the agreements and are generally not representative of the potential for gain or loss on these agreements. However, the notional amounts specified in credit default swaps where the Company has sold credit protection represent the maximum amount of potential loss, assuming no recoveries. Fair value, which is equal to the carrying value, is the estimated amount that the Company would receive or pay to terminate the derivative contracts at the reporting date. The carrying value amounts for OTC derivatives are further adjusted for the effects, if any, of enforceable master netting agreements and are presented on a net basis, by counterparty agreement, in the Condensed Consolidated Statements of Financial Position. 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 AOCI and are reported in net income in the same period the forecasted transactions being hedged impact net income. Non-hedge accounting is generally used for “portfolio” level hedging strategies where the terms of the individual hedged items do not meet the strict homogeneity requirements to permit the application of hedge accounting. For non-hedge derivatives, net income includes changes in fair value and accrued periodic settlements, when applicable. With the exception of non-hedge derivatives used for asset replication and non-hedge embedded derivatives, all of the Company’s derivatives are evaluated for their ongoing effectiveness as either accounting hedge or non-hedge derivative financial instruments on at least a quarterly basis. Summary of the volume and fair value positions of derivative instruments as of June 30, 2018 ($ 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 $ 13 n/a $ — $ — $ — Financial options Other investments — 718 — — — Equity and index contracts Options Other investments — 54,180 98 98 — Financial futures Other assets — 1,130 — — — Total return index contracts Total return swap agreements – fixed income Other investments 44 n/a — — — Total return swap agreements – equity index Other investments 147 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other investments 81 n/a — 1 (1 ) Credit default contracts Credit default swaps – buying protection Other investments 102 n/a (1 ) — (1 ) Credit default swaps – selling protection Other investments 250 n/a 4 4 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 640 56,028 $ 102 $ 104 $ (2 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 28 n/a $ 1 $ 1 $ — Financial options Other liabilities & accrued expenses — 7,022 — — — Equity and index contracts Options and futures Other liabilities & accrued expenses 1,032 54,447 (19 ) 16 (35 ) Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses 7 n/a — — — Total return swap agreements – equity index Other liabilities & accrued expenses 22 n/a — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 384 n/a 3 5 (2 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 205 n/a (19 ) — (19 ) Guaranteed withdrawal benefits Contractholder funds 252 n/a (10 ) — (10 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,774 n/a (231 ) — (231 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 331 n/a (6 ) 1 (7 ) Credit default swaps – selling protection Other liabilities & accrued expenses 15 n/a — — — Total liability derivatives 4,050 61,469 (281 ) $ 23 $ (304 ) Total derivatives $ 4,690 117,497 $ (179 ) (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) Summary of the volume and fair value positions of derivative instruments as of December 31, 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 $ 15 n/a $ — $ — $ — Equity and index contracts Options Other investments — 6,316 125 125 — Financial futures Other assets — 289 — — — Foreign currency contracts Foreign currency forwards Other investments 52 n/a 1 1 — Credit default contracts Credit default swaps – buying protection Other investments 105 n/a (1 ) — (1 ) Credit default swaps – selling protection Other investments 80 n/a 1 1 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 255 6,605 $ 126 $ 127 $ (1 ) Liability derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other liabilities & accrued expenses $ 19 n/a $ 2 $ 2 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses 30 n/a 1 1 — Equity and index contracts Options and futures Other liabilities & accrued expenses — 7,128 (58 ) — (58 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 650 n/a (17 ) 3 (20 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 225 n/a (22 ) — (22 ) Guaranteed withdrawal benefits Contractholder funds 274 n/a (12 ) — (12 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,774 n/a (252 ) — (252 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 136 n/a (5 ) — (5 ) Credit default swaps – selling protection Other liabilities & accrued expenses 25 n/a — — — Subtotal 3,114 7,128 (365 ) 4 (369 ) Total liability derivatives 3,133 7,128 (363 ) $ 6 $ (369 ) Total derivatives $ 3,388 13,733 $ (237 ) (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) Gross and net amounts for OTC derivatives (1) ($ 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, 2018 Asset derivatives $ 25 $ (25 ) $ 2 $ 2 $ — $ 2 Liability derivatives (11 ) 25 (23 ) (9 ) — (9 ) December 31, 2017 Asset derivatives $ 8 $ (7 ) $ 1 $ 2 $ — $ 2 Liability derivatives (26 ) 7 7 (12 ) 3 (9 ) (1) All OTC derivatives are subject to enforceable master netting agreements. Summary of the impacts of the foreign currency contracts in cash flow hedging relationships ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Gain (loss) recognized in OCI on derivatives during the period $ 1 $ — $ 1 $ (2 ) Loss recognized in OCI on derivatives during the term of the hedging relationship (3 ) (1 ) (3 ) (1 ) Gain reclassified from AOCI into income (net investment income) — 1 — 1 Gain reclassified from AOCI into income (realized capital gains and losses) 3 — 3 — Amortization of net gains from AOCI related to cash flow hedges is expected to be a gain of less than $1 million during the next twelve months. There was no hedge ineffectiveness reported in realized gains and losses for the three months and six months ended June 30, 2018 or 2017 . Gains and losses from valuation and settlements reported on derivatives not designated as accounting hedges ($ in millions) Realized capital gains and losses Life 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, 2018 Interest rate contracts $ 1 $ — $ — $ — $ 1 Equity and index contracts (1 ) — 10 6 15 Embedded derivative financial instruments — 1 1 — 2 Foreign currency contracts 19 — — (2 ) 17 Total return swaps 1 — — — 1 Total $ 20 $ 1 $ 11 $ 4 $ 36 Six months ended June 30, 2018 Interest rate contracts $ 1 $ — $ — $ — $ 1 Equity and index contracts (3 ) — 6 3 6 Embedded derivative financial instruments — 5 21 — 26 Foreign currency contracts 12 — — (1 ) 11 Total return swaps 1 — — — 1 Credit default contracts 1 — — — 1 Total $ 12 $ 5 $ 27 $ 2 $ 46 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 For the three months and six months ended June 30, 2018 and 2017 , the Company had no derivatives used in fair value hedging relationships. 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, 2018 , counterparties pledged $24 million in collateral to the Company, and the Company pledged $3 million in collateral to counterparties which includes $1 million of collateral posted under MNAs for contracts containing credit-risk-contingent provisions that are in a liability position and $2 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. For certain exchange traded and cleared derivatives, margin deposits are required as well as daily cash settlements of margin accounts. As of June 30, 2018 , the counterparties pledged $1 million in collateral to the Company, and the Company pledged $16 million in the form of margin deposits. OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) June 30, 2018 December 31, 2017 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- — $ — $ — $ — 1 $ 18 $ 1 $ — A+ — — — — 3 90 3 1 A- 2 34 2 — — — — — BBB+ 2 1,718 14 1 — — — — BBB 1 10 — — — — — — Total 5 $ 1,762 $ 16 $ 1 4 $ 108 $ 4 $ 1 (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, 2018 December 31, 2017 Gross liability fair value of contracts containing credit-risk-contingent features $ 10 $ 28 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (9 ) (17 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features (1 ) (6 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 5 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. 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, 2018 Single name Corporate debt $ — $ — $ 10 $ 5 $ 15 $ — Index Corporate debt 4 44 176 26 250 4 Total $ 4 $ 44 $ 186 $ 31 $ 265 $ 4 December 31, 2017 Single name Corporate debt $ — $ 10 $ 10 $ 5 $ 25 $ — Index Corporate debt 1 19 45 15 80 1 Total $ 1 $ 29 $ 55 $ 20 $ 105 $ 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 and Liabil
Reserve for Property and Liability Insurance Claims and Claims Expense | 6 Months Ended |
Jun. 30, 2018 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Reserve for Property and Liability Insurance Claims and Claims Expense | Note 8 Reserve for Property and Casualty 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 and casualty 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 and casualty 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. Allstate’s reserves for asbestos claims were $856 million and $884 million , net of reinsurance recoverables of $392 million and $412 million , as of June 30, 2018 and December 31, 2017 , respectively. Reserves for environmental claims were $159 million and $166 million , net of reinsurance recoverables of $36 million and $33 million , as of June 30, 2018 and December 31, 2017 , respectively. Rollforward of the reserve for property and casualty insurance claims and claims expense Six months ended June 30, ($ in millions) 2018 2017 Balance as of January 1 $ 26,325 $ 25,250 Less reinsurance recoverables (6,471 ) (6,184 ) Net balance as of January 1 19,854 19,066 SquareTrade acquisition as of January 3, 2017 — 17 Incurred claims and claims expense related to: Current year 11,089 11,291 Prior years (148 ) (186 ) Total incurred 10,941 11,105 Claims and claims expense paid related to: Current year (5,870 ) (6,060 ) Prior years (4,809 ) (4,450 ) Total paid (10,679 ) (10,510 ) Net balance as of June 30 20,116 19,678 Plus reinsurance recoverables 6,507 6,206 Balance as of June 30 $ 26,623 $ 25,884 Incurred claims and claims expense represents the sum of paid losses and reserve changes in the period. This expense includes losses from catastrophes of $1.27 billion and $1.75 billion in the six months ended June 30, 2018 and 2017 , respectively, net of reinsurance and other recoveries. Catastrophes are an inherent risk of the property and casualty 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, 2018 , incurred claims and claims expense included $148 million of prior year reserve reestimates, increasing net income, including f avorable prior year reserve reestimates excluding catastrophes of $192 million and $44 million of unfavorable prior year reserve reestimates related to catastrophes. Favorable prior year reserve reestimates excluding catastrophes is comprised of net decreases in auto reserves of $225 million , due to continued favorable personal lines auto injury coverage development and better than anticipated salvage and subrogation recoveries , offset by net increases in all other reserves of $33 million , primarily related to commercial lines. Unfavorable catastrophe loss reestimates of $44 million , net of reinsurance and other recoveries, include $78 million of unfavorable reestimates related to ho meowners, including $37 million for anticipated Texas Windstorm Insurance Association (“TWIA”) assessments related to Hurricane Harvey (see Note 12), and $34 million of favorable reestimates, primarily related to auto. |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Note 9 Reinsurance Effects of reinsurance ceded on property and casualty premiums earned and life premiums and contract charges ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Property and casualty insurance premiums earned $ (257 ) $ (254 ) $ (496 ) $ (500 ) Life premiums and contract charges (73 ) (75 ) (145 ) (150 ) Effects of reinsurance ceded on property and casualty insurance claims and claims expense, life contract benefits and interest credited to contractholder funds ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Property and casualty insurance claims and claims expense $ (138 ) $ (124 ) $ (325 ) $ (255 ) Life contract benefits (66 ) (70 ) (115 ) (117 ) Interest credited to contractholder funds (7 ) (6 ) (11 ) (11 ) |
Capital Structure
Capital Structure | 6 Months Ended |
Jun. 30, 2018 | |
Capital Structure | |
Capital Structure | Note 10 Capital Structure Debt On March 29, 2018, the Company issued $250 million of Floating Rate Senior Notes due 2021 (“2021 Senior Notes”) and $250 million of Floating Rate Senior Notes due 2023 (“2023 Senior Notes” and, together with the 2021 Senior Notes, the “Senior Notes”). The 2021 Senior Notes bear interest at a floating rate equal to three month LIBOR, reset quarterly on each interest reset date, plus 0.43% per year and the 2023 Senior Notes bear interest at a floating rate equal to three month LIBOR, reset quarterly on each interest reset date, plus 0.63% per year. The Company will pay interest on the Senior Notes quarterly in arrears on March 29, June 29, September 29 and December 29 of each year, beginning on June 29, 2018. The 2021 Senior Notes will mature on March 29, 2021, and the 2023 Senior Notes will mature on March 29, 2023. The Senior Notes will not be redeemable prior to the applicable maturity dates. Preferred stock On March 29, 2018, the Company issued 23,000 shares of 5.625% Fixed Rate Noncumulative Perpetual Preferred Stock, Series G, with a $1.00 par value per share and a liquidation preference of $25,000 per share, for gross proceeds of $575 million . The preferred stock is perpetual and has no maturity date. The preferred stock is redeemable at the Company’s option in whole or in part, on or after April 15, 2023 at a redemption price of $25,000 per share, plus declared and unpaid dividends. Prior to April 15, 2023, the preferred stock is redeemable at the Company’s option, in whole but not in part, within 90 days of the occurrence of certain rating agency events at a redemption price equal to $25,000 per share, plus declared and unpaid dividends. The proceeds of Senior Notes and Preferred Stock issuances will be used for general corporate purposes, including the redemption, repayment or repurchase of certain preferred stock or debt. On April 30, 2018, the Company filed a universal shelf registration statement with the Securities and Exchange Commission that expires in 2021. The registration statement covers an unspecified amount of securities and can be used to issue debt securities, common stock, preferred stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries. Redemption and repayment of debentures On May 13, 2018, the Company redeemed its $224 million Series B 6.125% Fixed-to-Floating Rate Junior Subordinated Debentures at a redemption price equal to 100% of the outstanding principal. On May 15, 2018, the Company repaid $176 million of 6.75% Senior Debentures at maturity. The repayment was equal to 100% of the outstanding principal. |
Company Restructuring
Company Restructuring | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Company Restructuring | Note 11 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 severance 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 and settlements 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 $27 million and $53 million during the three months ended June 30, 2018 and 2017 , respectively, and $49 million and $63 million during the six months ended June 30, 2018 and 2017 , respectively. Restructuring expenses in 2018 primarily related to realignment of certain employees to centralized talent centers as well as legal expenses and settlements. Restructuring activity during the period ($ in millions) Employee costs Exit costs Total liability Restructuring liability as of December 31, 2017 $ 15 $ 30 $ 45 Expense incurred 31 18 49 Adjustments to liability 1 (1 ) — Payments and non-cash pension settlements (6 ) (21 ) (27 ) Restructuring liability as of June 30, 2018 $ 41 $ 26 $ 67 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, 2018 , the cumulative amount incurred to date for active programs totaled $130 million for employee costs and $109 million for exit costs. |
Guarantees and Contingent Liabi
Guarantees and Contingent Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Guarantees and Contingent Liabilities | |
Guarantees and Contingent Liabilities | Note 12 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. Texas Windstorm Insurance Association The Company participates as a member of TWIA, which provides wind and hail property coverage to coastal risks unable to procure coverage in the voluntary market. Wind and hail coverage is written on a TWIA-issued policy. TWIA follows a funding structure first utilizing currently available funds set aside from current and prior years. Under the current law, to the extent losses exceed premiums received from policyholders, TWIA utilizes a combination of reinsurance, TWIA issued securities, as well as member and policyholder assessments to fund loss payments. On May 8, 2018, the TWIA Board announced an assessment related to Hurricane Harvey. As a result, the Company accrued $37 million for anticipated assessments. These costs are recorded in property and casualty insurance claims and claims expense as catastrophe losses on the Condensed Consolidated Statements of Operations. Any assessments from TWIA for a particular quarter or annual period may be material to the results of operations and cash flows, but not the financial position of the Company. Guarantees Related to the sale of Lincoln Benefit Life Company 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 its 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, 2018 . 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, impose additional regulations regarding cybersecurity and privacy, and otherwise expand overall regulation of insurance products and the insurance industry. In addition, the Company is subject to laws and regulations administered and enforced by federal agencies, international agencies, and other organizations, including but not limited to the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority, 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 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 $145 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 T he case of Jack Jimenez, et al. v. Allstate Insurance Company was filed in the U.S. District Court for the Central District of California in September 2010. Plaintiffs allege off-the-clock wage and hour claims and other California Labor Code violations resulting from purported unpaid overtime. Plaintiffs seek recovery of unpaid compensation, liquidated damages, penalties, and attorneys’ fees and costs. 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’s appeals to the Ninth Circuit Court of Appeals and then to the U.S. Supreme Court did not result in decertification. No trial date is calendared. 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 in April 2011. Plaintiffs alleged that no-fault claim adjusters have been improperly classified as exempt employees under the New York Labor Law and the Fair Labor Standards Act. Plaintiffs sought 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 the New York Labor Law and refused to decertify a Fair Labor Standards Act class of no-fault adjusters. The parties entered into a settlement agreement in May 2018 which is pending final approval by the court. The Company is managing various disputes challenging the method in which it has applied deductibles relating to claims for personal injury protection benefits under Florida auto policies. These disputes include a putative class action and litigation involving individual plaintiffs. Gail Pierce, et al. v. Allstate Insurance Company is a putative class action filed in August 2013 in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida. It is brought on behalf of all insureds and their health care provider assignees who submitted claims for personal injury protection under auto policies in effect from March 2008. In the policies at issue, the Company applied the personal injury protection deductible to health care provider charges after the Company reduced those charges for reasonableness. In Pierce and the individual matters, plaintiffs seek determinations that the Company must apply the personal injury protection deductible to the full amount charged by the providers. In addition to the difference in policy benefits that may result from applying the deductible to the full amount charged, plaintiffs also seek recovery of attorneys’ fees and costs pursuant to Florida statutes. The question concerning how the personal injury protection deductible is to be applied under Florida law is currently pending before the Florida Supreme Court in a matter involving another insurer, Progressive v. Florida Hospital . Progressive appealed from a Fifth District Court of Appeals decision in favor of the health providers. Another appellate district subsequently ruled in favor of insurers in three separate appeals. The Florida Supreme Court indicated that it will decide the issues in Progressive without oral argument. 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. The consolidated proceeding includes three separate cases filed in August 2001, December 2001, and December 2003. The court opted to resolve these proceedings in 4 phases. Phases 1, 2 and 3 are complete although the Company awaits final disposition in Phase 1. On January 30, 2018, the court decided two summary judgment motions filed by Allstate with respect to the Phase 4 claims. The court (i) granted summary judgment in Allstate’s favor on the claims by twenty-seven Phase 4 plaintiffs alleging that Allstate improperly retaliated against them by filing counterclaims to their original complaint; and (ii) declined to decide whether the remaining Phase 4 plaintiffs’ age discrimination (disparate treatment) claims should be dismissed due to their failure to exhaust administrative remedies. In May 2018, the court ruled on two additional Phase 4 summary judgment motions filed by Allstate. The court denied Allstate’s motion for summary judgment on several of the remaining plaintiffs’ state law claims, ruling that those claims are not barred by the statute of limitations. The court denied without prejudice Allstate’s renewed motion for summary judgment on the remaining plaintiffs’ age discrimination (disparate treatment) claims, ruling that Allstate could renew its motion when the trial court addresses those individual claims. Allstate continues to reach agreements to settle the claims of individual plaintiffs. As a result of these settlements, plus several voluntary and involuntary dismissals of individual plaintiffs’ claims, there are fewer than 20 individual plaintiffs with claims remaining in the litigation. The court has yet to decide the proper venue for trial, if necessary, of the remaining plaintiffs’ individual claims, but has stated that any trial in the Eastern District of Pennsylvania would take place in December 2018. 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. The three shareholder derivative actions described below are disclosed pursuant to SEC disclosure requirements for these types of matters, and the putative class action has been disclosed because these matters involve similar allegations. In Biefeldt v. Wilson, et al. , a plaintiff alleging to be a stockholder in the Company filed a shareholder derivative complaint in the Circuit Court for Cook County, Illinois, Chancery Division on August 3, 2017. The plaintiff seeks, on behalf of the Company, an unspecified amount of damages and various forms of equitable relief. The complaint alleges breaches of fiduciary duty based on allegations similar to those asserted in In re The Allstate Corp. Securities Litigation . The complaint names as defendants the Company’s chairman, president and chief executive officer, its former president, its former chief financial officer, who is now the Company’s vice chairman, and the members of the board of directors during the relevant period. The defendants’ motion to dismiss the complaint was heard on May 8, 2018. On June 29, 2018, the court granted the motion to dismiss. On July 26, 2018, the court consolidated this matter with the IBEW Local No. 98 Pension Fund matter described below. The court granted the consolidated plaintiffs leave to file a consolidated complaint by August 10, 2018. Defendants must answer or respond to the consolidated complaint by September 24, 2018. In IBEW Local No. 98 Pension Fund v. Wilson, et al. , another plaintiff alleging to be a stockholder in the Company filed a shareholder derivative complaint in the Circuit Court for Cook County, Illinois, Chancery Division on April 12, 2018. The plaintiff seeks, on behalf of the Company, an unspecified amount of damages and various forms of equitable relief. The complaint alleges breaches of fiduciary duty based on allegations similar to those asserted in In re The Allstate Corp. Securities Litigation . The complaint also includes allegations concerning the exercise of stock options by the Company’s chairman, president and chief executive officer and several other members of our board of directors during the relevant period. The complaint names as defendants the Company’s chairman, president and chief executive officer, its former president and the members of the board of directors during the relevant period. On May 17, 2018, the court transferred this case to the same judge handling the Biefeldt v. Wilson, et al. lawsuit. On July 26, 2018, the court consolidated this matter with the Biefeldt matter described above. The court granted the consolidated plaintiffs leave to file a consolidated complaint by August 10, 2018. Defendants must answer or respond to the consolidated complaint by September 24, 2018. In Sundquist v. Wilson, et al ., another plaintiff alleging to be a stockholder in the Company filed a shareholder derivative complaint in federal court in the Northern District of Illinois on May 21, 2018. The plaintiff seeks, on behalf of the Company, an unspecified amount of damages and various forms of equitable relief. The complaint alleges breaches of fiduciary duty based on allegations similar to those asserted in In re The Allstate Corp. Securities Litigation . The complaint also asserts state law “misappropriation” claims based on stock option transactions by the Company’s chairman, president and chief executive officer, its former chief financial officer, who is now the Company’s vice chairman, and members of the board of directors. The complaint names as defendants the Company’s chairman, president and chief executive officer, its former president, its former chief financial officer, who is now the Company’s vice chairman, and the members of the board of directors during the relevant period. Defendants must answer or respond to the complaint by August 7, 2018. In re The Allstate Corp. Securities Litigation is a putative class action filed in November 2016 in the United States District Court for the Northern District of Illinois against the Company and several of its officers asserting claims under the federal securities laws. Plaintiffs seek an unspecified amount of damages, costs, attorney’s fees, and such other relief as the court deems appropriate. Plaintiffs allege that the Company and certain senior officers made allegedly material misstatements or omissions concerning claim frequency statistics and the reasons for a claim frequency increase for Allstate brand auto insurance. Plaintiffs’ further allege that a senior officer engaged in stock option exercises and sales during that time allegedly while in possession of nonpublic information about claim frequency. The Company, its chairman, president and chief executive officer, and its former president are the named defendants. Defendants answered the complaint, disputing plaintiffs’ allegations that there was any misstatement or omission or other misconduct, after the court denied their motion to dismiss on February 27, 2018. |
Benefit Plans
Benefit Plans | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Note 13 Benefit Plans Components of net periodic cost included in operating costs and expenses Three months ended June 30, Six months ended June 30, ($ in millions) 2018 2017 2018 2017 Pension benefits Service cost $ 28 $ 28 $ 56 $ 57 Interest cost 61 66 121 132 Expected return on plan assets (106 ) (102 ) (211 ) (204 ) Amortization of: Prior service credit (14 ) (14 ) (28 ) (28 ) Net actuarial loss 45 47 89 94 Settlement loss 7 8 14 16 Net periodic pension cost $ 21 $ 33 $ 41 $ 67 Postretirement benefits Service cost $ 2 $ 2 $ 4 $ 4 Interest cost 4 3 7 7 Amortization of: Prior service credit (6 ) (6 ) (11 ) (12 ) Net actuarial gain (5 ) (6 ) (11 ) (12 ) Net periodic postretirement credit $ (5 ) $ (7 ) $ (11 ) $ (13 ) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 14 Supplemental Cash Flow Information Non-cash investing activities include $41 million and $9 million related to mergers and exchanges completed with equity securities, fixed income securities and limited partnerships, and modifications of certain mortgage loans for the six months ended June 30, 2018 and 2017 , respectively. Non-cash financing activities include $30 million and $42 million related to the issuance of Allstate common shares for vested equity awards for the six months ended June 30, 2018 and 2017 , respectively. Liabilities for collateral received in conjunction with the Company’s securities lending program and over-the-counter and cleared derivatives are reported in other liabilities and accrued expenses or other investments. The accompanying cash flows are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows along with the activities resulting from management of the proceeds, which are as follows: ($ in millions) Six months ended June 30, 2018 2017 Net change in proceeds managed Net change in fixed income securities $ 122 $ 10 Net change in short-term investments (663 ) (7 ) Operating cash flow (used) provided $ (541 ) $ 3 Net change in liabilities Liabilities for collateral, beginning of period $ (1,124 ) $ (1,129 ) Liabilities for collateral, end of period (1,665 ) (1,126 ) Operating cash flow provided (used) $ 541 $ (3 ) |
Other Comprehensive Income
Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other Comprehensive Income | Note 15 Other Comprehensive Income Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended June 30, 2018 2017 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (249 ) $ 53 $ (196 ) $ 479 $ (167 ) $ 312 Less: reclassification adjustment of realized capital gains and losses (80 ) 17 (63 ) 64 (22 ) 42 Unrealized net capital gains and losses (169 ) 36 (133 ) 415 (145 ) 270 Unrealized foreign currency translation adjustments (9 ) 2 (7 ) 17 (6 ) 11 Unrecognized pension and other postretirement benefit cost arising during the period 1 — 1 (3 ) 2 (1 ) Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (27 ) 6 (21 ) (29 ) 10 (19 ) Unrecognized pension and other postretirement benefit cost 28 (6 ) 22 26 (8 ) 18 Other comprehensive (loss) income $ (150 ) $ 32 $ (118 ) $ 458 $ (159 ) $ 299 Six months ended June 30, 2018 2017 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (990 ) $ 208 $ (782 ) $ 901 $ (315 ) $ 586 Less: reclassification adjustment of realized capital gains and losses (106 ) 22 (84 ) 174 (61 ) 113 Unrealized net capital gains and losses (884 ) 186 (698 ) 727 (254 ) 473 Unrealized foreign currency translation adjustments (14 ) 3 (11 ) 12 (4 ) 8 Unrecognized pension and other postretirement benefit cost arising during the period 4 (1 ) 3 (3 ) 2 (1 ) Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (53 ) 11 (42 ) (58 ) 20 (38 ) Unrecognized pension and other postretirement benefit cost 57 (12 ) 45 55 (18 ) 37 Other comprehensive (loss) income $ (841 ) $ 177 $ (664 ) $ 794 $ (276 ) $ 518 |
General (Policies)
General (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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 and casualty insurance company with various property and casualty 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, 2018 and for the three month and six month periods ended June 30, 2018 and 2017 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, 2017 . 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 Recognition and Measurement of Financial Assets and Financial Liabilities Effective January 1, 2018, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance requiring equity investments, including equity securities and limited partnership interests not accounted for under the equity method of accounting or that do not result in consolidation to be measured at fair value with changes in fair value recognized in net income. The guidance clarifies that an entity should evaluate the realizability of deferred tax assets related to available-for-sale fixed income securities in combination with the entity’s other deferred tax assets. The Company’s adoption of the new FASB guidance included adoption of the relevant elements of Technical Corrections and Improvements to Financial Instruments, issued in February 2018. Upon adoption of the new guidance on January 1, 2018, $1.16 billion of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. The after-tax change in accounting for equity securities did not affect the Company’s total shareholders’ equity and the unrealized net capital gains of $910 million , reclassified to retained income will never be recognized in net income. Upon adoption of the new guidance on January 1, 2018, the carrying value of cost method limited partnership interests increased $224 million , pre-tax, to fair value. The after-tax cumulative-effect increase in retained income of $177 million increased the Company’s shareholders’ equity but will never be recognized in net income thereby negatively impacting calculations of returns on equity. Revenue from Contracts with Customers Effective January 1, 2018, the Company adopted new FASB guidance which revises the criteria for revenue recognition. Insurance contracts are excluded from the scope of the new guidance. The Company’s principal activities impacted by the new guidance are those related to the issuance of protection plans for consumer products and automobiles and service contracts that provide roadside assistance. Under the guidance, the transaction price is attributed to underlying performance obligations in the contract and revenue is recognized as the entity satisfies 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. Adoption of the guidance on January 1, 2018 under the modified retrospective approach resulted in the recognition of an immaterial after-tax net cumulative effect increase to the beginning balance of retained income. In addition to the net cumulative effect, the Company also recorded in the statement of financial position an increase of approximately $160 million pre-tax in unearned premiums with a corresponding $160 million pre-tax increase in DAC for protection plans sold directly to retailers for which SquareTrade Holding Company, Inc. (“SquareTrade”) is deemed to be the principal in the transaction. This impact offsets fully and did not impact retained income at the date of adoption. Presentation of Net Periodic Pension and Postretirement Benefits Costs Effective January 1, 2018, the Company adopted new FASB guidance requiring identification, 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 adoption had no impact on the Company’s results of operations or financial position. 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 to be applied on a prospective basis, with the effects, if any, recognized in net income in the period of adoption. The Company elected to early adopt the new guidance as of January 1, 2018. The adoption had no impact on the Company’s results of operations or financial position. Changes to significant accounting policies Investments Changes were made to the Company’s Significant Accounting Policies upon adoption of new FASB guidance related to the recognition and measurement of financial assets. Equity securities primarily include common stocks, exchange traded and mutual funds, non-redeemable preferred stocks and real estate investment trust equity investments. Equity securities are carried at fair value. Equity securities without readily determinable or estimable fair values are measured using the measurement alternative which is cost less impairment, if any, and adjustments resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The periodic change in fair value of equity securities is recognized within realized capital gains and losses on the Condensed Consolidated Statements of Operations effective January 1, 2018. Investments in limited partnership interests include interests in private equity funds, real estate funds and other funds. Where the Company’s interest is so minor that it exercises virtually no influence over operating and financial policies, investments in limited partnership interests purchased prior to January 1, 2018 are accounted for at fair value primarily utilizing the net asset value as a practical expedient (“NAV”) to determine fair value. All other investments in limited partnership interests, including those purchased subsequent to January 1, 2018, are accounted for in accordance with the equity method of accounting (“EMA”). Investment income from limited partnership interests carried at fair value is recognized based upon the changes in fair value of the investee’s equity primarily determined using NAV. Income from EMA limited partnership interests is recognized based on the Company’s share of the partnerships’ earnings. Income from EMA limited partnership interests is generally recognized on a three month delay due to the availability of the related financial statements. Recognition of Revenue Revenues related to protection plans, other contracts (primarily finance and insurance products) and roadside assistance are deferred and earned over the term of the contract in a manner that recognizes revenue as obligations under the contracts are performed. Revenues from these products are classified as premiums as the products are backed by insurance. Protection plans and finance and insurance premiums are recognized using a cost-based incurrence method. Roadside assistance premiums are recognized evenly over the term of the contract as performance obligations are fulfilled . Tax Reform On December 22, 2017, Public Law 115-97, known as the Tax Cuts and Jobs Act of 2017 (“Tax Legislation”) became effective, permanently reducing the U.S. corporate income tax rate from 35% to 21% beginning January 1, 2018. As a result, the corporate tax rate is not comparable between periods. During 2017, the Company revalued its deferred tax assets and liabilities and recorded liabilities related to the transition to the modified territorial system for international taxation. The impact of the Tax Legislation may differ from the Company’s preliminary estimates due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued and actions the Company may take as a result of the Tax Legislation. During the period ended June 30, 2018, the Company has not recorded any material adjustments to these provisional amounts. The Company continues to refine the analysis and calculations, which could impact the provisional estimates previously recorded. Accordingly, as of June 30, 2018, the Company has not fully completed the accounting for the Tax Legislation. Pending accounting standards Accounting for Leases In February 2016, the FASB issued guidance revising the accounting for leases. Under the new guidance, lessees will be required to recognize a right-of-use (“ROU”) asset and lease liability for all leases other than those that are less than one year. The lease liability will be equal to the present value of lease payments. A ROU asset will be based on the lease liability adjusted for qualifying initial direct costs. The Company currently estimates that the recognition of the ROU asset and lease liability will result in an increase in both total assets and liabilities in the Condensed Consolidated Statement of Financial Position of approximately $500 million . The new guidance requires sellers in a sale-leaseback transaction to recognize the entire gain from the sale of an underlying asset at the time the sale is recognized rather than over the leaseback term. The carrying value of unrecognized gains on sale-leaseback transactions prior to January 1, 2019 are approximately $20 million , after-tax, and will be recorded as an increase to retained income. The expense of operating leases under the new guidance will be recognized in the income statement on a straight-line basis by adjusting the amortization of the ROU asset to produce a straight-line expense when combined with the interest expense on the lease liability. 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 ROU asset is amortized on a straight-line basis. 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, and will be implemented using the optional transition method that allows application of the transition provisions at the adoption date instead of the earliest date presented. 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 relevant information available 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 reporting 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. Accounting for Hedging Activities In August 2017, the FASB issued amendments intended to better align hedge accounting with an organization’s risk management activities. The amendments expand hedge accounting for nonfinancial and financial risk components and revise the measurement methodologies to better align with an organization’s risk management activities. Separate presentation of hedge ineffectiveness is eliminated to provide greater transparency of the full impact of hedging by requiring presentation of the results of the hedged item and hedging instrument in a single financial statement line item. In addition, the amendments reduce complexity by simplifying the manner in which assessments of hedge effectiveness may be performed. The guidance is effective for reporting periods beginning after December 15, 2018. The presentation and disclosure guidance is effective on a prospective basis. The impact of adoption is not expected to be material to the Company’s results of operations or financial position. Other revenue presentation Concurrent with the adoption of new FASB guidance on revenue from contracts with customers and the Company’s objective of providing more information related to revenues for our Service Businesses, the Company revised the presentation of total revenue to include other revenue. Previously, components of other revenue were presented within operating costs and expenses and primarily represent fees collected from policyholders relating to premium installment payments, commissions on sales of non-proprietary products, fee-based services and other revenue transactions. Other revenue is recognized when performance obligations are fulfilled. Prior periods have been reclassified to conform to current separate presentation of other revenue. |
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, 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 that are readily determinable 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, total return 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, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment. Level 3 measurements • Fixed income securities: Municipal: Comprise municipal bonds that are not rated by third party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable 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. EMA limited partnership interests written-down to fair value in connection with recognizing OTTI losses are generally valued using net asset values. Investments excluded from the fair value hierarchy Limited partnerships carried at fair value , which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold withou t approval of the general partner. We receive distributions of income and from liquidation of the underlying assets of the investees over the life of these investments, typically 10 - 12 years. As of June 30, 2018 , the Company has commitments to invest $866 million in these limited partnership interests. |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per common share | Computation of basic and diluted earnings per common share ($ in millions, except per share data) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Numerator: Net income $ 676 $ 579 $ 1,651 $ 1,274 Less: Preferred stock dividends 39 29 68 58 Net income applicable to common shareholders (1) $ 637 $ 550 $ 1,583 $ 1,216 Denominator: Weighted average common shares outstanding 349.2 363.6 351.6 364.6 Effect of dilutive potential common shares: Stock options 3.8 4.3 3.9 4.2 Restricted stock units (non-participating) and performance stock awards 1.6 1.1 1.7 1.3 Weighted average common and dilutive potential common shares outstanding 354.6 369.0 357.2 370.1 Earnings per common share - Basic $ 1.82 $ 1.51 $ 4.50 $ 3.34 Earnings per common share - Diluted $ 1.80 $ 1.49 $ 4.43 $ 3.29 (1) Net income applicable to common shareholders is net income less preferred stock dividends. |
Reportable Segments (Tables)
Reportable Segments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of business segments revenue disclosures | Reportable segments revenue information ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Property-Liability Insurance premiums Auto $ 5,705 $ 5,438 $ 11,296 $ 10,826 Homeowners 1,864 1,815 3,712 3,630 Other personal lines 455 436 899 867 Commercial lines 165 118 301 243 Allstate Protection 8,189 7,807 16,208 15,566 Discontinued Lines and Coverages — — — — Total property-liability insurance premiums 8,189 7,807 16,208 15,566 Other revenue 184 181 358 348 Net investment income 353 387 690 695 Realized capital gains and losses (15 ) 85 (110 ) 220 Total Property-Liability 8,711 8,460 17,146 16,829 Service Businesses Consumer product protection plans 121 70 244 129 Roadside assistance 68 67 132 135 Finance and insurance products 82 74 162 147 Intersegment premiums and service fees (1) 29 28 58 56 Other revenue 16 17 32 33 Net investment income 6 4 11 7 Realized capital gains and losses (2 ) — (6 ) — Total Service Businesses 320 260 633 507 Allstate Life Traditional life insurance premiums 148 139 294 279 Accident and health insurance premiums 1 1 1 1 Interest-sensitive life insurance contract charges 177 179 358 360 Other revenue 28 28 54 55 Net investment income 130 123 252 243 Realized capital gains and losses (3 ) 1 (6 ) 2 Total Allstate Life 481 471 953 940 Allstate Benefits Traditional life insurance premiums 10 9 19 18 Accident and health insurance premiums 245 232 493 464 Interest-sensitive life insurance contract charges 28 28 57 56 Net investment income 19 19 38 36 Realized capital gains and losses — — (2 ) — Total Allstate Benefits 302 288 605 574 Allstate Annuities Fixed annuities contract charges 3 3 6 6 Net investment income 293 354 583 643 Realized capital gains and losses 6 (5 ) (23 ) (7 ) Total Allstate Annuities 302 352 566 642 Corporate and Other Net investment income 23 10 36 21 Realized capital gains and losses (11 ) — (12 ) — Total Corporate and Other 12 10 24 21 Intersegment eliminations (1) (29 ) (28 ) (58 ) (56 ) Consolidated revenues $ 10,099 $ 9,813 $ 19,869 $ 19,457 (1) Intersegment insurance premiums and service fees are primarily related to Arity and Allstate Roadside Services and are eliminated in the condensed consolidated financial statements. |
Schedule of business segments net income disclosures | Reportable segments financial performance Three months ended June 30, Six months ended June 30, ($ in millions) 2018 2017 2018 2017 Property-Liability Allstate Protection $ 419 $ 270 $ 1,381 $ 820 Discontinued Lines and Coverages (3 ) (5 ) (6 ) (7 ) Total underwriting income 416 265 1,375 813 Net investment income 353 387 690 695 Income tax expense on operations (157 ) (207 ) (425 ) (475 ) Realized capital gains and losses, after-tax (12 ) 56 (87 ) 145 Gain on disposition of operations, after-tax — 6 — 6 Property-Liability net income applicable to common shareholders 600 507 1,553 1,184 Service Businesses Adjusted net income (loss) 1 (8 ) (4 ) (18 ) Realized capital gains and losses, after-tax (1 ) — (4 ) — Amortization of purchased intangible assets, after-tax (16 ) (15 ) (32 ) (30 ) Service Businesses net loss applicable to common shareholders (16 ) (23 ) (40 ) (48 ) Allstate Life Adjusted net income 78 63 147 122 Realized capital gains and losses, after-tax (2 ) — (4 ) 1 DAC and DSI amortization related to realized capital gains and losses, after-tax (3 ) (3 ) (5 ) (6 ) Allstate Life net income applicable to common shareholders 73 60 138 117 Allstate Benefits Adjusted net income 34 25 62 47 Realized capital gains and losses, after-tax — — (2 ) — Allstate Benefits net income applicable to common shareholders 34 25 60 47 Allstate Annuities Adjusted net income 44 65 79 94 Realized capital gains and losses, after-tax 5 (3 ) (18 ) (5 ) Valuation changes on embedded derivatives not hedged, after-tax — (1 ) 4 (1 ) Gain on disposition of operations, after-tax 1 — 2 2 Allstate Annuities net income applicable to common shareholders 50 61 67 90 Corporate and Other Adjusted net loss (95 ) (80 ) (185 ) (161 ) Realized capital gains and losses, after-tax (9 ) — (10 ) — Business combination expenses, after-tax — — — (13 ) Corporate and Other net loss applicable to common shareholders (104 ) (80 ) (195 ) (174 ) Consolidated net income applicable to common shareholders $ 637 $ 550 $ 1,583 $ 1,216 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments [Abstract] | |
Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value | Amortized cost, gross unrealized gains and losses and fair value for fixed income securities ($ in millions) Amortized cost Gross unrealized Fair value Gains Losses June 30, 2018 U.S. government and agencies $ 3,182 $ 40 $ (16 ) $ 3,206 Municipal 9,454 245 (71 ) 9,628 Corporate 41,584 590 (759 ) 41,415 Foreign government 917 18 (9 ) 926 Asset-backed securities (“ABS”) 1,084 9 (8 ) 1,085 Residential mortgage-backed securities (“RMBS”) 424 98 (2 ) 520 Commercial mortgage-backed securities (“CMBS”) 84 6 (2 ) 88 Redeemable preferred stock 21 2 — 23 Total fixed income securities $ 56,750 $ 1,008 $ (867 ) $ 56,891 December 31, 2017 U.S. government and agencies $ 3,580 $ 56 $ (20 ) $ 3,616 Municipal 8,053 311 (36 ) 8,328 Corporate 42,996 1,234 (204 ) 44,026 Foreign government 1,005 27 (11 ) 1,021 ABS 1,266 13 (7 ) 1,272 RMBS 480 101 (3 ) 578 CMBS 124 6 (2 ) 128 Redeemable preferred stock 21 2 — 23 Total fixed income securities $ 57,525 $ 1,750 $ (283 ) $ 58,992 |
Schedule for fixed income securities based on contractual maturities | Scheduled maturities for fixed income securities ($ in millions) As of June 30, 2018 Amortized cost Fair value Due in one year or less $ 4,289 $ 4,293 Due after one year through five years 28,481 28,384 Due after five years through ten years 15,933 15,673 Due after ten years 6,455 6,848 55,158 55,198 ABS, RMBS and CMBS 1,592 1,693 Total $ 56,750 $ 56,891 |
Schedule of net investment income | Net investment income ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ 509 $ 527 $ 1,017 $ 1,045 Equity securities 61 49 95 93 Mortgage loans 60 50 111 105 Limited partnership interests (1)(2) 173 253 353 373 Short-term investments 19 6 31 12 Other 68 60 134 116 Investment income, before expense 890 945 1,741 1,744 Investment expense (66 ) (48 ) (131 ) (99 ) Net investment income $ 824 $ 897 $ 1,610 $ 1,645 (1) Due to the adoption of the recognition and measurement accounting standard, limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net investment income . (2) Includes net investment income of $143 million and $246 million for EMA limited partnership interests and $30 million and $107 million for limited partnership interests carried at fair value for the three and six months ended June 30, 2018 , respectively. |
Schedule of realized capital gains and losses by asset type | Realized capital gains and losses by asset type ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed income securities $ (80 ) $ 32 $ (123 ) $ 37 Equity securities 74 19 (19 ) 125 Mortgage loans 2 — 2 — Limited partnership interests (43 ) 31 (33 ) 71 Derivatives 23 (8 ) 15 (23 ) Other (1 ) 7 (1 ) 5 Realized capital gains and losses $ (25 ) $ 81 $ (159 ) $ 215 |
Schedule of realized capital gains and losses by transaction type | Realized capital gains and losses by transaction type ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Impairment write-downs (1) $ (4 ) $ (28 ) $ (5 ) $ (71 ) Change in intent write-downs (1) — (22 ) — (38 ) Net OTTI losses recognized in earnings (4 ) (50 ) (5 ) (109 ) Sales (1) (75 ) 139 (117 ) 347 Valuation of equity investments (1) 34 — (49 ) — Valuation and settlements of derivative instruments 20 (8 ) 12 (23 ) Realized capital gains and losses $ (25 ) $ 81 $ (159 ) $ 215 (1) Due to the adoption of the recognition and measurement accounting standard, equity securities are reported at fair value with changes in fair value recognized in valuation of equity investments and are no longer included in impairment write-downs, change in intent write-downs and sales. |
Valuation changes included in net income for investments | Valuation changes included in net income for investments still held as of June 30, 2018 ($ in millions) Three months ended Six months ended Equity securities (1) $ 94 $ 71 Limited partnership interests carried at fair value (1) 28 106 Total valuation changes $ 122 $ 177 (1) Investments held at the end of a prior quarter that were sold in the current quarter are not included in the year-to-date amounts shown in the table above; therefore, the sum of the quarterly amounts may not equal the year-to-date amount. |
Schedule of other-than-temporary impairment losses by asset type | OTTI losses by asset type ($ in millions) Three months ended June 30, 2018 Three months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ (2 ) $ (3 ) ABS (1 ) — (1 ) (1 ) — (1 ) RMBS (1 ) — (1 ) — — — CMBS — — — (2 ) (1 ) (3 ) Total fixed income securities (2 ) — (2 ) (4 ) (3 ) (7 ) Equity securities (1) — — — (32 ) — (32 ) Limited partnership interests (1) (1 ) — (1 ) (9 ) — (9 ) Other (1 ) — (1 ) (2 ) — (2 ) OTTI losses $ (4 ) $ — $ (4 ) $ (47 ) $ (3 ) $ (50 ) Six months ended June 30, 2018 Six months ended June 30, 2017 Gross Included in OCI Net Gross Included in OCI Net Fixed income securities: Municipal $ — $ — $ — $ (1 ) $ (2 ) $ (3 ) Corporate — — — (9 ) 3 (6 ) ABS (1 ) — (1 ) (1 ) — (1 ) RMBS (1 ) — (1 ) (1 ) (3 ) (4 ) CMBS — (1 ) (1 ) (8 ) 2 (6 ) Total fixed income securities (2 ) (1 ) (3 ) (20 ) — (20 ) Equity securities (1) — — — (68 ) — (68 ) Limited partnership interests (1) (1 ) — (1 ) (16 ) — (16 ) Other (1 ) — (1 ) (5 ) — (5 ) OTTI losses $ (4 ) $ (1 ) $ (5 ) $ (109 ) $ — $ (109 ) (1) Due to the adopti on of the recognition and measurement accounting standard, equity securities and limited partnerships previously reported using the cost method are now reported at fair value with changes in fair value recognized in net income and are no longer included in the table above. |
Schedule of other-than-temporary impairment losses on fixed income securities included in Accumulated Other Comprehensive Income | OTTI losses included in AOCI at the time of impairment for fixed income securities ($ in millions) June 30, 2018 December 31, 2017 Municipal $ (5 ) $ (5 ) ABS (12 ) (15 ) RMBS (71 ) (77 ) CMBS (4 ) (4 ) Total $ (92 ) $ (101 ) |
Schedule of credit losses on fixed income securities recognized in earnings | Rollforward of the cumulative credit losses recognized in earnings for fixed income securities held as of June 30, ($ in millions) Three months ended Six months ended June 30, 2018 2017 2018 2017 Beginning balance $ (212 ) $ (294 ) $ (226 ) $ (318 ) Additional credit loss for securities previously other-than-temporarily impaired (1 ) (6 ) (2 ) (13 ) Additional credit loss for securities not previously other-than-temporarily impaired (1 ) (1 ) (1 ) (7 ) Reduction in credit loss for securities disposed or collected 7 19 22 56 Change in credit loss due to accretion of increase in cash flows 1 1 1 1 Ending balance $ (206 ) $ (281 ) $ (206 ) $ (281 ) |
Schedule of unrealized net capital gains and losses | Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) June 30, 2018 Gains Losses Fixed income securities $ 56,891 $ 1,008 $ (867 ) $ 141 Short-term investments 3,123 — — — Derivative instruments — — (3 ) (3 ) EMA limited partnerships (1) 3 Unrealized net capital gains and losses, pre-tax 141 Amounts recognized for: Insurance reserves (2) — DAC and DSI (3) (72 ) Amounts recognized (72 ) Deferred income taxes (15 ) Unrealized net capital gains and losses, after-tax $ 54 (1) 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. (2) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). (3) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. Unrealized net capital gains and losses included in AOCI ($ in millions) Fair value Gross unrealized Unrealized net gains (losses) December 31, 2017 Gains Losses Fixed income securities $ 58,992 $ 1,750 $ (283 ) $ 1,467 Equity securities 6,621 1,172 (12 ) 1,160 Short-term investments 1,944 — — — Derivative instruments (1) 2 2 (3 ) (1 ) EMA limited partnerships 1 Unrealized net capital gains and losses, pre-tax 2,627 Amounts recognized for: Insurance reserves (315 ) DAC and DSI (196 ) Amounts recognized (511 ) Deferred income taxes (454 ) Unrealized net capital gains and losses, after-tax $ 1,662 (1) Included in the fair value of derivative instruments is $2 million classified as liabilities. |
Schedule of change in unrealized net capital gains and losses | Change in unrealized net capital gains and losses ($ in millions) Six months ended June 30, 2018 Fixed income securities $ (1,326 ) Equity securities (1) — Derivative instruments (2 ) EMA limited partnerships 2 Total (1,326 ) Amounts recognized for: Insurance reserves 315 DAC and DSI 124 Amounts recognized 439 Deferred income taxes 189 Decrease in unrealized net capital gains and losses, after-tax $ (698 ) (1) Upon adoption of the recognition and measurement accounting standard on January 1, 2018, $1.16 billion of pre-tax unrealized net capital gains for equity securities were reclassified from AOCI to retained income. See Note 1 of the condensed consolidated financial statements. |
Schedule of gross unrealized losses and fair value of available for sale securities by length of time | Gross unrealized losses and fair value by type and length of time held in a continuous unrealized loss position ($ 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, 2018 Fixed income securities U.S. government and agencies 67 $ 2,022 $ (15 ) 11 $ 55 $ (1 ) $ (16 ) Municipal 2,456 4,039 (57 ) 151 268 (14 ) (71 ) Corporate 1,888 24,450 (603 ) 240 2,878 (156 ) (759 ) Foreign government 15 84 — 27 448 (9 ) (9 ) ABS 76 505 (5 ) 8 13 (3 ) (8 ) RMBS 143 35 (1 ) 181 40 (1 ) (2 ) CMBS 2 11 — 5 10 (2 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 4,648 $ 31,146 $ (681 ) 623 $ 3,712 $ (186 ) $ (867 ) Investment grade fixed income securities 4,218 $ 27,970 $ (573 ) 575 $ 3,537 $ (168 ) $ (741 ) Below investment grade fixed income securities 430 3,176 (108 ) 48 175 (18 ) (126 ) Total fixed income securities 4,648 $ 31,146 $ (681 ) 623 $ 3,712 $ (186 ) $ (867 ) December 31, 2017 Fixed income securities U.S. government and agencies 66 $ 2,829 $ (18 ) 18 $ 182 $ (2 ) $ (20 ) Municipal 1,756 3,143 (24 ) 165 349 (12 ) (36 ) Corporate 781 11,616 (102 ) 208 3,289 (102 ) (204 ) Foreign government 45 580 (10 ) 5 44 (1 ) (11 ) ABS 57 476 (3 ) 9 34 (4 ) (7 ) RMBS 118 35 (1 ) 181 50 (2 ) (3 ) CMBS 2 1 — 6 23 (2 ) (2 ) Redeemable preferred stock 1 — — — — — — Total fixed income securities 2,826 18,680 (158 ) 592 3,971 (125 ) (283 ) Equity securities 127 369 (12 ) 2 — — (12 ) Total fixed income and equity securities 2,953 $ 19,049 $ (170 ) 594 $ 3,971 $ (125 ) $ (295 ) Investment grade fixed income securities 2,706 $ 17,668 $ (134 ) 535 $ 3,751 $ (98 ) $ (232 ) Below investment grade fixed income securities 120 1,012 (24 ) 57 220 (27 ) (51 ) Total fixed income securities 2,826 $ 18,680 $ (158 ) 592 $ 3,971 $ (125 ) $ (283 ) |
Carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution | Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution ($ in millions) June 30, 2018 December 31, 2017 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 $ 3 $ 30 $ 33 $ 3 $ — $ 3 1.0 - 1.25 324 — 324 345 — 345 1.26 - 1.50 1,164 — 1,164 1,141 30 1,171 Above 1.50 2,909 101 3,010 2,949 62 3,011 Total non-impaired mortgage loans $ 4,400 $ 131 $ 4,531 $ 4,438 $ 92 $ 4,530 |
Net carrying value of impaired mortgage loans | Net carrying value of impaired mortgage loans ($ in millions) June 30, 2018 December 31, 2017 Impaired mortgage loans with a valuation allowance $ 4 $ 4 Impaired mortgage loans without a valuation allowance — — Total impaired mortgage loans $ 4 $ 4 Valuation allowance on impaired mortgage loans $ 3 $ 3 |
Schedule of other investments by type | Other investments by asset type ($ in millions) June 30, 2018 December 31, 2017 Bank loans $ 1,702 $ 1,702 Policy loans 894 905 Real estate 769 632 Agent loans 570 538 Other 190 195 Total $ 4,125 $ 3,972 |
Fair Value of Assets and Liab27
Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities that are measured at fair value on a recurring and non-recurring basis | Assets and liabilities measured at fair value As of June 30, 2018 ($ 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 Total Assets Fixed income securities: U.S. government and agencies $ 2,725 $ 481 $ — $ 3,206 Municipal — 9,522 106 9,628 Corporate - public — 30,594 76 30,670 Corporate - privately placed — 10,550 195 10,745 Foreign government — 926 — 926 ABS - CDO — 378 9 387 ABS - consumer and other — 625 73 698 RMBS — 520 — 520 CMBS — 62 26 88 Redeemable preferred stock — 23 — 23 Total fixed income securities 2,725 53,681 485 56,891 Equity securities 6,240 357 291 6,888 Short-term investments 1,276 1,847 — 3,123 Other investments: Free-standing derivatives — 126 1 $ (23 ) 104 Separate account assets 3,271 — — 3,271 Total recurring basis assets 13,512 56,011 777 (23 ) 70,277 Non-recurring basis (1) — — 8 8 Total assets at fair value $ 13,512 $ 56,011 $ 785 $ (23 ) $ 70,285 % of total assets at fair value 19.2 % 79.7 % 1.1 % — % 100 % Investments reported at NAV 1,650 Total $ 71,935 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (260 ) $ (260 ) Other liabilities: Free-standing derivatives — (46 ) — $ 2 (44 ) Total liabilities at fair value $ — $ (46 ) $ (260 ) $ 2 $ (304 ) % of total liabilities at fair value — % 15.1 % 85.5 % (0.6 )% 100 % (1) Includes $2 million of limited partnership interests and $6 million of other assets written-down to fair value in connection with recognizing OTTI losses. Assets and liabilities measured at fair value As of December 31, 2017 ($ 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 Total Assets Fixed income securities: U.S. government and agencies $ 3,079 $ 537 $ — $ 3,616 Municipal — 8,227 101 8,328 Corporate - public — 31,963 108 32,071 Corporate - privately placed — 11,731 224 11,955 Foreign government — 1,021 — 1,021 ABS - CDO — 480 99 579 ABS - consumer and other — 645 48 693 RMBS — 578 — 578 CMBS — 102 26 128 Redeemable preferred stock — 23 — 23 Total fixed income securities 3,079 55,307 606 58,992 Equity securities 6,032 379 210 6,621 Short-term investments 264 1,660 20 1,944 Other investments: Free-standing derivatives — 132 1 $ (6 ) 127 Separate account assets 3,444 — — 3,444 Total recurring basis assets 12,819 57,478 837 (6 ) 71,128 Non-recurring basis (1) — — 3 3 Total assets at fair value $ 12,819 $ 57,478 $ 840 $ (6 ) $ 71,131 % of total assets at fair value 18.0 % 80.8 % 1.2 % — % 100 % Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (286 ) $ (286 ) Other liabilities: Free-standing derivatives (1 ) (83 ) — $ 14 (70 ) Total liabilities at fair value $ (1 ) $ (83 ) $ (286 ) $ 14 $ (356 ) % of total liabilities at fair value 0.3 % 23.3 % 80.3 % (3.9 )% 100 % (1) Includes $3 million of limited partnership interests written-down to fair value in connection with recognizing OTTI losses. |
Summary of quantitative information about the significant unobservable inputs | Quantitative information about the significant unobservable inputs used in Level 3 fair value measurements ($ in millions) Fair value Valuation technique Unobservable input Range Weighted average June 30, 2018 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (231 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% December 31, 2017 Derivatives embedded in life and annuity contracts – Equity-indexed and forward starting options $ (252 ) Stochastic cash flow model Projected option cost 1.0 - 2.2% 1.74% |
Schedule of the rollforward of Level 3 assets and liabilities held at fair value on a recurring basis | Rollforward of Level 3 assets and liabilities held at fair value during the three months period June 30, 2018 Balance as of March 31, 2018 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 96 $ — $ — $ — $ — Corporate - public 77 — (1 ) — — Corporate - privately placed 215 (2 ) — 20 (10 ) ABS - CDO 10 — — — — ABS - consumer and other 62 — — 5 (16 ) CMBS 27 — — — — Total fixed income securities 487 (2 ) (1 ) 25 (26 ) Equity securities 242 13 — — — Short-term investments — — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 730 $ 11 $ (1 ) $ 25 $ (26 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (262 ) $ 1 $ — $ — $ — Total recurring Level 3 liabilities $ (262 ) $ 1 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 10 $ — $ — $ — $ 106 Corporate - public — — — — 76 Corporate - privately placed 2 (3 ) — (27 ) 195 ABS - CDO — — — (1 ) 9 ABS - consumer and other 30 (7 ) — (1 ) 73 CMBS — — — (1 ) 26 Total fixed income securities 42 (10 ) — (30 ) 485 Equity securities 49 (13 ) — — 291 Short-term investments — — — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 91 $ (23 ) $ — $ (30 ) $ 777 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ — $ 1 $ (260 ) Total recurring Level 3 liabilities $ — $ — $ — $ 1 $ (260 ) (1) The effect to net income totals $12 million and is reported in the Condensed Consolidated Statements of Operations as follows: $11 million in realized capital gains and losses and $1 million in life contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities held at fair value during the six months period June 30, 2018 Balance as of December 31, 2017 Total gains (losses) included in: Transfers Transfers ($ in millions) Net income (1) OCI Assets Fixed income securities: Municipal $ 101 $ 1 $ (1 ) $ — $ (2 ) Corporate - public 108 — (2 ) 4 (5 ) Corporate - privately placed 224 (2 ) (1 ) 20 (29 ) ABS - CDO 99 — — — (89 ) ABS - consumer and other 48 — 1 10 (16 ) CMBS 26 — — — — Total fixed income securities 606 (1 ) (3 ) 34 (141 ) Equity securities 210 16 — — — Short-term investments 20 — — — — Free-standing derivatives, net 1 — — — — Total recurring Level 3 assets $ 837 $ 15 $ (3 ) $ 34 $ (141 ) Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ (286 ) $ 24 $ — $ — $ — Total recurring Level 3 liabilities $ (286 ) $ 24 $ — $ — $ — Purchases Sales Issues Settlements Balance as of June 30, 2018 Assets Fixed income securities: Municipal $ 10 $ (2 ) $ — $ (1 ) $ 106 Corporate - public — (26 ) — (3 ) 76 Corporate - privately placed 15 (3 ) — (29 ) 195 ABS - CDO — — — (1 ) 9 ABS - consumer and other 75 (42 ) — (3 ) 73 CMBS 1 — — (1 ) 26 Total fixed income securities 101 (73 ) — (38 ) 485 Equity securities 79 (14 ) — — 291 Short-term investments 25 (45 ) — — — Free-standing derivatives, net — — — — 1 (2) Total recurring Level 3 assets $ 205 $ (132 ) $ — $ (38 ) $ 777 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ — $ — $ (1 ) $ 3 $ (260 ) Total recurring Level 3 liabilities $ — $ — $ (1 ) $ 3 $ (260 ) (1) The effect to net income totals $39 million and is reported in the Condensed Consolidated Statements of Operations as follows: $15 million in realized capital gains and losses, $19 million in interest credited to contractholder funds and $5 million in life contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities held at fair value during the three months period June 30, 2017 Balance as of March 31, 2017 Total gains (losses) included in: Transfers into Level 3 Transfers out of Level 3 ($ in millions) Net income (1) OCI 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 contract benefits. (2) Comprises $1 million of assets. Rollforward of Level 3 assets and liabilities held at fair value during the six months period June 30, 2017 Balance as of December 31, 2016 Total gains (losses) included in: Transfers Transfers ($ in millions) Net income (1) (1) OCI 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 contract benefits. (2) Comprises $1 million of assets. |
Schedule of gains and losses included in net income for Level 3 assets and liabilities still held at the balance sheet date | Valuation changes included in net income for Level 3 assets and liabilities held as of ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Assets Fixed income securities: Municipal $ — $ (3 ) $ — $ (3 ) Equity securities 13 4 15 14 Free-standing derivatives, net — 2 — 3 Other assets — — — (1 ) Total recurring Level 3 assets $ 13 $ 3 $ 15 $ 13 Liabilities Contractholder funds: Derivatives embedded in life and annuity contracts $ 1 $ — $ 24 $ 3 Total recurring Level 3 liabilities $ 1 $ — $ 24 $ 3 |
Schedule of carrying values and fair value estimates of financial instruments not carried at fair value | Financial assets Carrying values and fair value estimates of financial instruments not carried at fair value as of ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Mortgage loans $ 4,535 $ 4,582 $ 4,534 $ 4,732 Bank loans 1,702 1,704 1,702 1,704 Agent loans 570 562 538 536 Financial liabilities Carrying values and fair value estimates of financial instruments not carried at fair value as of ($ in millions) June 30, 2018 December 31, 2017 Carrying value Fair value Carrying value Fair value Contractholder funds on investment contracts $ 9,806 $ 10,238 $ 10,367 $ 11,071 Long-term debt 6,448 6,890 6,350 7,199 Liability for collateral 1,665 1,665 1,124 1,124 |
Derivative Financial Instrume28
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Volume and fair value positions of derivative instruments and location in the Consolidated Statement of Financial Position | Summary of the volume and fair value positions of derivative instruments as of June 30, 2018 ($ 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 $ 13 n/a $ — $ — $ — Financial options Other investments — 718 — — — Equity and index contracts Options Other investments — 54,180 98 98 — Financial futures Other assets — 1,130 — — — Total return index contracts Total return swap agreements – fixed income Other investments 44 n/a — — — Total return swap agreements – equity index Other investments 147 n/a 1 1 — Foreign currency contracts Foreign currency forwards Other investments 81 n/a — 1 (1 ) Credit default contracts Credit default swaps – buying protection Other investments 102 n/a (1 ) — (1 ) Credit default swaps – selling protection Other investments 250 n/a 4 4 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 640 56,028 $ 102 $ 104 $ (2 ) Liability derivatives Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses $ 28 n/a $ 1 $ 1 $ — Financial options Other liabilities & accrued expenses — 7,022 — — — Equity and index contracts Options and futures Other liabilities & accrued expenses 1,032 54,447 (19 ) 16 (35 ) Total return index contracts Total return swap agreements – fixed income Other liabilities & accrued expenses 7 n/a — — — Total return swap agreements – equity index Other liabilities & accrued expenses 22 n/a — — — Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 384 n/a 3 5 (2 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 205 n/a (19 ) — (19 ) Guaranteed withdrawal benefits Contractholder funds 252 n/a (10 ) — (10 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,774 n/a (231 ) — (231 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 331 n/a (6 ) 1 (7 ) Credit default swaps – selling protection Other liabilities & accrued expenses 15 n/a — — — Total liability derivatives 4,050 61,469 (281 ) $ 23 $ (304 ) Total derivatives $ 4,690 117,497 $ (179 ) (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) Summary of the volume and fair value positions of derivative instruments as of December 31, 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 $ 15 n/a $ — $ — $ — Equity and index contracts Options Other investments — 6,316 125 125 — Financial futures Other assets — 289 — — — Foreign currency contracts Foreign currency forwards Other investments 52 n/a 1 1 — Credit default contracts Credit default swaps – buying protection Other investments 105 n/a (1 ) — (1 ) Credit default swaps – selling protection Other investments 80 n/a 1 1 — Other contracts Other Other assets 3 n/a — — — Total asset derivatives $ 255 6,605 $ 126 $ 127 $ (1 ) Liability derivatives Derivatives designated as accounting hedging instruments Foreign currency swap agreements Other liabilities & accrued expenses $ 19 n/a $ 2 $ 2 $ — Derivatives not designated as accounting hedging instruments Interest rate contracts Interest rate cap agreements Other liabilities & accrued expenses 30 n/a 1 1 — Equity and index contracts Options and futures Other liabilities & accrued expenses — 7,128 (58 ) — (58 ) Foreign currency contracts Foreign currency forwards Other liabilities & accrued expenses 650 n/a (17 ) 3 (20 ) Embedded derivative financial instruments Guaranteed accumulation benefits Contractholder funds 225 n/a (22 ) — (22 ) Guaranteed withdrawal benefits Contractholder funds 274 n/a (12 ) — (12 ) Equity-indexed and forward starting options in life and annuity product contracts Contractholder funds 1,774 n/a (252 ) — (252 ) Credit default contracts Credit default swaps – buying protection Other liabilities & accrued expenses 136 n/a (5 ) — (5 ) Credit default swaps – selling protection Other liabilities & accrued expenses 25 n/a — — — Subtotal 3,114 7,128 (365 ) 4 (369 ) Total liability derivatives 3,133 7,128 (363 ) $ 6 $ (369 ) Total derivatives $ 3,388 13,733 $ (237 ) (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 | Gross and net amounts for OTC derivatives (1) ($ 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, 2018 Asset derivatives $ 25 $ (25 ) $ 2 $ 2 $ — $ 2 Liability derivatives (11 ) 25 (23 ) (9 ) — (9 ) December 31, 2017 Asset derivatives $ 8 $ (7 ) $ 1 $ 2 $ — $ 2 Liability derivatives (26 ) 7 7 (12 ) 3 (9 ) (1) All OTC derivatives are subject to enforceable master netting agreements. |
Impacts on operations and AOCI from foreign currency contracts, cash flow hedges | Summary of the impacts of the foreign currency contracts in cash flow hedging relationships ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Gain (loss) recognized in OCI on derivatives during the period $ 1 $ — $ 1 $ (2 ) Loss recognized in OCI on derivatives during the term of the hedging relationship (3 ) (1 ) (3 ) (1 ) 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 | Gains and losses from valuation and settlements reported on derivatives not designated as accounting hedges ($ in millions) Realized capital gains and losses Life 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, 2018 Interest rate contracts $ 1 $ — $ — $ — $ 1 Equity and index contracts (1 ) — 10 6 15 Embedded derivative financial instruments — 1 1 — 2 Foreign currency contracts 19 — — (2 ) 17 Total return swaps 1 — — — 1 Total $ 20 $ 1 $ 11 $ 4 $ 36 Six months ended June 30, 2018 Interest rate contracts $ 1 $ — $ — $ — $ 1 Equity and index contracts (3 ) — 6 3 6 Embedded derivative financial instruments — 5 21 — 26 Foreign currency contracts 12 — — (1 ) 11 Total return swaps 1 — — — 1 Credit default contracts 1 — — — 1 Total $ 12 $ 5 $ 27 $ 2 $ 46 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 |
Counterparty credit exposure by counterparty credit rating | OTC derivatives counterparty credit exposure by counterparty credit rating ($ in millions) June 30, 2018 December 31, 2017 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- — $ — $ — $ — 1 $ 18 $ 1 $ — A+ — — — — 3 90 3 1 A- 2 34 2 — — — — — BBB+ 2 1,718 14 1 — — — — BBB 1 10 — — — — — — Total 5 $ 1,762 $ 16 $ 1 4 $ 108 $ 4 $ 1 (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, 2018 December 31, 2017 Gross liability fair value of contracts containing credit-risk-contingent features $ 10 $ 28 Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs (9 ) (17 ) Collateral posted under MNAs for contracts containing credit-risk-contingent features (1 ) (6 ) Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently $ — $ 5 |
CDS notional amounts by credit rating and fair value of protection sold | 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, 2018 Single name Corporate debt $ — $ — $ 10 $ 5 $ 15 $ — Index Corporate debt 4 44 176 26 250 4 Total $ 4 $ 44 $ 186 $ 31 $ 265 $ 4 December 31, 2017 Single name Corporate debt $ — $ 10 $ 10 $ 5 $ 25 $ — Index Corporate debt 1 19 45 15 80 1 Total $ 1 $ 29 $ 55 $ 20 $ 105 $ 1 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, 2018 Single name Corporate debt $ — $ — $ 10 $ 5 $ 15 $ — Index Corporate debt 4 44 176 26 250 4 Total $ 4 $ 44 $ 186 $ 31 $ 265 $ 4 December 31, 2017 Single name Corporate debt $ — $ 10 $ 10 $ 5 $ 25 $ — Index Corporate debt 1 19 45 15 80 1 Total $ 1 $ 29 $ 55 $ 20 $ 105 $ 1 |
Reserve for Property and Liab29
Reserve for Property and Liability Insurance Claims and Claims Expense (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Reserve for Property-Liability Insurance Claims and Claims Expense [Abstract] | |
Schedule of liability for unpaid claims and claims adjustment expense | Rollforward of the reserve for property and casualty insurance claims and claims expense Six months ended June 30, ($ in millions) 2018 2017 Balance as of January 1 $ 26,325 $ 25,250 Less reinsurance recoverables (6,471 ) (6,184 ) Net balance as of January 1 19,854 19,066 SquareTrade acquisition as of January 3, 2017 — 17 Incurred claims and claims expense related to: Current year 11,089 11,291 Prior years (148 ) (186 ) Total incurred 10,941 11,105 Claims and claims expense paid related to: Current year (5,870 ) (6,060 ) Prior years (4,809 ) (4,450 ) Total paid (10,679 ) (10,510 ) Net balance as of June 30 20,116 19,678 Plus reinsurance recoverables 6,507 6,206 Balance as of June 30 $ 26,623 $ 25,884 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Schedule of reductions to premiums and contract charges due to reinsurance premium ceded amounts | Effects of reinsurance ceded on property and casualty premiums earned and life premiums and contract charges ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Property and casualty insurance premiums earned $ (257 ) $ (254 ) $ (496 ) $ (500 ) Life premiums and contract charges (73 ) (75 ) (145 ) (150 ) |
Schedule of reductions to costs and expenses due to reinsurance ceded amounts | Effects of reinsurance ceded on property and casualty insurance claims and claims expense, life contract benefits and interest credited to contractholder funds ($ in millions) Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Property and casualty insurance claims and claims expense $ (138 ) $ (124 ) $ (325 ) $ (255 ) Life contract benefits (66 ) (70 ) (115 ) (117 ) Interest credited to contractholder funds (7 ) (6 ) (11 ) (11 ) |
Company Restructuring (Tables)
Company Restructuring (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of changes in the restructuring liability | Restructuring activity during the period ($ in millions) Employee costs Exit costs Total liability Restructuring liability as of December 31, 2017 $ 15 $ 30 $ 45 Expense incurred 31 18 49 Adjustments to liability 1 (1 ) — Payments and non-cash pension settlements (6 ) (21 ) (27 ) Restructuring liability as of June 30, 2018 $ 41 $ 26 $ 67 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Company's pension and postretirement benefit plans | Components of net periodic cost included in operating costs and expenses Three months ended June 30, Six months ended June 30, ($ in millions) 2018 2017 2018 2017 Pension benefits Service cost $ 28 $ 28 $ 56 $ 57 Interest cost 61 66 121 132 Expected return on plan assets (106 ) (102 ) (211 ) (204 ) Amortization of: Prior service credit (14 ) (14 ) (28 ) (28 ) Net actuarial loss 45 47 89 94 Settlement loss 7 8 14 16 Net periodic pension cost $ 21 $ 33 $ 41 $ 67 Postretirement benefits Service cost $ 2 $ 2 $ 4 $ 4 Interest cost 4 3 7 7 Amortization of: Prior service credit (6 ) (6 ) (11 ) (12 ) Net actuarial gain (5 ) (6 ) (11 ) (12 ) Net periodic postretirement credit $ (5 ) $ (7 ) $ (11 ) $ (13 ) |
Supplemental Cash Flow Inform33
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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, 2018 2017 Net change in proceeds managed Net change in fixed income securities $ 122 $ 10 Net change in short-term investments (663 ) (7 ) Operating cash flow (used) provided $ (541 ) $ 3 Net change in liabilities Liabilities for collateral, beginning of period $ (1,124 ) $ (1,129 ) Liabilities for collateral, end of period (1,665 ) (1,126 ) Operating cash flow provided (used) $ 541 $ (3 ) |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Other comprehensive income (loss) on a pre-tax and after-tax basis | Components of other comprehensive income (loss) on a pre-tax and after-tax basis ($ in millions) Three months ended June 30, 2018 2017 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (249 ) $ 53 $ (196 ) $ 479 $ (167 ) $ 312 Less: reclassification adjustment of realized capital gains and losses (80 ) 17 (63 ) 64 (22 ) 42 Unrealized net capital gains and losses (169 ) 36 (133 ) 415 (145 ) 270 Unrealized foreign currency translation adjustments (9 ) 2 (7 ) 17 (6 ) 11 Unrecognized pension and other postretirement benefit cost arising during the period 1 — 1 (3 ) 2 (1 ) Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (27 ) 6 (21 ) (29 ) 10 (19 ) Unrecognized pension and other postretirement benefit cost 28 (6 ) 22 26 (8 ) 18 Other comprehensive (loss) income $ (150 ) $ 32 $ (118 ) $ 458 $ (159 ) $ 299 Six months ended June 30, 2018 2017 Pre-tax Tax After-tax Pre-tax Tax After-tax Unrealized net holding gains and losses arising during the period, net of related offsets $ (990 ) $ 208 $ (782 ) $ 901 $ (315 ) $ 586 Less: reclassification adjustment of realized capital gains and losses (106 ) 22 (84 ) 174 (61 ) 113 Unrealized net capital gains and losses (884 ) 186 (698 ) 727 (254 ) 473 Unrealized foreign currency translation adjustments (14 ) 3 (11 ) 12 (4 ) 8 Unrecognized pension and other postretirement benefit cost arising during the period 4 (1 ) 3 (3 ) 2 (1 ) Less: reclassification adjustment of net periodic cost recognized in operating costs and expenses (53 ) 11 (42 ) (58 ) 20 (38 ) Unrecognized pension and other postretirement benefit cost 57 (12 ) 45 55 (18 ) 37 Other comprehensive (loss) income $ (841 ) $ 177 $ (664 ) $ 794 $ (276 ) $ 518 |
General (Details)
General (Details) - USD ($) $ in Millions | 6 Months Ended | ||||
Jun. 30, 2018 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Equity securities, unrealized gain | $ 910 | ||||
Unearned premiums | 13,824 | $ 13,473 | |||
Deferred policy acquisition costs | 4,533 | 4,191 | |||
Assets | 113,369 | 112,422 | |||
Liabilities | $ 90,247 | 89,871 | |||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Unearned premiums | $ 160 | ||||
Deferred policy acquisition costs | $ 160 | ||||
Retained income | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of change in accounting principle | 1,088 | $ 0 | |||
Retained income | Accounting Standards Update 2016-01 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of change in accounting principle | 1,160 | ||||
Limited partnership interests | Accounting Standards Update 2016-01 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of change in accounting principle | 224 | ||||
Limited partnership interests | Retained income | Accounting Standards Update 2016-01 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of change in accounting principle | $ 177 | ||||
Scenario, Forecast [Member] | Accounting Standards Update 2017-13 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Assets | $ 500 | ||||
Liabilities | 500 | ||||
Scenario, Forecast [Member] | Retained income | Accounting Standards Update 2017-13 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of change in accounting principle | $ 20 |
Earnings per Common Share - Com
Earnings per Common Share - Computation earnings per common share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Net income | $ 676 | $ 579 | $ 1,651 | $ 1,274 |
Less: Preferred stock dividends | 39 | 29 | 68 | 58 |
Net income applicable to common shareholders | $ 637 | $ 550 | $ 1,583 | $ 1,216 |
Denominator: | ||||
Weighted average common shares outstanding (in shares) | 349.2 | 363.6 | 351.6 | 364.6 |
Effect of dilutive potential common shares: | ||||
Stock options (in shares) | 3.8 | 4.3 | 3.9 | 4.2 |
Restricted stock units (non-participating) and performance stock awards (in shares) | 1.6 | 1.1 | 1.7 | 1.3 |
Weighted average common and dilutive potential common shares outstanding (in shares) | 354.6 | 369 | 357.2 | 370.1 |
Earnings per common share - Basic (in dollars per share) | $ 1.82 | $ 1.51 | $ 4.50 | $ 3.34 |
Earnings per common share - Diluted (in dollars per share) | $ 1.80 | $ 1.49 | $ 4.43 | $ 3.29 |
Earnings per Common Share Earni
Earnings per Common Share Earnings per Common Share - Narrative (Details) - $ / shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Antidilutive stock options, exercise price exceeds market price (in shares) | 2.3 | 2.5 | 1.7 | 2.6 |
Antidilutive stock options, exercise price exceeds market price, exercise price range, low end of range (in dollars per share) | $ 81.42 | $ 74.03 | $ 81.42 | $ 69.95 |
Antidilutive stock options, exercise price exceeds market price, exercise price range, high end of range (in dollars per share) | $ 102.84 | $ 86.61 | $ 102.84 | $ 86.61 |
Acquisition (Details)
Acquisition (Details) - USD ($) $ in Millions | Jan. 03, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 2,189 | $ 2,189 | $ 2,181 | |||
SquareTrade | ||||||
Business Acquisition [Line Items] | ||||||
Consideration transferred | $ 1,400 | |||||
Goodwill | 1,100 | |||||
Commissions paid to retailers | 66 | |||||
Intangible assets | 555 | |||||
Prepaid contractual liability insurance policy premium expenses | 205 | |||||
Unearned premiums | 389 | |||||
Net deferred income tax liability | 138 | |||||
Amortization of intangible assets | $ 20 | $ 23 | $ 41 | $ 46 | ||
Customer Relationships | SquareTrade | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | 465 | |||||
Trade Names | SquareTrade | ||||||
Business Acquisition [Line Items] | ||||||
Indefinite-lived intangible assets acquired | $ 69 |
Reportable Segments - Revenue i
Reportable Segments - Revenue information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information | ||||
Net investment income | $ 824 | $ 897 | $ 1,610 | $ 1,645 |
Realized capital gains and losses | (25) | 81 | (159) | 215 |
Total revenues | 10,099 | 9,813 | 19,869 | 19,457 |
Other revenue | ||||
Segment Reporting Information | ||||
Other revenue | 228 | 226 | 444 | 436 |
Property-Liability | ||||
Segment Reporting Information | ||||
Net investment income | 353 | 387 | 690 | 695 |
Operating Segments | Property-Liability | ||||
Segment Reporting Information | ||||
Other revenue | 8,189 | 7,807 | 16,208 | 15,566 |
Net investment income | 353 | 387 | 690 | 695 |
Realized capital gains and losses | (15) | 85 | (110) | 220 |
Total revenues | 8,711 | 8,460 | 17,146 | 16,829 |
Operating Segments | Property-Liability | Auto | ||||
Segment Reporting Information | ||||
Other revenue | 5,705 | 5,438 | 11,296 | 10,826 |
Operating Segments | Property-Liability | Homeowners | ||||
Segment Reporting Information | ||||
Other revenue | 1,864 | 1,815 | 3,712 | 3,630 |
Operating Segments | Property-Liability | Other personal lines | ||||
Segment Reporting Information | ||||
Other revenue | 455 | 436 | 899 | 867 |
Operating Segments | Property-Liability | Commercial lines | ||||
Segment Reporting Information | ||||
Other revenue | 165 | 118 | 301 | 243 |
Operating Segments | Property-Liability | Other revenue | ||||
Segment Reporting Information | ||||
Other revenue | 184 | 181 | 358 | 348 |
Operating Segments | Allstate Protection | ||||
Segment Reporting Information | ||||
Other revenue | 8,189 | 7,807 | 16,208 | 15,566 |
Operating Segments | Discontinued Lines and Coverages | ||||
Segment Reporting Information | ||||
Other revenue | 0 | 0 | 0 | 0 |
Operating Segments | Service Businesses | ||||
Segment Reporting Information | ||||
Net investment income | 6 | 4 | 11 | 7 |
Realized capital gains and losses | (2) | 0 | (6) | 0 |
Intersegment premiums and service fees | 29 | 28 | 58 | 56 |
Total revenues | 320 | 260 | 633 | 507 |
Operating Segments | Service Businesses | Other revenue | ||||
Segment Reporting Information | ||||
Other revenue | 16 | 17 | 32 | 33 |
Operating Segments | Service Businesses | Consumer product protection plans | ||||
Segment Reporting Information | ||||
Other revenue | 121 | 70 | 244 | 129 |
Operating Segments | Service Businesses | Roadside assistance | ||||
Segment Reporting Information | ||||
Other revenue | 68 | 67 | 132 | 135 |
Operating Segments | Service Businesses | Finance and insurance products | ||||
Segment Reporting Information | ||||
Other revenue | 82 | 74 | 162 | 147 |
Operating Segments | Allstate Life | ||||
Segment Reporting Information | ||||
Net investment income | 130 | 123 | 252 | 243 |
Realized capital gains and losses | (3) | 1 | (6) | 2 |
Total revenues | 481 | 471 | 953 | 940 |
Operating Segments | Allstate Life | Other revenue | ||||
Segment Reporting Information | ||||
Other revenue | 28 | 28 | 54 | 55 |
Operating Segments | Allstate Life | Traditional life insurance premiums | ||||
Segment Reporting Information | ||||
Other revenue | 148 | 139 | 294 | 279 |
Operating Segments | Allstate Life | Accident and health insurance premiums | ||||
Segment Reporting Information | ||||
Other revenue | 1 | 1 | 1 | 1 |
Operating Segments | Allstate Life | Interest-sensitive life insurance contract charges | ||||
Segment Reporting Information | ||||
Other revenue | 177 | 179 | 358 | 360 |
Operating Segments | Allstate Benefits | ||||
Segment Reporting Information | ||||
Net investment income | 19 | 19 | 38 | 36 |
Realized capital gains and losses | 0 | 0 | (2) | 0 |
Total revenues | 302 | 288 | 605 | 574 |
Operating Segments | Allstate Benefits | Traditional life insurance premiums | ||||
Segment Reporting Information | ||||
Other revenue | 10 | 9 | 19 | 18 |
Operating Segments | Allstate Benefits | Accident and health insurance premiums | ||||
Segment Reporting Information | ||||
Other revenue | 245 | 232 | 493 | 464 |
Operating Segments | Allstate Benefits | Interest-sensitive life insurance contract charges | ||||
Segment Reporting Information | ||||
Other revenue | 28 | 28 | 57 | 56 |
Operating Segments | Allstate Annuities | ||||
Segment Reporting Information | ||||
Net investment income | 293 | 354 | 583 | 643 |
Realized capital gains and losses | 6 | (5) | (23) | (7) |
Total revenues | 302 | 352 | 566 | 642 |
Operating Segments | Allstate Annuities | Fixed annuities contract charges | ||||
Segment Reporting Information | ||||
Other revenue | 3 | 3 | 6 | 6 |
Operating Segments | Corporate and Other | ||||
Segment Reporting Information | ||||
Net investment income | 23 | 10 | 36 | 21 |
Realized capital gains and losses | (11) | 0 | (12) | 0 |
Total revenues | 12 | 10 | 24 | 21 |
Intersegment Eliminations | ||||
Segment Reporting Information | ||||
Total revenues | $ (29) | $ (28) | $ (58) | $ (56) |
Reportable Segments - Financial
Reportable Segments - Financial performance (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information | ||||
Net investment income | $ 824 | $ 897 | $ 1,610 | $ 1,645 |
Net income applicable to common shareholders | 637 | 550 | 1,583 | 1,216 |
Allstate Protection | ||||
Segment Reporting Information | ||||
Underwriting income (loss) | 419 | 270 | 1,381 | 820 |
Discontinued Lines and Coverages | ||||
Segment Reporting Information | ||||
Underwriting income (loss) | (3) | (5) | (6) | (7) |
Property-Liability | ||||
Segment Reporting Information | ||||
Underwriting income (loss) | 416 | 265 | 1,375 | 813 |
Net investment income | 353 | 387 | 690 | 695 |
Income tax expense on operations | (157) | (207) | (425) | (475) |
Realized capital gains and losses, after-tax | (12) | 56 | (87) | 145 |
Gain on disposition of operations, after-tax | 0 | 6 | 0 | 6 |
Net income applicable to common shareholders | 600 | 507 | 1,553 | 1,184 |
Service Businesses | ||||
Segment Reporting Information | ||||
Adjusted net income (loss) | 1 | (8) | (4) | (18) |
Realized capital gains and losses, after-tax | (1) | 0 | (4) | 0 |
Amortization of purchased intangible assets, after-tax | (16) | (15) | (32) | (30) |
Net income applicable to common shareholders | (16) | (23) | (40) | (48) |
Allstate Life | ||||
Segment Reporting Information | ||||
Adjusted net income (loss) | 78 | 63 | 147 | 122 |
Realized capital gains and losses, after-tax | (2) | 0 | (4) | 1 |
DAC and DSI amortization related to realized capital gains and losses, after-tax | (3) | (3) | (5) | (6) |
Net income applicable to common shareholders | 73 | 60 | 138 | 117 |
Allstate Benefits | ||||
Segment Reporting Information | ||||
Adjusted net income (loss) | 34 | 25 | 62 | 47 |
Realized capital gains and losses, after-tax | 0 | 0 | (2) | 0 |
Net income applicable to common shareholders | 34 | 25 | 60 | 47 |
Allstate Annuities | ||||
Segment Reporting Information | ||||
Adjusted net income (loss) | 44 | 65 | 79 | 94 |
Realized capital gains and losses, after-tax | 5 | (3) | (18) | (5) |
Valuation changes on embedded derivatives not hedged, after-tax | 0 | (1) | 4 | (1) |
Gain on disposition of operations, after-tax | 1 | 0 | 2 | 2 |
Net income applicable to common shareholders | 50 | 61 | 67 | 90 |
Corporate and Other | ||||
Segment Reporting Information | ||||
Adjusted net income (loss) | (95) | (80) | (185) | (161) |
Realized capital gains and losses, after-tax | (9) | 0 | (10) | 0 |
Business combination expenses, after-tax | 0 | 0 | 0 | (13) |
Net income applicable to common shareholders | $ (104) | $ (80) | $ (195) | $ (174) |
Investments - Amortized cost, g
Investments - Amortized cost, gross unrealized gains and losses and fair value for fixed income securities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of Available for Sale Securities | ||
Amortized cost | $ 56,750 | $ 57,525 |
Gross unrealized, Gains | 1,008 | 1,750 |
Gross unrealized, Losses | (867) | (283) |
Fair value | 56,891 | 58,992 |
U.S. government and agencies | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 3,182 | 3,580 |
Gross unrealized, Gains | 40 | 56 |
Gross unrealized, Losses | (16) | (20) |
Fair value | 3,206 | 3,616 |
Municipal | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 9,454 | 8,053 |
Gross unrealized, Gains | 245 | 311 |
Gross unrealized, Losses | (71) | (36) |
Fair value | 9,628 | 8,328 |
Corporate | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 41,584 | 42,996 |
Gross unrealized, Gains | 590 | 1,234 |
Gross unrealized, Losses | (759) | (204) |
Fair value | 41,415 | 44,026 |
Foreign government | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 917 | 1,005 |
Gross unrealized, Gains | 18 | 27 |
Gross unrealized, Losses | (9) | (11) |
Fair value | 926 | 1,021 |
Asset-backed securities (“ABS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 1,084 | 1,266 |
Gross unrealized, Gains | 9 | 13 |
Gross unrealized, Losses | (8) | (7) |
Fair value | 1,085 | 1,272 |
Residential mortgage-backed securities (“RMBS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 424 | 480 |
Gross unrealized, Gains | 98 | 101 |
Gross unrealized, Losses | (2) | (3) |
Fair value | 520 | 578 |
Commercial mortgage-backed securities (“CMBS”) | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 84 | 124 |
Gross unrealized, Gains | 6 | 6 |
Gross unrealized, Losses | (2) | (2) |
Fair value | 88 | 128 |
Redeemable preferred stock | ||
Schedule of Available for Sale Securities | ||
Amortized cost | 21 | 21 |
Gross unrealized, Gains | 2 | 2 |
Gross unrealized, Losses | 0 | 0 |
Fair value | $ 23 | $ 23 |
Investments - Scheduled maturit
Investments - Scheduled maturities for fixed income securities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Amortized cost | ||
Due in one year or less | $ 4,289 | |
Due after one year through five years | 28,481 | |
Due after five years through ten years | 15,933 | |
Due after ten years | 6,455 | |
Subtotal | 55,158 | |
ABS, RMBS and CMBS | 1,592 | |
Amortized cost | 56,750 | $ 57,525 |
Fair value | ||
Due in one year or less | 4,293 | |
Due after one year through five years | 28,384 | |
Due after five years through ten years | 15,673 | |
Due after ten years | 6,848 | |
Subtotal | 55,198 | |
ABS, RMBS and CMBS | 1,693 | |
Total fixed income securities | $ 56,891 | $ 58,992 |
Investments - Net investment in
Investments - Net investment income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net Investment Income: | ||||
Investment income, before expense | $ 890 | $ 945 | $ 1,741 | $ 1,744 |
Investment expense | (66) | (48) | (131) | (99) |
Net investment income | 824 | 897 | 1,610 | 1,645 |
Valuation of equity investments | 34 | 0 | (49) | 0 |
Fixed income securities | ||||
Net Investment Income: | ||||
Investment income, before expense | 509 | 527 | 1,017 | 1,045 |
Equity securities | ||||
Net Investment Income: | ||||
Investment income, before expense | 61 | 49 | 95 | 93 |
Mortgage loans | ||||
Net Investment Income: | ||||
Investment income, before expense | 60 | 50 | 111 | 105 |
Limited partnership interests | ||||
Net Investment Income: | ||||
Investment income, before expense | 173 | 253 | 353 | 373 |
Valuation of equity investments | 30 | 107 | ||
Short-term investments | ||||
Net Investment Income: | ||||
Investment income, before expense | 19 | 6 | 31 | 12 |
Other | ||||
Net Investment Income: | ||||
Investment income, before expense | 68 | $ 60 | 134 | $ 116 |
EMA limited partnerships | Limited partnership interests | ||||
Net Investment Income: | ||||
Investment income, before expense | $ 143 | $ 246 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Investment [Line Items] | |||||
Gross gains on fixed income securities | $ 29,000,000 | $ 74,000,000 | |||
Gross loss on fixed income securities | 107,000,000 | 194,000,000 | |||
Gross gains on fixed income and equity securities | $ 141,000,000 | $ 376,000,000 | |||
Gross loss on fixed income and equity securities | 50,000,000 | 125,000,000 | |||
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | 197,000,000 | 197,000,000 | $ 208,000,000 | ||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | 851,000,000 | 851,000,000 | |||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 16,000,000 | 16,000,000 | |||
Limited partnership interests | 7,679,000,000 | 7,679,000,000 | 6,740,000,000 | ||
Fixed income and equity securities | |||||
Investment [Line Items] | |||||
Unrealized losses | 867,000,000 | 867,000,000 | 295,000,000 | ||
Investment grade fixed income securities | |||||
Investment [Line Items] | |||||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | 730,000,000 | 730,000,000 | |||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 11,000,000 | 11,000,000 | |||
Below investment grade fixed income securities | |||||
Investment [Line Items] | |||||
Unrealized losses related to securities with unrealized loss position less than 20% of cost or amortized cost | 121,000,000 | 121,000,000 | |||
Unrealized losses having loss of less than twenty percent, less than 12 months | 107,000,000 | 107,000,000 | |||
Unrealized losses related to securities with unrealized loss position greater than or equal to 20% of cost or amortized cost | 5,000,000 | 5,000,000 | |||
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 | 3,000,000 | 3,000,000 | |||
EMA limited partnerships | |||||
Investment [Line Items] | |||||
Limited partnership interests | 6,030,000,000 | 6,030,000,000 | 5,410,000,000 | ||
Carrying value | Cost-method Investments | |||||
Investment [Line Items] | |||||
Cost method limited partnerships | 1,650,000,000 | 1,650,000,000 | $ 1,330,000,000 | ||
Mortgage loans, non-impaired | |||||
Investment [Line Items] | |||||
Allowance for credit losses, period increase (decrease) | $ 0 | $ 0 | 0 | 0 | |
Average impaired mortgage loans | $ 4,000,000 | $ 5,000,000 |
Investments - Realized capital
Investments - Realized capital gains and losses by asset type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ (25) | $ 81 | $ (159) | $ 215 |
Fixed income securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | (80) | 32 | (123) | 37 |
Equity securities | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 74 | 19 | (19) | 125 |
Mortgage loans | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 2 | 0 | 2 | 0 |
Limited partnership interests | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | (43) | 31 | (33) | 71 |
Derivatives | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | 23 | (8) | 15 | (23) |
Other | ||||
Realized capital gains and losses by asset type | ||||
Realized capital gains and losses | $ (1) | $ 7 | $ (1) | $ 5 |
Investments - Realized capita46
Investments - Realized capital gains and losses by transaction type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Investments [Abstract] | ||||
Impairment write-downs | $ (4) | $ (28) | $ (5) | $ (71) |
Change in intent write-downs | 0 | (22) | 0 | (38) |
Net OTTI losses recognized in earnings | (4) | (50) | (5) | (109) |
Sales | (75) | 139 | (117) | 347 |
Valuation of equity investments | 34 | 0 | (49) | 0 |
Valuation and settlements of derivative instruments | 20 | (8) | 12 | (23) |
Total realized capital gains and losses | $ (25) | $ 81 | $ (159) | $ 215 |
Investments - Valuation changes
Investments - Valuation changes included in net income for investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Investment [Line Items] | ||
Total valuation changes | $ 122 | $ 177 |
Equity securities | ||
Investment [Line Items] | ||
Total valuation changes | 94 | 71 |
Limited partnership interests | ||
Investment [Line Items] | ||
Total valuation changes | $ 28 | $ 106 |
Investments - OTTI losses by as
Investments - OTTI losses by asset type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Realized capital gains and losses by asset type | ||||
Gross | $ (4) | $ (47) | $ (4) | $ (109) |
Included in OCI | 0 | (3) | (1) | 0 |
Net | (4) | (50) | (5) | (109) |
Municipal | ||||
Realized capital gains and losses by asset type | ||||
Gross | 0 | (1) | 0 | (1) |
Included in OCI | 0 | (2) | 0 | (2) |
Net | 0 | (3) | 0 | (3) |
Corporate | ||||
Realized capital gains and losses by asset type | ||||
Gross | 0 | (9) | ||
Included in OCI | 0 | 3 | ||
Net | 0 | (6) | ||
Asset-backed securities (“ABS”) | ||||
Realized capital gains and losses by asset type | ||||
Gross | (1) | (1) | (1) | (1) |
Included in OCI | 0 | 0 | 0 | 0 |
Net | (1) | (1) | (1) | (1) |
Residential mortgage-backed securities (“RMBS”) | ||||
Realized capital gains and losses by asset type | ||||
Gross | (1) | 0 | (1) | (1) |
Included in OCI | 0 | 0 | 0 | (3) |
Net | (1) | 0 | (1) | (4) |
Commercial mortgage-backed securities (“CMBS”) | ||||
Realized capital gains and losses by asset type | ||||
Gross | 0 | (2) | 0 | (8) |
Included in OCI | 0 | (1) | (1) | 2 |
Net | 0 | (3) | (1) | (6) |
Fixed income securities | ||||
Realized capital gains and losses by asset type | ||||
Gross | (2) | (4) | (2) | (20) |
Included in OCI | 0 | (3) | (1) | 0 |
Net | (2) | (7) | (3) | (20) |
Equity securities | ||||
Realized capital gains and losses by asset type | ||||
Gross | 0 | (32) | 0 | (68) |
Included in OCI | 0 | 0 | 0 | 0 |
Net | 0 | (32) | 0 | (68) |
Limited partnership interests | ||||
Realized capital gains and losses by asset type | ||||
Gross | (1) | (9) | (1) | (16) |
Included in OCI | 0 | 0 | 0 | 0 |
Net | (1) | (9) | (1) | (16) |
Other | ||||
Realized capital gains and losses by asset type | ||||
Gross | (1) | (2) | (1) | (5) |
Included in OCI | 0 | 0 | 0 | 0 |
Net | $ (1) | $ (2) | $ (1) | $ (5) |
Investments - OTTI losses inclu
Investments - OTTI losses included in AOCI at the time of impairment for fixed income securities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Investments [Abstract] | ||
Net unrealized gains related to changes in valuation of fixed income securities subsequent to impairment measurement date | $ 197 | $ 208 |
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 | (92) | (101) |
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) | (5) |
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 | (12) | (15) |
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 | (71) | (77) |
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 | $ (4) | $ (4) |
Investments - Rollforward of th
Investments - Rollforward of the cumulative credit losses recognized in earnings for fixed income securities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Credit Losses on Fixed Income Securities | ||||
Beginning balance | $ (212) | $ (294) | $ (226) | $ (318) |
Additional credit loss for securities previously other-than-temporarily impaired | (1) | (6) | (2) | (13) |
Additional credit loss for securities not previously other-than-temporarily impaired | (1) | (1) | (1) | (7) |
Reduction in credit loss for securities disposed or collected | 7 | 19 | 22 | 56 |
Change in credit loss due to accretion of increase in cash flows | 1 | 1 | 1 | 1 |
Ending balance | $ (206) | $ (281) | $ (206) | $ (281) |
Investments - Unrealized net ca
Investments - Unrealized net capital gains and losses included in AOCI (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair value | ||
Fixed income securities: | $ 56,891 | $ 58,992 |
Short-term investments | 3,123 | 1,944 |
Derivative instruments | 0 | 2 |
Gross unrealized Gains | ||
Fixed income securities | 1,008 | 1,750 |
Equity securities | 1,172 | |
Short-term investments | 0 | 0 |
Derivative instruments | 0 | 2 |
Gross unrealized Losses | ||
Fixed income securities | (867) | (283) |
Equity securities | (12) | |
Short-term investments | 0 | 0 |
Derivative instruments | (3) | (3) |
Unrealized net gains (losses) | ||
Fixed income securities | 141 | 1,467 |
Equity securities | 1,160 | |
Short-term investments | 0 | 0 |
Derivative instruments | (3) | (1) |
EMA limited partnerships | 3 | 1 |
Unrealized net capital gains and losses, pre-tax | 141 | 2,627 |
Equity Securities, FV-NI | 6,888 | 6,621 |
Amount recognized for: | ||
Insurance reserves | 0 | (315) |
DAC and DSI | (72) | (196) |
Amounts recognized | (72) | (511) |
Deferred income taxes | (15) | (454) |
Total unrealized net capital gains and losses | $ 54 | 1,662 |
Fair value of derivative liabilities with unrealized net capital gain (loss) | $ 2 |
Investments - Change in unreali
Investments - Change in unrealized net capital gains and losses (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | $ (1,326) | ||
Amount recognized for: | |||
Insurance reserves | 315 | ||
DAC and DSI | 124 | ||
Amounts recognized | 439 | ||
Deferred income taxes | 189 | ||
Decrease in unrealized net capital gains and losses, after-tax | (698) | ||
Fixed income securities | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | (1,326) | ||
Equity securities | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | 0 | ||
Derivatives | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | (2) | ||
Retained income | |||
Amount recognized for: | |||
Cumulative effect of change in accounting principle | $ 1,088 | $ 0 | |
Retained income | Accounting Standards Update 2016-01 | |||
Amount recognized for: | |||
Cumulative effect of change in accounting principle | $ 1,160 | ||
EMA limited partnerships | |||
Change in Unrealized Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | |||
Change in unrealized net capital gains and losses | $ 2 |
Investments - Gross unrealized
Investments - Gross unrealized losses and fair value by the type and length of time held in continuous unrealized loss position (Details) $ in Millions | Jun. 30, 2018USD ($)contract | Dec. 31, 2017USD ($)contract |
U.S. government and agencies | ||
Less than 12 months | ||
Number of issues | contract | 67 | 66 |
Fair value | $ 2,022 | $ 2,829 |
Unrealized losses | $ (15) | $ (18) |
12 months or more | ||
Number of issues | contract | 11 | 18 |
Fair value | $ 55 | $ 182 |
Unrealized losses | (1) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (16) | $ (20) |
Municipal | ||
Less than 12 months | ||
Number of issues | contract | 2,456 | 1,756 |
Fair value | $ 4,039 | $ 3,143 |
Unrealized losses | $ (57) | $ (24) |
12 months or more | ||
Number of issues | contract | 151 | 165 |
Fair value | $ 268 | $ 349 |
Unrealized losses | (14) | (12) |
Total unrealized losses | ||
Total unrealized losses | $ (71) | $ (36) |
Corporate | ||
Less than 12 months | ||
Number of issues | contract | 1,888 | 781 |
Fair value | $ 24,450 | $ 11,616 |
Unrealized losses | $ (603) | $ (102) |
12 months or more | ||
Number of issues | contract | 240 | 208 |
Fair value | $ 2,878 | $ 3,289 |
Unrealized losses | (156) | (102) |
Total unrealized losses | ||
Total unrealized losses | $ (759) | $ (204) |
Foreign government | ||
Less than 12 months | ||
Number of issues | contract | 15 | 45 |
Fair value | $ 84 | $ 580 |
Unrealized losses | $ 0 | $ (10) |
12 months or more | ||
Number of issues | contract | 27 | 5 |
Fair value | $ 448 | $ 44 |
Unrealized losses | (9) | (1) |
Total unrealized losses | ||
Total unrealized losses | $ (9) | $ (11) |
Asset-backed securities (“ABS”) | ||
Less than 12 months | ||
Number of issues | contract | 76 | 57 |
Fair value | $ 505 | $ 476 |
Unrealized losses | $ (5) | $ (3) |
12 months or more | ||
Number of issues | contract | 8 | 9 |
Fair value | $ 13 | $ 34 |
Unrealized losses | (3) | (4) |
Total unrealized losses | ||
Total unrealized losses | $ (8) | $ (7) |
Residential mortgage-backed securities (“RMBS”) | ||
Less than 12 months | ||
Number of issues | contract | 143 | 118 |
Fair value | $ 35 | $ 35 |
Unrealized losses | $ (1) | $ (1) |
12 months or more | ||
Number of issues | contract | 181 | 181 |
Fair value | $ 40 | $ 50 |
Unrealized losses | (1) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (2) | $ (3) |
Commercial mortgage-backed securities (“CMBS”) | ||
Less than 12 months | ||
Number of issues | contract | 2 | 2 |
Fair value | $ 11 | $ 1 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | contract | 5 | 6 |
Fair value | $ 10 | $ 23 |
Unrealized losses | (2) | (2) |
Total unrealized losses | ||
Total unrealized losses | $ (2) | $ (2) |
Redeemable preferred stock | ||
Less than 12 months | ||
Number of issues | contract | 1 | 1 |
Fair value | $ 0 | $ 0 |
Unrealized losses | $ 0 | $ 0 |
12 months or more | ||
Number of issues | contract | 0 | 0 |
Fair value | $ 0 | $ 0 |
Unrealized losses | 0 | 0 |
Total unrealized losses | ||
Total unrealized losses | $ 0 | $ 0 |
Fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 4,648 | 2,826 |
Fair value | $ 31,146 | $ 18,680 |
Unrealized losses | $ (681) | $ (158) |
12 months or more | ||
Number of issues | contract | 623 | 592 |
Fair value | $ 3,712 | $ 3,971 |
Unrealized losses | (186) | (125) |
Total unrealized losses | ||
Total unrealized losses | (867) | $ (283) |
Equity securities | ||
Less than 12 months | ||
Number of issues | contract | 127 | |
Fair value | $ 369 | |
Unrealized losses | $ (12) | |
12 months or more | ||
Number of issues | contract | 2 | |
Fair value | $ 0 | |
Unrealized losses | 0 | |
Total unrealized losses | ||
Total unrealized losses | $ (12) | |
Fixed income and equity securities | ||
Less than 12 months | ||
Number of issues | contract | 2,953 | |
Fair value | $ 19,049 | |
Unrealized losses | $ (170) | |
12 months or more | ||
Number of issues | contract | 594 | |
Fair value | $ 3,971 | |
Unrealized losses | (125) | |
Total unrealized losses | ||
Total unrealized losses | $ (867) | $ (295) |
Investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 4,218 | 2,706 |
Fair value | $ 27,970 | $ 17,668 |
Unrealized losses | $ (573) | $ (134) |
12 months or more | ||
Number of issues | contract | 575 | 535 |
Fair value | $ 3,537 | $ 3,751 |
Unrealized losses | (168) | (98) |
Total unrealized losses | ||
Total unrealized losses | $ (741) | $ (232) |
Below investment grade fixed income securities | ||
Less than 12 months | ||
Number of issues | contract | 430 | 120 |
Fair value | $ 3,176 | $ 1,012 |
Unrealized losses | $ (108) | $ (24) |
12 months or more | ||
Number of issues | contract | 48 | 57 |
Fair value | $ 175 | $ 220 |
Unrealized losses | (18) | (27) |
Total unrealized losses | ||
Total unrealized losses | $ (126) | $ (51) |
Investments - Carrying value of
Investments - Carrying value of non-impaired mortgage loans summarized by debt service coverage ratio distribution (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Impaired [Line Items] | ||
Mortgage Loans on Real Estate, Commercial and Consumer, Net | $ 4,535 | $ 4,534 |
Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 4,400 | 4,438 |
Variable rate mortgage loans | 131 | 92 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 4,531 | 4,530 |
Below 1.0 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 3 | 3 |
Variable rate mortgage loans | 30 | 0 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 33 | 3 |
1.0 - 1.25 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 324 | 345 |
Variable rate mortgage loans | 0 | 0 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 324 | 345 |
1.26 - 1.50 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 1,164 | 1,141 |
Variable rate mortgage loans | 0 | 30 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | 1,164 | 1,171 |
Above 1.50 | Mortgage loans, non-impaired | ||
Financing Receivable, Impaired [Line Items] | ||
Fixed rate mortgage loans | 2,909 | 2,949 |
Variable rate mortgage loans | 101 | 62 |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | $ 3,010 | $ 3,011 |
Investments - Net carrying valu
Investments - Net carrying value of impaired mortgage loans (Details) - Mortgage loans, non-impaired - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Net carrying value of impaired mortgage loans | ||
Impaired mortgage loans with a valuation allowance | $ 4 | $ 4 |
Impaired mortgage loans without a valuation allowance | 0 | 0 |
Total impaired mortgage loans | 4 | 4 |
Valuation allowance on impaired mortgage loans | $ 3 | $ 3 |
Investments - Other investments
Investments - Other investments by type (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of Investments [Line Items] | ||
Other | $ 4,125 | $ 3,972 |
Bank loans | ||
Schedule of Investments [Line Items] | ||
Other | 1,702 | 1,702 |
Policy loans | ||
Schedule of Investments [Line Items] | ||
Other | 894 | 905 |
Real estate | ||
Schedule of Investments [Line Items] | ||
Other | 769 | 632 |
Agent loans | ||
Schedule of Investments [Line Items] | ||
Other | 570 | 538 |
Other | ||
Schedule of Investments [Line Items] | ||
Other | $ 190 | $ 195 |
Fair Value of Assets and Liab57
Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fair value | $ 56,891,000,000 | $ 56,891,000,000 | $ 58,992,000,000 | ||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 12,000,000 | $ 9,000,000 | 39,000,000 | $ 23,000,000 | |
Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Assets at fair value | 785,000,000 | 785,000,000 | 840,000,000 | ||
Recurring | Significant unobservable inputs (Level 3) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Fair value | 485,000,000 | 485,000,000 | 606,000,000 | ||
Assets at fair value | 777,000,000 | 777,000,000 | 837,000,000 | ||
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Assets at fair value | 251,000,000 | 251,000,000 | 271,000,000 | ||
Municipal Not Rated by Third Party Credit Rating Agencies | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Assets at fair value | 57,000,000 | 57,000,000 | $ 58,000,000 | ||
Gain (Loss) on Investments | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Total realized and unrealized gains (losses) included in net income, recurring Level 3 assets and liabilities | 14,000,000 | 3,000,000 | 39,000,000 | 16,000,000 | |
Realized capital gains and losses | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Change in unrealized gain (loss) | 13,000,000 | (1,000,000) | 15,000,000 | ||
Interest credited to contractholder funds | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Change in unrealized gain (loss) | (1,000,000) | 19,000,000 | (6,000,000) | ||
Life contract benefits | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Change in unrealized gain (loss) | 1,000,000 | 1,000,000 | 5,000,000 | 8,000,000 | |
(Loss) gain reclassified from AOCI into income (net investment income) | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Change in unrealized gain (loss) | $ 4,000,000 | $ 14,000,000 | |||
Limited partnership interests | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Commitments to invest in limited partnership interests | $ 866,000,000 | $ 866,000,000 | |||
Limited partnership interests | Minimum | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Investment assets, useful life | 10 years | ||||
Limited partnership interests | Maximum | |||||
Fair value of assets and liabilities measured on recurring and non-recurring basis | |||||
Investment assets, useful life | 12 years |
Fair Value of Assets and Liab58
Fair Value of Assets and Liabilities - Assets and liabilities measured at fair value on a recurring and non-recurring basis (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Assets | |||
Fixed income securities: | $ 56,891 | $ 58,992 | |
Short-term investments | 3,123 | 1,944 | |
Other investments: Free-standing derivatives | 1 | $ 1 | |
Separate account assets | 3,271 | 3,444 | |
Counterparty and cash collateral netting | $ (23) | $ (6) | |
% of total assets at fair value | 0.00% | 0.00% | |
Total | $ 71,935 | ||
Liabilities | |||
Counterparty and cash collateral netting | $ 2 | $ 14 | |
Counterparty and cash collateral netting as a percent of liabilities measured at fair value | (0.60%) | (3.90%) | |
U.S. government and agencies | |||
Assets | |||
Fixed income securities: | $ 3,206 | $ 3,616 | |
Municipal | |||
Assets | |||
Fixed income securities: | 9,628 | 8,328 | |
Foreign government | |||
Assets | |||
Fixed income securities: | 926 | 1,021 | |
Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 520 | 578 | |
Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 88 | 128 | |
Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 23 | 23 | |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Total assets at fair value | $ 13,512 | $ 12,819 | |
% of total assets at fair value | 19.20% | 18.00% | |
Liabilities | |||
Total liabilities at fair value | $ 0 | $ (1) | |
Liabilities as a percent of liabilities measured at fair value | 0.00% | 0.30% | |
Significant other observable inputs (Level 2) | |||
Assets | |||
Total assets at fair value | $ 56,011 | $ 57,478 | |
% of total assets at fair value | 79.70% | 80.80% | |
Liabilities | |||
Total liabilities at fair value | $ (46) | $ (83) | |
Liabilities as a percent of liabilities measured at fair value | 15.10% | 23.30% | |
Significant unobservable inputs (Level 3) | |||
Assets | |||
Total assets at fair value | $ 785 | $ 840 | |
% of total assets at fair value | 1.10% | 1.20% | |
Liabilities | |||
Total liabilities at fair value | $ (260) | $ (286) | |
Liabilities as a percent of liabilities measured at fair value | 85.50% | 80.30% | |
Investments reported at NAV | |||
Assets | |||
Investments reported at NAV | $ 1,650 | ||
Recurring | |||
Assets | |||
Other investments: Free-standing derivatives, Counterparty and cash collateral netting | (23) | $ (6) | |
Liabilities | |||
Counterparty and cash collateral netting | 2 | 14 | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Fixed income securities: | 2,725 | 3,079 | |
Equity securities | 6,240 | 6,032 | |
Short-term investments | 1,276 | 264 | |
Other investments: Free-standing derivatives | 0 | 0 | |
Separate account assets | 3,271 | 3,444 | |
Total assets at fair value | 13,512 | 12,819 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | 0 | (1) | |
Recurring | Quoted prices in active markets for identical assets (Level 1) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 2,725 | 3,079 | |
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: | 53,681 | 55,307 | |
Equity securities | 357 | 379 | |
Short-term investments | 1,847 | 1,660 | |
Other investments: Free-standing derivatives | 126 | 132 | |
Separate account assets | 0 | 0 | |
Total assets at fair value | 56,011 | 57,478 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (46) | (83) | |
Recurring | Significant other observable inputs (Level 2) | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 481 | 537 | |
Recurring | Significant other observable inputs (Level 2) | Municipal | |||
Assets | |||
Fixed income securities: | 9,522 | 8,227 | |
Recurring | Significant other observable inputs (Level 2) | Corporate - public | |||
Assets | |||
Fixed income securities: | 30,594 | 31,963 | |
Recurring | Significant other observable inputs (Level 2) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 10,550 | 11,731 | |
Recurring | Significant other observable inputs (Level 2) | Foreign government | |||
Assets | |||
Fixed income securities: | 926 | 1,021 | |
Recurring | Significant other observable inputs (Level 2) | ABS - CDO | |||
Assets | |||
Fixed income securities: | 378 | 480 | |
Recurring | Significant other observable inputs (Level 2) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 625 | 645 | |
Recurring | Significant other observable inputs (Level 2) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 520 | 578 | |
Recurring | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 62 | 102 | |
Recurring | Significant other observable inputs (Level 2) | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 23 | 23 | |
Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Fixed income securities: | 485 | 606 | |
Equity securities | 291 | 210 | |
Short-term investments | 0 | 20 | |
Other investments: Free-standing derivatives | 1 | 1 | |
Separate account assets | 0 | 0 | |
Total assets at fair value | 777 | 837 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | 0 | 0 | |
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: | 106 | 101 | |
Recurring | Significant unobservable inputs (Level 3) | Corporate - public | |||
Assets | |||
Fixed income securities: | 76 | 108 | |
Recurring | Significant unobservable inputs (Level 3) | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 195 | 224 | |
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: | 9 | 99 | |
Recurring | Significant unobservable inputs (Level 3) | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 73 | 48 | |
Recurring | Significant unobservable inputs (Level 3) | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 0 | 0 | |
Recurring | Significant unobservable inputs (Level 3) | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 26 | 26 | |
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 | 8 | 3 | |
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 | (260) | (286) | |
Fair value | |||
Assets | |||
Total assets at fair value | $ 70,285 | $ 71,131 | |
% of total assets at fair value | 100.00% | 100.00% | |
Liabilities | |||
Total liabilities at fair value | $ (304) | $ (356) | |
Liabilities as a percent of liabilities measured at fair value | 100.00% | 100.00% | |
Fair value | Recurring | |||
Assets | |||
Fixed income securities: | $ 56,891 | $ 58,992 | |
Equity securities | 6,888 | 6,621 | |
Short-term investments | 3,123 | 1,944 | |
Other investments: Free-standing derivatives | 104 | 127 | |
Separate account assets | 3,271 | 3,444 | |
Total assets at fair value | 70,277 | 71,128 | |
Liabilities | |||
Other liabilities: Free-standing derivatives | (44) | (70) | |
Fair value | Recurring | U.S. government and agencies | |||
Assets | |||
Fixed income securities: | 3,206 | 3,616 | |
Fair value | Recurring | Municipal | |||
Assets | |||
Fixed income securities: | 9,628 | 8,328 | |
Fair value | Recurring | Corporate - public | |||
Assets | |||
Fixed income securities: | 30,670 | 32,071 | |
Fair value | Recurring | Corporate - privately placed | |||
Assets | |||
Fixed income securities: | 10,745 | 11,955 | |
Fair value | Recurring | Foreign government | |||
Assets | |||
Fixed income securities: | 926 | 1,021 | |
Fair value | Recurring | ABS - CDO | |||
Assets | |||
Fixed income securities: | 387 | 579 | |
Fair value | Recurring | ABS - consumer and other | |||
Assets | |||
Fixed income securities: | 698 | 693 | |
Fair value | Recurring | Residential mortgage-backed securities (“RMBS”) | |||
Assets | |||
Fixed income securities: | 520 | 578 | |
Fair value | Recurring | Commercial mortgage-backed securities (“CMBS”) | |||
Assets | |||
Fixed income securities: | 88 | 128 | |
Fair value | Recurring | Redeemable preferred stock | |||
Assets | |||
Fixed income securities: | 23 | 23 | |
Fair value | Non-recurring | |||
Assets | |||
Total assets at fair value | 8 | 3 | |
Liabilities | |||
Limited partnership interests | 2 | 3 | |
Other Assets, Fair Value Disclosure | 6 | ||
Fair value | Derivatives embedded in life and annuity contracts | Recurring | |||
Liabilities | |||
Contractholder funds: Derivatives embedded in life and annuity contracts | (260) | (286) | |
Fixed Income Securities Valued Based on Nonbinding Broker Quotes | |||
Assets | |||
Total assets at fair value | 251 | 271 | |
Municipal Not Rated by Third Party Credit Rating Agencies | |||
Assets | |||
Total assets at fair value | $ 57 | $ 58 |
Fair Value of Assets and Liab59
Fair Value of Assets and Liabilities - Quantitative information about the significant unobservable inputs used in level 3 fair value measurements (Details) - Equity-indexed and forward starting options in life and annuity product contracts - Significant unobservable inputs (Level 3) $ in Millions | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Quantitative information about the significant unobservable inputs | ||
Fair value | $ (231) | $ (252) |
Projected option cost | Weighted Average | ||
Quantitative information about the significant unobservable inputs | ||
Measurement Input | 0.0174 | 0.0174 |
Projected option cost | Maximum | ||
Quantitative information about the significant unobservable inputs | ||
Measurement Input | 0.022 | 0.022 |
Projected option cost | Minimum | ||
Quantitative information about the significant unobservable inputs | ||
Measurement Input | 0.010 | 0.010 |
Fair Value of Assets and Liab60
Fair Value of Assets and Liabilities - Rollforward of level 3 assets and liabilities held at fair value on a recurring basis during the period (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | $ 730 | $ 903 | $ 837 | $ 735 |
Total gains (losses) included in: net income | 11 | 9 | 15 | 20 |
Total gains (losses) included in: OCI | (1) | 1 | (3) | 9 |
Transfers into Level 3 | 25 | 33 | 34 | 60 |
Transfers out of Level 3 | (26) | (127) | (141) | (149) |
Purchases | 91 | 128 | 205 | 288 |
Sales | (23) | (98) | (132) | (101) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (30) | (7) | (38) | (20) |
Balance at end of period | 777 | 842 | 777 | 842 |
Fair Value Liabilities Measured on Recurring Basis Unobservable Input Reconciliation Calculation | ||||
Balance at the beginning of the period | (262) | (286) | (286) | (290) |
Total gains (losses) included in: net income | 1 | 0 | 24 | 3 |
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 | 1 | 3 | 3 |
Balance at the end of the period | (260) | (285) | (260) | (285) |
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 | 12 | 9 | 39 | 23 |
Free-standing derivatives | 1 | 1 | 1 | 1 |
Realized capital gains and losses | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Total gains (losses) included in: net income | 11 | 5 | 15 | 7 |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | 13 | (1) | 15 | |
(Loss) 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 | 14 | ||
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | 4 | 14 | ||
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) | 19 | (6) | |
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | (1) | 19 | (6) | |
Life contract benefits | ||||
Fair value assets and liabilities measured on recurring basis, gain (loss) included in earnings | ||||
Change in unrealized gain (loss) | 1 | 1 | 5 | 8 |
Municipal | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 96 | 124 | 101 | 125 |
Total gains (losses) included in: net income | 0 | (2) | 1 | (1) |
Total gains (losses) included in: OCI | 0 | 5 | (1) | 6 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | (2) | (1) |
Purchases | 10 | 5 | 10 | 5 |
Sales | 0 | (18) | (2) | (20) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (1) | 0 |
Balance at end of period | 106 | 114 | 106 | 114 |
Corporate - public | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 77 | 60 | 108 | 78 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | (1) | 0 | (2) | 0 |
Transfers into Level 3 | 0 | 0 | 4 | 0 |
Transfers out of Level 3 | 0 | 0 | (5) | (16) |
Purchases | 0 | (1) | 0 | (1) |
Sales | 0 | 1 | (26) | 1 |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | (3) | (2) |
Balance at end of period | 76 | 60 | 76 | 60 |
Corporate - privately placed | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 215 | 263 | 224 | 263 |
Total gains (losses) included in: net income | (2) | 6 | (2) | 6 |
Total gains (losses) included in: OCI | 0 | (7) | (1) | (2) |
Transfers into Level 3 | 20 | 30 | 20 | 30 |
Transfers out of Level 3 | (10) | 0 | (29) | 0 |
Purchases | 2 | 4 | 15 | 4 |
Sales | (3) | (29) | (3) | (29) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (27) | (1) | (29) | (6) |
Balance at end of period | 195 | 266 | 195 | 266 |
ABS - CDO | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 10 | 147 | 99 | 27 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 0 | 2 |
Transfers into Level 3 | 0 | 3 | 0 | 30 |
Transfers out of Level 3 | 0 | (122) | (89) | (122) |
Purchases | 0 | 65 | 0 | 160 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (2) | (1) | (6) |
Balance at end of period | 9 | 91 | 9 | 91 |
ABS - consumer and other | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 62 | 80 | 48 | 42 |
Total gains (losses) included in: net income | 0 | 0 | 0 | 0 |
Total gains (losses) included in: OCI | 0 | 0 | 1 | 0 |
Transfers into Level 3 | 5 | 0 | 10 | 0 |
Transfers out of Level 3 | (16) | (5) | (16) | (7) |
Purchases | 30 | 48 | 75 | 89 |
Sales | (7) | 0 | (42) | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (3) | (3) | (4) |
Balance at end of period | 73 | 120 | 73 | 120 |
Residential mortgage-backed securities (“RMBS”) | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 1 | |||
Total gains (losses) included in: net income | 0 | |||
Total gains (losses) included in: OCI | 0 | |||
Transfers into Level 3 | 0 | |||
Transfers out of Level 3 | 0 | |||
Purchases | 0 | |||
Sales | 0 | |||
Issues | 0 | |||
Settlements | (1) | |||
Balance at end of period | 0 | 0 | ||
Commercial mortgage-backed securities (“CMBS”) | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 27 | 25 | 26 | 22 |
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 | 1 | 3 |
Sales | 0 | 0 | 0 | 0 |
Issues | 0 | 0 | 0 | 0 |
Settlements | (1) | (1) | (1) | (1) |
Balance at end of period | 26 | 24 | 26 | 24 |
Fixed income securities | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 487 | 699 | 606 | 558 |
Total gains (losses) included in: net income | (2) | 4 | (1) | 5 |
Total gains (losses) included in: OCI | (1) | (2) | (3) | 6 |
Transfers into Level 3 | 25 | 33 | 34 | 60 |
Transfers out of Level 3 | (26) | (127) | (141) | (146) |
Purchases | 42 | 121 | 101 | 260 |
Sales | (10) | (46) | (73) | (48) |
Issues | 0 | 0 | 0 | 0 |
Settlements | (30) | (7) | (38) | (20) |
Balance at end of period | 485 | 675 | 485 | 675 |
Equity securities | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 242 | 170 | 210 | 163 |
Total gains (losses) included in: net income | 13 | 3 | 16 | 13 |
Total gains (losses) included in: OCI | 0 | 3 | 0 | 3 |
Transfers into Level 3 | 0 | 0 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 | 0 | (3) |
Purchases | 49 | 2 | 79 | 3 |
Sales | (13) | (12) | (14) | (13) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 291 | 166 | 291 | 166 |
Short-term investments | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 0 | 35 | 20 | 15 |
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 | 5 | 25 | 25 |
Sales | 0 | (40) | (45) | (40) |
Issues | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Balance at end of period | 0 | 0 | 0 | 0 |
Free-standing derivatives, net | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 1 | (1) | 1 | (2) |
Total gains (losses) included in: net income | 0 | 2 | 0 | 3 |
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 | 1 | 1 | 1 |
Other assets | ||||
Fair Value Assets Measured on Recurring Basis Unobservable Input Reconciliation Calculation Rollforward | ||||
Balance at beginning of period | 1 | |||
Total gains (losses) included in: net income | (1) | |||
Total gains (losses) included in: OCI | 0 | |||
Transfers into Level 3 | 0 | |||
Transfers out of Level 3 | 0 | |||
Purchases | 0 | |||
Sales | 0 | |||
Issues | 0 | |||
Settlements | 0 | |||
Balance at end of period | 0 | 0 | ||
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 | (262) | (286) | (286) | (290) |
Total gains (losses) included in: net income | 1 | 0 | 24 | 3 |
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 | 1 | 3 | 3 |
Balance at the end of the period | $ (260) | $ (285) | $ (260) | $ (285) |
Fair Value of Assets and Liab61
Fair Value of Assets and Liabilities - Change in unrealized gains and losses included in net income for level 3 assets and liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | $ 13 | $ 3 | $ 15 | $ 13 |
Gains (losses) for Level 3 liabilities still held at the balance sheet date, included in earnings | 1 | 0 | 24 | 3 |
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 | 1 | 0 | 24 | 3 |
Municipal | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | 0 | (3) | 0 | (3) |
Equity securities | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | 13 | 4 | 15 | 14 |
Free-standing derivatives, net | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | 0 | 2 | 0 | 3 |
Other assets | ||||
Gains (losses) included in net income for Level 3 assets and liabilities: | ||||
Recurring Level 3 assets | $ 0 | $ 0 | $ 0 | $ (1) |
Fair Value of Assets and Liab62
Fair Value of Assets and Liabilities - Carrying values and fair value estimates of financial instruments not carried at fair value (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Financial assets | ||||
Mortgage loans | $ 4,535 | $ 4,534 | ||
Financial liabilities | ||||
Long-term debt | 6,448 | 6,350 | ||
Liability for collateral | 1,665 | 1,124 | $ 1,126 | $ 1,129 |
Carrying value | ||||
Financial assets | ||||
Mortgage loans | 4,535 | 4,534 | ||
Bank loans | 1,702 | 1,702 | ||
Agent loans | 570 | 538 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 9,806 | 10,367 | ||
Long-term debt | 6,448 | 6,350 | ||
Liability for collateral | 1,665 | 1,124 | ||
Fair value | ||||
Financial assets | ||||
Mortgage loans | 4,582 | 4,732 | ||
Bank loans | 1,704 | 1,704 | ||
Agent loans | 562 | 536 | ||
Financial liabilities | ||||
Contractholder funds on investment contracts | 10,238 | 11,071 | ||
Long-term debt | 6,890 | 7,199 | ||
Liability for collateral | $ 1,665 | $ 1,124 |
Derivative Financial Instrume63
Derivative Financial Instruments - Summary of the volume and fair value positions of derivative instruments (Details) | Jun. 30, 2018USD ($)contract | Dec. 31, 2017USD ($)contract |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Cash and securities pledged in the form of margin deposits | $ 16,000,000 | |
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 640,000,000 | $ 255,000,000 |
Total liability derivatives, notional amount | 4,050,000,000 | 3,133,000,000 |
Total derivatives, notional amount | $ 4,690,000,000 | $ 3,388,000,000 |
Total asset derivatives, number of contracts | contract | 56,028 | 6,605 |
Total liability derivatives, number of contracts | contract | 61,469 | 7,128 |
Total derivatives, Number of contracts | contract | 117,497 | 13,733 |
Derivative assets net amount on balance sheet | $ 102,000,000 | $ 126,000,000 |
Asset derivatives gross amount | 104,000,000 | 127,000,000 |
Asset derivatives, gross liability | (2,000,000) | (1,000,000) |
Derivative liabilities net amount on balance sheet | (281,000,000) | (363,000,000) |
Total derivatives, fair value, net | (179,000,000) | (237,000,000) |
Liability derivatives, gross asset | 23,000,000 | 6,000,000 |
Liability derivatives gross amount | (304,000,000) | (369,000,000) |
Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | $ 3,114,000,000 | |
Total liability derivatives, number of contracts | contract | 7,128 | |
Derivative liabilities net amount on balance sheet | $ (365,000,000) | |
Liability derivatives, gross asset | 4,000,000 | |
Liability derivatives gross amount | (369,000,000) | |
Foreign currency swap agreements | Other liabilities & accrued expenses | Derivatives designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 19,000,000 | |
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 | 13,000,000 | 15,000,000 |
Derivative assets net amount on balance sheet | 0 | 0 |
Asset derivatives gross amount | 0 | 0 |
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 | 28,000,000 | 30,000,000 |
Derivative liabilities net amount on balance sheet | 1,000,000 | 1,000,000 |
Liability derivatives, gross asset | 1,000,000 | 1,000,000 |
Liability derivatives gross amount | 0 | 0 |
Financial options | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 0 | |
Total liability derivatives, notional amount | $ 0 | |
Total asset derivatives, number of contracts | contract | 718 | |
Total liability derivatives, number of contracts | contract | 7,022 | |
Derivative assets net amount on balance sheet | $ 0 | |
Asset derivatives gross amount | 0 | |
Asset derivatives, gross liability | 0 | |
Derivative liabilities net amount on balance sheet | 0 | |
Liability derivatives, gross asset | 0 | |
Liability derivatives gross amount | 0 | |
Options | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | $ 0 | $ 0 |
Total asset derivatives, number of contracts | contract | 54,180 | 6,316 |
Derivative assets net amount on balance sheet | $ 98,000,000 | $ 125,000,000 |
Asset derivatives gross amount | 98,000,000 | 125,000,000 |
Asset derivatives, gross liability | 0 | 0 |
Financial futures | 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 | 1,130 | 289 |
Derivative assets net amount on balance sheet | $ 0 | $ 0 |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | 0 | 0 |
Total return swap agreements – fixed income | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 44,000,000 | |
Total liability derivatives, notional amount | 7,000,000 | |
Derivative assets net amount on balance sheet | 0 | |
Asset derivatives gross amount | 0 | |
Asset derivatives, gross liability | 0 | |
Derivative liabilities net amount on balance sheet | 0 | |
Liability derivatives, gross asset | 0 | |
Liability derivatives gross amount | 0 | |
Total return swap agreements – equity index | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 147,000,000 | |
Total liability derivatives, notional amount | 22,000,000 | |
Derivative assets net amount on balance sheet | 1,000,000 | |
Asset derivatives gross amount | 1,000,000 | |
Asset derivatives, gross liability | 0 | |
Derivative liabilities net amount on balance sheet | 0 | |
Liability derivatives, gross asset | 0 | |
Liability derivatives gross amount | 0 | |
Options and futures | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | $ 1,032,000,000 | $ 0 |
Total liability derivatives, number of contracts | contract | 54,447 | 7,128 |
Derivative liabilities net amount on balance sheet | $ (19,000,000) | $ (58,000,000) |
Liability derivatives, gross asset | 16,000,000 | 0 |
Liability derivatives gross amount | (35,000,000) | (58,000,000) |
Foreign currency forwards | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 81,000,000 | 52,000,000 |
Derivative assets net amount on balance sheet | 0 | 1,000,000 |
Asset derivatives gross amount | 1,000,000 | 1,000,000 |
Asset derivatives, gross liability | (1,000,000) | 0 |
Foreign currency forwards | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 384,000,000 | 650,000,000 |
Derivative liabilities net amount on balance sheet | 3,000,000 | (17,000,000) |
Liability derivatives, gross asset | 5,000,000 | 3,000,000 |
Liability derivatives gross amount | (2,000,000) | (20,000,000) |
Guaranteed accumulation benefits | Contractholder funds | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 205,000,000 | 225,000,000 |
Derivative liabilities net amount on balance sheet | (19,000,000) | (22,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (19,000,000) | (22,000,000) |
Guaranteed withdrawal benefits | Contractholder funds | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 252,000,000 | 274,000,000 |
Derivative liabilities net amount on balance sheet | (10,000,000) | (12,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (10,000,000) | (12,000,000) |
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 | 1,774,000,000 | 1,774,000,000 |
Derivative liabilities net amount on balance sheet | (231,000,000) | (252,000,000) |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | (231,000,000) | (252,000,000) |
Credit default swaps – buying protection | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 102,000,000 | 105,000,000 |
Derivative assets net amount on balance sheet | (1,000,000) | (1,000,000) |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | (1,000,000) | (1,000,000) |
Credit default swaps – buying protection | Other liabilities & accrued expenses | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total liability derivatives, notional amount | 331,000,000 | 136,000,000 |
Derivative liabilities net amount on balance sheet | (6,000,000) | (5,000,000) |
Liability derivatives, gross asset | 1,000,000 | 0 |
Liability derivatives gross amount | (7,000,000) | (5,000,000) |
Credit default swaps – selling protection | Other investments | Derivatives not designated as accounting hedging instruments | ||
Derivatives, Fair Value | ||
Total asset derivatives, notional amount | 250,000,000 | 80,000,000 |
Derivative assets net amount on balance sheet | 4,000,000 | 1,000,000 |
Asset derivatives gross amount | 4,000,000 | 1,000,000 |
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 | 15,000,000 | 25,000,000 |
Derivative liabilities net amount on balance sheet | 0 | 0 |
Liability derivatives, gross asset | 0 | 0 |
Liability derivatives gross amount | 0 | 0 |
Other | 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 | 0 |
Asset derivatives gross amount | 0 | 0 |
Asset derivatives, gross liability | $ 0 | $ 0 |
Derivative Financial Instrume64
Derivative Financial Instruments - Gross and net amounts for OTC derivatives (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Asset derivatives | ||
Asset derivatives gross amount | $ 104 | $ 127 |
Asset derivatives, gross liability | (2) | (1) |
Derivative assets net amount on balance sheet | 102 | 126 |
Liability derivatives | ||
Liability derivatives gross amount | (304) | (369) |
Liability derivatives, gross asset | 23 | 6 |
Derivative liabilities net amount on balance sheet | (281) | (363) |
OTC derivatives | ||
Asset derivatives | ||
Asset derivatives gross amount | 25 | 8 |
Asset derivatives, gross liability | (25) | (7) |
Derivative, collateral, right to reclaim cash | 2 | 1 |
Derivative assets net amount on balance sheet | 2 | 2 |
Derivative assets received under securities collateral | 0 | 0 |
Derivative asset, fair value, amount offset against collateral | 2 | 2 |
Liability derivatives | ||
Liability derivatives gross amount | (11) | (26) |
Liability derivatives, gross asset | 25 | 7 |
Derivative liability offsets under cash collateral pledged | (23) | 7 |
Derivative liabilities net amount on balance sheet | (9) | (12) |
Derivative liabilities received under securities collateral | 0 | 3 |
Derivative liability, fair value, amount offset against collateral | $ (9) | $ (9) |
Derivative Financial Instrume65
Derivative Financial Instruments - Summary of the impacts of the foreign currency contracts in cash flow hedging relationships (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative [Line Items] | ||||
Gain (loss) recognized in OCI on derivatives during the period | $ 1 | $ 0 | $ 1 | $ (2) |
Loss recognized in OCI on derivatives during the term of the hedging relationship | (3) | (1) | (3) | (1) |
(Loss) gain reclassified from AOCI into income (net investment income) | Gain reclassified from AOCI into income (net investment income) | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||||
Derivative [Line Items] | ||||
Investment Income, Net | 0 | 1 | 0 | 1 |
Realized capital gains and losses | Gain reclassified from AOCI into income (net investment income) | Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||||
Derivative [Line Items] | ||||
Investment Income, Net | $ 3 | $ 0 | $ 3 | $ 0 |
Derivative Financial Instrume66
Derivative Financial Instruments - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Derivative [Line Items] | |||||
Cash flow hedge losses to be reclassified from AOCI during the next twelve months (less than) | $ 1,000,000 | $ 1,000,000 | |||
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 | |
Cash and securities pledged as collateral by counterparties | 24,000,000 | 24,000,000 | |||
Securities pledged as collateral to counterparties | 3,000,000 | 3,000,000 | |||
Collateral posted under MNAs for contracts containing credit-risk-contingent features | 1,000,000 | 1,000,000 | $ 6,000,000 | ||
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | 2,000,000 | 2,000,000 | |||
Cash and securities pledged in the form of margin deposits | 16,000,000 | $ 16,000,000 | |||
Term of credit default swaps (in years) | 5 years | ||||
Counterparties | |||||
Derivative [Line Items] | |||||
Collateral posted under MNAs for contracts containing credit-risk-contingent features | $ 1,000,000 | $ 1,000,000 |
Derivative Financial Instrume67
Derivative Financial Instruments - Gains and losses from valuation and settlements reported on derivatives not designated as accounting hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | $ 36 | $ 11 | $ 46 | $ 20 |
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 | 20 | (8) | 12 | (23) |
Life contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | 5 | 8 |
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 | 11 | 9 | 27 | 18 |
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 | 9 | 2 | 17 |
Interest rate contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | ||
Interest rate contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | ||
Interest rate contracts | Life 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 | 15 | 14 | 6 | 27 |
Equity and index contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | (1) | 0 | (3) | (7) |
Equity and index contracts | Life 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 | 10 | 9 | 6 | 22 |
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 | 6 | 5 | 3 | 12 |
Embedded derivative financial instruments | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 2 | 1 | 26 | 4 |
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 contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | 5 | 8 |
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 | 1 | 0 | 21 | (4) |
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 | 17 | (4) | 11 | (10) |
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 | 19 | (8) | 12 | (15) |
Foreign currency contracts | Life 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 | (2) | $ 4 | (1) | 5 |
Total return swaps | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | ||
Total return swaps | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | 1 | ||
Total return swaps | Life contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Total return swaps | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Total return swaps | 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 | ||
Credit default contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | (1) | ||
Credit default contracts | Realized capital gains and losses | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 1 | (1) | ||
Credit default contracts | Life contract benefits | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
Credit default contracts | Interest credited to contractholder funds | ||||
Derivative Instruments, Gain (Loss) | ||||
Derivatives not designated as accounting hedging instruments, total gain (loss) recognized in net income on derivatives | 0 | 0 | ||
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 |
Derivative Financial Instrume68
Derivative Financial Instruments - OTC derivatives counterparty credit exposure by counterparty credit rating (Details) $ in Millions | Jun. 30, 2018USD ($)counter-party | Dec. 31, 2017USD ($)counter-party |
Credit Derivatives | ||
Number of counter- parties | counter-party | 5 | 4 |
Notional amount | $ 1,762 | $ 108 |
Credit exposure | 16 | 4 |
Exposure, net of collateral | $ 1 | $ 1 |
AA- | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 0 | 1 |
Notional amount | $ 0 | $ 18 |
Credit exposure | 0 | 1 |
Exposure, net of collateral | $ 0 | $ 0 |
A plus | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 0 | 3 |
Notional amount | $ 0 | $ 90 |
Credit exposure | 0 | 3 |
Exposure, net of collateral | $ 0 | $ 1 |
A- | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 2 | 0 |
Notional amount | $ 34 | $ 0 |
Credit exposure | 2 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
BBB plus | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 2 | 0 |
Notional amount | $ 1,718 | $ 0 |
Credit exposure | 14 | 0 |
Exposure, net of collateral | $ 1 | $ 0 |
BBB | ||
Credit Derivatives | ||
Number of counter- parties | counter-party | 1 | 0 |
Notional amount | $ 10 | $ 0 |
Credit exposure | 0 | 0 |
Exposure, net of collateral | $ 0 | $ 0 |
Derivative Financial Instrume69
Derivative Financial Instruments - Fair value of instruments with credit-risk-contingent features (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross liability fair value of contracts containing credit-risk-contingent features | $ 10 | $ 28 |
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | (9) | (17) |
Collateral posted under MNAs for contracts containing credit-risk-contingent features | (1) | (6) |
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ 0 | $ 5 |
Derivative Financial Instrume70
Derivative Financial Instruments - CDS notional amounts by credit rating and fair value of protection sold (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Term of credit default swaps (in years) | 5 years | |
Credit Derivatives | ||
Notional amount | $ 4,690 | $ 3,388 |
Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 265 | 105 |
Fair value | 4 | 1 |
Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 15 | 25 |
Fair value | 0 | 0 |
Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 250 | 80 |
Fair value | 4 | 1 |
AA | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 4 | 1 |
AA | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 0 |
AA | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 4 | 1 |
A | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 44 | 29 |
A | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 0 | 10 |
A | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 44 | 19 |
BBB | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 186 | 55 |
BBB | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 10 | 10 |
BBB | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 176 | 45 |
BB and lower | Credit default contracts | ||
Credit Derivatives | ||
Notional amount | 31 | 20 |
BB and lower | Credit default contracts | Single name | Corporate debt | ||
Credit Derivatives | ||
Notional amount | 5 | 5 |
BB and lower | Credit default contracts | Index | Corporate debt | ||
Credit Derivatives | ||
Notional amount | $ 26 | $ 15 |
Reserve for Property and Liab71
Reserve for Property and Liability Insurance Claims and Claims Expense - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Increase (decrease) in claims and claims expense | |||
Reserves for asbestos claims | $ 856 | $ 884 | |
Reinsurance recoverables for asbestos claims | 392 | 412 | |
Reserves for environmental claims | 159 | 166 | |
Reinsurance recoverables for environmental claims | 36 | $ 33 | |
Prior years claims and claims adjust expense, favorable (unfavorable) | 192 | ||
Auto | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | 225 | ||
Catastrophe | |||
Increase (decrease) in claims and claims expense | |||
Total incurred | 1,270 | $ 1,750 | |
Prior years claims and claims adjust expense, favorable (unfavorable) | (44) | ||
Reserve Adjustments | Other personal lines | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (33) | ||
Catastrophe Loss Re-estimates | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (44) | ||
Non Catastrophe Reestimates | Auto | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | 34 | ||
Non Catastrophe Reestimates | Homeowners | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | (78) | ||
Hurricane | Homeowners | |||
Increase (decrease) in claims and claims expense | |||
Prior years claims and claims adjust expense, favorable (unfavorable) | $ (37) |
Reserve for Property and Liab72
Reserve for Property and Liability Insurance Claims and Claims Expense - Rollforward of the reserve for property and casualty insurance claims and claims expense (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Incurred claims and claims expense related to: | ||
Prior years | $ (192) | |
Property-Liability | ||
Activity in the reserve for property-liability insurance claims and claims expense: | ||
Balance as of January 1 | 26,325 | $ 25,250 |
Less reinsurance recoverables | (6,471) | (6,184) |
Net balance as of January 1 | 19,854 | 19,066 |
SquareTrade acquisition as of January 3, 2017 | 0 | 17 |
Incurred claims and claims expense related to: | ||
Current year | 11,089 | 11,291 |
Prior years | (148) | (186) |
Total incurred | 10,941 | 11,105 |
Claims and claims expense paid related to: | ||
Current year | (5,870) | (6,060) |
Prior years | (4,809) | (4,450) |
Total paid | (10,679) | (10,510) |
Net balance as of June 30 | 20,116 | 19,678 |
Plus reinsurance recoverables | 6,507 | 6,206 |
Balance as of June 30 | $ 26,623 | $ 25,884 |
Reinsurance - Premiums earned a
Reinsurance - Premiums earned and life premiums and contract charges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property and casualty insurance premiums | ||||
Reinsurance | ||||
Property and casualty insurance premiums earned | $ (257) | $ (254) | $ (496) | $ (500) |
Life premiums | ||||
Reinsurance | ||||
Life premiums and contract charges | $ (73) | $ (75) | $ (145) | $ (150) |
Reinsurance - Claims expense, l
Reinsurance - Claims expense, life contract benefits and interest credited to contractholder funds (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property and casualty insurance claims and claims expense | ||||
Reductions to costs and expenses due to reinsurance ceded amounts | ||||
Ceded losses incurred | $ (138) | $ (124) | $ (325) | $ (255) |
Life contract benefits | ||||
Reductions to costs and expenses due to reinsurance ceded amounts | ||||
Ceded losses incurred | (66) | (70) | (115) | (117) |
Interest credited to contractholder funds | ||||
Reductions to costs and expenses due to reinsurance ceded amounts | ||||
Ceded losses incurred | $ (7) | $ (6) | $ (11) | $ (11) |
Capital Structure (Details)
Capital Structure (Details) - USD ($) | May 15, 2018 | May 13, 2018 | Mar. 29, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Debt outstanding: | ||||||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 | ||||
Repayments of long-term debt | $ 401,000,000 | $ 0 | ||||
Noncumulative Preferred Stock | ||||||
Debt outstanding: | ||||||
Preferred stock, issued shares (in shares) | 23,000 | |||||
Preferred stock, dividend rate | 5.625% | |||||
Preferred stock, par value (in dollars per share) | $ 1 | |||||
Preferred stock, shares liquidation preference (in dollars per share) | $ 25,000 | |||||
Proceeds from issuance of redeemable preferred stock | $ 575,000,000 | |||||
Preferred stock, redemption price per share (in dollars per share) | $ 25,000 | |||||
Period after occurrence of certain rating agency events in which redemption of debt in whole permissible | 90 days | |||||
Senior Notes, Due 2021 | ||||||
Debt outstanding: | ||||||
Debt instrument, face amount | $ 250,000,000 | |||||
Senior Notes, Due 2023 | ||||||
Debt outstanding: | ||||||
Debt instrument, face amount | $ 250,000,000 | |||||
Junior Subordinated Debentures Due 2067 at 6.125% | ||||||
Debt outstanding: | ||||||
Debt instrument, face amount | $ 224,000,000 | |||||
Note stated interest rate (as a percent) | 6.125% | |||||
Redemption price, percentage of principal amount redeemed | 100.00% | |||||
Senior Debentures Due 2018 at 6.75% | ||||||
Debt outstanding: | ||||||
Note stated interest rate (as a percent) | 6.75% | |||||
Redemption price, percentage of principal amount redeemed | 100.00% | |||||
Repayments of long-term debt | $ 176,000,000 | |||||
London Interbank Offered Rate (LIBOR) | Senior Notes, Due 2021 | ||||||
Debt outstanding: | ||||||
Basis spread on variable rate | 0.43% | |||||
London Interbank Offered Rate (LIBOR) | Senior Notes, Due 2023 | ||||||
Debt outstanding: | ||||||
Basis spread on variable rate | 0.63% |
Company Restructuring - Narrati
Company Restructuring - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and related charges | $ 27 | $ 53 | $ 49 | $ 63 |
Employee costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Cumulative amount incurred to date for active programs | 130 | 130 | ||
Exit costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Cumulative amount incurred to date for active programs | $ 109 | $ 109 |
Company Restructuring - Changes
Company Restructuring - Changes in the restructuring liability (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2017 | $ 45 |
Expense incurred | 49 |
Adjustments to liability | 0 |
Payments and non-cash pension settlements | (27) |
Restructuring liability as of June 30, 2018 | 67 |
Employee costs | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2017 | 15 |
Expense incurred | 31 |
Adjustments to liability | 1 |
Payments and non-cash pension settlements | (6) |
Restructuring liability as of June 30, 2018 | 41 |
Exit costs | |
Restructuring Reserve | |
Restructuring liability as of December 31, 2017 | 30 |
Expense incurred | 18 |
Adjustments to liability | (1) |
Payments and non-cash pension settlements | (21) |
Restructuring liability as of June 30, 2018 | $ 26 |
Guarantees and Contingent Lia78
Guarantees and Contingent Liabilities (Details) | Jan. 30, 2018judgmentplaintiff | Jun. 30, 2018USD ($)appeal | Dec. 31, 2003case | May 08, 2018USD ($) |
Proceedings: | ||||
Number of appeals | appeal | 3 | |||
Number of class action cases | case | 3 | |||
Loss contingency, number of summary judgments | judgment | 2 | |||
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 | $ 145,000,000 | |||
Judicial Ruling | ||||
Proceedings: | ||||
Loss contingency, number of plaintiffs | plaintiff | 27 | |||
Texas Windstorm Insurance Association | ||||
Proceedings: | ||||
Loss contingency, loss accrual | $ 37,000,000 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Pension benefits | ||||
Components of net periodic cost | ||||
Service cost | $ 28 | $ 28 | $ 56 | $ 57 |
Interest cost | 61 | 66 | 121 | 132 |
Expected return on plan assets | (106) | (102) | (211) | (204) |
Amortization of prior service credit | (14) | (14) | (28) | (28) |
Amortization of net actuarial loss (gain) | 45 | 47 | 89 | 94 |
Settlement loss | 7 | 8 | 14 | 16 |
Net periodic postretirement credit | 21 | 33 | 41 | 67 |
Postretirement benefits | ||||
Components of net periodic cost | ||||
Service cost | 2 | 2 | 4 | 4 |
Interest cost | 4 | 3 | 7 | 7 |
Amortization of prior service credit | (6) | (6) | (11) | (12) |
Amortization of net actuarial loss (gain) | (5) | (6) | (11) | (12) |
Net periodic postretirement credit | $ (5) | $ (7) | $ (11) | $ (13) |
Supplemental Cash Flow Inform80
Supplemental Cash Flow Information Supplemental Cash Flow Information - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract] | ||
Transfer from Investments | $ 41 | $ 9 |
Non-cash financing activities related to the issuance of shares for vested restricted stock units | $ 30 | $ 42 |
Supplemental Cash Flow Inform81
Supplemental Cash Flow Information - Activities resulting from management of proceeds (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Net change in proceeds managed | ||
Net change in fixed income securities | $ 122 | $ 10 |
Net change in short-term investments | (663) | (7) |
Operating cash flow (used) provided | (541) | 3 |
Change in Liabilities for Collateral [Roll Forward] | ||
Liabilities for collateral, beginning of period | (1,124) | (1,129) |
Liabilities for collateral, end of period | (1,665) | (1,126) |
Operating cash flow provided (used) | $ 541 | $ (3) |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Pre-tax | ||||
Other comprehensive (loss) income | $ (150) | $ 458 | $ (841) | $ 794 |
Tax | ||||
Other comprehensive (loss) income | 32 | (159) | 177 | (276) |
After-tax | ||||
Other comprehensive (loss) income | (118) | 299 | (664) | 518 |
Unrealized net holding gains and losses arising during the period, net of related offsets | ||||
Pre-tax | ||||
Unrealized net holding during the period | (249) | 479 | (990) | 901 |
Less: reclassification adjustment | (80) | 64 | (106) | 174 |
Other comprehensive (loss) income | (169) | 415 | (884) | 727 |
Tax | ||||
Unrealized net holding during the period | 53 | (167) | 208 | (315) |
Less: reclassification adjustment | 17 | (22) | 22 | (61) |
Other comprehensive (loss) income | 36 | (145) | 186 | (254) |
After-tax | ||||
Unrealized net holding during the period | (196) | 312 | (782) | 586 |
Less: reclassification adjustment | (63) | 42 | (84) | 113 |
Other comprehensive (loss) income | (133) | 270 | (698) | 473 |
Unrealized foreign currency translation adjustments | ||||
Pre-tax | ||||
Other comprehensive (loss) income | (9) | 17 | (14) | 12 |
Tax | ||||
Other comprehensive (loss) income | 2 | (6) | 3 | (4) |
After-tax | ||||
Other comprehensive (loss) income | (7) | 11 | (11) | 8 |
Unrecognized pension and other postretirement benefit cost | ||||
Pre-tax | ||||
Unrealized net holding during the period | 1 | (3) | 4 | (3) |
Less: reclassification adjustment | (27) | (29) | (53) | (58) |
Other comprehensive (loss) income | 28 | 26 | 57 | 55 |
Tax | ||||
Unrealized net holding during the period | 0 | 2 | (1) | 2 |
Less: reclassification adjustment | 6 | 10 | 11 | 20 |
Other comprehensive (loss) income | (6) | (8) | (12) | (18) |
After-tax | ||||
Unrealized net holding during the period | 1 | (1) | 3 | (1) |
Less: reclassification adjustment | (21) | (19) | (42) | (38) |
Other comprehensive (loss) income | $ 22 | $ 18 | $ 45 | $ 37 |