| Investments | 6 . Investments Fixed Maturity and Equity Securities Available-for-Sale Fixed Maturity and Equity Securities Available-for-Sale by Sector The following table presents the fixed maturity and equity securities available-for-sale (“AFS”) by sector. Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities and non-redeemable preferred stock is reported within equity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”). September 30, 2016 December 31, 2015 Cost or Gross Unrealized Estimated Cost or Gross Unrealized Estimated Temporary OTTI Temporary OTTI (In millions) Fixed maturity securities: U.S. corporate $ 56,531 $ 6,548 $ 361 $ — $ 62,718 $ 59,305 $ 3,763 $ 1,511 $ — $ 61,557 U.S. government and agency 36,365 5,985 9 — 42,341 36,183 3,638 128 — 39,693 Foreign corporate 26,263 1,710 870 — 27,103 27,218 1,005 1,427 1 26,795 RMBS (1) 26,177 1,262 211 (6 ) 27,234 23,195 1,008 252 36 23,915 State and political subdivision 6,314 1,586 1 1 7,898 6,070 935 29 2 6,974 CMBS 5,486 339 34 — 5,791 6,547 114 82 — 6,579 ABS 8,343 46 82 — 8,307 6,665 40 138 — 6,567 Foreign government 4,319 974 40 — 5,253 3,178 536 108 — 3,606 Total fixed maturity securities $ 169,798 $ 18,450 $ 1,608 $ (5 ) $ 186,645 $ 168,361 $ 11,039 $ 3,675 $ 39 $ 175,686 Equity securities: Common stock $ 1,272 $ 80 $ 12 $ — $ 1,340 $ 1,298 $ 46 $ 101 $ — $ 1,243 Non-redeemable preferred stock 569 36 38 — 567 687 59 40 — 706 Total equity securities $ 1,841 $ 116 $ 50 $ — $ 1,907 $ 1,985 $ 105 $ 141 $ — $ 1,949 __________________ (1) The noncredit loss component of other-than-temporary impairment (“OTTI”) losses for RMBS was in an unrealized gain position of $6 million at September 30, 2016 due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).” The Company held non-income producing fixed maturity securities with an estimated fair value of $38 million and $3 million with unrealized gains (losses) of ($2) million and less than $1 million at September 30, 2016 and December 31, 2015 , respectively. Maturities of Fixed Maturity Securities The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2016 : Due in One Year or Less Due After One Year Through Five Years Due After Five Years Through Ten Years Due After Ten Years Structured Securities Total Fixed Maturity Securities (In millions) Amortized cost $ 6,763 $ 37,857 $ 31,864 $ 53,308 $ 40,006 $ 169,798 Estimated fair value $ 6,770 $ 39,660 $ 33,892 $ 64,991 $ 41,332 $ 186,645 Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity. Continuous Gross Unrealized Losses for Fixed Maturity and Equity Securities AFS by Sector The following table presents the estimated fair value and gross unrealized losses of fixed maturity and equity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at: September 30, 2016 December 31, 2015 Less than 12 Months Equal to or Greater Less than 12 Months Equal to or Greater Estimated Gross Estimated Gross Estimated Gross Estimated Gross (Dollars in millions) Fixed maturity securities: U.S. corporate $ 2,257 $ 71 $ 3,046 $ 290 $ 17,480 $ 1,078 $ 2,469 $ 433 U.S. government and agency 2,568 9 — — 11,683 125 248 3 Foreign corporate 2,640 167 4,832 703 8,823 669 4,049 759 RMBS 3,170 80 2,162 125 6,065 158 1,769 130 State and political subdivision 87 1 13 1 767 26 15 5 CMBS 222 1 426 33 2,266 42 509 40 ABS 1,039 9 2,172 73 3,211 54 1,817 84 Foreign government 114 3 445 37 961 91 87 17 Total fixed maturity securities $ 12,097 $ 341 $ 13,096 $ 1,262 $ 51,256 $ 2,243 $ 10,963 $ 1,471 Equity securities: Common stock $ 62 $ 11 $ 5 $ 1 $ 182 $ 99 $ 19 $ 2 Non-redeemable preferred stock 37 3 117 35 56 2 132 38 Total equity securities $ 99 $ 14 $ 122 $ 36 $ 238 $ 101 $ 151 $ 40 Total number of securities in an unrealized loss position 1,189 1,169 4,167 807 Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities As described more fully in Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2015 Annual Report, the Company performs a regular evaluation of all investment classes for impairment, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy, in order to evaluate whether such investments are other-than-temporarily impaired. Current Period Evaluation Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company concluded that these securities were not other-than-temporarily impaired at September 30, 2016 . Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings, collateral valuation, interest rates and credit spreads. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods. Gross unrealized losses on fixed maturity securities decreased $2.1 billion during the nine months ended September 30, 2016 to $1.6 billion . The decrease in gross unrealized losses for the nine months ended September 30, 2016 was primarily attributable to a decrease in interest rates and, to a lesser extent, narrowing credit spreads. At September 30, 2016 , $239 million of the total $1.6 billion of gross unrealized losses were from 56 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater. Investment Grade Fixed Maturity Securities Of the $239 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $140 million , or 59% , were related to gross unrealized losses on 24 investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads and, with respect to fixed-rate fixed maturity securities, rising interest rates since purchase. Below Investment Grade Fixed Maturity Securities Of the $239 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $99 million , or 41% , were related to gross unrealized losses on 32 below investment grade fixed maturity securities. Unrealized losses on below investment grade fixed maturity securities are principally related to U.S. and foreign corporate securities (primarily industrial securities) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over lower oil prices in the energy sector. Management evaluates U.S. and foreign corporate securities based on factors such as expected cash flows and the financial condition and near-term and long-term prospects of the issuers. Equity Securities Gross unrealized losses on equity securities decreased $91 million during the nine months ended September 30, 2016 to $50 million . Of the $50 million , $32 million were from six securities with gross unrealized losses of 20% or more of cost for 12 months or greater. Of the $32 million , 66% were rated A or better, and all were from financial services industry investment grade non-redeemable preferred stock. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at: September 30, 2016 December 31, 2015 Carrying Value % of Total Carrying Value % of Total (Dollars in millions) Mortgage loans: Commercial $ 33,286 60.3 % $ 33,440 62.3 % Agricultural 12,369 22.4 11,663 21.7 Residential 9,358 16.9 8,562 15.9 Subtotal (1) 55,013 99.6 53,665 99.9 Valuation allowances (256 ) (0.5 ) (257 ) (0.5 ) Subtotal mortgage loans, net 54,757 99.1 53,408 99.4 Residential — FVO 481 0.9 314 0.6 Total mortgage loans, net $ 55,238 100.0 % $ 53,722 100.0 % __________________ (1) Purchases of mortgage loans were $732 million and $1.9 billion for the three months and nine months ended September 30, 2016 , respectively, and $821 million and $3.0 billion for the three months and nine months ended September 30, 2015 , respectively. Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on residential — FVO is presented in Note 8 . The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. Mortgage Loans, Valuation Allowance and Impaired Loans by Portfolio Segment Mortgage loans by portfolio segment, by method of evaluation of credit loss, impaired mortgage loans including those modified in a troubled debt restructuring, and the related valuation allowances, were as follows at: Evaluated Individually for Credit Losses Evaluated Collectively for Credit Losses Impaired Loans Impaired Loans with a Valuation Allowance Impaired Loans without a Valuation Allowance Unpaid Principal Balance Recorded Investment Valuation Unpaid Principal Balance Recorded Recorded Valuation Carrying (In millions) September 30, 2016 Commercial $ — $ — $ — $ 12 $ 12 $ 33,274 $ 165 $ 12 Agricultural 12 10 1 39 38 12,321 36 47 Residential — — — 235 215 9,143 54 215 Total $ 12 $ 10 $ 1 $ 286 $ 265 $ 54,738 $ 255 $ 274 December 31, 2015 Commercial $ — $ — $ — $ 57 $ 57 $ 33,383 $ 165 $ 57 Agricultural 45 43 3 22 21 11,599 34 61 Residential — — — 141 131 8,431 55 131 Total $ 45 $ 43 $ 3 $ 220 $ 209 $ 53,413 $ 254 $ 249 The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $12 million , $48 million and $202 million , respectively, for the three months ended September 30, 2016 ; and $34 million , $52 million and $174 million , respectively, for the nine months ended September 30, 2016 . The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $118 million , $58 million and $96 million , respectively, for the three months ended September 30, 2015 ; and $136 million , $59 million and $72 million , respectively, for the nine months ended September 30, 2015 . Valuation Allowance Rollforward by Portfolio Segment The changes in the valuation allowance, by portfolio segment, were as follows: Nine Months 2016 2015 Commercial Agricultural Residential Total Commercial Agricultural Residential Total (In millions) Balance, beginning of period $ 165 $ 37 $ 55 $ 257 $ 182 $ 35 $ 41 $ 258 Provision (release) — 2 11 13 (4 ) 2 26 24 Charge-offs, net of recoveries — (2 ) (12 ) (14 ) (12 ) — (14 ) (26 ) Balance, end of period $ 165 $ 37 $ 54 $ 256 $ 166 $ 37 $ 53 $ 256 Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans was as follows at: Recorded Investment Estimated % of Debt Service Coverage Ratios % of > 1.20x 1.00x - 1.20x < 1.00x Total (Dollars in millions) September 30, 2016 Loan-to-value ratios: Less than 65% $ 30,025 $ 743 $ 474 $ 31,242 93.9 % $ 32,512 94.0 % 65% to 75% 1,493 31 277 1,801 5.4 1,826 5.3 76% to 80% — — — — — — — Greater than 80% 118 38 87 243 0.7 261 0.7 Total $ 31,636 $ 812 $ 838 $ 33,286 100 % $ 34,599 100 % December 31, 2015 Loan-to-value ratios: Less than 65% $ 28,828 $ 909 $ 408 $ 30,145 90.2 % $ 30,996 90.5 % 65% to 75% 2,550 138 61 2,749 8.2 2,730 8.0 76% to 80% — — — — — — — Greater than 80% 208 115 223 546 1.6 519 1.5 Total $ 31,586 $ 1,162 $ 692 $ 33,440 100 % $ 34,245 100 % Credit Quality of Agricultural Mortgage Loans The credit quality of agricultural mortgage loans was as follows at: September 30, 2016 December 31, 2015 Recorded Investment % of Total Recorded Investment % of Total (Dollars in millions) Loan-to-value ratios: Less than 65% $ 11,878 96.0 % $ 10,975 94.1 % 65% to 75% 424 3.4 609 5.2 76% to 80% 20 0.2 21 0.2 Greater than 80% 47 0.4 58 0.5 Total $ 12,369 100.0 % $ 11,663 100.0 % The estimated fair value of agricultural mortgage loans was $12.7 billion and $11.9 billion at September 30, 2016 and December 31, 2015 , respectively. Credit Quality of Residential Mortgage Loans The credit quality of residential mortgage loans was as follows at: September 30, 2016 December 31, 2015 Recorded Investment % of Total Recorded Investment % of Total (Dollars in millions) Performance indicators: Performing $ 9,056 96.8 % $ 8,261 96.5 % Nonperforming 302 3.2 301 3.5 Total $ 9,358 100.0 % $ 8,562 100.0 % The estimated fair value of residential mortgage loans was $9.8 billion and $8.8 billion at September 30, 2016 and December 31, 2015 , respectively. Past Due and Interest Accrual Status of Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both September 30, 2016 and December 31, 2015 . The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days. The past due and accrual status of mortgage loans at recorded investment, prior to valuation allowances, by portfolio segment, were as follows at: Past Due Nonaccrual Status September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015 (In millions) Commercial $ — $ — $ — $ — Agricultural 144 103 39 46 Residential 302 301 302 301 Total $ 446 $ 404 $ 341 $ 347 Mortgage Loans Modified in a Troubled Debt Restructuring During both the three months and nine months ended September 30, 2016 and 2015 , the Company did not have a significant amount of mortgage loans modified in a troubled debt restructuring. Cash Equivalents The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $2.8 billion and $3.9 billion at September 30, 2016 and December 31, 2015 , respectively. Net Unrealized Investment Gains (Losses) Unrealized investment gains (losses) on fixed maturity and equity securities AFS and the effect on DAC, VOBA, deferred sales inducements (“DSI”), future policy benefits and the policyholder dividend obligation, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI. The components of net unrealized investment gains (losses), included in AOCI, were as follows: September 30, 2016 December 31, 2015 (In millions) Fixed maturity securities $ 16,779 $ 7,331 Fixed maturity securities with noncredit OTTI losses included in AOCI 5 (39 ) Total fixed maturity securities 16,784 7,292 Equity securities 144 27 Derivatives 2,684 2,208 Other 170 137 Subtotal 19,782 9,664 Amounts allocated from: Future policy benefits (1,668 ) (7 ) DAC and VOBA related to noncredit OTTI losses recognized in AOCI (1 ) — DAC, VOBA and DSI (964 ) (572 ) Policyholder dividend obligation (3,352 ) (1,783 ) Subtotal (5,985 ) (2,362 ) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (1 ) 14 Deferred income tax benefit (expense) (4,802 ) (2,542 ) Net unrealized investment gains (losses) 8,994 4,774 Net unrealized investment gains (losses) attributable to noncontrolling interests (1 ) (1 ) Net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company $ 8,993 $ 4,773 The changes in fixed maturity securities with noncredit OTTI losses included in AOCI were as follows: Nine Months Year (In millions) Balance, beginning of period $ (39 ) $ (66 ) Noncredit OTTI losses and subsequent changes recognized 9 5 Securities sold with previous noncredit OTTI loss 26 105 Subsequent changes in estimated fair value 9 (83 ) Balance, end of period (1) $ 5 $ (39 ) __________________ (1) The noncredit loss component of OTTI losses was in an unrealized gain position of $5 million at September 30, 2016 due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).” The changes in net unrealized investment gains (losses) were as follows: Nine Months (In millions) Balance, beginning of period $ 4,773 Fixed maturity securities on which noncredit OTTI losses have been recognized 44 Unrealized investment gains (losses) during the period 10,074 Unrealized investment gains (losses) relating to: Future policy benefits (1,661 ) DAC and VOBA related to noncredit OTTI losses recognized in AOCI (1 ) DAC, VOBA and DSI (392 ) Policyholder dividend obligation (1,569 ) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (15 ) Deferred income tax benefit (expense) (2,260 ) Net unrealized investment gains (losses) 8,993 Net unrealized investment gains (losses) attributable to noncontrolling interests — Balance, end of period $ 8,993 Change in net unrealized investment gains (losses) $ 4,220 Change in net unrealized investment gains (losses) attributable to noncontrolling interests — Change in net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company $ 4,220 Concentrations of Credit Risk There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both September 30, 2016 and December 31, 2015 . Securities Lending Elements of the securities lending program are presented below at: September 30, 2016 December 31, 2015 (In millions) Securities on loan: (1) Amortized cost $ 15,009 $ 16,257 Estimated fair value $ 17,308 $ 17,700 Cash collateral on deposit from counterparties (2) $ 17,770 $ 18,053 Security collateral on deposit from counterparties (3) $ 45 $ 22 Reinvestment portfolio — estimated fair value $ 17,977 $ 18,138 __________________ (1) Included within fixed maturity securities, cash equivalents and short-term investments. (2) Included within payables for collateral under securities loaned and other transactions. (3) Security collateral on deposit from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements. The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at: September 30, 2016 December 31, 2015 Remaining Tenor of Securities Lending Agreements Remaining Tenor of Securities Lending Agreements Open (1) 1 Month or Less 1 to 6 Months Total Open (1) 1 Month or Less 1 to 6 Months Total (In millions) Cash collateral liability by loaned security type: U.S. government and agency $ 4,933 $ 6,439 $ 6,347 $ 17,719 $ 6,260 $ 7,421 $ 4,303 $ 17,984 All other securities — 46 5 51 1 47 21 69 Total $ 4,933 $ 6,485 $ 6,352 $ 17,770 $ 6,261 $ 7,468 $ 4,324 $ 18,053 __________________ (1) The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral. If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2016 was $4.8 billion , all of which were U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement. The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including U.S. government and agency, agency RMBS, ABS, short-term investments and U.S. corporate securities) with 65% invested in U.S. government and agency securities, agency RMBS, short-term investments, or held in cash and cash equivalents. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company. Invested Assets on Deposit and Pledged as Collateral Invested assets on deposit and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans, which are presented at carrying value at: September 30, 2016 December 31, 2015 (In millions) Invested assets on deposit (regulatory deposits) $ 1,417 $ 1,245 Invested assets pledged as collateral (1) 21,832 19,011 Total invested assets on deposit and pledged as collateral $ 23,249 $ 20,256 __________________ (1) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Consolidated Financial Statements included in the 2015 Annual Report) and derivative transactions (see Note 7 ). See “— Securities Lending” for information regarding securities on loan and Note 5 for information regarding investments designated to the closed block. Variable Interest Entities The Company is involved with certain legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity. Consolidated VIEs Creditors or beneficial interest holders of VIEs where the Company is the pr imary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment. The following table presents the total assets and total liabilities re lating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at: September 30, 2016 December 31, 2015 Total Assets Total Liabilities Total Assets Total Liabilities (In millions) Real estate joint ventures (1) $ 492 $ — $ — $ — Fixed maturity securities (2) — — 104 50 Other investments (3) 63 12 89 13 Total $ 555 $ 12 $ 193 $ 63 __________________ (1) The Company consolidates certain affiliated real estate joint ventures. At September 30, 2016 , the Company and its affiliates invested $428 million and $64 million , respectively, in these affiliated real estate joint ventures. (2) The Company consolidated certain fixed maturity securities purchased in an investment structure which was partially funded with affiliated long-term debt. These investments were sold in June 2016. The long-term debt bore interest primarily at variable rates, payable on a bi-annual basis. (3) Other investments is primarily comprised of other invested assets and other limited partnership interests. The Company consolidates entities that are structured as collateralized debt obligations. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in these entities of less than $1 million at estimated fair value at both September 30, 2016 and December 31, 2015 . Unconsolidated VIEs The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at: September 30, 2016 December 31, 2015 Carrying Amount Maximum Exposure to Loss (1) Carrying Amount Maximum Exposure to Loss (1) (In millions) Fixed maturity securities AFS: Structured Securities (2) $ 41,332 $ 41,332 $ 37,061 $ 37,061 U.S. and foreign corporate 1,657 1,657 1,593 1,593 Other limited partnership interests 3,384 5,575 2,874 3,672 Other invested assets 2,022 2,604 1,564 2,116 Real estate joint ventures 85 110 31 44 Total $ 48,480 $ 51,278 $ 43,123 $ 44,486 __________________ (1) The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $151 million and $179 million at September 30, 2016 and December 31, 2015 , respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. (2) For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset backed securities issued by trusts that do not have substantial equity. As described in Note 12 , the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during both the nine months ended September 30, 2016 and 2015 . Net Investment Income The components of net investment income were as follows: Three Months Nine Months 2016 2015 2016 2015 (In millions) Investment income: Fixed maturity securities $ 1,907 $ 1,918 $ 5,803 $ 5,992 Equity securities 19 21 65 64 Trading and FVO securities — Actively traded and FVO general account securities (1) — (39 ) 3 (21 ) Mortgage loans 630 623 1,930 1,871 Policy loans 104 105 311 324 Real estate and real estate joint ventures 159 190 366 599 Other limited partnership interests 154 169 274 485 Cash, cash equivalents and short-term investments 10 5 31 17 Operating joint venture 2 — 7 6 Other 67 25 133 154 Subtotal 3,052 3,017 8,923 9,491 Less: Investment expenses 182 220 574 670 Subtotal, net 2,870 2,797 8,349 8,821 FVO CSEs — interest income: Securities — — — 1 Subtotal — — — 1 Net investment income $ 2,870 $ 2,797 $ 8,349 $ 8,822 __________________ (1) Changes in estimated fair value subsequent to purchase for securities still held as of the end of the respective periods included in net investment income were less than $1 million for both the three months and nine months ended September 30, 2016 , and ($39) million and ($47) million for the three months and nine months ended September 30, 2015 , respectively. See “— Related Party Investment Transactions” for discussion of affiliated net investment income and investment expenses. The Company previously maintained a trading securities portfolio, principally invested in fixed maturity securities, to support investment strategies that involved the active and frequent purchase and sale of actively traded securities and the execution of short sale agreements. In June 2016, the Company commenced a reinvestment of this portfolio into other asset classes. Fair value option securities (“FVO securities”) include certain fixed maturity and equity securities held-for-investment by the general account to support asset/liability management strategies for certain insurance products and securities held by consolidated securitization entities (“CSEs”). Net Investment Gains (Losses) Components of Net Investment Gains (Losses) The components of net investment gains (losses) were as follows: Three Months Nine Months 2016 2015 2016 2015 (In millions) Total gains (losses) on fixed maturity securities: Total OTTI losses recognized — by sector and industry: U.S. and foreign corporate securities — by industry: Consumer $ — $ (9 ) $ — $ (12 ) Industrial — — (58 ) — Communications — — (3 ) — Total U.S. and foreign corporate securities — (9 ) (61 ) (12 ) State and political subdivision — (1 ) — (1 ) RMBS (9 ) — (14 ) (14 ) OTTI losses on fixed maturity securities recognized in earnings (9 ) (10 ) (75 ) (27 ) Fixed maturity securities — net gains (losses) on sales and disposals 61 (65 ) 268 50 Total gains (losses) on fixed maturity securities 52 (75 ) 193 23 Total gains (losses) on equity securities: Total OTTI losses recognized — by sector: Common stock (5 ) (6 ) (71 ) (14 ) OTTI losses on equity securities recognized in earnings (5 ) (6 ) (71 ) (14 ) Equity securities — net gains (losses) on sales and disposals 7 7 21 5 Total gains (losses) on equity securities 2 1 (50 ) (9 ) Mortgage loans (9 ) (26 ) (6 ) (70 ) Real estate and real estate joint ventures 20 206 28 214 Other limited partnership interests (8 ) (75 ) (38 ) (52 ) Other (14 ) 19 (44 ) 7 Subtotal 43 50 83 113 FVO CSEs: Securities 1 — 2 — Non-investment portfolio gains (losses) (2 ) 82 30 151 Subtotal (1 ) 82 32 151 Total net investment gains (losses) $ 42 $ 132 $ 115 $ 264 See “— Related Party Investment Transactions” for discussion of affiliated net investment gains (losses) related to transfers of invested assets to affiliates. Gains (losses) from foreign currency transactions included within net investment gains (losses) were $1 million and $24 million for the three months and nine months ended September 30, 2016 , respectively, and $76 million and $93 million for the three months and nine months ended September 30, 2015 , respectively. Sales or Disposals and Impairments of Fixed Maturity and Equity Securities Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown in the table below. Three Months 2016 2015 2016 2015 Fixed Maturity Securities Equity Securities (In millions) Proceeds $ 15,343 $ 13,895 $ 28 $ 16 Gross investment gains $ 135 $ 74 $ 9 $ 9 Gross investment losses (74 ) (139 ) (2 ) (2 ) OTTI losses (9 ) (10 ) (5 ) (6 ) Net investment gains (losses) $ 52 $ (75 ) $ 2 $ 1 Nine Months 2016 2015 2016 2015 Fixed Maturity Securities Equity Securities (In millions) Proceeds $ 41,425 $ 45,974 $ 85 $ 44 Gross investment gains $ 637 $ 474 $ 28 $ 15 Gross investment losses (369 ) (424 ) (7 ) (10 ) OTTI losses (75 ) (27 ) (71 ) (14 ) Net investment gains (losses) $ 193 $ 23 $ (50 ) $ (9 ) Credit Loss Rollforward The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (loss) (“OCI”): Three Months Nine Months 2016 2015 2016 2015 (In millions) Balance, beginning of period $ 171 $ 194 $ 188 $ 263 Additions: Initial impairments — credit loss OTTI on securities not previously impaired 1 — 1 1 Additional impairments — credit loss OTTI on securities previously impaired 7 1 10 12 Reductions: Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI (10 ) (15 ) (29 ) (95 ) Securities impaired to net present value of expected future cash flows — — (1 ) — Increase in cash flows — accretion of previous credit loss OTTI — (1 ) — (2 ) Balance, end of period $ 169 $ 179 $ 169 $ 179 Related Party Investment Transactions The Company transfers invested assets, primarily consisting of fixed maturity securities and mortgage loans to and from affiliates. Invested assets transferred to and from affiliates were as follows: Three Months Nine Months 2 |
