| Investments | 5 . 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 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”), asset-backed securities (“ABS”) and commercial mortgage-backed securities (“CMBS”) (collectively, “Structured Securities”). June 30, 2017 December 31, 2016 Cost or Gross Unrealized Estimated Cost or Gross Unrealized Estimated Temporary OTTI Temporary OTTI (In millions) Fixed maturity securities: U.S. corporate $ 52,474 $ 4,711 $ 318 $ — $ 56,867 $ 52,665 $ 4,079 $ 586 $ — $ 56,158 U.S. government and agency 33,333 3,709 235 — 36,807 32,834 3,238 457 — 35,615 Foreign corporate 24,290 1,366 683 — 24,973 24,596 957 1,196 — 24,357 RMBS 22,876 1,070 195 (34 ) 23,785 22,786 911 290 (10 ) 23,417 ABS 7,914 57 37 — 7,934 7,567 32 95 — 7,504 State and political subdivision 6,252 1,114 11 — 7,355 6,252 928 44 — 7,136 CMBS 5,011 154 28 — 5,137 4,876 118 59 — 4,935 Foreign government 3,722 596 34 — 4,284 3,565 507 74 — 3,998 Total fixed maturity securities $ 155,872 $ 12,777 $ 1,541 $ (34 ) $ 167,142 $ 155,141 $ 10,770 $ 2,801 $ (10 ) $ 163,120 Equity securities: Common stock $ 1,507 $ 76 $ 14 $ — $ 1,569 $ 1,220 $ 91 $ 12 $ — $ 1,299 Non-redeemable preferred stock 491 31 12 — 510 565 14 39 — 540 Total equity securities $ 1,998 $ 107 $ 26 $ — $ 2,079 $ 1,785 $ 105 $ 51 $ — $ 1,839 __________________ (1) Noncredit OTTI losses included in AOCI in an unrealized gain position are 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 less than $1 million and unrealized gains (losses) of less than $1 million , at both June 30, 2017 and December 31, 2016 . Maturities of Fixed Maturity Securities The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at June 30, 2017 : 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 $ 6,528 $ 32,617 $ 30,034 $ 50,892 $ 35,801 $ 155,872 Estimated fair value $ 6,566 $ 33,767 $ 31,335 $ 58,618 $ 36,856 $ 167,142 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: June 30, 2017 December 31, 2016 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 $ 5,485 $ 164 $ 1,672 $ 154 $ 8,406 $ 337 $ 2,260 $ 249 U.S. government and agency 10,958 235 — — 6,032 457 — — Foreign corporate 2,830 125 4,062 558 5,343 336 4,523 860 RMBS 5,455 106 1,065 55 6,662 187 1,707 93 ABS 1,634 3 761 34 1,482 12 1,714 83 State and political subdivision 312 11 3 — 943 43 17 1 CMBS 526 7 280 21 922 15 432 44 Foreign government 333 8 260 26 581 26 309 48 Total fixed maturity securities $ 27,533 $ 659 $ 8,103 $ 848 $ 30,371 $ 1,413 $ 10,962 $ 1,378 Equity securities: Common stock $ 260 $ 14 $ 4 $ — $ 58 $ 12 $ 10 $ — Non-redeemable preferred stock 21 — 113 12 139 6 120 33 Total equity securities $ 281 $ 14 $ 117 $ 12 $ 197 $ 18 $ 130 $ 33 Total number of securities in an unrealized loss position 1,925 710 3,076 940 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 2016 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 June 30, 2017 . 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, as well as a change in the Company’s intention to hold or sell a security that is in an unrealized loss position. 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 $1.3 billion during the six months ended June 30, 2017 to $1.5 billion . The decrease in gross unrealized losses for the six months ended June 30, 2017 was primarily attributable to narrowing credit spreads and decreasing longer-term interest rates, and to a lesser extent, the impact of strengthening foreign currencies on non-functional currency denominated fixed maturity securities. At June 30, 2017 , $145 million of the total $1.5 billion of gross unrealized losses were from 34 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 $145 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, $116 million , or 80% , were related to gross unrealized losses on 18 investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads since purchase and, with respect to fixed-rate fixed maturity securities, rising interest rates since purchase. Below Investment Grade Fixed Maturity Securities Of the $145 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, $29 million , or 20% , were related to gross unrealized losses on 16 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 utility and 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. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at: June 30, 2017 December 31, 2016 Carrying Value % of Total Carrying Value % of Total (Dollars in millions) Mortgage loans: Commercial $ 34,155 59.2 % $ 34,008 60.1 % Agricultural 12,524 21.7 12,358 21.9 Residential 10,671 18.5 9,895 17.5 Subtotal (1) 57,350 99.4 56,261 99.5 Valuation allowances (272 ) (0.5 ) (267 ) (0.5 ) Subtotal mortgage loans, net 57,078 98.9 55,994 99.0 Residential — FVO 615 1.1 566 1.0 Total mortgage loans, net $ 57,693 100.0 % $ 56,560 100.0 % __________________ (1) Purchases of mortgage loans were $742 million and $1.5 billion for the three months and six months ended June 30, 2017 , respectively, and $959 million and $1.2 billion for the three months and six months ended June 30, 2016 , respectively. Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on residential — FVO is presented in Note 7 . 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) June 30, 2017 Commercial $ — $ — $ — $ — $ — $ 34,155 $ 170 $ — Agricultural 11 9 1 4 4 12,511 38 12 Residential — — — 321 291 10,380 63 291 Total $ 11 $ 9 $ 1 $ 325 $ 295 $ 57,046 $ 271 $ 303 December 31, 2016 Commercial $ — $ — $ — $ 12 $ 12 $ 33,996 $ 167 $ 12 Agricultural 11 9 1 27 27 12,322 37 35 Residential — — — 265 241 9,654 62 241 Total $ 11 $ 9 $ 1 $ 304 $ 280 $ 55,972 $ 266 $ 288 The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $6 million , $13 million and $278 million , respectively, for the three months ended June 30, 2017 ; and $8 million , $21 million and $266 million , respectively, for the six months ended June 30, 2017 . The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $34 million , $49 million and $175 million , respectively, for the three months ended June 30, 2016 ; and $41 million , $54 million and $161 million , respectively, for the six months ended June 30, 2016 . Valuation Allowance Rollforward by Portfolio Segment The changes in the valuation allowance, by portfolio segment, were as follows: Six Months 2017 2016 Commercial Agricultural Residential Total Commercial Agricultural Residential Total (In millions) Balance, beginning of period $ 167 $ 38 $ 62 $ 267 $ 165 $ 37 $ 55 $ 257 Provision (release) 3 1 9 13 (1 ) 1 5 5 Charge-offs, net of recoveries — — (8 ) (8 ) — (2 ) (7 ) (9 ) Balance, end of period $ 170 $ 39 $ 63 $ 272 $ 164 $ 36 $ 53 $ 253 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) June 30, 2017 Loan-to-value ratios: Less than 65% $ 29,705 $ 1,282 $ 153 $ 31,140 91.2 % $ 31,850 91.4 % 65% to 75% 2,301 207 187 2,695 7.9 2,694 7.7 76% to 80% — 115 58 173 0.5 169 0.5 Greater than 80% — — 147 147 0.4 142 0.4 Total $ 32,006 $ 1,604 $ 545 $ 34,155 100 % $ 34,855 100 % December 31, 2016 Loan-to-value ratios: Less than 65% $ 29,352 $ 1,036 $ 564 $ 30,952 91.0 % $ 31,320 91.2 % 65% to 75% 2,522 — 198 2,720 8.0 2,694 7.9 76% to 80% 116 — — 116 0.3 115 0.3 Greater than 80% 118 27 75 220 0.7 214 0.6 Total $ 32,108 $ 1,063 $ 837 $ 34,008 100 % $ 34,343 100 % Credit Quality of Agricultural Mortgage Loans The credit quality of agricultural mortgage loans was as follows at: June 30, 2017 December 31, 2016 Recorded Investment % of Total Recorded Investment % of Total (Dollars in millions) Loan-to-value ratios: Less than 65% $ 11,921 95.2 % $ 11,829 95.7 % 65% to 75% 463 3.7 424 3.4 76% to 80% 127 1.0 17 0.2 Greater than 80% 13 0.1 88 0.7 Total $ 12,524 100.0 % $ 12,358 100.0 % The estimated fair value of agricultural mortgage loans was $12.7 billion and $12.5 billion at June 30, 2017 and December 31, 2016 , respectively. Credit Quality of Residential Mortgage Loans The credit quality of residential mortgage loans was as follows at: June 30, 2017 December 31, 2016 Recorded Investment % of Total Recorded Investment % of Total (Dollars in millions) Performance indicators: Performing $ 10,308 96.6 % $ 9,563 96.6 % Nonperforming 363 3.4 332 3.4 Total $ 10,671 100.0 % $ 9,895 100.0 % The estimated fair value of residential mortgage loans was $11.1 billion and $10.3 billion at June 30, 2017 and December 31, 2016 , respectively. Past Due and Nonaccrual Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both June 30, 2017 and December 31, 2016 . 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 nonaccrual mortgage loans at recorded investment, prior to valuation allowances, by portfolio segment, were as follows at: Past Due Greater than 90 Days Past Due and Still Accruing Interest Nonaccrual June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 (In millions) Commercial $ — $ — $ — $ — $ — $ — Agricultural 116 127 108 104 10 23 Residential 363 332 — — 363 332 Total $ 479 $ 459 $ 108 $ 104 $ 373 $ 355 Mortgage Loans Modified in a Troubled Debt Restructuring During both the three months and six months ended June 30, 2017 and 2016 , 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 $3.8 billion and $4.7 billion at June 30, 2017 and December 31, 2016 , 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: June 30, 2017 December 31, 2016 (In millions) Fixed maturity securities $ 11,176 $ 7,912 Fixed maturity securities with noncredit OTTI losses included in AOCI 34 10 Total fixed maturity securities 11,210 7,922 Equity securities 135 72 Derivatives 1,870 2,244 Other 152 16 Subtotal 13,367 10,254 Amounts allocated from: Future policy benefits (54 ) (9 ) DAC and VOBA related to noncredit OTTI losses recognized in AOCI (1 ) (1 ) DAC, VOBA and DSI (703 ) (569 ) Policyholder dividend obligation (2,237 ) (1,931 ) Subtotal (2,995 ) (2,510 ) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (12 ) (3 ) Deferred income tax benefit (expense) (3,595 ) (2,690 ) Net unrealized investment gains (losses) $ 6,765 $ 5,051 The changes in net unrealized investment gains (losses) were as follows: Six Months (In millions) Balance, beginning of period $ 5,051 Fixed maturity securities on which noncredit OTTI losses have been recognized 24 Unrealized investment gains (losses) during the period 3,089 Unrealized investment gains (losses) relating to: Future policy benefits (45 ) DAC and VOBA related to noncredit OTTI losses recognized in AOCI — DAC, VOBA and DSI (134 ) Policyholder dividend obligation (306 ) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (9 ) Deferred income tax benefit (expense) (905 ) Balance, end of period $ 6,765 Change in net unrealized investment gains (losses) $ 1,714 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 June 30, 2017 and December 31, 2016 . Securities Lending Elements of the securities lending program are presented below at: June 30, 2017 December 31, 2016 (In millions) Securities on loan: (1) Amortized cost $ 14,512 $ 15,694 Estimated fair value $ 15,689 $ 16,496 Cash collateral received from counterparties (2) $ 16,096 $ 16,807 Security collateral received from counterparties (3) $ 9 $ 14 Reinvestment portfolio — estimated fair value $ 16,208 $ 16,821 __________________ (1) Included within fixed maturity securities. (2) Included within payables for collateral under securities loaned and other transactions. (3) Security collateral received 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 was as follows at: June 30, 2017 December 31, 2016 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 $ 3,242 $ 8,181 $ 4,673 $ 16,096 $ 4,033 $ 5,640 $ 7,134 $ 16,807 __________________ (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 June 30, 2017 was $3.2 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 agency RMBS, U.S. government and agency and ABS), short-term investments and cash equivalents with 66% invested in agency RMBS, short-term investments, U.S. government and agency securities, cash equivalents or held in cash. 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. Repurchase Agreements Elements of the short-term repurchase agreements are presented below at: June 30, 2017 (In millions) Securities on loan: (1) Amortized cost $ 1,743 Estimated fair value $ 1,873 Cash collateral received from counterparties (2) $ 1,850 Reinvestment portfolio — estimated fair value $ 1,863 __________________ (1) Included within fixed maturity securities. (2) Included within payables for collateral under securities loaned and other transactions. The cash collateral liability by loaned security type and remaining tenor of the agreements was as follows at: June 30, 2017 Remaining Tenor of Repurchase Agreements 1 Month or Less Total (In millions) Cash collateral liability by loaned security type: U.S. government and agency $ 1,850 $ 1,850 The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, U.S. government and agency securities and ABS), short-term investments and cash equivalents with 66% invested in agency RMBS, short-term investments, U.S. government and agency securities, cash equivalents or held in cash. 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. There were no repurchase agreements outstanding at December 31, 2016. 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: June 30, 2017 December 31, 2016 (In millions) Invested assets on deposit (regulatory deposits) $ 48 $ 47 Invested assets pledged as collateral 20,771 20,750 Total invested assets on deposit and pledged as collateral $ 20,819 $ 20,797 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 2016 Annual Report) and derivative transactions (see Note 6 ). Amounts in the table above include invested assets, and cash and cash equivalents. See Note 6. See “— Securities Lending” and “— Repurchase Agreements” for information regarding securities on loan and Note 4 for information regarding investments designated to the closed block. Variable Interest Entities The Company has invested in 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, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved 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 investment-related VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at: June 30, 2017 December 31, 2016 Total Assets Total Liabilities Total Assets Total Liabilities (In millions) Real estate joint ventures (1) $ 1,110 $ — $ 1,124 $ — Other investments (2) 59 12 62 12 Total $ 1,169 $ 12 $ 1,186 $ 12 __________________ (1) The Company consolidates certain affiliated real estate joint ventures. At June 30, 2017 , the Company and its affiliates invested $1.0 billion and $84 million , respectively, in these affiliated real estate joint ventures. (2) 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. 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: June 30, 2017 December 31, 2016 Carrying Amount Maximum Exposure to Loss (1) Carrying Amount Maximum Exposure to Loss (1) (In millions) Fixed maturity securities AFS: Structured Securities (2) $ 35,822 $ 35,822 $ 34,912 $ 34,912 U.S. and foreign corporate 1,282 1,282 1,167 1,167 Other limited partnership interests 3,381 5,789 3,383 5,674 Other invested assets 2,322 2,776 2,089 2,666 Real estate joint ventures 72 86 81 95 Total $ 42,879 $ 45,755 $ 41,632 $ 44,514 __________________ (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 $137 million and $150 million at June 30, 2017 and December 31, 2016 , 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 11 , 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 six months ended June 30, 2017 and 2016 . Net Investment Income The components of net investment income were as follows: Three Months Six Months 2017 2016 2017 2016 (In millions) Investment income: Fixed maturity securities $ 1,744 $ 1,941 $ 3,510 $ 3,896 Equity securities 24 22 48 46 Mortgage loans 655 664 1,292 1,300 Policy loans 77 104 153 207 Real estate and real estate joint ventures 125 105 223 207 Other limited partnership interests 147 77 343 120 Cash, cash equivalents and short-term investments 18 11 34 21 Operating joint venture 5 3 6 5 Other 40 46 105 69 Subtotal 2,835 2,973 5,714 5,871 Less: Investment expenses 212 197 419 392 Net investment income $ 2,623 $ 2,776 $ 5,295 $ 5,479 See “— Related Party Investment Transactions” for discussion of affiliated net investment income and investment expenses. Net Investment Gains (Losses) Components of Net Investment Gains (Losses) The components of net investment gains (losses) were as follows: Three Months Six Months 2017 2016 2017 2016 (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: Industrial $ — $ (8 ) $ — $ (58 ) Communications — — — (3 ) Total U.S. and foreign corporate securities — (8 ) — (61 ) State and political subdivision (1 ) — (1 ) — RMBS — (3 ) — (5 ) OTTI losses on fixed maturity securities recognized in earnings (1 ) (11 ) (1 ) (66 ) Fixed maturity securities — net gains (losses) on sales and disposals 9 298 40 207 Total gains (losses) on fixed maturity securities 8 287 39 141 Total gains (losses) on equity securities: Total OTTI losses recognized — by sector: Common stock (5 ) (16 ) (12 ) (66 ) Non-redeemable preferred stock — — (1 ) — OTTI losses on equity securities recognized in earnings (5 ) (16 ) (13 ) (66 ) Equity securities — net gains (losses) on sales and disposals 4 13 1 14 Total gains (losses) on equity securities (1 ) (3 ) (12 ) (52 ) Mortgage loans (16 ) 7 (28 ) 3 Real estate and real estate joint ventures 270 7 267 8 Other limited partnership interests (11 ) (12 ) (14 ) (30 ) Other (73 ) (23 ) (111 ) (30 ) Subtotal 177 263 141 40 FVO consolidated securitization entities: Securities — — — 1 Non-investment portfolio gains (losses) (46 ) 46 (53 ) 32 Subtotal (46 ) 46 (53 ) 33 Total net investment gains (losses) $ 131 $ 309 $ 88 $ 73 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 ($61) million and ($109) million for the three months and six months ended June 30, 2017 , respectively, and $35 million and $23 million for the three months and six months ended June 30, 2016 , 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 2017 2016 2017 2016 Fixed Maturity Securities Equity Securities (In millions) Proceeds $ 8,734 $ 13,187 $ 70 $ 23 Gross investment gains $ 63 $ 378 $ 5 $ 13 Gross investment losses (54 ) (80 ) (1 ) — OTTI losses (1 ) (11 ) (5 ) (16 ) Net investment gains (losses) $ 8 $ 287 $ (1 ) $ (3 ) Six Months 2017 2016 2017 2016 Fixed Maturity Securities Equity Securities (In millions) Proceeds $ 16,212 $ 26,082 $ 89 $ 57 Gross investment gains $ 193 $ 502 $ 5 $ 19 Gross investment losses (153 ) (295 ) (4 ) (5 ) OTTI losses (1 ) (66 ) (13 ) (66 ) Net investment gains (losses) $ 39 $ 141 $ (12 ) $ (52 ) 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 Six Months 2017 2016 2017 2016 (In millions) Balance, beginning of period $ 141 $ 182 $ 157 $ 188 Additions: Additional impairments — credit loss OTTI on securities previously impaired — 2 — 3 Reductions: Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI (5 ) (13 ) (21 ) (20 ) Balance, end of period $ 136 $ 171 $ 136 $ 171 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 Six Months 2017 2016 2017 2016 (In millions) Estimated fair value of invested assets transferred to affiliates $ — $ 4,139 $ 453 $ 4,376 Amortized cost of invested assets transferred to affiliates $ — $ 3,895 $ 416 $ 4,128 Net investment gains (losses) recognized on transfers $ — $ 244 $ 37 $ 248 Estimated fair value of invested assets transferred from affiliates $ — $ 99 $ 293 $ 99 In January 2017 , the Company received transferred investments with an estimated fair value of $292 million , which are included in the table above, in addition to $275 million in cash related to the recapture of risks from minimum benefit guarantees on certain variable annuities previously reinsured by Brighthouse Life Insurance Company (“Brighthouse Insurance”). See Note 12 for additional information related to the transfer. Below is a summary of certain affiliated loans which are more fully described in Note 8 of the Notes of the Consolidated Financial Statements included in the 2016 Annual Report. The Company had affiliated loans outstanding to MetLife, Inc., which are included in other invested assets, totaling $1.8 billion at both June 30, 2017 and December 31, 2016 . Net investment income from affiliated loans was $20 million and $39 million for the three months and six months ended June 30, 2017 , respectively, and $24 million and $47 million for the three months and six months ended June 30, 2016 , respectively. As a structured settlements assignment company, the Company purchases annuities from affiliates to fund the periodic structured settlement claim payment obligations it assumes. Each annuity purchased is contractually designated to the assumed claim obligation it funds. The aggregate annuity contract values recorded, for which the Company has also recorded unpaid claim obligations of equal amounts, were $1.3 billion at both June 30, 2017 and December 31, 2016 . The related net investment income and corresponding policyholder benefits and claims recognized were $17 million and $33 million for the three months and six months ended June 30, 2017 , respectively, and $17 million and $29 million for the |
