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INVESTMENTS | 12 Months Ended
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Dec. 31, 2019
Investments [Abstract] |
INVESTMENTS | INVESTMENTS Net Investment Income The components of net investment income for the years ended December 31 were as follows:
(In millions) | 2019 |  | 2018 |  | 2017
Fixed maturity securities |  | $ | 3,141 |  |  |  |  | $ | 3,142 |  |  |  |  | $ | 3,173 |  |
Equity securities |  | 37 |  |  |  |  | 38 |  |  |  |  | 42 |  |
Commercial mortgage and other loans |  | 468 |  |  |  |  | 333 |  |  |  |  | 86 |  |
Other investments |  | 53 |  |  |  |  | 36 |  |  |  |  | 8 |  |
Short-term investments and cash equivalents |  | 56 |  |  |  |  | 41 |  |  |  |  | 25 |  |
Gross investment income |  | 3,755 |  |  |  |  | 3,590 |  |  |  |  | 3,334 |  |
Less investment expenses |  | 177 |  |  |  |  | 148 |  |  |  |  | 114 |  |
Net investment income |  | $ | 3,578 |  |  |  |  | $ | 3,442 |  |  |  |  | $ | 3,220 |  |
Investment Holdings The amortized cost for the Company's investments in fixed maturity securities, the cost for equity securities and the fair values of these investments at December 31 are shown in the following tables.
| 2019
(In millions) | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities available for sale, carried at fair value through other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Yen-denominated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan government and agencies |  | $ | 30,929 |  |  |  |  | $ | 5,169 |  |  |  |  | $ | 0 |  |  |  |  | $ | 36,098 |  |
Municipalities |  | 516 |  |  |  |  | 116 |  |  |  |  | 3 |  |  |  |  | 629 |  |
Mortgage- and asset-backed securities |  | 229 |  |  |  |  | 25 |  |  |  |  | 0 |  |  |  |  | 254 |  |
Public utilities |  | 1,855 |  |  |  |  | 406 |  |  |  |  | 0 |  |  |  |  | 2,261 |  |
Sovereign and supranational |  | 680 |  |  |  |  | 50 |  |  |  |  | 0 |  |  |  |  | 730 |  |
Banks/financial institutions |  | 6,152 |  |  |  |  | 700 |  |  |  |  | 86 |  |  |  |  | 6,766 |  |
Other corporate |  | 5,323 |  |  |  |  | 944 |  |  |  |  | 24 |  |  |  |  | 6,243 |  |
Total yen-denominated |  | 45,684 |  |  |  |  | 7,410 |  |  |  |  | 113 |  |  |  |  | 52,981 |  |
U.S. dollar-denominated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies |  | 293 |  |  |  |  | 9 |  |  |  |  | 0 |  |  |  |  | 302 |  |
Municipalities |  | 1,077 |  |  |  |  | 141 |  |  |  |  | 0 |  |  |  |  | 1,218 |  |
Mortgage- and asset-backed securities |  | 149 |  |  |  |  | 7 |  |  |  |  | 0 |  |  |  |  | 156 |  |
Public utilities |  | 3,804 |  |  |  |  | 725 |  |  |  |  | 10 |  |  |  |  | 4,519 |  |
Sovereign and supranational |  | 239 |  |  |  |  | 73 |  |  |  |  | 0 |  |  |  |  | 312 |  |
Banks/financial institutions |  | 2,879 |  |  |  |  | 646 |  |  |  |  | 4 |  |  |  |  | 3,521 |  |
Other corporate |  | 25,246 |  |  |  |  | 3,255 |  |  |  |  | 248 |  |  |  |  | 28,253 |  |
Total U.S. dollar-denominated |  | 33,687 |  |  |  |  | 4,856 |  |  |  |  | 262 |  |  |  |  | 38,281 |  |
Total securities available for sale |  | $ | 79,371 |  |  |  |  | $ | 12,266 |  |  |  |  | $ | 375 |  |  |  |  | $ | 91,262 |  |
| 2018
(In millions) | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities available for sale, carried at fair value through other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Yen-denominated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan government and agencies |  | $ | 30,637 |  |  |  |  | $ | 3,700 |  |  |  |  | $ | 140 |  |  |  |  | $ | 34,197 |  |
Municipalities |  | 385 |  |  |  |  | 32 |  |  |  |  | 9 |  |  |  |  | 408 |  |
Mortgage- and asset-backed securities |  | 155 |  |  |  |  | 22 |  |  |  |  | 0 |  |  |  |  | 177 |  |
Public utilities |  | 1,732 |  |  |  |  | 280 |  |  |  |  | 4 |  |  |  |  | 2,008 |  |
Sovereign and supranational |  | 826 |  |  |  |  | 123 |  |  |  |  | 0 |  |  |  |  | 949 |  |
Banks/financial institutions |  | 5,440 |  |  |  |  | 502 |  |  |  |  | 238 |  |  |  |  | 5,704 |  |
Other corporate |  | 4,852 |  |  |  |  | 649 |  |  |  |  | 44 |  |  |  |  | 5,457 |  |
Total yen-denominated |  | 44,027 |  |  |  |  | 5,308 |  |  |  |  | 435 |  |  |  |  | 48,900 |  |
U.S dollar-denominated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies |  | 137 |  |  |  |  | 9 |  |  |  |  | 1 |  |  |  |  | 145 |  |
Municipalities |  | 1,343 |  |  |  |  | 120 |  |  |  |  | 8 |  |  |  |  | 1,455 |  |
Mortgage- and asset-backed securities |  | 155 |  |  |  |  | 8 |  |  |  |  | 1 |  |  |  |  | 162 |  |
Public utilities |  | 4,772 |  |  |  |  | 496 |  |  |  |  | 105 |  |  |  |  | 5,163 |  |
Sovereign and supranational |  | 251 |  |  |  |  | 60 |  |  |  |  | 0 |  |  |  |  | 311 |  |
Banks/financial institutions |  | 2,860 |  |  |  |  | 389 |  |  |  |  | 35 |  |  |  |  | 3,214 |  |
Other corporate |  | 23,311 |  |  |  |  | 1,343 |  |  |  |  | 1,109 |  |  |  |  | 23,545 |  |
Total U.S. dollar-denominated |  | 32,829 |  |  |  |  | 2,425 |  |  |  |  | 1,259 |  |  |  |  | 33,995 |  |
Total securities available for sale |  | $ | 76,856 |  |  |  |  | $ | 7,733 |  |  |  |  | $ | 1,694 |  |  |  |  | $ | 82,895 |  |
| 2019
(In millions) | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities held to maturity, carried at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Yen-denominated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan government and agencies |  | $ | 22,241 |  |  |  |  | $ | 6,050 |  |  |  |  | $ | 0 |  |  |  |  | $ | 28,291 |  |
Municipalities |  | 821 |  |  |  |  | 262 |  |  |  |  | 0 |  |  |  |  | 1,083 |  |
Mortgage- and asset-backed securities |  | 16 |  |  |  |  | 1 |  |  |  |  | 0 |  |  |  |  | 17 |  |
Public utilities |  | 2,535 |  |  |  |  | 419 |  |  |  |  | 0 |  |  |  |  | 2,954 |  |
Sovereign and supranational |  | 1,123 |  |  |  |  | 197 |  |  |  |  | 0 |  |  |  |  | 1,320 |  |
Banks/financial institutions |  | 916 |  |  |  |  | 105 |  |  |  |  | 3 |  |  |  |  | 1,018 |  |
Other corporate |  | 2,433 |  |  |  |  | 485 |  |  |  |  | 7 |  |  |  |  | 2,911 |  |
Total yen-denominated |  | 30,085 |  |  |  |  | 7,519 |  |  |  |  | 10 |  |  |  |  | 37,594 |  |
Total securities held to maturity |  | $ | 30,085 |  |  |  |  | $ | 7,519 |  |  |  |  | $ | 10 |  |  |  |  | $ | 37,594 |  |
| 2018
(In millions) | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities held to maturity, carried at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Yen-denominated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japan government and agencies |  | $ | 21,712 |  |  |  |  | $ | 5,326 |  |  |  |  | $ | 0 |  |  |  |  | $ | 27,038 |  |
Municipalities |  | 359 |  |  |  |  | 110 |  |  |  |  | 0 |  |  |  |  | 469 |  |
Mortgage- and asset-backed securities |  | 14 |  |  |  |  | 1 |  |  |  |  | 0 |  |  |  |  | 15 |  |
Public utilities |  | 2,727 |  |  |  |  | 254 |  |  |  |  | 8 |  |  |  |  | 2,973 |  |
Sovereign and supranational |  | 1,551 |  |  |  |  | 289 |  |  |  |  | 0 |  |  |  |  | 1,840 |  |
Banks/financial institutions |  | 1,445 |  |  |  |  | 158 |  |  |  |  | 20 |  |  |  |  | 1,583 |  |
Other corporate |  | 2,510 |  |  |  |  | 332 |  |  |  |  | 38 |  |  |  |  | 2,804 |  |
Total yen-denominated |  | 30,318 |  |  |  |  | 6,470 |  |  |  |  | 66 |  |  |  |  | 36,722 |  |
Total securities held to maturity |  | $ | 30,318 |  |  |  |  | $ | 6,470 |  |  |  |  | $ | 66 |  |  |  |  | $ | 36,722 |  |
| 2019 |  | 2018
(In millions) | Fair Value |  | Fair Value
Equity securities, carried at fair value through net earnings: |  |  |  |  |  |  |
Equity securities: |  |  |  |  |  |  |
Yen-denominated |  | $ | 658 |  |  |  |  | $ | 641 |  |
U.S. dollar-denominated |  | 144 |  |  |  |  | 346 |  |
Total equity securities |  | $ | 802 |  |  |  |  | $ | 987 |  |
The methods of determining the fair values of the Company's investments in fixed maturity securities and equity securities are described in Note 5. During 2019 and 2018, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category. During 2017, the Company reclassified three investments from the held-to-maturity category to the available-for-sale category as a result of the issuers' credit rating being downgraded to below investment grade. At the time of the transfer, the securities had an aggregate amortized cost of $773 million and an aggregate unrealized gain of $47 million. Contractual and Economic Maturities The contractual and economic maturities of the Company's investments in fixed maturity securities at December 31, 2019, were as follows:
(In millions) | Amortized Cost |  | Fair Value
Available for sale: |  |  |  |  |  |
Due in one year or less |  | $ | 583 |  |  |  |  | $ | 612 |
Due after one year through five years |  | 7,933 |  |  |  |  | 8,122 |
Due after five years through 10 years |  | 11,347 |  |  |  |  | 12,819 |
Due after 10 years |  | 59,130 |  |  |  |  | 69,299 |
Mortgage- and asset-backed securities |  | 378 |  |  |  |  | 410 |
Total fixed maturity securities available for sale |  | $ | 79,371 |  |  |  |  | $ | 91,262 |
Held to maturity: |  |  |  |  |  |
Due in one year or less |  | $ | 265 |  |  |  |  | $ | 270 |
Due after one year through five years |  | 1,227 |  |  |  |  | 1,330 |
Due after five years through 10 years |  | 532 |  |  |  |  | 599 |
Due after 10 years |  | 28,045 |  |  |  |  | 35,378 |
Mortgage- and asset-backed securities |  | 16 |  |  |  |  | 17 |
Total fixed maturity securities held to maturity |  | $ | 30,085 |  |  |  |  | $ | 37,594 |
Economic maturities are used for certain debt instruments with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates. Investment Concentrations The Company's process for investing in credit-related investments begins with an independent approach to underwriting each issuer's fundamental credit quality. The Company evaluates independently those factors that it believes could influence an issuer's ability to make payments under the contractual terms of the Company's instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). The Company further evaluates the investment considering broad business and portfolio management objectives, including asset/liability needs, portfolio diversification, and expected income. Investment exposures that individually exceeded 10% of shareholders' equity as of December 31 were as follows:
| 2019 |  | 2018
(In millions) | Credit Rating |  | Amortized Cost |  | Fair Value |  | Credit Rating |  | Amortized Cost |  | Fair Value
Japan National Government(1) | A+ |  | $51,726 |  | $62,584 |  | A+ |  | $51,207 |  | $59,945
(1)Japan Government Bonds (JGBs) or JGB-backed securities Realized Investment Gains and Losses Information regarding pretax realized gains and losses from investments for the years ended December 31 follows:
(In millions) | 2019 |  | 2018 |  | 2017 |
Realized investment gains (losses): |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |
Available for sale: |  |  |  |  |  |
Gross gains from sales | $ | 115 |  |  | $ | 101 |  |  | $ | 51 |  |
Gross losses from sales | (68 | ) |  | (156 | ) |  | (68 | ) |
Foreign currency gains (losses) on sales and redemptions | (16 | ) |  | 73 |  |  | (48 | ) |
Other-than-temporary impairment losses | (13 | ) |  | (64 | ) |  | (7 | ) |
Total fixed maturity securities | 18 |  |  | (46 | ) |  | (72 | ) |
Equity securities | 101 |  |  | (131 | ) |  | 71 |  | (1)
Loan receivables: |  |  |  |  |  |
Loan loss reserves | (18 | ) |  | (19 | ) |  | (8 | ) |
Total loan receivables | (18 | ) |  | (19 | ) |  | (8 | ) |
Derivatives and other: |  |  |  |  |  |
Derivative gains (losses) | (174 | ) |  | (224 | ) |  | (109 | ) |
Foreign currency gains (losses) | (62 | ) |  | (10 | ) |  | (33 | ) |
Total derivatives and other | (236 | ) |  | (234 | ) |  | (142 | ) |
Total realized investment gains (losses) | $ | (135 | ) |  | $ | (430 | ) |  | $ | (151 | ) |
(1) Includes impairments of $22 in 2017 The unrealized holding gains, net of losses, recorded as a component of realized investment gains and losses for the year ended December 31, 2019, that relates to equity securities still held at the December 31, 2019, reporting date was $64 million. Unrealized Investment Gains and Losses Information regarding changes in unrealized gains and losses from investments recorded in AOCI for the years ended December 31 follows:
(In millions) | 2019 |  | 2018 |  | 2017
Changes in unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale |  | $ | 5,852 |  |  |  |  | $ | (3,142 | ) |  |  |  | $ | 1,657 |  |
Equity securities |  | 0 |  |  |  |  | 0 |  |  |  |  | 71 |  |
Total change in unrealized gains (losses) |  | $ | 5,852 |  |  |  |  | $ | (3,142 | ) |  |  |  | $ | 1,728 |  |
Effect on Shareholders' Equity The net effect on shareholders' equity of unrealized gains and losses from fixed maturity securities at December 31 was as follows:
(In millions) | 2019 |  | 2018
Unrealized gains (losses) on securities available for sale |  | $ | 11,891 |  |  |  |  | $ | 6,039 |  |
Deferred income taxes |  | (3,343 | ) |  |  |  | (1,805 | ) |
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities |  | $ | 8,548 |  |  |  |  | $ | 4,234 |  |
Gross Unrealized Loss Aging The following tables show the fair values and gross unrealized losses of the Company's available-for-sale and held-to-maturity investments that were in an unrealized loss position, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31.
| 2019
| Total |  | Less than 12 months |  | 12 months or longer
(In millions) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipalities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Yen-denominated |  | $ | 80 |  |  |  |  | $ | 3 |  |  |  |  | $ | 80 |  |  |  |  | $ | 3 |  |  |  |  | $ | 0 |  |  |  |  | $ | 0 |  |
Public utilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 306 |  |  |  |  | 10 |  |  |  |  | 69 |  |  |  |  | 2 |  |  |  |  | 237 |  |  |  |  | 8 |  |
Banks/financial institutions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 79 |  |  |  |  | 4 |  |  |  |  | 18 |  |  |  |  | 0 |  |  |  |  | 61 |  |  |  |  | 4 |  |
Yen-denominated |  | 1,828 |  |  |  |  | 89 |  |  |  |  | 1,828 |  |  |  |  | 89 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Other corporate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 4,261 |  |  |  |  | 248 |  |  |  |  | 792 |  |  |  |  | 53 |  |  |  |  | 3,469 |  |  |  |  | 195 |  |
Yen-denominated |  | 636 |  |  |  |  | 31 |  |  |  |  | 636 |  |  |  |  | 31 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Total |  | $ | 7,190 |  |  |  |  | $ | 385 |  |  |  |  | $ | 3,423 |  |  |  |  | $ | 178 |  |  |  |  | $ | 3,767 |  |  |  |  | $ | 207 |  |
| 2018
| Total |  | Less than 12 months |  | 12 months or longer
(In millions) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government and agencies: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | $ | 67 |  |  |  |  | $ | 1 |  |  |  |  | $ | 67 |  |  |  |  | $ | 1 |  |  |  |  | $ | 0 |  |  |  |  | $ | 0 |  |
Japan government and agencies: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Yen-denominated |  | 3,604 |  |  |  |  | 140 |  |  |  |  | 3,604 |  |  |  |  | 140 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Municipalities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 515 |  |  |  |  | 8 |  |  |  |  | 515 |  |  |  |  | 8 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Yen-denominated |  | 148 |  |  |  |  | 9 |  |  |  |  | 148 |  |  |  |  | 9 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Mortgage- and asset- backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 74 |  |  |  |  | 1 |  |  |  |  | 74 |  |  |  |  | 1 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Public utilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 1,585 |  |  |  |  | 105 |  |  |  |  | 892 |  |  |  |  | 48 |  |  |  |  | 693 |  |  |  |  | 57 |  |
Yen-denominated |  | 604 |  |  |  |  | 12 |  |  |  |  | 604 |  |  |  |  | 12 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Banks/financial institutions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 625 |  |  |  |  | 35 |  |  |  |  | 340 |  |  |  |  | 19 |  |  |  |  | 285 |  |  |  |  | 16 |  |
Yen-denominated |  | 3,057 |  |  |  |  | 258 |  |  |  |  | 3,057 |  |  |  |  | 258 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Other corporate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. dollar-denominated |  | 12,899 |  |  |  |  | 1,109 |  |  |  |  | 5,782 |  |  |  |  | 407 |  |  |  |  | 7,117 |  |  |  |  | 702 |  |
Yen-denominated |  | 1,306 |  |  |  |  | 82 |  |  |  |  | 1,306 |  |  |  |  | 82 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Total |  | $ | 24,484 |  |  |  |  | $ | 1,760 |  |  |  |  | $ | 16,389 |  |  |  |  | $ | 985 |  |  |  |  | $ | 8,095 |  |  |  |  | $ | 775 |  |
Analysis of Securities in Unrealized Loss Positions The unrealized losses on the Company's fixed maturity securities investments have been primarily related to general market changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal. For any significant declines in fair value of its fixed maturity securities, the Company performs a more focused review of the related issuers' credit profile. For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal. Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company. Commercial Mortgage and Other Loans The Company classifies its TREs, CMLs and MMLs as held-for-investment and includes them in the commercial mortgage and other loans line on the consolidated balance sheets. The Company carries them on the balance sheet at amortized cost less an estimated allowance for loan losses. The table below reflects the composition of the carrying value for commercial mortgage and other loans by property type as of December 31.
(In millions) | 2019 |  | 2018
| Amortized Cost |  | % of Total |  | Amortized Cost |  | % of Total
Commercial Mortgage and other loans |  |  |  |  |  |  |
Transitional real estate loans: |  |  |  |  |  |  |
Office | $ | 1,800 |  |  | 18.7 | % |  | $ | 1,621 |  |  | 23.3 | %
Retail | 131 |  |  | 1.4 |  |  | 147 |  |  | 2.1 |
Apartments/Multi-Family | 2,085 |  |  | 21.7 |  |  | 1,706 |  |  | 24.6 |
Industrial | 256 |  |  | 2.7 |  |  | 250 |  |  | 3.6 |
Hospitality | 1,036 |  |  | 10.8 |  |  | 531 |  |  | 7.6 |
Other | 164 |  |  | 1.7 |  |  | 139 |  |  | 2.0 |
Total transitional real estate loans | 5,472 |  |  | 57.0 |  |  | 4,394 |  |  | 63.2 |
Commercial mortgage loans: |  |  |  |  |  |  |
Office | 410 |  |  | 4.3 |  |  | 281 |  |  | 4.1 |
Retail | 348 |  |  | 3.5 |  |  | 316 |  |  | 4.6 |
Apartments/Multi-Family | 569 |  |  | 5.9 |  |  | 369 |  |  | 5.3 |
Industrial | 383 |  |  | 4.0 |  |  | 99 |  |  | 1.4 |
Total commercial mortgage loans | 1,710 |  |  | 17.7 |  |  | 1,065 |  |  | 15.4 |
Middle market loans | 2,432 |  |  | 25.3 |  |  | 1,487 |  |  | 21.4 |
Total commercial mortgage and other loans | $ | 9,614 |  |  | 100.0 | % |  | $ | 6,946 |  |  | 100.0 | %
Allowance for Loan Losses | (45 | ) |  |  |  | (27 | ) |  |
Total net commercial mortgage and other loans | $ | 9,569 |  |  |  |  | $ | 6,919 |  |  |
Commercial mortgage and transitional real estate loans were secured by properties entirely within the U.S. (with the largest concentrations in California (20%), Texas (15%) and Florida (10%)). Middle market loans are issued only to companies domiciled within the U.S. and Canada. Transitional Real Estate Loans Transitional real estate loans are commercial mortgage loans that are typically relatively short-term floating rate instruments secured by a first lien on the property.These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date. This loan portfolio is generally considered to be investment grade. As of December 31, 2019, the Company had $875 million in outstanding commitments to fund transitional real estate loans. These commitments are contingent on the final underwriting and due diligence to be performed. Commercial Mortgage Loans Commercial mortgage loans are typically fixed rate loans on commercial real estate with partial repayment of principal over the life of the loan with the remaining outstanding principal being repaid upon maturity. This loan portfolio is generally considered higher quality investment grade loans. As of December 31, 2019, the Company had $27 million of outstanding commitments to fund commercial mortgage loans. These commitments are contingent on the final underwriting and due diligence to be performed. Middle Market Loans Middle market loans are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade. The carrying value for middle market loans included $99 million and $56 million for a short term credit facility that is reflected in other liabilities on the consolidated balance sheets, as of December 31, 2019, and 2018, respectively. As of December 31, 2019, the Company had commitments of approximately $502 million to fund potential future loan originations related to this investment program. These commitments are contingent upon the availability of middle market loans that meet the Company's underwriting criteria. Allowance for Loan Losses The Company's allowance for loan losses is established using both general and specific allowances. The general allowance is used for loans grouped by similar risk characteristics where a loan-specific or market-specific risk has not been identified, but for which the Company estimates probable incurred losses. The specific allowance is used on an individual loan basis when it is probable that a loss has been incurred. As of December 31, 2019, the Company had loan loss reserves of $6 million related to two specific middle market loans. There was no specific loan loss reserve as of December 31, 2018. The following table presents the rollforward of the Company's allowance for loan losses by portfolio segment during the year ended December 31.
(In millions) | Commercial Mortgage Loans |  | Transitional Real Estate Loans |  | Middle Market Loans |  | Total
Allowance for loan losses at December 31, 2018 |  | $ | (1 | ) |  |  |  | $ | (17 | ) |  |  |  | $ | (9 | ) |  |  |  | $ | (27 | ) |
Addition to (release of) allowance for credit losses |  | (2 | ) |  |  |  | (5 | ) |  |  |  | (11 | ) |  |  |  | (18 | ) |
Allowance for loan losses at December 31, 2019 |  | $ | (3 | ) |  |  |  | $ | (22 | ) |  |  |  | $ | (20 | ) |  |  |  | $ | (45 | ) |
As of December 31, 2019 and 2018, the Company had no loans that were past due in regards to principal and/or interest payments. Additionally, the Company held no loans that were on nonaccrual status or considered impaired as of December 31, 2019 and 2018. The Company had no troubled debt restructurings during the years ended December 31, 2019 and 2018. Credit Quality Indicators The key credit quality indicators used by the Company in establishing the general and specific loan loss reserves, as well as in determining whether or not a loan should be impaired, include loan-to-value and debt service coverage ratios for CMLs and TREs and ratings for its middle market loan portfolio. Given that transitional real estate loans involve properties undergoing renovation or construction, loan-to-value provides the most insight on the credit risk of the property. Middle market loans generally have below-investment-grade ratings. The performance of the loans are monitored and reviewed periodically, but not less than quarterly. The table below summarizes key credit quality information by carrying value for CMLs and TREs as of December 31.
| 2019
(In millions) | Transitional Real Estate Loans | Commercial Mortgage Loans | Total
Loan-to-Value Ratio: |  |  |
0%-59.99% | $ | 1,424 |  | $ | 1,390 |  | $ | 2,814 |
60%-69.99% | 1,927 | 297 | 2,224
70%-79.99% | 2,085 | 23 | 2,108
80% or greater | 36 | 0 | 36
Total | $ | 5,472 |  | $ | 1,710 |  | $ | 7,182 |
Weighted Average Debt-Service Coverage Ratio |  | 2.38 |
| 2018
(In millions) | Transitional Real Estate Loans | Commercial Mortgage Loans | Total
Loan-to-Value Ratio: |  |  |
0%-59.99% | $ | 819 |  | $ | 877 |  | $ | 1,696 |
60%-69.99% | 1,681 | 165 | 1,846
70%-79.99% | 1,558 | 23 | 1,581
80% or greater | 336 | 0 | 336
Total | $ | 4,394 |  | $ | 1,065 |  | $ | 5,459 |
Weighted Average Debt-Service Coverage Ratio |  | 2.45 |
Other Investments The table below reflects the composition of the carrying value for other investments as of December 31.
(In millions) | 2019 |  | 2018
Other investments: |  |  |  |  |  |  |
Policy loans |  | $ | 250 |  |  |  |  | $ | 232 |  |
Short-term investments (1) |  | 628 |  |  |  |  | 152 |  |
Limited partnerships |  | 569 |  |  |  |  | 377 |  |
Other |  | 30 |  |  |  |  | 26 |  |
Total other investments |  | $ | 1,477 |  |  |  |  | $ | 787 |  |
(1) Includes securities lending collateral As of December 31, 2019, the Company had $1.3 billion in outstanding commitments to fund alternative investments in limited partnerships. Variable Interest Entities (VIEs) As a condition of its involvement or investment in a VIE, the Company enters into certain protective rights and covenants that preclude changes in the structure of the VIE that would alter the creditworthiness of the Company's investment or its beneficial interest in the VIE. For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature. The Company has not, nor has it been, required to purchase any securities issued in the future by these VIEs. The Company's ownership interest in VIEs is limited to holding the obligations issued by them. The Company has no direct or contingent obligations to fund the limited activities of these VIEs, nor does it have any direct or indirect financial guarantees related to the limited activities of these VIEs. The Company has not provided any assistance or any other type of financing support to any of the VIEs it invests in, nor does it have any intention to do so in the future. For those VIEs in which the Company holds debt obligations, the weighted-average lives of the Company's notes are very similar to the underlying collateral held by these VIEs where applicable. The Company's risk of loss related to its interests in any of its VIEs is limited to the carrying value of the related investments held in the VIE. VIEs - Consolidated The following table presents the cost or amortized cost, fair value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported as of December 31. Investments in Consolidated Variable Interest Entities
| 2019 |  | 2018
(In millions) | Cost or Amortized Cost |  | Fair Value |  | Cost or Amortized Cost |  | Fair Value
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale |  | $ | 3,308 |  |  |  |  | $ | 4,312 |  |  |  |  | $ | 3,849 |  |  |  |  | $ | 4,466 |  |
Equity securities |  | 0 |  |  |  |  | 0 |  |  |  |  | 160 |  |  |  |  | 160 |  |
Commercial mortgage and other loans |  | 7,956 |  |  |  |  | 8,015 |  |  |  |  | 5,528 |  |  |  |  | 5,506 |  |
Other investments (1) |  | 494 |  |  |  |  | 494 |  |  |  |  | 328 |  |  |  |  | 328 |  |
Other assets (2) |  | 169 |  |  |  |  | 169 |  |  |  |  | 182 |  |  |  |  | 182 |  |
Total assets of consolidated VIEs |  | $ | 11,927 |  |  |  |  | $ | 12,990 |  |  |  |  | $ | 10,047 |  |  |  |  | $ | 10,642 |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other liabilities (2) |  | $ | 126 |  |  |  |  | $ | 126 |  |  |  |  | $ | 102 |  |  |  |  | $ | 102 |  |
Total liabilities of consolidated VIEs |  | $ | 126 |  |  |  |  | $ | 126 |  |  |  |  | $ | 102 |  |  |  |  | $ | 102 |  |
(1) Consists entirely of alternative investments in limited partnerships (2) Consists entirely of derivatives The Company is substantively the only investor in the consolidated VIEs listed in the table above. As the sole investor in these VIEs, the Company has the power to direct the activities of a variable interest entity that most significantly impact the entity's economic performance and is therefore considered to be the primary beneficiary of the VIEs that it consolidates. The Company also participates in substantially all of the variability created by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps, as appropriate, and utilizing the cash flows from these securities to service its investment. Neither the Company nor any of its creditors are able to obtain the underlying collateral of the VIEs unless there is an event of default or other specified event. For those VIEs that contain a swap, the Company is not a direct counterparty to the swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. The Company's consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and swap contracts, if applicable. With the exception of its investment in unit trust structures, the underlying collateral assets and funding of the Company's consolidated VIEs are generally static in nature. Investments in Unit Trust Structures The Company also utilizes unit trust structures in its Aflac Japan segment to invest in various asset classes. As the sole investor of these VIEs, the Company is required to consolidate these trusts under U.S. GAAP. VIEs - Not Consolidated The table below reflects the amortized cost, fair value and balance sheet caption in which the Company's investment in VIEs not consolidated are reported as of December 31. Investments in Variable Interest Entities Not Consolidated
| 2019 |  | 2018
(In millions) | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities, available for sale |  | $ | 4,129 |  |  |  |  | $ | 4,884 |  |  |  |  | $ | 4,575 |  |  |  |  | $ | 4,982 |  |
Fixed maturity securities, held to maturity |  | 1,848 |  |  |  |  | 2,236 |  |  |  |  | 2,007 |  |  |  |  | 2,254 |  |
Other investments (1) |  | 75 |  |  |  |  | 74 |  |  |  |  | 49 |  |  |  |  | 49 |  |
Total investments in VIEs not consolidated |  | $ | 6,052 |  |  |  |  | $ | 7,194 |  |  |  |  | $ | 6,631 |  |  |  |  | $ | 7,285 |  |
(1) Consists entirely of alternative investments in limited partnerships The Company holds alternative investments in limited partnerships that have been determined to be VIEs. These partnerships invest in private equity and structured investments. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as Other investments in the consolidated balance sheets. Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations from the VIEs that are irrevocably and unconditionally guaranteed by their corporate parents or sponsors. These VIEs are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the entity or the right to receive benefits from the entity. As such, the Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. Securities Lending and Pledged Securities The Company lends fixed maturity and public equity securities to financial institutions in short-term security-lending transactions. These short-term security-lending arrangements increase investment income with minimal risk. The Company receives cash or other securities as collateral for such loans. The Company's security lending policy requires that the fair value of the securities received as collateral be 102% or more of the fair value of the loaned securities and that unrestricted cash received as collateral be 100% or more of the fair value of the loaned securities. The securities loaned continue to be carried as investment assets on the Company's balance sheet during the terms of the loans and are not reported as sales. For loans involving unrestricted cash or securities as collateral, the collateral is reported as an asset with a corresponding liability for the return of the collateral. For loans where the Company receives as collateral securities that the Company is not permitted to sell or repledge, the collateral is not reflected on the consolidated financial statements. Details of collateral by loaned security type and remaining maturity of the agreements as of December 31 were as follows:
Securities Lending Transactions Accounted for as Secured Borrowings
2019
Remaining Contractual Maturity of the Agreements
(In millions) | Overnight and Continuous(1) |  | Up to 30 days |  | Greater than 90 days |  | Total
Securities lending transactions: |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |
Japan government and agencies | $ | 0 |  |  | $ | 1,013 |  |  | $ | 4,759 |  |  | $ | 5,772 |
Public utilities | 35 |  |  | 0 |  |  | 0 |  |  | 35 |
Sovereign and supranational | 2 |  |  | 0 |  |  | 0 |  |  | 2 |
Banks/financial institutions | 48 |  |  | 0 |  |  | 0 |  |  | 48 |
Other corporate | 778 |  |  | 0 |  |  | 0 |  |  | 778 |
Equity securities | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Total borrowings | $ | 863 |  |  | $ | 1,013 |  |  | $ | 4,759 |  |  | $ | 6,635 |
Gross amount of recognized liabilities for securities lending transactions |  |  | $ | 1,876 |
Amounts related to agreements not included in offsetting disclosure in Note 4 |  |  | $ | 4,759 |
(1) The related loaned security, under the Company's Aflac U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.
Securities Lending Transactions Accounted for as Secured Borrowings
2018
Remaining Contractual Maturity of the Agreements
(In millions) | Overnight and Continuous(1) |  | Up to 30 days |  | Greater than 90 days |  | Total
Securities lending transactions: |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |
Japan government and agencies | $ | 0 |  |  | $ | 387 |  |  | 1,190 |  |  | $ | 1,577 |
Municipalities | 5 |  |  | 0 |  |  | 0 |  |  | 5 |
Public utilities | 27 |  |  | 0 |  |  | 0 |  |  | 27 |
Banks/financial institutions | 74 |  |  | 0 |  |  | 0 |  |  | 74 |
Other corporate | 549 |  |  | 0 |  |  | 0 |  |  | 549 |
Equity securities | 10 |  |  | 0 |  |  | 0 |  |  | 10 |
Total borrowings | $ | 665 |  |  | $ | 387 |  |  | $ | 1,190 |  |  | $ | 2,242 |
Gross amount of recognized liabilities for securities lending transactions |  |  | $ | 1,052 |
Amounts related to agreements not included in offsetting disclosure in Note 4 |  |  | $ | 1,190 |
(1) The related loaned security, under the Company's Aflac U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of December 31, 2019 and 2018, respectively. Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4. At December 31, 2019, debt securities with a fair value of $18 million were on deposit with regulatory authorities in the U.S. (including U.S. territories). The Company retains ownership of all securities on deposit and receives the related investment income. For general information regarding the Company's investment accounting policies, see Note 1.

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