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Investments | 9 Months Ended
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Sep. 30, 2021
Investments, Debt and Equity Securities [Abstract] |
Investments | Investments Our fixed maturity securities investments have been designated as available-for-sale and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in AOCI, net of associated adjustments for DAC, VOBA, DSI, unearned revenue ("UREV"), SOP 03-1 reserves, and deferred income taxes. Our equity securities investments are carried at fair value with unrealized gains and losses included in net earnings. The Company’s consolidated investments at September 30, 2021 and December 31, 2020 are summarized as follows (in millions):
| September 30, 2021
| Amortized Cost |  | Allowance for Expected Credit Losses |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Carrying Value
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities | $ | 7,916 |  |  | $ | (3) |  |  | $ | 293 |  |  | $ | (15) |  |  | $ | 8,191 |  |  | $ | 8,191 |
Commercial mortgage-backed securities | 2,619 |  |  | (1) |  |  | 411 |  |  | (5) |  |  | 3,024 |  |  | 3,024 |
Corporates | 14,441 |  |  | — |  |  | 887 |  |  | (151) |  |  | 15,177 |  |  | 15,177 |
Hybrids | 834 |  |  | — |  |  | 89 |  |  | — |  |  | 923 |  |  | 923 |
Municipals | 1,306 |  |  | — |  |  | 71 |  |  | (9) |  |  | 1,368 |  |  | 1,368 |
Residential mortgage-backed securities | 714 |  |  | (4) |  |  | 33 |  |  | (2) |  |  | 741 |  |  | 741 |
U.S. Government | 808 |  |  | — |  |  | 5 |  |  | (8) |  |  | 805 |  |  | 805 |
Foreign Governments | 199 |  |  | — |  |  | 8 |  |  | (1) |  |  | 206 |  |  | 206 |
Total available-for-sale securities | $ | 28,837 |  |  | $ | (8) |  |  | $ | 1,797 |  |  | $ | (191) |  |  | $ | 30,435 |  |  | $ | 30,435 |
| December 31, 2020
| Amortized Cost |  | Allowance for Expected Credit Losses |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Carrying Value
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities | $ | 5,941 |  |  | $ | — |  |  | $ | 343 |  |  | $ | (18) |  |  | $ | 6,266 |  |  | $ | 6,266 |
Commercial mortgage-backed/asset-backed securities | 2,490 |  |  | — |  |  | 342 |  |  | (3) |  |  | 2,829 |  |  | 2,829 |
Corporates | 13,582 |  |  | (16) |  |  | 1,184 |  |  | (15) |  |  | 14,735 |  |  | 14,735 |
Hybrids | 914 |  |  | — |  |  | 80 |  |  | — |  |  | 994 |  |  | 994 |
Municipals | 1,333 |  |  | — |  |  | 72 |  |  | (2) |  |  | 1,403 |  |  | 1,403 |
Residential mortgage-backed securities | 806 |  |  | (3) |  |  | 23 |  |  | (1) |  |  | 825 |  |  | 825 |
U.S. Government | 332 |  |  | — |  |  | 10 |  |  | — |  |  | 342 |  |  | 342 |
Foreign Governments | 179 |  |  | — |  |  | 14 |  |  | — |  |  | 193 |  |  | 193 |
Total available-for-sale securities | $ | 25,577 |  |  | $ | (19) |  |  | $ | 2,068 |  |  | $ | (39) |  |  | $ | 27,587 |  |  | $ | 27,587 |
Securities held on deposit with various state regulatory authorities had a fair value of $21,198 million and $16,714 million at September 30, 2021 and December 31, 2020, respectively. As of September 30, 2021 and December 31, 2020, the Company held no material investments that were non-income producing for a period greater than twelve months. As of September 30, 2021 and December 31, 2020, the Company's accrued interest receivable balance was $255 million and $235 million, respectively. Accrued interest receivable is classified within Prepaid expenses and other assets within the unaudited Condensed Consolidated Balance Sheets. In accordance with our FHLB agreements, the investments supporting the funding agreement liabilities are pledged as collateral to secure the FHLB funding agreement liabilities and are not available to the Company for general purposes. The collateral investments had a fair value of $2,278 million and $1,622 million as of September 30, 2021 and December 31, 2020, respectively. The amortized cost and fair value of fixed maturity available-for-sale securities by contractual maturities, as applicable, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.
| September 30, 2021
| (in millions)
| Amortized Cost |  | Fair Value
Corporates, Non-structured Hybrids, Municipal and Government securities: |  |  |
Due in one year or less | $ | 387 |  |  | $ | 391 |
Due after one year through five years | 2,668 |  |  | 2,758 |
Due after five years through ten years | 2,593 |  |  | 2,683 |
Due after ten years | 11,914 |  |  | 12,616 |
Subtotal | 17,562 |  |  | 18,448 |
Other securities which provide for periodic payments: |  |  |
Asset-backed securities | 7,916 |  |  | 8,190 |
Commercial mortgage-backed securities | 2,619 |  |  | 3,024 |
Structured hybrids | 26 |  |  | 32 |
Residential mortgage-backed securities | 714 |  |  | 741 |
Subtotal | 11,275 |  |  | 11,987 |
Total fixed maturity available-for-sale securities | $ | 28,837 |  |  | $ | 30,435 |
Allowance for Expected Credit Loss We regularly review available for sale ("AFS") securities for declines in fair value that we determine to be credit related. For our fixed maturity securities, we generally consider the following in determining whether our unrealized losses are credit related, and if so, the magnitude of the credit loss: •The extent to which the fair value is less than the amortized cost basis; •The reasons for the decline in value (credit event, currency or interest-rate related, including general credit spread widening); •The financial condition of and near-term prospects of the issuer (including issuer's current credit rating and the probability of full recovery of principal based upon the issuer's financial strength); •Delinquencies and nonperforming assets of underlying collateral; •Expected future default rates; •Collateral value by vintage, geographic region, industry concentration or property type; •Subordination levels or other credit enhancements as of the balance sheet date as compared to origination; and •Contractual and regulatory cash obligations and the issuer's plans to meet such obligations. We recognize an allowance for expected credit losses on fixed maturity securities in an unrealized loss position when it is determined, using the factors discussed above, a component of the unrealized loss is related to credit. We measure the credit loss using a discounted cash flow model that utilizes the single best estimate cash flow and the recognized credit loss is limited to the total unrealized loss on the security (i.e. the fair value floor). Cash flows are discounted using the implicit yield of bonds at their time of purchase and the current book yield for asset and mortgage backed securities as well as variable rate securities. We recognize the expected credit losses in Recognized gains and losses, net in the Consolidated Statements of Earnings, with an offset for the amount of non-credit impairments recognized in AOCI. We do not measure a credit loss allowance on accrued investment income because we write-off accrued interest through to interest and investment income when collectability concerns arise. We consider the following in determining whether write-offs of a security’s amortized cost is necessary: • We believe amounts related to securities have become uncollectible; or • We intend to sell a security; or • It is more likely than not that we will be required to sell a security prior to recovery. If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis and the fair value of the security is below amortized cost, we will write down the security to current fair value, with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. If we do not intend to sell a fixed maturity security or it is more likely than not that we will not be required to sell a fixed maturity security before recovery of its amortized cost basis but believe amounts related to a security are uncollectible (generally based on proximity to expected credit loss), an impairment is deemed to have occurred and the amortized cost is written down to the estimated recovery value with a corresponding charge, net of any amount previously recognized as an allowance for expected credit loss, to Recognized gains and losses, net in the accompanying Consolidated Statements of Earnings. The remainder of unrealized loss is held in AOCI. The activity in the allowance for expected credit losses of available-for-sale securities aggregated by investment category were as follows for the three and nine-month periods ended September 30, 2021 (in millions):
| Three Months Ended September 30, 2021
|  | Additions |  |  | Reductions |  |  |  |  |  |
| Balance at Beginning of Period | For credit losses on securities for which losses were not previously recorded | For initial credit losses on purchased securities accounted for as PCD financial assets (1) | (Additions) reductions in allowance recorded on previously impaired securities |  |  | For securities sold during the period | For securities intended/required to be sold prior to recovery of amortized cost basis | Write-offs charged against the allowance | Recoveries of amounts previously written off |  |  |  |  | Balance at End of Period
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities | $ | (4) |  | $ | — |  | $ | — |  | $ | 1 |  |  |  | $ | — |  | $ | — |  | $ | — |  | — |  |  |  |  |  | $ | (3) |
Commercial mortgage-backed securities | (1) |  | — |  | — |  | — |  |  |  | — |  | — |  | — |  | — |  |  |  |  |  | (1) |
Corporates | (5) |  | — |  | — |  | — |  |  |  | — |  | — |  | 5 |  | — |  |  |  |  |  | — |
Residential mortgage-backed securities | (3) |  | — |  | — |  | (1) |  |  |  | — |  | — |  | — |  | — |  |  |  |  |  | (4) |
Total available-for-sale securities | $ | (13) |  | $ | — |  | $ | — |  | $ | — |  |  |  | $ | — |  | $ | — |  | $ | 5 |  | $ | — |  |  |  |  |  | $ | (8) |
| Nine Months Ended September 30, 2021
|  | Additions |  |  | Reductions |  |  |  |  |  |
| Balance at Beginning of Period | For credit losses on securities for which losses were not previously recorded | For initial credit losses on purchased securities accounted for as PCD financial assets (1) | (Additions) reductions in allowance recorded on previously impaired securities |  |  | For securities sold during the period | For securities intended/required to be sold prior to recovery of amortized cost basis | Writeoffs charged against the allowance | Recoveries of amounts previously written off |  |  |  |  | Balance at End of Period
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities | $ | — |  | $ | — |  | $ | (1) |  | $ | (2) |  | — |  |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  |  |  |  |  | $ | (3) |
Commercial mortgage-backed securities | — |  | (1) |  | — |  | — |  | — |  |  | — |  | — |  | — |  | — |  |  |  |  |  | (1) |
Corporates | (16) |  | — |  | — |  | 4 |  | — |  |  | — |  | — |  | 8 |  | 4 |  |  |  |  |  | — |
Residential mortgage-backed securities | (3) |  | — |  | — |  | (1) |  | — |  |  | — |  | — |  | — |  | — |  |  |  |  |  | (4) |
Total available-for-sale securities | $ | (19) |  | $ | (1) |  | $ | (1) |  | $ | 1 |  | $ | — |  |  | $ | — |  | $ | — |  | $ | 8 |  | $ | 4 |  |  |  |  |  | $ | (8) |
(1) Purchased credit deteriorated financial assets ("PCD") Purchased credit-deteriorated available-for-sale debt securities ("PCD"s) are AFS securities purchased at a discount, where part of that discount is attributable to credit. Credit loss allowances are calculated for these securities as of the date of their acquisition, with the initial allowance serving to increase amortized cost. The following table summarizes purchases of PCD AFS securities during the three and nine-month periods ended September 30, 2021 (in millions).
| Three months ended |  | Nine months ended |  |  |
Purchased credit-deteriorated available-for-sale debt securities | September 30, 2021 |  | September 30, 2021 |  |  |
Purchase price | $ | — |  |  | $ | 4 |  |  |  |
Allowance for credit losses at acquisition | — |  |  | 1 |  |  |  |
AFS purchased credit-deteriorated par value | $ | — |  |  | $ | 5 |  |  |  |
The fair value and gross unrealized losses of AFS securities, excluding securities in an unrealized loss position with an allowance for expected credit loss, aggregated by investment category and duration of fair value below amortized cost as of September 30, 2021 and December 31, 2020 were as follows (dollars in millions):
| September 30, 2021
| Less than 12 months |  | 12 months or longer |  | Total
| Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities | $ | 1,462 |  |  | $ | (10) |  |  | $ | 121 |  |  | $ | (5) |  |  | $ | 1,583 |  |  | $ | (15) |
Commercial mortgage-backed securities | 258 |  |  | (4) |  |  | 3 |  |  | (2) |  |  | 261 |  |  | (6) |
Corporates | 4,190 |  |  | (130) |  |  | 219 |  |  | (20) |  |  | 4,409 |  |  | (150) |
Hybrids | 2 |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | — |
Municipals | 234 |  |  | (7) |  |  | 53 |  |  | (2) |  |  | 287 |  |  | (9) |
Residential mortgage-backed securities | 55 |  |  | (1) |  |  | 11 |  |  | (1) |  |  | 66 |  |  | (2) |
U.S. Government | 567 |  |  | (8) |  |  | 2 |  |  | — |  |  | 569 |  |  | (8) |
Foreign Government | 13 |  |  | (1) |  |  | — |  |  | — |  |  | 13 |  |  | (1) |
Total available-for-sale securities | $ | 6,781 |  |  | $ | (161) |  |  | $ | 409 |  |  | $ | (30) |  |  | $ | 7,190 |  |  | $ | (191) |
Total number of available-for-sale securities in an unrealized loss position less than twelve months |  |  |  |  |  |  |  |  |  |  | 916 |
Total number of available-for-sale securities in an unrealized loss position twelve months or longer |  |  |  |  |  |  |  |  |  |  | 53
Total number of available-for-sale securities in an unrealized loss position |  |  |  |  |  |  |  |  |  |  | 969 |
| December 31, 2020
| Less than 12 months |  | 12 months or longer |  | Total
| Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |
Asset-backed securities | $ | 477 |  |  | $ | (18) |  |  | $ | — |  |  | $ | — |  |  | $ | 477 |  |  | $ | (18) |
Commercial mortgage-backed securities | 51 |  |  | (3) |  |  | — |  |  | — |  |  | 51 |  |  | (3) |
Corporates | 865 |  |  | (15) |  |  | 36 |  |  | — |  |  | 901 |  |  | (15) |
Hybrids | 1 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |
Municipals | 115 |  |  | (2) |  |  | — |  |  | — |  |  | 115 |  |  | (2) |
Residential mortgage-backed securities | 30 |  |  | (1) |  |  | — |  |  | — |  |  | 30 |  |  | (1) |
U.S. Government | 11 |  |  | — |  |  | — |  |  | — |  |  | 11 |  |  | — |
Total available-for-sale securities | $ | 1,550 |  |  | $ | (39) |  |  | $ | 36 |  |  | $ | — |  |  | $ | 1,586 |  |  | $ | (39) |
Total number of available-for-sale securities in an unrealized loss position less than twelve months |  |  |  |  |  |  |  |  |  |  | 222
Total number of available-for-sale securities in an unrealized loss position twelve months or longer |  |  |  |  |  |  |  |  |  |  | 11
Total number of available-for-sale securities in an unrealized loss position |  |  |  |  |  |  |  |  |  |  | 233 |
We determined the increase in unrealized losses as of September 30, 2021 was caused by higher treasury rates, offset by narrower spreads in certain sectors. This in part is expected as the economy continues its anticipated path to recovery. For securities in an unrealized loss position as of September 30, 2021 an expected credit loss was not determined, and we believe that the unrealized loss is being driven by interest rate increases or near-term illiquidity and uncertainty of the impact of COVID-19 on the economy as opposed to issuer specific credit concerns. Specific to asset-backed and mortgage-backed securities for which an expected credit loss was not determined, the effect of any increased expectations of underlying collateral defaults has not risen to the level of impacting the tranches of those securities.

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- Definition The entire disclosure for investment. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 321 -URI http://asc.fasb.org/topic&trid=75115024 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -URI http://asc.fasb.org/topic&trid=2197064 Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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