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Investments | 12 Months Ended
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Dec. 31, 2017
Investments [Abstract] |
Investments | Investments The significant components of Net investment income are presented in the following table.
Years ended December 31 |  |  |  |  |
(In millions) | 2017 |  | 2016 |  | 2015
Fixed maturity securities | $ | 1,812 |  |  | $ | 1,819 |  |  | $ | 1,751 |
Equity securities | 12 |  |  | 10 |  |  | 12 |
Limited partnership investments | 207 |  |  | 155 |  |  | 92 |
Mortgage loans | 34 |  |  | 41 |  |  | 33 |
Short term investments | 15 |  |  | 8 |  |  | 6 |
Trading portfolio | 12 |  |  | 10 |  |  | 8 |
Other | 1 |  |  | 4 |  |  | 1 |
Gross investment income | 2,093 |  |  | 2,047 |  |  | 1,903 |
Investment expense | (59 | ) |  | (59 | ) |  | (63 | )
Net investment income | $ | 2,034 |  |  | $ | 1,988 |  |  | $ | 1,840 |
As of December 31, 2017 the Company held $2 million of non-income producing fixed maturity securities. As of December 31, 2016, the Company held no non-income producing fixed maturity securities. As of December 31, 2017 and 2016, no investments in a single issuer exceeded 10% of stockholders' equity, other than investments in securities issued by the U.S. Treasury and obligations of government-sponsored enterprises. Net realized investment gains (losses) are presented in the following table.
Years ended December 31 |  |  |  |  |
(In millions) | 2017 |  | 2016 |  | 2015
Net realized investment gains (losses): |  |  |  |  |
Fixed maturity securities: |  |  |  |  |
Gross realized gains | $ | 186 |  |  | $ | 204 |  |  | $ | 131 |
Gross realized losses | (64 | ) |  | (138 | ) |  | (197 | )
Net realized investment gains (losses) on fixed maturity securities | 122 |  |  | 66 |  |  | (66 | )
Equity securities: |  |  |  |  |  |  |
Gross realized gains | 1 |  |  | 5 |  |  | 2 |
Gross realized losses | (1 | ) |  | (10 | ) |  | (25 | )
Net realized investment gains (losses) on equity securities | — |  |  | (5 | ) |  | (23 | )
Derivatives | (4 | ) |  | (2 | ) |  | 10 |
Short term investments and other | (25 | ) |  | (9 | ) |  | 12 |
Net realized investment gains (losses) | $ | 93 |  |  | $ | 50 |  |  | $ | (67 | )
Net realized investment gains (losses) for the year ended December 31, 2017 included a $42 million loss related to the redemption of the Company's $350 million senior notes due November 2019. Net change in unrealized gains on investments is presented in the following table.
Years ended December 31 |  |  |  |  |
(In millions) | 2017 |  | 2016 |  | 2015
Net change in unrealized gains on investments: |  |  |  |  |
Fixed maturity securities | $ | 728 |  |  | $ | 225 |  |  | $ | (1,114 | )
Equity securities | 32 |  |  | (2 | ) |  | (6 | )
Other | (2 | ) |  | 1 |  |  | 1 |
Total net change in unrealized gains on investments | $ | 758 |  |  | $ | 224 |  |  | $ | (1,119 | )
The components of OTTI losses recognized in earnings by asset type are presented in the following table.
Years ended December 31 |  |  |  |  |
(In millions) | 2017 |  | 2016 |  | 2015
Fixed maturity securities available-for-sale: |  |  |  |  |
Corporate and other bonds | $ | 12 |  |  | $ | 59 |  |  | $ | 104 |
States, municipalities and political subdivisions | — |  |  | — |  |  | 18 |
Asset-backed: |  |  |  |  |  |  |
Residential mortgage-backed | 1 |  |  | 10 |  |  | 8 |
Other asset-backed | — |  |  | 3 |  |  | 1 |
Total asset-backed | 1 |  |  | 13 |  |  | 9 |
Total fixed maturity securities available-for-sale | 13 |  |  | 72 |  |  | 131 |
Equity securities available-for-sale | 1 |  |  | 9 |  |  | 25 |
OTTI losses recognized in earnings | $ | 14 |  |  | $ | 81 |  |  | $ | 156 |
The following tables present a summary of fixed maturity and equity securities.
December 31, 2017 | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Unrealized OTTI Losses (Gains)
(In millions) |  |  |  |
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |  |  |
Corporate and other bonds | $ | 17,210 |  |  | $ | 1,625 |  |  | $ | 28 |  |  | $ | 18,807 |  |  | $ | — |
States, municipalities and political subdivisions | 12,478 |  |  | 1,551 |  |  | 2 |  |  | 14,027 |  |  | (11 | )
Asset-backed: |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 5,043 |  |  | 109 |  |  | 32 |  |  | 5,120 |  |  | (27 | )
Commercial mortgage-backed | 1,840 |  |  | 46 |  |  | 14 |  |  | 1,872 |  |  | — |
Other asset-backed | 1,083 |  |  | 16 |  |  | 5 |  |  | 1,094 |  |  | — |
Total asset-backed | 7,966 |  |  | 171 |  |  | 51 |  |  | 8,086 |  |  | (27 | )
U.S. Treasury and obligations of government-sponsored enterprises | 111 |  |  | 2 |  |  | 4 |  |  | 109 |  |  | — |
Foreign government | 437 |  |  | 9 |  |  | 2 |  |  | 444 |  |  | — |
Redeemable preferred stock | 10 |  |  | 1 |  |  | — |  |  | 11 |  |  | — |
Total fixed maturity securities available-for-sale | 38,212 |  |  | 3,359 |  |  | 87 |  |  | 41,484 |  |  | $ | (38 | )
Total fixed maturity securities trading | 3 |  |  |  |  |  |  |  |  | 3 |  |  |
Equity securities available-for-sale: |  |  |  |  |  |  |  |  |
Common stock | 21 |  |  | 7 |  |  | 1 |  |  | 27 |  |  |
Preferred stock | 638 |  |  | 31 |  |  | 1 |  |  | 668 |  |  |
Total equity securities available-for-sale | 659 |  |  | 38 |  |  | 2 |  |  | 695 |  |  |
Total | $ | 38,874 |  |  | $ | 3,397 |  |  | $ | 89 |  |  | $ | 42,182 |  |  |
December 31, 2016 | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Unrealized OTTI Losses (Gains)
(In millions) |  |  |  |
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |  |  |
Corporate and other bonds | $ | 17,711 |  |  | $ | 1,323 |  |  | $ | 76 |  |  | $ | 18,958 |  |  | $ | (1 | )
States, municipalities and political subdivisions | 12,060 |  |  | 1,213 |  |  | 33 |  |  | 13,240 |  |  | (16 | )
Asset-backed: |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 5,004 |  |  | 120 |  |  | 51 |  |  | 5,073 |  |  | (28 | )
Commercial mortgage-backed | 2,016 |  |  | 48 |  |  | 24 |  |  | 2,040 |  |  | — |
Other asset-backed | 1,022 |  |  | 8 |  |  | 5 |  |  | 1,025 |  |  | — |
Total asset-backed | 8,042 |  |  | 176 |  |  | 80 |  |  | 8,138 |  |  | (28 | )
U.S. Treasury and obligations of government-sponsored enterprises | 83 |  |  | 10 |  |  | — |  |  | 93 |  |  | — |
Foreign government | 435 |  |  | 13 |  |  | 3 |  |  | 445 |  |  | — |
Redeemable preferred stock | 18 |  |  | 1 |  |  | — |  |  | 19 |  |  | — |
Total fixed maturity securities available-for-sale | 38,349 |  |  | 2,736 |  |  | 192 |  |  | 40,893 |  |  | $ | (45 | )
Total fixed maturity securities trading | 12 |  |  |  |  |  |  | 12 |  |  |
Equity securities available-for-sale: |  |  |  |  |  |  |  |  |
Common stock | 13 |  |  | 6 |  |  | — |  |  | 19 |  |  |
Preferred stock | 93 |  |  | 2 |  |  | 4 |  |  | 91 |  |  |
Total equity securities available-for-sale | 106 |  |  | 8 |  |  | 4 |  |  | 110 |  |  |
Total | $ | 38,467 |  |  | $ | 2,744 |  |  | $ | 196 |  |  | $ | 41,015 |  |  |
The following tables present the estimated fair value and gross unrealized losses of fixed maturity and equity securities in a gross unrealized loss position by the length of time in which the securities have continuously been in that position.
| Less than 12 Months |  | 12 Months or Longer |  | Total
December 31, 2017 | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses
(In millions) |  |  |  |  |
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |
Corporate and other bonds | $ | 1,354 |  |  | $ | 21 |  |  | $ | 168 |  |  | $ | 7 |  |  | $ | 1,522 |  |  | $ | 28 |
States, municipalities and political subdivisions | 72 |  |  | 1 |  |  | 85 |  |  | 1 |  |  | 157 |  |  | 2 |
Asset-backed: |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 1,228 |  |  | 5 |  |  | 947 |  |  | 27 |  |  | 2,175 |  |  | 32 |
Commercial mortgage-backed | 403 |  |  | 4 |  |  | 212 |  |  | 10 |  |  | 615 |  |  | 14 |
Other asset-backed | 248 |  |  | 3 |  |  | 18 |  |  | 2 |  |  | 266 |  |  | 5 |
Total asset-backed | 1,879 |  |  | 12 |  |  | 1,177 |  |  | 39 |  |  | 3,056 |  |  | 51 |
U.S. Treasury and obligations of government-sponsored enterprises | 49 |  |  | 2 |  |  | 21 |  |  | 2 |  |  | 70 |  |  | 4 |
Foreign government | 166 |  |  | 2 |  |  | 4 |  |  | — |  |  | 170 |  |  | 2 |
Total fixed maturity securities available-for-sale | 3,520 |  |  | 38 |  |  | 1,455 |  |  | 49 |  |  | 4,975 |  |  | 87 |
Equity securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |
Common stock | 7 |  |  | 1 |  |  | — |  |  | — |  |  | 7 |  |  | 1 |
Preferred stock | 93 |  |  | 1 |  |  | — |  |  | — |  |  | 93 |  |  | 1 |
Total equity securities available-for-sale | 100 |  |  | 2 |  |  | — |  |  | — |  |  | 100 |  |  | 2 |
Total | $ | 3,620 |  |  | $ | 40 |  |  | $ | 1,455 |  |  | $ | 49 |  |  | $ | 5,075 |  |  | $ | 89 |
| Less than 12 Months |  | 12 Months or Longer |  | Total
December 31, 2016 | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses
(In millions) |  |  |  |  |
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |
Corporate and other bonds | $ | 2,615 |  |  | $ | 61 |  |  | $ | 254 |  |  | $ | 15 |  |  | $ | 2,869 |  |  | $ | 76 |
States, municipalities and political subdivisions | 959 |  |  | 32 |  |  | 23 |  |  | 1 |  |  | 982 |  |  | 33 |
Asset-backed: |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 2,136 |  |  | 44 |  |  | 201 |  |  | 7 |  |  | 2,337 |  |  | 51 |
Commercial mortgage-backed | 756 |  |  | 22 |  |  | 69 |  |  | 2 |  |  | 825 |  |  | 24 |
Other asset-backed | 398 |  |  | 5 |  |  | 24 |  |  | — |  |  | 422 |  |  | 5 |
Total asset-backed | 3,290 |  |  | 71 |  |  | 294 |  |  | 9 |  |  | 3,584 |  |  | 80 |
U.S. Treasury and obligations of government-sponsored enterprises | 5 |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | — |
Foreign government | 108 |  |  | 3 |  |  | — |  |  | — |  |  | 108 |  |  | 3 |
Total fixed maturity securities available-for-sale | 6,977 |  |  | 167 |  |  | 571 |  |  | 25 |  |  | 7,548 |  |  | 192 |
Equity securities available-for-sale -- Preferred stock | 12 |  |  | — |  |  | 13 |  |  | 4 |  |  | 25 |  |  | 4 |
Total | $ | 6,989 |  |  | $ | 167 |  |  | $ | 584 |  |  | $ | 29 |  |  | $ | 7,573 |  |  | $ | 196 |
Based on current facts and circumstances, the Company believes the unrealized losses presented in the December 31, 2017 securities in a gross unrealized loss position table above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors. The Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded as of December 31, 2017. The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held as of December 31, 2017, 2016 and 2015 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).
Years ended December 31 |  |  |  |  |
(In millions) | 2017 |  | 2016 |  | 2015
Beginning balance of credit losses on fixed maturity securities | $ | 36 |  |  | $ | 53 |  |  | $ | 62 |
Reductions for securities sold during the period | (9 | ) |  | (16 | ) |  | (9 | )
Reductions for securities the Company intends to sell or more likely than not will be required to sell | — |  |  | (1 | ) |  | — |
Ending balance of credit losses on fixed maturity securities | $ | 27 |  |  | $ | 36 |  |  | $ | 53 |
Contractual Maturity The following table presents available-for-sale fixed maturity securities by contractual maturity.
December 31 | 2017 |  | 2016
(In millions) | Cost or Amortized Cost |  | Estimated Fair Value |  | Cost or Amortized Cost |  | Estimated Fair Value
Due in one year or less | $ | 1,135 |  |  | $ | 1,157 |  |  | $ | 1,779 |  |  | $ | 1,828 |
Due after one year through five years | 8,165 |  |  | 8,501 |  |  | 7,566 |  |  | 7,955 |
Due after five years through ten years | 16,060 |  |  | 16,718 |  |  | 15,892 |  |  | 16,332 |
Due after ten years | 12,852 |  |  | 15,108 |  |  | 13,112 |  |  | 14,778 |
Total | $ | 38,212 |  |  | $ | 41,484 |  |  | $ | 38,349 |  |  | $ | 40,893 |
Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life. Limited Partnerships The carrying value of limited partnerships as of December 31, 2017 and 2016 was $2,369 million and $2,371 million, which includes undistributed earnings of $539 million and $523 million. Limited partnerships comprising 61% of the total carrying value are reported on a current basis through December 31, 2017 with no reporting lag, 18% are reported on a one month lag and the remainder are reported on more than a one month lag. The number of limited partnerships held and the strategies employed provide diversification to the limited partnership portfolio and the overall invested asset portfolio. Limited partnerships comprising 71% and 68% of the carrying value as of December 31, 2017 and 2016 employ hedge fund strategies. Limited partnerships comprising 25% and 27% of the carrying value as of December 31, 2017 and 2016 were invested in private debt and equity and the remainder were primarily invested in real estate strategies. Hedge fund strategies include both long and short positions in fixed income, equity and derivative instruments. These hedge fund strategies may seek to generate gains from mispriced or undervalued securities, price differentials between securities, distressed investments, sector rotation or various arbitrage disciplines. Within hedge fund strategies, approximately 62% were equity related, 19% pursued a multi-strategy approach, 17% were focused on distressed investments and 2% were fixed income related as of December 31, 2017. The ten largest limited partnership positions held totaled $1,136 million and $1,168 million as of December 31, 2017 and 2016. Based on the most recent information available regarding the Company’s percentage ownership of the individual limited partnerships, the carrying value reflected on the Consolidated Balance Sheets represents approximately 3% and 4% of the aggregate partnership equity as of December 31, 2017 and 2016, and the related income reflected on the Consolidated Statements of Operations represents approximately 3%, 4% and 3% of the changes in aggregate partnership equity for the years ended December 31, 2017, 2016 and 2015. While the Company generally does not invest in highly leveraged partnerships, there are risks inherent in limited partnership investments which may result in losses due to short-selling, derivatives or other speculative investment practices. The use of leverage increases volatility generated by the underlying investment strategies. The Company’s limited partnership investments contain withdrawal provisions that generally limit liquidity for a period of thirty days up to one year and in some cases do not permit withdrawals until the termination of the partnership. Typically, withdrawals require advance written notice of up to 90 days. Derivative Financial Instruments The Company may use derivatives in the normal course of business, primarily in an attempt to reduce its exposure to market risk (principally interest rate risk, credit risk, equity price risk and foreign currency risk) stemming from various assets and liabilities. The Company's principal objective under such strategies is to achieve the desired reduction in economic risk, even if the position does not receive hedge accounting treatment. The Company may enter into interest rate swaps, futures and forward commitments to purchase securities to manage interest rate risk. The Company may use foreign currency forward contracts to manage foreign currency risk. Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to the instruments recognized on the Consolidated Balance Sheets. The Company generally requires that all over-the-counter derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement, and exchanges collateral under the terms of these agreements with its derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty. Gross estimated fair values of derivative positions are presented in Other invested assets and Other liabilities on the Consolidated Balance Sheet. The Company does not offset derivative positions against the fair value of collateral provided or positions subject to netting arrangements. There would be no significant difference in the balance included in such accounts if the estimated fair values were presented net for the periods ended December 31, 2017 and 2016. There was no cash collateral provided by the Company as of December 31, 2017 or 2016. There was no cash collateral received from counterparties held as of December 31, 2017 or 2016. The Company holds an embedded derivative on a funds withheld liability with a notional value of $167 million and $174 million as of December 31, 2017 and 2016 and a fair value of $(3) million and $3 million as of December 31, 2017 and 2016. The embedded derivative on the funds withheld liability is accounted for separately and reported with the funds withheld liability in Other liabilities on the Consolidated Balance Sheets. Investment Commitments As of December 31, 2017, the Company had committed approximately $384 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships. As of December 31, 2017, the Company had mortgage loan commitments of $46 million representing signed loan applications received and accepted. The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. Purchases and sales of privately placed debt securities are recorded once funded. As of December 31, 2017, the Company had commitments to purchase or fund additional amounts of $165 million and sell $108 million under the terms of such securities. Investments on Deposit Securities with carrying values of approximately $2.6 billion and $2.3 billion were deposited by the Company’s insurance subsidiaries under requirements of regulatory authorities and others as of December 31, 2017 and 2016. Cash and securities with carrying values of approximately $471 million and $514 million were deposited with financial institutions as collateral for letters of credit as of December 31, 2017 and 2016. In addition, cash and securities were deposited in trusts with financial institutions to secure reinsurance and other obligations with various third parties. The carrying values of these deposits were approximately $587 million and $261 million as of December 31, 2017 and 2016.

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- Definition The entire disclosure for investments, including all tables. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 6 -Section 10 -Paragraph (c) -Subparagraph (1) + Details
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