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Investments | 9 Months Ended
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Sep. 30, 2021
Investments [Abstract] |
Investments | Investments The significant components of Net investment income are presented in the following table.
Periods ended September 30 | Three Months |  | Nine Months
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Fixed maturity securities | $ | 425 |  |  | $ | 432 |  |  | $ | 1,278 |  |  | $ | 1,300 |
Equity securities | 4 |  |  | 18 |  |  | 53 |  |  | 24 |
Limited partnership investments | 85 |  |  | 64 |  |  | 274 |  |  | 38 |
Mortgage loans | 13 |  |  | 14 |  |  | 42 |  |  | 42 |
Short term investments | 1 |  |  | 1 |  |  | 1 |  |  | 9 |
Trading portfolio | 1 |  |  | 4 |  |  | 8 |  |  | 13 |
Other | (1) |  |  | — |  |  | — |  |  | 2 |
Gross investment income | 528 |  |  | 533 |  |  | 1,656 |  |  | 1,428 |
Investment expense | (15) |  |  | (16) |  |  | (48) |  |  | (48) |
Net investment income | $ | 513 |  |  | $ | 517 |  |  | $ | 1,608 |  |  | $ | 1,380 |
During the three and nine months ended September 30, 2021, $(7) million and $11 million of Net i nvestment income was recognized due to the change in fair value of common stock still held as of September 30, 2021. During the three and nine months ended September 30, 2020, $4 million and $9 million of Net investment income was recognized due to the change in fair value of common stock still held as of September 30, 2020. Net investment gains (losses) are presented in the following table.
Periods ended September 30 | Three Months |  | Nine Months
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Net investment gains (losses): |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |
Gross gains | $ | 50 |  |  | $ | 44 |  |  | $ | 159 |  |  | $ | 175 |
Gross losses | (28) |  |  | (18) |  |  | (68) |  |  | (207) |
Net investment gains (losses) on fixed maturity securities | 22 |  |  | 26 |  |  | 91 |  |  | (32) |
Equity securities | (2) |  |  | 25 |  |  | 17 |  |  | (45) |
Derivatives | 2 |  |  | (2) |  |  | 7 |  |  | (7) |
Mortgage loans | — |  |  | (3) |  |  | — |  |  | (16) |
Short term investments and other | — |  |  | (19) |  |  | 2 |  |  | (20) |
Net investment gains (losses) | $ | 22 |  |  | $ | 27 |  |  | $ | 117 |  |  | $ | (120) |
During the three and nine months ended September 30, 2021, $(2) million of losses and $15 million of gains w ere recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2021. During the three and nine months ended September 30, 2020, $25 million of gains and $(44) million of losses were recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of September 30, 2020. Short term investments and other included a $(20) million loss for the three and nine months ended September 30, 2020 related to the third quarter 2020 redemption of the Company's $400 million senior notes due August 2021. The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and purchased credit-deteriorated (PCD) assets. Accrued interest receivable on available-for-sale fixed maturity securities totaled $387 million, $371 million and $390 million as of September 30, 2021, December 31, 2020 and September 30, 2020 and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.
(In millions) | Corporate and other bonds |  | Asset-backed |  | Total
Allowance for credit losses: |  |  |  |  |
Balance as of July 1, 2021 | $ | 24 |  |  | $ | 21 |  |  | $ | 45 |
Additions to the allowance for credit losses: |  |  |  |  |
Securities for which credit losses were not previously recorded | — |  |  | — |  |  | — |
Available-for-sale securities accounted for as PCD assets | 2 |  |  | — |  |  | 2 |
Reductions to the allowance for credit losses: |  |  |  |  |
Securities sold during the period (realized) | — |  |  | — |  |  | — |
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | — |  |  | — |  |  | — |
Write-offs charged against the allowance | 16 |  |  | — |  |  | 16 |
Recoveries of amounts previously written off | — |  |  | — |  |  | — |
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | — |  |  | — |  |  | — |
Balance as of September 30, 2021 | $ | 10 |  |  | $ | 21 |  |  | $ | 31 |
(In millions) | Corporate and other bonds |  | Asset-backed |  | Total
Allowance for credit losses: |  |  |  |  |
Balance as of July 1, 2020 | $ | 39 |  |  | $ | 12 |  |  | $ | 51 |
Additions to the allowance for credit losses: |  |  |  |  |
For securities for which credit losses were not previously recorded | 4 |  |  | — |  |  | 4 |
For available-for-sale securities accounted for as PCD assets | 1 |  |  | — |  |  | 1 |
Reductions to the allowance for credit losses: |  |  |  |  |
Securities sold during the period (realized) | 9 |  |  | — |  |  | 9 |
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | — |  |  | — |  |  | — |
Write-offs charged against the allowance | — |  |  | — |  |  | — |
Recoveries of amounts previously written off | — |  |  | — |  |  | — |
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | (1) |  |  | 1 |  |  | — |
Balance as of September 30, 2020 | $ | 34 |  |  | $ | 13 |  |  | $ | 47 |
(In millions) | Corporate and other bonds |  | Asset-backed |  | Total
Allowance for credit losses: |  |  |  |  |
Balance as of January 1, 2021 | $ | 23 |  |  | $ | 17 |  |  | $ | 40 |
Additions to the allowance for credit losses: |  |  |  |  |
Securities for which credit losses were not previously recorded | 14 |  |  | — |  |  | 14 |
Available-for-sale securities accounted for as PCD assets | 4 |  |  | 4 |  |  | 8 |
Reductions to the allowance for credit losses: |  |  |  |  |
Securities sold during the period (realized) | 6 |  |  | — |  |  | 6 |
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | — |  |  | — |  |  | — |
Write-offs charged against the allowance | 16 |  |  | — |  |  | 16 |
Recoveries of amounts previously written off | — |  |  | — |  |  | — |
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | (9) |  |  | — |  |  | (9) |
Balance as of September 30, 2021 | $ | 10 |  |  | $ | 21 |  |  | $ | 31 |
(In millions) | Corporate and other bonds |  | Asset-backed |  | Total
Allowance for credit losses: |  |  |  |  |
Balance as of January 1, 2020 | $ | — |  |  | $ | — |  |  | $ | — |
Additions to the allowance for credit losses: |  |  |  |  |
Impact of adopting ASC 326 | 6 |  |  | — |  |  | 6 |
For securities for which credit losses were not previously recorded | 62 |  |  | 12 |  |  | 74 |
For available-for-sale securities accounted for as PCD assets | 3 |  |  | — |  |  | 3 |
Reductions to the allowance for credit losses: |  |  |  |  |
Securities sold during the period (realized) | 15 |  |  | — |  |  | 15 |
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | 1 |  |  | — |  |  | 1 |
Write-offs charged against the allowance | — |  |  | — |  |  | — |
Recoveries of amounts previously written off | — |  |  | — |  |  | — |
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | (21) |  |  | 1 |  |  | (20) |
Balance as of September 30, 2020 | $ | 34 |  |  | $ | 13 |  |  | $ | 47 |
The components of available-for-sale impairment losses recognized in earnings by asset type are presented in the following table. The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.
Periods ended September 30 | Three Months |  | Nine Months
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |
Corporate and other bonds | $ | — |  |  | $ | 4 |  |  | $ | 5 |  |  | $ | 94 |
Asset-backed | 11 |  |  | 1 |  |  | 11 |  |  | 14 |
Impairment losses (gains) recognized in earnings | $ | 11 |  |  | $ | 5 |  |  | $ | 16 |  |  | $ | 108 |
The Company also recognized $3 million and $16 million of losses on mortgage loans during the three and nine months ended September 30, 2020 primarily due to changes in expected credit losses. There were no losses recognized on mortgage loans during the three and nine months ended September 30, 2021. The following tables present a summary of fixed maturity securities.
September 30, 2021 | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Losses |  | Estimated Fair Value
(In millions) |  |  |  |
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |  |  |
Corporate and other bonds | $ | 21,608 |  |  | $ | 2,967 |  |  | $ | 42 |  |  | $ | 10 |  |  | $ | 24,523 |
States, municipalities and political subdivisions | 10,384 |  |  | 1,610 |  |  | 15 |  |  | — |  |  | 11,979 |
Asset-backed: |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 3,176 |  |  | 89 |  |  | 6 |  |  | — |  |  | 3,259 |
Commercial mortgage-backed | 2,064 |  |  | 85 |  |  | 16 |  |  | 17 |  |  | 2,116 |
Other asset-backed | 2,429 |  |  | 76 |  |  | 4 |  |  | 4 |  |  | 2,497 |
Total asset-backed | 7,669 |  |  | 250 |  |  | 26 |  |  | 21 |  |  | 7,872 |
U.S. Treasury and obligations of government-sponsored enterprises | 139 |  |  | 1 |  |  | 4 |  |  | — |  |  | 136 |
Foreign government | 521 |  |  | 19 |  |  | 2 |  |  | — |  |  | 538 |
Redeemable preferred stock | 12 |  |  | — |  |  | — |  |  | — |  |  | 12 |
Total fixed maturity securities available-for-sale | 40,333 |  |  | 4,847 |  |  | 89 |  |  | 31 |  |  | 45,060 |
Total fixed maturity securities trading | 9 |  |  | — |  |  | — |  |  | — |  |  | 9 |
Total fixed maturity securities | $ | 40,342 |  |  | $ | 4,847 |  |  | $ | 89 |  |  | $ | 31 |  |  | $ | 45,069 |
December 31, 2020 | Cost or Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Allowance for Credit Losses |  | Estimated Fair Value
(In millions) |  |  |  |
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |  |  |
Corporate and other bonds | $ | 20,792 |  |  | $ | 3,578 |  |  | $ | 22 |  |  | $ | 23 |  |  | $ | 24,325 |
States, municipalities and political subdivisions | 9,729 |  |  | 1,863 |  |  | — |  |  | — |  |  | 11,592 |
Asset-backed: |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 3,442 |  |  | 146 |  |  | 1 |  |  | — |  |  | 3,587 |
Commercial mortgage-backed | 1,933 |  |  | 93 |  |  | 42 |  |  | 17 |  |  | 1,967 |
Other asset-backed | 2,179 |  |  | 81 |  |  | 9 |  |  | — |  |  | 2,251 |
Total asset-backed | 7,554 |  |  | 320 |  |  | 52 |  |  | 17 |  |  | 7,805 |
U.S. Treasury and obligations of government-sponsored enterprises | 339 |  |  | 2 |  |  | 3 |  |  | — |  |  | 338 |
Foreign government | 512 |  |  | 32 |  |  | — |  |  | — |  |  | 544 |
Redeemable preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total fixed maturity securities available-for-sale | 38,926 |  |  | 5,795 |  |  | 77 |  |  | 40 |  |  | 44,604 |
Total fixed maturity securities trading | 27 |  |  | — |  |  | — |  |  | — |  |  | 27 |
Total fixed maturity securities | $ | 38,953 |  |  | $ | 5,795 |  |  | $ | 77 |  |  | $ | 40 |  |  | $ | 44,631 |
The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated other comprehensive income (AOCI). When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group segment would result in a premium deficiency if realized, a related increase in Insurance reserves is recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments). As of September 30, 2021 and December 31, 2020, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $2,481 million and $2,773 million. The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by the length of time in which the securities have continuously been in that position.
| Less than 12 Months |  | 12 Months or Longer |  | Total
September 30, 2021 | 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 | $ | 1,853 |  |  | $ | 37 |  |  | $ | 88 |  |  | $ | 5 |  |  | $ | 1,941 |  |  | $ | 42 |
States, municipalities and political subdivisions | 885 |  |  | 15 |  |  | — |  |  | — |  |  | 885 |  |  | 15 |
Asset-backed: |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 1,295 |  |  | 6 |  |  | — |  |  | — |  |  | 1,295 |  |  | 6 |
Commercial mortgage-backed | 317 |  |  | 4 |  |  | 194 |  |  | 12 |  |  | 511 |  |  | 16 |
Other asset-backed | 439 |  |  | 3 |  |  | 58 |  |  | 1 |  |  | 497 |  |  | 4 |
Total asset-backed | 2,051 |  |  | 13 |  |  | 252 |  |  | 13 |  |  | 2,303 |  |  | 26 |
U.S. Treasury and obligations of government-sponsored enterprises | 65 |  |  | 4 |  |  | 1 |  |  | — |  |  | 66 |  |  | 4 |
Foreign government | 73 |  |  | 2 |  |  | — |  |  | — |  |  | 73 |  |  | 2 |
Total | $ | 4,927 |  |  | $ | 71 |  |  | $ | 341 |  |  | $ | 18 |  |  | $ | 5,268 |  |  | $ | 89 |
| Less than 12 Months |  | 12 Months or Longer |  | Total
December 31, 2020 | 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 | $ | 609 |  |  | $ | 21 |  |  | $ | 12 |  |  | $ | 1 |  |  | $ | 621 |  |  | $ | 22 |
States, municipalities and political subdivisions | 33 |  |  | — |  |  | — |  |  | — |  |  | 33 |  |  | — |
Asset-backed: |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 71 |  |  | 1 |  |  | 11 |  |  | — |  |  | 82 |  |  | 1 |
Commercial mortgage-backed | 533 |  |  | 40 |  |  | 28 |  |  | 2 |  |  | 561 |  |  | 42 |
Other asset-backed | 344 |  |  | 9 |  |  | 13 |  |  | — |  |  | 357 |  |  | 9 |
Total asset-backed | 948 |  |  | 50 |  |  | 52 |  |  | 2 |  |  | 1,000 |  |  | 52 |
U.S. Treasury and obligations of government-sponsored enterprises | 63 |  |  | 3 |  |  | — |  |  | — |  |  | 63 |  |  | 3 |
Foreign government | 13 |  |  | — |  |  | — |  |  | — |  |  | 13 |  |  | — |
Total | $ | 1,666 |  |  | $ | 74 |  |  | $ | 64 |  |  | $ | 3 |  |  | $ | 1,730 |  |  | $ | 77 |
Based on current facts and circumstances, the Company believes the unrealized losses presented in the September 30, 2021 securities in a gross unrealized loss position table above are not indicative of the ultimate collectability 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 impairment losses to be recorded as of September 30, 2021. Contractual Maturity The following table presents available-for-sale fixed maturity securities by contractual maturity.
| September 30, 2021 |  | December 31, 2020
(In millions) | Cost or Amortized Cost |  | Estimated Fair Value |  | Cost or Amortized Cost |  | Estimated Fair Value
Due in one year or less | $ | 1,648 |  |  | $ | 1,656 |  |  | $ | 1,456 |  |  | $ | 1,458 |
Due after one year through five years | 10,776 |  |  | 11,517 |  |  | 12,304 |  |  | 13,098 |
Due after five years through ten years | 13,628 |  |  | 14,794 |  |  | 12,319 |  |  | 13,878 |
Due after ten years | 14,281 |  |  | 17,093 |  |  | 12,847 |  |  | 16,170 |
Total | $ | 40,333 |  |  | $ | 45,060 |  |  | $ | 38,926 |  |  | $ | 44,604 |
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. Derivative Financial Instruments The Company holds an embedded derivative on a funds withheld liability with a notional value of $272 million and $190 million and a fair value of $(11) million an d $(19) million as of September 30, 2021 and December 31, 2020. The embedded derivative on the funds withheld liability is accounted for separately and reported with the funds withheld liability in Other liabilities on the Condensed Consolidated Balance Sheets. Investment Commitments As part of its overall investment strategy, the Company invests in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to private placement securities. As of September 30, 2021, the Company had commitments to purchase or fund approximately $1,250 million and sell approximately $55 million under the terms of these investments. Mortgage Loans The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination. The primary credit quality indicators utilized are debt service coverage ratios (DSCR) and loan-to-value ratios (LTV).
September 30, 2021 | Mortgage Loans Amortized Cost Basis by Origination Year (1)
(In millions) | 2021 |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | Prior |  | Total
DSCR ≥1.6x |  |  |  |  |  |  |  |  |  |  |  |  |
LTV less than 55% | $ | 8 |  |  | $ | 75 |  |  | $ | 16 |  |  | $ | 37 |  |  | $ | 116 |  |  | $ | 203 |  |  | $ | 455 |
LTV 55% to 65% | — |  |  | 38 |  |  | 15 |  | 18 |  |  | — |  |  | 1 |  |  | 72
LTV greater than 65% | 17 |  |  | — |  |  | 14 |  |  | 7 |  |  | — |  |  | 23 |  |  | 61
DSCR 1.2x - 1.6x |  |  |  |  |  |  |  |  |  |  |  |  |
LTV less than 55% | 13 |  |  | 15 |  |  | 95 |  |  | — |  |  | 5 |  |  | 58 |  |  | 186
LTV 55% to 65% | 25 |  |  | — |  |  | — |  |  | 24 |  |  | 10 |  |  | 4 |  |  | 63
LTV greater than 65% | — |  |  | 24 |  |  | 9 |  |  | — |  |  | 8 |  |  | — |  |  | 41
DSCR ≤1.2 |  |  |  |  |  |  |  |  |  |  |  |  |
LTV less than 55% | — |  |  | — |  |  | 35 |  |  | — |  |  | 30 |  |  | — |  |  | 65
LTV 55% to 65% | — |  |  | — |  |  | 42 |  |  | — |  |  | — |  |  | — |  |  | 42
LTV greater than 65% | — |  |  | 9 |  |  | 56 |  |  | — |  |  | — |  |  | 7 |  |  | 72
Total | $ | 63 |  |  | $ | 161 |  |  | $ | 282 |  |  | $ | 86 |  |  | $ | 169 |  |  | $ | 296 |  |  | $ | 1,057 |
(1) The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index. As of September 30, 2021, accrued interest receivable on mortgage loans totaled $4 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses.

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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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