XML 21 R11.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Investments | 9 Months Ended
--- | ---
Sep. 30, 2022
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) | 2022 |  | 2021 |  | 2022 |  | 2021
Fixed maturity securities | $ | 454 |  |  | $ | 425 |  |  | $ | 1,324 |  |  | $ | 1,278 |
Equity securities | 2 |  |  | 4 |  |  | (7) |  |  | 53 |
Limited partnership investments | (35) |  |  | 85 |  |  | (11) |  |  | 274 |
Mortgage loans | 13 |  |  | 13 |  |  | 40 |  |  | 42 |
Short term investments | 4 |  |  | 1 |  |  | 6 |  |  | 1 |
Trading portfolio | 1 |  |  | 1 |  |  | 2 |  |  | 8 |
Other | 1 |  |  | (1) |  |  | 1 |  |  | — |
Gross investment income | 440 |  |  | 528 |  |  | 1,355 |  |  | 1,656 |
Investment expense | (18) |  |  | (15) |  |  | (53) |  |  | (48) |
Net investment income | $ | 422 |  |  | $ | 513 |  |  | $ | 1,302 |  |  | $ | 1,608 |
Net investment income (loss) recognized due to the change in fair value of common stock held as of September 30, 2022 and 2021 | $ | (18) |  |  | $ | (7) |  |  | $ | (38) |  |  | $ | 11 |
Net investment gains (losses) are presented in the following table.
Periods ended September 30 | Three Months |  | Nine Months
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Net investment gains (losses): |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |
Gross gains | $ | 23 |  |  | $ | 50 |  |  | $ | 94 |  |  | $ | 159 |
Gross losses | (134) |  |  | (28) |  |  | (222) |  |  | (68) |
Net investment gains (losses) on fixed maturity securities | (111) |  |  | 22 |  |  | (128) |  |  | 91 |
Equity securities | (2) |  |  | (2) |  |  | (111) |  |  | 17 |
Derivatives | 24 |  |  | 2 |  |  | 79 |  |  | 7 |
Mortgage loans | (8) |  |  | — |  |  | (8) |  |  | — |
Short term investments and other | 1 |  |  | — |  |  | 2 |  |  | 2 |
Net investment gains (losses) | $ | (96) |  |  | $ | 22 |  |  | $ | (166) |  |  | $ | 117 |
Net investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock held as of September 30, 2022 and 2021 | $ | (2) |  |  | $ | (2) |  |  | $ | (109) |  |  | $ | 15 |
Net investment gains (losses) for the three months ended September 30, 2022 in the table above include a $35 million net loss related to the expected novation of a coinsurance agreement on the Company’s legacy annuity business, which was transacted on a funds withheld basis and gave rise to an embedded derivative. The net loss of $35 million is comprised of a $59 million loss on the fixed maturity securities supporting the funds withheld liability to recognize unrealized losses which had been included in AOCI since the inception of the coinsurance agreement, partially offset by a $24 million gain on the associated embedded derivative. Taken together, this net loss is the final recognition of changes in the valuation of the funds held assets and offsets previously recognized net investment gains on the associated embedded derivative. The components of available-for-sale impairment losses (gains) recognized in earnings by asset type are presented in the following table. The table includes losses (gains) 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) | 2022 |  | 2021 |  | 2022 |  | 2021
Fixed maturity securities available-for-sale: |  |  |  |  |  |  |
Corporate and other bonds | $ | 24 |  |  | $ | — |  |  | $ | 53 |  |  | $ | 5 |
Asset-backed | 1 |  |  | 11 |  |  | 2 |  |  | 11 |
Impairment losses (gains) recognized in earnings | $ | 25 |  |  | $ | 11 |  |  | $ | 55 |  |  | $ | 16 |
The Company also recognized $8 million of losses on mortgage loans during the three and nine months ended September 30, 2022 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, 2022 | 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 | $ | 23,082 |  |  | $ | 231 |  |  | $ | 2,398 |  |  | $ | — |  |  | $ | 20,915 |
States, municipalities and political subdivisions | 9,244 |  |  | 259 |  |  | 1,080 |  |  | — |  |  | 8,423 |
Asset-backed: |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 3,153 |  |  | 6 |  |  | 470 |  |  | — |  |  | 2,689 |
Commercial mortgage-backed | 1,921 |  |  | 4 |  |  | 237 |  |  | — |  |  | 1,688 |
Other asset-backed | 3,264 |  |  | 2 |  |  | 349 |  |  | 3 |  |  | 2,914 |
Total asset-backed | 8,338 |  |  | 12 |  |  | 1,056 |  |  | 3 |  |  | 7,291 |
U.S. Treasury and obligations of government-sponsored enterprises | 107 |  |  | 3 |  |  | 1 |  |  | — |  |  | 109 |
Foreign government | 544 |  |  | 2 |  |  | 48 |  |  | — |  |  | 498 |
Redeemable preferred stock | 3 |  |  | — |  |  | — |  |  | — |  |  | 3 |
Total fixed maturity securities available-for-sale | 41,318 |  |  | 507 |  |  | 4,583 |  |  | 3 |  |  | 37,239 |
Total fixed maturity securities trading | 12 |  |  | — |  |  | — |  |  | — |  |  | 12 |
Total fixed maturity securities | $ | 41,330 |  |  | $ | 507 |  |  | $ | 4,583 |  |  | $ | 3 |  |  | $ | 37,251 |
December 31, 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 | $ | 21,444 |  |  | $ | 2,755 |  |  | $ | 56 |  |  | $ | 11 |  |  | $ | 24,132 |
States, municipalities and political subdivisions | 10,358 |  |  | 1,599 |  |  | 14 |  |  | — |  |  | 11,943 |
Asset-backed: |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 2,893 |  |  | 71 |  |  | 8 |  |  | — |  |  | 2,956 |
Commercial mortgage-backed | 1,987 |  |  | 63 |  |  | 19 |  |  | — |  |  | 2,031 |
Other asset-backed | 2,561 |  |  | 54 |  |  | 10 |  |  | 7 |  |  | 2,598 |
Total asset-backed | 7,441 |  |  | 188 |  |  | 37 |  |  | 7 |  |  | 7,585 |
U.S. Treasury and obligations of government-sponsored enterprises | 132 |  |  | 1 |  |  | 3 |  |  | — |  |  | 130 |
Foreign government | 570 |  |  | 15 |  |  | 2 |  |  | — |  |  | 583 |
Redeemable preferred stock | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total fixed maturity securities available-for-sale | 39,945 |  |  | 4,558 |  |  | 112 |  |  | 18 |  |  | 44,373 |
Total fixed maturity securities trading | 7 |  |  | — |  |  | — |  |  | — |  |  | 7 |
Total fixed maturity securities | $ | 39,952 |  |  | $ | 4,558 |  |  | $ | 112 |  |  | $ | 18 |  |  | $ | 44,380 |
The net unrealized gains and losses on investments included in the tables above are recorded as a component of AOCI. When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. To the extent there are unrealized gains on fixed income securities supporting the reserves of certain products within the Life & Group segment that would result in a premium deficiency, or would impact the reserve balance if realized, a related increase in Insurance reserves is recorded as a reduction of net unrealized gains (losses), net of tax, through Other comprehensive income (loss) (Shadow Adjustments). As of September 30, 2022 and December 31, 2021, the net unrealized gains and losses on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $46 million and $2,477 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, 2022 | 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 | $ | 16,707 |  |  | $ | 2,117 |  |  | $ | 914 |  |  | $ | 281 |  |  | $ | 17,621 |  |  | $ | 2,398 |
States, municipalities and political subdivisions | 4,793 |  |  | 1,029 |  |  | 128 |  |  | 51 |  |  | 4,921 |  |  | 1,080 |
Asset-backed: |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 2,582 |  |  | 462 |  |  | 17 |  |  | 8 |  |  | 2,599 |  |  | 470 |
Commercial mortgage-backed | 1,372 |  |  | 194 |  |  | 233 |  |  | 43 |  |  | 1,605 |  |  | 237 |
Other asset-backed | 2,433 |  |  | 307 |  |  | 233 |  |  | 42 |  |  | 2,666 |  |  | 349 |
Total asset-backed | 6,387 |  |  | 963 |  |  | 483 |  |  | 93 |  |  | 6,870 |  |  | 1,056 |
U.S. Treasury and obligations of government-sponsored enterprises | 61 |  |  | 1 |  |  | — |  |  | — |  |  | 61 |  |  | 1 |
Foreign government | 446 |  |  | 42 |  |  | 25 |  |  | 6 |  |  | 471 |  |  | 48 |
Total | $ | 28,394 |  |  | $ | 4,152 |  |  | $ | 1,550 |  |  | $ | 431 |  |  | $ | 29,944 |  |  | $ | 4,583 |
| Less than 12 Months |  | 12 Months or Longer |  | Total
December 31, 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 | $ | 2,389 |  |  | $ | 48 |  |  | $ | 136 |  |  | $ | 8 |  |  | $ | 2,525 |  |  | $ | 56 |
States, municipalities and political subdivisions | 730 |  |  | 14 |  |  | — |  |  | — |  |  | 730 |  |  | 14 |
Asset-backed: |  |  |  |  |  |  |  |  |  |  |
Residential mortgage-backed | 1,043 |  |  | 8 |  |  | — |  |  | — |  |  | 1,043 |  |  | 8 |
Commercial mortgage-backed | 527 |  |  | 7 |  |  | 167 |  |  | 12 |  |  | 694 |  |  | 19 |
Other asset-backed | 840 |  |  | 10 |  |  | 62 |  |  | — |  |  | 902 |  |  | 10 |
Total asset-backed | 2,410 |  |  | 25 |  |  | 229 |  |  | 12 |  |  | 2,639 |  |  | 37 |
U.S. Treasury and obligations of government-sponsored enterprises | 69 |  |  | 3 |  |  | 5 |  |  | — |  |  | 74 |  |  | 3 |
Foreign government | 97 |  |  | 2 |  |  | — |  |  | — |  |  | 97 |  |  | 2 |
Total | $ | 5,695 |  |  | $ | 92 |  |  | $ | 370 |  |  | $ | 20 |  |  | $ | 6,065 |  |  | $ | 112 |
The following table presents 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 ratings distribution.
| September 30, 2022 |  | December 31, 2021
(In millions) | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 2,360 |  |  | $ | 360 |  |  | $ | 898 |  |  | $ | 8 |
AAA | 1,566 |  |  | 318 |  |  | 368 |  |  | 6 |
AA | 4,430 |  |  | 917 |  |  | 875 |  |  | 17 |
A | 6,548 |  |  | 838 |  |  | 1,516 |  |  | 23 |
BBB | 13,394 |  |  | 1,902 |  |  | 1,812 |  |  | 42 |
Non-investment grade | 1,646 |  |  | 248 |  |  | 596 |  |  | 16 |
Total | $ | 29,944 |  |  | $ | 4,583 |  |  | $ | 6,065 |  |  | $ | 112 |
Based on current facts and circumstances, the Company believes the unrealized losses presented in the September 30, 2022 securities in a gross unrealized loss position tables above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates and a general market widening of credit spreads. In reaching this determination, the Company considered the recent volatility in risk-free rates and credit spreads as well as the fact that its unrealized losses are concentrated in investment grade issuers. Additionally, 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, 2022. 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 $401 million, $369 million and $387 million as of September 30, 2022, December 31, 2021 and September 30, 2021 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, 2022 | $ | — |  |  | $ | 5 |  |  | $ | 5 |
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 | — |  |  | — |  |  | — |
Reductions to the allowance for credit losses: |  |  |  |  |
Securities sold during the period (realized) | — |  |  | — |  |  | — |
Write-offs charged against the allowance | — |  |  | — |  |  | — |
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | — |  |  | (2) |  |  | (2) |
Balance as of September 30, 2022 | $ | — |  |  | $ | 3 |  |  | $ | 3 |
(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) | — |  |  | — |  |  | — |
Write-offs charged against the allowance | 16 |  |  | — |  |  | 16 |
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 January 1, 2022 | $ | 11 |  |  | $ | 7 |  |  | $ | 18 |
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 | — |  |  | 3 |  |  | 3 |
Reductions to the allowance for credit losses: |  |  |  |  |
Securities sold during the period (realized) | — |  |  | — |  |  | — |
Write-offs charged against the allowance | 12 |  |  | — |  |  | 12 |
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | 1 |  |  | (7) |  |  | (6) |
Balance as of September 30, 2022 | $ | — |  |  | $ | 3 |  |  | $ | 3 |
(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 |
Write-offs charged against the allowance | 16 |  |  | — |  |  | 16 |
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 |
Contractual Maturity The following table presents available-for-sale fixed maturity securities by contractual maturity.
| September 30, 2022 |  | December 31, 2021
(In millions) | Cost or Amortized Cost |  | Estimated Fair Value |  | Cost or Amortized Cost |  | Estimated Fair Value
Due in one year or less | $ | 952 |  |  | $ | 948 |  |  | $ | 1,603 |  |  | $ | 1,624 |
Due after one year through five years | 9,487 |  |  | 9,000 |  |  | 10,637 |  |  | 11,229 |
Due after five years through ten years | 14,323 |  |  | 12,765 |  |  | 13,294 |  |  | 14,338 |
Due after ten years | 16,556 |  |  | 14,526 |  |  | 14,411 |  |  | 17,182 |
Total | $ | 41,318 |  |  | $ | 37,239 |  |  | $ | 39,945 |  |  | $ | 44,373 |
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 $220 million and $270 million and a fair value of $1 million and $(12) million as of September 30, 2022 and December 31, 2021. 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, 2022, the Company had commitments to purchase or fund approximately $1,595 million and sell approximately $100 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, 2022 | Mortgage Loans Amortized Cost Basis by Origination Year (1)
(In millions) | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior |  | Total
DSCR ≥1.6x |  |  |  |  |  |  |  |  |  |  |  |  |
LTV less than 55% | $ | 9 |  |  | $ | 13 |  |  | $ | 112 |  |  | $ | 29 |  |  | $ | 54 |  |  | $ | 275 |  |  | $ | 492 |
LTV 55% to 65% | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
LTV greater than 65% | 18 |  |  | 11 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 29
DSCR 1.2x - 1.6x |  |  |  |  |  |  |  |  |  |  |  |  |
LTV less than 55% | 5 |  |  | 49 |  |  | 18 |  |  | 56 |  |  | 10 |  |  | 42 |  |  | 180
LTV 55% to 65% | 87 |  |  | — |  |  | 20 |  |  | — |  |  | — |  |  | 8 |  |  | 115
LTV greater than 65% | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
DSCR ≤1.2 |  |  |  |  |  |  |  |  |  |  |  |  |
LTV less than 55% | — |  |  | — |  |  | — |  |  | 57 |  |  | — |  |  | — |  |  | 57
LTV 55% to 65% | — |  |  | 21 |  |  | — |  |  | 44 |  |  | — |  |  | — |  |  | 65
LTV greater than 65% | 10 |  |  | — |  |  | — |  |  | 22 |  |  | — |  |  | 7 |  |  | 39
Total | $ | 129 |  |  | $ | 94 |  |  | $ | 150 |  |  | $ | 208 |  |  | $ | 64 |  |  | $ | 332 |  |  | $ | 977 |
(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, 2022, accrued interest receivable on mortgage loans totaled $3 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses.

X
- 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 https://asc.fasb.org/topic&trid=75115024 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -URI https://asc.fasb.org/topic&trid=2197064 Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
Name: | us-gaap_InvestmentTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration