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As Of Filer Filing For·On·As Docs:Size 11/05/19 Allstate Life Insurance Co 10-Q 9/30/19 72:20M |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 2.63M 2: EX-15 Letter re: Unaudited Interim Financial Info HTML 27K 3: EX-31.I Certification -- §302 - SOA'02 HTML 34K 4: EX-32 Certification -- §906 - SOA'02 HTML 23K 26: R1 Document and Entity Information HTML 70K 67: R2 Condensed Consolidated Statements of Operations HTML 102K and Comprehensive Income (Unaudited) 43: R3 Condensed Consolidated Statements of Financial HTML 146K Position (Unaudited) 15: R4 Condensed Consolidated Statements of Financial HTML 45K Position (Unaudited) (Parenthetical) 25: R5 Condensed Consolidated Statements of Shareholder's HTML 49K Equity (Unaudited) 66: R6 Condensed Consolidated Statements of Cash Flows HTML 120K (Unaudited) 42: R7 General HTML 69K 14: R8 Supplemental Cash Flow Information HTML 41K 27: R9 Investments HTML 611K 33: R10 Fair Value of Assets and Liabilities HTML 894K 22: R11 Derivative Financial Instruments HTML 538K 45: R12 Reinsurance HTML 102K 68: R13 Guarantees and Contingent Liabilities HTML 31K 35: R14 Other Comprehensive Income HTML 84K 23: R15 General (Tables) HTML 54K 46: R16 Supplemental Cash Flow Information (Tables) HTML 39K 69: R17 Investments (Tables) HTML 622K 32: R18 Fair Value of Assets and Liabilities (Tables) HTML 868K 24: R19 Derivative Financial Instruments (Tables) HTML 568K 50: R20 Reinsurance (Tables) HTML 103K 59: R21 Other Comprehensive Income (Tables) HTML 84K 36: R22 General (Details) HTML 63K 10: R23 Supplemental Cash Flow Information - 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Document |
i Illinois | i 36-2554642 | |||
(State
or other jurisdiction of | (I.R.S. Employer | |||
incorporation or organization) | Identification No.) |
i Yes | ☒ | No | ☐ |
i Yes | ☒ | No | ☐ |
Large accelerated filer | ☐ | Accelerated filer | ☐ |
i Non-accelerated
filer | ☒ | Smaller reporting company | i ☐ |
Emerging
growth company | i ☐ |
Yes | i ☐ | No | ☒ |
PART I | FINANCIAL INFORMATION | PAGE |
Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Month and Nine Month Periods Ended September 30, 2019 and 2018 (unaudited) | ||
Condensed
Consolidated Statements of Financial Position as of September 30, 2019 and December 31, 2018 (unaudited) | ||
Condensed Consolidated Statements of Shareholder’s Equity for the Three Month and Nine Month Periods Ended September 30, 2019 and 2018 (unaudited) | ||
Condensed
Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2019 and 2018 (unaudited) | ||
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Premiums | $ | i 165 | $ | i 174 | $ | i 506 | $ | i 526 | |||||||
Contract
charges | i 168 | i 170 | i 514 | i 519 | |||||||||||
Other
revenue | i 11 | i 10 | i 32 | i 26 | |||||||||||
Net
investment income | i 373 | i 385 | i 1,101 | i 1,211 | |||||||||||
Realized
capital gains and losses: | |||||||||||||||
Total other-than-temporary impairment (“OTTI”) losses | ( i 10 | ) | ( i 3 | ) | ( i 23 | ) | ( i 5 | ) | |||||||
OTTI
losses reclassified from other comprehensive income (“OCI”) | i 2 | ( i 1 | ) | i 3 | ( i 2 | ) | |||||||||
Net
OTTI losses recognized in earnings | ( i 8 | ) | ( i 4 | ) | ( i 20 | ) | ( i 7 | ) | |||||||
Sales
and valuation changes on equity investments and derivatives | i 33 | i 52 | i 239 | i 31 | |||||||||||
Total
realized capital gains and losses | i 25 | i 48 | i 219 | i 24 | |||||||||||
Total
revenues | i 742 | i 787 | i 2,372 | i 2,306 | |||||||||||
Costs
and expenses | |||||||||||||||
Contract benefits | i 366 | i 362 | i 1,104 | i 1,089 | |||||||||||
Interest
credited to contractholder funds | i 154 | i 150 | i 445 | i 450 | |||||||||||
Amortization
of deferred policy acquisition costs | i 71 | i 39 | i 136 | i 117 | |||||||||||
Operating
costs and expenses | i 51 | i 63 | i 186 | i 199 | |||||||||||
Restructuring
and related charges | i 1 | i — | i 1 | i 2 | |||||||||||
Interest
expense | i 1 | i 1 | i 3 | i 3 | |||||||||||
Total
costs and expenses | i 644 | i 615 | i 1,875 | i 1,860 | |||||||||||
Gain
on disposition of operations | i — | i 1 | i 3 | i 4 | |||||||||||
Income
from operations before income tax expense | i 98 | i 173 | i 500 | i 450 | |||||||||||
Income
tax expense (benefit) | i 18 | ( i 20 | ) | i 99 | i 33 | ||||||||||
Net
income | i 80 | i 193 | i 401 | i 417 | |||||||||||
Other
comprehensive income (loss), after-tax | |||||||||||||||
Change in unrealized net capital gains and losses | i 157 | ( i 44 | ) | i 673 | ( i 280 | ) | |||||||||
Change
in unrealized foreign currency translation adjustments | i 1 | ( i 9 | ) | ( i 4 | ) | i — | |||||||||
Other
comprehensive income (loss), after-tax | i 158 | ( i 53 | ) | i 669 | ( i 280 | ) | |||||||||
Comprehensive
income | $ | i 238 | $ | i 140 | $ | i 1,070 | $ | i 137 |
($ in millions, except par value data) | |||||||
Assets | |||||||
Investments | |||||||
Fixed
income securities, at fair value (amortized cost $20,419 and $21,057) | $ | i 22,000 | $ | i 21,400 | |||
Mortgage
loans | i 4,012 | i 3,995 | |||||
Equity
securities, at fair value (cost $923 and $1,197) | i 1,217 | i 1,325 | |||||
Limited
partnership interests | i 3,304 | i 3,292 | |||||
Short-term,
at fair value (amortized cost $1,475 and $810) | i 1,475 | i 810 | |||||
Policy
loans | i 555 | i 561 | |||||
Other | i 1,366 | i 1,300 | |||||
Total
investments | i 33,929 | i 32,683 | |||||
Cash | i 50 | i 52 | |||||
Deferred
policy acquisition costs | i 973 | i 1,232 | |||||
Reinsurance
recoverables from non-affiliates | i 2,072 | i 2,185 | |||||
Reinsurance
recoverables from affiliates | i 408 | i 420 | |||||
Accrued
investment income | i 248 | i 253 | |||||
Other
assets | i 586 | i 534 | |||||
Separate
Accounts | i 2,912 | i 2,783 | |||||
Total
assets | $ | i 41,178 | $ | i 40,142 | |||
Liabilities | |||||||
Contractholder
funds | $ | i 16,843 | $ | i 17,470 | |||
Reserve
for life-contingent contract benefits | i 11,361 | i 11,239 | |||||
Unearned
premiums | i 4 | i 4 | |||||
Payable
to affiliates, net | i 34 | i 50 | |||||
Other
liabilities and accrued expenses | i 1,297 | i 1,101 | |||||
Deferred
income taxes | i 900 | i 663 | |||||
Notes
due to related parties | i 140 | i 140 | |||||
Separate
Accounts | i 2,912 | i 2,783 | |||||
Total
liabilities | i 33,491 | i 33,450 | |||||
Commitments
and Contingent Liabilities (Note 7) | i | i | |||||
Shareholder’s
equity | |||||||
Redeemable preferred stock - series A, $100 par value, 1,500,000 shares authorized, none issued | i — | i — | |||||
Redeemable
preferred stock - series B, $100 par value, 1,500,000 shares authorized, none issued | i — | i — | |||||
Common
stock, $227 par value, 23,800 shares authorized and outstanding | i 5 | i 5 | |||||
Additional
capital paid-in | i 2,024 | i 2,024 | |||||
Retained
income | i 4,736 | i 4,410 | |||||
Accumulated
other comprehensive income: | |||||||
Unrealized net capital gains and losses: | |||||||
Unrealized net capital gains and losses
on fixed income securities with OTTI | i 50 | i 45 | |||||
Other
unrealized net capital gains and losses | i 1,198 | i 225 | |||||
Unrealized
adjustment to DAC, DSI and insurance reserves | ( i 332 | ) | ( i 27 | ) | |||
Total
unrealized net capital gains and losses | i 916 | i 243 | |||||
Unrealized
foreign currency translation adjustments | i 6 | i 10 | |||||
Total
accumulated other comprehensive income (“AOCI”) | i 922 | i 253 | |||||
Total
shareholder’s equity | i 7,687 | i 6,692 | |||||
Total
liabilities and shareholder’s equity | $ | i 41,178 | $ | i 40,142 |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Common
stock | $ | i 5 | $ | i 5 | $ | i 5 | $ | i 5 | |||||||
Additional
capital paid-in | i 2,024 | i 2,024 | i 2,024 | i 2,024 | |||||||||||
Retained
income | |||||||||||||||
Balance, beginning of period | i 4,656 | i 4,519 | i 4,410 | i 3,981 | |||||||||||
Net
income | i 80 | i 193 | i 401 | i 417 | |||||||||||
Cumulative
effect of change in accounting principle | i — | i — | i — | i 314 | |||||||||||
Dividends | i — | ( i 100 | ) | ( i 75 | ) | ( i 100 | ) | ||||||||
Balance,
end of period | i 4,736 | i 4,612 | i 4,736 | i 4,612 | |||||||||||
Accumulated
other comprehensive income | |||||||||||||||
Balance, beginning of period | i 764 | i 380 | i 253 | i 845 | |||||||||||
Change
in unrealized net capital gains and losses | i 157 | ( i 44 | ) | i 673 | ( i 280 | ) | |||||||||
Change
in unrealized foreign currency translation adjustments | i 1 | ( i 9 | ) | ( i 4 | ) | i — | |||||||||
Cumulative
effect of change in accounting principle | i — | i — | i — | ( i 238 | ) | ||||||||||
Balance,
end of period | i 922 | i 327 | i 922 | i 327 | |||||||||||
Total
shareholder’s equity | $ | i 7,687 | $ | i 6,968 | $ | i 7,687 | $ | i 6,968 |
($ in millions) | Nine
months ended September 30, | ||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | i 401 | $ | i 417 | |||
Adjustments
to reconcile net income to net cash provided by operating activities: | |||||||
Amortization and other non-cash items | ( i 49 | ) | ( i 44 | ) | |||
Realized
capital gains and losses | ( i 219 | ) | ( i 24 | ) | |||
Gain
on disposition of operations | ( i 3 | ) | ( i 4 | ) | |||
Interest
credited to contractholder funds | i 445 | i 450 | |||||
Changes
in: | |||||||
Policy benefits and other insurance reserves | ( i 495 | ) | ( i 472 | ) | |||
Deferred
policy acquisition costs | i 94 | i 55 | |||||
Reinsurance
recoverables, net | i 77 | i 51 | |||||
Income
taxes | ( i 16 | ) | ( i 51 | ) | |||
Other
operating assets and liabilities | i 20 | i 69 | |||||
Net
cash provided by operating activities | i 255 | i 447 | |||||
Cash
flows from investing activities | |||||||
Proceeds from sales | |||||||
Fixed income securities | i 3,021 | i 4,057 | |||||
Equity
securities | i 853 | i 1,114 | |||||
Limited
partnership interests | i 258 | i 223 | |||||
Other
investments | i 55 | i 16 | |||||
Investment
collections | |||||||
Fixed income securities | i 964 | i 1,077 | |||||
Mortgage
loans | i 364 | i 349 | |||||
Other
investments | i 58 | i 137 | |||||
Investment
purchases | |||||||
Fixed income securities | ( i 3,284 | ) | ( i 4,470 | ) | |||
Equity
securities | ( i 540 | ) | ( i 919 | ) | |||
Limited
partnership interests | ( i 298 | ) | ( i 426 | ) | |||
Mortgage
loans | ( i 381 | ) | ( i 395 | ) | |||
Other
investments | ( i 96 | ) | ( i 201 | ) | |||
Change
in short-term investments, net | ( i 467 | ) | ( i 124 | ) | |||
Change
in policy loans and other investments, net | ( i 23 | ) | ( i 46 | ) | |||
Net
cash provided by investing activities | i 484 | i 392 | |||||
Cash
flows from financing activities | |||||||
Contractholder fund deposits | i 565 | i 577 | |||||
Contractholder
fund withdrawals | ( i 1,231 | ) | ( i 1,418 | ) | |||
Dividends
paid | ( i 75 | ) | ( i 100 | ) | |||
Other | i — | i 28 | |||||
Net
cash used in financing activities | ( i 741 | ) | ( i 913 | ) | |||
Net
decrease in cash | ( i 2 | ) | ( i 74 | ) | |||
Cash
at beginning of period | i 52 | i 145 | |||||
Cash
at end of period | $ | i 50 | $ | i 71 |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Premiums | |||||||||||||||
Traditional
life insurance | $ | i 135 | $ | i 143 | $ | i 416 | $ | i 435 | |||||||
Accident
and health insurance | i 30 | i 31 | i 90 | i 91 | |||||||||||
Total
premiums | i 165 | i 174 | i 506 | i 526 | |||||||||||
Contract
charges | |||||||||||||||
Interest-sensitive life insurance | i 165 | i 165 | i 505 | i 508 | |||||||||||
Fixed
annuities | i 3 | i 5 | i 9 | i 11 | |||||||||||
Total
contract charges | i 168 | i 170 | i 514 | i 519 | |||||||||||
Total
premiums and contract charges | $ | i 333 | $ | i 344 | $ | i 1,020 | $ | i 1,045 |
($ in millions) | Nine months ended September 30, | ||||||
2019 | 2018 | ||||||
Net
change in proceeds managed | |||||||
Net change in fixed income securities | $ | i 28 | $ | i 78 | |||
Net
change in short-term investments | ( i 194 | ) | ( i 72 | ) | |||
Operating
cash flow (used) provided | $ | ( i 166 | ) | $ | i 6 | ||
Net
change in liabilities | |||||||
Liabilities for collateral, beginning of period | $ | ( i 525 | ) | $ | ( i 542 | ) | |
Liabilities
for collateral, end of period | ( i 691 | ) | ( i 536 | ) | |||
Operating
cash flow provided (used) | $ | i 166 | $ | ( i 6 | ) |
($ in millions) | Amortized | Gross unrealized | Fair | ||||||||||||
cost | Gains | Losses | value | ||||||||||||
U.S. government and agencies | $ | i 555 | $ | i 40 | $ | i — | $ | i 595 | |||||||
Municipal | i 1,592 | i 324 | ( i 3 | ) | i 1,913 | ||||||||||
Corporate | i 17,644 | i 1,193 | ( i 38 | ) | i 18,799 | ||||||||||
Foreign
government | i 155 | i 8 | i — | i 163 | |||||||||||
Asset-backed
securities (“ABS”) | i 315 | i 4 | ( i 2 | ) | i 317 | ||||||||||
Residential
mortgage-backed securities (“RMBS”) | i 123 | i 49 | i — | i 172 | |||||||||||
Commercial
mortgage-backed securities (“CMBS”) | i 22 | i 6 | ( i 1 | ) | i 27 | ||||||||||
Redeemable
preferred stock | i 13 | i 1 | i — | i 14 | |||||||||||
Total
fixed income securities | $ | i 20,419 | $ | i 1,625 | $ | ( i 44 | ) | $ | i 22,000 | ||||||
U.S. government and agencies | $ | i 740 | $ | i 33 | $ | i — | $ | i 773 | |||||||
Municipal | i 1,997 | i 202 | ( i 4 | ) | i 2,195 | ||||||||||
Corporate | i 17,521 | i 433 | ( i 381 | ) | i 17,573 | ||||||||||
Foreign
government | i 170 | i 9 | i — | i 179 | |||||||||||
ABS | i 429 | i 3 | ( i 3 | ) | i 429 | ||||||||||
RMBS | i 154 | i 44 | ( i 1 | ) | i 197 | ||||||||||
CMBS | i 33 | i 7 | i — | i 40 | |||||||||||
Redeemable
preferred stock | i 13 | i 1 | i — | i 14 | |||||||||||
Total
fixed income securities | $ | i 21,057 | $ | i 732 | $ | ( i 389 | ) | $ | i 21,400 |
($ in millions) | As of September
30, 2019 | ||||||
Amortized cost | Fair value | ||||||
Due in one year or less | $ | i 1,410 | $ | i 1,426 | |||
Due
after one year through five years | i 7,675 | i 7,982 | |||||
Due
after five years through ten years | i 7,354 | i 7,845 | |||||
Due
after ten years | i 3,520 | i 4,231 | |||||
i 19,959 | i 21,484 | ||||||
ABS,
RMBS and CMBS | i 460 | i 516 | |||||
Total | $ | i 20,419 | $ | i 22,000 |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Fixed income securities | $ | i 235 | $ | i 247 | $ | i 721 | $ | i 745 | |||||||
Mortgage
loans | i 48 | i 44 | i 140 | i 141 | |||||||||||
Equity
securities | i 6 | i 7 | i 26 | i 30 | |||||||||||
Limited
partnership interests | i 69 | i 74 | i 174 | i 262 | |||||||||||
Short-term
investments | i 8 | i 7 | i 24 | i 16 | |||||||||||
Policy
loans | i 9 | i 8 | i 25 | i 23 | |||||||||||
Other | i 24 | i 23 | i 70 | i 68 | |||||||||||
Investment
income, before expense | i 399 | i 410 | i 1,180 | i 1,285 | |||||||||||
Investment
expense | ( i 26 | ) | ( i 25 | ) | ( i 79 | ) | ( i 74 | ) | |||||||
Net
investment income | $ | i 373 | $ | i 385 | $ | i 1,101 | $ | i 1,211 |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Fixed income securities | $ | i 19 | $ | ( i 8 | ) | $ | i 17 | $ | ( i 26 | ) | |||||
Mortgage
loans | i — | i — | i — | i 2 | |||||||||||
Equity
securities | i 7 | i 56 | i 192 | i 50 | |||||||||||
Limited
partnership interests | ( i 2 | ) | ( i 4 | ) | i 8 | ( i 12 | ) | ||||||||
Derivatives | i 8 | i 4 | i 16 | i 11 | |||||||||||
Other | ( i 7 | ) | i — | ( i 14 | ) | ( i 1 | ) | ||||||||
Realized
capital gains (losses) | $ | i 25 | $ | i 48 | $ | i 219 | $ | i 24 |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Impairment
write-downs | $ | ( i 8 | ) | $ | ( i 4 | ) | $ | ( i 20 | ) | $ | ( i 7 | ) | |||
Sales | i 20 | ( i 2 | ) | i 20 | ( i 14 | ) | |||||||||
Valuation
of equity investments (1) | i 5 | i 50 | i 203 | i 37 | |||||||||||
Valuation
and settlements of derivative instruments | i 8 | i 4 | i 16 | i 8 | |||||||||||
Realized
capital gains (losses) | $ | i 25 | $ | i 48 | $ | i 219 | $ | i 24 |
(1) | Includes
valuation of equity securities and certain limited partnership interests where the underlying assets are predominately public equity securities. |
($ in millions) | Three months ended September 30, | Nine
months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Equity securities | $ | i 16 | $ | i 51 | $ | i 155 | $ | i 71 | |||||||
Limited
partnership interests carried at fair value | i 21 | i 35 | i 41 | i 84 | |||||||||||
Total | $ | i 37 | $ | i 86 | $ | i 196 | $ | i 155 |
Three months ended | Three months ended | ||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||
Gross | Included in OCI | Net | Gross | Included in OCI | Net | ||||||||||||||||||
Fixed
income securities: | |||||||||||||||||||||||
Municipal | $ | ( i 2 | ) | $ | i 2 | $ | i — | $ | i — | $ | i — | $ | i — | ||||||||||
Corporate | i — | i — | i — | i — | i — | i — | |||||||||||||||||
ABS | i — | i — | i — | i — | ( i 1 | ) | ( i 1 | ) | |||||||||||||||
RMBS | i — | i — | i — | i — | i — | i — | |||||||||||||||||
CMBS | ( i 1 | ) | i — | ( i 1 | ) | ( i 3 | ) | i — | ( i 3 | ) | |||||||||||||
Total
fixed income securities | ( i 3 | ) | i 2 | ( i 1 | ) | ( i 3 | ) | ( i 1 | ) | ( i 4 | ) | ||||||||||||
Limited
partnership interests | i — | i — | i — | i — | i — | i — | |||||||||||||||||
Other | ( i 7 | ) | i — | ( i 7 | ) | i — | i — | i — | |||||||||||||||
OTTI losses | $ | ( i 10 | ) | $ | i 2 | $ | ( i 8 | ) | $ | ( i 3 | ) | $ | ( i 1 | ) | $ | ( i 4 | ) | ||||||
Nine
months ended | Nine months ended | ||||||||||||||||||||||
Gross | Included in OCI | Net | Gross | Included in OCI | Net | ||||||||||||||||||
Fixed
income securities: | |||||||||||||||||||||||
Municipal | $ | ( i 2 | ) | $ | i 2 | $ | i — | $ | i — | $ | i — | $ | i — | ||||||||||
Corporate | ( i 1 | ) | ( i 1 | ) | ( i 2 | ) | i — | i — | i — | ||||||||||||||
ABS | ( i 1 | ) | i — | ( i 1 | ) | i — | ( i 1 | ) | ( i 1 | ) | |||||||||||||
RMBS | i — | i — | i — | ( i 1 | ) | i — | ( i 1 | ) | |||||||||||||||
CMBS | ( i 3 | ) | i 2 | ( i 1 | ) | ( i 3 | ) | ( i 1 | ) | ( i 4 | ) | ||||||||||||
Total
fixed income securities | ( i 7 | ) | i 3 | ( i 4 | ) | ( i 4 | ) | ( i 2 | ) | ( i 6 | ) | ||||||||||||
Limited
partnership interests | ( i 2 | ) | i — | ( i 2 | ) | i — | i — | i — | |||||||||||||||
Other | ( i 14 | ) | i — | ( i 14 | ) | ( i 1 | ) | i — | ( i 1 | ) | |||||||||||||
OTTI losses | $ | ( i 23 | ) | $ | i 3 | $ | ( i 20 | ) | $ | ( i 5 | ) | $ | ( i 2 | ) | $ | ( i 7 | ) |
($ in millions) | |||||||
Municipal | $ | ( i 6 | ) | $ | ( i 4 | ) | |
Corporate | i — | ( i 1 | ) | ||||
ABS | ( i 4 | ) | ( i 5 | ) | |||
RMBS | ( i 28 | ) | ( i 32 | ) | |||
CMBS | ( i 4 | ) | ( i 2 | ) | |||
Total | $ | ( i 42 | ) | $ | ( i 44 | ) |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Beginning
balance | $ | ( i 122 | ) | $ | ( i 124 | ) | $ | ( i 123 | ) | $ | ( i 138 | ) | |||
Additional
credit loss for securities previously other-than-temporarily impaired | ( i 1 | ) | ( i 3 | ) | ( i 3 | ) | ( i 5 | ) | |||||||
Additional
credit loss for securities not previously other-than-temporarily impaired | i — | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | ||||||||
Reduction
in credit loss for securities disposed or collected | i 12 | i 2 | i 16 | i 18 | |||||||||||
Change
in credit loss due to accretion of increase in cash flows | i — | i 1 | i — | i 1 | |||||||||||
Ending
balance | $ | ( i 111 | ) | $ | ( i 125 | ) | $ | ( i 111 | ) | $ | ( i 125 | ) |
($ in millions) | Fair value | Gross unrealized | Unrealized net
gains (losses) | ||||||||||||
Gains | Losses | ||||||||||||||
Fixed income securities | $ | i 22,000 | $ | i 1,625 | $ | ( i 44 | ) | $ | i 1,581 | ||||||
Short-term
investments | i 1,475 | i — | i — | i — | |||||||||||
Equity
method of accounting (“EMA”) limited partnerships (1) | ( i 1 | ) | |||||||||||||
Unrealized
net capital gains and losses, pre-tax | i 1,580 | ||||||||||||||
Amounts
recognized for: | |||||||||||||||
Insurance reserves (2) | ( i 202 | ) | |||||||||||||
DAC
and DSI (3) | ( i 218 | ) | |||||||||||||
Amounts
recognized | ( i 420 | ) | |||||||||||||
Deferred
income taxes | ( i 244 | ) | |||||||||||||
Unrealized
net capital gains and losses, after-tax | $ | i 916 |
(1) | Unrealized
net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ OCI. Fair value and gross unrealized gains and losses are not applicable. |
(2) | The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at lower interest rates, resulting in a premium deficiency. This adjustment primarily relates to structured settlement annuities with life contingencies (a type of immediate fixed annuities). |
(3) | The
DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized. |
($ in millions) | Fair value | Gross unrealized | Unrealized net
gains (losses) | ||||||||||||
Gains | Losses | ||||||||||||||
Fixed income securities | $ | i 21,400 | $ | i 732 | $ | ( i 389 | ) | $ | i 343 | ||||||
Short-term
investments | i 810 | i — | i — | i — | |||||||||||
EMA
limited partnerships | i — | ||||||||||||||
Unrealized
net capital gains and losses, pre-tax | i 343 | ||||||||||||||
Amounts
recognized for: | |||||||||||||||
Insurance reserves | i — | ||||||||||||||
DAC
and DSI | ( i 35 | ) | |||||||||||||
Amounts
recognized | ( i 35 | ) | |||||||||||||
Deferred
income taxes | ( i 65 | ) | |||||||||||||
Unrealized
net capital gains and losses, after-tax | $ | i 243 |
($ in millions) | |||
Fixed
income securities | $ | i 1,238 | |
EMA limited partnerships | ( i 1 | ) | |
Total | i 1,237 | ||
Amounts
recognized for: | |||
Insurance reserves | ( i 202 | ) | |
DAC and DSI | ( i 183 | ) | |
Amounts
recognized | ( i 385 | ) | |
Deferred income taxes | ( i 179 | ) | |
Increase
in unrealized net capital gains and losses, after-tax | $ | i 673 |
($ in millions) | Less than 12 months | 12 months or more | Total unrealized losses | |||||||||||||||||||||||
Number of
issues | Fair value | Unrealized losses | Number of issues | Fair value | Unrealized losses | |||||||||||||||||||||
Fixed
income securities | ||||||||||||||||||||||||||
U.S.
government and agencies | i 2 | $ | i 16 | $ | i — | i — | $ | i — | $ | i — | $ | i — | ||||||||||||||
Municipal | i 2 | i 2 | i — | i 1 | i 14 | ( i 3 | ) | ( i 3 | ) | |||||||||||||||||
Corporate | i 123 | i 413 | ( i 9 | ) | i 59 | i 343 | ( i 29 | ) | ( i 38 | ) | ||||||||||||||||
ABS | i 18 | i 38 | ( i 1 | ) | i 4 | i 13 | ( i 1 | ) | ( i 2 | ) | ||||||||||||||||
RMBS | i 6 | i 2 | i — | i 25 | i 4 | i — | i — | |||||||||||||||||||
CMBS | i 1 | i 5 | i — | i 1 | i 2 | ( i 1 | ) | ( i 1 | ) | |||||||||||||||||
Redeemable
preferred stock | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||
Total
fixed income securities | i 152 | $ | i 476 | $ | ( i 10 | ) | i 90 | $ | i 376 | $ | ( i 34 | ) | $ | ( i 44 | ) | |||||||||||
Investment
grade fixed income securities | i 82 | $ | i 325 | $ | ( i 3 | ) | i 52 | $ | i 212 | $ | ( i 18 | ) | $ | ( i 21 | ) | |||||||||||
Below
investment grade fixed income securities | i 70 | i 151 | ( i 7 | ) | i 38 | i 164 | ( i 16 | ) | ( i 23 | ) | ||||||||||||||||
Total
fixed income securities | i 152 | $ | i 476 | $ | ( i 10 | ) | i 90 | $ | i 376 | $ | ( i 34 | ) | $ | ( i 44 | ) | |||||||||||
Fixed
income securities | ||||||||||||||||||||||||||
U.S.
government and agencies | i 2 | $ | i 6 | $ | i — | i 1 | $ | i 1 | $ | i — | $ | i — | ||||||||||||||
Municipal | i 38 | i 98 | ( i 1 | ) | i 5 | i 26 | ( i 3 | ) | ( i 4 | ) | ||||||||||||||||
Corporate | i 1,260 | i 6,799 | ( i 218 | ) | i 370 | i 2,633 | ( i 163 | ) | ( i 381 | ) | ||||||||||||||||
ABS | i 30 | i 167 | ( i 1 | ) | i 11 | i 31 | ( i 2 | ) | ( i 3 | ) | ||||||||||||||||
RMBS | i 124 | i 11 | i — | i 47 | i 10 | ( i 1 | ) | ( i 1 | ) | |||||||||||||||||
CMBS | i 3 | i 7 | i — | i 2 | i — | i — | i — | |||||||||||||||||||
Redeemable
preferred stock | i 1 | i — | i — | i — | i — | i — | i — | |||||||||||||||||||
Total
fixed income securities | i 1,458 | $ | i 7,088 | $ | ( i 220 | ) | i 436 | $ | i 2,701 | $ | ( i 169 | ) | $ | ( i 389 | ) | |||||||||||
Investment
grade fixed income securities | i 948 | $ | i 5,255 | $ | ( i 121 | ) | i 388 | $ | i 2,551 | $ | ( i 147 | ) | $ | ( i 268 | ) | |||||||||||
Below
investment grade fixed income securities | i 510 | i 1,833 | ( i 99 | ) | i 48 | i 150 | ( i 22 | ) | ( i 121 | ) | ||||||||||||||||
Total
fixed income securities | i 1,458 | $ | i 7,088 | $ | ( i 220 | ) | i 436 | $ | i 2,701 | $ | ( i 169 | ) | $ | ( i 389 | ) |
($ in millions) | Investment grade | Below investment grade | Total | ||||||||
Fixed
income securities with unrealized loss position less than 20% of amortized cost (1) (2) | $ | ( i 8 | ) | $ | ( i 20 | ) | $ | ( i 28 | ) | ||
Fixed
income securities with unrealized loss position greater than or equal to 20% of amortized cost (3) (4) | ( i 13 | ) | ( i 3 | ) | ( i 16 | ) | |||||
Total
unrealized losses | $ | ( i 21 | ) | $ | ( i 23 | ) | $ | ( i 44 | ) |
(1) | Below
investment grade fixed income securities include $ i 7 million that have been in an unrealized loss position for less than twelve months. |
(2) | Related
to securities with an unrealized loss position less than 20% of amortized cost, the degree of which suggests that these securities do not pose a high risk of being other-than-temporarily impaired. |
(3) | Below investment grade fixed income securities include i zero
that have been in an unrealized loss position for a period of twelve or more consecutive months. |
(4) | Evaluated based on factors such as discounted cash flows and the financial condition and near-term and long-term prospects of the issue or issuer and were determined to have adequate resources to fulfill contractual obligations. |
($ in millions) | ||||||||||||||||||||||||
Debt service coverage ratio distribution | Fixed rate mortgage loans | Variable rate mortgage loans | Total | Fixed rate mortgage loans | Variable rate mortgage loans | Total | ||||||||||||||||||
Below
1.0 | $ | i 11 | $ | i 16 | $ | i 27 | $ | i 6 | $ | i 15 | $ | i 21 | ||||||||||||
1.0
- 1.25 | i 221 | i — | i 221 | i 221 | i — | i 221 | ||||||||||||||||||
1.26
- 1.50 | i 1,203 | i 9 | i 1,212 | i 1,048 | i — | i 1,048 | ||||||||||||||||||
Above
1.50 | i 2,502 | i 44 | i 2,546 | i 2,659 | i 42 | i 2,701 | ||||||||||||||||||
Total
non-impaired mortgage loans | $ | i 3,937 | $ | i 69 | $ | i 4,006 | $ | i 3,934 | $ | i 57 | $ | i 3,991 |
($ in millions) | |||||||
Impaired mortgage loans with a valuation allowance | $ | i 6 | $ | i 4 | |||
Impaired
mortgage loans without a valuation allowance | i — | i — | |||||
Total
impaired mortgage loans | $ | i 6 | $ | i 4 | |||
Valuation
allowance on impaired mortgage loans | $ | i 3 | $ | i 3 |
($ in millions) | ||||||||
Agent loans | $ | i 663 | $ | i 620 | ||||
Bank
loans | i 363 | i 422 | ||||||
Real
estate | i 243 | i 228 | ||||||
Derivatives
and other | i 97 | i 30 | ||||||
Total | $ | i 1,366 | $ | i 1,300 |
(a) | Quoted prices for similar assets or liabilities in active markets; |
(b) | Quoted prices for identical or similar assets or liabilities in markets that are not active; or |
(c) | Valuation
models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability. |
• | Fixed income securities: Comprise certain U.S. Treasury fixed income securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. |
• | Equity
securities: Comprise actively traded, exchange-listed equity securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. |
• | Short-term: Comprise U.S. Treasury bills valued based on unadjusted quoted prices for identical assets in active markets that the Company can access and actively traded money market funds that have daily quoted net asset values for identical assets that the
Company can access. |
• | Separate account assets: Comprise actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Net asset values for the actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers. |
• | Fixed
income securities: |
• | Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active. |
• | Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash
flows, benchmark yields and credit spreads. |
• | Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active. |
• | Fixed income securities: |
• | Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. |
• | Other investments: Certain OTC derivatives, such as interest rate caps, certain credit default swaps and certain options
(including swaptions), are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and credit spreads. |
• | Contractholder funds: Derivatives embedded in certain life and annuity contracts are valued internally using models widely accepted in the financial services industry that determine a single best estimate of fair value for the embedded derivatives within a block of contractholder liabilities. The models primarily use stochastically
determined cash flows based on the contractual elements of embedded derivatives, projected option cost and applicable market data, such as interest rate yield curves and equity index volatility assumptions. These are categorized as Level 3 as a result of the significance of non-market observable inputs. |
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Counterparty and cash collateral netting | Balance
as of September 30, 2019 | ||||||||||||||
Assets | |||||||||||||||||||
Fixed
income securities: | |||||||||||||||||||
U.S.
government and agencies | $ | i 302 | $ | i 293 | $ | i — | $ | i 595 | |||||||||||
Municipal | i — | i 1,871 | i 42 | i 1,913 | |||||||||||||||
Corporate
- public | i — | i 12,954 | i 54 | i 13,008 | |||||||||||||||
Corporate
- privately placed | i — | i 5,695 | i 96 | i 5,791 | |||||||||||||||
Foreign
government | i — | i 163 | i — | i 163 | |||||||||||||||
ABS
- CDO | i — | i 19 | i 7 | i 26 | |||||||||||||||
ABS
- consumer and other | i — | i 278 | i 13 | i 291 | |||||||||||||||
RMBS | i — | i 172 | i — | i 172 | |||||||||||||||
CMBS | i — | i 25 | i 2 | i 27 | |||||||||||||||
Redeemable
preferred stock | i — | i 14 | i — | i 14 | |||||||||||||||
Total
fixed income securities | i 302 | i 21,484 | i 214 | i 22,000 | |||||||||||||||
Equity
securities | i 1,081 | i 12 | i 124 | i 1,217 | |||||||||||||||
Short-term
investments | i 802 | i 673 | i — | i 1,475 | |||||||||||||||
Other
investments: Free-standing derivatives | i — | i 112 | i — | $ | ( i 16 | ) | i 96 | ||||||||||||
Separate
account assets | i 2,912 | i — | i — | i 2,912 | |||||||||||||||
Total
recurring basis assets | i 5,097 | i 22,281 | i 338 | ( i 16 | ) | i 27,700 | |||||||||||||
Total
assets at fair value | $ | i 5,097 | $ | i 22,281 | $ | i 338 | $ | ( i 16 | ) | $ | i 27,700 | ||||||||
%
of total assets at fair value | i 18.4 | % | i 80.5 | % | i 1.2 | % | ( i 0.1 | )% | i 100.0 | % | |||||||||
Investments
reported at NAV | i 762 | ||||||||||||||||||
Total | $ | i 28,462 | |||||||||||||||||
Liabilities | |||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 424 | ) | $ | ( i 424 | ) | |||||||||
Other
liabilities: Free-standing derivatives | i — | ( i 36 | ) | i — | $ | i 2 | ( i 34 | ) | |||||||||||
Total
recurring basis liabilities at fair value | $ | i — | $ | ( i 36 | ) | $ | ( i 424 | ) | $ | i 2 | $ | ( i 458 | ) | ||||||
%
of total liabilities at fair value | i — | % | i 7.9 | % | i 92.6 | % | ( i 0.5 | )% | i 100.0 | % |
($ in millions) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Counterparty and cash collateral netting | Balance
as of December 31, 2018 | ||||||||||||||
Assets | |||||||||||||||||||
Fixed
income securities: | |||||||||||||||||||
U.S.
government and agencies | $ | i 493 | $ | i 280 | $ | i — | $ | i 773 | |||||||||||
Municipal | i — | i 2,156 | i 39 | i 2,195 | |||||||||||||||
Corporate
- public | i — | i 11,891 | i 33 | i 11,924 | |||||||||||||||
Corporate
- privately placed | i — | i 5,552 | i 97 | i 5,649 | |||||||||||||||
Foreign
government | i — | i 179 | i — | i 179 | |||||||||||||||
ABS
- CDO | i — | i 26 | i 6 | i 32 | |||||||||||||||
ABS
- consumer and other | i — | i 381 | i 16 | i 397 | |||||||||||||||
RMBS | i — | i 197 | i — | i 197 | |||||||||||||||
CMBS | i — | i 40 | i — | i 40 | |||||||||||||||
Redeemable
preferred stock | i — | i 14 | i — | i 14 | |||||||||||||||
Total
fixed income securities | i 493 | i 20,716 | i 191 | i 21,400 | |||||||||||||||
Equity
securities | i 1,182 | i 14 | i 129 | i 1,325 | |||||||||||||||
Short-term
investments | i 443 | i 367 | i — | i 810 | |||||||||||||||
Other
investments: Free-standing derivatives | i — | i 30 | i 1 | $ | ( i 8 | ) | i 23 | ||||||||||||
Separate
account assets | i 2,783 | i — | i — | i 2,783 | |||||||||||||||
Total
recurring basis assets at fair value | $ | i 4,901 | $ | i 21,127 | $ | i 321 | $ | ( i 8 | ) | $ | i 26,341 | ||||||||
%
of total assets at fair value | i 18.6 | % | i 80.2 | % | i 1.2 | % | i — | % | i 100.0 | % | |||||||||
Investments
reported at NAV | i 787 | ||||||||||||||||||
Total | $ | i 27,128 | |||||||||||||||||
Liabilities | |||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 223 | ) | $ | ( i 223 | ) | |||||||||
Other
liabilities: Free-standing derivatives | i — | ( i 7 | ) | i — | $ | i 2 | ( i 5 | ) | |||||||||||
Total
recurring basis liabilities at fair value | $ | i — | $ | ( i 7 | ) | $ | ( i 223 | ) | $ | i 2 | $ | ( i 228 | ) | ||||||
%
of total liabilities at fair value | i — | % | i 3.1 | % | i 97.8 | % | ( i 0.9 | )% | i 100.0 | % |
($ in millions) | Fair value | Valuation technique | Unobservable input | Range | Weighted average | |||||||
Derivatives embedded in life and annuity contracts – Equity-indexed
and forward starting options | $ | ( i 387 | ) | Stochastic
cash flow model | Projected option cost | 1.0 - 4.2% | i 2.55 | % | ||||
Derivatives embedded in life and annuity contracts –
Equity-indexed and forward starting options | $ | ( i 184 | ) | Stochastic
cash flow model | Projected option cost | 1.0 - 2.2% | i 1.74 | % |
($ in millions) | Total gains (losses) included in: | |||||||||||||||||||
Balance
as of June 30, 2019 | Net income | OCI | Transfers into Level 3 | Transfers out of Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i 40 | $ | i — | $ | i 2 | $ | i — | $ | i — | ||||||||||
Corporate
- public | i 32 | i — | i — | i — | ( i 7 | ) | ||||||||||||||
Corporate
- privately placed | i 96 | i — | i — | i — | i — | |||||||||||||||
ABS
- CDO | i 6 | i 1 | ( i 1 | ) | i — | i — | ||||||||||||||
ABS
- consumer and other | i 28 | i — | i — | i — | ( i 15 | ) | ||||||||||||||
CMBS | i 2 | i — | i — | i — | i — | |||||||||||||||
Total
fixed income securities | i 204 | i 1 | i 1 | i — | ( i 22 | ) | ||||||||||||||
Equity
securities | i 119 | i 3 | i — | i — | i — | |||||||||||||||
Free-standing
derivatives, net | i — | i — | i — | i — | i — | |||||||||||||||
Total
recurring Level 3 assets | $ | i 323 | $ | i 4 | $ | i 1 | $ | i — | $ | ( i 22 | ) | |||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | ( i 411 | ) | $ | ( i 12 | ) | $ | i — | $ | i — | $ | i — | ||||||||
Total
recurring Level 3 liabilities | $ | ( i 411 | ) | $ | ( i 12 | ) | $ | i — | $ | i — | $ | i — | ||||||||
Purchases | Sales | Issues | Settlements | Balance
as of September 30, 2019 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 42 | ||||||||||
Corporate
- public | i 29 | i — | i — | i — | i 54 | |||||||||||||||
Corporate
- privately placed | i 1 | i — | i — | ( i 1 | ) | i 96 | ||||||||||||||
ABS
- CDO | i 1 | i — | i — | i — | i 7 | |||||||||||||||
ABS
- consumer and other | i 1 | i — | i — | ( i 1 | ) | i 13 | ||||||||||||||
CMBS | i — | i — | i — | i — | i 2 | |||||||||||||||
Total
fixed income securities | i 32 | i — | i — | ( i 2 | ) | i 214 | ||||||||||||||
Equity
securities | i 2 | i — | i — | i — | i 124 | |||||||||||||||
Free-standing
derivatives, net | i — | i — | i — | i — | i — | |||||||||||||||
Total
recurring Level 3 assets | $ | i 34 | $ | i — | $ | i — | $ | ( i 2 | ) | $ | i 338 | |||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 6 | ) | $ | i 5 | $ | ( i 424 | ) | ||||||||
Total
recurring Level 3 liabilities | $ | i — | $ | i — | $ | ( i 6 | ) | $ | i 5 | $ | ( i 424 | ) |
Total
Level 3 gains (losses) included in net income for the three months ended September 30, 2019 | |||||||||||||||||||||
Net investment income | Realized capital gains and losses | Contract benefits | Interest
credited to contractholder funds | Total | |||||||||||||||||
Components of net income | $ | i 1 | $ | i 3 | $ | ( i 1 | ) | $ | ( i 11 | ) | $ | ( i 8 | ) |
($ in millions) | Total gains (losses) included in: | |||||||||||||||||||
Balance
as of December 31, 2018 | Net income | OCI | Transfers into Level 3 | Transfers out of Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i 39 | $ | i — | $ | i 4 | $ | i — | $ | i — | ||||||||||
Corporate
- public | i 33 | i — | i — | i — | ( i 9 | ) | ||||||||||||||
Corporate
- privately placed | i 97 | ( i 2 | ) | i 2 | i 15 | ( i 1 | ) | |||||||||||||
ABS
- CDO | i 6 | i 1 | ( i 1 | ) | i — | i — | ||||||||||||||
ABS
- consumer and other | i 16 | i — | i — | i — | ( i 27 | ) | ||||||||||||||
CMBS | i — | i — | i — | i 2 | i — | |||||||||||||||
Total
fixed income securities | i 191 | ( i 1 | ) | i 5 | i 17 | ( i 37 | ) | |||||||||||||
Equity
securities | i 129 | i 23 | i — | i — | i — | |||||||||||||||
Free-standing
derivatives, net | i 1 | ( i 1 | ) | i — | i — | i — | ||||||||||||||
Total
recurring Level 3 assets | $ | i 321 | $ | i 21 | $ | i 5 | $ | i 17 | $ | ( i 37 | ) | |||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | ( i 223 | ) | $ | ( i 48 | ) | $ | i — | $ | ( i 154 | ) | $ | i — | |||||||
Total
recurring Level 3 liabilities | $ | ( i 223 | ) | $ | ( i 48 | ) | $ | i — | $ | ( i 154 | ) | $ | i — | |||||||
Purchases | Sales | Issues | Settlements | Balance
as of September 30, 2019 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i — | $ | ( i 1 | ) | $ | i — | $ | i — | $ | i 42 | |||||||||
Corporate
- public | i 32 | ( i 1 | ) | i — | ( i 1 | ) | i 54 | |||||||||||||
Corporate
- privately placed | i 2 | ( i 13 | ) | i — | ( i 4 | ) | i 96 | |||||||||||||
ABS
- CDO | i 1 | i — | i — | i — | i 7 | |||||||||||||||
ABS
- consumer and other | i 35 | ( i 6 | ) | i — | ( i 5 | ) | i 13 | |||||||||||||
CMBS | i — | i — | i — | i — | i 2 | |||||||||||||||
Total
fixed income securities | i 70 | ( i 21 | ) | i — | ( i 10 | ) | i 214 | |||||||||||||
Equity
securities | i 10 | ( i 38 | ) | i — | i — | i 124 | ||||||||||||||
Free-standing
derivatives, net | i — | i — | i — | i — | i — | |||||||||||||||
Total
recurring Level 3 assets | $ | i 80 | $ | ( i 59 | ) | $ | i — | $ | ( i 10 | ) | $ | i 338 | ||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 6 | ) | $ | i 7 | $ | ( i 424 | ) | ||||||||
Total
recurring Level 3 liabilities | $ | i — | $ | i — | $ | ( i 6 | ) | $ | i 7 | $ | ( i 424 | ) |
Total
Level 3 gains (losses) included in net income for the nine months ended September 30, 2019 | |||||||||||||||||||||
Net investment income | Realized capital gains and losses | Contract benefits | Interest
credited to contractholder funds | Total | |||||||||||||||||
Components of net income | $ | i 3 | $ | i 18 | $ | i 2 | $ | ( i 50 | ) | $ | ( i 27 | ) |
($ in millions) | Total gains (losses)
included in: | |||||||||||||||||||
Balance as of June 30, 2018 | Net income (1) | OCI | Transfers into Level 3 | Transfers out of Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i 58 | $ | i — | $ | ( i 1 | ) | $ | i — | $ | ( i 1 | ) | ||||||||
Corporate
- public | i 47 | i — | ( i 1 | ) | i — | ( i 3 | ) | |||||||||||||
Corporate
- privately placed | i 187 | i — | ( i 1 | ) | i — | ( i 9 | ) | |||||||||||||
ABS
- CDO | i 9 | i — | i — | i — | i — | |||||||||||||||
ABS
- consumer and other | i 47 | i — | i — | i 6 | ( i 13 | ) | ||||||||||||||
Total
fixed income securities | i 348 | i — | ( i 3 | ) | i 6 | ( i 26 | ) | |||||||||||||
Equity
securities | i 113 | i 3 | i — | i — | i — | |||||||||||||||
Free-standing
derivatives, net | i 1 | i — | i — | i — | i — | |||||||||||||||
Total
recurring Level 3 assets | $ | i 462 | $ | i 3 | $ | ( i 3 | ) | $ | i 6 | $ | ( i 26 | ) | ||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | ( i 257 | ) | $ | ( i 6 | ) | $ | i — | $ | i — | $ | i — | ||||||||
Total
recurring Level 3 liabilities | $ | ( i 257 | ) | $ | ( i 6 | ) | $ | i — | $ | i — | $ | i — | ||||||||
Purchases | Sales | Issues | Settlements | Balance
as of September 30, 2018 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i — | $ | i — | $ | i — | $ | i — | $ | i 56 | ||||||||||
Corporate
- public | i — | ( i 1 | ) | i — | i — | i 42 | ||||||||||||||
Corporate
- privately placed | i — | i — | i — | ( i 11 | ) | i 166 | ||||||||||||||
ABS
- CDO | i — | i — | i — | ( i 1 | ) | i 8 | ||||||||||||||
ABS
- consumer and other | i 7 | ( i 6 | ) | i — | ( i 16 | ) | i 25 | |||||||||||||
Total
fixed income securities | i 7 | ( i 7 | ) | i — | ( i 28 | ) | i 297 | |||||||||||||
Equity
securities | i 5 | i — | i — | i — | i 121 | |||||||||||||||
Free-standing
derivatives, net | i — | i — | i — | i — | i 1 | (1) | ||||||||||||||
Total
recurring Level 3 assets | $ | i 12 | $ | ( i 7 | ) | $ | i — | $ | ( i 28 | ) | $ | i 419 | ||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | i — | $ | i 1 | $ | ( i 262 | ) | |||||||||
Total
recurring Level 3 liabilities | $ | i — | $ | i — | $ | i — | $ | i 1 | $ | ( i 262 | ) |
(1) | Comprises
$ i 1 million of assets. |
Total
Level 3 gains (losses) included in net income for the three months ended September 30, 2018 | |||||||||||||||||||||
Net investment income | Realized capital gains and losses | Contract benefits | Interest
credited to contractholder funds | Total | |||||||||||||||||
Components of net income | $ | i — | $ | i 3 | $ | i 2 | $ | ( i 8 | ) | $ | ( i 3 | ) |
($ in millions) | Total gains (losses)
included in: | |||||||||||||||||||
Balance as of December 31, 2017 | Net income (1) | OCI | Transfers into Level 3 | Transfers out of Level 3 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i 57 | $ | i — | $ | ( i 2 | ) | $ | i — | $ | ( i 1 | ) | ||||||||
Corporate
- public | i 49 | i — | ( i 2 | ) | i 3 | ( i 3 | ) | |||||||||||||
Corporate
- privately placed | i 220 | ( i 2 | ) | ( i 2 | ) | i 10 | ( i 32 | ) | ||||||||||||
ABS
- CDO | i 10 | i — | i — | i — | i — | |||||||||||||||
ABS
- consumer and other | i 40 | i — | i — | i 12 | ( i 15 | ) | ||||||||||||||
Total
fixed income securities | i 376 | ( i 2 | ) | ( i 6 | ) | i 25 | ( i 51 | ) | ||||||||||||
Equity
securities | i 90 | i 10 | i — | i — | i — | |||||||||||||||
Free-standing
derivatives, net | i 1 | i — | i — | i — | i — | |||||||||||||||
Total
recurring Level 3 assets | $ | i 467 | $ | i 8 | $ | ( i 6 | ) | $ | i 25 | $ | ( i 51 | ) | ||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | ( i 284 | ) | $ | i 19 | $ | i — | $ | i — | $ | i — | |||||||||
Total
recurring Level 3 liabilities | $ | ( i 284 | ) | $ | i 19 | $ | i — | $ | i — | $ | i — | |||||||||
Purchases | Sales | Issues | Settlements | Balance
as of September 30, 2018 | ||||||||||||||||
Assets | ||||||||||||||||||||
Fixed
income securities: | ||||||||||||||||||||
Municipal | $ | i 2 | $ | i — | $ | i — | $ | i — | $ | i 56 | ||||||||||
Corporate
- public | i — | ( i 2 | ) | i — | ( i 3 | ) | i 42 | |||||||||||||
Corporate
- privately placed | i 11 | i — | i — | ( i 39 | ) | i 166 | ||||||||||||||
ABS
- CDO | i — | i — | i — | ( i 2 | ) | i 8 | ||||||||||||||
ABS
- consumer and other | i 20 | ( i 14 | ) | i — | ( i 18 | ) | i 25 | |||||||||||||
Total
fixed income securities | i 33 | ( i 16 | ) | i — | ( i 62 | ) | i 297 | |||||||||||||
Equity
securities | i 28 | ( i 7 | ) | i — | i — | i 121 | ||||||||||||||
Free-standing
derivatives, net | i — | i — | i — | i — | i 1 | (1) | ||||||||||||||
Total
recurring Level 3 assets | $ | i 61 | $ | ( i 23 | ) | $ | i — | $ | ( i 62 | ) | $ | i 419 | ||||||||
Liabilities | ||||||||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | i — | $ | i — | $ | ( i 1 | ) | $ | i 4 | $ | ( i 262 | ) | ||||||||
Total
recurring Level 3 liabilities | $ | i — | $ | i — | $ | ( i 1 | ) | $ | i 4 | $ | ( i 262 | ) |
(1) | Comprises
$ i 1 million of assets. |
Total
Level 3 gains (losses) included in net income for the nine months ended September 30, 2018 | |||||||||||||||||||||
Net investment income | Realized capital gains and losses | Contract benefits | Interest
credited to contractholder funds | Total | |||||||||||||||||
Components of net income | $ | i — | $ | i 8 | $ | i 7 | $ | i 12 | $ | i 27 |
($ in millions) | Three months ended September 30, | Nine months ended September
30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Assets | |||||||||||||||
Equity
securities | $ | i 3 | $ | i 3 | $ | i 10 | $ | i 10 | |||||||
Free-standing
derivatives, net | i — | i — | ( i 1 | ) | i — | ||||||||||
Total
recurring Level 3 assets | $ | i 3 | $ | i 3 | $ | i 9 | $ | i 10 | |||||||
Liabilities | |||||||||||||||
Contractholder
funds: Derivatives embedded in life and annuity contracts | $ | ( i 12 | ) | $ | ( i 6 | ) | $ | ( i 48 | ) | $ | i 19 | ||||
Total
recurring Level 3 liabilities | ( i 12 | ) | ( i 6 | ) | ( i 48 | ) | i 19 | ||||||||
Total
included in net income | $ | ( i 9 | ) | $ | ( i 3 | ) | $ | ( i 39 | ) | $ | i 29 | ||||
Components
of net income | |||||||||||||||
Net investment income | $ | i 1 | $ | i — | $ | i 3 | $ | i — | |||||||
Realized
capital gains and losses | i 2 | i 3 | i 6 | i 10 | |||||||||||
Contract
benefits | ( i 1 | ) | i 2 | i 2 | i 7 | ||||||||||
Interest
credited to contractholder funds | ( i 11 | ) | ( i 8 | ) | ( i 50 | ) | i 12 | ||||||||
Total
included in net income | $ | ( i 9 | ) | $ | ( i 3 | ) | $ | ( i 39 | ) | $ | i 29 |
($ in millions) | ||||||||||||||||||
Fair value level | Carrying value | Fair value | Carrying value | Fair value | ||||||||||||||
Mortgage
loans | Level 3 | $ | i 4,012 | $ | i 4,176 | $ | i 3,995 | $ | i 4,028 | |||||||||
Bank
loans | Level 3 | i 363 | i 356 | i 422 | i 408 | |||||||||||||
Agent
loans | Level 3 | i 663 | i 666 | i 620 | i 617 |
($ in millions) | ||||||||||||||||||
Fair value level | Carrying value | Fair value | Carrying value | Fair value | ||||||||||||||
Contractholder
funds on investment contracts | Level 3 | $ | i 8,584 | $ | i 9,400 | $ | i 9,213 | $ | i 9,629 | |||||||||
Liability
for collateral | Level 2 | i 691 | i 691 | i 525 | i 525 | |||||||||||||
Notes
due to related parties | Level 3 | i 140 | i 144 | i 140 | i 138 |
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||
Balance
sheet location | Notional amount | Number of | Fair value, net | Gross asset | Gross liability | |||||||||||||||
Asset
derivatives | ||||||||||||||||||||
Derivatives
designated as fair value accounting hedging instruments | ||||||||||||||||||||
Other
| Other assets | $ | i 2 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Interest
rate cap agreements | Other investments | i 22 | n/a | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
investments | i — | i 3,149 | i 96 | i 96 | i — | ||||||||||||||
Futures
| Other assets | i — | i 25 | i — | i — | i — | ||||||||||||||
Total
return index contracts | ||||||||||||||||||||
Total return
swap agreements - fixed income | Other investments | i 7 | n/a | i — | i — | i — | ||||||||||||||
Total
return swap agreements - equity index | Other investments | i 12 | n/a | i — | i — | i — | ||||||||||||||
Foreign
currency contracts | ||||||||||||||||||||
Foreign
currency forwards | Other investments | i 223 | n/a | i 15 | i 16 | ( i 1 | ) | |||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other investments | i 29 | n/a | ( i 1 | ) | i — | ( i 1 | ) | ||||||||||||
Credit
default swaps – selling protection | Other investments | i 5 | n/a | i — | i — | i — | ||||||||||||||
Subtotal | i 298 | i 3,174 | i 110 | i 112 | ( i 2 | ) | ||||||||||||||
Total
asset derivatives | $ | i 300 | i 3,174 | $ | i 110 | $ | i 112 | $ | ( i 2 | ) | ||||||||||
Liability
derivatives | ||||||||||||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Interest
rate cap agreements | Other liabilities & accrued expenses | $ | i 13 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Futures | Other
liabilities & accrued expenses | i — | i 723 | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
liabilities & accrued expenses | i — | i 3,025 | ( i 34 | ) | i — | ( i 34 | ) | ||||||||||||
Futures | Other
liabilities & accrued expenses | i — | i 8 | i — | i — | i — | ||||||||||||||
Foreign
currency contracts | ||||||||||||||||||||
Foreign
currency forwards | Other liabilities & accrued expenses | i 6 | n/a | i — | i — | i — | ||||||||||||||
Embedded
derivative financial instruments | ||||||||||||||||||||
Guaranteed
accumulation benefits | Contractholder funds | i 161 | n/a | ( i 21 | ) | i — | ( i 21 | ) | ||||||||||||
Guaranteed
withdrawal benefits | Contractholder funds | i 205 | n/a | ( i 16 | ) | i — | ( i 16 | ) | ||||||||||||
Equity-indexed
and forward starting options in life and annuity product contracts | Contractholder funds | i 1,680 | n/a | ( i 387 | ) | i — | ( i 387 | ) | ||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other liabilities & accrued expenses | i 5 | n/a | i — | i — | i — | ||||||||||||||
Credit
default swaps – selling protection | Other liabilities & accrued expenses | i — | n/a | i — | i — | i — | ||||||||||||||
Total
liability derivatives | i 2,070 | i 3,756 | ( i 458 | ) | $ | i — | $ | ( i 458 | ) | |||||||||||
Total
derivatives | $ | i 2,370 | i 6,930 | $ | ( i 348 | ) |
(1) |
($ in millions, except number of contracts) | Volume (1) | |||||||||||||||||||
Balance
sheet location | Notional amount | Number of | Fair value, net | Gross asset | Gross liability | |||||||||||||||
Asset
derivatives | ||||||||||||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Interest
rate cap agreements | Other investments | $ | i 6 | n/a | $ | i — | $ | i — | $ | i — | ||||||||||
Futures | Other
assets | i — | i 330 | i — | i — | i — | ||||||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
investments | i — | i 3,440 | i 21 | i 21 | i — | ||||||||||||||
Futures | Other
assets | i — | i 26 | i — | i — | i — | ||||||||||||||
Total
return index contracts | ||||||||||||||||||||
Total return
swap agreements - fixed income | Other investments | i 7 | n/a | i — | i — | i — | ||||||||||||||
Total
return swap agreements - equity index | Other investments | i 10 | n/a | ( i 1 | ) | i — | ( i 1 | ) | ||||||||||||
Foreign
currency contracts | ||||||||||||||||||||
Foreign
currency forwards | Other investments | i 240 | n/a | i 8 | i 8 | i — | ||||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – buying protection | Other investments | i 27 | n/a | i — | i 1 | ( i 1 | ) | |||||||||||||
Other
contracts | ||||||||||||||||||||
Other
| Other assets | i 2 | n/a | i — | i — | i — | ||||||||||||||
Total
asset derivatives | $ | i 292 | i 3,796 | $ | i 28 | $ | i 30 | $ | ( i 2 | ) | ||||||||||
Liability
derivatives | ||||||||||||||||||||
Derivatives
not designated as accounting hedging instruments | ||||||||||||||||||||
Interest
rate contracts | ||||||||||||||||||||
Interest
rate cap agreements | Other liabilities & accrued expenses | $ | i 31 | n/a | $ | i 1 | $ | i 1 | $ | i — | ||||||||||
Equity
and index contracts | ||||||||||||||||||||
Options | Other
liabilities & accrued expenses | i — | i 3,266 | ( i 5 | ) | i — | ( i 5 | ) | ||||||||||||
Embedded
derivative financial instruments | ||||||||||||||||||||
Guaranteed
accumulation benefits | Contractholder funds | i 169 | n/a | ( i 25 | ) | i — | ( i 25 | ) | ||||||||||||
Guaranteed
withdrawal benefits | Contractholder funds | i 210 | n/a | ( i 14 | ) | i — | ( i 14 | ) | ||||||||||||
Equity-indexed
and forward starting options in life and annuity product contracts | Contractholder funds | i 1,696 | n/a | ( i 184 | ) | i — | ( i 184 | ) | ||||||||||||
Credit
default contracts | ||||||||||||||||||||
Credit
default swaps – selling protection | Other liabilities & accrued expenses | i 1 | n/a | i — | i — | i — | ||||||||||||||
Total
liability derivatives | i 2,107 | i 3,266 | ( i 227 | ) | $ | i 1 | $ | ( i 228 | ) | |||||||||||
Total
derivatives | $ | i 2,399 | i 7,062 | $ | ( i 199 | ) |
($ in millions) | Offsets | ||||||||||||||||||||||
Gross amount | Counter- party netting | Cash collateral (received) pledged | Net amount on balance sheet | Securities collateral (received) pledged | Net amount | ||||||||||||||||||
Asset
derivatives | $ | i 16 | $ | ( i 2 | ) | $ | ( i 14 | ) | $ | i — | $ | i — | $ | i — | |||||||||
Liability
derivatives | ( i 2 | ) | i 2 | i — | i — | i — | i — | ||||||||||||||||
Asset
derivatives | $ | i 10 | $ | ( i 3 | ) | $ | ( i 5 | ) | $ | i 2 | $ | i — | $ | i 2 | |||||||||
Liability
derivatives | ( i 2 | ) | i 3 | ( i 1 | ) | i — | i — | i — |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Gain recognized in OCI on derivatives during the period | $ | i — | $ | i — | $ | i — | $ | i 1 | |||||||
Gain
reclassified from AOCI into income (realized capital gains and losses) | i — | i — | i — | i 3 |
($ in millions) | Realized capital gains and losses | Contract
benefits | Interest credited to contractholder funds | Total gain (loss) recognized in net income on derivatives | |||||||||||
Three months ended September 30, 2019 | |||||||||||||||
Equity
and index contracts | $ | i — | $ | i — | $ | i 3 | $ | i 3 | |||||||
Embedded
derivative financial instruments | i — | ( i 1 | ) | ( i 12 | ) | ( i 13 | ) | ||||||||
Foreign
currency contracts | i 8 | i — | i — | i 8 | |||||||||||
Total
return swaps - fixed income | i — | i — | i — | i — | |||||||||||
Total
return swaps - equity index | i — | i — | i — | i — | |||||||||||
Total | $ | i 8 | $ | ( i 1 | ) | $ | ( i 9 | ) | $ | ( i 2 | ) | ||||
Nine
months ended September 30, 2019 | |||||||||||||||
Equity and index contracts | $ | i 2 | $ | i — | $ | i 43 | $ | i 45 | |||||||
Embedded
derivative financial instruments | i — | i 2 | ( i 49 | ) | ( i 47 | ) | |||||||||
Foreign
currency contracts | i 11 | i — | i — | i 11 | |||||||||||
Total
return swaps - fixed income | i 1 | i — | i — | i 1 | |||||||||||
Total
return swaps - equity index | i 2 | i — | i — | i 2 | |||||||||||
Total | $ | i 16 | $ | i 2 | $ | ( i 6 | ) | $ | i 12 | ||||||
Three
months ended September 30, 2018 | |||||||||||||||
Interest rate contracts | $ | i 1 | $ | i — | $ | i — | $ | i 1 | |||||||
Equity
and index contracts | ( i 2 | ) | i — | i 18 | i 16 | ||||||||||
Embedded
derivative financial instruments | i — | i 2 | ( i 7 | ) | ( i 5 | ) | |||||||||
Foreign
currency contracts | i 4 | i — | i — | i 4 | |||||||||||
Total
return swaps | i 1 | i — | i — | i 1 | |||||||||||
Total | $ | i 4 | $ | i 2 | $ | i 11 | $ | i 17 | |||||||
Nine
months ended September 30, 2018 | |||||||||||||||
Interest rate contracts | $ | i 1 | $ | i — | $ | i — | $ | i 1 | |||||||
Equity
and index contracts | ( i 2 | ) | i — | i 24 | i 22 | ||||||||||
Embedded
derivative financial instruments | i — | i 7 | i 15 | i 22 | |||||||||||
Foreign
currency contracts | i 8 | i — | i — | i 8 | |||||||||||
Total
return swaps | i 1 | i — | i — | i 1 | |||||||||||
Total | $ | i 8 | $ | i 7 | $ | i 39 | $ | i 54 |
($ in millions) | ||||||||||||||||||||||||||||||
Rating (1) | Number of counter-parties | Notional amount (2) | Credit exposure (2) | Exposure,
net of collateral (2) | Number of counter- parties | Notional amount (2) | Credit exposure (2) | Exposure,
net of collateral (2) | ||||||||||||||||||||||
A+ | i 5 | $ | i 276 | $ | i 13 | $ | i 1 | i 3 | $ | i 283 | $ | i 9 | $ | i 1 | ||||||||||||||||
A | i 1 | i 41 | i 1 | i — | i 1 | i 23 | i — | i — | ||||||||||||||||||||||
Total | i 6 | $ | i 317 | $ | i 14 | $ | i 1 | i 4 | $ | i 306 | $ | i 9 | $ | i 1 |
(1) | Allstate
uses the lower of S&P’s or Moody’s long-term debt issuer ratings. |
(2) | Only OTC derivatives with a net positive fair value are included for each counterparty. |
($ in millions) | As of September 30, 2019 | As of December
31, 2018 | |||||
Gross liability fair value of contracts containing credit-risk-contingent features | $ | i 2 | $ | i 2 | |||
Gross
asset fair value of contracts containing credit-risk-contingent features and subject to MNAs | ( i 2 | ) | ( i 2 | ) | |||
Collateral
posted under MNAs for contracts containing credit-risk-contingent features | i — | i — | |||||
Maximum
amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently | $ | i — | $ | i — |
($ in millions) | Notional amount | ||||||||||||||||||||||
AA | A | BBB | BB and lower | Total | Fair value | ||||||||||||||||||
Single
name | |||||||||||||||||||||||
Corporate
debt | $ | i — | $ | i — | $ | i — | $ | i 5 | $ | i 5 | $ | i — | |||||||||||
Total | $ | i — | $ | i — | $ | i — | $ | i 5 | $ | i 5 | $ | i — | |||||||||||
Single
name | |||||||||||||||||||||||
Corporate
debt | $ | i — | $ | i — | $ | i — | $ | i 1 | $ | i 1 | $ | i — | |||||||||||
Total | $ | i — | $ | i — | $ | i — | $ | i 1 | $ | i 1 | $ | i — |
($ in millions) | Three months ended September 30, | Nine months ended September
30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Direct | $ | i 180 | $ | i 184 | $ | i 548 | $ | i 553 | |||||||
Assumed | |||||||||||||||
Affiliate | i 58 | i 60 | i 174 | i 181 | |||||||||||
Non-affiliate | i 172 | i 184 | i 524 | i 558 | |||||||||||
Ceded | |||||||||||||||
Affiliate | ( i 12 | ) | ( i 13 | ) | ( i 37 | ) | ( i 38 | ) | |||||||
Non-affiliate | ( i 65 | ) | ( i 71 | ) | ( i 189 | ) | ( i 209 | ) | |||||||
Premiums
and contract charges, net of reinsurance | $ | i 333 | $ | i 344 | $ | i 1,020 | $ | i 1,045 |
($ in millions) | Three months ended September 30, | Nine months ended September
30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Direct | $ | i 278 | $ | i 253 | $ | i 739 | $ | i 776 | |||||||
Assumed | |||||||||||||||
Affiliate | i 37 | i 44 | i 99 | i 112 | |||||||||||
Non-affiliate | i 127 | i 101 | i 377 | i 358 | |||||||||||
Ceded | |||||||||||||||
Affiliate | ( i 8 | ) | ( i 7 | ) | ( i 27 | ) | ( i 27 | ) | |||||||
Non-affiliate | ( i 68 | ) | ( i 29 | ) | ( i 84 | ) | ( i 130 | ) | |||||||
Contract
benefits, net of reinsurance | $ | i 366 | $ | i 362 | $ | i 1,104 | $ | i 1,089 |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Direct | $ | i 123 | $ | i 119 | $ | i 353 | $ | i 378 | |||||||
Assumed | |||||||||||||||
Affiliate | i 2 | i 2 | i 6 | i 6 | |||||||||||
Non-affiliate | i 41 | i 38 | i 116 | i 96 | |||||||||||
Ceded | |||||||||||||||
Affiliate | ( i 5 | ) | ( i 5 | ) | ( i 15 | ) | ( i 15 | ) | |||||||
Non-affiliate | ( i 7 | ) | ( i 4 | ) | ( i 15 | ) | ( i 15 | ) | |||||||
Interest
credited to contractholder funds, net of reinsurance | $ | i 154 | $ | i 150 | $ | i 445 | $ | i 450 |
($ in millions) | Three
months ended September 30, | ||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Pre- tax | Tax | After- tax | Pre- tax | Tax | After- tax | ||||||||||||||||||
Unrealized
net holding gains and losses arising during the period, net of related offsets | $ | i 216 | $ | ( i 46 | ) | $ | i 170 | $ | ( i 64 | ) | $ | i 14 | $ | ( i 50 | ) | ||||||||
Less:
reclassification adjustment of realized capital gains and losses | i 17 | ( i 4 | ) | i 13 | ( i 8 | ) | i 2 | ( i 6 | ) | ||||||||||||||
Unrealized
net capital gains and losses | i 199 | ( i 42 | ) | i 157 | ( i 56 | ) | i 12 | ( i 44 | ) | ||||||||||||||
Unrealized
foreign currency translation adjustments | i 1 | i — | i 1 | ( i 11 | ) | i 2 | ( i 9 | ) | |||||||||||||||
Other
comprehensive income (loss) | $ | i 200 | $ | ( i 42 | ) | $ | i 158 | $ | ( i 67 | ) | $ | i 14 | $ | ( i 53 | ) | ||||||||
Nine
months ended September 30, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Pre- tax | Tax | After- tax | Pre- tax | Tax | After- tax | ||||||||||||||||||
Unrealized
net holding gains and losses arising during the period, net of related offsets | $ | i 863 | $ | ( i 181 | ) | $ | i 682 | $ | ( i 379 | ) | $ | i 80 | $ | ( i 299 | ) | ||||||||
Less:
reclassification adjustment of realized capital gains and losses | i 11 | ( i 2 | ) | i 9 | ( i 24 | ) | i 5 | ( i 19 | ) | ||||||||||||||
Unrealized
net capital gains and losses | i 852 | ( i 179 | ) | i 673 | ( i 355 | ) | i 75 | ( i 280 | ) | ||||||||||||||
Unrealized
foreign currency translation adjustments | ( i 5 | ) | i 1 | ( i 4 | ) | i — | i — | i — | |||||||||||||||
Other
comprehensive income (loss) | $ | i 847 | $ | ( i 178 | ) | $ | i 669 | $ | ( i 355 | ) | $ | i 75 | $ | ( i 280 | ) |
• | Net income was $80 million and $401 million in the third quarter and first nine
months of 2019, respectively, compared to $193 million and $417 million in the third quarter and first nine months of 2018, respectively. |
• | Premiums and contract charges totaled $333 million in the third quarter of 2019, a
decrease of 3.2% from $344 million in the third quarter of 2018, and $1.02 billion in the first nine months of 2019, a decrease of 2.4% from $1.05 billion in the first nine months of 2018. |
• | Investments
totaled $33.93 billion as of September 30, 2019, an increase of $1.25 billion from $32.68 billion as of December 31, 2018. Net investment income decreased 3.1% to $373 million in the third quarter of 2019 and decreased 9.1% to $1.10
billion in the first nine months of 2019 from $385 million and $1.21 billion in the third quarter and first nine months of 2018, respectively. |
• | Net realized capital gains totaled $25 million and $219 million in the third
quarter and first nine months of 2019, respectively, compared to $48 million and $24 million in the third quarter and first nine months of 2018, respectively. |
• | During third quarter 2019, a $39 million pre-tax decrease to income was recorded related to our annual comprehensive review of the deferred policy acquisition costs (“DAC”), deferred sales inducement costs and secondary guarantee liability balances. This
compares to a $5 million pre-tax decrease to income in the third quarter of 2018. |
• | Contractholder funds totaled $16.84 billion as of September 30, 2019, a decrease of $627 million from $17.47 billion as of December 31, 2018. |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Premiums | $ | 165 | $ | 174 | $ | 506 | $ | 526 | |||||||
Contract
charges | 168 | 170 | 514 | 519 | |||||||||||
Other revenue | 11 | 10 | 32 | 26 | |||||||||||
Net
investment income | 373 | 385 | 1,101 | 1,211 | |||||||||||
Realized capital gains and losses | 25 | 48 | 219 | 24 | |||||||||||
Total
revenues | 742 | 787 | 2,372 | 2,306 | |||||||||||
Costs
and expenses | |||||||||||||||
Contract benefits | (366 | ) | (362 | ) | (1,104 | ) | (1,089 | ) | |||||||
Interest
credited to contractholder funds | (154 | ) | (150 | ) | (445 | ) | (450 | ) | |||||||
Amortization of DAC | (71 | ) | (39 | ) | (136 | ) | (117 | ) | |||||||
Operating
costs and expenses | (51 | ) | (63 | ) | (186 | ) | (199 | ) | |||||||
Restructuring and related charges | (1 | ) | — | (1 | ) | (2 | ) | ||||||||
Interest
expense | (1 | ) | (1 | ) | (3 | ) | (3 | ) | |||||||
Total costs and expenses | (644 | ) | (615 | ) | (1,875 | ) | (1,860 | ) | |||||||
Gain
on disposition of operations | — | 1 | 3 | 4 | |||||||||||
Income tax (expense) benefit | (18 | ) | 20 | (99 | ) | (33 | ) | ||||||||
Net
income | $ | 80 | $ | 193 | $ | 401 | $ | 417 |
($ in millions) | Three months ended September 30, | Nine months ended September
30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Underwritten products | |||||||||||||||
Traditional
life insurance premiums | $ | 135 | $ | 143 | $ | 416 | $ | 435 | |||||||
Accident
and health insurance premiums | 30 | 31 | 90 | 91 | |||||||||||
Interest-sensitive life insurance contract
charges | 165 | 165 | 505 | 508 | |||||||||||
Subtotal | 330 | 339 | 1,011 | 1,034 | |||||||||||
Annuities | |||||||||||||||
Fixed
annuity contract charges | 3 | 5 | 9 | 11 | |||||||||||
$ | 333 | $ | 344 | $ | 1,020 | $ | 1,045 |
(1) | Contract
charges related to the cost of insurance totaled $123 million and $120 million in the third quarter of 2019 and 2018, respectively, and $376 million and $368 million in the first nine months of 2019 and 2018, respectively. |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Life insurance | $ | 57 | $ | 62 | $ | 171 | $ | 194 | |||||||
Accident
and health insurance | 13 | 14 | 41 | 46 | |||||||||||
Annuities | (29 | ) | (21 | ) | (74 | ) | (65 | ) | |||||||
Total
benefit spread | $ | 41 | $ | 55 | $ | 138 | $ | 175 |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Investment spread before valuation changes on embedded derivatives not
hedged | $ | 112 | $ | 112 | $ | 314 | $ | 385 | |||||||
Valuation
changes on derivatives embedded in equity-indexed life and annuity contracts that are not hedged | (12 | ) | — | (18 | ) | 6 | |||||||||
Total
investment spread | $ | 100 | $ | 112 | $ | 296 | $ | 391 |
Three
months ended September 30, | |||||||||||||||||
Weighted average investment yield | Weighted average interest crediting rate | Weighted average investment spreads | |||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest-sensitive
life insurance | 5.0 | % | 5.1 | % | 3.7 | % | 3.7 | % | 1.3 | % | 1.4 | % | |||||
Deferred
fixed annuities | 4.3 | 4.1 | 2.8 | 2.8 | 1.5 | 1.3 | |||||||||||
Immediate
fixed annuities with and without life contingencies | 5.9 | 6.0 | 5.9 | 6.0 | — | — | |||||||||||
Investments
supporting capital, traditional life and other products | 3.4 | 3.5 | n/a | n/a | n/a | n/a | |||||||||||
Nine
months ended September 30, | |||||||||||||||||
Weighted average investment yield | Weighted average interest crediting rate | Weighted average investment spreads | |||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Interest-sensitive
life insurance | 4.9 | % | 5.2 | % | 3.7 | % | 3.7 | % | 1.2 | % | 1.5 | % | |||||
Deferred
fixed annuities | 4.3 | 4.1 | 2.7 | 2.8 | 1.6 | 1.3 | |||||||||||
Immediate
fixed annuities with and without life contingencies | 5.6 | 6.6 | 5.9 | 6.0 | (0.3 | ) | 0.6 | ||||||||||
Investments
supporting capital, traditional life and other products | 3.6 | 3.5 | n/a | n/a | n/a | n/a |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Amortization
of DAC before amortization relating to realized capital gains and losses, valuation changes on embedded derivatives not hedged, and changes in assumptions | $ | 29 | $ | 35 | $ | 90 | $ | 107 | |||||||
Amortization
relating to realized capital gains and losses (1) and valuation changes on embedded derivatives not hedged | (2 | ) | 2 | 2 | 8 | ||||||||||
Amortization
acceleration (deceleration) for changes in assumptions (“DAC unlocking”) | 44 | 2 | 44 | 2 | |||||||||||
Total amortization of DAC | $ | 71 | $ | 39 | $ | 136 | $ | 117 |
(1) | The
impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits. |
($ in millions) | Nine months ended September 30, | ||||||
2019 | 2018 | ||||||
Investment
margin | $ | 18 | $ | 9 | |||
Benefit margin | 26 | (7 | ) | ||||
Expense
margin | — | — | |||||
Net acceleration | $ | 44 | $ | 2 |
($ in millions) | |||||||
Traditional life insurance | $ | 2,544 | $ | 2,517 | |||
Accident and health insurance | 195 | 203 | |||||
Immediate
fixed annuities with life contingencies | |||||||
Sub-standard structured settlements and group pension terminations (1) | 5,151 | 4,990 | |||||
Standard structured settlements and SPIA (2) | 3,394 | 3,420 | |||||
Other | 77 | 109 | |||||
Reserve
for life-contingent contract benefits | $ | 11,361 | $ | 11,239 | |||
Interest-sensitive
life insurance | $ | 7,394 | $ | 7,369 | |||
Deferred fixed annuities | 6,617 | 7,123 | |||||
Immediate
fixed annuities without life contingencies | 2,379 | 2,522 | |||||
Other | 453 | 456 | |||||
Contractholder funds | $ | 16,843 | $ | 17,470 |
(1) | Comprises
structured settlement annuities for annuitants with severe injuries or other health impairments which increased their expected mortality rate at the time the annuity was issued (“sub-standard structured settlements”) and group annuity contracts issued to sponsors of terminated pension plans. |
(2) | Comprises structured settlement annuities for annuitants with standard life expectancy (“standard structured settlements”) and single premium immediate annuities (“SPIA”) with life contingencies. |
($ in millions) | Three
months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Contractholder funds, beginning balance | $ | 17,024 | $ | 18,016 | $ | 17,470 | $ | 18,592 | |||||||
Deposits | |||||||||||||||
Interest-sensitive
life insurance | 204 | 206 | 616 | 631 | |||||||||||
Fixed annuities | 3 | 2 | 12 | 11 | |||||||||||
Total
deposits | 207 | 208 | 628 | 642 | |||||||||||
Interest
credited | 152 | 149 | 442 | 447 | |||||||||||
Benefits,
withdrawals and other adjustments | |||||||||||||||
Benefits | (199 | ) | (204 | ) | (593 | ) | (619 | ) | |||||||
Surrenders
and partial withdrawals | (193 | ) | (257 | ) | (647 | ) | (808 | ) | |||||||
Contract
charges | (159 | ) | (161 | ) | (477 | ) | (483 | ) | |||||||
Net transfers from separate accounts | 1 | 1 | 7 | 5 | |||||||||||
Other
adjustments (1) | 10 | 7 | 13 | (17 | ) | ||||||||||
Total
benefits, withdrawals and other adjustments | (540 | ) | (614 | ) | (1,697 | ) | (1,922 | ) | |||||||
Contractholder
funds, ending balance | $ | 16,843 | $ | 17,759 | $ | 16,843 | $ | 17,759 |
(1) | The
table above illustrates the changes in contractholder funds, which are presented gross of reinsurance recoverables on the Condensed Consolidated Statements of Financial Position. The table above is intended to supplement our discussion and analysis of revenues, which are presented net of reinsurance on the Condensed Consolidated Statements of Operations and Comprehensive Income. As a result, the net change in contractholder funds associated with products reinsured is reflected as a component of the other adjustments line. |
($ in millions) | Percent to total | |||||
Fixed income securities (1) | $ | 22,000 | 64.9 | % | ||
Mortgage
loans | 4,012 | 11.8 | ||||
Equity securities (2) | 1,217 | 3.6 | ||||
Limited partnership interests | 3,304 | 9.7 | ||||
Short-term
investments (3) | 1,475 | 4.4 | ||||
Policy loans | 555 | 1.6 | ||||
Other | 1,366 | 4.0 | ||||
Total | $ | 33,929 | 100.0 | % |
(1) | Fixed
income securities are carried at fair value. Amortized cost basis for these securities was $20.42 billion. |
(2) | Equity securities are carried at fair value. The fair value of equity securities held as of September 30, 2019 was $294 million in excess of cost. These net gains were primarily concentrated in the consumer goods, technology and financial services sectors. |
(3) | Short-term
investments are carried at fair value. |
($
in millions) | Market-based core | Market-based active | Performance-based | Total | |||||||||||
Fixed income securities | $ | 20,782 | $ | 1,207 | $ | 11 | $ | 22,000 | |||||||
Mortgage
loans | 4,012 | — | — | 4,012 | |||||||||||
Equity securities | 1,061 | 75 | 81 | 1,217 | |||||||||||
Limited
partnership interests | 117 | — | 3,187 | 3,304 | |||||||||||
Short-term investments | 1,377 | 98 | — | 1,475 | |||||||||||
Policy
loans | 555 | — | — | 555 | |||||||||||
Other | 1,096 | 4 | 266 | 1,366 | |||||||||||
Total | $ | 29,000 | $ | 1,384 | $ | 3,545 | $ | 33,929 | |||||||
Percent
to total | 85.5 | % | 4.1 | % | 10.4 | % | 100.0 | % | |||||||
Unrealized
net capital gains and losses | |||||||||||||||
Fixed income securities | $ | 1,539 | $ | 43 | $ | (1 | ) | $ | 1,581 | ||||||
Limited
partnership interests | — | — | (1 | ) | (1 | ) | |||||||||
Total | $ | 1,539 | $ | 43 | $ | (2 | ) | $ | 1,580 |
Fair value as of | |||||||
($ in millions) | |||||||
U.S.
government and agencies | $ | 595 | $ | 773 | |||
Municipal | 1,913 | 2,195 | |||||
Corporate | 18,799 | 17,573 | |||||
Foreign
government | 163 | 179 | |||||
Asset-backed securities (“ABS”) | 317 | 429 | |||||
Residential mortgage-backed securities (“RMBS”) | 172 | 197 | |||||
Commercial
mortgage-backed securities (“CMBS”) | 27 | 40 | |||||
Redeemable preferred stock | 14 | 14 | |||||
Total fixed income securities | $ | 22,000 | $ | 21,400 |
($ in
millions) | Investment grade | Below investment grade | Total | |||||||||||||||||||||||
Fair value | Unrealized gain (loss) | Fair value | Unrealized gain (loss) | Fair value | Unrealized gain (loss) | Percent rated investment grade | ||||||||||||||||||||
U.S. government and agencies | $ | 595 | $ | 40 | $ | — | $ | — | $ | 595 | $ | 40 | 100.0 | % | ||||||||||||
Municipal | 1,871 | 318 | 42 | 3 | 1,913 | 321 | 97.8 | |||||||||||||||||||
Corporate | ||||||||||||||||||||||||||
Public | 11,675 | 805 | 1,333 | 40 | 13,008 | 845 | 89.8 | |||||||||||||||||||
Privately
placed | 4,502 | 274 | 1,289 | 36 | 5,791 | 310 | 77.7 | |||||||||||||||||||
Total
Corporate | 16,177 | 1,079 | 2,622 | 76 | 18,799 | 1,155 | 86.1 | |||||||||||||||||||
Foreign
government | 156 | 8 | 7 | — | 163 | 8 | 95.7 | |||||||||||||||||||
ABS | ||||||||||||||||||||||||||
Collateralized
debt obligations (“CDO”) | 16 | (1 | ) | 10 | — | 26 | (1 | ) | 61.5 | |||||||||||||||||
Consumer
and other asset-backed securities (“Consumer and other ABS”) (1) | 283 | 3 | 8 | — | 291 | 3 | 97.3 | |||||||||||||||||||
Total
ABS | 299 | 2 | 18 | — | 317 | 2 | 94.3 | |||||||||||||||||||
RMBS | ||||||||||||||||||||||||||
U.S.
government sponsored entities (“U.S. Agency”) | 19 | 1 | — | — | 19 | 1 | 100.0 | |||||||||||||||||||
Non-agency | 14 | 1 | 139 | 47 | 153 | 48 | 9.2 | |||||||||||||||||||
Total
RMBS | 33 | 2 | 139 | 47 | 172 | 49 | 19.2 | |||||||||||||||||||
CMBS | — | — | 27 | 5 | 27 | 5 | — | |||||||||||||||||||
Redeemable
preferred stock | 14 | 1 | — | — | 14 | 1 | 100.0 | |||||||||||||||||||
Total
fixed income securities | $ | 19,145 | $ | 1,450 | $ | 2,855 | $ | 131 | $ | 22,000 | $ | 1,581 | 87.0 | % |
(1) | Total
Consumer and other ABS consists of $72 million of consumer auto, $93 million of credit card and $126 million of other ABS with unrealized net capital gains of $1 million, zero and $2 million, respectively. |
($ in millions) | Limited partnership interests (1) | Number of managers | Number
of individual investments | Largest exposure to single investment | |||||||||
Private equity | $ | 2,821 | 149 | 288 | $ | 152 | |||||||
Real
estate | 366 | 25 | 48 | 34 | |||||||||
Other | 117 | 3 | 3 | 62 | |||||||||
Total
| $ | 3,304 | 177 | 339 |
(1) | We
have commitments to invest in additional limited partnership interests totaling $1.08 billion. |
($ in millions) | |||||||
U.S. government and agencies | $ | 40 | $ | 33 | |||
Municipal | 321 | 198 | |||||
Corporate | 1,155 | 52 | |||||
Foreign
government | 8 | 9 | |||||
ABS | 2 | — | |||||
RMBS | 49 | 43 | |||||
CMBS | 5 | 7 | |||||
Redeemable
preferred stock | 1 | 1 | |||||
Fixed income securities | 1,581 | 343 | |||||
EMA limited partnerships | (1 | ) | — | ||||
Unrealized
net capital gains and losses, pre-tax | $ | 1,580 | $ | 343 |
($ in millions) | Amortized cost | Gross unrealized | Fair value | ||||||||||||
Gains | Losses | ||||||||||||||
Corporate: | |||||||||||||||
Banking | $ | 943 | $ | 40 | $ | (15 | ) | $ | 968 | ||||||
Energy
| 1,205 | 88 | (8 | ) | 1,285 | ||||||||||
Consumer goods (cyclical and non-cyclical) | 4,856 | 266 | (6 | ) | 5,116 | ||||||||||
Utilities | 3,166 | 343 | (3 | ) | 3,506 | ||||||||||
Financial
services | 1,074 | 51 | (2 | ) | 1,123 | ||||||||||
Technology | 1,058 | 51 | (2 | ) | 1,107 | ||||||||||
Communications | 1,101 | 74 | (1 | ) | 1,174 | ||||||||||
Basic
industry | 888 | 57 | (1 | ) | 944 | ||||||||||
Capital goods | 2,343 | 136 | — | 2,479 | |||||||||||
Transportation
| 924 | 81 | — | 1,005 | |||||||||||
Other | 86 | 6 | — | 92 | |||||||||||
Total
corporate fixed income portfolio | 17,644 | 1,193 | (38 | ) | 18,799 | ||||||||||
U.S. government and agencies | 555 | 40 | — | 595 | |||||||||||
Municipal | 1,592 | 324 | (3 | ) | 1,913 | ||||||||||
Foreign
government | 155 | 8 | — | 163 | |||||||||||
ABS | 315 | 4 | (2 | ) | 317 | ||||||||||
RMBS | 123 | 49 | — | 172 | |||||||||||
CMBS | 22 | 6 | (1 | ) | 27 | ||||||||||
Redeemable
preferred stock | 13 | 1 | — | 14 | |||||||||||
Total fixed income securities | $ | 20,419 | $ | 1,625 | $ | (44 | ) | $ | 22,000 |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Fixed
income securities | $ | 235 | $ | 247 | $ | 721 | $ | 745 | |||||||
Mortgage
loans | 48 | 44 | 140 | 141 | |||||||||||
Equity securities | 6 | 7 | 26 | 30 | |||||||||||
Limited
partnership interests | 69 | 74 | 174 | 262 | |||||||||||
Short-term investments | 8 | 7 | 24 | 16 | |||||||||||
Policy
loans | 9 | 8 | 25 | 23 | |||||||||||
Other | 24 | 23 | 70 | 68 | |||||||||||
Investment
income, before expense | 399 | 410 | 1,180 | 1,285 | |||||||||||
Investment expense (1) (2) | (26 | ) | (25 | ) | (79 | ) | (74 | ) | |||||||
Net
investment income | $ | 373 | $ | 385 | $ | 1,101 | $ | 1,211 | |||||||
Market-based
core | $ | 311 | $ | 321 | $ | 950 | $ | 977 | |||||||
Market-based
active | 12 | 10 | 35 | 29 | |||||||||||
Performance-based | 76 | 79 | 195 | 279 | |||||||||||
Investment
income, before expense | $ | 399 | $ | 410 | $ | 1,180 | $ | 1,285 |
(1) | Investment
expense includes $7 million and $6 million of investee level expenses in the third quarter of 2019 and 2018, respectively, and $19 million and $17 million in the first nine months of 2019 and 2018, respectively. Investee level expenses include depreciation and asset level operating expenses on directly held real estate and other consolidated investments. |
(2) | Investment
expense includes $3 million related to the portion of reinvestment income on securities lending collateral paid to the counterparties in both the third quarter of 2019 and 2018, and $10 million and $7 million in the first nine months of 2019 and 2018, respectively. |
($
in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Limited
partnerships | |||||||||||||||
Private equity | $ | 55 | $ | 52 | $ | 134 | $ | 216 | |||||||
Real
estate | 14 | 22 | 40 | 46 | |||||||||||
Performance-based - limited partnerships | 69 | 74 | 174 | 262 | |||||||||||
Non-limited
partnerships | |||||||||||||||
Private equity | 1 | — | 4 | 1 | |||||||||||
Real
estate | 6 | 5 | 17 | 16 | |||||||||||
Performance-based - non-limited partnerships | 7 | 5 | 21 | 17 | |||||||||||
Total | |||||||||||||||
Private
equity | 56 | 52 | 138 | 217 | |||||||||||
Real estate | 20 | 27 | 57 | 62 | |||||||||||
Total
performance-based | $ | 76 | $ | 79 | $ | 195 | $ | 279 | |||||||
Investee
level expenses (1) | $ | (7 | ) | $ | (6 | ) | $ | (19 | ) | $ | (17 | ) |
(1) | Investee
level expenses include depreciation and asset level operating expenses reported in investment expense. |
($ in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Impairment
write-downs | |||||||||||||||
Fixed income securities | $ | (1 | ) | $ | (4 | ) | $ | (4 | ) | $ | (6 | ) | |||
Limited
partnership interests | — | — | (2 | ) | — | ||||||||||
Other investments | (7 | ) | — | (14 | ) | (1 | ) | ||||||||
Total
impairment write-downs | (8 | ) | (4 | ) | (20 | ) | (7 | ) | |||||||
Sales | 20 | (2 | ) | 20 | (14 | ) | |||||||||
Valuation
of equity investments | 5 | 50 | 203 | 37 | |||||||||||
Valuation and settlements of derivative instruments | 8 | 4 | 16 | 8 | |||||||||||
Realized
capital gains and losses, pre-tax | 25 | 48 | 219 | 24 | |||||||||||
Income tax expense | (5 | ) | (10 | ) | (46 | ) | (5 | ) | |||||||
Realized
capital gains and losses, after-tax | $ | 20 | $ | 38 | $ | 173 | $ | 19 | |||||||
Market-based
core | $ | 5 | $ | 35 | $ | 164 | $ | 8 | |||||||
Market-based
active | 11 | 7 | 30 | (3 | ) | ||||||||||
Performance-based | 9 | 6 | 25 | 19 | |||||||||||
Realized
capital gains and losses, pre-tax | $ | 25 | $ | 48 | $ | 219 | $ | 24 |
($
in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Impairment
write-downs | $ | — | $ | — | $ | (2 | ) | $ | — | ||||||
Sales | (1 | ) | 2 | (1 | ) | 1 | |||||||||
Valuation
of equity investments | 2 | 1 | 17 | 10 | |||||||||||
Valuation and settlements of derivative instruments | 8 | 3 | 11 | 8 | |||||||||||
Total
performance-based | $ | 9 | $ | 6 | $ | 25 | $ | 19 |
($ in millions) | |||||||
Common stock, retained income and additional capital paid-in | $ | 6,765 | $ | 6,439 | |||
Accumulated other comprehensive income | 922 | 253 | |||||
Total
shareholder’s equity | 7,687 | 6,692 | |||||
Notes due to related parties | 140 | 140 | |||||
Total capital resources | $ | 7,827 | $ | 6,832 |
• | A commercial paper facility with a borrowing limit of $1.00 billion to cover short-term cash needs. As of September 30,
2019, there were no balances outstanding and therefore the remaining borrowing capacity was $1.00 billion. |
• | A universal shelf registration statement that was filed by the Corporation with the Securities and Exchange Commission that expires in 2021. The Corporation can use this shelf registration to issue an unspecified amount of debt securities, common stock (including 575 million shares of treasury stock as of September 30, 2019), preferred
stock, depositary shares, warrants, stock purchase contracts, stock purchase units and securities of trust subsidiaries. The specific terms of any securities the Corporation issues under this registration statement will be provided in the applicable prospectus supplements. |
($ in millions) | Percent to total | |||||
Not
subject to discretionary withdrawal | $ | 2,676 | 15.9 | % | ||
Subject to discretionary withdrawal with adjustments: | ||||||
Specified surrender charges (1) | 4,383 | 26.0 | ||||
Market
value adjustments (2) | 850 | 5.0 | ||||
Subject to discretionary withdrawal without adjustments (3) | 8,934 | 53.1 | ||||
Total
contractholder funds (4) | $ | 16,843 | 100.0 | % |
(1) | Includes $1.32 billion of liabilities with a contractual surrender charge of less than 5% of the account
balance. |
(2) | $399 million of the contracts with market value adjusted surrenders have a 30-45 day period at the end of their initial and subsequent interest rate guarantee periods (which are typically 1, 5, 7 or 10 years) during which there is no surrender charge or market value adjustment. |
(3) | 89% of these contracts
have a minimum interest crediting rate guarantee of 3% or higher. |
(4) | Includes $699 million of contractholder funds on variable annuities reinsured to The Prudential Insurance Company of America, a subsidiary of Prudential Financial Inc., in 2006. |
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
15 | X | |||||
31(i) | X | |||||
31(i) | X | |||||
32 | X | |||||
101.INS | XBRL
Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | X | ||||
101.SCH | XBRL Taxonomy Extension Schema | X | ||||
101.CAL | XBRL
Taxonomy Extension Calculation Linkbase | X | ||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | ||||
101.LAB | XBRL
Taxonomy Extension Label Linkbase | X | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X |
Allstate Life Insurance Company | ||
(Registrant) | ||
By | /s/ John C. Pintozzi | |
Senior Vice President and Controller | ||
(Authorized
Signatory and Principal Accounting Officer) |
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
12/15/21 | ||||
12/15/19 | ||||
Filed on: | 11/5/19 | |||
10/15/19 | ||||
For Period end: | 9/30/19 | |||
6/30/19 | 10-Q | |||
3/6/19 | ||||
2/22/19 | 10-K | |||
1/1/19 | ||||
12/31/18 | 10-K | |||
12/14/18 | ||||
9/30/18 | 10-Q | |||
6/30/18 | 10-Q | |||
12/31/17 | 10-K | |||
4/1/14 | 8-K | |||
List all Filings |