|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
13-3180631
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
1099 Ameriprise Financial Center, Minneapolis, Minnesota
|
55474
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
||
Large Accelerated Filer
x
|
Accelerated Filer
o
|
|
Non-Accelerated Filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
|
Emerging growth company
o
|
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
|
Class
|
|
Outstanding at October 20, 2017
|
Common Stock (par value $.01 per share)
|
|
147,930,011 shares
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions, except per share amounts)
|
|||||||||||||||
Revenues
|
|||||||||||||||
Management and financial advice fees
|
$
|
1,626
|
|
|
$
|
1,464
|
|
|
$
|
4,669
|
|
|
$
|
4,289
|
|
Distribution fees
|
437
|
|
|
455
|
|
|
1,310
|
|
|
1,338
|
|
||||
Net investment income
|
372
|
|
|
387
|
|
|
1,154
|
|
|
1,090
|
|
||||
Premiums
|
348
|
|
|
374
|
|
|
1,035
|
|
|
1,114
|
|
||||
Other revenues
|
210
|
|
|
330
|
|
|
733
|
|
|
832
|
|
||||
Total revenues
|
2,993
|
|
|
3,010
|
|
|
8,901
|
|
|
8,663
|
|
||||
Banking and deposit interest expense
|
12
|
|
|
12
|
|
|
34
|
|
|
29
|
|
||||
Total net revenues
|
2,981
|
|
|
2,998
|
|
|
8,867
|
|
|
8,634
|
|
||||
Expenses
|
|||||||||||||||
Distribution expenses
|
850
|
|
|
798
|
|
|
2,505
|
|
|
2,371
|
|
||||
Interest credited to fixed accounts
|
176
|
|
|
161
|
|
|
509
|
|
|
465
|
|
||||
Benefits, claims, losses and settlement expenses
|
474
|
|
|
855
|
|
|
1,652
|
|
|
1,934
|
|
||||
Amortization of deferred acquisition costs
|
48
|
|
|
163
|
|
|
189
|
|
|
360
|
|
||||
Interest and debt expense
|
52
|
|
|
52
|
|
|
154
|
|
|
160
|
|
||||
General and administrative expense
|
753
|
|
|
731
|
|
|
2,244
|
|
|
2,221
|
|
||||
Total expenses
|
2,353
|
|
|
2,760
|
|
|
7,253
|
|
|
7,511
|
|
||||
Pretax income
|
628
|
|
|
238
|
|
|
1,614
|
|
|
1,123
|
|
||||
Income tax provision
|
125
|
|
|
23
|
|
|
315
|
|
|
209
|
|
||||
Net income
|
$
|
503
|
|
|
$
|
215
|
|
|
$
|
1,299
|
|
|
$
|
914
|
|
|
|||||||||||||||
Earnings per share
|
|||||||||||||||
Basic
|
$
|
3.29
|
|
|
$
|
1.31
|
|
|
$
|
8.37
|
|
|
$
|
5.43
|
|
Diluted
|
$
|
3.24
|
|
|
$
|
1.30
|
|
|
$
|
8.24
|
|
|
$
|
5.37
|
|
|
|||||||||||||||
Cash dividends declared per common share
|
$
|
0.83
|
|
|
$
|
0.75
|
|
|
$
|
2.41
|
|
|
$
|
2.17
|
|
|
|||||||||||||||
Supplemental Disclosures:
|
|||||||||||||||
Total other-than-temporary impairment losses on securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Portion of loss recognized in other comprehensive income (before taxes)
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Net impairment losses recognized in net investment income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
See Notes to Consolidated Financial Statements.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions)
|
|||||||||||||||
Net income
|
$
|
503
|
|
|
$
|
215
|
|
|
$
|
1,299
|
|
|
$
|
914
|
|
Other comprehensive income (loss), net of tax:
|
|||||||||||||||
Foreign currency translation adjustment
|
16
|
|
|
(16
|
)
|
|
46
|
|
|
(55
|
)
|
||||
Net unrealized gains (losses) on securities
|
(4
|
)
|
|
(28
|
)
|
|
60
|
|
|
382
|
|
||||
Net unrealized gains (losses) on derivatives
|
1
|
|
|
1
|
|
|
2
|
|
|
3
|
|
||||
Defined benefit plans
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
||||
Other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Total other comprehensive income (loss), net of tax
|
13
|
|
|
(43
|
)
|
|
112
|
|
|
336
|
|
||||
Total comprehensive income
|
$
|
516
|
|
|
$
|
172
|
|
|
$
|
1,411
|
|
|
$
|
1,250
|
|
See Notes to Consolidated Financial Statements.
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
(in millions, except share amounts)
|
|||||||
Assets
|
|||||||
Cash and cash equivalents
|
$
|
2,398
|
|
|
$
|
2,318
|
|
Cash of consolidated investment entities
|
106
|
|
|
168
|
|
||
Investments
|
36,202
|
|
|
35,834
|
|
||
Investments of consolidated investment entities, at fair value
|
2,215
|
|
|
2,254
|
|
||
Separate account assets
|
85,287
|
|
|
80,210
|
|
||
Receivables
|
5,742
|
|
|
5,299
|
|
||
Receivables of consolidated investment entities, at fair value
|
9
|
|
|
11
|
|
||
Deferred acquisition costs
|
2,661
|
|
|
2,648
|
|
||
Restricted and segregated cash and investments
|
3,131
|
|
|
3,331
|
|
||
Other assets
|
7,735
|
|
|
7,748
|
|
||
Total assets
|
$
|
145,486
|
|
|
$
|
139,821
|
|
|
|||||||
Liabilities and Equity
|
|||||||
Liabilities:
|
|||||||
Policyholder account balances, future policy benefits and claims
|
$
|
29,963
|
|
|
$
|
30,202
|
|
Separate account liabilities
|
85,287
|
|
|
80,210
|
|
||
Customer deposits
|
10,427
|
|
|
10,036
|
|
||
Short-term borrowings
|
201
|
|
|
200
|
|
||
Long-term debt
|
2,902
|
|
|
2,917
|
|
||
Debt of consolidated investment entities, at fair value
|
2,267
|
|
|
2,319
|
|
||
Accounts payable and accrued expenses
|
1,728
|
|
|
1,727
|
|
||
Other liabilities
|
6,363
|
|
|
5,823
|
|
||
Other liabilities of consolidated investment entities, at fair value
|
43
|
|
|
95
|
|
||
Total liabilities
|
139,181
|
|
|
133,529
|
|
||
Equity:
|
|||||||
Ameriprise Financial, Inc.:
|
|||||||
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 327,007,785 and 324,006,315, respectively)
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
8,017
|
|
|
7,765
|
|
||
Retained earnings
|
11,271
|
|
|
10,351
|
|
||
Treasury shares, at cost (178,670,257 and 169,246,411 shares, respectively)
|
(13,298
|
)
|
|
(12,027
|
)
|
||
Accumulated other comprehensive income, net of tax
|
312
|
|
|
200
|
|
||
Total equity
|
6,305
|
|
|
6,292
|
|
||
Total liabilities and equity
|
$
|
145,486
|
|
|
$
|
139,821
|
|
See Notes to Consolidated Financial Statements.
|
|
Ameriprise Financial, Inc.
|
Non-controlling Interests
|
Total
|
||||||||||||||||||||||||||||||||||||
Number of Outstanding Shares
|
Common Shares
|
Additional Paid-In Capital
|
Retained Earnings
|
Appropriated Retained
Earnings of Consolidated Investment Entities |
Treasury
Shares |
Accumulated Other Com-
prehensive Income |
Total Ameriprise Financial, Inc. Shareholders’ Equity
|
||||||||||||||||||||||||||||||||
(in millions, except share data)
|
|||||||||||||||||||||||||||||||||||||||
Balances at January 1, 2016
(1)
|
171,033,260
|
|
$
|
3
|
|
$
|
7,611
|
|
$
|
9,525
|
|
$
|
137
|
|
$
|
(10,338
|
)
|
$
|
253
|
|
$
|
7,191
|
|
$
|
1,188
|
|
$
|
8,379
|
|
||||||||||
Cumulative effect of change in accounting policies
|
—
|
|
—
|
|
—
|
|
1
|
|
(137
|
)
|
—
|
|
6
|
|
(130
|
)
|
(1,188
|
)
|
(1,318
|
)
|
|||||||||||||||||||
Comprehensive income:
|
|||||||||||||||||||||||||||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
914
|
|
—
|
|
—
|
|
—
|
|
914
|
|
—
|
|
914
|
|
|||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
336
|
|
336
|
|
—
|
|
336
|
|
|||||||||||||||||||
Total comprehensive income
|
1,250
|
|
—
|
|
1,250
|
|
|||||||||||||||||||||||||||||||||
Dividends to shareholders
|
—
|
|
—
|
|
—
|
|
(368
|
)
|
—
|
|
—
|
|
—
|
|
(368
|
)
|
—
|
|
(368
|
)
|
|||||||||||||||||||
Repurchase of common shares
|
(14,349,061
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,333
|
)
|
—
|
|
(1,333
|
)
|
—
|
|
(1,333
|
)
|
|||||||||||||||||||
Share-based compensation plans
|
1,812,137
|
|
—
|
|
98
|
|
—
|
|
—
|
|
62
|
|
—
|
|
160
|
|
—
|
|
160
|
|
|||||||||||||||||||
Balances at
September 30, 2016
(1)
|
158,496,336
|
|
$
|
3
|
|
$
|
7,709
|
|
$
|
10,072
|
|
$
|
—
|
|
$
|
(11,609
|
)
|
$
|
595
|
|
$
|
6,770
|
|
$
|
—
|
|
$
|
6,770
|
|
||||||||||
|
|||||||||||||||||||||||||||||||||||||||
Balances at January 1, 2017
|
154,759,904
|
|
$
|
3
|
|
$
|
7,765
|
|
$
|
10,351
|
|
$
|
—
|
|
$
|
(12,027
|
)
|
$
|
200
|
|
$
|
6,292
|
|
$
|
—
|
|
$
|
6,292
|
|
||||||||||
Comprehensive income:
|
|||||||||||||||||||||||||||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
1,299
|
|
—
|
|
—
|
|
—
|
|
1,299
|
|
—
|
|
1,299
|
|
|||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
112
|
|
112
|
|
—
|
|
112
|
|
|||||||||||||||||||
Total comprehensive income
|
1,411
|
|
—
|
|
1,411
|
|
|||||||||||||||||||||||||||||||||
Dividends to shareholders
|
—
|
|
—
|
|
—
|
|
(379
|
)
|
—
|
|
—
|
|
—
|
|
(379
|
)
|
—
|
|
(379
|
)
|
|||||||||||||||||||
Repurchase of common shares
|
(10,184,145
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,323
|
)
|
—
|
|
(1,323
|
)
|
—
|
|
(1,323
|
)
|
|||||||||||||||||||
Share-based compensation plans
|
3,761,769
|
|
—
|
|
252
|
|
—
|
|
—
|
|
52
|
|
—
|
|
304
|
|
—
|
|
304
|
|
|||||||||||||||||||
Balances at September 30, 2017
|
148,337,528
|
|
$
|
3
|
|
$
|
8,017
|
|
$
|
11,271
|
|
$
|
—
|
|
$
|
(13,298
|
)
|
$
|
312
|
|
$
|
6,305
|
|
$
|
—
|
|
$
|
6,305
|
|
|
||||||||
|
September 30,
|
|||||||
2017
|
|
2016
|
||||||
(in millions)
|
||||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
1,299
|
|
|
$
|
914
|
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation, amortization and accretion, net
|
176
|
|
|
187
|
|
|||
Deferred income tax expense (benefit)
|
(58
|
)
|
|
(47
|
)
|
|||
Share-based compensation
|
91
|
|
|
101
|
|
|||
Net realized investment (gains) losses
|
(37
|
)
|
|
(1
|
)
|
|||
Net trading (gains) losses
|
(5
|
)
|
|
(5
|
)
|
|||
Loss from equity method investments
|
41
|
|
|
45
|
|
|||
Net losses of consolidated investment entities
|
3
|
|
|
5
|
|
|||
Changes in operating assets and liabilities:
|
||||||||
Restricted and segregated investments
|
1
|
|
|
200
|
|
|||
Deferred acquisition costs
|
(31
|
)
|
|
86
|
|
|||
Other investments, net
|
(139
|
)
|
|
9
|
|
|||
Policyholder account balances, future policy benefits and claims, net
|
(353
|
)
|
|
1,172
|
|
|||
Derivatives, net of collateral
|
589
|
|
|
(676
|
)
|
|||
Receivables
|
(445
|
)
|
|
(177
|
)
|
|||
Brokerage deposits
|
(47
|
)
|
|
3
|
|
|||
Accounts payable and accrued expenses
|
(19
|
)
|
|
(24
|
)
|
|||
Other operating assets and liabilities of consolidated investment entities, net
|
—
|
|
|
(9
|
)
|
|||
Other, net
|
113
|
|
|
239
|
|
|||
Net cash provided by (used in) operating activities
|
1,179
|
|
|
2,022
|
|
|||
|
||||||||
Cash Flows from Investing Activities
|
||||||||
Available-for-Sale securities:
|
||||||||
Proceeds from sales
|
335
|
|
|
322
|
|
|||
Maturities, sinking fund payments and calls
|
3,583
|
|
|
3,379
|
|
|||
Purchases
|
(3,722
|
)
|
|
(4,666
|
)
|
|||
Proceeds from sales, maturities and repayments of mortgage loans
|
348
|
|
|
705
|
|
|||
Funding of mortgage loans
|
(372
|
)
|
|
(334
|
)
|
|||
Proceeds from sales and collections of other investments
|
211
|
|
|
131
|
|
|||
Purchase of other investments
|
(351
|
)
|
|
(144
|
)
|
|||
Purchase of investments by consolidated investment entities
|
(1,092
|
)
|
|
(566
|
)
|
|||
Proceeds from sales, maturities and repayments of investments by consolidated investment entities
|
1,087
|
|
|
803
|
|
|||
Purchase of land, buildings, equipment and software
|
(125
|
)
|
|
(66
|
)
|
|||
Other, net
|
(8
|
)
|
|
69
|
|
|||
Net cash provided by (used in) investing activities
|
$
|
(106
|
)
|
|
$
|
(367
|
)
|
|
See Notes to Consolidated Financial Statements.
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
|
||||||||
|
September 30,
|
|||||||
2017
|
|
2016
|
||||||
(in millions)
|
||||||||
Cash Flows from Financing Activities
|
||||||||
Investment certificates:
|
||||||||
Proceeds from additions
|
$
|
3,595
|
|
|
$
|
3,184
|
|
|
Maturities, withdrawals and cash surrenders
|
(3,158
|
)
|
|
(2,376
|
)
|
|||
Policyholder account balances:
|
||||||||
Deposits and other additions
|
1,538
|
|
|
1,532
|
|
|||
Net transfers from (to) separate accounts
|
(120
|
)
|
|
113
|
|
|||
Surrenders and other benefits
|
(1,413
|
)
|
|
(1,448
|
)
|
|||
Cash paid for purchased options with deferred premiums
|
(187
|
)
|
|
(256
|
)
|
|||
Cash received from purchased options with deferred premiums
|
42
|
|
|
242
|
|
|||
Issuance of long-term debt
|
—
|
|
|
495
|
|
|||
Repayments of long-term debt
|
(8
|
)
|
|
(254
|
)
|
|||
Dividends paid to shareholders
|
(368
|
)
|
|
(361
|
)
|
|||
Repurchase of common shares
|
(1,161
|
)
|
|
(1,319
|
)
|
|||
Exercise of stock options
|
13
|
|
|
6
|
|
|||
Repayments of debt by consolidated investment entities
|
(59
|
)
|
|
(134
|
)
|
|||
Other, net
|
—
|
|
|
3
|
|
|||
Net cash provided by (used in) financing activities
|
(1,286
|
)
|
|
(573
|
)
|
|||
Effect of exchange rate changes on cash
|
32
|
|
|
(53
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(181
|
)
|
|
1,029
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
5,392
|
|
|
5,407
|
|
|||
Net cash outflows upon the deconsolidation of VIEs
|
—
|
|
|
(346
|
)
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
5,211
|
|
|
$
|
6,090
|
|
|
|
||||||||
Supplemental Disclosures:
|
||||||||
Interest paid excluding consolidated investment entities
|
$
|
130
|
|
|
$
|
121
|
|
|
Interest paid by consolidated investment entities
|
65
|
|
|
74
|
|
|||
Income taxes paid, net
|
387
|
|
|
201
|
|
|||
Non-cash investing activity:
|
||||||||
Partnership commitments not yet remitted
|
9
|
|
|
75
|
|
|||
|
September 30,
2017 |
|
December 31, 2016
|
|||||
(in millions)
|
||||||||
Reconciliation of cash, cash equivalents and restricted cash:
|
||||||||
Cash and cash equivalents
|
$
|
2,398
|
|
|
$
|
2,318
|
|
|
Cash of consolidated investment entities
|
106
|
|
|
168
|
|
|||
Restricted and segregated cash and investments
|
3,131
|
|
|
3,331
|
|
|||
Less: Restricted and segregated investments
|
(424
|
)
|
|
(425
|
)
|
|||
Total cash, cash equivalents and restricted cash per consolidated statements of cash flows
|
$
|
5,211
|
|
|
$
|
5,392
|
|
|
See Notes to Consolidated Financial Statements.
|
|
September 30, 2017
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
(in millions)
|
|||||||||||||||
Assets
|
|||||||||||||||
Investments:
|
|||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
29
|
|
Common stocks
|
22
|
|
|
11
|
|
|
4
|
|
|
37
|
|
||||
Other investments
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Syndicated loans
|
—
|
|
|
1,963
|
|
|
182
|
|
|
2,145
|
|
||||
Total investments
|
26
|
|
|
2,003
|
|
|
186
|
|
|
2,215
|
|
||||
Receivables
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||
Total assets at fair value
|
$
|
26
|
|
|
$
|
2,012
|
|
|
$
|
186
|
|
|
$
|
2,224
|
|
|
|||||||||||||||
Liabilities
|
|||||||||||||||
Debt
(1)
|
$
|
—
|
|
|
$
|
2,267
|
|
|
$
|
—
|
|
|
$
|
2,267
|
|
Other liabilities
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
2,310
|
|
|
$
|
—
|
|
|
$
|
2,310
|
|
|
December 31, 2016
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
(in millions)
|
|||||||||||||||
Assets
|
|||||||||||||||
Investments:
|
|||||||||||||||
Corporate debt securities
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Common stocks
|
22
|
|
|
6
|
|
|
5
|
|
|
33
|
|
||||
Other investments
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Syndicated loans
|
—
|
|
|
1,944
|
|
|
254
|
|
|
2,198
|
|
||||
Total investments
|
26
|
|
|
1,969
|
|
|
259
|
|
|
2,254
|
|
||||
Receivables
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||
Total assets at fair value
|
$
|
26
|
|
|
$
|
1,980
|
|
|
$
|
259
|
|
|
$
|
2,265
|
|
|
|||||||||||||||
Liabilities
|
|||||||||||||||
Debt
(1)
|
$
|
—
|
|
|
$
|
2,319
|
|
|
$
|
—
|
|
|
$
|
2,319
|
|
Other liabilities
|
—
|
|
|
95
|
|
|
—
|
|
|
95
|
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
2,414
|
|
|
$
|
—
|
|
|
$
|
2,414
|
|
(1)
|
The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was
$2.2 billion
and
$2.3 billion
as of
September 30, 2017
and
December 31, 2016
, respectively.
|
|
Corporate Debt Securities
|
|
Common Stocks
|
|
Syndicated Loans
|
|
||||||
(in millions)
|
||||||||||||
Balance, July 1, 2017
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
185
|
|
|
Total gains (losses) included in:
|
||||||||||||
Net income
|
—
|
|
|
1
|
|
(1)
|
(1
|
)
|
(1)
|
|||
Purchases
|
—
|
|
|
—
|
|
|
6
|
|
|
|||
Sales
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
|||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
84
|
|
|
|||
Transfers out of Level 3
|
—
|
|
|
(4
|
)
|
|
(77
|
)
|
|
|||
Balance, September 30, 2017
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
182
|
|
|
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2017
|
$
|
—
|
|
|
$
|
1
|
|
(1)
|
$
|
—
|
|
|
|
Common Stocks
|
|
Syndicated Loans
|
|
Other Assets
|
|
||||||
(in millions)
|
||||||||||||
Balance at July 1, 2016
|
$
|
1
|
|
|
$
|
243
|
|
|
$
|
1
|
|
|
Total gains (losses) included in:
|
||||||||||||
Net income
|
—
|
|
|
2
|
|
(1)
|
—
|
|
|
|||
Purchases
|
1
|
|
|
50
|
|
|
—
|
|
|
|||
Sales
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
|||
Settlements
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
|||
Transfers into Level 3
|
1
|
|
|
57
|
|
|
—
|
|
|
|||
Transfers out of Level 3
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
|||
Balance, September 30, 2016
|
$
|
3
|
|
|
$
|
196
|
|
|
$
|
1
|
|
|
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2016
|
$
|
—
|
|
|
$
|
2
|
|
(1)
|
$
|
—
|
|
|
|
Corporate Debt Securities
|
|
Common Stocks
|
|
Syndicated Loans
|
|
||||||
(in millions)
|
||||||||||||
Balance, January 1, 2017
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
254
|
|
|
Total gains (losses) included in:
|
||||||||||||
Net income
|
—
|
|
|
1
|
|
(1)
|
—
|
|
|
|||
Purchases
|
—
|
|
|
3
|
|
|
133
|
|
|
|||
Sales
|
(2
|
)
|
|
(1
|
)
|
|
(27
|
)
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(56
|
)
|
|
|||
Transfers into Level 3
|
2
|
|
|
2
|
|
|
197
|
|
|
|||
Transfers out of Level 3
|
—
|
|
|
(6
|
)
|
|
(319
|
)
|
|
|||
Balance, September 30, 2017
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
182
|
|
|
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2017
|
$
|
—
|
|
|
$
|
1
|
|
(1)
|
$
|
(2
|
)
|
(1)
|
|
Common Stocks
|
|
Syndicated Loans
|
|
Other Assets
|
|
Debt
|
|
||||||||
(in millions)
|
||||||||||||||||
Balance at January 1, 2016, previously reported
|
$
|
3
|
|
|
$
|
529
|
|
|
$
|
2,065
|
|
|
$
|
(6,630
|
)
|
|
Cumulative effect of change in accounting policies
(3)
|
(2
|
)
|
|
(304
|
)
|
|
(2,065
|
)
|
|
6,630
|
|
|
||||
Balance at January 1, 2016, as adjusted
|
1
|
|
|
225
|
|
|
—
|
|
|
—
|
|
|
||||
Total gains (losses) included in:
|
||||||||||||||||
Net income
|
—
|
|
|
1
|
|
(1)
|
1
|
|
(2)
|
—
|
|
|
||||
Purchases
|
1
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
||||
Sales
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
||||
Settlements
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
||||
Transfers into Level 3
|
3
|
|
|
286
|
|
|
—
|
|
|
—
|
|
|
||||
Transfers out of Level 3
|
(2
|
)
|
|
(354
|
)
|
|
—
|
|
|
—
|
|
|
||||
Balance, September 30, 2016
|
$
|
3
|
|
|
$
|
196
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Changes in unrealized gains (losses) included in income relating to assets and liabilities held at September 30, 2016
|
$
|
—
|
|
|
$
|
1
|
|
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
|
September 30,
2017 |
|
December 31, 2016
|
||||
(in millions)
|
|||||||
Syndicated loans
|
|||||||
Unpaid principal balance
|
$
|
2,215
|
|
|
$
|
2,281
|
|
Excess unpaid principal over fair value
|
(70
|
)
|
|
(83
|
)
|
||
Fair value
|
$
|
2,145
|
|
|
$
|
2,198
|
|
Fair value of loans more than 90 days past due
|
$
|
12
|
|
|
$
|
8
|
|
Fair value of loans in nonaccrual status
|
12
|
|
|
8
|
|
||
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both
|
26
|
|
|
34
|
|
||
|
|||||||
Debt
|
|||||||
Unpaid principal balance
|
$
|
2,400
|
|
|
$
|
2,459
|
|
Excess unpaid principal over carrying value
|
(133
|
)
|
|
(140
|
)
|
||
Carrying value
(1)
|
$
|
2,267
|
|
|
$
|
2,319
|
|
|
Carrying Value
|
|
Weighted Average Interest Rate
|
||||||||||
September 30,
2017 |
|
December 31,
2016 |
September 30,
2017 |
|
December 31,
2016 |
||||||||
(in millions)
|
|
||||||||||||
Debt of consolidated CLOs due 2025-2026
|
$
|
2,267
|
|
|
$
|
2,319
|
|
|
2.7
|
%
|
|
2.5
|
%
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
(in millions)
|
|||||||
Available-for-Sale securities, at fair value
|
$
|
30,826
|
|
|
$
|
30,719
|
|
Mortgage loans, net
|
3,000
|
|
|
2,986
|
|
||
Policy and certificate loans
|
841
|
|
|
831
|
|
||
Other investments
|
1,535
|
|
|
1,298
|
|
||
Total
|
$
|
36,202
|
|
|
$
|
35,834
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions)
|
|||||||||||||||
Investment income on fixed maturities
|
$
|
340
|
|
|
$
|
342
|
|
|
$
|
1,012
|
|
|
$
|
1,028
|
|
Net realized gains (losses)
|
(3
|
)
|
|
6
|
|
|
35
|
|
|
(5
|
)
|
||||
Affordable housing partnerships
|
(17
|
)
|
|
(17
|
)
|
|
(42
|
)
|
|
(35
|
)
|
||||
Other
|
26
|
|
|
25
|
|
|
70
|
|
|
13
|
|
||||
Consolidated investment entities
|
26
|
|
|
31
|
|
|
79
|
|
|
89
|
|
||||
Total
|
$
|
372
|
|
|
$
|
387
|
|
|
$
|
1,154
|
|
|
$
|
1,090
|
|
Description of Securities
|
September 30, 2017
|
|||||||||||||||||||
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Noncredit OTTI
(1)
|
||||||||||||
|
(in millions)
|
|||||||||||||||||||
Corporate debt securities
|
$
|
14,528
|
|
|
$
|
1,145
|
|
|
$
|
(23
|
)
|
|
$
|
15,650
|
|
|
$
|
—
|
|
|
Residential mortgage backed securities
|
6,740
|
|
|
79
|
|
|
(29
|
)
|
|
6,790
|
|
|
—
|
|
||||||
Commercial mortgage backed securities
|
3,917
|
|
|
62
|
|
|
(27
|
)
|
|
3,952
|
|
|
—
|
|
||||||
Asset backed securities
|
1,611
|
|
|
39
|
|
|
(4
|
)
|
|
1,646
|
|
|
5
|
|
||||||
State and municipal obligations
|
2,216
|
|
|
249
|
|
|
(10
|
)
|
|
2,455
|
|
|
—
|
|
||||||
U.S. government and agencies obligations
|
5
|
|
|
1
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||||
Foreign government bonds and obligations
|
292
|
|
|
21
|
|
|
(5
|
)
|
|
308
|
|
|
—
|
|
||||||
Common stocks
|
9
|
|
|
11
|
|
|
(1
|
)
|
|
19
|
|
|
6
|
|
||||||
Total
|
$
|
29,318
|
|
|
$
|
1,607
|
|
|
$
|
(99
|
)
|
|
$
|
30,826
|
|
|
$
|
11
|
|
Description of Securities
|
December 31, 2016
|
|||||||||||||||||||
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Noncredit OTTI
(1)
|
||||||||||||
|
(in millions)
|
|||||||||||||||||||
Corporate debt securities
|
$
|
15,231
|
|
|
$
|
1,065
|
|
|
$
|
(60
|
)
|
|
$
|
16,236
|
|
|
$
|
—
|
|
|
Residential mortgage backed securities
|
6,899
|
|
|
86
|
|
|
(67
|
)
|
|
6,918
|
|
|
(3
|
)
|
||||||
Commercial mortgage backed securities
|
3,347
|
|
|
59
|
|
|
(39
|
)
|
|
3,367
|
|
|
—
|
|
||||||
Asset backed securities
|
1,532
|
|
|
33
|
|
|
(16
|
)
|
|
1,549
|
|
|
5
|
|
||||||
State and municipal obligations
|
2,195
|
|
|
198
|
|
|
(35
|
)
|
|
2,358
|
|
|
—
|
|
||||||
U.S. government and agencies obligations
|
7
|
|
|
1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||||
Foreign government bonds and obligations
|
251
|
|
|
17
|
|
|
(7
|
)
|
|
261
|
|
|
—
|
|
||||||
Common stocks
|
10
|
|
|
13
|
|
|
(1
|
)
|
|
22
|
|
|
6
|
|
||||||
Total
|
$
|
29,472
|
|
|
$
|
1,472
|
|
|
$
|
(225
|
)
|
|
$
|
30,719
|
|
|
$
|
8
|
|
(1)
|
Represents the amount of other-than-temporary impairment (“OTTI”) losses in accumulated other comprehensive income (“AOCI”). Amount includes unrealized gains and losses on impaired securities subsequent to the initial impairment measurement date. These amounts are included in gross unrealized gains and losses as of the end of the period.
|
Ratings
|
September 30, 2017
|
|
December 31, 2016
|
|||||||||||||||||||
Amortized Cost
|
|
Fair Value
|
|
Percent of
Total Fair Value
|
Amortized Cost
|
|
Fair Value
|
|
Percent of
Total Fair Value
|
|||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||
AAA
|
$
|
10,444
|
|
|
$
|
10,528
|
|
|
34
|
%
|
|
$
|
9,252
|
|
|
$
|
9,305
|
|
|
31
|
%
|
|
AA
|
1,914
|
|
|
2,132
|
|
|
7
|
|
|
1,729
|
|
|
1,906
|
|
|
6
|
|
|||||
A
|
4,986
|
|
|
5,453
|
|
|
18
|
|
|
5,157
|
|
|
5,567
|
|
|
18
|
|
|||||
BBB
|
10,745
|
|
|
11,435
|
|
|
37
|
|
|
11,739
|
|
|
12,340
|
|
|
40
|
|
|||||
Below investment grade
(1)
|
1,220
|
|
|
1,259
|
|
|
4
|
|
|
1,585
|
|
|
1,579
|
|
|
5
|
|
|||||
Total fixed maturities
|
$
|
29,309
|
|
|
$
|
30,807
|
|
|
100
|
%
|
|
$
|
29,462
|
|
|
$
|
30,697
|
|
|
100
|
%
|
(1)
|
The amortized cost and fair value of below investment grade securities includes interest in CLOs managed by the Company of
$6 million
and
$11 million
, respectively, at
September 30, 2017
, and
$9 million
and
$14 million
, respectively, at
December 31, 2016
. These securities are not rated but are included in below investment grade due to their risk characteristics.
|
Description of Securities
|
September 30, 2017
|
||||||||||||||||||||||||||||||||
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||||||||||||
Number of Securities
|
|
Fair Value
|
|
Unrealized Losses
|
Number of Securities
|
|
Fair Value
|
|
Unrealized Losses
|
Number of Securities
|
|
Fair Value
|
|
Unrealized Losses
|
|||||||||||||||||||
|
(in millions, except number of securities)
|
||||||||||||||||||||||||||||||||
Corporate debt securities
|
106
|
|
|
$
|
1,151
|
|
|
$
|
(7
|
)
|
|
34
|
|
|
$
|
325
|
|
|
$
|
(16
|
)
|
|
140
|
|
|
$
|
1,476
|
|
|
$
|
(23
|
)
|
|
Residential mortgage backed securities
|
113
|
|
|
1,901
|
|
|
(16
|
)
|
|
109
|
|
|
993
|
|
|
(13
|
)
|
|
222
|
|
|
2,894
|
|
|
(29
|
)
|
|||||||
Commercial mortgage backed securities
|
90
|
|
|
1,391
|
|
|
(21
|
)
|
|
19
|
|
|
210
|
|
|
(6
|
)
|
|
109
|
|
|
1,601
|
|
|
(27
|
)
|
|||||||
Asset backed securities
|
33
|
|
|
398
|
|
|
(2
|
)
|
|
16
|
|
|
105
|
|
|
(2
|
)
|
|
49
|
|
|
503
|
|
|
(4
|
)
|
|||||||
State and municipal obligations
|
89
|
|
|
176
|
|
|
(1
|
)
|
|
16
|
|
|
142
|
|
|
(9
|
)
|
|
105
|
|
|
318
|
|
|
(10
|
)
|
|||||||
Foreign government bonds and obligations
|
6
|
|
|
19
|
|
|
—
|
|
|
14
|
|
|
21
|
|
|
(5
|
)
|
|
20
|
|
|
40
|
|
|
(5
|
)
|
|||||||
Common stocks
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
(1
|
)
|
|
3
|
|
|
1
|
|
|
(1
|
)
|
|||||||
Total
|
437
|
|
|
$
|
5,036
|
|
|
$
|
(47
|
)
|
|
211
|
|
|
$
|
1,797
|
|
|
$
|
(52
|
)
|
|
648
|
|
|
$
|
6,833
|
|
|
$
|
(99
|
)
|
Description of Securities
|
December 31, 2016
|
||||||||||||||||||||||||||||||||
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||||||||||||||||
Number of Securities
|
|
Fair Value
|
|
Unrealized Losses
|
Number of Securities
|
|
Fair Value
|
|
Unrealized Losses
|
Number of Securities
|
|
Fair Value
|
|
Unrealized Losses
|
|||||||||||||||||||
|
(in millions, except number of securities)
|
||||||||||||||||||||||||||||||||
Corporate debt securities
|
187
|
|
|
$
|
2,452
|
|
|
$
|
(33
|
)
|
|
38
|
|
|
$
|
377
|
|
|
$
|
(27
|
)
|
|
225
|
|
|
$
|
2,829
|
|
|
$
|
(60
|
)
|
|
Residential mortgage backed securities
|
127
|
|
|
2,533
|
|
|
(33
|
)
|
|
177
|
|
|
1,290
|
|
|
(34
|
)
|
|
304
|
|
|
3,823
|
|
|
(67
|
)
|
|||||||
Commercial mortgage backed securities
|
100
|
|
|
1,583
|
|
|
(39
|
)
|
|
5
|
|
|
43
|
|
|
—
|
|
|
105
|
|
|
1,626
|
|
|
(39
|
)
|
|||||||
Asset backed securities
|
48
|
|
|
524
|
|
|
(9
|
)
|
|
27
|
|
|
298
|
|
|
(7
|
)
|
|
75
|
|
|
822
|
|
|
(16
|
)
|
|||||||
State and municipal obligations
|
181
|
|
|
374
|
|
|
(14
|
)
|
|
3
|
|
|
110
|
|
|
(21
|
)
|
|
184
|
|
|
484
|
|
|
(35
|
)
|
|||||||
Foreign government bonds and obligations
|
7
|
|
|
30
|
|
|
(1
|
)
|
|
15
|
|
|
23
|
|
|
(6
|
)
|
|
22
|
|
|
53
|
|
|
(7
|
)
|
|||||||
Common stocks
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
(1
|
)
|
|
3
|
|
|
1
|
|
|
(1
|
)
|
|||||||
Total
|
650
|
|
|
$
|
7,496
|
|
|
$
|
(129
|
)
|
|
268
|
|
|
$
|
2,142
|
|
|
$
|
(96
|
)
|
|
918
|
|
|
$
|
9,638
|
|
|
$
|
(225
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions)
|
|||||||||||||||
Beginning balance
|
$
|
2
|
|
|
$
|
81
|
|
|
$
|
69
|
|
|
$
|
85
|
|
Credit losses for which an other-than-temporary impairment was not previously recognized
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Credit losses for which an other-than-temporary impairment was previously recognized
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Reductions for securities sold during the period (realized)
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
(5
|
)
|
||||
Ending balance
|
$
|
2
|
|
|
$
|
81
|
|
|
$
|
2
|
|
|
$
|
81
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions)
|
|||||||||||||||
Gross realized gains
|
$
|
6
|
|
|
$
|
10
|
|
|
$
|
50
|
|
|
$
|
24
|
|
Gross realized losses
|
(2
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
(12
|
)
|
||||
Other-than-temporary impairments
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Total
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
43
|
|
|
$
|
11
|
|
|
Amortized Cost
|
|
Fair
Value
|
||||
(in millions)
|
|||||||
Due within one year
|
$
|
2,311
|
|
|
$
|
2,340
|
|
Due after one year through five years
|
6,562
|
|
|
6,820
|
|
||
Due after five years through 10 years
|
3,852
|
|
|
4,010
|
|
||
Due after 10 years
|
4,316
|
|
|
5,249
|
|
||
|
17,041
|
|
|
18,419
|
|
||
Residential mortgage backed securities
|
6,740
|
|
|
6,790
|
|
||
Commercial mortgage backed securities
|
3,917
|
|
|
3,952
|
|
||
Asset backed securities
|
1,611
|
|
|
1,646
|
|
||
Common stocks
|
9
|
|
|
19
|
|
||
Total
|
$
|
29,318
|
|
|
$
|
30,826
|
|
|
September 30,
|
||||||
2017
|
|
2016
|
|||||
(in millions)
|
|||||||
Beginning balance
|
$
|
29
|
|
|
$
|
32
|
|
Charge-offs
|
—
|
|
|
(1
|
)
|
||
Provisions
|
(1
|
)
|
|
(1
|
)
|
||
Ending balance
|
$
|
28
|
|
|
$
|
30
|
|
|
|||||||
Individually evaluated for impairment
|
$
|
3
|
|
|
$
|
2
|
|
Collectively evaluated for impairment
|
25
|
|
|
28
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
(in millions)
|
|||||||
Individually evaluated for impairment
|
$
|
19
|
|
|
$
|
12
|
|
Collectively evaluated for impairment
|
3,490
|
|
|
3,480
|
|
||
Total
|
$
|
3,509
|
|
|
$
|
3,492
|
|
|
Loans
|
|
Percentage
|
||||||||||
September 30,
2017 |
|
December 31,
2016 |
|
September 30,
2017 |
|
December 31,
2016 |
|||||||
(in millions)
|
|
|
|
|
|||||||||
East North Central
|
$
|
237
|
|
|
$
|
198
|
|
|
9
|
%
|
|
7
|
%
|
East South Central
|
92
|
|
|
88
|
|
|
3
|
|
|
3
|
|
||
Middle Atlantic
|
198
|
|
|
203
|
|
|
7
|
|
|
8
|
|
||
Mountain
|
253
|
|
|
240
|
|
|
9
|
|
|
9
|
|
||
New England
|
87
|
|
|
91
|
|
|
3
|
|
|
3
|
|
||
Pacific
|
785
|
|
|
746
|
|
|
28
|
|
|
28
|
|
||
South Atlantic
|
767
|
|
|
783
|
|
|
28
|
|
|
29
|
|
||
West North Central
|
215
|
|
|
222
|
|
|
8
|
|
|
8
|
|
||
West South Central
|
136
|
|
|
131
|
|
|
5
|
|
|
5
|
|
||
|
2,770
|
|
|
2,702
|
|
|
100
|
%
|
|
100
|
%
|
||
Less: allowance for loan losses
|
21
|
|
|
21
|
|
|
|
|
|
|
|
||
Total
|
$
|
2,749
|
|
|
$
|
2,681
|
|
|
|
|
|
|
|
|
Loans
|
|
Percentage
|
||||||||||
September 30,
2017 |
|
December 31,
2016 |
|
September 30,
2017 |
|
December 31,
2016 |
|||||||
(in millions)
|
|
|
|
|
|||||||||
Apartments
|
$
|
560
|
|
|
$
|
504
|
|
|
20
|
%
|
|
19
|
%
|
Hotel
|
41
|
|
|
42
|
|
|
1
|
|
|
1
|
|
||
Industrial
|
466
|
|
|
446
|
|
|
17
|
|
|
17
|
|
||
Mixed use
|
48
|
|
|
49
|
|
|
2
|
|
|
2
|
|
||
Office
|
502
|
|
|
489
|
|
|
18
|
|
|
18
|
|
||
Retail
|
937
|
|
|
950
|
|
|
34
|
|
|
35
|
|
||
Other
|
216
|
|
|
222
|
|
|
8
|
|
|
8
|
|
||
|
2,770
|
|
|
2,702
|
|
|
100
|
%
|
|
100
|
%
|
||
Less: allowance for loan losses
|
21
|
|
|
21
|
|
|
|
|
|
|
|
||
Total
|
$
|
2,749
|
|
|
$
|
2,681
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
||||
(in millions)
|
||||||||
Balance at January 1
|
$
|
2,648
|
|
|
$
|
2,730
|
|
(1)
|
Capitalization of acquisition costs
|
220
|
|
|
274
|
|
(2)
|
||
Amortization, excluding the impact of valuation assumptions review
|
(201
|
)
|
|
(279
|
)
|
|
||
Amortization, impact of valuation assumptions review
|
12
|
|
|
(81
|
)
|
|
||
Impact of change in net unrealized securities (gains) losses
|
(18
|
)
|
|
(105
|
)
|
|
||
Balance at September 30
|
$
|
2,661
|
|
|
$
|
2,539
|
|
(1)
|
(1)
|
DAC balances were restated for the correction of commission expense accrual for certain insurance and annuity products in the fourth quarter of 2016. See Note 1 in the 2016 10-K.
|
(2)
|
Includes a
$27 million
benefit related to the write-off of the deferred reinsurance liability in connection with the loss recognition on LTC business.
|
|
2017
|
|
2016
|
||||
(in millions)
|
|||||||
Balance at January 1
|
$
|
302
|
|
|
$
|
335
|
|
Capitalization of sales inducement costs
|
3
|
|
|
4
|
|
||
Amortization, excluding the impact of valuation assumptions review
|
(26
|
)
|
|
(32
|
)
|
||
Amortization, impact of valuation assumptions review
|
(1
|
)
|
|
4
|
|
||
Impact of change in net unrealized securities (gains) losses
|
1
|
|
|
(14
|
)
|
||
Balance at September 30
|
$
|
279
|
|
|
$
|
297
|
|
|
September 30,
2017 |
|
December 31,
2016 |
|
||||
(in millions)
|
||||||||
Policyholder account balances
|
||||||||
Fixed annuities
(1)
|
$
|
10,100
|
|
|
$
|
10,588
|
|
|
Variable annuity fixed sub-accounts
|
5,187
|
|
|
5,211
|
|
|
||
Variable universal life (“VUL”)/universal life (“UL”) insurance
|
3,028
|
|
|
3,007
|
|
|
||
Indexed universal life (“IUL”) insurance
|
1,290
|
|
|
1,054
|
|
|
||
Other life insurance
|
731
|
|
|
758
|
|
|
||
Total policyholder account balances
|
20,336
|
|
|
20,618
|
|
|
||
|
||||||||
Future policy benefits
|
||||||||
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)
|
539
|
|
|
1,017
|
|
|
||
Variable annuity guaranteed minimum accumulation benefits (“GMAB”)
|
(73
|
)
|
(2)
|
(24
|
)
|
(2)
|
||
Other annuity liabilities
|
85
|
|
|
66
|
|
|
||
Fixed annuity life contingent liabilities
|
1,482
|
|
|
1,497
|
|
|
||
Life, disability income and long term care insurance
|
6,027
|
|
|
5,556
|
|
|
||
VUL/UL and other life insurance additional liabilities
|
674
|
|
|
588
|
|
|
||
Total future policy benefits
|
8,734
|
|
|
8,700
|
|
|
||
Policy claims and other policyholders’ funds
|
893
|
|
|
884
|
|
|
||
Total policyholder account balances, future policy benefits and claims
|
$
|
29,963
|
|
|
$
|
30,202
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
(in millions)
|
|||||||
Variable annuity
|
$
|
73,467
|
|
|
$
|
69,606
|
|
VUL insurance
|
7,154
|
|
|
6,659
|
|
||
Other insurance
|
33
|
|
|
33
|
|
||
Threadneedle investment liabilities
|
4,633
|
|
|
3,912
|
|
||
Total
|
$
|
85,287
|
|
|
$
|
80,210
|
|
Variable Annuity
Guarantees
by Benefit Type
(1)
|
September 30, 2017
|
|
December 31, 2016
|
|||||||||||||||||||||||||
Total Contract Value
|
|
Contract Value in Separate Accounts
|
|
Net Amount
at Risk
|
|
Weighted Average
Attained Age
|
Total Contract Value
|
|
Contract Value in Separate Accounts
|
|
Net Amount
at Risk
|
|
Weighted Average
Attained Age
|
|||||||||||||||
|
(in millions, except age)
|
|||||||||||||||||||||||||||
GMDB:
|
||||||||||||||||||||||||||||
Return of premium
|
$
|
59,806
|
|
|
$
|
57,840
|
|
|
$
|
11
|
|
|
66
|
|
$
|
56,143
|
|
|
$
|
54,145
|
|
|
$
|
208
|
|
|
65
|
|
Five/six-year reset
|
8,869
|
|
|
6,141
|
|
|
13
|
|
|
66
|
|
8,878
|
|
|
6,170
|
|
|
22
|
|
|
66
|
|||||||
One-year ratchet
|
6,502
|
|
|
6,139
|
|
|
12
|
|
|
69
|
|
6,426
|
|
|
6,050
|
|
|
110
|
|
|
68
|
|||||||
Five-year ratchet
|
1,562
|
|
|
1,504
|
|
|
1
|
|
|
65
|
|
1,542
|
|
|
1,483
|
|
|
7
|
|
|
64
|
|||||||
Other
|
1,057
|
|
|
1,034
|
|
|
58
|
|
|
72
|
|
965
|
|
|
942
|
|
|
86
|
|
|
71
|
|||||||
Total — GMDB
|
$
|
77,796
|
|
|
$
|
72,658
|
|
|
$
|
95
|
|
|
66
|
|
$
|
73,954
|
|
|
$
|
68,790
|
|
|
$
|
433
|
|
|
65
|
|
|
||||||||||||||||||||||||||||
GGU death benefit
|
$
|
1,103
|
|
|
$
|
1,052
|
|
|
$
|
126
|
|
|
69
|
|
$
|
1,047
|
|
|
$
|
996
|
|
|
$
|
108
|
|
|
68
|
|
GMIB
|
$
|
236
|
|
|
$
|
219
|
|
|
$
|
8
|
|
|
69
|
|
$
|
245
|
|
|
$
|
227
|
|
|
$
|
13
|
|
|
68
|
|
|
||||||||||||||||||||||||||||
GMWB:
|
||||||||||||||||||||||||||||
GMWB
|
$
|
2,525
|
|
|
$
|
2,517
|
|
|
$
|
2
|
|
|
71
|
|
$
|
2,650
|
|
|
$
|
2,642
|
|
|
$
|
2
|
|
|
70
|
|
GMWB for life
|
42,933
|
|
|
42,813
|
|
|
160
|
|
|
67
|
|
39,436
|
|
|
39,282
|
|
|
289
|
|
(2)
|
66
|
|||||||
Total — GMWB
|
$
|
45,458
|
|
|
$
|
45,330
|
|
|
$
|
162
|
|
|
67
|
|
$
|
42,086
|
|
|
$
|
41,924
|
|
|
$
|
291
|
|
|
66
|
|
|
||||||||||||||||||||||||||||
GMAB
|
$
|
3,157
|
|
|
$
|
3,153
|
|
|
$
|
—
|
|
|
59
|
|
$
|
3,484
|
|
|
$
|
3,476
|
|
|
$
|
21
|
|
|
59
|
(1)
|
Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.
|
(2)
|
Amount revised to reflect updated contractholder mortality assumptions at December 31, 2016.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||
Net Amount
at Risk |
|
Weighted Average Attained Age
|
Net Amount
at Risk |
|
Weighted Average Attained Age
|
||||||
(in millions, except age)
|
|||||||||||
UL secondary guarantees
|
$
|
6,443
|
|
|
65
|
|
$
|
6,376
|
|
|
64
|
|
GMDB & GGU
|
|
GMIB
|
|
GMWB
(1)
|
|
GMAB
(1)
|
|
UL
|
||||||||||
(in millions)
|
|||||||||||||||||||
Balance at January 1, 2016
|
$
|
14
|
|
|
$
|
8
|
|
|
$
|
1,057
|
|
|
$
|
—
|
|
|
$
|
332
|
|
Incurred claims
|
10
|
|
|
—
|
|
|
1,056
|
|
|
9
|
|
|
99
|
|
|||||
Paid claims
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(18
|
)
|
|||||
Balance at September 30, 2016
|
$
|
17
|
|
|
$
|
8
|
|
|
$
|
2,113
|
|
|
$
|
8
|
|
|
$
|
413
|
|
|
|||||||||||||||||||
Balance at January 1, 2017
|
$
|
16
|
|
|
$
|
8
|
|
|
$
|
1,017
|
|
|
$
|
(24
|
)
|
|
$
|
434
|
|
Incurred claims
|
3
|
|
|
—
|
|
|
(478
|
)
|
|
(49
|
)
|
|
59
|
|
|||||
Paid claims
|
(3
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||||
Balance at September 30, 2017
|
$
|
16
|
|
|
$
|
7
|
|
|
$
|
539
|
|
|
$
|
(73
|
)
|
|
$
|
471
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
(in millions)
|
|||||||
Mutual funds:
|
|||||||
Equity
|
$
|
44,365
|
|
|
$
|
40,622
|
|
Bond
|
23,481
|
|
|
23,142
|
|
||
Other
|
5,117
|
|
|
5,326
|
|
||
Total mutual funds
|
$
|
72,963
|
|
|
$
|
69,090
|
|
|
Outstanding Balance
|
|
Stated Interest Rate
|
||||||||||
September 30,
2017 |
|
December 31,
2016 |
September 30,
2017 |
|
December 31,
2016 |
||||||||
(in millions)
|
|
|
|||||||||||
Long-term debt:
|
|||||||||||||
Senior notes due 2019
|
$
|
300
|
|
|
$
|
300
|
|
|
7.3
|
%
|
|
7.3
|
%
|
Senior notes due 2020
|
750
|
|
|
750
|
|
|
5.3
|
|
|
5.3
|
|
||
Senior notes due 2023
|
750
|
|
|
750
|
|
|
4.0
|
|
|
4.0
|
|
||
Senior notes due 2024
|
550
|
|
|
550
|
|
|
3.7
|
|
|
3.7
|
|
||
Senior notes due 2026
|
500
|
|
|
500
|
|
|
2.9
|
|
|
2.9
|
|
||
Capitalized lease obligations
|
41
|
|
|
49
|
|
|
|
|
|
|
|||
Other
(1)
|
11
|
|
|
18
|
|
|
|
|
|
||||
Total long-term debt
|
2,902
|
|
|
2,917
|
|
|
|
|
|
||||
|
|||||||||||||
Short-term borrowings:
|
|||||||||||||
Federal Home Loan Bank (“FHLB”) advances
|
151
|
|
|
150
|
|
|
1.3
|
|
|
0.8
|
|
||
Repurchase agreements
|
50
|
|
|
50
|
|
|
1.4
|
|
|
0.9
|
|
||
Total short-term borrowings
|
201
|
|
|
200
|
|
|
|
|
|
|
|
||
Total
|
$
|
3,103
|
|
|
$
|
3,117
|
|
|
|
|
|
|
|
Level 1
|
Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
|
Level 2
|
Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
Level 3
|
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
|
|
September 30, 2017
|
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
(in millions)
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$
|
136
|
|
|
$
|
1,882
|
|
|
$
|
—
|
|
|
$
|
2,018
|
|
|
Available-for-Sale securities:
|
||||||||||||||||
Corporate debt securities
|
—
|
|
|
14,383
|
|
|
1,267
|
|
|
15,650
|
|
|
||||
Residential mortgage backed securities
|
—
|
|
|
6,625
|
|
|
165
|
|
|
6,790
|
|
|
||||
Commercial mortgage backed securities
|
—
|
|
|
3,887
|
|
|
65
|
|
|
3,952
|
|
|
||||
Asset backed securities
|
—
|
|
|
1,611
|
|
|
35
|
|
|
1,646
|
|
|
||||
State and municipal obligations
|
—
|
|
|
2,455
|
|
|
—
|
|
|
2,455
|
|
|
||||
U.S. government and agencies obligations
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
||||
Foreign government bonds and obligations
|
—
|
|
|
308
|
|
|
—
|
|
|
308
|
|
|
||||
Common stocks
|
4
|
|
|
8
|
|
|
1
|
|
|
13
|
|
|
||||
Common stocks measured at net asset value (“NAV”)
|
|
|
|
|
|
|
6
|
|
(1)
|
|||||||
Total Available-for-Sale securities
|
10
|
|
|
29,277
|
|
|
1,533
|
|
|
30,826
|
|
|
||||
Trading securities
|
131
|
|
|
32
|
|
|
—
|
|
|
163
|
|
|
||||
Separate account assets measured at NAV
|
85,287
|
|
(1)
|
|||||||||||||
Investments segregated for regulatory purposes
|
424
|
|
|
—
|
|
|
—
|
|
|
424
|
|
|
||||
Other assets:
|
||||||||||||||||
Interest rate derivative contracts
|
1
|
|
|
1,200
|
|
|
—
|
|
|
1,201
|
|
|
||||
Equity derivative contracts
|
51
|
|
|
1,891
|
|
|
—
|
|
|
1,942
|
|
|
||||
Credit derivative contracts
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
||||
Foreign exchange derivative contracts
|
1
|
|
|
42
|
|
|
—
|
|
|
43
|
|
|
||||
Total other assets
|
53
|
|
|
3,137
|
|
|
—
|
|
|
3,190
|
|
|
||||
Total assets at fair value
|
$
|
754
|
|
|
$
|
34,328
|
|
|
$
|
1,533
|
|
|
$
|
121,908
|
|
|
Liabilities
|
||||||||||||||||
Policyholder account balances, future policy benefits and claims:
|
||||||||||||||||
EIA embedded derivatives
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
IUL embedded derivatives
|
—
|
|
|
—
|
|
|
577
|
|
|
577
|
|
|
||||
GMWB and GMAB embedded derivatives
|
—
|
|
|
—
|
|
|
45
|
|
|
45
|
|
(2)
|
||||
Total policyholder account balances, future policy benefits and claims
|
—
|
|
|
4
|
|
|
622
|
|
|
626
|
|
(3)
|
||||
Customer deposits
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
||||
Other liabilities:
|
||||||||||||||||
Interest rate derivative contracts
|
—
|
|
|
416
|
|
|
—
|
|
|
416
|
|
|
||||
Equity derivative contracts
|
5
|
|
|
2,664
|
|
|
—
|
|
|
2,669
|
|
|
||||
Foreign exchange derivative contracts
|
4
|
|
|
27
|
|
|
—
|
|
|
31
|
|
|
||||
Other
|
6
|
|
|
6
|
|
|
27
|
|
|
39
|
|
|
||||
Total other liabilities
|
15
|
|
|
3,113
|
|
|
27
|
|
|
3,155
|
|
|
||||
Total liabilities at fair value
|
$
|
15
|
|
|
$
|
3,126
|
|
|
$
|
649
|
|
|
$
|
3,790
|
|
|
|
December 31, 2016
|
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||
(in millions)
|
||||||||||||||||
Assets
|
||||||||||||||||
Cash equivalents
|
$
|
30
|
|
|
$
|
1,796
|
|
|
$
|
—
|
|
|
$
|
1,826
|
|
|
Available-for-Sale securities:
|
||||||||||||||||
Corporate debt securities
|
—
|
|
|
14,925
|
|
|
1,311
|
|
|
16,236
|
|
|
||||
Residential mortgage backed securities
|
—
|
|
|
6,650
|
|
|
268
|
|
|
6,918
|
|
|
||||
Commercial mortgage backed securities
|
—
|
|
|
3,367
|
|
|
—
|
|
|
3,367
|
|
|
||||
Asset backed securities
|
—
|
|
|
1,481
|
|
|
68
|
|
|
1,549
|
|
|
||||
State and municipal obligations
|
—
|
|
|
2,358
|
|
|
—
|
|
|
2,358
|
|
|
||||
U.S. government and agencies obligations
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
||||
Foreign government bonds and obligations
|
—
|
|
|
261
|
|
|
—
|
|
|
261
|
|
|
||||
Common stocks
|
8
|
|
|
8
|
|
|
1
|
|
|
17
|
|
|
||||
Common stocks at NAV
|
|
|
|
|
|
|
5
|
|
(1)
|
|||||||
Total Available-for-Sale securities
|
16
|
|
|
29,050
|
|
|
1,648
|
|
|
30,719
|
|
|
||||
Trading securities
|
9
|
|
|
16
|
|
|
—
|
|
|
25
|
|
|
||||
Separate account assets at NAV
|
80,210
|
|
(1)
|
|||||||||||||
Investments segregated for regulatory purposes
|
425
|
|
|
—
|
|
|
—
|
|
|
425
|
|
|
||||
Other assets:
|
||||||||||||||||
Interest rate derivative contracts
|
—
|
|
|
1,778
|
|
|
—
|
|
|
1,778
|
|
|
||||
Equity derivative contracts
|
43
|
|
|
1,531
|
|
|
—
|
|
|
1,574
|
|
|
||||
Credit derivative contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
||||
Foreign exchange derivative contracts
|
13
|
|
|
80
|
|
|
—
|
|
|
93
|
|
|
||||
Total other assets
|
56
|
|
|
3,390
|
|
|
—
|
|
|
3,446
|
|
|
||||
Total assets at fair value
|
$
|
536
|
|
|
$
|
34,252
|
|
|
$
|
1,648
|
|
|
$
|
116,651
|
|
|
Liabilities
|
||||||||||||||||
Policyholder account balances, future policy benefits and claims:
|
||||||||||||||||
EIA embedded derivatives
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
IUL embedded derivatives
|
—
|
|
|
—
|
|
|
464
|
|
|
464
|
|
|
||||
GMWB and GMAB embedded derivatives
|
—
|
|
|
—
|
|
|
614
|
|
|
614
|
|
(4)
|
||||
Total policyholder account balances, future policy benefits and claims
|
—
|
|
|
5
|
|
|
1,078
|
|
|
1,083
|
|
(5)
|
||||
Customer deposits
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
||||
Other liabilities:
|
||||||||||||||||
Interest rate derivative contracts
|
2
|
|
|
987
|
|
|
—
|
|
|
989
|
|
|
||||
Equity derivative contracts
|
3
|
|
|
2,132
|
|
|
—
|
|
|
2,135
|
|
|
||||
Foreign exchange derivative contracts
|
2
|
|
|
45
|
|
|
—
|
|
|
47
|
|
|
||||
Other
|
3
|
|
|
8
|
|
|
13
|
|
|
24
|
|
|
||||
Total other liabilities
|
10
|
|
|
3,172
|
|
|
13
|
|
|
3,195
|
|
|
||||
Total liabilities at fair value
|
$
|
10
|
|
|
$
|
3,185
|
|
|
$
|
1,091
|
|
|
$
|
4,286
|
|
|
(3)
|
The Company’s adjustment for nonperformance risk resulted in a
$(376) million
cumulative increase (decrease) to the embedded derivatives as of
September 30, 2017
.
|
(4)
|
The fair value of the GMWB and GMAB embedded derivatives included
$880 million
of individual contracts in a liability position and
$266 million
of individual contracts in an asset position as of
December 31, 2016
.
|
(5)
|
The Company’s adjustment for nonperformance risk resulted in a
$(498) million
cumulative increase (decrease) to the embedded derivatives as of
December 31, 2016
.
|
|
Available-for-Sale Securities
|
||||||||||||||||||||||
Corporate Debt Securities
|
|
Residential Mortgage Backed Securities
|
|
Commercial Mortgage Backed Securities
|
|
Asset Backed Securities
|
|
Common Stocks
|
|
Total
|
|||||||||||||
(in millions)
|
|||||||||||||||||||||||
Balance, July 1, 2017
|
$
|
1,333
|
|
|
$
|
172
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
1,538
|
|
Total gains (losses) included in:
|
|||||||||||||||||||||||
Other comprehensive income
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
(2
|
)
|
|
1
|
|
|
(1
|
)
|
||||||
Purchases
|
39
|
|
|
—
|
|
|
65
|
|
|
10
|
|
|
—
|
|
|
114
|
|
||||||
Settlements
|
(104
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
||||||
Transfers into Level 3
|
—
|
|
|
20
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
33
|
|
||||||
Transfers out of Level 3
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(38
|
)
|
||||||
Balance, September 30, 2017
|
$
|
1,267
|
|
|
$
|
165
|
|
|
$
|
65
|
|
|
$
|
35
|
|
|
$
|
1
|
|
|
$
|
1,533
|
|
Changes in unrealized gains (losses) relating to assets held at September 30, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Policyholder Account Balances,
Future Policy Benefits and Claims
|
|
Other Liabilities
|
||||||||||||
IUL Embedded Derivatives
|
|
GMWB and GMAB Embedded Derivatives
|
|
Total
|
|||||||||||
(in millions)
|
|||||||||||||||
Balance, July 1, 2017
|
$
|
527
|
|
|
$
|
272
|
|
|
$
|
799
|
|
|
$
|
14
|
|
Total (gains) losses included in:
|
|||||||||||||||
Net income
|
35
|
|
(1)
|
(309
|
)
|
(2)
|
(274
|
)
|
|
—
|
|
||||
Issues
|
26
|
|
|
84
|
|
|
110
|
|
|
13
|
|
||||
Settlements
|
(11
|
)
|
|
(2
|
)
|
|
(13
|
)
|
|
—
|
|
||||
Balance, September 30, 2017
|
$
|
577
|
|
|
$
|
45
|
|
|
$
|
622
|
|
|
$
|
27
|
|
Changes in unrealized (gains) losses relating to liabilities held at September 30, 2017
|
$
|
35
|
|
(1)
|
$
|
(307
|
)
|
(2)
|
$
|
(272
|
)
|
|
$
|
—
|
|
|
Available-for-Sale Securities
|
|
Other Derivative Contracts
|
|
||||||||||||||||||||
Corporate Debt Securities
|
|
Residential Mortgage Backed Securities
|
|
Commercial Mortgage Backed Securities
|
|
Asset Backed Securities
|
|
Total
|
||||||||||||||||
(in millions)
|
|
|
||||||||||||||||||||||
Balance, July 1, 2016
|
$
|
1,350
|
|
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
178
|
|
|
$
|
1,681
|
|
|
$
|
2
|
|
|
Total gains (losses) included in:
|
|
|||||||||||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
(3)
|
(2
|
)
|
(2)
|
||||||
Other comprehensive income
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
||||||
Purchases
|
20
|
|
|
144
|
|
|
33
|
|
|
12
|
|
|
209
|
|
|
—
|
|
|
||||||
Settlements
|
(26
|
)
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
||||||
Transfers out of Level 3
|
—
|
|
|
1
|
|
|
—
|
|
|
(27
|
)
|
|
(26
|
)
|
|
—
|
|
|
||||||
Balance, September 30, 2016
|
$
|
1,342
|
|
|
$
|
285
|
|
|
$
|
33
|
|
|
$
|
165
|
|
|
$
|
1,825
|
|
|
$
|
—
|
|
|
Changes in unrealized gains (losses) relating to assets held at September 30, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
(2)
|
|
Policyholder Account Balances,
Future Policy Benefits and Claims
|
|
|
||||||||||||
IUL Embedded Derivatives
|
|
GMWB and GMAB Embedded Derivatives
|
|
Total
|
|
Other Liabilities
|
|||||||||
(in millions)
|
|
|
|||||||||||||
Balance, July 1, 2016
|
$
|
408
|
|
|
$
|
1,965
|
|
|
$
|
2,373
|
|
|
$
|
—
|
|
Total (gains) losses included in:
|
|
|
|||||||||||||
Net income
|
12
|
|
(1)
|
(280
|
)
|
(2)
|
(268
|
)
|
|
—
|
|
||||
Issues
|
25
|
|
|
77
|
|
|
102
|
|
|
13
|
|
||||
Settlements
|
(7
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|
—
|
|
||||
Balance, September 30, 2016
|
$
|
438
|
|
|
$
|
1,756
|
|
|
$
|
2,194
|
|
|
$
|
13
|
|
Changes in unrealized (gains) losses relating to liabilities held at September 30, 2016
|
$
|
12
|
|
(1)
|
$
|
(267
|
)
|
(2)
|
$
|
(255
|
)
|
|
$
|
—
|
|
|
Available-for-Sale Securities
|
|
||||||||||||||||||||||
Corporate Debt Securities
|
|
Residential Mortgage Backed Securities
|
|
Commercial Mortgage Backed Securities
|
|
Asset Backed Securities
|
|
Common Stocks
|
|
Total
|
||||||||||||||
(in millions)
|
||||||||||||||||||||||||
Balance, January 1, 2017
|
$
|
1,311
|
|
|
$
|
268
|
|
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
1
|
|
|
$
|
1,648
|
|
|
Total gains (losses) included in:
|
||||||||||||||||||||||||
Other comprehensive income
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
||||||
Purchases
|
109
|
|
|
132
|
|
|
65
|
|
|
64
|
|
|
—
|
|
|
370
|
|
|
||||||
Settlements
|
(154
|
)
|
|
(34
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(203
|
)
|
|
||||||
Transfers into Level 3
|
—
|
|
|
20
|
|
|
—
|
|
|
27
|
|
|
8
|
|
|
55
|
|
|
||||||
Transfers out of Level 3
|
—
|
|
|
(223
|
)
|
|
—
|
|
|
(109
|
)
|
|
(9
|
)
|
|
(341
|
)
|
|
||||||
Balance, September 30, 2017
|
$
|
1,267
|
|
|
$
|
165
|
|
|
$
|
65
|
|
|
$
|
35
|
|
|
$
|
1
|
|
|
$
|
1,533
|
|
|
Changes in unrealized gains (losses) relating to assets held at September 30, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
(3)
|
|
Policyholder Account Balances,
Future Policy Benefits and Claims
|
|
Other Liabilities
|
|
||||||||||||
IUL Embedded Derivatives
|
|
GMWB and GMAB Embedded Derivatives
|
|
Total
|
||||||||||||
(in millions)
|
||||||||||||||||
Balance, January 1, 2017
|
$
|
464
|
|
|
$
|
614
|
|
|
$
|
1,078
|
|
|
$
|
13
|
|
|
Total (gains) losses included in:
|
||||||||||||||||
Net income
|
75
|
|
(1)
|
(798
|
)
|
(2)
|
(723
|
)
|
|
1
|
|
(4)
|
||||
Issues
|
70
|
|
|
238
|
|
|
308
|
|
|
13
|
|
|
||||
Settlements
|
(32
|
)
|
|
(9
|
)
|
|
(41
|
)
|
|
—
|
|
|
||||
Balance, September 30, 2017
|
$
|
577
|
|
|
$
|
45
|
|
|
$
|
622
|
|
|
$
|
27
|
|
|
Changes in unrealized (gains) losses relating to liabilities held at September 30, 2017
|
$
|
75
|
|
(1)
|
$
|
(771
|
)
|
(2)
|
$
|
(696
|
)
|
|
$
|
—
|
|
|
|
Available-for-Sale Securities
|
|
Other Derivative Contracts
|
|
||||||||||||||||||||
Corporate Debt Securities
|
|
Residential Mortgage Backed Securities
|
|
Commercial Mortgage Backed Securities
|
|
Asset Backed Securities
|
|
Total
|
||||||||||||||||
(in millions)
|
|
|
||||||||||||||||||||||
Balance, January 1, 2016
|
$
|
1,425
|
|
|
$
|
218
|
|
|
$
|
3
|
|
|
$
|
162
|
|
|
$
|
1,808
|
|
|
$
|
—
|
|
|
Cumulative effect of change in accounting policies
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
—
|
|
|
||||||
Total gains (losses) included in:
|
|
|||||||||||||||||||||||
Net income
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
(3)
|
(2
|
)
|
(2)
|
||||||
Other comprehensive income
|
29
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
24
|
|
|
—
|
|
|
||||||
Purchases
|
34
|
|
|
144
|
|
|
42
|
|
|
28
|
|
|
248
|
|
|
2
|
|
|
||||||
Settlements
|
(144
|
)
|
|
(53
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(201
|
)
|
|
—
|
|
|
||||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
||||||
Transfers out of Level 3
|
—
|
|
|
(24
|
)
|
|
(9
|
)
|
|
(52
|
)
|
|
(85
|
)
|
|
—
|
|
|
||||||
Balance, September 30, 2016
|
$
|
1,342
|
|
|
$
|
285
|
|
|
$
|
33
|
|
|
$
|
165
|
|
|
$
|
1,825
|
|
|
$
|
—
|
|
|
Changes in unrealized gains (losses) relating to assets held at September 30, 2016
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
(3)
|
$
|
(2
|
)
|
(2)
|
|
Policyholder Account Balances,
Future Policy Benefits and Claims
|
|
Other Liabilities
|
||||||||||||
IUL Embedded Derivatives
|
|
GMWB and GMAB Embedded Derivatives
|
|
Total
|
|
||||||||||
(in millions)
|
|
|
|||||||||||||
Balance, January 1, 2016
|
$
|
364
|
|
|
$
|
851
|
|
|
$
|
1,215
|
|
|
$
|
—
|
|
Total (gains) losses included in:
|
|
|
|||||||||||||
Net income
|
8
|
|
(1)
|
708
|
|
(2)
|
716
|
|
|
—
|
|
||||
Issues
|
86
|
|
|
215
|
|
|
301
|
|
|
13
|
|
||||
Settlements
|
(20
|
)
|
|
(18
|
)
|
|
(38
|
)
|
|
—
|
|
||||
Balance, September 30, 2016
|
$
|
438
|
|
|
$
|
1,756
|
|
|
$
|
2,194
|
|
|
$
|
13
|
|
Changes in unrealized (gains) losses relating to liabilities held at September 30, 2016
|
$
|
8
|
|
(1)
|
$
|
830
|
|
(2)
|
$
|
838
|
|
|
$
|
—
|
|
|
September 30, 2017
|
||||||||||||||
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted Average
|
|||||||||||
(in millions)
|
|||||||||||||||
Corporate debt securities (private placements)
|
$
|
1,266
|
|
Discounted cash flow
|
Yield/spread to U.S. Treasuries
|
0.8
|
%
|
–
|
2.3%
|
1.1
|
%
|
||||
Asset backed securities
|
$
|
11
|
|
Discounted cash flow
|
Annual short-term default rate
|
3.8%
|
|
||||||||
|
|
|
Annual long-term default rate
|
2.5%
|
–
|
3.0%
|
2.6
|
%
|
|||||||
|
|
|
Discount rate
|
11.0%
|
|
||||||||||
|
|
|
Constant prepayment rate
|
5.0
|
%
|
–
|
10.0%
|
9.9
|
%
|
||||||
|
|
|
Loss recovery
|
36.4
|
%
|
–
|
63.6%
|
63.1
|
%
|
||||||
IUL embedded derivatives
|
$
|
577
|
|
Discounted cash flow
|
Nonperformance risk
(1)
|
67 bps
|
|
||||||||
GMWB and GMAB embedded derivatives
|
$
|
45
|
|
Discounted cash flow
|
Utilization of guaranteed withdrawals
(2)
|
0.0
|
%
|
–
|
42.0%
|
|
|||||
|
|
|
|
Surrender rate
|
0.1
|
%
|
–
|
74.7%
|
|
||||||
|
|
|
|
Market volatility
(3)
|
4.3
|
%
|
–
|
15.9%
|
|
||||||
|
|
|
|
Nonperformance risk
(1)
|
67 bps
|
|
|||||||||
Contingent consideration liabilities
|
$
|
27
|
|
Discounted cash flow
|
Discount rate
|
9.0%
|
|
|
December 31, 2016
|
||||||||||||||
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted Average
|
|||||||||||
(in millions)
|
|||||||||||||||
Corporate debt securities (private placements)
|
$
|
1,308
|
|
Discounted cash flow
|
Yield/spread to U.S. Treasuries
|
0.9
|
%
|
–
|
2.5%
|
1.3
|
%
|
||||
Asset backed securities
|
$
|
14
|
|
Discounted cash flow
|
Annual short-term default rate
|
4.8%
|
|
||||||||
|
|
|
Annual long-term default rate
|
2.5%
|
|
||||||||||
|
|
|
Discount rate
|
13.5%
|
|
||||||||||
|
|
|
Constant prepayment rate
|
5.0
|
%
|
–
|
10.0%
|
9.9
|
%
|
||||||
|
|
|
Loss recovery
|
36.4
|
%
|
–
|
63.6%
|
62.8
|
%
|
||||||
IUL embedded derivatives
|
$
|
464
|
|
Discounted cash flow
|
Nonperformance risk
(1)
|
82 bps
|
|
||||||||
GMWB and GMAB embedded derivatives
|
$
|
614
|
|
Discounted cash flow
|
Utilization of guaranteed withdrawals
(2)
|
0.0
|
%
|
–
|
75.6%
|
|
|||||
|
|
|
|
Surrender rate
|
0.1
|
%
|
–
|
66.4%
|
|
||||||
|
|
|
|
Market volatility
(3)
|
5.3
|
%
|
–
|
21.2%
|
|
||||||
|
|
|
|
Nonperformance risk
(1)
|
82 bps
|
|
|||||||||
Contingent consideration liabilities
|
$
|
13
|
|
Discounted cash flow
|
Discount rate
|
9.0%
|
|
(1)
|
The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.
|
(2)
|
The utilization of guaranteed withdrawals represents the percentage of contractholders that will begin withdrawing in any given year.
|
(3)
|
Market volatility is implied volatility of fund of funds and managed volatility funds.
|
|
September 30, 2017
|
|
||||||||||||||||||
Carrying Value
|
|
Fair Value
|
||||||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||
(in millions)
|
||||||||||||||||||||
Financial Assets
|
||||||||||||||||||||
Mortgage loans, net
|
$
|
2,749
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,768
|
|
|
$
|
2,768
|
|
|
Policy and certificate loans
|
841
|
|
|
—
|
|
|
1
|
|
|
797
|
|
|
798
|
|
|
|||||
Receivables
|
1,595
|
|
|
196
|
|
|
942
|
|
|
457
|
|
|
1,595
|
|
|
|||||
Restricted and segregated cash
|
2,707
|
|
|
2,707
|
|
|
—
|
|
|
—
|
|
|
2,707
|
|
|
|||||
Other investments and assets
|
511
|
|
|
—
|
|
|
439
|
|
|
71
|
|
|
510
|
|
|
|||||
|
||||||||||||||||||||
Financial Liabilities
|
||||||||||||||||||||
Policyholder account balances, future policy benefits and claims
|
$
|
10,415
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,052
|
|
|
$
|
11,052
|
|
|
Investment certificate reserves
|
6,364
|
|
|
—
|
|
|
—
|
|
|
6,351
|
|
|
6,351
|
|
|
|||||
Brokerage customer deposits
|
4,065
|
|
|
4,065
|
|
|
—
|
|
|
—
|
|
|
4,065
|
|
|
|||||
Separate account liabilities measured at NAV
|
4,989
|
|
|
|
|
|
|
|
|
4,989
|
|
(1)
|
||||||||
Debt and other liabilities
|
3,395
|
|
|
202
|
|
|
3,197
|
|
|
140
|
|
|
3,539
|
|
|
|
December 31, 2016
|
|
||||||||||||||||||
Carrying Value
|
|
Fair Value
|
||||||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||
(in millions)
|
||||||||||||||||||||
Financial Assets
|
||||||||||||||||||||
Mortgage loans, net
|
$
|
2,986
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,972
|
|
|
$
|
2,972
|
|
|
Policy and certificate loans
|
831
|
|
|
—
|
|
|
1
|
|
|
807
|
|
|
808
|
|
|
|||||
Receivables
(2)
|
1,396
|
|
|
127
|
|
|
870
|
|
|
403
|
|
|
1,400
|
|
|
|||||
Restricted and segregated cash
|
2,905
|
|
|
2,905
|
|
|
—
|
|
|
—
|
|
|
2,905
|
|
|
|||||
Other investments and assets
|
508
|
|
|
—
|
|
|
449
|
|
|
61
|
|
|
510
|
|
|
|||||
|
||||||||||||||||||||
Financial Liabilities
|
||||||||||||||||||||
Policyholder account balances, future policy benefits and claims
|
$
|
10,906
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,417
|
|
|
$
|
11,417
|
|
|
Investment certificate reserves
|
5,927
|
|
|
—
|
|
|
—
|
|
|
5,914
|
|
|
5,914
|
|
|
|||||
Brokerage customer deposits
|
4,112
|
|
|
4,112
|
|
|
—
|
|
|
—
|
|
|
4,112
|
|
|
|||||
Separate account liabilities measured at NAV
|
4,253
|
|
|
|
|
|
|
|
|
4,253
|
|
(1)
|
||||||||
Debt and other liabilities
|
3,371
|
|
|
146
|
|
|
3,176
|
|
|
169
|
|
|
3,491
|
|
|
(1)
|
Amounts are comprised of certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy.
|
(2)
|
In the third quarter of 2017, the Company corrected the classification of the fair value of advisor loans, net from Level 2 to Level 3 as the valuation includes a significant unobservable input. The fair value levels at December 31, 2016 have been revised to reflect this change. The fair value of advisor loans, net was
$400 million
at December 31, 2016.
|
|
September 30, 2017
|
||||||||||||||||||||||||||
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Amounts of Assets Presented in the
Consolidated Balance Sheets |
|
Gross Amounts Not Offset in the
Consolidated Balance Sheets |
|
Net Amount
|
|||||||||||||||||||
Financial Instruments
(1)
|
|
Cash Collateral
|
|
Securities Collateral
|
|||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||||||
Derivatives:
|
|||||||||||||||||||||||||||
OTC
|
$
|
3,156
|
|
|
$
|
—
|
|
|
$
|
3,156
|
|
|
$
|
(2,379
|
)
|
|
$
|
(661
|
)
|
|
$
|
(109
|
)
|
|
$
|
7
|
|
OTC cleared
(2)
|
14
|
|
|
—
|
|
|
14
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Exchange-traded
|
20
|
|
|
—
|
|
|
20
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Total derivatives
|
3,190
|
|
|
—
|
|
|
3,190
|
|
|
(2,393
|
)
|
|
(661
|
)
|
|
(109
|
)
|
|
27
|
|
|||||||
Securities borrowed
|
196
|
|
|
—
|
|
|
196
|
|
|
(48
|
)
|
|
—
|
|
|
(145
|
)
|
|
3
|
|
|||||||
Total
|
$
|
3,386
|
|
|
$
|
—
|
|
|
$
|
3,386
|
|
|
$
|
(2,441
|
)
|
|
$
|
(661
|
)
|
|
$
|
(254
|
)
|
|
$
|
30
|
|
|
December 31, 2016
|
||||||||||||||||||||||||||
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Amounts of Assets Presented in the Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in the
Consolidated Balance Sheets |
|
Net Amount
|
|||||||||||||||||||
Financial Instruments
(1)
|
|
Cash Collateral
|
|
Securities Collateral
|
|||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||||||
Derivatives:
|
|||||||||||||||||||||||||||
OTC
|
$
|
2,920
|
|
|
$
|
—
|
|
|
$
|
2,920
|
|
|
$
|
(2,214
|
)
|
|
$
|
(406
|
)
|
|
$
|
(235
|
)
|
|
$
|
65
|
|
OTC cleared
|
512
|
|
|
—
|
|
|
512
|
|
|
(509
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||||||
Exchange-traded
|
14
|
|
|
—
|
|
|
14
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
Total derivatives
|
3,446
|
|
|
—
|
|
|
3,446
|
|
|
(2,725
|
)
|
|
(409
|
)
|
|
(235
|
)
|
|
77
|
|
|||||||
Securities borrowed
|
127
|
|
|
—
|
|
|
127
|
|
|
(16
|
)
|
|
—
|
|
|
(108
|
)
|
|
3
|
|
|||||||
Total
|
$
|
3,573
|
|
|
$
|
—
|
|
|
$
|
3,573
|
|
|
$
|
(2,741
|
)
|
|
$
|
(409
|
)
|
|
$
|
(343
|
)
|
|
$
|
80
|
|
|
September 30, 2017
|
||||||||||||||||||||||||||
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the
Consolidated Balance Sheets |
|
Amounts of Liabilities Presented in the Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in the
Consolidated Balance Sheets |
|
Net Amount
|
|||||||||||||||||||
Financial Instruments
(1)
|
|
Cash Collateral
|
|
Securities Collateral
|
|||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||||||
Derivatives:
|
|||||||||||||||||||||||||||
OTC
|
$
|
3,102
|
|
|
$
|
—
|
|
|
$
|
3,102
|
|
|
$
|
(2,379
|
)
|
|
$
|
(48
|
)
|
|
$
|
(669
|
)
|
|
$
|
6
|
|
OTC cleared
(2)
|
12
|
|
|
—
|
|
|
12
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Exchange-traded
|
2
|
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total derivatives
|
3,116
|
|
|
—
|
|
|
3,116
|
|
|
(2,393
|
)
|
|
(48
|
)
|
|
(669
|
)
|
|
6
|
|
|||||||
Securities loaned
|
202
|
|
|
—
|
|
|
202
|
|
|
(48
|
)
|
|
—
|
|
|
(150
|
)
|
|
4
|
|
|||||||
Repurchase agreements
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
2
|
|
|||||||
Total
|
$
|
3,368
|
|
|
$
|
—
|
|
|
$
|
3,368
|
|
|
$
|
(2,441
|
)
|
|
$
|
(48
|
)
|
|
$
|
(867
|
)
|
|
$
|
12
|
|
|
December 31, 2016
|
||||||||||||||||||||||||||
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated
Balance Sheets |
|
Amounts of Liabilities Presented in the
Consolidated Balance Sheets |
|
Gross Amounts Not Offset in the
Consolidated Balance Sheets |
|
Net Amount
|
|||||||||||||||||||
Financial Instruments
(1)
|
|
Cash Collateral
|
|
Securities Collateral
|
|||||||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||||||
Derivatives:
|
|||||||||||||||||||||||||||
OTC
|
$
|
2,626
|
|
|
$
|
—
|
|
|
$
|
2,626
|
|
|
$
|
(2,214
|
)
|
|
$
|
(53
|
)
|
|
$
|
(352
|
)
|
|
$
|
7
|
|
OTC cleared
|
539
|
|
|
—
|
|
|
539
|
|
|
(509
|
)
|
|
(25
|
)
|
|
—
|
|
|
5
|
|
|||||||
Exchange-traded
|
6
|
|
|
—
|
|
|
6
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||
Total derivatives
|
3,171
|
|
|
—
|
|
|
3,171
|
|
|
(2,725
|
)
|
|
(78
|
)
|
|
(352
|
)
|
|
16
|
|
|||||||
Securities loaned
|
146
|
|
|
—
|
|
|
146
|
|
|
(16
|
)
|
|
—
|
|
|
(125
|
)
|
|
5
|
|
|||||||
Repurchase agreements
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|||||||
Total
|
$
|
3,367
|
|
|
$
|
—
|
|
|
$
|
3,367
|
|
|
$
|
(2,741
|
)
|
|
$
|
(78
|
)
|
|
$
|
(527
|
)
|
|
$
|
21
|
|
|
Net Investment Income
|
|
Banking and Deposit Interest Expense
|
|
Distribution Expenses
|
|
Interest Credited
to Fixed Accounts
|
|
Benefits, Claims, Losses and Settlement Expenses
|
|
General and Administrative Expense
|
||||||||||||
(in millions)
|
|||||||||||||||||||||||
Three Months Ended September 30, 2017
|
|||||||||||||||||||||||
Interest rate contracts
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
Equity contracts
|
(10
|
)
|
|
1
|
|
|
13
|
|
|
18
|
|
|
(261
|
)
|
|
2
|
|
||||||
Credit contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Other contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||||
GMWB and GMAB embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
—
|
|
||||||
IUL embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
||||||
SMC embedded derivatives
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total gain (loss)
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
(6
|
)
|
|
$
|
(24
|
)
|
|
$
|
3
|
|
Nine Months Ended September 30, 2017
|
|||||||||||||||||||||||
Interest rate contracts
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61
|
|
|
$
|
—
|
|
Equity contracts
|
(7
|
)
|
|
3
|
|
|
36
|
|
|
50
|
|
|
(920
|
)
|
|
7
|
|
||||||
Credit contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
||||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(27
|
)
|
|
5
|
|
||||||
Other contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||||
GMWB and GMAB embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
569
|
|
|
—
|
|
||||||
IUL embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
||||||
SMC embedded derivatives
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total gain (loss)
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
7
|
|
|
$
|
(341
|
)
|
|
$
|
12
|
|
|
Net Investment Income
|
|
Banking and Deposit Interest Expense
|
|
Distribution Expenses
|
|
Interest Credited
to Fixed Accounts |
|
Benefits, Claims, Losses and Settlement Expenses
|
|
General and Administrative Expense
|
||||||||||||
(in millions)
|
|||||||||||||||||||||||
Three Months Ended September 30, 2016
|
|||||||||||||||||||||||
Interest rate contracts
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
Equity contracts
|
2
|
|
|
2
|
|
|
11
|
|
|
12
|
|
|
(385
|
)
|
|
2
|
|
||||||
Credit contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||||
Foreign exchange contracts
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
3
|
|
||||||
Other contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||||
GMWB and GMAB embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
209
|
|
|
—
|
|
||||||
IUL embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||||
SMC embedded derivatives
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total gain (loss)
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
11
|
|
|
$
|
7
|
|
|
$
|
(204
|
)
|
|
$
|
5
|
|
Nine Months Ended September 30, 2016
|
|||||||||||||||||||||||
Interest rate contracts
|
$
|
(54
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,175
|
|
|
$
|
—
|
|
Equity contracts
|
2
|
|
|
1
|
|
|
13
|
|
|
10
|
|
|
(536
|
)
|
|
3
|
|
||||||
Credit contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
||||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(66
|
)
|
|
15
|
|
||||||
Other contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||||
GMWB and GMAB embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(905
|
)
|
|
—
|
|
||||||
IUL embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
||||||
SMC embedded derivatives
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total gain (loss)
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
22
|
|
|
$
|
(368
|
)
|
|
$
|
18
|
|
|
Premiums Payable
|
|
Premiums Receivable
|
||||
(in millions)
|
|||||||
2017
(1)
|
$
|
98
|
|
|
$
|
26
|
|
2018
|
232
|
|
|
131
|
|
||
2019
|
295
|
|
|
171
|
|
||
2020
|
217
|
|
|
100
|
|
||
2021
|
187
|
|
|
109
|
|
||
2022 - 2027
|
739
|
|
|
183
|
|
||
Total
|
$
|
1,768
|
|
|
$
|
720
|
|
Derivatives designated as
hedging instruments
|
Location of Gain Recorded into Income
|
Amount of Gain Recognized in Income on Derivatives
|
||||||||||||||||
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||||
|
(in millions)
|
|||||||||||||||||
Interest rate contracts
|
Interest and debt expense
|
$
|
4
|
|
$
|
5
|
|
|
$
|
12
|
|
$
|
15
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
2017
|
|
2016
|
|||||||||||||||||||||
Pretax
|
Income Tax Benefit
(Expense)
|
Net of Tax
|
Pretax
|
Income Tax Benefit
(Expense)
|
Net of Tax
|
||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||
Net unrealized securities
gains (losses)
:
|
|||||||||||||||||||||||
Net unrealized securities
gains (losses)
arising during the period
(1)
|
$
|
60
|
|
|
$
|
(22
|
)
|
|
$
|
38
|
|
|
$
|
82
|
|
|
$
|
(31
|
)
|
|
$
|
51
|
|
Reclassification of net securities (gains) losses included in net income
(2)
|
(4
|
)
|
|
1
|
|
|
(3
|
)
|
|
(8
|
)
|
|
4
|
|
|
(4
|
)
|
||||||
Impact of deferred acquisition costs, deferred sales inducement costs, unearned revenue, benefit reserves and reinsurance recoverables
|
(61
|
)
|
|
22
|
|
|
(39
|
)
|
|
(114
|
)
|
|
39
|
|
|
(75
|
)
|
||||||
Net unrealized securities
gains (losses)
|
(5
|
)
|
|
1
|
|
|
(4
|
)
|
|
(40
|
)
|
|
12
|
|
|
(28
|
)
|
||||||
|
|||||||||||||||||||||||
Net unrealized derivatives
gains (losses)
:
|
|||||||||||||||||||||||
Reclassification of net derivative (gains) losses included in net income
(3)
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Net unrealized derivatives
gains (losses)
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
|
|||||||||||||||||||||||
Defined benefit plans:
|
|||||||||||||||||||||||
Net gain arising during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Defined benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|||||||||||||||||||||||
Foreign currency translation
|
25
|
|
|
(9
|
)
|
|
16
|
|
|
(26
|
)
|
|
10
|
|
|
(16
|
)
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total other comprehensive income (loss)
|
$
|
21
|
|
|
$
|
(8
|
)
|
|
$
|
13
|
|
|
$
|
(65
|
)
|
|
$
|
22
|
|
|
$
|
(43
|
)
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
2017
|
|
2016
|
|||||||||||||||||||||
Pretax
|
Income Tax Benefit
(Expense)
|
Net of Tax
|
Pretax
|
Income Tax Benefit
(Expense)
|
Net of Tax
|
||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||
Net unrealized securities
gains (losses)
:
|
|||||||||||||||||||||||
Net unrealized securities
gains (losses)
arising during the period
(1)
|
$
|
304
|
|
|
$
|
(107
|
)
|
|
$
|
197
|
|
|
$
|
1,134
|
|
|
$
|
(398
|
)
|
|
$
|
736
|
|
Reclassification of net securities (gains) losses included in net income
(2)
|
(43
|
)
|
|
15
|
|
|
(28
|
)
|
|
(12
|
)
|
|
5
|
|
|
(7
|
)
|
||||||
Impact of deferred acquisition costs, deferred sales inducement costs, unearned revenue, benefit reserves and reinsurance recoverables
|
(168
|
)
|
|
59
|
|
|
(109
|
)
|
|
(533
|
)
|
|
186
|
|
|
(347
|
)
|
||||||
Net unrealized securities
gains (losses)
|
93
|
|
|
(33
|
)
|
|
60
|
|
|
589
|
|
|
(207
|
)
|
|
382
|
|
||||||
|
|||||||||||||||||||||||
Net unrealized derivatives
gains (losses)
:
|
|||||||||||||||||||||||
Reclassification of net derivative (gains) losses included in net income
(4)
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||||
Net unrealized derivatives
gains (losses)
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
2017
|
|
2016
|
|||||||||||||||||||||
Pretax
|
Income Tax Benefit
(Expense)
|
Net of Tax
|
Pretax
|
Income Tax Benefit
(Expense)
|
Net of Tax
|
||||||||||||||||||
(in millions)
|
|||||||||||||||||||||||
Defined benefit plans:
|
|||||||||||||||||||||||
Net gain arising during the period
|
7
|
|
|
(2
|
)
|
|
5
|
|
|
9
|
|
|
(3
|
)
|
|
6
|
|
||||||
Defined benefit plans
|
7
|
|
|
(2
|
)
|
|
5
|
|
|
9
|
|
|
(3
|
)
|
|
6
|
|
||||||
|
|||||||||||||||||||||||
Foreign currency translation
|
71
|
|
|
(25
|
)
|
|
46
|
|
|
(85
|
)
|
|
30
|
|
|
(55
|
)
|
||||||
Other
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total other comprehensive income (loss)
|
$
|
173
|
|
|
$
|
(61
|
)
|
|
$
|
112
|
|
|
$
|
517
|
|
|
$
|
(181
|
)
|
|
$
|
336
|
|
|
Net Unrealized Securities Gains
|
|
Net Unrealized Derivatives Gains
|
|
Defined
Benefit Plans
|
|
Foreign Currency Translation
|
|
Other
|
|
Total
|
||||||||||||
(in millions)
|
|||||||||||||||||||||||
Balance, July 1, 2017
|
$
|
543
|
|
|
$
|
6
|
|
|
$
|
(120
|
)
|
|
$
|
(129
|
)
|
|
$
|
(1
|
)
|
|
$
|
299
|
|
OCI before reclassifications
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
15
|
|
||||||
Amounts reclassified from AOCI
|
(3
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Total OCI
|
(4
|
)
|
|
1
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
13
|
|
||||||
Balance, September 30, 2017
|
$
|
539
|
|
(1)
|
$
|
7
|
|
|
$
|
(120
|
)
|
|
$
|
(113
|
)
|
|
$
|
(1
|
)
|
|
$
|
312
|
|
Balance, January 1, 2017
|
$
|
479
|
|
|
$
|
5
|
|
|
$
|
(125
|
)
|
|
$
|
(159
|
)
|
|
$
|
—
|
|
|
$
|
200
|
|
OCI before reclassifications
|
88
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
(1
|
)
|
|
133
|
|
||||||
Amounts reclassified from AOCI
|
(28
|
)
|
|
2
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
||||||
Total OCI
|
60
|
|
|
2
|
|
|
5
|
|
|
46
|
|
|
(1
|
)
|
|
112
|
|
||||||
Balance, September 30, 2017
|
$
|
539
|
|
(1)
|
$
|
7
|
|
|
$
|
(120
|
)
|
|
$
|
(113
|
)
|
|
$
|
(1
|
)
|
|
$
|
312
|
|
|
Net Unrealized Securities Gains
|
|
Net Unrealized Derivatives Gains
|
|
Defined Benefit Plans
|
|
Foreign Currency Translation
|
|
Total
|
||||||||||||
(in millions)
|
|||||||||||||||||||||
Balance, July 1, 2016
|
$
|
842
|
|
|
$
|
3
|
|
|
$
|
(85
|
)
|
|
$
|
(122
|
)
|
|
$
|
638
|
|
||
OCI before reclassifications
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(40
|
)
|
|||||||
Amounts reclassified from AOCI
|
(4
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||||
Total OCI
|
(28
|
)
|
|
1
|
|
|
—
|
|
|
(16
|
)
|
|
(43
|
)
|
|||||||
Balance, September 30, 2016
|
$
|
814
|
|
(1)
|
$
|
4
|
|
|
$
|
(85
|
)
|
|
$
|
(138
|
)
|
|
$
|
595
|
|
Balance, January 1, 2016
|
$
|
426
|
|
|
$
|
1
|
|
|
$
|
(91
|
)
|
|
$
|
(83
|
)
|
|
$
|
253
|
|
||
Cumulative effect of change in accounting policies
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Balance, January 1, 2016, as adjusted
|
432
|
|
|
1
|
|
|
(91
|
)
|
|
(83
|
)
|
|
259
|
|
|||||||
OCI before reclassifications
|
389
|
|
|
—
|
|
|
—
|
|
|
(55
|
)
|
|
334
|
|
|||||||
Amounts reclassified from AOCI
|
(7
|
)
|
|
3
|
|
|
6
|
|
|
—
|
|
|
2
|
|
|||||||
Total OCI
|
382
|
|
|
3
|
|
|
6
|
|
|
(55
|
)
|
|
336
|
|
|||||||
Balance, September 30, 2016
|
$
|
814
|
|
(1)
|
$
|
4
|
|
|
$
|
(85
|
)
|
|
$
|
(138
|
)
|
|
$
|
595
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions, except per share amounts)
|
|||||||||||||||
Numerator:
|
|||||||||||||||
Net income
|
$
|
503
|
|
|
$
|
215
|
|
|
$
|
1,299
|
|
|
$
|
914
|
|
|
|||||||||||||||
Denominator:
|
|||||||||||||||
Basic: Weighted-average common shares outstanding
|
153.0
|
|
|
164.0
|
|
|
155.2
|
|
|
168.3
|
|
||||
Effect of potentially dilutive nonqualified stock options and other share-based awards
|
2.4
|
|
|
1.8
|
|
|
2.4
|
|
|
1.8
|
|
||||
Diluted: Weighted-average common shares outstanding
|
155.4
|
|
|
165.8
|
|
|
157.6
|
|
|
170.1
|
|
||||
|
|||||||||||||||
Earnings per share:
|
|||||||||||||||
Basic
|
$
|
3.29
|
|
|
$
|
1.31
|
|
|
$
|
8.37
|
|
|
$
|
5.43
|
|
Diluted
|
$
|
3.24
|
|
|
$
|
1.30
|
|
|
$
|
8.24
|
|
|
$
|
5.37
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
(in millions)
|
|||||||
Advice & Wealth Management
|
$
|
13,407
|
|
|
$
|
12,654
|
|
Asset Management
|
8,163
|
|
|
7,254
|
|
||
Annuities
|
96,656
|
|
|
93,481
|
|
||
Protection
|
17,543
|
|
|
16,780
|
|
||
Corporate & Other
|
9,717
|
|
|
9,652
|
|
||
Total assets
|
$
|
145,486
|
|
|
$
|
139,821
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions)
|
|||||||||||||||
Operating net revenues:
|
|||||||||||||||
Advice & Wealth Management
|
$
|
1,383
|
|
|
$
|
1,272
|
|
|
$
|
4,026
|
|
|
$
|
3,720
|
|
Asset Management
|
778
|
|
|
740
|
|
|
2,252
|
|
|
2,203
|
|
||||
Annuities
|
626
|
|
|
631
|
|
|
1,861
|
|
|
1,846
|
|
||||
Protection
|
478
|
|
|
613
|
|
|
1,516
|
|
|
1,693
|
|
||||
Corporate & Other
|
50
|
|
|
51
|
|
|
162
|
|
|
178
|
|
||||
Eliminations
(1)(2)
|
(348
|
)
|
|
(353
|
)
|
|
(1,040
|
)
|
|
(1,042
|
)
|
||||
Total segment operating revenues
|
2,967
|
|
|
2,954
|
|
|
8,777
|
|
|
8,598
|
|
||||
Net realized investment gains (losses)
|
(3
|
)
|
|
6
|
|
|
35
|
|
|
(5
|
)
|
||||
Revenues attributable to CIEs
|
23
|
|
|
27
|
|
|
70
|
|
|
77
|
|
||||
Market impact on IUL benefits
|
(5
|
)
|
|
6
|
|
|
(7
|
)
|
|
18
|
|
||||
Market impact of hedges on investments
|
(1
|
)
|
|
5
|
|
|
(8
|
)
|
|
(54
|
)
|
||||
Total net revenues per consolidated statements of operations
(3)(4)
|
$
|
2,981
|
|
|
$
|
2,998
|
|
|
$
|
8,867
|
|
|
$
|
8,634
|
|
(2)
|
Represents the elimination of intersegment revenues recognized for the
nine
months ended
September 30, 2017
and
2016
in each segment as follows: Advice & Wealth Management (
$701 million
and
$727 million
, respectively); Asset Management (
$35 million
and
$33 million
, respectively); Annuities (
$259 million
and
$247 million
, respectively); Protection (
$46 million
and
$34 million
, respectively); and Corporate & Other (
$(1) million
and
$1 million
, respectively).
|
(4)
|
Includes foreign net revenues of
$539 million
and
$500 million
for the
nine
months ended
September 30, 2017
and
2016
, respectively.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions)
|
|||||||||||||||
Operating earnings:
|
|||||||||||||||
Advice & Wealth Management
|
$
|
298
|
|
|
$
|
231
|
|
|
$
|
837
|
|
|
$
|
657
|
|
Asset Management
|
200
|
|
|
155
|
|
|
526
|
|
|
452
|
|
||||
Annuities
|
281
|
|
|
(68
|
)
|
|
562
|
|
|
202
|
|
||||
Protection
|
55
|
|
|
84
|
|
|
169
|
|
|
190
|
|
||||
Corporate & Other
|
(136
|
)
|
|
(145
|
)
|
|
(292
|
)
|
|
(271
|
)
|
||||
Total segment operating earnings
|
698
|
|
|
257
|
|
|
1,802
|
|
|
1,230
|
|
||||
Net realized investment gains (losses)
|
(3
|
)
|
|
6
|
|
|
33
|
|
|
(5
|
)
|
||||
Net income (loss) attributable to CIEs
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
||||
Market impact on variable annuity guaranteed benefits
|
(55
|
)
|
|
(37
|
)
|
|
(198
|
)
|
|
(78
|
)
|
||||
Market impact on IUL benefits
|
(10
|
)
|
|
7
|
|
|
(16
|
)
|
|
31
|
|
||||
Market impact of hedges on investments
|
(1
|
)
|
|
5
|
|
|
(8
|
)
|
|
(54
|
)
|
||||
Integration and restructuring charges
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Pretax income per consolidated statements of operations
|
$
|
628
|
|
|
$
|
238
|
|
|
$
|
1,614
|
|
|
$
|
1,123
|
|
•
|
Advice & Wealth Management;
|
•
|
Asset Management;
|
•
|
Annuities;
|
•
|
Protection; and
|
•
|
Corporate & Other.
|
•
|
Operating total net revenue growth of 6% to 8%,
|
•
|
Operating earnings per diluted share growth of 12% to 15%, and
|
•
|
Operating return on equity excluding accumulated other comprehensive income (“AOCI”) of 19% to 23%.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
(in millions)
|
|||||||||||||||
Total net revenues
|
$
|
2,981
|
|
|
$
|
2,998
|
|
|
$
|
8,867
|
|
|
$
|
8,634
|
|
Less: Revenue attributable to CIEs
|
23
|
|
|
27
|
|
|
70
|
|
|
77
|
|
||||
Less: Net realized investment gains (losses)
|
(3
|
)
|
|
6
|
|
|
35
|
|
|
(5
|
)
|
||||
Less: Market impact on indexed universal life benefits
|
(5
|
)
|
|
6
|
|
|
(7
|
)
|
|
18
|
|
||||
Less: Market impact of hedges on investments
|
(1
|
)
|
|
5
|
|
|
(8
|
)
|
|
(54
|
)
|
||||
Operating total net revenues
|
$
|
2,967
|
|
|
$
|
2,954
|
|
|
$
|
8,777
|
|
|
$
|
8,598
|
|
|
Three Months Ended September 30,
|
|
Per Diluted Share
|
||||||||||||
Three Months Ended September 30,
|
|||||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions, except per share amounts)
|
|||||||||||||||
Net income
|
$
|
503
|
|
|
$
|
215
|
|
|
$
|
3.24
|
|
|
$
|
1.30
|
|
Add: Integration/restructuring charges
(1)
|
1
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Add: Market impact on variable annuity guaranteed benefits
(1)
|
55
|
|
|
37
|
|
|
0.35
|
|
|
0.22
|
|
||||
Add: Market impact on indexed universal life benefits
(1)
|
10
|
|
|
(7
|
)
|
|
0.06
|
|
|
(0.04
|
)
|
||||
Add: Market impact of hedges on investments
(1)
|
1
|
|
|
(5
|
)
|
|
0.01
|
|
|
(0.03
|
)
|
||||
Less: Net realized investment gains
(losses)
(1)
|
(3
|
)
|
|
6
|
|
|
(0.02
|
)
|
|
0.04
|
|
||||
Tax effect of adjustments
(2)
|
(25
|
)
|
|
(7
|
)
|
|
(0.16
|
)
|
|
(0.04
|
)
|
||||
Operating earnings
|
$
|
548
|
|
|
$
|
227
|
|
|
$
|
3.53
|
|
|
$
|
1.37
|
|
|
|||||||||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
153.0
|
|
|
164.0
|
|
|
|
|
|
|
|
||||
Diluted
|
155.4
|
|
|
165.8
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
Per Diluted Share
|
||||||||||||
Nine Months Ended September 30,
|
|||||||||||||||
2017
|
|
2016
|
2017
|
|
2016
|
||||||||||
(in millions, except per share amounts)
|
|||||||||||||||
Net income
|
$
|
1,299
|
|
|
$
|
914
|
|
|
$
|
8.24
|
|
|
$
|
5.37
|
|
Less: Net income (loss) attributable to CIEs
|
1
|
|
|
(1
|
)
|
|
0.01
|
|
|
(0.01
|
)
|
||||
Add: Integration/restructuring charges
(1)
|
1
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Add: Market impact on variable annuity guaranteed benefits
(1)
|
198
|
|
|
78
|
|
|
1.26
|
|
|
0.46
|
|
||||
Add: Market impact on indexed universal life benefits
(1)
|
16
|
|
|
(31
|
)
|
|
0.10
|
|
|
(0.18
|
)
|
||||
Add: Market impact of hedges on investments
(1)
|
8
|
|
|
54
|
|
|
0.05
|
|
|
0.31
|
|
||||
Less: Net realized investment gains (losses)
(1)
|
33
|
|
|
(5
|
)
|
|
0.21
|
|
|
(0.03
|
)
|
||||
Tax effect of adjustments
(2)
|
(67
|
)
|
|
(37
|
)
|
|
(0.42
|
)
|
|
(0.22
|
)
|
||||
Operating earnings
|
$
|
1,421
|
|
|
$
|
984
|
|
|
$
|
9.02
|
|
|
$
|
5.78
|
|
|
|||||||||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
155.2
|
|
|
168.3
|
|
|
|
|
|
|
|
||||
Diluted
|
157.6
|
|
|
170.1
|
|
|
|
|
|
|
|
|
Twelve Months Ended September 30,
|
||||||
2017
|
|
2016
|
|||||
(in millions)
|
|||||||
Net income attributable to Ameriprise Financial
|
$
|
1,699
|
|
|
$
|
1,271
|
|
Less: Adjustments
(1)
|
(165
|
)
|
|
(154
|
)
|
||
Operating earnings
|
$
|
1,864
|
|
|
$
|
1,425
|
|
|
|||||||
Total Ameriprise Financial, Inc. shareholders’ equity
|
$
|
6,369
|
|
|
$
|
7,139
|
|
Less: AOCI, net of tax
|
325
|
|
|
478
|
|
||
Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI
|
6,044
|
|
|
6,661
|
|
||
Less: Equity impacts attributable to CIEs
|
1
|
|
|
62
|
|
||
Operating equity
|
$
|
6,043
|
|
|
$
|
6,599
|
|
|
|||||||
Return on equity, excluding AOCI
|
28.1
|
%
|
|
19.1
|
%
|
||
Operating return on equity, excluding AOCI
(2)
|
30.8
|
%
|
|
21.6
|
%
|
(1)
|
Adjustments reflect the trailing twelve months’ sum of after-tax net realized investment gains/losses, net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on variable annuity guaranteed benefits, net of hedges and related DSIC and DAC amortization; the market impact on indexed universal life benefits, net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; integration and restructuring charges; and net income (loss) from consolidated investment entities. After-tax is calculated using the statutory tax rate of 35%.
|
(2)
|
Operating return on equity, excluding AOCI, is calculated using the trailing twelve months of earnings excluding the after-tax net realized investment gains/losses, net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; market impact on variable annuity guaranteed benefits, net of hedges and related DSIC and DAC amortization; the market impact on indexed universal benefits, net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; integration and restructuring charges; and net income (loss) from consolidated investment entities in the numerator, and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory rate of 35%.
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
1,626
|
|
|
$
|
1,464
|
|
|
$
|
162
|
|
|
11
|
%
|
Distribution fees
|
437
|
|
|
455
|
|
|
(18
|
)
|
|
(4
|
)
|
|||
Net investment income
|
372
|
|
|
387
|
|
|
(15
|
)
|
|
(4
|
)
|
|||
Premiums
|
348
|
|
|
374
|
|
|
(26
|
)
|
|
(7
|
)
|
|||
Other revenues
|
210
|
|
|
330
|
|
|
(120
|
)
|
|
(36
|
)
|
|||
Total revenues
|
2,993
|
|
|
3,010
|
|
|
(17
|
)
|
|
(1
|
)
|
|||
Banking and deposit interest expense
|
12
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
2,981
|
|
|
2,998
|
|
|
(17
|
)
|
|
(1
|
)
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
850
|
|
|
798
|
|
|
52
|
|
|
7
|
|
|||
Interest credited to fixed accounts
|
176
|
|
|
161
|
|
|
15
|
|
|
9
|
|
|||
Benefits, claims, losses and settlement expenses
|
474
|
|
|
855
|
|
|
(381
|
)
|
|
(45
|
)
|
|||
Amortization of deferred acquisition costs
|
48
|
|
|
163
|
|
|
(115
|
)
|
|
(71
|
)
|
|||
Interest and debt expense
|
52
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|||
General and administrative expense
|
753
|
|
|
731
|
|
|
22
|
|
|
3
|
|
|||
Total expenses
|
2,353
|
|
|
2,760
|
|
|
(407
|
)
|
|
(15
|
)%
|
|||
Pretax income
|
628
|
|
|
238
|
|
|
390
|
|
|
NM
|
|
|||
Income tax provision
|
125
|
|
|
23
|
|
|
102
|
|
|
NM
|
|
|||
Net income
|
$
|
503
|
|
|
$
|
215
|
|
|
$
|
288
|
|
|
NM
|
|
NM Not Meaningful.
|
Pretax Increase (Decrease)
|
|
2017
|
|
2016
|
||||
|
|
(in millions)
|
||||||
Other revenues
|
|
$
|
(47
|
)
|
|
$
|
64
|
|
Total revenues
|
|
(47
|
)
|
|
64
|
|
||
|
|
|
|
|
||||
Distribution expenses
|
|
—
|
|
|
(27
|
)
|
||
Benefits, claims, losses and settlement expenses
|
|
(139
|
)
|
|
229
|
|
||
Amortization of DAC
|
|
(12
|
)
|
|
81
|
|
||
Total expenses
|
|
(151
|
)
|
|
283
|
|
||
Total
(1)
|
|
$
|
104
|
|
|
$
|
(219
|
)
|
(1)
Includes a $5 million and $16 million net benefit related to the market impact on variable annuity guaranteed benefits for the three months ended September 30, 2017 and 2016, respectively.
|
•
|
The three months ended September 30, 2017 included a $139 million benefit from unlocking compared to a $229 million expense in the prior year period. The unlocking impact for the third quarter of 2017 primarily reflected a benefit from updates to market-related inputs to our living benefit valuation. The unlocking impact for the prior year period primarily reflected low interest rates and an unfavorable impact from persistency on living benefit reserves, partially offset by a benefit from updates to withdrawal utilization and fee assumptions, as well as market-related inputs to our living benefit valuation.
|
•
|
A $29 million increase in LTC reserves from a correction related to our claim utilization assumption in the third quarter of 2016.
|
•
|
A $26 million decrease in auto and home expenses reflecting the impact of new reinsurance arrangements, a lower non-catastrophe loss ratio and an $8 million benefit from a correction of a reinsurance recoverable estimate, partially offset by higher gross catastrophe losses and a $10 million positive impact from prior year reserve development in the third quarter of 2016. Catastrophe losses, net of the impact of reinsurance, were $15 million for the three months ended
September 30, 2017
, primarily related to Hurricanes Harvey and Irma, compared to $29 million for the prior year period. In the first quarter of 2017, we entered into quota share and excess of loss reinsurance arrangements designed to reduce net retained exposure to property losses. The expanded reinsurance program resulted in ceded losses of approximately $38 million in the third quarter.
|
•
|
A $57 million expense from loss recognition on LTC insurance products in the third quarter of 2017 primarily due to unfavorable morbidity experience, partially offset by premium increases.
|
|
Three Months Ended September 30,
|
||||||
2017
|
|
2016
|
|||||
(in millions)
|
|||||||
Advice & Wealth Management
|
|
|
|
|
|
||
Net revenues
|
$
|
1,383
|
|
|
$
|
1,272
|
|
Expenses
|
1,085
|
|
|
1,041
|
|
||
Operating earnings
|
$
|
298
|
|
|
$
|
231
|
|
Asset Management
|
|
|
|
|
|
||
Net revenues
|
$
|
778
|
|
|
$
|
740
|
|
Expenses
|
578
|
|
|
585
|
|
||
Operating earnings
|
$
|
200
|
|
|
$
|
155
|
|
Annuities
|
|
|
|
|
|
||
Net revenues
|
$
|
626
|
|
|
$
|
631
|
|
Expenses
|
345
|
|
|
699
|
|
||
Operating earnings (loss)
|
$
|
281
|
|
|
$
|
(68
|
)
|
Protection
|
|
|
|
|
|
||
Net revenues
|
$
|
478
|
|
|
$
|
613
|
|
Expenses
|
423
|
|
|
529
|
|
||
Operating earnings
|
$
|
55
|
|
|
$
|
84
|
|
Corporate & Other
|
|
|
|
|
|
||
Net revenues
|
$
|
50
|
|
|
$
|
51
|
|
Expenses
|
186
|
|
|
196
|
|
||
Operating loss
|
$
|
(136
|
)
|
|
$
|
(145
|
)
|
Segment Pretax Operating Increase (Decrease)
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
2017
|
|
2016
|
||||||||||||||||||||||
Annuities
|
|
Protection
|
|
Corporate
|
Annuities
|
|
Protection
|
|
Corporate
|
|||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Other revenues
|
|
$
|
—
|
|
|
$
|
(47
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
—
|
|
Total revenues
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distribution expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
||||||
Benefits, claims, losses and settlement expenses
|
|
(119
|
)
|
|
(14
|
)
|
|
1
|
|
|
197
|
|
|
40
|
|
|
6
|
|
||||||
Amortization of DAC
|
|
(1
|
)
|
|
(13
|
)
|
|
—
|
|
|
18
|
|
|
7
|
|
|
58
|
|
||||||
Total expenses
|
|
(120
|
)
|
|
(27
|
)
|
|
1
|
|
|
215
|
|
|
47
|
|
|
37
|
|
||||||
Total
|
|
$
|
120
|
|
|
$
|
(20
|
)
|
|
$
|
(1
|
)
|
|
$
|
(215
|
)
|
|
$
|
17
|
|
|
$
|
(37
|
)
|
|
2017
|
|
2016
|
||||
(in billions)
|
|||||||
Beginning balance
|
$
|
222.3
|
|
|
$
|
189.7
|
|
Inflows from acquisition
(1)
|
0.7
|
|
|
—
|
|
||
Other net flows
|
5.4
|
|
|
2.8
|
|
||
Net flows
|
6.1
|
|
|
2.8
|
|
||
Market appreciation (depreciation) and other
|
6.8
|
|
|
5.0
|
|
||
Ending balance
|
$
|
235.2
|
|
|
$
|
197.5
|
|
|
|
|
|
||||
Advisory wrap account assets ending balance
(2)
|
$
|
233.0
|
|
|
$
|
195.4
|
|
Average advisory wrap account assets
(3)
|
$
|
227.0
|
|
|
$
|
192.7
|
|
(1)
|
Inflows associated with acquisition that closed during the period.
|
(2)
|
Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.
|
(3)
|
Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.
|
|
2017
|
|
2016
|
||||
(in billions)
|
|||||||
Beginning balance
|
$
|
197.5
|
|
|
$
|
173.8
|
|
Inflows from acquisition
(1)
|
0.7
|
|
|
—
|
|
||
Other net flows
|
17.1
|
|
|
9.0
|
|
||
Net flows
|
17.8
|
|
|
9.0
|
|
||
Market appreciation (depreciation) and other
|
19.9
|
|
|
14.7
|
|
||
Ending balance
|
$
|
235.2
|
|
|
$
|
197.5
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
799
|
|
|
$
|
689
|
|
|
$
|
110
|
|
|
16
|
%
|
Distribution fees
|
515
|
|
|
531
|
|
|
(16
|
)
|
|
(3
|
)
|
|||
Net investment income
|
64
|
|
|
47
|
|
|
17
|
|
|
36
|
|
|||
Other revenues
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
1,395
|
|
|
1,284
|
|
|
111
|
|
|
9
|
|
|||
Banking and deposit interest expense
|
12
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
1,383
|
|
|
1,272
|
|
|
111
|
|
|
9
|
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
813
|
|
|
781
|
|
|
32
|
|
|
4
|
|
|||
Interest and debt expense
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||
General and administrative expense
|
270
|
|
|
258
|
|
|
12
|
|
|
5
|
|
|||
Total expenses
|
1,085
|
|
|
1,041
|
|
|
44
|
|
|
4
|
|
|||
Operating earnings
|
$
|
298
|
|
|
$
|
231
|
|
|
$
|
67
|
|
|
29
|
%
|
Columbia
Mutual Fund Rankings in top 2 Lipper Quartiles |
2017
|
|
2016
|
||||
Domestic Equity
|
Equal weighted
|
1 year
|
72
|
%
|
|
62
|
%
|
|
|
3 year
|
75
|
%
|
|
68
|
%
|
|
|
5 year
|
78
|
%
|
|
67
|
%
|
|
Asset weighted
|
1 year
|
68
|
%
|
|
74
|
%
|
|
|
3 year
|
82
|
%
|
|
78
|
%
|
|
|
5 year
|
82
|
%
|
|
84
|
%
|
International Equity
|
Equal weighted
|
1 year
|
75
|
%
|
|
55
|
%
|
|
|
3 year
|
55
|
%
|
|
60
|
%
|
|
|
5 year
|
75
|
%
|
|
80
|
%
|
|
Asset weighted
|
1 year
|
56
|
%
|
|
73
|
%
|
|
|
3 year
|
44
|
%
|
|
44
|
%
|
|
|
5 year
|
55
|
%
|
|
52
|
%
|
Taxable Fixed Income
|
Equal weighted
|
1 year
|
72
|
%
|
|
78
|
%
|
|
|
3 year
|
78
|
%
|
|
71
|
%
|
|
|
5 year
|
76
|
%
|
|
76
|
%
|
|
Asset weighted
|
1 year
|
74
|
%
|
|
82
|
%
|
|
|
3 year
|
83
|
%
|
|
76
|
%
|
|
|
5 year
|
87
|
%
|
|
85
|
%
|
Tax Exempt Fixed Income
|
Equal weighted
|
1 year
|
74
|
%
|
|
84
|
%
|
|
|
3 year
|
89
|
%
|
|
89
|
%
|
|
|
5 year
|
100
|
%
|
|
94
|
%
|
|
Asset weighted
|
1 year
|
60
|
%
|
|
92
|
%
|
|
|
3 year
|
98
|
%
|
|
81
|
%
|
|
|
5 year
|
100
|
%
|
|
88
|
%
|
Asset Allocation Funds
|
Equal weighted
|
1 year
|
54
|
%
|
|
69
|
%
|
|
|
3 year
|
90
|
%
|
|
100
|
%
|
|
|
5 year
|
78
|
%
|
|
75
|
%
|
|
Asset weighted
|
1 year
|
47
|
%
|
|
87
|
%
|
|
|
3 year
|
94
|
%
|
|
100
|
%
|
|
|
5 year
|
93
|
%
|
|
81
|
%
|
Number of funds with 4 or 5 Morningstar star ratings
|
|
Overall
|
51
|
|
|
54
|
|
|
|
3 year
|
56
|
|
|
54
|
|
|
|
5 year
|
49
|
|
|
52
|
|
Percent of funds with 4 or 5 Morningstar star ratings
|
|
Overall
|
50
|
%
|
|
56
|
%
|
|
|
3 year
|
55
|
%
|
|
56
|
%
|
|
|
5 year
|
49
|
%
|
|
55
|
%
|
Percent of assets with 4 or 5 Morningstar star ratings
|
|
Overall
|
58
|
%
|
|
68
|
%
|
|
|
3 year
|
66
|
%
|
|
75
|
%
|
|
|
5 year
|
57
|
%
|
|
67
|
%
|
Fixed Income
|
Equal weighted
|
1 year
|
76
|
%
|
|
58
|
%
|
|
|
3 year
|
79
|
%
|
|
50
|
%
|
|
|
5 year
|
76
|
%
|
|
64
|
%
|
|
Asset weighted
|
1 year
|
85
|
%
|
|
57
|
%
|
|
|
3 year
|
90
|
%
|
|
69
|
%
|
|
|
5 year
|
92
|
%
|
|
73
|
%
|
Allocation (Managed) Funds
|
Equal weighted
|
1 year
|
78
|
%
|
|
88
|
%
|
|
|
3 year
|
89
|
%
|
|
88
|
%
|
|
|
5 year
|
86
|
%
|
|
83
|
%
|
|
Asset weighted
|
1 year
|
61
|
%
|
|
80
|
%
|
|
|
3 year
|
94
|
%
|
|
97
|
%
|
|
|
5 year
|
93
|
%
|
|
92
|
%
|
|
Three Months Ended September 30,
|
|||||||
2017
|
|
2016
|
||||||
(in billions)
|
||||||||
Global Retail Funds
|
||||||||
Beginning assets
|
$
|
272.9
|
|
—
|
|
$
|
259.2
|
|
Inflows
|
10.9
|
|
—
|
|
12.3
|
|
||
Acquisition related inflows
(1)
|
—
|
|
|
1.0
|
|
|||
Outflows
|
(12.3
|
)
|
—
|
|
(14.2
|
)
|
||
Net VP/VIT fund flows
|
(0.8
|
)
|
—
|
|
(0.6
|
)
|
||
Net new flows
|
(2.2
|
)
|
|
(1.5
|
)
|
|||
Reinvested dividends
|
0.5
|
|
—
|
|
0.6
|
|
||
Net flows
|
(1.7
|
)
|
|
(0.9
|
)
|
|||
Distributions
|
(0.7
|
)
|
—
|
|
(0.9
|
)
|
||
Market appreciation (depreciation) and other
|
9.2
|
|
—
|
|
9.5
|
|
||
Foreign currency translation
(2)
|
1.1
|
|
—
|
|
(0.9
|
)
|
||
Total ending assets
|
280.8
|
|
|
266.0
|
|
|||
|
||||||||
Global Institutional
|
||||||||
Beginning assets
|
199.7
|
|
—
|
|
200.4
|
|
||
Inflows
|
5.8
|
|
—
|
|
5.1
|
|
||
Outflows
|
(8.8
|
)
|
—
|
|
(8.5
|
)
|
||
Net flows
|
(3.0
|
)
|
|
(3.4
|
)
|
|||
Market appreciation (depreciation) and other
(3)
|
4.1
|
|
—
|
|
7.1
|
|
||
Foreign currency translation
(2)
|
2.4
|
|
—
|
|
(2.3
|
)
|
||
Total ending assets
|
203.2
|
|
|
201.8
|
|
|||
Total managed assets
|
$
|
484.0
|
|
|
$
|
467.8
|
|
|
Total net flows
|
$
|
(4.7
|
)
|
|
$
|
(4.3
|
)
|
|
|
||||||||
Former Parent Company Related
(4)(5)
|
||||||||
Retail net new flows
|
$
|
(0.6
|
)
|
—
|
|
$
|
—
|
|
Institutional net new flows
|
(2.4
|
)
|
—
|
|
(1.5
|
)
|
||
Total net new flows
|
$
|
(3.0
|
)
|
|
$
|
(1.5
|
)
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
657
|
|
|
$
|
612
|
|
|
$
|
45
|
|
|
7
|
%
|
Distribution fees
|
111
|
|
|
125
|
|
|
(14
|
)
|
|
(11
|
)
|
|||
Net investment income
|
6
|
|
|
1
|
|
|
5
|
|
|
NM
|
|
|||
Other revenues
|
4
|
|
|
2
|
|
|
2
|
|
|
NM
|
|
|||
Total revenues
|
778
|
|
|
740
|
|
|
38
|
|
|
5
|
|
|||
Banking and deposit interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
778
|
|
|
740
|
|
|
38
|
|
|
5
|
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
246
|
|
|
261
|
|
|
(15
|
)
|
|
(6
|
)
|
|||
Amortization of deferred acquisition costs
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|||
Interest and debt expense
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|||
General and administrative expense
|
323
|
|
|
315
|
|
|
8
|
|
|
3
|
|
|||
Total expenses
|
578
|
|
|
585
|
|
|
(7
|
)
|
|
(1
|
)
|
|||
Operating earnings
|
$
|
200
|
|
|
$
|
155
|
|
|
$
|
45
|
|
|
29
|
%
|
NM Not Meaningful.
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
196
|
|
|
$
|
188
|
|
|
$
|
8
|
|
|
4
|
%
|
Distribution fees
|
91
|
|
|
89
|
|
|
2
|
|
|
2
|
|
|||
Net investment income
|
173
|
|
|
192
|
|
|
(19
|
)
|
|
(10
|
)
|
|||
Premiums
|
24
|
|
|
29
|
|
|
(5
|
)
|
|
(17
|
)
|
|||
Other revenues
|
142
|
|
|
133
|
|
|
9
|
|
|
7
|
|
|||
Total revenues
|
626
|
|
|
631
|
|
|
(5
|
)
|
|
(1
|
)
|
|||
Banking and deposit interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
626
|
|
|
631
|
|
|
(5
|
)
|
|
(1
|
)
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
105
|
|
|
106
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Interest credited to fixed accounts
|
121
|
|
|
122
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Benefits, claims, losses and settlement expenses
|
19
|
|
|
346
|
|
|
(327
|
)
|
|
(95
|
)
|
|||
Amortization of deferred acquisition costs
|
40
|
|
|
66
|
|
|
(26
|
)
|
|
(39
|
)
|
|||
Interest and debt expense
|
9
|
|
|
7
|
|
|
2
|
|
|
29
|
|
|||
General and administrative expense
|
51
|
|
|
52
|
|
|
(1
|
)
|
|
(2
|
)
|
|||
Total expenses
|
345
|
|
|
699
|
|
|
(354
|
)
|
|
(51
|
)%
|
|||
Operating earnings (loss)
|
$
|
281
|
|
|
$
|
(68
|
)
|
|
$
|
349
|
|
|
NM
|
|
NM Not Meaningful.
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
(1
|
)
|
|
(8
|
)%
|
Distribution fees
|
24
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|||
Net investment income
|
86
|
|
|
85
|
|
|
1
|
|
|
1
|
|
|||
Premiums
|
305
|
|
|
323
|
|
|
(18
|
)
|
|
(6
|
)
|
|||
Other revenues
|
51
|
|
|
168
|
|
|
(117
|
)
|
|
(70
|
)
|
|||
Total revenues
|
478
|
|
|
613
|
|
|
(135
|
)
|
|
(22
|
)
|
|||
Banking and deposit interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
478
|
|
|
613
|
|
|
(135
|
)
|
|
(22
|
)
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|||
Interest credited to fixed accounts
|
47
|
|
|
44
|
|
|
3
|
|
|
7
|
|
|||
Benefits, claims, losses and settlement expenses
|
278
|
|
|
363
|
|
|
(85
|
)
|
|
(23
|
)
|
|||
Amortization of deferred acquisition costs
|
13
|
|
|
38
|
|
|
(25
|
)
|
|
(66
|
)
|
|||
Interest and debt expense
|
7
|
|
|
6
|
|
|
1
|
|
|
17
|
|
|||
General and administrative expense
|
61
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|||
Total expenses
|
423
|
|
|
529
|
|
|
(106
|
)
|
|
(20
|
)
|
|||
Operating earnings
|
$
|
55
|
|
|
$
|
84
|
|
|
$
|
(29
|
)
|
|
(35
|
)%
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Net investment income
|
$
|
22
|
|
|
$
|
21
|
|
|
$
|
1
|
|
|
5
|
%
|
Premiums
|
28
|
|
|
27
|
|
|
1
|
|
|
4
|
|
|||
Other revenues
|
1
|
|
|
4
|
|
|
(3
|
)
|
|
(75
|
)
|
|||
Total revenues
|
51
|
|
|
52
|
|
|
(1
|
)
|
|
(2
|
)
|
|||
Banking and deposit interest expense
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
50
|
|
|
51
|
|
|
(1
|
)
|
|
(2
|
)
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
(2
|
)
|
|
(31
|
)
|
|
29
|
|
|
94
|
|
|||
Benefits, claims, losses and settlement expenses
|
119
|
|
|
101
|
|
|
18
|
|
|
18
|
|
|||
Amortization of deferred acquisition costs
|
—
|
|
|
59
|
|
|
(59
|
)
|
|
NM
|
|
|||
Interest and debt expense
|
6
|
|
|
7
|
|
|
(1
|
)
|
|
(14
|
)
|
|||
General and administrative expense
|
63
|
|
|
60
|
|
|
3
|
|
|
5
|
|
|||
Total expenses
|
186
|
|
|
196
|
|
|
(10
|
)
|
|
(5
|
)
|
|||
Operating loss
|
$
|
(136
|
)
|
|
$
|
(145
|
)
|
|
$
|
9
|
|
|
6
|
%
|
NM Not Meaningful.
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
4,669
|
|
|
$
|
4,289
|
|
|
$
|
380
|
|
|
9
|
%
|
Distribution fees
|
1,310
|
|
|
1,338
|
|
|
(28
|
)
|
|
(2
|
)
|
|||
Net investment income
|
1,154
|
|
|
1,090
|
|
|
64
|
|
|
6
|
|
|||
Premiums
|
1,035
|
|
|
1,114
|
|
|
(79
|
)
|
|
(7
|
)
|
|||
Other revenues
|
733
|
|
|
832
|
|
|
(99
|
)
|
|
(12
|
)
|
|||
Total revenues
|
8,901
|
|
|
8,663
|
|
|
238
|
|
|
3
|
|
|||
Banking and deposit interest expense
|
34
|
|
|
29
|
|
|
5
|
|
|
17
|
|
|||
Total net revenues
|
8,867
|
|
|
8,634
|
|
|
233
|
|
|
3
|
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
2,505
|
|
|
2,371
|
|
|
134
|
|
|
6
|
|
|||
Interest credited to fixed accounts
|
509
|
|
|
465
|
|
|
44
|
|
|
9
|
|
|||
Benefits, claims, losses and settlement expenses
|
1,652
|
|
|
1,934
|
|
|
(282
|
)
|
|
(15
|
)
|
|||
Amortization of deferred acquisition costs
|
189
|
|
|
360
|
|
|
(171
|
)
|
|
(48
|
)
|
|||
Interest and debt expense
|
154
|
|
|
160
|
|
|
(6
|
)
|
|
(4
|
)
|
|||
General and administrative expense
|
2,244
|
|
|
2,221
|
|
|
23
|
|
|
1
|
|
|||
Total expenses
|
7,253
|
|
|
7,511
|
|
|
(258
|
)
|
|
(3
|
)
|
|||
Pretax income
|
1,614
|
|
|
1,123
|
|
|
491
|
|
|
44
|
|
|||
Income tax provision
|
315
|
|
|
209
|
|
|
106
|
|
|
51
|
|
|||
Net income
|
$
|
1,299
|
|
|
$
|
914
|
|
|
$
|
385
|
|
|
42
|
%
|
•
|
The market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization) was an expense of $198 million for the
nine
months ended
September 30, 2017
compared to an expense of $78 million for the prior year period.
|
•
|
The market impact on indexed universal life benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual) was an expense of $16 million for the
nine
months ended
September 30, 2017
compared to a benefit of $31 million for the prior year period.
|
•
|
The market impact of hedges on investments was an expense of $8 million for the
nine
months ended
September 30, 2017
compared to an expense of $54 million for the prior year period.
|
•
|
Net realized investment gains were $33 million for the
nine
months ended
September 30, 2017
compared to net realized investment losses of $5 million for the prior year period.
|
•
|
The impact on DAC, DSIC and reserves for insurance features in non-traditional long-duration contracts from actual versus expected market performance based on our view of bond and equity performance was a benefit of $63 million ($27 million for DAC, $6 million for DSIC and $30 million for insurance features in non-traditional long duration contracts) for the
nine
months ended
September 30, 2017
reflecting favorable equity market and bond fund returns compared to a benefit of $5 million ($3 million for DAC, $1 million for DSIC and $1 million for insurance features in non-traditional long duration contracts) for the prior year period.
|
•
|
The nine months ended September 30, 2017 included a $139 million benefit from unlocking compared to a $229 million expense in the prior year period. The unlocking impact for the
nine
months ended
September 30, 2017
primarily reflected a benefit from updates to market-related inputs to our living benefit valuation. The unlocking impact for the prior year period primarily reflected low interest rates and an unfavorable impact from persistency on living benefit reserves, partially offset by a benefit from updates to withdrawal utilization and fee assumptions, as well as market-related inputs related to our living benefit valuation.
|
•
|
A $29 million increase in LTC reserves from a correction related to our claim utilization assumption in the third quarter of 2016.
|
•
|
The impact on DSIC and reserves for insurance features in non-traditional long-duration contracts from actual versus expected market performance based on our view of bond and equity performance was a benefit of $36 million for the nine months ended September 30, 2017 reflecting favorable equity market and bond fund returns compared to a benefit of $2 million for the prior year period.
|
•
|
An $84 million decrease in auto and home expenses reflecting the impact of new reinsurance arrangements and a lower non-catastrophe loss ratio, partially offset by higher gross catastrophe losses. Catastrophe losses, net of the impact of reinsurance, were $84 million for the
nine
months ended
September 30, 2017
compared to $89 million for the prior year period. The expanded reinsurance program resulted in ceded losses of approximately $82 million for the
nine
months ended
September 30, 2017
.
|
•
|
A $57 million expense from loss recognition on LTC insurance products in the third quarter of 2017 primarily due to unfavorable morbidity experience, partially offset by premium increases.
|
•
|
A $24 million increase in expense related to higher reserve funding driven by the impact of higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date.
|
•
|
A $21 million negative impact from changes in assumptions in the prior year unlocking process that resulted in ongoing increases to living benefit reserves.
|
•
|
A $459 million increase in expense compared to the prior year period from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. The unfavorable impact of the nonperformance credit spread was $122 million for the
nine
months ended
September 30, 2017
compared to a favorable impact of $337 million for the prior year period.
|
•
|
A $309 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This decrease was the result of a favorable $1.7 billion change in the market impact on variable annuity guaranteed living benefits reserves, an unfavorable $1.4 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits and a favorable $3 million change in the DSIC offset. The main market drivers contributing to these changes are summarized below:
|
•
|
Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower expense for the
nine
months ended
September 30, 2017
compared to the prior year period.
|
•
|
Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the
nine
months ended
September 30, 2017
compared to an expense in the prior year period.
|
•
|
Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the
nine
months ended
September 30, 2017
compared to the prior year period.
|
•
|
Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net favorable impact compared to the prior year period.
|
•
|
The impact of unlocking was a benefit of $12 million for the
nine
months ended
September 30, 2017
compared to an expense of $81 million for the prior year period.
The impact of unlocking
for the
nine
months ended
September 30, 2017
primarily reflected improved persistency and mortality on life insurance contracts and a $10 million benefit from a
correction related to a variable annuity model assumption
, partially offset by updates to market-related inputs to the living benefit valuation.
The impact of unlocking in the prior year period primarily reflected low interest rates that more than offset benefits from persistency on annuity contracts without living benefits.
In addition, we wrote-off $58 million of DAC in connection with the loss recognition on LTC insurance products in the prior year period.
|
•
|
The impact on DAC from actual versus expected market performance based on our view of bond and equity performance was a benefit of $27 million for the
nine
months ended
September 30, 2017
reflecting favorable equity market and bond fund returns compared to a benefit of $3 million for the prior year period.
|
•
|
The DAC offset to the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization) was a benefit of $24 million for the
nine
months ended
September 30, 2017
compared to an expense of $6 million for the prior year period.
|
|
2017
|
|
2016
|
||||
(in billions)
|
|||||||
Beginning balance
|
$
|
201.1
|
|
|
$
|
180.5
|
|
Inflows from acquisition
(1)
|
0.7
|
|
|
—
|
|
||
Other net flows
|
13.8
|
|
|
6.9
|
|
||
Net flows
|
14.5
|
|
|
6.9
|
|
||
Market appreciation (depreciation) and other
|
19.6
|
|
|
10.1
|
|
||
Ending balance
|
$
|
235.2
|
|
|
$
|
197.5
|
|
|
|||||||
Advisory wrap account assets ending balance
(2)
|
$
|
233.0
|
|
|
$
|
195.4
|
|
Average advisory wrap account assets
(3)
|
$
|
216.2
|
|
|
$
|
184.7
|
|
(2)
|
Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.
|
(3)
|
Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
2,294
|
|
|
$
|
1,989
|
|
|
$
|
305
|
|
|
15
|
%
|
Distribution fees
|
1,533
|
|
|
1,569
|
|
|
(36
|
)
|
|
(2
|
)
|
|||
Net investment income
|
174
|
|
|
138
|
|
|
36
|
|
|
26
|
|
|||
Other revenues
|
59
|
|
|
53
|
|
|
6
|
|
|
11
|
|
|||
Total revenues
|
4,060
|
|
|
3,749
|
|
|
311
|
|
|
8
|
|
|||
Banking and deposit interest expense
|
34
|
|
|
29
|
|
|
5
|
|
|
17
|
|
|||
Total net revenues
|
4,026
|
|
|
3,720
|
|
|
306
|
|
|
8
|
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
2,379
|
|
|
2,275
|
|
|
104
|
|
|
5
|
|
|||
Interest and debt expense
|
7
|
|
|
6
|
|
|
1
|
|
|
17
|
|
|||
General and administrative expense
|
803
|
|
|
782
|
|
|
21
|
|
|
3
|
|
|||
Total expenses
|
3,189
|
|
|
3,063
|
|
|
126
|
|
|
4
|
|
|||
Operating earnings
|
$
|
837
|
|
|
$
|
657
|
|
|
$
|
180
|
|
|
27
|
%
|
|
Nine Months Ended September 30,
|
||||||
2017
|
|
2016
|
|||||
(in billions)
|
|||||||
Global Retail Funds
|
|||||||
Beginning assets
|
$
|
259.9
|
|
|
$
|
263.9
|
|
Inflows
|
38.0
|
|
|
38.3
|
|
||
Acquisition related inflows
(1)
|
—
|
|
|
1.0
|
|
||
Outflows
|
(45.7
|
)
|
|
(45.7
|
)
|
||
Net VP/VIT fund flows
|
(2.5
|
)
|
|
(1.3
|
)
|
||
Net new flows
|
(10.2
|
)
|
|
(7.7
|
)
|
||
Reinvested dividends
|
3.3
|
|
|
3.8
|
|
||
Net flows
|
(6.9
|
)
|
|
(3.9
|
)
|
||
Distributions
|
(4.1
|
)
|
|
(4.6
|
)
|
||
Market appreciation (depreciation) and other
|
28.5
|
|
|
13.8
|
|
||
Foreign currency translation
(2)
|
3.4
|
|
|
(3.2
|
)
|
||
Total ending assets
|
280.8
|
|
|
266.0
|
|
||
|
|||||||
Global Institutional
|
|||||||
Beginning assets
|
194.5
|
|
|
208.0
|
|
||
Inflows
|
18.9
|
|
|
18.5
|
|
||
Outflows
|
(31.0
|
)
|
|
(31.1
|
)
|
||
Net flows
|
(12.1
|
)
|
|
(12.6
|
)
|
||
Market appreciation (depreciation) and other
(3)
|
13.9
|
|
|
14.9
|
|
||
Foreign currency translation
(2)
|
6.9
|
|
|
(8.5
|
)
|
||
Total ending assets
|
203.2
|
|
|
201.8
|
|
||
Total managed assets
|
$
|
484.0
|
|
|
$
|
467.8
|
|
Total net flows
|
$
|
(19.0
|
)
|
|
$
|
(16.5
|
)
|
|
|
Nine Months Ended September 30,
|
||||||
2017
|
|
2016
|
|||||
(in billions)
|
|||||||
Former Parent Company Related
(4)(5)
|
|||||||
Retail net new flows
|
$
|
(2.3
|
)
|
|
$
|
(0.6
|
)
|
Institutional net new flows
|
(10.4
|
)
|
|
(7.6
|
)
|
||
Total net new flows
|
$
|
(12.7
|
)
|
|
$
|
(8.2
|
)
|
(1)
|
Inflows associated with acquisitions that closed during the period.
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
1,880
|
|
|
$
|
1,826
|
|
|
$
|
54
|
|
|
3
|
%
|
Distribution fees
|
344
|
|
|
363
|
|
|
(19
|
)
|
|
(5
|
)
|
|||
Net investment income
|
16
|
|
|
9
|
|
|
7
|
|
|
78
|
|
|||
Other revenues
|
12
|
|
|
5
|
|
|
7
|
|
|
NM
|
|
|||
Total revenues
|
2,252
|
|
|
2,203
|
|
|
49
|
|
|
2
|
|
|||
Banking and deposit interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
2,252
|
|
|
2,203
|
|
|
49
|
|
|
2
|
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
750
|
|
|
762
|
|
|
(12
|
)
|
|
(2
|
)
|
|||
Amortization of deferred acquisition costs
|
12
|
|
|
13
|
|
|
(1
|
)
|
|
(8
|
)
|
|||
Interest and debt expense
|
16
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|||
General and administrative expense
|
948
|
|
|
960
|
|
|
(12
|
)
|
|
(1
|
)
|
|||
Total expenses
|
1,726
|
|
|
1,751
|
|
|
(25
|
)
|
|
(1
|
)
|
|||
Operating earnings
|
$
|
526
|
|
|
$
|
452
|
|
|
$
|
74
|
|
|
16
|
%
|
NM Not Meaningful.
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
573
|
|
|
$
|
549
|
|
|
$
|
24
|
|
|
4
|
%
|
Distribution fees
|
270
|
|
|
260
|
|
|
10
|
|
|
4
|
|
|||
Net investment income
|
527
|
|
|
573
|
|
|
(46
|
)
|
|
(8
|
)
|
|||
Premiums
|
84
|
|
|
89
|
|
|
(5
|
)
|
|
(6
|
)
|
|||
Other revenues
|
407
|
|
|
375
|
|
|
32
|
|
|
9
|
|
|||
Total revenues
|
1,861
|
|
|
1,846
|
|
|
15
|
|
|
1
|
|
|||
Banking and deposit interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
1,861
|
|
|
1,846
|
|
|
15
|
|
|
1
|
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
314
|
|
|
316
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Interest credited to fixed accounts
|
357
|
|
|
360
|
|
|
(3
|
)
|
|
(1
|
)
|
|||
Benefits, claims, losses and settlement expenses
|
311
|
|
|
628
|
|
|
(317
|
)
|
|
(50
|
)
|
|||
Amortization of deferred acquisition costs
|
135
|
|
|
159
|
|
|
(24
|
)
|
|
(15
|
)
|
|||
Interest and debt expense
|
26
|
|
|
24
|
|
|
2
|
|
|
8
|
|
|||
General and administrative expense
|
156
|
|
|
157
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total expenses
|
1,299
|
|
|
1,644
|
|
|
(345
|
)
|
|
(21
|
)
|
|||
Operating earnings
|
$
|
562
|
|
|
$
|
202
|
|
|
$
|
360
|
|
|
NM
|
|
NM Not Meaningful.
|
•
|
The impact of unlocking was a $119 million benefit for the
nine
months ended
September 30, 2017
compared to a $197 million expense for the prior year period. The unlocking impact for the
nine
months ended
September 30, 2017
primarily reflected a benefit from updates to market-related inputs to our living benefit valuation. The unlocking impact for the prior year period primarily reflected low interest rates and an unfavorable impact from persistency on living benefit reserves, partially offset by a benefit from updates to withdrawal utilization and fee assumptions, as well as market-related inputs related to our living benefit valuation.
|
•
|
The impact on DSIC and reserves for insurance features in non-traditional long-duration contracts from actual versus
expected
market performance based on our view of bond and equity performance was a benefit of $36 million for the
nine
months ended
September 30, 2017
reflecting favorable equity market
and bond fund returns
compared to a benefit of $2 million for the prior year period.
|
•
|
A $24 million increase in expense related to higher reserve funding driven by the impact of higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date.
|
•
|
A $21 million negative impact from changes in assumptions in the prior year unlocking process that resulted in ongoing increases to living benefit reserves.
|
•
|
The impact of unlocking was a benefit of $1 million for the
nine
months ended
September 30, 2017
compared to an expense of $18 million for the prior year period.
The impact of unlocking
for the
nine
months ended
September 30, 2017
primarily
|
•
|
The impact on DAC from actual versus expected market performance based on our view of bond and equity performance was a benefit of $25 million for the
nine
months ended
September 30, 2017
reflecting favorable equity market and bond fund returns compared to a benefit of $3 million for the prior year period.
|
•
|
The negative impact on DAC from higher than expected lapses on variable annuities
was $14 million.
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Management and financial advice fees
|
$
|
35
|
|
|
$
|
38
|
|
|
$
|
(3
|
)
|
|
(8
|
)%
|
Distribution fees
|
74
|
|
|
72
|
|
|
2
|
|
|
3
|
|
|||
Net investment income
|
253
|
|
|
247
|
|
|
6
|
|
|
2
|
|
|||
Premiums
|
896
|
|
|
959
|
|
|
(63
|
)
|
|
(7
|
)
|
|||
Other revenues
|
258
|
|
|
377
|
|
|
(119
|
)
|
|
(32
|
)
|
|||
Total revenues
|
1,516
|
|
|
1,693
|
|
|
(177
|
)
|
|
(10
|
)
|
|||
Banking and deposit interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total net revenues
|
1,516
|
|
|
1,693
|
|
|
(177
|
)
|
|
(10
|
)
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
50
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|||
Interest credited to fixed accounts
|
138
|
|
|
130
|
|
|
8
|
|
|
6
|
|
|||
Benefits, claims, losses and settlement expenses
|
888
|
|
|
1,015
|
|
|
(127
|
)
|
|
(13
|
)
|
|||
Amortization of deferred acquisition costs
|
70
|
|
|
107
|
|
|
(37
|
)
|
|
(35
|
)
|
|||
Interest and debt expense
|
19
|
|
|
18
|
|
|
1
|
|
|
6
|
|
|||
General and administrative expense
|
182
|
|
|
183
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total expenses
|
1,347
|
|
|
1,503
|
|
|
(156
|
)
|
|
(10
|
)
|
|||
Operating earnings
|
$
|
169
|
|
|
$
|
190
|
|
|
$
|
(21
|
)
|
|
(11
|
)%
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
||||||||||||
(in millions)
|
|
|
||||||||||||
Revenues
|
||||||||||||||
Net investment income
|
$
|
79
|
|
|
$
|
94
|
|
|
$
|
(15
|
)
|
|
(16
|
)%
|
Premiums
|
81
|
|
|
81
|
|
|
—
|
|
|
—
|
|
|||
Other revenues
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
164
|
|
|
179
|
|
|
(15
|
)
|
|
(8
|
)
|
|||
Banking and deposit interest expense
|
2
|
|
|
1
|
|
|
1
|
|
|
NM
|
|
|||
Total net revenues
|
162
|
|
|
178
|
|
|
(16
|
)
|
|
(9
|
)
|
|||
Expenses
|
||||||||||||||
Distribution expenses
|
(7
|
)
|
|
(39
|
)
|
|
32
|
|
|
82
|
|
|||
Benefits, claims, losses and settlement expenses
|
239
|
|
|
219
|
|
|
20
|
|
|
9
|
|
|||
Amortization of deferred acquisition costs
|
—
|
|
|
63
|
|
|
(63
|
)
|
|
NM
|
|
|||
Interest and debt expense
|
20
|
|
|
21
|
|
|
(1
|
)
|
|
(5
|
)
|
|||
General and administrative expense
|
202
|
|
|
185
|
|
|
17
|
|
|
9
|
|
|||
Total expenses
|
454
|
|
|
449
|
|
|
5
|
|
|
1
|
|
|||
Operating loss
|
$
|
(292
|
)
|
|
$
|
(271
|
)
|
|
$
|
(21
|
)
|
|
(8
|
)%
|
NM Not Meaningful.
|
Equity Price Decline 10%
|
|
Equity Price Exposure to Pretax Income
|
||||||||||
Before Hedge Impact
|
|
Hedge Impact
|
|
Net Impact
|
||||||||
|
|
(in millions)
|
||||||||||
Asset-based management and distribution fees
(1)
|
|
$
|
(261
|
)
|
|
$
|
6
|
|
|
$
|
(255
|
)
|
DAC and DSIC amortization
(2) (3)
|
|
(129
|
)
|
|
—
|
|
|
(129
|
)
|
|||
Variable annuity riders:
|
|
|
|
|
|
|
|
|
|
|||
GMDB and GMIB
(3)
|
|
(29
|
)
|
|
—
|
|
|
(29
|
)
|
|||
GMWB
(3) (4)
|
|
(379
|
)
|
|
233
|
|
|
(146
|
)
|
|||
GMAB
|
|
(25
|
)
|
|
26
|
|
|
1
|
|
|||
DAC and DSIC amortization
(4)
|
|
N/A
|
|
|
N/A
|
|
|
(3
|
)
|
|||
Total variable annuity riders
|
|
(433
|
)
|
|
259
|
|
|
(177
|
)
|
|||
Macro hedge program
(5)
|
|
—
|
|
|
43
|
|
|
43
|
|
|||
Equity indexed annuities
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Certificates
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|||
Indexed universal life insurance
|
|
66
|
|
|
(49
|
)
|
|
17
|
|
|||
Total
|
|
$
|
(753
|
)
|
|
$
|
255
|
|
|
$
|
(501
|
)
|
Interest Rate Increase 100 Basis Points
|
|
Interest Rate Exposure to Pretax Income
|
||||||||||
Before Hedge Impact
|
|
Hedge Impact
|
|
Net Impact
|
||||||||
|
|
(in millions)
|
||||||||||
Asset-based management and distribution fees
(1)
|
|
$
|
(50
|
)
|
|
$
|
—
|
|
|
$
|
(50
|
)
|
Variable annuity riders:
|
|
|
|
|
|
|
|
|
|
|||
GMDB and GMIB
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
GMWB
|
|
983
|
|
|
(1,089
|
)
|
|
(106
|
)
|
|||
GMAB
|
|
21
|
|
|
(23
|
)
|
|
(2
|
)
|
|||
DAC and DSIC amortization
(4)
|
|
N/A
|
|
|
N/A
|
|
|
18
|
|
|||
Total variable annuity riders
|
|
1,004
|
|
|
(1,112
|
)
|
|
(90
|
)
|
|||
Macro hedge program
(5)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products
|
|
99
|
|
|
—
|
|
|
99
|
|
|||
Brokerage client cash balances
|
|
115
|
|
|
—
|
|
|
115
|
|
|||
Certificates
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Indexed universal life insurance
|
|
93
|
|
|
2
|
|
|
95
|
|
|||
Total
|
|
$
|
1,261
|
|
|
$
|
(1,112
|
)
|
|
$
|
167
|
|
N/A Not Applicable.
|
|
Actual Capital
|
|
Regulatory Capital
Requirements |
||||||||||||
September 30, 2017
|
|
December 31, 2016
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||
|
(in millions)
|
||||||||||||||
RiverSource Life
(1)(2)
|
$
|
2,737
|
|
|
$
|
3,052
|
|
|
N/A
|
|
|
$
|
606
|
|
|
RiverSource Life of NY
(1)(2)
|
306
|
|
|
323
|
|
|
N/A
|
|
|
38
|
|
||||
IDS Property Casualty
(1)(3)
|
805
|
|
|
800
|
|
|
$
|
216
|
|
|
213
|
|
|||
Ameriprise Insurance Company
(1)(3)
|
48
|
|
|
47
|
|
|
3
|
|
|
2
|
|
||||
ACC
(4)(5)
|
369
|
|
|
335
|
|
|
341
|
|
|
317
|
|
||||
Threadneedle Asset Management Holdings Sàrl
(6)
|
424
|
|
|
360
|
|
|
169
|
|
|
149
|
|
||||
Ameriprise National Trust Bank
(7)
|
23
|
|
|
22
|
|
|
10
|
|
|
10
|
|
||||
AFSI
(3)(4)
|
126
|
|
|
77
|
|
|
#
|
|
|
#
|
|
||||
Ameriprise Captive Insurance Company
(3)
|
54
|
|
|
51
|
|
|
10
|
|
|
9
|
|
||||
Ameriprise Trust Company
(3)
|
30
|
|
|
29
|
|
|
26
|
|
|
24
|
|
||||
AEIS
(3)(4)
|
115
|
|
|
107
|
|
|
21
|
|
|
19
|
|
||||
RiverSource Distributors, Inc.
(3)(4)
|
13
|
|
|
11
|
|
|
#
|
|
|
#
|
|
||||
Columbia Management Investment Distributors, Inc.
(3)(4)
|
17
|
|
|
14
|
|
|
#
|
|
|
#
|
|
||||
N/A Not applicable.
# Amounts are less than $1 million.
|
(1)
|
Actual capital is determined on a statutory basis.
|
(2)
|
Regulatory capital requirement is based on the statutory risk-based capital filing.
|
(3)
|
Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of
September 30, 2017
and
December 31, 2016
.
|
(4)
|
Actual capital is determined on an adjusted GAAP basis.
|
(5)
|
ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.
|
(6)
|
Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The regulatory capital requirements at
September 30, 2017
represent calculations at
December 31, 2016
of the rule based requirements, as specified by FCA regulations.
|
(7)
|
Ameriprise National Trust Bank is required to maintain capital in compliance with the Office of the Comptroller of the Currency regulations and policies.
|
•
|
statements of the Company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth opportunities;
|
•
|
other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and
|
•
|
statements of assumptions underlying such statements.
|
•
|
conditions in the interest rate, credit default, equity market and foreign exchange environments, including changes in valuations, liquidity and volatility;
|
•
|
changes in and the adoption of relevant accounting standards and securities rating agency standards and processes, as well as changes in the litigation and regulatory environment, including ongoing legal proceedings and regulatory actions, the frequency and extent of legal claims threatened or initiated by clients, other persons and regulators, and developments in regulation and legislation, including the rules and regulations implemented or that may be implemented or modified in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act or in light of the U.S. Department of Labor rule and exemptions pertaining to the fiduciary status of investment advice providers to 401(k) plans, plan sponsors, plan participants and the holders of individual retirement or health savings accounts;
|
•
|
investment management performance and distribution partner and consumer acceptance of the Company’s products;
|
•
|
effects of competition in the financial services industry, including pricing pressure, the introduction of new products and services and changes in product distribution mix and distribution channels;
|
•
|
changes to the Company’s reputation that may arise from employee or advisor misconduct, legal or regulatory actions, perceptions of the financial services industry generally, improper management of conflicts of interest or otherwise;
|
•
|
the Company’s capital structure, including indebtedness, limitations on subsidiaries to pay dividends, and the extent, manner, terms and timing of any share or debt repurchases management may effect as well as the opinions of rating agencies and other analysts and the reactions of market participants or the Company’s regulators, advisors, distribution partners or customers in response to any change or prospect of change in any such opinion;
|
•
|
changes to the availability and cost of liquidity and the Company’s credit capacity that may arise due to shifts in market conditions, the Company’s credit ratings and the overall availability of credit;
|
•
|
risks of default, capacity constraint or repricing by issuers or guarantors of investments the Company owns or by counterparties to hedge, derivative, insurance or reinsurance arrangements or by manufacturers of products the Company distributes, experience deviations from the Company’s assumptions regarding such risks, the evaluations or the prospect of changes in evaluations of any such third parties published by rating agencies or other analysts, and the reactions of other market participants or the Company’s regulators, advisors, distribution partners or customers in response to any such evaluation or prospect of changes in evaluation;
|
•
|
experience deviations from the Company’s assumptions regarding morbidity, mortality and persistency in certain annuity and insurance products, or from assumptions regarding market returns assumed in valuing or unlocking DAC and DSIC or market volatility underlying the Company’s valuation and hedging of guaranteed benefit annuity riders, or from assumptions regarding interest rates assumed in the Company's loss recognition testing of its long term care business, or from assumptions regarding anticipated claims and losses relating to the Company’s automobile and home insurance products;
|
•
|
changes in capital requirements that may be indicated, required or advised by regulators or rating agencies;
|
•
|
the impacts of the Company’s efforts to improve distribution economics and to grow third-party distribution of its products;
|
•
|
the ability to pursue and complete strategic transactions and initiatives, including acquisitions, divestitures, restructurings, joint ventures and the development of new products and services;
|
•
|
the ability to realize the financial, operating and business fundamental benefits of strategic transactions and initiatives the Company has completed, is pursuing or may pursue in the future, which may be impacted by the ability to obtain regulatory
|
•
|
the ability and timing to realize savings and other benefits from re-engineering and tax planning;
|
•
|
interruptions or other failures in the Company’s communications, technology and other operating systems, including errors or failures caused by third-party service providers, interference or failures caused by third party attacks on the Company’s systems, or the failure to safeguard the privacy or confidentiality of sensitive information and data on such systems; and
|
•
|
general economic and political factors, including consumer confidence in the economy and the financial industry, the ability and inclination of consumers generally to invest as well as their ability and inclination to invest in financial instruments and products other than cash and cash equivalents, the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation and changes therein
(such as the June 2016 UK referendum on membership in the European Union and the uncertain regulatory environment in the U.S. after the recent U.S. election)
, including tax laws, tax treaties, fiscal and central government treasury policy, and policies regarding the financial services industry and publicly-held firms, and regulatory rulings and pronouncements.
|
|
AMERIPRISE FINANCIAL, INC.
|
|
|||
(Registrant)
|
|||||
Date:
|
November 1, 2017
|
By
|
/s/ Walter S. Berman
|
||
|
Walter S. Berman
|
||||
Executive Vice President and
|
|||||
Chief Financial Officer
|
|||||
Date:
|
November 1, 2017
|
By
|
/s/ David K. Stewart
|
||
|
David K. Stewart
|
||||
Senior Vice President and Controller
|
|||||
(Principal Accounting Officer)
|