Company Quick10K Filing
Loew's
Price51.51 EPS4
Shares306 P/E14
MCap15,748 P/FCF12
Net Debt10,953 EBIT1,743
TEV26,701 TEV/EBIT15
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-12
10-Q 2019-09-30 Filed 2019-10-28
10-Q 2019-06-30 Filed 2019-08-05
10-Q 2019-03-31 Filed 2019-04-29
10-K 2018-12-31 Filed 2019-02-13
10-Q 2018-09-30 Filed 2018-11-05
10-Q 2018-06-30 Filed 2018-07-30
10-Q 2018-03-31 Filed 2018-04-30
10-K 2017-12-31 Filed 2018-02-15
10-Q 2017-09-30 Filed 2017-10-30
10-Q 2017-06-30 Filed 2017-07-31
10-Q 2017-03-31 Filed 2017-05-01
10-K 2016-12-31 Filed 2017-02-16
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-01
10-Q 2016-03-31 Filed 2016-05-03
10-K 2015-12-31 Filed 2016-02-19
10-Q 2015-09-30 Filed 2015-11-03
10-Q 2015-06-30 Filed 2015-08-04
10-Q 2015-03-31 Filed 2015-05-05
10-K 2014-12-31 Filed 2015-02-24
10-Q 2014-09-30 Filed 2014-11-04
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-02-24
10-Q 2013-09-30 Filed 2013-10-29
10-Q 2013-06-30 Filed 2013-07-30
10-Q 2013-03-31 Filed 2013-04-30
10-K 2012-12-31 Filed 2013-02-22
10-Q 2012-09-30 Filed 2012-10-30
10-Q 2012-06-30 Filed 2012-07-31
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-02-22
10-Q 2011-09-30 Filed 2011-11-01
10-Q 2011-06-30 Filed 2011-08-03
10-Q 2011-03-31 Filed 2011-05-03
10-K 2010-12-31 Filed 2011-02-23
10-Q 2010-06-30 Filed 2010-08-04
10-Q 2010-03-31 Filed 2010-05-04
10-K 2009-12-31 Filed 2010-02-24
8-K 2020-05-12
8-K 2020-05-06
8-K 2020-05-04
8-K 2020-04-26
8-K 2020-02-10
8-K 2019-10-28
8-K 2019-08-05
8-K 2019-05-14
8-K 2019-04-29
8-K 2019-02-11
8-K 2019-01-28
8-K 2018-11-05
8-K 2018-07-30
8-K 2018-06-29
8-K 2018-05-08
8-K 2018-04-30
8-K 2018-02-13
8-K 2018-02-12
8-K 2018-02-07

L 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 ex31_1.htm
EX-31.2 ex31_2.htm
EX-32.1 ex32_1.htm
EX-32.2 ex32_2.htm

Loew's Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
856851341702012201420172020
Assets, Equity
3.93.12.21.40.5-0.32012201420172020
Rev, G Profit, Net Income
1.40.70.1-0.6-1.2-1.92012201420172020
Ops, Inv, Fin


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ____________ to _____________

Commission File Number 1-6541

LOEWS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
 
13-2646102
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

667 Madison Avenue, New York, NY 10065-8087
(Address of principal executive offices) (Zip Code)

(212) 521-2000
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
L
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes 
 
No
   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes 
 
No
   
Not Applicable

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 
Accelerated filer 
Non-accelerated filer 
Smaller reporting company 

 
Emerging growth company 
 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes 
 
No 
   

As of April 24, 2020, there were 281,430,472 shares of the registrant’s common stock outstanding.



INDEX

Page
No.
Part I. Financial Information
 
   
Item 1. Financial Statements (unaudited)
 
   
3
 
   
4
 
   
5
 
   
6
 
   
7
 
   
8
   
32
   
50
   
50
   
50
   
50
   
50
   
55
   
56

2




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.

Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)

 
March 31, 2020
   
December 31, 2019
 
(Dollar amounts in millions, except per share data)
           
             
Assets:
           
Investments:
           
Fixed maturities, amortized cost of $38,059 and $38,157, less allowance for credit loss of $49 and $0
 
$
40,124
   
$
42,240
 
Equity securities, cost of $1,446 and $1,244
   
1,182
     
1,306
 
Limited partnership investments
   
1,730
     
2,004
 
Other invested assets, primarily mortgage loans, less allowance for credit loss of $20 and $0
   
1,101
     
1,072
 
Short term investments
   
3,705
     
4,628
 
Total investments
   
47,842
     
51,250
 
Cash
   
939
     
336
 
Receivables
   
8,136
     
7,675
 
Property, plant and equipment
   
14,751
     
15,568
 
Goodwill
   
763
     
767
 
Deferred non-insurance warranty acquisition expenses
   
2,905
     
2,840
 
Deferred acquisition costs of insurance subsidiaries
   
683
     
662
 
Other assets
   
3,235
     
3,145
 
Total assets
 
$
79,254
   
$
82,243
 
                 
Liabilities and Equity:
               
Insurance reserves:
               
Claim and claim adjustment expense
 
$
21,872
   
$
21,720
 
Future policy benefits
   
11,734
     
12,311
 
Unearned premiums
   
4,745
     
4,583
 
Total insurance reserves
   
38,351
     
38,614
 
Payable to brokers
   
249
     
108
 
Short term debt
   
2,460
     
77
 
Long term debt
   
9,508
     
11,456
 
Deferred income taxes
   
858
     
1,168
 
Deferred non-insurance warranty revenue
   
3,848
     
3,779
 
Other liabilities
   
4,802
     
5,111
 
Total liabilities
   
60,076
     
60,313
 
                 
Commitments and contingent liabilities
               
Preferred stock, $0.10 par value:
               
Authorized – 100,000,000 shares
   
     
 
Common stock, $0.01 par value:
   
     
 
Authorized – 1,800,000,000 shares
               
Issued – 291,381,794 and 291,210,222 shares
   
3
     
3
 
Additional paid-in capital
   
3,347
     
3,374
 
Retained earnings
   
15,167
     
15,823
 
Accumulated other comprehensive loss
   
(1,093
)
   
(68
)
     
17,424
     
19,132
 
Less treasury stock, at cost (9,951,322 and 240,000 shares)
   
(458
)
   
(13
)
Total shareholders’ equity
   
16,966
     
19,119
 
Noncontrolling interests
   
2,212
     
2,811
 
Total equity
   
19,178
     
21,930
 
Total liabilities and equity
 
$
79,254
   
$
82,243
 

See accompanying Notes to Consolidated Condensed Financial Statements.

3



Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended March 31
 
2020
   
2019
 
(In millions, except per share data)
           
             
Revenues:
           
Insurance premiums
 
$
1,869
   
$
1,803
 
Net investment income
   
163
     
657
 
Investment gains (losses)
   
(216
)
   
31
 
Non-insurance warranty revenue
   
301
     
281
 
Operating revenues and other
   
982
     
985
 
Total
   
3,099
     
3,757
 
                 
Expenses:
               
Insurance claims and policyholders’ benefits
   
1,425
     
1,357
 
Amortization of deferred acquisition costs
   
344
     
342
 
Non-insurance warranty expense
   
281
     
260
 
Operating expenses and other
   
2,026
     
1,149
 
Interest
   
144
     
141
 
Total
   
4,220
     
3,249
 
Income (loss) before income tax
   
(1,121
)
   
508
 
Income tax (expense) benefit
   
77
     
(112
)
Net income (loss)
   
(1,044
)
   
396
 
Amounts attributable to noncontrolling interests
   
412
     
(2
)
Net income (loss) attributable to Loews Corporation
 
$
(632
)
 
$
394
 
                 
Basic and diluted net income (loss) per share
 
$
(2.20
)
 
$
1.27
 
                 
                 
Weighted average shares outstanding:
               
Shares of common stock
   
287.04
     
309.83
 
Dilutive potential shares of common stock
           
0.53
 
Total weighted average shares outstanding assuming dilution
   
287.04
     
310.36
 

See accompanying Notes to Consolidated Condensed Financial Statements.

4



Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

Three Months Ended March 31
 
2020
   
2019
 
(In millions)
           
Net income (loss)
 
$
(1,044
)
 
$
396
 
Other comprehensive income (loss), after tax
               
Changes in:
               
Net unrealized losses on investments with an allowance for credit losses
   
(11
)
       
Net unrealized gains (losses) on other investments
   
(1,044
)
   
530
 
Total unrealized gains (losses) on investments
   
(1,055
)
   
530
 
Unrealized losses on cash flow hedges
   
(19
)
   
(6
)
Pension and postretirement benefits
   
14
     
8
 
Foreign currency translation
   
(84
)
   
17
 
Other comprehensive income (loss)
   
(1,144
)
   
549
 
Comprehensive income (loss)
   
(2,188
)
   
945
 
Amounts attributable to noncontrolling interests
   
531
     
(61
)
Total comprehensive income (loss) attributable to Loews Corporation
 
$
(1,657
)
 
$
884
 

See accompanying Notes to Consolidated Condensed Financial Statements.

5



Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY
(Unaudited)

       
Loews Corporation Shareholders
       
   
Total
   
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Common
Stock
Held in
Treasury
   
Noncontrolling
Interests
 
(In millions)
                                         
                                           
Balance, January 1, 2019
 
$
21,386
   
$
3
   
$
3,627
   
$
15,773
   
$
(880
)
 
$
(5
)
 
$
2,868
 
Net income
   
396
                     
394
                     
2
 
Other comprehensive income
   
549
                             
490
             
59
 
Dividends paid ($0.0625 per share)
   
(87
)
                   
(19
)
                   
(68
)
Purchases of Loews Corporation treasury stock
   
(322
)
                                   
(322
)
       
Purchases of subsidiary stock from non- controlling interests
   
(14
)
                                           
(14
)
Stock-based compensation
   
1
             
(19
)
                           
20
 
Other
   
(7
)
           
(1
)
   
(4
)
                   
(2
)
Balance,March 31, 2019
 
$
21,902
   
$
3
   
$
3,607
   
$
16,144
   
$
(390
)
 
$
(327
)
 
$
2,865
 
                                                         
Balance, December 31, 2019, as reported
 
$
21,930
   
$
3
   
$
3,374
   
$
15,823
   
$
(68
)
 
$
(13
)
 
$
2,811
 
Cumulative effect adjustment from change in accounting standards (Note 1)
   
(5
)
                   
(5
)
                       
Balance, January 1, 2020, as adjusted
   
21,925
     
3
     
3,374
     
15,818
     
(68
)
   
(13
)
   
2,811
 
Net loss
   
(1,044
)
                   
(632
)
                   
(412
)
Other comprehensive loss
   
(1,144
)
                           
(1,025
)
           
(119
)
Dividends paid ($0.0625 per share)
   
(87
)
                   
(18
)
                   
(69
)
Purchases of Loews Corporation treasury stock
   
(445
)
                                   
(445
)
       
Purchases of subsidiary stock from non-controlling interests
   
(18
)
                                           
(18
)
Stock-based compensation
   
(4
)
           
(22
)
                           
18
 
Other
   
(5
)
           
(5
)
   
(1
)
                   
1
 
Balance, March 31, 2020
 
$
19,178
   
$
3
   
$
3,347
   
$
15,167
   
$
(1,093
)
 
$
(458
)
 
$
2,212
 

See accompanying Notes to Consolidated Condensed Financial Statements.
6



Loews Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended March 31,
 
2020
   
2019
 
(In millions)
           
             
Operating Activities:
           
Net income (loss)
 
$
(1,044
)
 
$
396
 
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities, net
   
1,363
     
369
 
Changes in operating assets and liabilities, net:
               
Receivables
   
(266
)
   
15
 
Deferred acquisition costs
   
(27
)
   
(29
)
Insurance reserves
   
510
     
57
 
Other assets
   
(116
)
   
(143
)
Other liabilities
   
(288
)
   
(104
)
Trading securities
   
197
     
(480
)
Net cash flow provided by operating activities
   
329
     
81
 
                 
Investing Activities:
               
Purchases of fixed maturities
   
(1,818
)
   
(2,447
)
Proceeds from sales of fixed maturities
   
823
     
2,259
 
Proceeds from maturities of fixed maturities
   
799
     
576
 
Purchases of limited partnership investments
   
(32
)
   
(114
)
Proceeds from sales of limited partnership investments
   
204
     
337
 
Purchases of property, plant and equipment
   
(233
)
   
(223
)
Change in short term investments
   
837
     
(27
)
Other, net
   
(153
)
   
(61
)
Net cash flow provided by investing activities
   
427
     
300
 
                 
Financing Activities:
               
Dividends paid
   
(18
)
   
(19
)
Dividends paid to noncontrolling interests
   
(69
)
   
(68
)
Purchases of Loews Corporation treasury stock
   
(458
)
   
(317
)
Purchases of subsidiary stock from noncontrolling interests
   
(18
)
   
(14
)
Principal payments on debt
   
(223
)
   
(210
)
Issuance of debt
   
654
     
192
 
Other, net
   
(12
)
   
(13
)
Net cash flow used by financing activities
   
(144
)
   
(449
)
Effect of foreign exchange rate on cash
   
(9
)
   
2
 
                 
Net change in cash
   
603
     
(66
)
Cash, beginning of period
   
336
     
405
 
Cash, end of period
 
$
939
   
$
339
 

See accompanying Notes to Consolidated Condensed Financial Statements.
7



Loews Corporation and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation


Loews Corporation is a holding company. Its subsidiaries are engaged in the following lines of business: commercial property and casualty insurance (CNA Financial Corporation (“CNA”), an 89% owned subsidiary); the operation of offshore oil and gas drilling rigs (Diamond Offshore Drilling, Inc. (“Diamond Offshore”), a 53% owned subsidiary); transportation and storage of natural gas and natural gas liquids (Boardwalk Pipeline Partners, LP (“Boardwalk Pipelines”), a wholly owned subsidiary); the operation of a chain of hotels (Loews Hotels Holding Corporation (“Loews Hotels & Co”), a wholly owned subsidiary); and the manufacture of rigid plastic packaging solutions (Altium Packaging LLC (“Altium Packaging”), a 99% owned subsidiary). Unless the context otherwise requires, the term “Company” as used herein means Loews Corporation including its subsidiaries and the term “Net income (loss) attributable to Loews Corporation” as used herein means Net income (loss) attributable to Loews Corporation shareholders.


On April 26, 2020, Diamond Offshore and certain of its subsidiaries commenced proceedings under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”). Financial information in this Report has been prepared on the basis that Diamond Offshore will continue as a going concern, which presumes that it will be able to realize assets and discharge liabilities in the normal course of business as they come due. As a result of the Chapter 11 proceedings, the principal and interest due under Diamond Offshore’s outstanding senior notes and revolving credit facility became immediately due and payable and have been presented as Short term debt in the unaudited Consolidated Condensed Balance Sheet as of March 31, 2020.


In the opinion of management, the accompanying unaudited Consolidated Condensed Financial Statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of March 31, 2020 and December 31, 2019 and results of operations, comprehensive income and changes in shareholders’ equity and cash flows for the three months ended March 31, 2020 and 2019. Net income (loss) for the first quarter of each of the years is not necessarily indicative of net income (loss) for that entire year. These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.


The Company presents basic and diluted net income (loss) per share on the Consolidated Condensed Statements of Operations. Basic net income (loss) per share excludes dilution and is computed by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.


Accounting changes – In June of 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. For financial assets measured at cost, the expected credit loss model requires immediate recognition of estimated credit losses over the life of the asset and presentation of the asset at the net amount expected to be collected. This new guidance applies to mortgage loan investments, reinsurance and insurance receivables and other financing and trade receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows, however, the other than temporary impairment (“OTTI”) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where there is an intent to sell, impairment will continue to result in a write-down of amortized cost.


On January 1, 2020, the Company adopted the updated guidance using a modified retrospective method with a cumulative effect adjustment recorded to beginning Retained earnings. Prior period amounts have not been adjusted and continue to be reported in accordance with the previous accounting guidance. A prospective transition approach is required for available-for-sale fixed maturity securities that were purchased with credit deterioration (“PCD assets”) or have recognized an OTTI write-down prior to the effective date. The cumulative effect of the accounting change resulted in a $5 million decrease in Retained earnings, after tax and noncontrolling interests.

8


The allowance for doubtful accounts for insurance, reinsurance and trade receivables was unchanged as a result of adopting the new guidance. At adoption, an allowance for credit losses of $6 million was established for available-for-sale fixed maturity securities that were PCD assets, with a corresponding increase to amortized cost, resulting in no adjustment to the carrying value of the securities. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13.


The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. The allowance is estimated using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Current and forecast economic conditions are considered, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to the forecast of economic conditions can vary by financial asset class. A reasonable and supportable forecast period is up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. Collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk are considered in the estimate of the net amount expected to be collected.


A policy election has been made to present accrued interest balances separately from the amortized cost basis of assets, and a practical expedient has been elected to exclude the accrued interest from the tabular disclosures for mortgage loans and available-for-sale securities. An election has been made not to estimate an allowance for credit losses on accrued interest receivables. The accrual of interest income is discontinued and the asset is placed on nonaccrual status in the quarter that the payment becomes delinquent. Interest accrued but not received for assets on nonaccrual status is reversed through Net investment income. Interest received for assets that are on nonaccrual status is recognized as payment is received. The asset is returned to accrual status when the principal and interest amounts contractually due are brought current, and future payments are expected. Interest receivables are presented in Receivables on the Consolidated Condensed Balance Sheet.


See Notes 2 and 8 for more information on credit losses.


Recently issued ASUs – In August of 2018, the FASB issued ASU 2018-12, “Financial Services – Insurance (Topic 944):  Targeted Improvements to the Accounting for Long-Duration Contracts.” The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. The guidance requires entities to update annually cash flow assumptions, including morbidity and persistency, and update quarterly discount rate assumptions using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income (“OCI”). This guidance is effective for interim and annual periods beginning after December 15, 2021 and will be adopted on January 1, 2022. The guidance requires restatement of prior periods presented. The Company is currently evaluating the method of adoption and the effect the updated guidance will have on its consolidated financial statements, including increased disclosure requirements. The annual updating of cash flow assumptions is expected to increase income statement volatility. While the requirements of the new guidance represent a material change from existing accounting guidance, the underlying economics of the business and related cash flows will be unchanged.

2. Investments


Net investment income is as follows:

Three Months Ended March 31,
 
2020
   
2019
 
(In millions)
           
             
Fixed maturity securities
 
$
438
   
$
455
 
Limited partnership investments
   
(102
)
   
81
 
Short term investments
   
7
     
15
 
Equity securities
   
(44
)
   
30
 
Income (loss) from trading portfolio (a)
   
(129
)
   
81
 
Other
   
14
     
14
 
Total investment income
   
184
     
676
 
Investment expenses
   
(21
)
   
(19
)
Net investment income
 
$
163
   
$
657
 

9


(a)
Net unrealized gains (losses) related to changes in fair value on securities still held were $(117) and $44 for the three months ended March 31, 2020 and 2019.


Investment gains (losses) are as follows:

 Three Months Ended March 31,
 
2020
   
2019
 
(In millions)
           
             
Fixed maturity securities
 
$
(75
)
 
$
(6
)
Equity securities
   
(133
)
   
42
 
Derivative instruments
   
5
     
(5
)
Short term investments and other
   
(13
)
       
Investment gains (a)
 
$
(216
)
 
$
31
 

(a)
Gross investment gains on available-for-sale securities were $29 and $36 for the three months ended March 31, 2020 and 2019. Gross investment losses on available-for-sale securities were $104 and $42 for the three months ended March 31, 2020 and 2019. During the three months ended March 31, 2020 and 2019, $133 of net investment losses and $42 of net investment gains were recognized due to the change in fair value of non-redeemable preferred stock still held as of March 31, 2020 and 2019.



The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between the present value of cash flows expected to be collected and the amortized cost basis. All available evidence is considered when determining whether an investment requires a credit loss write-down or allowance to be recorded. Examples of such evidence may include the financial condition and near term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions and industry, sector or other specific factors and whether it is likely that the amortized cost will be recovered through the collection of cash flows. Changes in the allowance are presented as a component of Investment gains (losses) on the Consolidated Condensed Statements of Operations.


The following table presents the activity related to the allowance on available-for-sale securities with credit impairments and PCD assets. Accrued interest receivables on available-for-sale fixed maturity securities totaled $390 million and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables within this Note.

March 31, 2020
 
Corporate and
Other Bonds
 
(In millions)
     
Allowance for credit losses:
     
Balance as of December 31, 2019
 
$
-
 
Additions to the allowance for credit losses:
       
Impact of adopting ASU 2016-13
   
6
 
For securities for which credit losses were not previously recorded
   
48
 
For available-for-sale securities accounted for as PCD assets
   
1
 
         
Reductions to the allowance for credit losses:
       
Securities sold during the period (realized)
   
(5
)
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis
   
(1
)
Total allowance for credit losses
 
$
49
 


The components of available-for-sale impairment losses recognized in earnings by asset type are presented in the following table. The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date:

Three Months Ended March 31,
 
2020
   
2019
 
(In millions)
           
Fixed maturity securities available-for-sale:
           
Corporate and other bonds
 
$
91
   
$
6
 
Asset-backed
   
1
     
8
 
Impairment losses recognized in earnings
 
$
92
   
$
14
 

10


The amortized cost and fair values of fixed maturity securities are as follows:

March 31, 2020
 
Cost or
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Allowance
for Credit
Losses (a)
   
Estimated
Fair Value
 
(In millions)
                             
Fixed maturity securities:
                             
Corporate and other bonds
 
$
20,181
   
$
1,419
   
$
817
   
$
49
   
$
20,734
 
States, municipalities and political subdivisions
   
8,957
     
1,536
     
2
             
10,491
 
Asset-backed:
                                       
Residential mortgage-backed
   
4,198
     
207
     
8
             
4,397
 
Commercial mortgage-backed
   
2,207
     
36
     
153
             
2,090
 
Other asset-backed
   
1,868
     
9
     
133
             
1,744
 
Total asset-backed
   
8,273
     
252
     
294
     
-
     
8,231
 
U.S. Treasury and obligations of government-sponsored enterprises
   
147
     
8
                     
155
 
Foreign government
   
452
     
15
     
4
             
463
 
Redeemable preferred stock
   
9
                             
9
 
Fixed maturities available-for-sale
   
38,019
     
3,230
     
1,117
     
49
     
40,083
 
Fixed maturities trading
   
40
     
1
                     
41
 
Total fixed maturity securities
 
$
38,059
   
$
3,231
   
$
1,117
   
$
49
   
$
40,124
 

December 31, 2019
 
Cost or
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Estimated
Fair Value
   
Unrealized
OTTI Losses
(Gains) (a)
 
                               
Fixed maturity securities:
                             
Corporate and other bonds
 
$
19,789
   
$
2,292
   
$
32
   
$
22,049
       
States, municipalities and political subdivisions
   
9,093
     
1,559
             
10,652
       
Asset-backed:
                                     
Residential mortgage-backed
   
4,387
     
133
     
1
     
4,519
   
$
(17
)
Commercial mortgage-backed
   
2,265
     
86
     
5
     
2,346
     
1
 
Other asset-backed
   
1,925
     
41
     
4
     
1,962