VOYA FINANCIAL, INC., 10-Q filed on 8/9/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 02, 2019
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2019  
Document Transition Report false  
Entity File Number 001-35897  
Entity Registrant Name Voya Financial, Inc.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 52-1222820  
Entity Address, Address Line One 230 Park Avenue  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10169  
City Area Code 212  
Local Phone Number 309-8200  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   140,359,868
Entity Central Index Key 0001535929  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Common Stock, $.01 par value    
Entity Information [Line Items]    
Title of 12(b) Security Common Stock, $.01 par value  
Trading Symbol VOYA  
Security Exchange Name NYSE  
Depositary Shares, each representing a 1/40th    
Entity Information [Line Items]    
Title of 12(b) Security Depositary Shares, each representing a 1/40  
Trading Symbol VOYAPrB  
Security Exchange Name NYSE  
v3.19.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2019
Dec. 31, 2018
Investments:    
Fixed maturities, available-for-sale, at fair value (amortized cost of $44,806 as of 2019 and $45,241 as of 2018) $ 49,150 $ 46,298
Fixed maturities, at fair value using the fair value option 3,358 2,956
Equity securities, at fair value (cost of $335 as of 2019 and $255 as of 2018) 367 273
Short-term investments 154 168
Mortgage loans on real estate, net of valuation allowance of $1 as of 2019 and $2 as of 2018 8,418 8,676
Policy loans 1,797 1,833
Limited partnerships/corporations 1,325 1,158
Derivatives 440 247
Other investments 96 90
Total investments 67,050 63,566
Cash and cash equivalents 1,482 1,538
Short-term investments under securities loan agreements, including collateral delivered 1,929 1,684
Accrued investment income 662 650
Premium receivable and reinsurance recoverable 6,640 6,860
Deferred policy acquisition costs and Value of business acquired 3,246 4,116
Current income taxes 226 237
Deferred income taxes 576 1,157
Other assets 1,425 1,336
Assets related to consolidated investment entities:    
Assets held in separate accounts 79,915 71,228
Total assets 165,162 154,682
Liabilities and Shareholders' Equity:    
Future policy benefits 14,841 14,488
Contract owner account balances 50,580 51,001
Payables under securities loan and repurchase agreements, including collateral held 1,972 1,821
Short-term debt 97 1
Long-term debt 3,041 3,136
Derivatives 432 139
Pension and other postretirement provisions 445 551
Other liabilities 2,106 2,148
Liabilities related to consolidated investment entities:    
Collateralized loan obligations notes, at fair value using the fair value option 432 540
Other liabilities 562 688
Liabilities related to separate accounts 79,915 71,228
Total liabilities 154,423 145,741
Commitments and Contingencies (Note 13)
Shareholders' equity:    
Preferred stock ($0.01 par value per share; $625 and $325 aggregate liquidation preference as of 2019 and 2018, respectively) 0 0
Common stock ($0.01 par value per share; 900,000,000 shares authorized; 275,273,194 and 272,431,745 shares issued as of 2019 and 2018, respectively; 140,329,307 and 150,978,184 shares outstanding as of 2019 and 2018, respectively) 3 3
Treasury stock (at cost; 134,943,887 and 121,453,561 shares as of 2019 and 2018, respectively) (5,663) (4,981)
Additional paid-in capital 24,642 24,316
Accumulated other comprehensive income (loss) 2,867 607
Retained earnings (deficit):    
Appropriated-consolidated investment entities 0 0
Unappropriated (11,785) (11,732)
Total Voya Financial, Inc. shareholders' equity 10,064 8,213
Noncontrolling interest 675 728
Total shareholders' equity 10,739 8,941
Total liabilities and shareholders' equity 165,162 154,682
Limited partnerships/corporations, at fair value    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 1,429 1,421
Cash and cash equivalents    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 59 331
Corporate loans, at fair value using the fair value option    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 512 542
Other assets    
Assets related to consolidated investment entities:    
Assets related to consolidated investment entities 11 16
Collateral Pledged    
Investments:    
Securities pledged (amortized cost of $1,739 as of 2019 and $1,824 as of 2018) $ 1,945 $ 1,867
v3.19.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Fixed maturities, amortized cost $ 44,806 $ 45,241
Equity securities, cost 335 255
Mortgage loans on real estate valuation allowance 1 2
Securities pledged, amortized costs 1,739 1,824
Preferred stock, aggregate liquidation preference $ 625 $ 325
Preferred stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 900,000,000 900,000,000
Common stock, shares issued 275,273,194 272,431,745
Common stock, shares outstanding 140,329,307 150,978,184
Treasury stock, shares 134,943,887 121,453,561
Common stock, par value $ 0.01 $ 0.01
v3.19.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Revenues:        
Net investment income $ 880.0 $ 813.0 $ 1,695.0 $ 1,636.0
Fee income 662.0 660.0 1,327.0 1,336.0
Premiums 585.0 533.0 1,167.0 1,072.0
Net realized capital gains (losses):        
Total other-than-temporary impairments (3.0) 0.0 (36.0) (14.0)
Less: Portion of other-than-temporary impairments recognized in Other comprehensive income (loss) 0.0 1.0 0.0 1.0
Net other-than-temporary impairments recognized in earnings (3.0) (1.0) (36.0) (15.0)
Other net realized capital gains (losses) 53.0 (119.0) 103.0 (286.0)
Total net realized capital gains (losses) 50.0 (120.0) 67.0 (301.0)
Other revenue 102.0 101.0 215.0 200.0
Income (loss) related to consolidated investment entities:        
Net investment income 67.0 126.0 72.0 137.0
Total revenues 2,346.0 2,113.0 4,543.0 4,080.0
Benefits and expenses:        
Policyholder benefits 852.0 706.0 1,667.0 1,414.0
Interest credited to contract owner account balances 380.0 382.0 751.0 764.0
Operating expenses 687.0 645.0 1,389.0 1,345.0
Net amortization of Deferred policy acquisition costs and Value of business acquired 67.0 74.0 152.0 174.0
Interest expense 42.0 46.0 84.0 95.0
Operating expenses related to consolidated investment entities:        
Interest expense 16.0 16.0 21.0 22.0
Other expense 4.0 3.0 4.0 4.0
Total benefits and expenses 2,048.0 1,872.0 4,068.0 3,818.0
Income (loss) from continuing operations before income taxes 298.0 241.0 475.0 262.0
Income tax expense (benefit) 44.0 45.0 69.0 49.0
Income (loss) from continuing operations 254.0 196.0 406.0 213.0
Income (loss) from discontinued operations, net of tax (3.0) 28.0 (82.0) 457.0
Net income (loss) 251.0 224.0 324.0 670.0
Less: Net income (loss) attributable to noncontrolling interest 25.0 58.0 24.0 58.0
Net income (loss) available to Voya Financial, Inc. 226.0 166.0 300.0 612.0
Less: Preferred stock dividends 0.0 0.0 10.0 0.0
Net income (loss) available to Voya Financial, Inc.'s common shareholders $ 226.0 $ 166.0 $ 290.0 $ 612.0
Net income (loss) per common share:        
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders $ 1.59 $ 0.83 $ 2.56 $ 0.91
Income (loss) available to Voya Financial, Inc.'s common shareholders 1.57 1.00 1.99 3.60
Income (loss) from continuing operations available to Voya Financial, Inc.'s common shareholders 1.53 0.80 2.47 0.88
Income (loss) available to Voya Financial, Inc.'s common shareholders 1.51 0.96 1.93 3.48
Cash dividends declared per share of common stock $ 0.01 $ 0.01 $ 0.02 $ 0.02
v3.19.2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 251 $ 224 $ 324 $ 670
Other comprehensive income (loss), before tax:        
Unrealized gains (losses) on securities 1,141 (867) 2,425 (2,390)
Other-than-temporary impairments 1 10 2 30
Pension and other postretirement benefits liability (1) (3) (2) (6)
Other comprehensive income (loss), before tax 1,141 (860) 2,425 (2,366)
Income tax expense (benefit) related to items of other comprehensive income (loss) 240 (292) 508 (606)
Other comprehensive income (loss), after tax 901 (568) 1,917 (1,760)
Comprehensive income (loss) 1,152 (344) 2,241 (1,090)
Less: Comprehensive income (loss) attributable to noncontrolling interest 25 58 24 58
Comprehensive income (loss) attributable to Voya Financial, Inc. $ 1,127 $ (402) $ 2,217 $ (1,148)
v3.19.2
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)
$ in Millions
Total
Preferred Stock
Common Stock
Treasury Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Appropriated
Unappropriated
Total Voya Financial, Inc. Shareholders' Equity
Noncontrolling Interest
Previously Reported
Previously Reported
Preferred Stock
Previously Reported
Common Stock
Previously Reported
Treasury Stock
Previously Reported
Additional Paid-In Capital
Previously Reported
Accumulated Other Comprehensive Income (Loss)
Previously Reported
Appropriated
Previously Reported
Unappropriated
Previously Reported
Total Voya Financial, Inc. Shareholders' Equity
Previously Reported
Noncontrolling Interest
Cumulative effect of changes in accounting:                                        
Adjustment for adoption of ASU | Accounting Standards Update 2014-09 $ 84 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 84 $ 84 $ 0                    
Adjustment for adoption of ASU | Accounting Standards Update 2016-01 0 0 0 0 0 (28) 0 28 0 0                    
Balance - As adjusted 11,123 0 3 (3,827) 23,821 2,703 0 (12,607) 10,093 1,030                    
Beginning balance at Dec. 31, 2017                     $ 11,039 $ 0 $ 3 $ (3,827) $ 23,821 $ 2,731 $ 0 $ (12,719) $ 10,009 $ 1,030
Comprehensive income (loss):                                        
Net income (loss) 670 0 0 0 0 0 0 612 612 58                    
Reversal of Other Comprehensive Income (Loss) due to Sale of Annuity and CBVA (79) 0 0 0 0 (79) 0 0 (79) 0                    
Other comprehensive income (loss), after tax (1,760)                                      
Other comprehensive income (loss), Other, net of tax (1,681) 0 0 0 0 (1,681) 0 0 (1,681) 0                    
Less: Comprehensive income (loss) attributable to noncontrolling interest 58                 58                    
Comprehensive income (loss) (1,090)               (1,148)                      
Effect of transaction for entities under common control (31) 0 0 0 (31) 0 0 0 (31) 0                    
Net consolidations (deconsolidations) of consolidated investment entities (33) 0 0 0 0 0 0 0 0 (33)                    
Preferred stock issuance 0 0 0 0 0 0 0 0 0 0                    
Common stock issuance 1 0 0 0 1 0 0 0 1 0                    
Common stock acquired - Share repurchase (500) 0 0 (600) 100 0 0 0 (500) 0                    
Dividends on preferred stock 0 0 0 0 0 0 0 0 0 0                    
Dividends on common stock (3) 0 0 0 (3) 0 0 0 (3) 0                    
Share-based compensation 48 0 0 (15) 63 0 0 0 48 0                    
Contributions from (Distributions to) noncontrolling interest, net (273) 0 0 0 0 0 0 0 0 (273)                    
Ending Balance at Jun. 30, 2018 9,242 0 3 (4,442) 23,951 943 0 (11,995) 8,460 782                    
Beginning balance at Mar. 31, 2018 10,409 0 3 (3,936) 23,961 1,511 0 (12,161) 9,378 1,031                    
Comprehensive income (loss):                                        
Net income (loss) 224 0 0 0 0 0 0 166 166 58                    
Reversal of Other Comprehensive Income (Loss) due to Sale of Annuity and CBVA (79) 0 0 0 0 (79) 0 0 (79) 0                    
Other comprehensive income (loss), after tax (568)                                      
Other comprehensive income (loss), Other, net of tax (489) 0 0 0 0 (489) 0 0 (489) 0                    
Less: Comprehensive income (loss) attributable to noncontrolling interest 58                 58                    
Comprehensive income (loss) (344)               (402)                      
Effect of transaction for entities under common control (31) 0 0 0 (31) 0 0 0 (31) 0                    
Net consolidations (deconsolidations) of consolidated investment entities (33) 0 0 0 0 0 0 0 0 (33)                    
Preferred stock issuance 0 0 0 0 0 0 0 0 0 0                    
Common stock issuance (1) 0 0 0 (1) 0 0 0 (1) 0                    
Common stock acquired - Share repurchase (500) 0 0 (500) 0 0 0 0 (500) 0                    
Dividends on preferred stock 0 0 0 0 0 0 0 0 0 0                    
Dividends on common stock (1) 0 0 0 (1) 0 0 0 (1) 0                    
Share-based compensation 17 0 0 (6) 23 0 0 0 17 0                    
Contributions from (Distributions to) noncontrolling interest, net (274) 0 0 0 0 0 0 0 0 (274)                    
Ending Balance at Jun. 30, 2018 9,242 0 3 (4,442) 23,951 943 0 (11,995) 8,460 782                    
Beginning balance at Dec. 31, 2018 8,941 0 3 (4,981) 24,316 607 0 (11,732) 8,213 728                    
Comprehensive income (loss):                                        
Net income (loss) 324 0 0 0 0 0 0 300 300 24                    
Other comprehensive income (loss), after tax 1,917 0 0 0 0 1,917 0 0 1,917 0                    
Less: Comprehensive income (loss) attributable to noncontrolling interest 24                 24                    
Comprehensive income (loss) 2,241               2,217                      
Preferred stock issuance 293 0 0 0 293 0 0 0 293 0                    
Common stock issuance 2 0 0 0 2 0 0 0 2 0                    
Common stock acquired - Share repurchase (686) 0 0 (646) (40) 0 0 0 (686) 0                    
Dividends on preferred stock (10) 0 0 0 0 0 0 (10) (10) 0                    
Dividends on common stock (3) 0 0 0 (3) 0 0 0 (3) 0                    
Share-based compensation 38 0 0 (36) 74 0 0 0 38 0                    
Contributions from (Distributions to) noncontrolling interest, net (77) 0 0 0 0 0 0 0 0 (77)                    
Ending Balance at Jun. 30, 2019 10,739 0 3 (5,663) 24,642 2,867 0 (11,785) 10,064 675                    
Cumulative effect of changes in accounting:                                        
Adjustment for adoption of ASU | Accounting Standards Update 2018-02 0 0 0 0 0 0 0 0 0 0                    
Beginning balance at Mar. 31, 2019 9,806 0 3 (5,203) 24,310 1,966 0 (12,011) 9,065 741                    
Comprehensive income (loss):                                        
Net income (loss) 251 0 0 0 0 0 0 226 226 25                    
Other comprehensive income (loss), after tax 901 0 0 0 0 901 0 0 901 0                    
Less: Comprehensive income (loss) attributable to noncontrolling interest 25                 25                    
Comprehensive income (loss) 1,152               1,127                      
Preferred stock issuance 293 0 0 0 293 0 0 0 293 0                    
Common stock issuance 0 0 0 0 0 0 0 0 0 0                    
Common stock acquired - Share repurchase (436) 0 0 (446) 10 0 0 0 (436) 0                    
Dividends on preferred stock 0 0 0 0 0 0 0 0 0 0                    
Dividends on common stock (2) 0 0 0 (2) 0 0 0 (2) 0                    
Share-based compensation 17 0 0 (14) 31 0 0 0 17 0                    
Contributions from (Distributions to) noncontrolling interest, net (91) 0 0 0 0 0 0 0 0 (91)                    
Ending Balance at Jun. 30, 2019 10,739 0 3 (5,663) 24,642 2,867 0 (11,785) 10,064 675                    
Cumulative effect of changes in accounting:                                        
Adjustment for adoption of ASU | Accounting Standards Update 2018-02 $ 0 $ 0 $ 0 $ 0 $ 0 $ 343 $ 0 $ (343) $ 0 $ 0                    
v3.19.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash Flows from Operating Activities:    
Net cash provided by (used in) operating activities - continuing operations $ 549 $ (408)
Net cash provided by operating activities - discontinued operations 0 1,462
Net cash provided by operating activities 549 1,054
Proceeds from the sale, maturity, disposal or redemption of:    
Fixed maturities 4,463 4,577
Equity securities 15 20
Mortgage loans on real estate 608 471
Limited partnerships/corporations 115 152
Acquisition of:    
Fixed maturities (4,125) (4,881)
Equity securities (23) (20)
Mortgage loans on real estate (357) (574)
Limited partnerships/corporations (221) (158)
Short-term investments, net 14 403
Derivatives, net 62 35
Sales from consolidated investment entities 329 602
Purchases within consolidated investment entities (572) (607)
Collateral (delivered) received, net (95) 38
Other investments, net (12) (5)
Net cash used in investing activities - discontinued operations (128) 34
Net cash provided by investing activities 73 87
Cash Flows from Financing Activities:    
Deposits received for investment contracts 2,855 3,083
Maturities and withdrawals from investment contracts (3,285) (2,716)
Settlements on deposit contracts (6) 0
Proceeds from issuance of debt with maturities of more than three months 0 350
Repayment of debt with maturities of more than three months 0 (350)
Debt issuance costs 0 (6)
Borrowings of consolidated investment entities 304 469
Repayments of borrowings of consolidated investment entities (407) (461)
Contributions from (distributions to) participants in consolidated investment entities, net 282 34
Proceeds from issuance of common stock, net 2 1
Proceeds from issuance of preferred stock, net 293 0
Share-based compensation (17) (15)
Common stock acquired - Share repurchase (686) (500)
Dividends paid on common stock (3) (3)
Dividends paid on preferred stock (10) 0
Net cash used in financing activities - discontinued operations 0 (1,209)
Net cash used in financing activities (678) (1,323)
Net decrease in cash and cash equivalents (56) (182)
Cash and Cash Equivalents, beginning of period 1,538 1,716
Cash and Cash Equivalents, end of period 1,482 1,534
Accounting Standards Update 2016-02    
Non-cash investing and financing activities:    
Initial recognition of operating leases upon adoption of ASU 2016-02 146 0
Leased assets in exchange for finance lease liabilities $ 68 $ 0
v3.19.2
Business, Basis of Presentation and Significant Accounting Policies
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Business, Basis of Presentation and Significant Accounting Policies Business, Basis of Presentation and Significant Accounting Policies

Business    

Voya Financial, Inc. and its subsidiaries (collectively the "Company") is a financial services organization in the United States that offers a broad range of retirement services, investment management services, mutual funds, group insurance and supplemental health products.

The Company provides its principal products and services through four segments: Retirement, Investment Management, Employee Benefits and Individual Life. In addition, the Company includes in Corporate activities not directly related to its segments, results of the Retained Business (defined in the Discontinued Operations Note to these Condensed Consolidated Financial Statements) and certain run-off activities that are not meaningful to the Company's business strategy. See the Segments Note to these Condensed Consolidated Financial Statements.

After conducting a strategic review of the Individual Life business, in October 2018, the Company announced that it would retain the in-force block of individual life policies and cease new individual life insurance sales, effective December 31, 2018. Applications for individual life insurance policies were accepted through the end of 2018, resulting in some placement of policies in early 2019. The Company will continue to manage its existing in-force Individual Life business as a separate segment, with results included in the Company's Adjusted operating earnings before income taxes.

Prior to May 2013, the Company was an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING Group" or "ING"), a global financial services holding company based in The Netherlands. In May 2013, Voya Financial Inc. completed its initial public offering of common stock, including the issuance and sale of common stock by Voya Financial, Inc. and the sale of shares of common stock owned indirectly by ING Group. Between October 2013 and March 2015, ING Group completed the sale of its remaining shares of common stock of Voya Financial, Inc. in a series of registered public offerings.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and are unaudited. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates.

The Condensed Consolidated Financial Statements include the accounts of Voya Financial, Inc. and its subsidiaries, as well as partnerships (voting interest entities ("VOEs")) in which the Company has control and variable interest entities ("VIEs") for which the Company is the primary beneficiary. See the Consolidated Investment Entities Note to these Condensed Consolidated Financial Statements. Intercompany transactions and balances have been eliminated.

The accompanying Condensed Consolidated Financial Statements reflect adjustments (including normal, recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 2019, its results of operations, comprehensive income and changes in shareholders' equity for the three and six months ended June 30, 2019 and 2018, and its statements of cash flows for the six months ended June 30, 2019 and 2018, in conformity with U.S. GAAP. Interim results are not necessarily indicative of full year performance.

The December 31, 2018 Consolidated Balance Sheet is from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K, filed with the SEC. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K.



Adoption of New Pronouncements

The following table provides a description of the Company's adoption of new Accounting Standard Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB") and the impact of the adoption on the Company's financial statements.
Standard
Description of Requirements
Effective Date and Method of Adoption
Effect on the Financial Statements or Other Significant Matters
ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
This standard, issued in February 2018, permits a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 ("Tax Reform"). Stranded tax effects arise because U.S. GAAP requires that the impact of a change in tax laws or rates on deferred tax liabilities and assets be reported in net income, even if related to items recognized within accumulated other comprehensive income. The amount of the reclassification would be based on the difference between the historical corporate income tax rate and the newly enacted 21% corporate income tax rate, applied to deferred tax liabilities and assets reported within accumulated other comprehensive income.
January 1, 2019, with the change reported in the period of adoption.
The impact to the January 1, 2019 Condensed Consolidated Balance Sheet was an increase to AOCI of $343, with a corresponding decrease to Retained earnings. The ASU did not have a material impact on the Company's results of operations, cash flows, or disclosures.

Standard
Description of Requirements
Effective Date and Method of Adoption
Effect on the Financial Statements or Other Significant Matters
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities
This standard, issued in August 2017, enables entities to better portray risk management activities in their financial statements, as follows:
• Expands an entity's ability to hedge nonfinancial and financial risk components and reduces complexity in accounting for fair value hedges of interest rate risk,
• Eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item, and
• Eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness, and modifies required disclosures.

In October 2018, the FASB issued an amendment which expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting.
January 1, 2019, using the modified retrospective method, with the exception of the presentation and disclosure requirements which were adopted prospectively.
The adoption had no effect on the Company's financial condition, results of operations, or cash flows. The adoption resulted in a change to the Company's significant accounting policy with respect to Derivatives, as follows:

Fair Value Hedge: For derivative instruments that are designated and qualify as a fair value hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item.

Cash Flow Hedge: For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness is reported as a component of AOCI. Those amounts are subsequently reclassified to earnings when the hedged item affects earnings, and are reported in the same line item in the Condensed Consolidated Statements of Operations as impacted by the hedged item.

Other required disclosure changes have been included in Note 4, Derivative Financial Instruments.

Standard
Description of Requirements
Effective Date and Method of Adoption
Effect on the Financial Statements or Other Significant Matters
ASU 2016-02, Leases
This standard, issued in February 2016, requires lessees to recognize a right-of-use asset and a lease liability for all leases with terms of more than 12 months. The lease liability will be measured as the present value of the lease payments, and the asset will be based on the liability. For income statement purposes, expense recognition will depend on the lessee's classification of the lease as either finance, with a front-loaded amortization expense pattern similar to current capital leases, or operating, with a straight-line expense pattern similar to current operating leases. Lessor accounting will be similar to the current model, and lessors will be required to classify leases as operating, direct financing, or sales-type.

ASU 2016-02 also replaces the sale-leaseback guidance to align with the new revenue recognition standard, addresses statement of operation and statement of cash flow classification, and requires additional disclosures for all leases. In addition, the FASB issued various amendments during 2018 to clarify and simplify the provisions and implementation guidance of ASU 2016-02.
January 1, 2019 using the modified retrospective method.


Adoption of the ASU resulted in the establishment of a $146 lease liability for operating leases and a corresponding right-of-use asset, which are included in Other liabilities and Other assets, respectively. The Company elected the practical expedients at transition. The ASU did not impact the Company's Shareholders’ equity or results of operations, and did not materially impact cash flows or disclosures.


Future Adoption of Accounting Pronouncements
Long-Duration Contracts
In August 2018, the FASB issued ASU 2018-12, "Financial Services - Insurance (Topic 944) Targeted Improvements to the Accounting for Long-Duration Contracts" ("ASU 2018-12"), which changes the measurement and disclosures of insurance liabilities and deferred acquisition costs ("DAC") for long-duration contracts issued by insurers. The provisions of ASU 2018-12 are effective for fiscal years beginning after December 15, 2020, including interim periods, with early adoption permitted. On July 17, 2019, the FASB decided to issue an exposure draft proposing the extension of the effective date of ASU 2018-12 for public business entities that are required to file with the SEC by one year, to fiscal years beginning after December 15, 2021. This exposure draft is expected to be issued during the third quarter of 2019 and will have a 30 day comment period. The Company is currently in the process of evaluating the provisions of ASU 2018-12. While it is not possible to estimate the expected impact of adoption at this time, the Company believes there is a reasonable possibility that implementation of ASU 2018-12 may result in a significant impact on Shareholders’ equity and future earnings patterns.

In addition to requiring significantly expanded interim and annual disclosures regarding long-duration insurance contract assets and liabilities, ASU 2018-12's provisions include modifications to the accounting for such contracts in the following areas:
ASU 2018-12 Subject Area
Description of Requirements
Transition Provisions
Effect on the Financial Statements or Other Significant Matters
Assumptions used to measure the liability for future policy benefits for nonparticipating traditional and limited payment insurance contracts


Requires insurers to review and, if necessary, update cash flow assumptions at least annually.

The effect of updating cash flow assumptions will be measured on a retrospective catch-up basis and presented in the Statement of Operations in the period in which the update is made.
The rate used to discount the liability for future policy benefits will be required to be updated quarterly, with related changes in the liability recorded in AOCI. The discount rate will be based on an upper-medium grade fixed-income corporate instrument yield reflecting the duration characteristics of the relevant liabilities.

Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. Under either method, upon adoption the liability for future policy benefits will be remeasured using current discount rates as of the beginning of the earliest period presented with the impact recorded as a cumulative effect adjustment to AOCI.

The application of periodic assumption updates for nonparticipating traditional and limited payment insurance contracts is significantly different from the current accounting approach for such liabilities, which is based on assumptions that are locked in at contract inception unless a premium deficiency occurs. Under the current accounting guidance, the liability discount rate is based on expected yields on the underlying investment portfolio held by the insurer.
The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.
Measurement of market risk benefits


Creates a new category of benefit features called market risk benefits, defined as features that protect contract holders from capital market risk and expose the insurers to that risk. Market risk benefits will be required to be measured at fair value, with changes in fair value recognized in the Statement of Operations, except for changes in fair value attributable to changes in the instrument-specific credit risk, which will be recorded in AOCI.

Full retrospective application is required. Upon adoption, any difference between the fair value and pre-adoption carrying value of market risk benefits not currently measured at fair value will be recorded to retained earnings. In addition, the cumulative effect of changes in instrument-specific credit risk will be reclassified from retained earnings to AOCI.
Under the current accounting guidance, certain features that are expected to meet the definition of market risk benefits are accounted for as either insurance liabilities (for example, GMDB and GMIB) or embedded derivatives (for example, GMWBL and GMWB).
The implications of these requirements and related potential financial statement impacts are currently being evaluated.

ASU 2018-12 Subject Area
Description of Requirements
Transition Provisions
Effect on the Financial Statements or Other Significant Matters
Amortization of DAC and other balances


Requires DAC (and other balances that refer to the DAC model, such as deferred sales inducement costs and unearned revenue liabilities) for all long-duration contracts to be measured on a constant level basis over the expected life of the contract.

Initial adoption is required to be reported using either a full retrospective or modified retrospective approach. The method of transition applied for DAC and other balances must be consistent with the transition method selected for future policy benefit liabilities, as described above.

This approach is intended to approximate straight-line amortization and cannot be based on revenue or profits as it is under the current accounting model. Related amounts in AOCI will be eliminated upon adoption. ASU 2018-12 did not change the existing accounting guidance related to value of business acquired ("VOBA") and net cost of reinsurance, which allows, but does not require, insurers to amortize such balances on a basis consistent with DAC.

The implications of these requirements, including transition options, and related potential financial statement impacts are currently being evaluated.












The following table provides a description of future adoptions of other new accounting standards that may have an impact on the Company's financial statements when adopted:
Standard
Description of Requirements

Effective date and transition provisions
Effect on the financial statements or other significant matters
ASU 2019-04, Codification Improvements to Financial Instruments
This standard, issued in April 2019, represents changes to clarify, correct errors in, and improve the financial instruments guidance in the following areas:
• Topic 326, Financial Instruments-Credit Losses,
• Topic 815, Derivatives and Hedging, and
• Topic 825, Financial Instruments.
Generally January 1, 2020, including interim periods, with early adoption permitted. The effective dates and transition methods vary by provision.

The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2019-04.

ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract
This standard, issued in August 2018, requires a customer in a hosting arrangement that is a service contract to follow the guidance for internal-use software projects to determine which implementation costs to capitalize as an asset. Capitalized implementation costs are required to be expensed over the term of the hosting arrangement. In addition, a customer is required to apply the impairment and abandonment guidance for long-lived assets to the capitalized implementation costs. Balances related to capitalized implementation costs must be presented in the same financial statement line items as other hosting arrangement balances, and additional disclosures are required.
January 1, 2020 with early adoption permitted. Initial adoption of ASU 2018-15 may be reported either on a prospective or retrospective basis.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-15.
ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans
This standard, issued in August 2018, eliminates certain disclosure requirements that are no longer considered cost beneficial and requires new disclosures that are considered relevant.
January 1, 2021 with early adoption permitted. Initial adoption of ASU 2018-14 is required to be reported on a retrospective basis for all periods presented.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-14.
ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement
This standard, issued in August 2018, simplifies certain disclosure requirements for fair value measurement.
January 1, 2020, including interim periods, with early adoption permitted. The transition method varies by provision.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2018-13.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments
This standard, issued in June 2016:
• Introduces a new current expected credit loss ("CECL") model to measure impairment on certain types of financial instruments,
• Requires an entity to estimate lifetime expected credit losses, under the new CECL model, based on relevant information about historical events, current conditions, and reasonable and supportable forecasts,
• Modifies the impairment model for available-for-sale debt securities, and
• Provides a simplified accounting model for purchased financial assets with credit deterioration since their origination.

In addition, the FASB issued various amendments during 2018 and 2019 to clarify the provisions of ASU 2016-13.
January 1, 2020, including interim periods, with early adoption permitted. Initial adoption of ASU 2016-13 is required to be reported on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for certain provisions that are required to be applied prospectively.
The Company is currently in the process of determining the impact of adoption of the provisions of ASU 2016-13.

v3.19.2
Discontinued Operations (Notes)
6 Months Ended
Jun. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations

On June 1, 2018, the Company consummated a series of transactions (collectively, the "2018 Transaction") pursuant to a Master Transaction Agreement dated December 20, 2017 (the "MTA") with VA Capital Company LLC ("VA Capital") and Athene Holding Ltd. ("Athene"). As part of the 2018 Transaction, Venerable Holdings, Inc. ("Venerable"), a wholly owned subsidiary of VA Capital, acquired two of the Company's subsidiaries, Voya Insurance and Annuity Company ("VIAC") and Directed Services, LLC ("DSL"), and VIAC and other Voya subsidiaries reinsured to Athene substantially all of their fixed and fixed indexed annuities business. In connection with the 2018 Transaction, VIAC and another Voya subsidiary engaged in a series of reinsurance arrangements pursuant to which Voya and its subsidiaries other than VIAC retained VIAC’s businesses other than variable annuities and fixed and fixed indexed annuities. Pursuant to the terms of the 2018 Transaction, the Company has retained a small number of CBVA and Annuities policies that are not included in the disposed businesses described above as "Retained Business."

During the second quarter of 2019, the Company settled the outstanding purchase price true-up amounts with VA Capital. The Company does not anticipate further material charges in connection with the 2018 Transaction. Income(loss) from discontinued operations, net of tax for the six months ended June 30, 2019 includes a $82 charge related to the purchase price true-up settlement in connection with the 2018 Transaction.

The following table summarizes the components of Income (loss) from discontinued operations, net of tax for the six months ended June 30, 2019 and 2018:
 
Six Months Ended June 30,
 
2019
 
2018
Revenues:
 
 
 
Net investment income
$

 
$
510

Fee income

 
295

Premiums

 
(50
)
Total net realized capital gains (losses)

 
(345
)
Other revenue

 
10

Total revenues

 
420

Benefits and expenses:
 
 
 
Interest credited and other benefits to contract owners/policyholders

 
442

Operating expenses

 
(14
)
Net amortization of Deferred policy acquisition costs and Value of business acquired

 
49

Interest expense

 
10

Total benefits and expenses

 
487

Income (loss) from discontinued operations before income taxes

 
(67
)
Income tax expense (benefit)

 
(19
)
Adjustment to loss on sale, net of tax
(82
)
 
505

Income (loss) from discontinued operations, net of tax
$
(82
)
 
$
457


v3.19.2
Investments (excluding Consolidated Investment Entities)
6 Months Ended
Jun. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Investments (excluding Consolidated Investment Entities) Investments (excluding Consolidated Investment Entities)

Fixed Maturities

Available-for-sale and fair value option ("FVO") fixed maturities were as follows as of June 30, 2019:
 
Amortized Cost
 
Gross Unrealized Capital Gains
 
Gross Unrealized Capital Losses
 
Embedded Derivatives(2)
 
Fair Value
 
OTTI(3)(4)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
1,666

 
$
500

 
$

 
$

 
$
2,166

 
$

U.S. Government agencies and authorities
197

 
52

 

 

 
249

 

State, municipalities and political subdivisions
1,642

 
114

 
2

 

 
1,754

 

U.S. corporate public securities
18,170

 
2,307

 
67

 

 
20,410

 

U.S. corporate private securities
6,292

 
444

 
38

 

 
6,698

 

Foreign corporate public securities and foreign governments(1)
5,320

 
521

 
31

 

 
5,810

 

Foreign corporate private securities(1)
5,027

 
250

 
15

 

 
5,262

 

Residential mortgage-backed securities
5,282

 
285

 
20

 
29

 
5,576

 
10

Commercial mortgage-backed securities
3,892

 
203

 
5

 

 
4,090

 

Other asset-backed securities
2,415

 
46

 
23

 

 
2,438

 
2

Total fixed maturities, including securities pledged
49,903

 
4,722

 
201

 
29

 
54,453

 
12

Less: Securities pledged
1,739

 
219

 
13

 

 
1,945

 

Total fixed maturities
$
48,164

 
$
4,503

 
$
188

 
$
29

 
$
52,508

 
$
12

(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
(3) Represents Other-than-Temporary-Impairments ("OTTI") reported as a component of Other comprehensive income (loss).
(4) Amount excludes $411 of net unrealized gains on impaired available-for-sale securities.


Available-for-sale and FVO fixed maturities were as follows as of December 31, 2018:
 
Amortized Cost
 
Gross Unrealized Capital Gains
 
Gross Unrealized Capital Losses
 
Embedded Derivatives(2)
 
Fair Value
 
OTTI(3)(4)
Fixed maturities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
$
1,937

 
$
360

 
$
2

 
$

 
$
2,295

 
$

U.S. Government agencies and authorities
204

 
38

 

 

 
242

 

State, municipalities and political subdivisions
1,652

 
29

 
22

 

 
1,659

 

U.S. corporate public securities
19,210

 
1,053

 
415

 

 
19,848

 

U.S. corporate private securities
6,264

 
138

 
170

 

 
6,232

 

Foreign corporate public securities and foreign governments(1)
5,429

 
193

 
167

 

 
5,455

 

Foreign corporate private securities(1)
5,176

 
70

 
152

 

 
5,094

 

Residential mortgage-backed securities
4,616

 
214

 
53

 
26

 
4,803

 
11

Commercial mortgage-backed securities
3,438

 
33

 
55

 

 
3,416

 

Other asset-backed securities
2,095

 
30

 
48

 

 
2,077

 
2

Total fixed maturities, including securities pledged
50,021

 
2,158

 
1,084

 
26

 
51,121

 
13

Less: Securities pledged
1,824

 
107

 
64

 

 
1,867

 

Total fixed maturities
$
48,197

 
$
2,051

 
$
1,020

 
$
26

 
$
49,254

 
$
13

(1) Primarily U.S. dollar denominated.
(2) Embedded derivatives within fixed maturity securities are reported with the host investment. The changes in fair value of embedded derivatives are reported in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.
(3) Represents OTTI reported as a component of Other comprehensive income (loss).
(4) Amount excludes $300 of net unrealized gains on impaired available-for-sale securities.

The amortized cost and fair value of fixed maturities, including securities pledged, as of June 30, 2019, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as securities may be restructured, called or prepaid. Mortgage-backed securities ("MBS") and Other asset-backed securities ("ABS") are shown separately because they are not due at a single maturity date.
 
Amortized
Cost
 
Fair
Value
Due to mature:
 
 
 
One year or less
$
1,265

 
$
1,277

After one year through five years
6,452

 
6,697

After five years through ten years
9,227

 
9,800

After ten years
21,370

 
24,575

Mortgage-backed securities
9,174

 
9,666

Other asset-backed securities
2,415

 
2,438

Fixed maturities, including securities pledged
$
49,903

 
$
54,453



The investment portfolio is monitored to maintain a diversified portfolio on an ongoing basis. Credit risk is mitigated by monitoring concentrations by issuer, sector and geographic stratification and limiting exposure to any one issuer.

As of June 30, 2019 and December 31, 2018, the Company did not have any investments in a single issuer, other than obligations of the U.S. Government and government agencies, with a carrying value in excess of 10% of the Company’s Total shareholders' equity.

The following tables present the composition of the U.S. and foreign corporate securities within the fixed maturity portfolio by industry category as of the dates indicated:
 
Amortized
Cost
 
Gross
Unrealized
Capital
Gains
 
Gross
Unrealized
Capital
Losses
 
Fair
Value
June 30, 2019
 
 
 
 
 
 
 
Communications
$
2,456

 
$
368

 
$
1

 
$
2,823

Financial
5,184

 
614

 
6

 
5,792

Industrial and other companies
14,889

 
1,312

 
57

 
16,144

Energy
3,764

 
457

 
52

 
4,169

Utilities
6,270

 
575

 
23

 
6,822

Transportation
1,394

 
133

 
4

 
1,523

Total
$
33,957

 
$
3,459

 
$
143

 
$
37,273

 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
Communications
$
2,554

 
$
162

 
$
35

 
$
2,681

Financial
5,200

 
293

 
90

 
5,403

Industrial and other companies
15,591

 
487

 
422

 
15,656

Energy
4,034

 
194

 
143

 
4,085

Utilities
6,560

 
253

 
158

 
6,655

Transportation
1,281

 
47

 
32

 
1,296

Total
$
35,220

 
$
1,436

 
$
880

 
$
35,776



The Company has elected the FVO for certain of its fixed maturities to better match the measurement of assets and liabilities in the Condensed Consolidated Statements of Operations. Certain collateralized mortgage obligations ("CMOs"), primarily interest-only and principal-only strips, are accounted for as hybrid instruments and reported at fair value with changes in the fair value recorded in Other net realized capital gains (losses) in the Condensed Consolidated Statements of Operations.

The Company invests in various categories of CMOs, including CMOs that are not agency-backed, that are subject to different degrees of risk from changes in interest rates and defaults. The principal risks inherent in holding CMOs are prepayment and extension risks related to significant decreases and increases in interest rates resulting in the prepayment of principal from the underlying mortgages, either earlier or later than originally anticipated. As of June 30, 2019 and December 31, 2018, approximately 40.3% and 41.6%, respectively, of the Company's CMO holdings, were invested in the above mentioned types of CMOs such as interest-only or principal-only strips, that are subject to more prepayment and extension risk than traditional CMOs.

Public corporate fixed maturity securities are distinguished from private corporate fixed maturity securities based upon the manner in which they are transacted. Public corporate fixed maturity securities are issued initially through market intermediaries on a registered basis or pursuant to Rule 144A under the Securities Act of 1933 (the "Securities Act") and are traded on the secondary market through brokers acting as principal. Private corporate fixed maturity securities are originally issued by borrowers directly to investors pursuant to Section 4(a)(2) of the Securities Act, and are traded in the secondary market directly with counterparties, either without the participation of a broker or in agency transactions.

Repurchase Agreements

As of June 30, 2019 and December 31, 2018, the Company did not have any securities pledged in dollar rolls or reverse repurchase agreements. As of June 30, 2019, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $67, respectively, and included in Securities pledged and Payables under securities loan and repurchase agreements, including collateral held, respectively, on the Condensed Consolidated Balance Sheets. As of December 31, 2018, the carrying value of securities pledged and obligation to repay loans related to repurchase agreement transaction was $45 and $46, respectively. Securities pledged related to repurchase agreements are comprised of other asset-backed securities.

Securities Lending

The Company engages in securities lending whereby the initial collateral is required at a rate of 102% of the market value of the loaned securities.  The lending agent retains the collateral and invests it in high quality liquid assets on behalf of the Company. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. The lending agent indemnifies the Company against losses resulting from the failure of a counterparty to return securities pledged where collateral is insufficient to cover the loss. As of June 30, 2019 and December 31, 2018, the fair value of loaned securities was $1,707 and $1,635, respectively, and is included in Securities pledged on the Condensed Consolidated Balance Sheets.

If cash is received as collateral, the lending agent retains the cash collateral and invests it in short-term liquid assets on behalf of the Company. As of June 30, 2019 and December 31, 2018, cash collateral retained by the lending agent and invested in short-term liquid assets on the Company's behalf was $1,525 and $1,581, respectively, and is recorded in Short-term investments under securities loan agreements, including collateral delivered on the Condensed Consolidated Balance Sheets. As of June 30, 2019 and December 31, 2018, liabilities to return collateral of $1,525 and $1,581, respectively, are included in Payables under securities loan and repurchase agreements, including collateral held on the Condensed Consolidated Balance Sheets.

The Company accepts non-cash collateral in the form of securities. The securities retained as collateral by the lending agent may not be sold or re-pledged, except in the event of default, and are not reflected on the Company’s Condensed Consolidated Balance Sheets. This collateral generally consists of U.S. Treasury, U.S. Government agency securities and MBS pools. As of June 30, 2019 and December 31, 2018, the fair value of securities retained as collateral by the lending agent on the Company’s behalf was $238 and $111, respectively.

The following table presents borrowings under securities lending transactions by asset class pledged as of the dates indicated:
 
June 30, 2019 (1)(2)
 
December 31, 2018 (1)(2)
U.S. Treasuries
$
403

 
$
337

U.S. Government agencies and authorities
43

 
7

U.S. corporate public securities
860

 
992

Equity Securities

 
1

Short-term investments
61

 

Foreign corporate public securities and foreign governments
396

 
355

Payables under securities loan agreements
$
1,763

 
$
1,692

(1)As of June 30, 2019 and December 31, 2018, borrowings under securities lending transactions include cash collateral of $1,525 and $1,581, respectively.
(2)As of June 30, 2019 and December 31, 2018, borrowings under securities lending transactions include non-cash collateral of $238 and $111, respectively.

The Company's securities lending activities are conducted on an overnight basis, and all securities loaned can be recalled at any time. The Company does not offset assets and liabilities associated with its securities lending program.

Unrealized Capital Losses

Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of June 30, 2019:
 
Twelve Months or Less
Below Amortized Cost
 
More Than Twelve
Months Below
Amortized Cost
 
Total
 
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
U.S. Treasuries
$

 
$

 
$
54

 
$

*
$
54

 
$

*
State, municipalities and political subdivisions
7

 

*
49

 
2

 
56

 
2

 
U.S. corporate public securities
320

 
5

 
926

 
62

 
1,246

 
67

 
U.S. corporate private securities
273

 
5

 
496

 
33

 
769

 
38

 
Foreign corporate public securities and foreign governments
96

 
2

 
348

 
29

 
444

 
31

 
Foreign corporate private securities
86

 
1

 
491

 
14

 
577

 
15

 
Residential mortgage-backed
644

 
11

 
372

 
9

 
1,016

 
20

 
Commercial mortgage-backed
192

 
1

 
122

 
4

 
314

 
5

 
Other asset-backed
712

 
10

 
524

 
13

 
1,236

 
23

 
Total
$
2,330

 
$
35

 
$
3,382

 
$
166

 
$
5,712

 
$
201

 
Total number of securities in an unrealized loss position
342

 
 
 
542

 
 
 
884

 
 
 
*Less than $1.


Unrealized capital losses (including noncredit impairments), along with the fair value of fixed maturity securities, including securities pledged, by market sector and duration were as follows as of December 31, 2018:
 
Twelve Months or Less
Below Amortized Cost
 
More Than Twelve
Months Below
Amortized Cost
 
Total
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
 
Fair Value
 
Unrealized Capital Losses
U.S. Treasuries
$
24

 
$

*
$
94

 
$
2

 
$
118

 
$
2

State, municipalities and political subdivisions
523

 
10

 
241

 
12

 
764

 
22

U.S. corporate public securities
6,544

 
305

 
972

 
110

 
7,516

 
415

U.S. corporate private securities
2,348

 
68

 
888

 
102

 
3,236

 
170

Foreign corporate public securities and foreign governments
2,379

 
119

 
314

 
48

 
2,693

 
167

Foreign corporate private securities
2,130

 
113

 
403

 
39

 
2,533

 
152

Residential mortgage-backed
897

 
18

 
602

 
35

 
1,499

 
53

Commercial mortgage-backed
1,555

 
33

 
550

 
22

 
2,105

 
55

Other asset-backed
1,436

 
46

 
98

 
2

 
1,534

 
48

Total
$
17,836

 
$
712

 
$
4,162

 
$
372

 
$
21,998

 
$
1,084

Total number of securities in an unrealized loss position
2,338

 
 
 
751

 
 
 
3,089

 
 

*Less than $1.

Based on the Company's quarterly evaluation of its securities in a unrealized loss position, described below, the Company concluded that these securities were not other-than-temporarily impaired as of June 30, 2019. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.
On a quarterly basis, the Company evaluates its available-for-sale investment portfolio to determine whether there has been an other-than-temporary decline in fair value below the amortized cost basis. All available-for-sale securities with fair values less than amortized cost are included in the Company’s evaluation. Generally, for non-structured securities, management considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, management considers in the determination of recovery value the same consideration utilized in its overall impairment evaluation process, which incorporates available information and the company’s best estimate of scenario based outcomes regarding the specific security and issuer. The Company also considers quality and amount of any credit enhancement; the security's position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates; and the overall macroeconomic conditions. For structured securities, such as non-agency RMBS, CMBS, and ABS, the Company evaluates other-than-temporary impairments based on actual and projected cash flows, after considering the quality and updated loan-to-value ratios, reflecting current home prices of the underlying collateral, forecasted loss severity, the payment priority in the tranche and any credit enhancement within the structure. In assessing credit impairment, the Company performs discounted cash flow analysis comparing the current amortized cost of a security to the present value of the expected future cash flows, including estimated defaults, and prepayments. The discount rate is generally the effective interest rate of the fixed maturity prior to the impairment.

See the Business, Basis of Presentation and Significant Accounting Policies Note to our Consolidated Financial Statements in Part II, Item 8. in our Annual Report on Form 10-K for the policy used to evaluate whether the investments are other-than-temporarily impaired.

Gross unrealized capital losses on fixed maturities, including securities pledged, decreased $883 from $1,084 to $201 for the six months ended June 30, 2019. The decrease in gross unrealized capital losses was primarily due to declining interest rates.

At June 30, 2019, $39 of the total $201 of gross unrealized losses were from 13 available-for-sale fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for 12 months or greater.

Evaluating Securities for Other-Than-Temporary Impairments

The Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities, in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired.

The following table identifies the Company's impairments included in the Condensed Consolidated Statements of Operations, excluding impairments included in Other comprehensive income (loss) by type for the periods indicated:
 
Three Months Ended June 30,
 
2019
 
2018