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Composition of Portfolio by Sector
2016
2015
Debt and perpetual securities, at amortized cost:
Banks/financial institutions
(1)
9.8%
10.4%
Government and agencies
.6
.7
Municipalities
4.8
5.1
Public utilities
15.9
16.9
Sovereign and supranational
1.4
1.4
Mortgage- and asset-backed securities
.3
.3
Other corporate
53.7
52.0
Total debt and perpetual securities
86.5
86.8
Equity securities
.8
.0
Other investments
(2)
2.6
1.3
Cash and cash equivalents
10.1
11.9
Total investments and cash
100.0%
100.0%
(1)
Includes .3% of perpetual securities at December 31, 2016 and 2015, respectively.
(2)
Includes 2.5% and .9% of loan receivables at December 31, 2016 and 2015, respectively.
See Note 3 of the Notes to the Consolidated Financial Statements and the Market Risks of Financial Instruments -
Credit Risk subsection of MD&A for more information regarding the sector concentrations of our investments.
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OTHER OPERATIONS
Corporate operating expenses consist primarily of personnel compensation, benefits, reinsurance retrocession
activities, and facilities expenses. Corporate expenses, excluding investment and retrocession income, were $141 million
in 2016, $90 million in 2015 and $91 million in 2014. Investment income included in reported corporate expenses was $18
million in 2016, $22 million in 2015 and $13 million in 2014, and net retrocession income was $7 million in 2016 and 2015.
ANALYSIS OF FINANCIAL CONDITION
Our financial condition has remained strong in the functional currencies of our operations. The yen/dollar exchange
rate at the end of each period is used to translate yen-denominated balance sheet items to U.S. dollars for reporting
purposes.
The following table demonstrates the effect of the change in the yen/dollar exchange rate by comparing select
balance sheet items as reported at December 31, 2016, with the amounts that would have been reported had the
exchange rate remained unchanged from December 31, 2015.
Impact of Foreign Exchange on Balance Sheet Items
(In millions)
As
Reported
Exchange
Effect
Net of
Exchange Effect
(1)
Yen/dollar exchange rate
(2)
116.49
120.61
Investments and cash
$116,361
$ 2,522
$113,839
Deferred policy acquisition costs
8,993
197
8,796
Policy liabilities
93,726
2,853
90,873
(1)
Amounts excluding foreign currency changes on U.S. dollar-denominated items (a non-U.S. GAAP measure) were determined using
the same yen/dollar exchange rate for the current period as the comparable period in the prior year.
(2)
The exchange rate at December 31, 2016, was 116.49 yen to one dollar, or 3.5% stronger than the December 31, 2015, exchange
rate of 120.61.