Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Assets and liabilities measured at fair value

	Level 1		Level 2		Level 3		Total
June 30, 2012
Assets:
Available for sale (“AFS”) fixed maturities:
U.S. Government and government agencies	$	234	$	145	$	—	$	379
States, municipalities and political subdivisions		—		3,981		86		4,067
Foreign government		—		256		—		256
Residential MBS		—		3,869		320		4,189
Commercial MBS		—		2,866		20		2,886
All other corporate		5		10,642		557		11,204
Total AFS fixed maturities		239		21,759		983		22,981
Trading fixed maturities		—		446		1		447
Equity securities		991		89		41		1,121
Assets of managed investment entities (“MIE”)		153		2,618		54		2,825
Variable annuity assets (separate accounts) (a)		—		574		—		574
Other investments		—		131		—		131
Total assets accounted for at fair value	$	1,383	$	25,617	$	1,079	$	28,079
Liabilities:
Liabilities of managed investment entities	$	73	$	—	$	2,429	$	2,502
Derivatives in annuity benefits accumulated		—		—		512		512
Other liabilities — derivatives		—		26		—		26
Total liabilities accounted for at fair value	$	73	$	26	$	2,941	$	3,040
December 31, 2011
Assets:
Available for sale (“AFS”) fixed maturities:
U.S. Government and government agencies	$	248	$	134	$	—	$	382
States, municipalities and political subdivisions		—		3,794		83		3,877
Foreign government		—		254		—		254
Residential MBS		—		3,487		361		3,848
Commercial MBS		—		2,821		19		2,840
All other corporate		9		10,078		519		10,606
Total AFS fixed maturities		257		20,568		982		21,807
Trading fixed maturities		—		439		1		440
Equity securities		888		29		11		928
Assets of managed investment entities (“MIE”)		290		2,724		44		3,058
Variable annuity assets (separate accounts) (a)		—		548		—		548
Other investments		—		71		—		71
Total assets accounted for at fair value	$	1,435	$	24,379	$	1,038	$	26,852
Liabilities:
Liabilities of managed investment entities	$	194	$	—	$	2,593	$	2,787
Derivatives in annuity benefits accumulated		—		—		395		395
Other liabilities — derivatives		—		23		—		23
Total liabilities accounted for at fair value	$	194	$	23	$	2,988	$	3,205

(a) Variable annuity liabilities equal the fair value of variable annuity assets.

Unobservable inputs used by management in determining fair value of embedded derivatives

Unobservable Input	Range
Adjustment for insurance subsidiary’s credit risk	0.5% – 2.35% over the risk free rate
Risk margin for uncertainty in cash flows	0.3% reduction in the discount rate
Surrenders	4% – 25% of indexed account value
Partial surrenders	3% – 5% of indexed account value
Annuitizations	1% – 2% of indexed account value
Deaths	1% – 2.5% of indexed account value
Budgeted option costs	2.5% – 4.0% of indexed account value

Changes in balances of Level 3 financial assets and liabilities

				Total realized/unrealized gains (losses) included in
	Balance at March 31, 2012			Net income			Other comp. income (loss)		Purchases and issuances			Sales and Settlements			Transfer into Level 3		Transfer out of Level 3			Balance at June 30, 2012
AFS fixed maturities:
State and municipal	$	72		$	—		$	1	$	9		$	—		$	5		($1	)	$	86
Residential MBS		314			1			—		63			(7	)		21		(72	)		320
Commercial MBS		20			—			—		—			—			—		—			20
All other corporate		515			5			8		51			(22	)		7		(7	)		557
Trading fixed maturities		1			—			—		—			—			—		—			1
Equity securities		24			—			—		17			—			—		—			41
Assets of MIE		64			—			—		1			(9	)		—		(2	)		54
Liabilities of MIE (*)		(2,554	)		(19	)		—		—			144			—		—			(2,429	)
Embedded derivatives		(483	)		—			—		(39	)		10			—		—			(512	)

(*) Total realized/unrealized loss included in net income includes losses of $14 million related to liabilities outstanding as of June 30, 2012. See Note H — “Managed Investment Entities.”

				Total realized/unrealized gains (losses) included in
	Balance at March 31, 2011			Net income			Other comp. income (loss)			Purchases and Issuances			Sales and Settlements			Transfer into Level 3		Transfer out of Level 3			Balance at June 30, 2011
AFS fixed maturities:
State and municipal	$	21		$	—		$	—		$	53		$	—		$	10	$	—		$	84
Residential MBS		271			—			(2	)		17			(7	)		—		(24	)		255
Commercial MBS		9			—			—			—			—			1		—			10
All other corporate		424			1			6			46			(26	)		2		(71	)		382
Trading fixed maturities		1			—			—			—			—			—		—			1
Equity securities		21			—			—			—			—			—		—			21
Assets of MIE		54			—			—			9			(2	)		2		(10	)		53
Liabilities of MIE (*)		(2,316	)		(10	)		—			—			4			—		—			(2,322	)
Embedded derivatives		(234	)		(10	)		—			(60	)		5			—		—			(299	)

(*) Total realized/unrealized loss included in net income includes losses of $10 million related to liabilities outstanding as of June 30, 2011. See Note H — “Managed Investment Entities.”

				Total realized/unrealized gains (losses) included in
	Balance at December 31, 2011			Net income			Other comp. income (loss)		Purchases and Issuances			Sales and Settlements			Transfer into Level 3		Transfer out of Level 3			Balance at June 30, 2012
AFS fixed maturities:
State and municipal	$	83		$	—		$	1	$	19		$	—		$	5		($22	)	$	86
Residential MBS		361			2			—		71			(17	)		81		(178	)		320
Commercial MBS		19			—			1		—			—			—		—			20
All other corporate		519			7			11		77			(38	)		28		(47	)		557
Trading fixed maturities		1			—			—		—			—			—		—			1
Equity securities		11			—			—		26			—			4		—			41
Assets of MIE		44			—			—		13			(12	)		14		(5	)		54
Liabilities of MIE (*)		(2,593	)		(103	)		—		(366	)		633			—		—			(2,429	)
Embedded derivatives		(395	)		(62	)		—		(73	)		18			—		—			(512	)

(*) Total realized/unrealized loss included in net income includes losses of $51 million related to liabilities outstanding as of June 30, 2012. See Note H — “Managed Investment Entities.”

				Total realized/unrealized gains (losses) included in
	Balance at December 31, 2010			Net income			Other comp. income (loss)			Purchases and Issuances			Sales and Settlements			Transfer into Level 3		Transfer out of Level 3			Balance at June 30, 2011
AFS fixed maturities:
State and municipal	$	20		$	—		$	1		$	53		$	—		$	10	$	—		$	84
Residential MBS		312			1			(2	)		17			(20	)		7		(60	)		255
Commercial MBS		6			—			—			—			—			4		—			10
All other corporate		436			(1	)		6			91			(37	)		24		(137	)		382
Trading fixed maturities		3			—			—			—			—			—		(2	)		1
Equity securities		21			—			2			—			(2	)		—		—			21
Assets of MIE		48			(1	)		—			16			(6	)		8		(12	)		53
Liabilities of MIE (*)		(2,258	)		(72	)		—			—			8			—		—			(2,322	)
Embedded derivatives		(190	)		(29	)		—			(90	)		10			—		—			(299	)

(*) Total realized/unrealized loss included in net income includes losses of $71 million related to liabilities outstanding as of June 30, 2011. See Note H — “Managed Investment Entities.”

Fair value of financial instruments

June 30, 2012	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	1,523	$	1,523	$	1,523	$	—	$	—
Mortgage loans		488		491		—		—		491
Policy loans		247		247		—		—		247
Total financial assets not accounted for at fair value	$	2,258	$	2,261	$	1,523	$	—	$	738
Financial liabilities:
Annuity benefits accumulated (*)	$	16,559	$	16,773	$	—	$	—	$	16,773
Long-term debt		1,158		1,271		—		1,158		113
Total financial liabilities not accounted for at fair value	$	17,717	$	18,044	$	—	$	1,158	$	16,886

(*) Excludes life contingent annuities in the payout phase.