Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2011

Fair Value Hierarchy for Assets Measured at Fair Value on a Recurring Basis

The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at June 30, 2011, and December 31, 2010. We do not have any material liabilities carried at fair value. There were no significant transfers between Level 1 and Level 2.

Fair Value Disclosures for Assets

(In millions)	Asset fair value measurements at June 30, 2011 using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Fixed maturities, available for sale:
States, municipalities and political subdivisions	$	-	$	3,227	$	4	$	3,231
Convertibles and bonds with warrants attached		-		73		-		73
United States government		6		-		-		6
Government-sponsored enterprises		-		162		-		162
Foreign government		-		3		-		3
Corporate securities		-		5,227		15		5,242
Subtotal		6		8,692		19		8,717
Common equities, available for sale		2,864		-		-		2,864
Preferred equities, available for sale		-		100		7		107
Taxable fixed maturities separate accounts		-		626		-		626
Top Hat Savings Plan		8		-		-		8
Total	$	2,878	$	9,418	$	26	$	12,322

(In millions)	Asset fair value measurements at December 31, 2010 using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Fixed maturities, available for sale:
States, municipalities and political subdivisions	$	-	$	3,139	$	4	$	3,143
Convertibles and bonds with warrants attached		-		69		-		69
United States government		5		-		-		5
Government-sponsored enterprises		-		200		-		200
Foreign government		-		3		-		3
Corporate securities		-		4,943		20		4,963
Subtotal		5		8,354		24		8,383
Common equities, available for sale		2,940		-		-		2,940
Preferred equities, available for sale		-		96		5		101
Taxable fixed maturities separate accounts		-		606		2		608
Top Hat Savings Plan		9		-		-		9
Total	$	2,954	$	9,056	$	31	$	12,041

Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

The following table provides the change in Level 3 assets for the three months ended June 30, 2011. Level 3 corporate fixed-maturity securities increased by $4 million as one security was purchased for $7 million and two securities totaling $3 million were transferred into Level 2. There were no other significant changes to Level 3 assets during this period.

(In millions)	Asset fair value measurements using significant unobservable inputs (Level 3)
	Corporate fixed maturities			States, municipalities and political subdivisions fixed maturities		Preferred equities		Total
Beginning balance, March 31, 2011	$	11		$	4	$	6	$	21
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		-			-		-		-
Included in other comprehensive income		-			-		1		1
Purchases		7			-		-		7
Transfers into Level 3		-			-		-		-
Transfers out of Level 3		(3	)		-		-		(3	)
Ending balance, June 30, 2011	$	15		$	4	$	7	$	26

(In millions)	Asset fair value measurements using significant unobservable inputs (Level 3)
	Taxable fixed maturities			Tax-exempt fixed maturities		Preferred equities			Total
Beginning balance, March 31, 2010	$	28		$	4	$	6		$	38
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		-			-		-			-
Included in other comprehensive income		-			-		(1	)		(1	)
Purchases, sales, issuances, and settlements		(3	)		-		-			(3	)
Transfers in and/or out of Level 3		(2	)		-		-			(2	)
Ending balance, June 30, 2010	$	23		$	4	$	5		$	32

The following table provides the change in Level 3 assets for the six months ended June 30, 2011. As a result of available observable inputs, four Level 3 corporate fixed-maturity securities transferred into Level 2 resulting in a $12 million decrease. There were no other significant changes to Level 3 assets during this period.

(In millions)	Asset fair value measurements using significant unobservable inputs (Level 3)
	Corporate fixed maturities			Taxable fixed maturities- separate accounts			States, municipalities and political subdivisions fixed maturities		Preferred equities		Total
Beginning balance, December 31, 2010	$	20		$	2		$	4	$	5	$	31
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		-			-			-		-		-
Included in other comprehensive income		-			-			-		1		1
Purchases		7			-			-		-		7
Transfers into Level 3		-			-			-		1		1
Transfers out of Level 3		(12	)		(2	)		-		-		(14	)
Ending balance, June 30, 2011	$	15		$	-		$	4	$	7	$	26

(In millions)	Asset fair value measurements using significant unobservable inputs (Level 3)
	Taxable fixed maturities			Taxable fixed maturities- separate accounts		Tax-exempt fixed maturities		Preferred equities		Total
Beginning balance, December 31, 2009	$	27		$	-	$	4	$	5	$	36
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		-			-		-		-		-
Included in other comprehensive income		-			-		-		-		-
Purchases, sales, issuances, and settlements		2			-		-		-		2
Transfers in and/or out of Level 3		(6	)		-		-		-		(6	)
Ending balance, June 30, 2010	$	23		$	-	$	4	$	5	$	32

Book Value and Principal Amounts of Long-Term Debt

This table summarizes the amortized cost and principal amounts of our long-term debt:

(In millions)			Book value				Principal amount
			June 30,		December 31,		June 30,		December 31,
Interest rate	Year of issue		2011		2010		2011		2010
6.900%	1998	Senior debentures, due 2028	$	28	$	28	$	28	$	28
6.920%	2005	Senior debentures, due 2028		391		391		391		391
6.125%	2004	Senior notes, due 2034		371		371		374		374
		Total	$	790	$	790	$	793	$	793

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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