Fair Value Measurements (Tables)

9 Months Ended

Sep. 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 September 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 September 30, 2011 using:
	Quoted prices in				Significant
	active markets for		Significant other		unobservable
	identical assets		observable inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturities, available for sale:
States, municipalities and political subdivisions	$	-	$	3,236	$	3	$	3,239
Convertibles and bonds with warrants attached		-		69		-		69
United States government		7		-		-		7
Government-sponsored enterprises		-		217		-		217
Foreign government		-		3		-		3
Corporate securities		-		5,297		22		5,319
Subtotal		7		8,822		25		8,854
Common equities, available for sale		2,509		-		-		2,509
Preferred equities, available for sale		-		94		6		100
Taxable fixed maturities separate accounts		-		631		-		631
Top Hat Savings Plan		7		-		-		7
Total	$	2,523	$	9,547	$	31	$	12,101

(In millions)	Asset fair value measurements at December 31, 2010 using:
	Quoted prices in				Significant
	active markets for		Significant other		unobservable
	identical assets		observable inputs		inputs
	(Level 1)		(Level 2)		(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 September 30, 2011. Level 3 corporate fixed-maturity securities increased by $7 million as one security was purchased for $8 million, two securities totaling $8 million were transferred into Level 2 and one security totaling $7 million was transferred into Level 3. 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)
						States,
						municipalities and
	Corporate			Taxable fixed		political
	fixed			maturities-		subdivisions fixed			Preferred
	maturities			separate accounts		maturities			equities			Total
Beginning balance, June 30, 2011	$	15		$	-	$	4		$	7		$	26
Total gains or losses (realized/unrealized):
Included in earnings (or changes in net assets)		-			-		-			-			-
Included in other comprehensive income		-			-		-			(1	)		(1	)
Purchases		8			-		-			-			8
Sales		-			-		(1	)		-			(1	)
Transfers into Level 3		7			-		-			-			7
Transfers out of Level 3		(8	)		-		-			-			(8	)
Ending balance, September 30, 2011	$	22		$	-	$	3		$	6		$	31

(In millions)	Asset fair value measurements using significant unobservable inputs (Level 3)
						States,
						municipalities and
	Corporate			Taxable fixed		political
	fixed			maturities-		subdivisions fixed		Preferred
	maturities			separate accounts		maturities		equities		Total
Beginning balance, June 30, 2010	$	23		$	-	$	4	$	5	$	32
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		(4	)		2		-		-		(2	)
Transfers in and/or out of Level 3		1			-		-		-		1
Ending balance, September 30, 2010	$	21		$	2	$	4	$	5	$	32

The following table provides the change in Level 3 assets for the nine months ended September 30, 2011. Level 3 corporate fixed-maturity securities increased $2 million for the nine months ended September 30, 2011. The change in corporate fixed-maturity securities resulted from the transfer of five securities totaling $20 million into Level 2, two securities totaling $7 million transferred into Level 3 and the purchase of two securities totaling $15 million. 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)
							States,
							municipalities and
	Corporate			Taxable fixed			political
	fixed			maturities-			subdivisions fixed			Preferred
	maturities			separate accounts			maturities			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		-			-			-			-		-
Purchases		15			-			-			-		15
Sales		-			-			(1	)		-		(1	)
Transfers into Level 3		7			-			-			1		8
Transfers out of Level 3		(20	)		(2	)		-			-		(22	)
Ending balance, September 30, 2011	$	22		$	-		$	3		$	6	$	31

(In millions)	Asset fair value measurements using significant unobservable inputs (Level 3)
	Taxable			Taxable fixed
	fixed			maturities-		Tax-exempt fixed		Preferred
	maturities			separate accounts		maturities		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		1			-		-		-		1
Purchases, sales, issuances, and settlements		(2	)		2		-		-		-
Transfers in and/or out of Level 3		(5	)		-		-		-		(5	)
Ending balance, September 30, 2010	$	21		$	2	$	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
			September 30,		December 31,		September 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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