Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

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

The following tables illustrate the fair value hierarchy for those assets measured at fair value on a recurring basis at June 30, 2012, and December 31, 2011. We do not have any material liabilities carried at fair value. There were no transfers between Level 1 and Level 2.

(In millions)	Asset fair value measurements at June 30, 2012 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	$	-	$	3,281	$	2	$	3,283
Convertibles and bonds with warrants attached		-		51		-		51
United States government		8		-		-		8
Government-sponsored enterprises		-		86		-		86
Foreign government		-		3		-		3
Corporate securities		-		5,590		4		5,594
Subtotal		8		9,011		6		9,025
Common equities, available for sale		3,007		-		-		3,007
Preferred equities, available for sale		-		125		7		132
Taxable fixed maturities separate accounts		-		657		-		657
Top Hat Savings Plan		9		-		-		9
Total	$	3,024	$	9,793	$	13	$	12,830

(In millions)	Asset fair value measurements at December 31, 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	$	-	$	3,249	$	3	$	3,252
Convertibles and bonds with warrants attached		-		59		-		59
United States government		7		-		-		7
Government-sponsored enterprises		-		160		-		160
Foreign government		-		3		-		3
Corporate securities		-		5,280		18		5,298
Subtotal		7		8,751		21		8,779
Common equities, available for sale		2,854		-		-		2,854
Preferred equities, available for sale		-		98		4		102
Taxable fixed-maturities separate accounts		-		628		-		628
Top Hat Savings Plan		8		-		-		8
Total	$	2,869	$	9,477	$	25	$	12,371

Change in Level 3 Assets

The following tables provide the change in Level 3 assets for the three months ended June 30:

(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, 2012	$	16		$	2	$	7	$	25
Total gains or losses (realized/unrealized):
Included in earnings		-			-		-		-
Included in other comprehensive income		-			-		-		-
Purchases		-			-		-		-
Sales		(1	)		-		-		(1	)
Transfers into Level 3		-			-		-		-
Transfers out of Level 3		(11	)		-		-		(11	)
Ending balance, June 30, 2012	$	4		$	2	$	7	$	13

Beginning balance, March 31, 2011	$	11		$	4	$	6	$	21
Total gains or losses (realized/unrealized):
Included in earnings		-			-		-		-
Included in other comprehensive income		-			-		1		1
Purchases		7			-		-		7
Sales		-			-		-		-
Transfers into Level 3		-			-		-		-
Transfers out of Level 3		(3	)		-		-		(3	)
Ending balance, June 30, 2011	$	15		$	4	$	7	$	26

The following tables provide the change in Level 3 assets for the six months ended June 30:

(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, 2011	$	18		$	-		$	3		$	4	$	25
Total gains or losses (realized/unrealized):
Included in earnings		-			-			-			-		-
Included in other comprehensive income		3			-			-			2		5
Purchases		-			-			-			1		1
Sales		(4	)		-			(1	)		-		(5	)
Transfers into Level 3		1			-			-			-		1
Transfers out of Level 3		(14	)		-			-			-		(14	)
Ending balance, June 30, 2012	$	4		$	-		$	2		$	7	$	13

Beginning balance, December 31, 2010	$	20		$	2		$	4		$	5	$	31
Total gains or losses (realized/unrealized):
Included in earnings		-			-			-			-		-
Included in other comprehensive income		-			-			-			1		1
Purchases		7			-			-			-		7
Sales													-
Transfers into Level 3		-			-			-			1		1
Transfers out of Level 3		(12	)		(2	)		-			-		(14	)
Ending balance, June 30, 2011	$	15		$	-		$	4		$	7	$	26

Summary of Amortized Cost 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			2012		2011		2012		2011
	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

Fair Value of Life Policy Loans

The following table shows the fair value of our life policy loans, included in other invested assets, subject to fair value disclosure requirements:

(In millions)	Life insurance assets fair value disclosures at June 30, 2012 using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Life policy loans	$	-	$	-	$	46	$	46

Debt

Fair Values of Deferred Annuities, Structured Settlements and Other Items

The following table shows fair values of our note payable and long-term debt subject to fair value disclosure requirements:

(In millions)	Note payable and long-term debt fair value disclosures at June 30, 2012 using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Note payable	$	-	$	104	$	-	$	104
6.9% senior debentures, due 2028		-		32		-		32
6.92% senior debentures, due 2028		-		457		-		457
6.125% senior notes, due 2034		-		410		-		410
Total	$	-	$	1,003	$	-	$	1,003

Deferred annuities, structured settlements, and other

Fair Values of Deferred Annuities, Structured Settlements and Other Items

The following table shows fair values of our deferred annuities and structured settlements, included in life policy and investment contract reserves, subject to fair value disclosure requirements:

(In millions)	Life insurance liabilities fair value disclosures at June 30, 2012 using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Deferred annuities	$	-	$	-	$	834	$	834
Structured settlements		-		214		-		214
Total	$	-	$	214	$	834	$	1,048

- 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 and/or nonrecurring 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 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 (loss), 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, issues, 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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- Definition

Tabular disclosure of liabilities, 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 and/or nonrecurring 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). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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