FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels. Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets. Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets. Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

The following tables present the fair value hierarchy levels of the Company's assets and liabilities that are carried and measured at fair value on a recurring basis as of December 31.

	2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies		$	12,265		$	732		$	0		$	12,997
Municipalities		0			1,195			0			1,195
Mortgage- and asset-backed securities		0			693			338			1,031
Public utilities		0			8,077			420			8,497
Sovereign and supranational		0			1,654			418			2,072
Banks/financial institutions		0			6,610			1,024			7,634
Other corporate		0			22,841			986			23,827
Total fixed maturities		12,265			41,802			3,186			57,253
Perpetual securities:
Banks/financial institutions		0			3,735			215			3,950
Other corporate		0			352			0			352
Total perpetual securities		0			4,087			215			4,302
Equity securities		13			6			4			23
Other assets:
Interest rate swaps		0			0			32			32
Foreign currency swaps		0			154			157			311
Credit default swaps		0			0			2			2
Total other assets		0			154			191			345
Cash and cash equivalents		2,041			0			0			2,041
Total assets		$	14,319		$	46,049		$	3,596		$	63,964
Liabilities:
Interest rate swaps		$	0		$	0		$	3		$	3
Foreign currency swaps		0			0			329			329
Foreign currency forwards		0			535			0			535
Credit default swaps		0			0			67			67
Total liabilities		$	0		$	535		$	399		$	934

	2011
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies		$	11,092		$	721		$	0		$	11,813
Municipalities		0			1,159			0			1,159
Mortgage- and asset-backed securities		0			944			394			1,338
Public utilities		0			6,803			422			7,225
Sovereign and supranational		0			1,874			434			2,308
Banks/financial institutions		0			6,379			1,074			7,453
Other corporate		0			15,171			1,105			16,276
Total fixed maturities		11,092			33,051			3,429			47,572
Perpetual securities:
Banks/financial institutions		0			5,552			526			6,078
Other corporate		0			361			0			361
Total perpetual securities		0			5,913			526			6,439
Equity securities		15			6			4			25
Other assets:
Interest rate swaps		0			0			34			34
Foreign currency swaps		0			0			341			341
Total other assets		0			0			375			375
Cash and cash equivalents		2,249			0			0			2,249
Total assets		$	13,356		$	38,970		$	4,334		$	56,660
Liabilities:
Interest rate swaps		$	0		$	0		$	4		$	4
Foreign currency swaps		0			0			397			397
Credit default swaps		0			0			130			130
Total liabilities		$	0		$	0		$	531		$	531

The following tables present the carrying amount and fair value categorized by fair value hierarchy level for the Company's financial instruments that are not carried at fair value as of December 31.

	2012
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies		$	32,043		$	32,332		$	0		$	0		$	32,332
Municipalities		492			0			520			0			520
Mortgage- and asset-backed securities		90			0			30			64			94
Public utilities		4,924			0			5,051			0			5,051
Sovereign and supranational		3,209			0			3,317			0			3,317
Banks/financial institutions		9,211			0			8,991			0			8,991
Other corporate		4,457			0			4,536			0			4,536
Total assets		$	54,426		$	32,332		$	22,445		$	64		$	54,841
Liabilities:
Notes payable (excluding capital leases)		$	4,343		$	0		$	0		$	4,992		$	4,992
Obligation to Japanese policyholder protection corporation		23			0			0			23			23
Total liabilities		$	4,366		$	0		$	0		$	5,015		$	5,015

				2011
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies		$	18,775		$	19,071		$	0		$	0		$	19,071
Municipalities		553			0			584			0			584
Mortgage- and asset-backed securities		129			0			39			95			134
Public utilities		5,615			0			5,637			0			5,637
Sovereign and supranational		4,200			0			4,165			0			4,165
Banks/financial institutions		12,389			0			11,480			0			11,480
Other corporate		5,348			0			5,312			0			5,312
Total assets		$	47,009		$	19,071		$	27,217		$	95		$	46,383
Liabilities:
Notes payable (excluding capital leases)		$	3,275		$	0		$	0		$	3,536		$	3,536
Obligation to Japanese policyholder protection corporation		71			0			0			71			71
Total liabilities		$	3,346		$	0		$	0		$	3,607		$	3,607

Fair Value of Financial Instruments

U.S. GAAP requires disclosure of the fair value of certain financial instruments including those that are not carried at fair value. The carrying amounts for cash and cash equivalents, receivables, accrued investment income, accounts payable, cash collateral and payables for security transactions approximated their fair values due to the short-term nature of these instruments. Liabilities for future policy benefits and unpaid policy claims are not financial instruments as defined by GAAP.

Fixed maturities, perpetual securities, and equity securities

We determine the fair values of our fixed maturity securities, perpetual securities, and privately issued equity securities using the following approaches or techniques: price quotes and valuations from third party pricing vendors (including quoted market prices readily available from public exchange markets), a discounted cash flow (DCF) pricing model, and non-binding price quotes we obtain from outside brokers.

Our DCF pricing model incorporates an option adjusted spread and utilizes various market inputs we obtain from both active and inactive markets. The estimated fair values developed by the DCF pricing model is most sensitive to prevailing credit spreads, the level of interest rates (yields) and interest rate volatility. Credit spreads are derived using a bond index to create a credit spread matrix which takes into account the current credit spread, ratings and remaining time to maturity, and subordination levels for securities that are included in the bond index. Our DCF pricing model is based on a widely used global bond index that comprises investments in active markets. The index provides a broad-based measure of the global fixed-income bond market. This index covers bonds issued by European and American issuers, which account for the majority of bonds that we hold. We validate the reliability of the DCF pricing model periodically by using the model to price investments for which there are quoted market prices from active and inactive markets or, in the alternative, are quoted by our custodian for the same or similar securities. For securities valued by our DCF pricing model that are below investment grade or have split ratings, a CDS spread is used in lieu of the index spread discussed above. The CDS is chosen based on an average of spreads of issues with the same issuer, rating and subordination, or comparable issues in that particular sector.

The pricing data and market quotes we obtain from outside sources, including third party pricing services, are reviewed internally for reasonableness. If a fair value appears unreasonable, we will re-examine the inputs and assess the reasonableness of the pricing data with the vendor. Additionally, we may compare the inputs to relevant market indices and other performance measurements. Based on that analysis, the valuation is confirmed or revised.

The fixed maturities classified as Level 3 consist of securities for which there are limited or no observable valuation inputs. For Level 3 securities that are investment grade, we estimate the fair value of these securities by obtaining non-binding broker quotes from a limited number of brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market conditions. We consider these inputs to be unobservable. For Level 3 investments that are below-investment-grade securities or private placements, we consider a variety of significant valuation inputs in the valuation process, including forward exchange rates, yen swap rates, dollar swap rates, interest rate volatilities, credit spread data on specific issuers, assumed default and default recovery rates, and certain probability assumptions. In obtaining these valuation inputs, we have determined that certain pricing assumptions and data used by our pricing sources are difficult to validate or corroborate by the market and/or appear to be internally developed rather than observed in or corroborated by the market. The use of these unobservable valuation inputs causes more subjectivity in the valuation process for these securities.

Historically, we have not adjusted the quotes or prices we obtain from the pricing services and brokers we use.

The following tables present the pricing sources for the fair values of our fixed maturities, perpetual securities, and equity securities as of December 31.

	2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	12,265		$	685		$	0		$	12,950
DCF pricing model		0			47			0			47
Total government and agencies		12,265			732			0			12,997
Municipalities:
Third party pricing vendor		0			1,177			0			1,177
DCF pricing model		0			18			0			18
Total municipalities		0			1,195			0			1,195
Mortgage- and asset-backed securities:
Third party pricing vendor		0			682			0			682
DCF pricing model		0			11			0			11
Broker/other		0			0			338			338
Total mortgage- and asset-backed securities		0			693			338			1,031
Public utilities:
Third party pricing vendor		0			5,144			0			5,144
DCF pricing model		0			2,908			420			3,328
Broker/other		0			25			0			25
Total public utilities		0			8,077			420			8,497
Sovereign and supranational:
Third party pricing vendor		0			540			0			540
DCF pricing model		0			619			418			1,037
Broker/other		0			495			0			495
Total sovereign and supranational		0			1,654			418			2,072
Banks/financial institutions:
Third party pricing vendor		0			4,257			0			4,257
DCF pricing model		0			2,136			444			2,580
Broker/other		0			217			580			797
Total banks/financial institutions		0			6,610			1,024			7,634
Other corporate:
Third party pricing vendor		0			18,093			0			18,093
DCF pricing model		0			4,747			575			5,322
Broker/other		0			1			411			412
Total other corporate		0			22,841			986			23,827
Total fixed maturities		12,265			41,802			3,186			57,253
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			283			0			283
DCF pricing model		0			3,452			215			3,667
Total banks/financial institutions		0			3,735			215			3,950

(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Other corporate:
DCF pricing model		0			352			0			352
Total other corporate		0			352			0			352
Total perpetual securities		0			4,087			215			4,302
Equity securities:
Third party pricing vendor		13			0			0			13
DCF pricing model		0			6			0			6
Broker/other		0			0			4			4
Total equity securities		13			6			4			23
Total securities available for sale		$	12,278		$	45,895		$	3,405		$	61,578

		2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	32,332		$	0		$	0		$	32,332
Total government and agencies		32,332			0			0			32,332
Municipalities:
Third party pricing vendor		0			464			0			464
DCF pricing model		0			56			0			56
Total municipalities		0			520			0			520
Mortgage- and asset-backed securities:
Third party pricing vendor		0			30			0			30
Broker/other		0			0			64			64
Total mortgage- and asset-backed securities		0			30			64			94
Public utilities:
Third party pricing vendor		0			58			0			58
DCF pricing model		0			4,993			0			4,993
Total public utilities		0			5,051			0			5,051
Sovereign and supranational:
Third party pricing vendor		0			370			0			370
DCF pricing model		0			2,947			0			2,947
Total sovereign and supranational		0			3,317			0			3,317
Banks/financial institutions:
Third party pricing vendor		0			254			0			254
DCF pricing model		0			8,737			0			8,737
Total banks/financial institutions		0			8,991			0			8,991
Other corporate:
Third party pricing vendor		0			122			0			122
DCF pricing model		0			4,414			0			4,414
Total other corporate		0			4,536			0			4,536
Total securities held to maturity		$	32,332		$	22,445		$	64		$	54,841

	2011
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available for sale, carried at fair value:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	11,092		$	721		$	0		$	11,813
Total government and agencies		11,092			721			0			11,813
Municipalities:
Third party pricing vendor		0			1,142			0			1,142
DCF pricing model		0			17			0			17
Total municipalities		0			1,159			0			1,159
Mortgage- and asset-backed securities:
Third party pricing vendor		0			932			0			932
DCF pricing model		0			12			0			12
Broker/other		0			0			394			394
Total mortgage- and asset-backed securities		0			944			394			1,338
Public utilities:
Third party pricing vendor		0			3,908			0			3,908
DCF pricing model		0			2,895			422			3,317
Total public utilities		0			6,803			422			7,225
Sovereign and supranational:
Third party pricing vendor		0			491			0			491
DCF pricing model		0			1,383			434			1,817
Total sovereign and supranational		0			1,874			434			2,308
Banks/financial institutions:
Third party pricing vendor		0			3,612			0			3,612
DCF pricing model		0			2,722			552			3,274
Broker/other		0			45			522			567
Total banks/financial institutions		0			6,379			1,074			7,453
Other corporate:
Third party pricing vendor		0			10,351			0			10,351
DCF pricing model		0			4,763			605			5,368
Broker/other		0			57			500			557
Total other corporate		0			15,171			1,105			16,276
Total fixed maturities		11,092			33,051			3,429			47,572
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			292			0			292
DCF pricing model		0			5,260			317			5,577
Broker/other		0			0			209			209
Total banks/financial institutions		0			5,552			526			6,078
Other corporate:
DCF pricing model		0			361			0			361
Total other corporate		0			361			0			361
Total perpetual securities		0			5,913			526			6,439

(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Equity securities:
Third party pricing vendor		15			0			0			15
DCF pricing model		0			6			0			6
Broker/other		0			0			4			4
Total equity securities		15			6			4			25
Total securities available for sale		$	11,107		$	38,970		$	3,959		$	54,036

		2011
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held to maturity, carried at amortized cost:
Fixed maturities:
Government and agencies:
Third party pricing vendor		$	19,071		$	0		$	0		$	19,071
Total government and agencies		19,071			0			0			19,071
Municipalities:
Third party pricing vendor		0			524			0			524
DCF pricing model		0			60			0			60
Total municipalities		0			584			0			584
Mortgage- and asset-backed securities:
Third party pricing vendor		0			39			0			39
Broker/other		0			0			95			95
Total mortgage- and asset-backed securities		0			39			95			134
Public utilities:
Third party pricing vendor		0			65			0			65
DCF pricing model		0			5,572			0			5,572
Total public utilities		0			5,637			0			5,637
Sovereign and supranational:
Third party pricing vendor		0			257			0			257
DCF pricing model		0			3,772			0			3,772
Broker/other		0			136			0			136
Total sovereign and supranational		0			4,165			0			4,165
Banks/financial institutions:
Third party pricing vendor		0			285			0			285
DCF pricing model		0			11,195			0			11,195
Total banks/financial institutions		0			11,480			0			11,480
Other corporate:
Third party pricing vendor		0			116			0			116
DCF pricing model		0			5,176			0			5,176
Broker/other		0			20			0			20
Total other corporate		0			5,312			0			5,312
Total securities held to maturity		$	19,071		$	27,217		$	95		$	46,383

The following is a discussion of the determination of fair value of our remaining financial instruments.

Derivatives

We use derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. Inputs used to value derivatives include, but are not limited to, interest rates, credit spreads, foreign currency forward and spot rates, and interest volatility.

The fair values of the foreign currency forwards associated with certain fixed-maturity securities and the fair values of the foreign currency swaps associated with our senior notes and subordinated debentures and the interest rate swap associated with our yen-denominated notes are based on the amounts we would expect to receive or pay to terminate the swaps. The determination of the fair value of these derivatives is based on observable market inputs, therefore they are classified as Level 2.

For derivatives associated with VIEs where we are the primary beneficiary, we are not the direct counterparty to the swap contracts. As a result, the fair value measurements incorporate the credit risk of the collateral associated with the VIE. We receive valuations from a third party pricing vendor for these derivatives. Based on an analysis of these derivatives and a review of the methodology employed by the pricing vendor, we determined that due to the long duration of these swaps and the need to extrapolate from short-term observable data to derive and measure long-term inputs, certain inputs, assumptions and judgments are required to value future cash flows that cannot be corroborated by current inputs or current observable market data. As a result, the derivatives associated with our consolidated VIEs are classified as Level 3 of the fair value hierarchy.

Notes payable

The fair values of our publicly issued notes payable classified as Level 3 were obtained from a limited number of independent brokers. These brokers base their quotes on a combination of their knowledge of the current pricing environment and market conditions. We consider these inputs to be unobservable. The fair values of our yen-denominated loans approximate their carrying values.

Obligation to Japanese policyholder protection corporation

The fair value of the obligation to the Japanese policyholder protection corporation classified as Level 3 is our estimated share of the industry's obligation calculated on a pro rata basis by projecting our percentage of the industry's premiums and reserves and applying that percentage to the total industry obligation payable in future years. We consider our inputs for this valuation to be unobservable.

2012
	Fixed Maturities																Perpetual Securities			Equity Securities		Derivatives(1)
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities			Sovereign and Supranational			Banks/ Financial Institutions				Other Corporate			Banks/ Financial Institutions					Interest Rate Swaps			Foreign Currency Swaps			Credit Default Swaps			Total
Balance, beginning of period	$	394		$	422		$	434		$	1,074			$	1,105		$	526		$	4	$	30		$	(56	)	$	(130	)	$	3,803
Realized investment gains (losses) included in earnings	(3		)	0			0			0				2			49			0		(1		)	(61		)	65			51
Unrealized gains (losses) included in other comprehensive income (loss)	(33		)	(2		)	(16		)	70				(87		)	33			0		0			(22		)	0			(57		)
Purchases, issuances, sales and settlements:
Purchases	0			0			0			0				0			0			0		0			0			0			0
Issuances	0			0			0			0				0			0			0		0			0			0			0
Sales	0			0			0			(326		)		(34		)	(393		)	0		0			0			0			(753		)
Settlements	(20		)	0			0			0				0			0			0		0			(33		)	0			(53		)
Transfers into Level 3	0			0			0			206			(2)	0			0			0		0			0			0			206
Transfers out of Level 3	0			0			0			0				0			0			0		0			0			0			0
Balance, end of period	$	338		$	420		$	418		$	1,024			$	986		$	215		$	4	$	29		$	(172	)	$	(65	)	$	3,197
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	(3	)	$	0		$	0		$	0			$	0		$	0		$	0	$	(1	)	$	(61	)	$	65		$	0

⁽¹⁾ Derivative assets and liabilities are presented net

⁽²⁾ Due to a lack of visibility to observe significant inputs to price

2011
	Fixed Maturities															Perpetual Securities		Equity Securities		Derivatives(1)
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Collateralized Debt Obligations			Sovereign and Supranational		Banks/ Financial Institutions			Other Corporate		Banks/ Financial Institutions				Interest Rate Swaps			Foreign Currency Swaps			Credit Default Swaps			Total
Balance, beginning of period	$	267		$	0	$	5		$	0	$	386		$	0	$	0	$	4	$	0		$	241		$	(343	)	$	560
Realized investment gains (losses) included in earnings	(16		)	0		(2		)	0		1			0		0		0		(33		)	(160		)	(64		)	(274		)
Unrealized gains (losses) included in other comprehensive income (loss)	18			0		0			0		15			0		0		0		0			(33		)	0			0
Purchases, issuances, sales and settlements:
Purchases	0			0		0			0		0			0		0		0		0			(6		)	0			(6		)
Issuances	0			0		0			0		0			0		0		0		0			0			0			0
Sales	0			0		(3		)	0		0			0		0		0		0			0			15			12
Settlements	(10		)	0		0			0		0			0		0		0		4			(8		)	262			248
Transfers into Level 3(2)	139			422		0			434		1,048			1,105		526		0		59			(90		)	0			3,643
Transfers out of Level 3(3)	(4		)	0		0			0		(376		)	0		0		0		0			0			0			(380		)
Balance, end of period	$	394		$	422	$	0		$	434	$	1,074		$	1,105	$	526	$	4	$	30		$	(56	)	$	(130	)	$	3,803
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in realized investment gains (losses)	$	(16	)	$	0	$	0		$	0	$	1		$	0	$	0	$	0	$	(33	)	$	(160	)	$	(64	)	$	(272	)

⁽¹⁾ Derivative assets and liabilities are presented net

⁽²⁾ Due to a lack of visibility to observe significant inputs to price

⁽³⁾ A result of changing our pricing methodology to using a third party pricing vendor for estimating fair values instead of obtaining pricing of the securities from brokers or arrangers

Transfers into and/or out of Level 3 are attributable to a change in the observability of inputs. Transfers into and/or out of any fair value hierarchy level are assumed to occur at the balance sheet date. There were no transfers between Level 1 and 2 for the years ended December 31, 2012 and 2011.

Fair Value Sensitivity

DCF Sensitivity

Our DCF pricing model utilizes various market inputs we obtain from both active and inactive markets. The estimated fair values developed by the DCF pricing models are most sensitive to prevailing credit spreads, the level of interest rates (yields), and, for our callable securities, interest rate volatility. Management believes that under normal market conditions, a movement of 50 basis points (bps) in interest rates and credit spreads and 50 percent in interest rate volatility would be sufficiently reasonable stresses to illustrate the sensitivity of valuations to these risk factors. Therefore, we selected these magnitudes of movement and provided both upward and downward movements in these key assumptions used to estimate fair value. Since the changes in fair value are relatively linear, readers of these financial statements can make their own judgments as to the movement in interest rates and the change in fair value based upon this data. The following scenarios provide a view of the sensitivity of our securities priced by our DCF pricing model.

The fair values of our available-for-sale fixed-maturity and perpetual securities valued by our DCF pricing model totaled $16.4 billion at December 31, 2012. The estimated effect of potential changes in interest rates, credit spreads and interest rate volatility on these fair values as of such date is as follows:

Interest Rates						Credit Spreads						Interest Rate Volatility
Factor Change		Change in fair value   (in millions)				Factor change		Change in fair value   (in millions)				Factor change		Change in fair value   (in millions)
	+50 bps		$	(825	)		+50 bps		$	(820	)		+50 %		$	(12	)
	-50 bps		864				-50 bps		843				-50 %		25

The fair values of our held-to-maturity fixed-maturity securities valued by our DCF pricing model totaled $21.1 billion at December 31, 2012. The estimated effect of potential changes in interest rates, credit spreads and interest rate volatility on these fair values as of such date is as follows:

Interest Rates						Credit Spreads						Interest Rate Volatility
Factor Change		Change in fair value   (in millions)				Factor change		Change in fair value   (in millions)				Factor change		Change in fair value   (in millions)
	+50 bps		$	(1,308	)		+50 bps		$	(1,223	)		+50 %		$	(110	)
	-50 bps		1,287				-50 bps		1,203				-50 %		117

Level 3 Significant Unobservable Input Sensitivity

The following tables summarize the significant unobservable inputs used in the valuation of our Level 3 available-for-sale investments and derivatives. Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

December 31, 2012
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets:
Securities available for sale, carried at fair value:
Fixed maturities:
Mortgage- and asset-backed securities		$	338	Consensus pricing	Offered quotes	N/A	(e)
Public utilities		420		Discounted cash flow	Historical volatility	7.36%
Sovereign and supranational		418		Discounted cash flow	Historical volatility	7.36%
Banks/financial institutions		444		Discounted cash flow	Historical volatility	7.36%
		580		Consensus pricing	Offered quotes	N/A	(e)
Other corporate		575		Discounted cash flow	Historical volatility	7.36%
		411		Consensus pricing	Offered quotes	N/A	(e)
Perpetual securities:
Banks/financial institutions		215		Discounted cash flow	Historical volatility	7.36%
Equity securities		4		Net asset value	Offered quotes	$2-$943 ($8)
Other assets:
Interest rate swaps		32		Discounted cash flow	Base correlation	49% - 50%	(a)
					CDS spreads	91 - 152 bps
					Recovery rate	37.00%
Foreign currency swaps		51		Discounted cash flow	Interest rates (USD)	1.84% - 2.84%	(b)
					Interest rates (JPY)	.84% - 2.05%	(c)
					CDS spreads	12 - 117 bps
					Foreign exchange rates	20.65%	(d)
		4		Discounted cash flow	Interest rates (USD)	1.84% - 2.84%	(b)
					Interest rates (JPY)	.84% - 2.05%	(c)
					CDS spreads	12 - 126 bps
		102		Discounted cash flow	Interest rates (USD)	1.84% - 2.84%	(b)
					Interest rates (JPY)	.84% - 2.05%	(c)
					Foreign exchange rates	20.65%	(d)
Credit default swaps		2		Discounted cash flow	Base correlation	49% - 50%	(a)
					CDS spreads	91 - 152 bps
					Recovery rate	37.00%
Total assets		$	3,596

(a) Weighted-average range of base correlations for our bespoke tranches for attachment and detachment points corresponding to market indices

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of our swaps

(c) Inputs derived from Japan long-term rates to accommodate long maturity nature of our swaps

(d) Based on 10 year volatility of JPY/USD exchange rate

(e) N/A represents securities where we receive unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques or unobservable inputs.

December 31, 2012
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Liabilities:
Interest rate swaps		$	3	Discounted cash flow	Base correlation	49% - 50%	(a)
					CDS spreads	91 - 152 bps
					Recovery rate	37.00%
Foreign currency swaps		118		Discounted cash flow	Interest rates (USD)	1.84% - 2.84%	(b)
					Interest rates (JPY)	.84% - 2.05%	(c)
					CDS spreads	22 - 141 bps
					Foreign exchange rates	20.65%	(d)
		60		Discounted cash flow	Interest rates (USD)	1.84% - 2.84%	(b)
					Interest rates (JPY)	.84% - 2.05%	(c)
					CDS spreads	25 - 186 bps
		151		Discounted cash flow	Interest rates (USD)	1.84% - 2.84%	(b)
					Interest rates (JPY)	.84% - 2.05%	(c)
					Foreign exchange rates	20.65%	(d)
Credit default swaps		67		Discounted cash flow	Base correlations	49% - 50%	(a)
					CDS spreads	91 - 152 bps
					Recovery rate	37.00%
Total liabilities		$	399

(a) Weighted-average range of base correlations for our bespoke tranches for attachment and detachment points corresponding to market indices

(b) Inputs derived from U.S. long-term rates to accommodate long maturity nature of our swaps

(c) Inputs derived from Japan long-term rates to accommodate long maturity nature of our swaps

(d) Based on 10 year volatility of JPY/USD exchange rate

The following is a discussion of the significant unobservable inputs or valuation technique used in determining the fair value of securities and derivatives classified as Level 3.

Annualized Historical Foreign Exchange Volatility

We own a portfolio of callable reverse dual-currency bonds (RDCs). RDCs are securities that have principal denominated in yen while paying U.S. dollar (USD) coupons. The market standard approach is to use implied volatility to value options or instruments with optionality because historical volatility may not represent current market participants' expectations about future volatility. Our use of historical foreign exchange volatility as an input for valuing these investments could result in a significant increase or decrease in fair value measurement, given the importance of this input to the overall valuation. Historical volatility is an unobservable input in the determination of fair value of public utilities, sovereign and supranational, certain banks/financial institutions, and certain other corporate investments.

Net Asset Value

We hold certain unlisted equity securities whose fair value is derived based on the financial statements published by the investee. These securities do not trade on an active market and the valuations derived are dependent on the availability of timely financial reporting of the investee. Net asset value is an unobservable input in the determination of fair value ofequity securities.

Offered Quotes

In circumstances where our valuation model price is overridden because it implies a value that is not consistent with current market conditions, we will solicit bids from a limited number of brokers. We also receive unadjusted prices from brokers for our mortgage and asset-backed securities. These quotes are non-binding but are reflective of valuation best estimates at that particular point in time. Offered quotes are an unobservable input in the determination of fair value of mortgage- and asset-backed securities, certain banks/financial institutions, certain other corporate, and equity securities investments.

Interest Rates, CDS Spreads, Foreign Exchange Rates

The significant drivers of the valuation of the interest and foreign exchange swaps are interest rates, foreign exchange rates and CDS spreads. Our swaps have long maturities that increase the sensitivity of the swaps to interest rate fluctuations. Since most of our yen-denominated cross currency swaps are in a net liability position, an increase in interest rates will decrease the liabilities and increase the value of the swap.

Foreign exchange swaps also have a lump-sum final settlement of foreign exchange principal receivables at the termination of the swap. An increase in yen interest rates will decrease the value of the final settlement foreign exchange receivables and decrease the value of the swap, and an increase in USD interest rates increase the swap value.

A similar sensitivity pattern is observed for the foreign exchange rates. When the spot U.S. dollar/Japanese yen (USD/JPY) foreign exchange rate decreases and the swap is receiving a final exchange payment in JPY, the swap value will increase due to the appreciation of the JPY. Most of our swaps are designed to receive payments in JPY at the termination and will thus be impacted by the USD/JPY foreign exchange rate in this way. In cases where there is no final foreign exchange receivable in JPY and we are paying JPY as interest payments and receiving USD, a decrease in the foreign exchange rate will lead to a decrease in the swap value.

The extinguisher feature in most of our swaps results in a cessation of cash flows and no further payments between the parties to the swap in the event of a default on the referenced or underlying collateral. To price this feature, we apply the survival probability of the referenced entity to the projected cash flows. The survival probability uses the CDS spreads and recovery rates to adjust the present value of the cash flows. For extinguisher swaps with positive values, an increase in CDS spreads decreases the likelihood of receiving the final exchange payments and reduces the value of the swap.

Due to the long duration of these swaps and the need to extrapolate from short-term observable data to derive and measure long-term inputs, certain inputs, assumptions and judgments are required to value future cash flows that cannot be corroborated by current inputs or current observable market data.

Interest rates, CDS spreads, and foreign exchange rates are unobservable inputs in the determination of fair value of foreign currency swaps.

Base Correlations, CDS Spreads, Recovery Rates

Our CDOs are tranches on baskets of single-name credit default swaps. The risks in these types of synthetic CDOs come from the single-name CDS risk and the correlations between the single names. The valuation of synthetic CDOs is dependent on the calibration of market prices for interest rates, single name CDS default probabilities and base correlation using financial modeling tools. Since there is limited or no observable data available for these tranches, these base correlations must be obtained from commonly traded market tranches such as the CDX and iTraxx indices. From the historical prices of these indices, base correlations can be obtained to develop a pricing curve of CDOs with different seniorities. Since the reference entities of the market indices do not match those in our portfolio underlying the synthetic CDO to be valued, several processing steps are taken to map the securities in our portfolio to the indices. With the base correlation determined and the appropriate spreads selected, a valuation is calculated. An increase in the CDS spreads in the underlying portfolio leads to a decrease in the value due to higher probability of defaults and losses. The impact on the valuation due to base correlation depends on a number of factors, including the riskiness between market tranches and the modeled tranche based on our portfolio and the equivalence between detachment points in these tranches. Generally speaking, an increase in base correlation will decrease the value of the senior tranches while increasing the value of junior tranches. This may result in a positive or negative value change.

The CDO tranches in our portfolio are junior tranches and, due to the low level of credit support for these tranches, exhibit equity-like behavior. As a result, an increase in recovery rates tends to cause their values to decrease.

Our interest rate swaps are linked to the underlying synthetic CDOs. The valuation of these swaps is performed using a similar approach to that of the synthetic CDOs themselves; that is, the base correlation model is used to ensure consistency between the synthetic CDOs and the swaps.

Base correlations, CDS spreads, and recovery rates are unobservable inputs in the determination of fair value of credit default swaps and interest rate swaps.

For additional information on our investments and financial instruments, see the accompanying Notes 1, 3 and 4.