FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Hierarchy, Assets and Liabilities Measured on Recurring Basis

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



	March 31, 2014
(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		$	18,407		$	499		$	0		$	18,906
Municipalities		0			1,097			0			1,097
Mortgage- and asset-backed securities		0			404			262			666
Public utilities		0			7,926			0			7,926
Sovereign and supranational		0			1,544			0			1,544
Banks/financial institutions		0			6,767			25			6,792
Other corporate		0			27,350			0			27,350
Total fixed maturities		18,407			45,587			287			64,281
Perpetual securities:
Banks/financial institutions		0			2,731			56			2,787
Other corporate		0			229			0			229
Total perpetual securities		0			2,960			56			3,016
Equity securities		14			4			3			21
Other assets:
Foreign currency swaps		0			320			106			426
Foreign currency forwards		0			58			0			58
Foreign currency options		0			26			0			26
Credit default swaps		0			0			1			1
Interest rate swaptions		0			12			0			12
Total other assets		0			416			107			523
Cash and cash equivalents		1,994			0			0			1,994
Total assets		$	20,415		$	48,967		$	453		$	69,835
Liabilities:
Foreign currency swaps		$	0		$	14		$	192		$	206
Foreign currency forwards		0			59			0			59
Foreign currency options		0			23			0			23
Credit default swaps		0			0			2			2
Interest rate swaptions		0			61			0			61
Futures		0			7			0			7
Total liabilities		$	0		$	164		$	194		$	358



	December 31, 2013
(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		$	14,928		$	504		$	0		$	15,432
Municipalities		0			1,051			0			1,051
Mortgage- and asset-backed securities		0			402			369			771
Public utilities		0			7,562			0			7,562
Sovereign and supranational		0			1,523			0			1,523
Banks/financial institutions		0			6,486			23			6,509
Other corporate		0			25,222			0			25,222
Total fixed maturities		14,928			42,750			392			58,070
Perpetual securities:
Banks/financial institutions		0			2,686			52			2,738
Other corporate		0			209			0			209
Total perpetual securities		0			2,895			52			2,947
Equity securities		14			4			3			21
Other assets:
Foreign currency swaps		0			341			104			445
Foreign currency forwards		0			17			0			17
Foreign currency options		0			4			0			4
Credit default swaps		0			0			1			1
Interest rate swaps		0			0			1			1
Interest rate swaptions		0			20			0			20
Total other assets		0			382			106			488
Cash and cash equivalents		2,543			0			0			2,543
Total assets		$	17,485		$	46,031		$	553		$	64,069
Liabilities:
Foreign currency swaps		$	0		$	15		$	203		$	218
Foreign currency forwards		0			582			0			582
Foreign currency options		0			1			0			1
Credit default swaps		0			0			4			4
Interest rate swaptions		0			32			0			32
Total liabilities		$	0		$	630		$	207		$	837

Fair Value Hierarchy Levels of Assets and Liabilities Carried at Cost or Amortized Cost

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.



	March 31, 2014
(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		$	23,461		$	25,129		$	0		$	0		$	25,129
Municipalities		409			0			455			0			455
Mortgage and asset-backed securities		58			0			20			41			61
Public utilities		3,993			0			4,075			0			4,075
Sovereign and supranational		3,011			0			3,118			0			3,118
Banks/financial institutions		6,398			0			6,277			0			6,277
Other corporate		3,528			0			3,701			0			3,701
Total assets		$	40,858		$	25,129		$	17,646		$	41		$	42,816
Liabilities:
Other policyholders’ funds		$	6,547		$	0		$	0		$	6,391		$	6,391
Notes payable (excluding capital leases)		4,908			0			0			5,389			5,389
Total liabilities		$	11,455		$	0		$	0		$	11,780		$	11,780



	December 31, 2013
(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		$	27,362		$	28,708		$	0		$	0		$	28,708
Municipalities		399			0			440			0			440
Mortgage and asset-backed securities		58			0			20			41			61
Public utilities		3,900			0			3,928			0			3,928
Sovereign and supranational		2,941			0			3,040			0			3,040
Banks/financial institutions		6,310			0			6,128			0			6,128
Other corporate		3,445			0			3,541			0			3,541
Total assets		$	44,415		$	28,708		$	17,097		$	41		$	45,846
Liabilities:
Other policyholders’ funds		$	5,861		$	0		$	0		$	5,715		$	5,715
Notes payable (excluding capital leases)		4,891			0			0			5,241			5,241
Total liabilities		$	10,752		$	0		$	0		$	10,956		$	10,956

Fair Value Assets Available-for-Sale Securities Primary Pricing Sources

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



	March 31, 2014
(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		$	18,407		$	499		$	0		$	18,906
Total government and agencies		18,407			499			0			18,906
Municipalities:
Third party pricing vendor		0			1,097			0			1,097
Total municipalities		0			1,097			0			1,097
Mortgage- and asset-backed securities:
Third party pricing vendor		0			404			0			404
Broker/other		0			0			262			262
Total mortgage- and asset-backed securities		0			404			262			666
Public utilities:
Third party pricing vendor		0			7,926			0			7,926
Total public utilities		0			7,926			0			7,926
Sovereign and supranational:
Third party pricing vendor		0			1,544			0			1,544
Total sovereign and supranational		0			1,544			0			1,544
Banks/financial institutions:
Third party pricing vendor		0			6,767			0			6,767
Broker/other		0			0			25			25
Total banks/financial institutions		0			6,767			25			6,792
Other corporate:
Third party pricing vendor		0			27,350			0			27,350
Total other corporate		0			27,350			0			27,350
Total fixed maturities		18,407			45,587			287			64,281
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			2,731			56			2,787
Total banks/financial institutions		0			2,731			56			2,787
Other corporate:
Third party pricing vendor		0			229			0			229
Total other corporate		0			229			0			229
Total perpetual securities		0			2,960			56			3,016
Equity securities:
Third party pricing vendor		14			4			0			18
Broker/other		0			0			3			3
Total equity securities		14			4			3			21
Total securities available for sale		$	18,421		$	48,551		$	346		$	67,318



	December 31, 2013
(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		$	14,928		$	504		$	0		$	15,432
Total government and agencies		14,928			504			0			15,432
Municipalities:
Third party pricing vendor		0			1,051			0			1,051
Total municipalities		0			1,051			0			1,051
Mortgage- and asset-backed securities:
Third party pricing vendor		0			402			0			402
Broker/other		0			0			369			369
Total mortgage- and asset-backed securities		0			402			369			771
Public utilities:
Third party pricing vendor		0			7,562			0			7,562
Total public utilities		0			7,562			0			7,562
Sovereign and supranational:
Third party pricing vendor		0			1,523			0			1,523
Total sovereign and supranational		0			1,523			0			1,523
Banks/financial institutions:
Third party pricing vendor		0			6,486			0			6,486
Broker/other		0			0			23			23
Total banks/financial institutions		0			6,486			23			6,509
Other corporate:
Third party pricing vendor		0			25,220			0			25,220
Broker/other		0			2			0			2
Total other corporate		0			25,222			0			25,222
Total fixed maturities		14,928			42,750			392			58,070
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			2,686			52			2,738
Total banks/financial institutions		0			2,686			52			2,738
Other corporate:
Third party pricing vendor		0			209			0			209
Total other corporate		0			209			0			209
Total perpetual securities		0			2,895			52			2,947
Equity securities:
Third party pricing vendor		14			4			0			18
Broker/other		0			0			3			3
Total equity securities		14			4			3			21
Total securities available for sale		$	14,942		$	45,649		$	447		$	61,038

Fair Value Assets Held-To-Maturity Securities Primary Pricing Sources



	December 31, 2013
(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		$	28,708		$	0		$	0		$	28,708
Total government and agencies		28,708			0			0			28,708
Municipalities:
Third party pricing vendor		0			440			0			440
Total municipalities		0			440			0			440
Mortgage- and asset-backed securities:
Third party pricing vendor		0			20			0			20
Broker/other		0			0			41			41
Total mortgage- and asset-backed securities		0			20			41			61
Public utilities:
Third party pricing vendor		0			3,928			0			3,928
Total public utilities		0			3,928			0			3,928
Sovereign and supranational:
Third party pricing vendor		0			3,040			0			3,040
Total sovereign and supranational		0			3,040			0			3,040
Banks/financial institutions:
Third party pricing vendor		0			6,128			0			6,128
Total banks/financial institutions		0			6,128			0			6,128
Other corporate:
Third party pricing vendor		0			3,509			0			3,509
Broker/other		0			32			0			32
Total other corporate		0			3,541			0			3,541
Total securities held to maturity		$	28,708		$	17,097		$	41		$	45,846



	March 31, 2014
(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		$	25,129		$	0		$	0		$	25,129
Total government and agencies		25,129			0			0			25,129
Municipalities:
Third party pricing vendor		0			455			0			455
Total municipalities		0			455			0			455
Mortgage- and asset-backed securities:
Third party pricing vendor		0			20			0			20
Broker/other		0			0			41			41
Total mortgage- and asset-backed securities		0			20			41			61
Public utilities:
Third party pricing vendor		0			4,075			0			4,075
Total public utilities		0			4,075			0			4,075
Sovereign and supranational:
Third party pricing vendor		0			3,118			0			3,118
Total sovereign and supranational		0			3,118			0			3,118
Banks/financial institutions:
Third party pricing vendor		0			6,277			0			6,277
Total banks/financial institutions		0			6,277			0			6,277
Other corporate:
Third party pricing vendor		0			3,669			0			3,669
Broker/other		0			32			0			32
Total other corporate		0			3,701			0			3,701
Total securities held to maturity		$	25,129		$	17,646		$	41		$	42,816

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

Level 3 Rollforward and Transfers between Hierarchy Levels

The following tables present the changes in fair value of our available-for-sale investments and derivatives classified as Level 3.



Three Months Ended March 31, 2014
	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	$	369		$	0	$	0	$	23	$	0	$	52	$	3	$	1		$	(99	)	$	(3	)	$	346
Realized investment gains (losses) included in earnings	0			0		0		0		0		0		0		(1		)	(10		)	2			(9		)
Unrealized gains (losses) included in other comprehensive income (loss)	(104		)	0		0		2		0		4		0		0			(1		)	0			(99		)
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		0		0		0		0		0			0			0			0
Settlements	(3		)	0		0		0		0		0		0		0			24			0			21
Transfers into Level 3	0			0		0		0		0		0		0		0			0			0			0
Transfers out of Level 3	0			0		0		0		0		0		0		0			0			0			0
Balance, end of period	$	262		$	0	$	0	$	25	$	0	$	56	$	3	$	0		$	(86	)	$	(1	)	$	259
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)	$	0		$	0	$	0	$	0	$	0	$	0	$	0	$	(1	)	$	(10	)	$	2		$	(9	)

⁽¹⁾ Derivative assets and liabilities are presented net



Three Months Ended March 31, 2013
	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	$	338		$	420		$	418		$	1,024		$	986		$	215		$	4	$	29		$	(172	)	$	(65	)	$	3,197
Realized investment gains (losses) included in earnings	0			0			0			0			0			0			0		(4		)	(5		)	11			2
Unrealized gains (losses) included in other comprehensive income (loss)	(21		)	(20		)	0			(1		)	0			0			0		0			(7		)	0			(49		)
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			(400		)	0			0			0			0			0		0			0			0			(400		)
Settlements	(3		)	0			0			0			0			0			0		0			0			0			(3		)
Transfers into Level 3⁽²⁾	125			0			0			0			0			0			0		0			0			0			125
Transfers out of Level 3⁽³⁾	0			0			(418		)	(997		)	(986		)	(215		)	0		0			0			0			(2,616		)
Balance, end of period	$	439		$	0		$	0		$	26		$	0		$	0		$	4	$	25		$	(184	)	$	(54	)	$	256
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)	$	0		$	0		$	0		$	0		$	0		$	0		$	0	$	(4	)	$	(5	)	$	11		$	2

⁽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 a valuation method that uses observable market data as significant inputs to estimate fair value

Fair Value Inputs Assets Quantitative Information

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.

March 31, 2014

(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

262

Consensus pricing

Offered quotes

N/A

^(e)

Banks/financial institutions

Consensus pricing

Offered quotes

N/A

^(e)

Perpetual securities:

Banks/financial institutions

Model pricing

Offered quotes

N/A

^(e)

Equity securities

Net asset value

Offered quotes

$1-$793 ($7)

Other assets:

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

2.84% - 3.56%

^(b)

Interest rates (JPY)

.83% - 1.96%

^(c)

CDS spreads

11 - 124 bps

Foreign exchange rates

20.45%

^(d)

Discounted cash flow

Interest rates (USD)

2.84% - 3.56%

^(b)

Interest rates (JPY)

.83% - 1.96%

^(c)

CDS spreads

21 - 120 bps

Discounted cash flow

Interest rates (USD)

2.84% - 3.56%

^(b)

Interest rates (JPY)

.83% - 1.96%

^(c)

Foreign exchange rates

20.45%

^(d)

Credit default swaps

Discounted cash flow

Base correlation

65% - 75% (72%)

^(a)

CDS spreads

66 - 101 (86) bps

Recovery rate

37.00%

Total assets

453

(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

(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, 2013

(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

369

Consensus pricing

Offered quotes

N/A

^(e)

Banks/financial institutions

Consensus pricing

Offered quotes

N/A

^(e)

Perpetual securities:

Banks/financial institutions

Consensus pricing

Offered quotes

N/A

^(e)

Equity securities

Net asset value

Offered quotes

$1-$774 ($7)

Other assets:

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

3.09% - 3.96%

^(b)

Interest rates (JPY)

.93% - 2.02%

^(c)

CDS spreads

16 - 141 bps

Foreign exchange rates

21.16%

^(d)

Discounted cash flow

Interest rates (USD)

3.09% - 3.96%

^(b)

Interest rates (JPY)

.93% - 2.02%

^(c)

CDS spreads

17 - 149 bps

Discounted cash flow

Interest rates (USD)

3.09% - 3.96%

^(b)

Interest rates (JPY)

.93% - 2.02%

^(c)

Foreign exchange rates

21.16%

^(d)

Credit default swaps

Discounted cash flow

Base correlation

65% - 76% (72%)

^(a)

CDS spreads

65 - 106 (92) bps

Recovery rate

37.00%

Interest rate swaps

Discounted cash flow

Base correlation

65% - 76% (72%)

^(a)

CDS spreads

65 - 106 (92) bps

Recovery rate

37.00%

Total assets

553

(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

(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.

Fair Value Inputs Liabilities Quantitative Information

March 31, 2014

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Liabilities:

Foreign currency swaps

100

Discounted cash flow

Interest rates (USD)

2.84% - 3.56%

^(b)

Interest rates (JPY)

.83% - 1.96%

^(c)

CDS spreads

11 - 124 bps

Foreign exchange rates

20.45%

^(d)

Discounted cash flow

Interest rates (USD)

2.84% - 3.56%

^(b)

Interest rates (JPY)

.83% - 1.96%

^(c)

CDS spreads

10 - 177 bps

Discounted cash flow

Interest rates (USD)

2.84% - 3.56%

^(b)

Interest rates (JPY)

.83% - 1.96%

^(c)

Foreign exchange rates

20.45%

^(d)

Credit default swaps

Discounted cash flow

Base correlations

65% - 75% (72%)

^(a)

CDS spreads

66 - 101 (86) bps

Recovery rate

37.00%

Total liabilities

194

(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

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

December 31, 2013

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Liabilities:

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

3.09% - 3.96%

^(b)

Interest rates (JPY)

.93% - 2.02%

^(c)

CDS spreads

16 - 141 bps

Foreign exchange rates

21.16%

^(d)

Discounted cash flow

Interest rates (USD)

3.09% - 3.96%

^(b)

Interest rates (JPY)

.93% - 2.02%

^(c)

CDS spreads

11 - 189 bps

Discounted cash flow

Interest rates (USD)

3.09% - 3.96%

^(b)

Interest rates (JPY)

.93% - 2.02%

^(c)

Foreign exchange rates

21.16%

^(d)

Credit default swaps

Discounted cash flow

Base correlations

65% - 76% (72%)

^(a)

CDS spreads

65 - 106 (92) bps

Recovery rate

37.00%

Total liabilities

207

(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

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

- 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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