DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value and Notional Amount of Derivatives with Counterparty Credit Risk

The counterparties to these derivatives are financial institutions with the following credit ratings:



	June 30, 2014										December 31, 2013
(In millions)	Notional Amount of Derivatives			Asset Derivatives Fair Value			Liability Derivatives Fair Value				Notional Amount of Derivatives			Asset Derivatives Fair Value			Liability Derivatives Fair Value
Counterparties' credit rating:
AA		$	161		$	3		$	(4	)		$	161		$	1		$	(7	)
A		23,782			588			(236		)		22,314			487			(830		)
Total		$	23,943		$	591		$	(240	)		$	22,475		$	488		$	(837	)

Maximum Potential Risk, Fair Value, Weighted Average Years to Maturity, and Underlying Referenced Credit Obligation Type for Credit Derivatives

The following tables present the maximum potential risk, fair value, weighted-average years to maturity, and underlying referenced credit obligation type for credit default swaps within consolidated VIE structures.



June 30, 2014
		Less than one year					One to three years				Three to five years					Five to ten years				Total
(In millions)	Credit Rating	Maximum potential risk			Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk			Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk			Estimated fair value
Index exposure:
Corporate bonds:
	A	$	(17	)	$	0	$	0	$	0	$	0		$	0	$	0	$	0	$	(17	)	$	0
	BBB	0			0		0		0		(99		)	0		0		0		(99		)	0
Total		$	(17	)	$	0	$	0	$	0	$	(99	)	$	0	$	0	$	0	$	(116	)	$	0



December 31, 2013
		Less than one year				One to three years					Three to five years				Five to ten years						Total
(In millions)	Credit Rating	Maximum potential risk		Estimated fair value		Maximum potential risk			Estimated fair value		Maximum potential risk		Estimated fair value		Maximum potential risk			Estimated fair value			Maximum potential risk			Estimated fair value
Index exposure:
Corporate bonds:
	A	$	0	$	0	$	(112	)	$	1	$	0	$	0	$	0		$	0		$	(112	)	$	1
	BBB	0		0		0			0		0		0		(95		)	(4		)	(95		)	(4		)
Total		$	0	$	0	$	(112	)	$	1	$	0	$	0	$	(95	)	$	(4	)	$	(207	)	$	(3	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The tables below summarize the balance sheet classification of our derivative fair value amounts, as well as the gross asset and liability fair value amounts. The fair value amounts presented do not include income accruals. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated. Notional amounts are not reflective of credit risk.



		June 30, 2014
(In millions)	Net Derivatives							Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value				Fair Value			Fair Value
Cash flow hedges:
Foreign currency swaps		$	75		$	4			$	4		$	0
Interest rate swaps		54			0				0			0
Total cash flow hedges		129			4				4			0
Fair value hedges:
Foreign currency forwards		13,837			104				104			0
Foreign currency options		750			1				2			(1		)
Interest rate swaptions		3,265			(65		)		11			(76		)
Total fair value hedges		17,852			40				117			(77		)
Net investment hedge:
Foreign currency forwards		99			3				3			0
Foreign currency options		518			1				7			(6		)
Total net investment hedge		617			4				10			(6		)
Non-qualifying strategies:
Foreign currency swaps		5,212			304				460			(156		)
Credit default swaps		116			0				0			0
Interest rate swaps		17			(1		)		0			(1		)
Total non-qualifying strategies		5,345			303				460			(157		)
Total derivatives		$	23,943		$	351			$	591		$	(240	)
Balance Sheet Location
Other assets		$	18,881		$	591			$	591		$	0
Other liabilities		5,062			(240		)		0			(240		)
Total derivatives		$	23,943		$	351			$	591		$	(240	)



		December 31, 2013
(In millions)	Net Derivatives							Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value				Fair Value			Fair Value
Cash flow hedges:
Foreign currency swaps		$	75		$	3			$	3		$	0
Interest rate swaps		52			0				0			0
Total cash flow hedges		127			3				3			0
Fair value hedges:
Foreign currency forwards		11,249			(582		)		0			(582		)
Interest rate swaptions		4,500			(12		)		20			(32		)
Total fair value hedges		15,749			(594		)		20			(614		)
Net investment hedge:
Foreign currency forwards		356			17				17			0
Foreign currency options		95			3				4			(1		)
Total net investment hedge		451			20				21			(1		)
Non-qualifying strategies:
Foreign currency swaps		5,829			224				442			(218		)
Credit default swaps		207			(3		)		1			(4		)
Interest rate swaps		112			1				1			0
Total non-qualifying strategies		6,148			222				444			(222		)
Total derivatives		$	22,475		$	(349	)		$	488		$	(837	)
Balance Sheet Location
Other assets		$	5,308		$	488			$	488		$	0
Other liabilities		17,167			(837		)		0			(837		)
Total derivatives		$	22,475		$	(349	)		$	488		$	(837	)

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location

The following table presents the gains and losses on derivatives and the related hedged items in fair value hedges.

Fair Value Hedging Relationships



(In millions)		Hedging Derivatives									Hedged Items
Hedging Derivatives	Hedged Items	Total Gains (Losses)			Gains (Losses) Excluded from Effectiveness Testing			Gains (Losses) Included in Effectiveness Testing			Gains (Losses)			Ineffectiveness Recognized for Fair Value Hedge
Three Months Ended June 30, 2014:
Foreign currency forwards	Fixed-maturity securities	$	199		$	(25	)	$	224		$	(204	)	$	20
Foreign currency options	Fixed-maturity securities	1			1			0			0			0
Interest rate swaptions	Fixed-maturity securities	(81		)	2			(83		)	90			7
Six Months Ended June 30, 2014:
Foreign currency forwards	Fixed-maturity securities	$	463		$	(35	)	$	498		$	(473	)	$	25
Foreign currency options	Fixed-maturity securities	1			1			0			0			0
Interest rate swaptions	Fixed-maturity securities	(135		)	(22		)	(113		)	122			9
Three Months Ended June 30, 2013:
Foreign currency forwards	Fixed-maturity securities	$	(384	)	$	(6	)	$	(378	)	$	371		$	(7	)
Six Months Ended June 30, 2013:
Foreign currency forwards	Fixed-maturity securities	$	(993	)	$	(11	)	$	(982	)	$	974		$	(8	)

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

Impact of Derivatives and Hedging Instruments

The following table summarizes the impact to realized investment gains (losses) and other comprehensive income (loss) from all derivatives and hedging instruments.



	Three Months Ended June 30,																Six Months Ended June 30,
	2014								2013								2014								2013
(In millions)	Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾				Realized Investment Gains (Losses)				Other Comprehensive Income (Loss)⁽¹⁾
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps		$	0			$	2			$	(1	)		$	0			$	(1	)		$	1			$	(2	)		$	(7	)
Total cash flow hedges		0				2				(1		)		0				(1		)		1				(2		)		(7		)
Fair value hedges:
Foreign currency forwards⁽²⁾		(5		)		0				(13		)		0				(10		)		0				(19		)		0
Foreign currency options ⁽²⁾		1				0				0				0				1				0				0				0
Interest rate swaptions⁽²⁾		9				0				0				0				(13		)		0				0				0
Total fair value hedges		5				0				(13		)		0				(22		)		0				(19		)		0
Net investment hedge:
Non- derivative hedging instruments		0				(11		)		0				37				0				(28		)		0				106
Foreign currency swaps		0				0				0				(82		)		0				0				0				(82		)
Foreign currency forwards		0				(7		)		0				(4		)		0				(13		)		0				(4		)
Foreign currency options		0				(2		)		0				3				0				(3		)		0				3
Total net investment hedge		0				(20		)		0				(46		)		0				(44		)		0				23
Non-qualifying strategies:
Foreign currency swaps		24				0				111				0				4				0				195				0
Foreign currency options		0				0				9				0				0				0				11				0
Credit default swaps		1				0				9				0				3				0				21				0
Interest rate swaps		2				0				(4		)		0				1				0				(8		)		0
Futures		1				0				0				0				(35		)		0				0				0
Total non- qualifying strategies		28				0				125				0				(27		)		0				219				0
Total		$	33			$	(18	)		$	111			$	(46	)		$	(50	)		$	(43	)		$	198			$	16

⁽¹⁾Cash flow hedge items are recorded as unrealized gains (losses) on derivatives and net investment hedge items are recorded in the unrealized

foreign currency translation gains (losses) line in the consolidated statement of comprehensive income (loss).

⁽²⁾ Impact shown net of effect of hedged items (see Fair Value Hedges section of this Note 4 for further detail)

Offsetting Assets

The tables below summarize our derivatives and securities lending transactions, and as reflected in the tables, in accordance with GAAP, our policy is to not offset these financial instruments in the Consolidated Balance Sheets.

Offsetting of Financial Assets and Derivative Assets



June 30, 2014
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Carrying Value of Financial Instruments			Collateral Received					Net Amount
Derivative assets:
Foreign currency swaps		$	464		$	0		$	464		$	0		$	(250	)			$	214
Foreign currency forwards		107			0			107			0			(16		)			91
Foreign currency options		9			0			9			0			(7		)			2
Interest rate swaptions		11			0			11			0			0					11
Total derivative assets, subject to a master netting arrangement or offsetting arrangement		591			0			591			0			(273		)	⁽¹⁾		318
Securities lending and similar arrangements		2,907			0			2,907			0			(2,907		)			0
Total		$	3,498		$	0		$	3,498		$	0		$	(3,180	)			$	318

⁽¹⁾ Consists of $82 of securities and $191 of cash



December 31, 2013
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Carrying Value of Financial Instruments			Collateral Received					Net Amount
Derivative assets:
Foreign currency swaps		$	445		$	0		$	445		$	0		$	(276	)			$	169
Foreign currency forwards		17			0			17			0			(16		)			1
Foreign currency options		4			0			4			0			(3		)			1
Credit default swaps		1			0			1			0			0					1
Interest rate swaps		1			0			1			0			0					1
Interest rate swaptions		20			0			20			0			0					20
Total derivative assets, subject to a master netting arrangement or offsetting arrangement		488			0			488			0			(295		)	⁽¹⁾		193
Securities lending and similar arrangements		5,656			0			5,656			0			(5,656		)			0
Total		$	6,144		$	0		$	6,144		$	0		$	(5,951	)			$	193

⁽¹⁾ Consists entirely of cash.

Offsetting Liabilities

Offsetting of Financial Liabilities and Derivative Liabilities



June 30, 2014
												Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities				Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet				Carrying Value of Financial Instruments			Collateral Pledged				Net Amount
Derivative liabilities:
Foreign currency swaps		$	(156	)		$	0		$	(156	)		$	0		$	5			$	(151	)
Foreign currency options		(7		)		0			(7		)		0			2				(5		)
Interest rate swaps		(1		)		0			(1		)		0			0				(1		)
Interest rate swaptions		(76		)		0			(76		)		0			55				(21		)
Total derivative liabilities, subject to a master netting arrangement or offsetting arrangement		(240		)		0			(240		)		0			62		⁽¹⁾		(178		)
Securities lending and similar arrangements		(2,972		)		0			(2,972		)		2,907			0				(65		)
Total		$	(3,212	)		$	0		$	(3,212	)		$	2,907		$	62			$	(243	)

⁽¹⁾ Consists of $55 of pledged JGBs and $7 of cash.



December 31, 2013
												Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities				Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet				Carrying Value of Financial Instruments			Collateral Pledged				Net Amount
Derivative liabilities:
Foreign currency swaps		$	(218	)		$	0		$	(218	)		$	0		$	1			$	(217	)
Foreign currency forwards		(582		)		0			(582		)		0			0				(582		)
Foreign currency options		(1		)		0			(1		)		0			0				(1		)
Credit default swaps		(4		)		0			(4		)		0			0				(4		)
Interest rate swaptions		(32		)		0			(32		)		0			7				(25		)
Total derivative liabilities, subject to a master netting arrangement or offsetting arrangement		(837		)		0			(837		)		0			8		⁽¹⁾		(829		)
Securities lending and similar arrangements		(5,820		)		0			(5,820		)		5,656			0				(164		)
Total		$	(6,657	)		$	0		$	(6,657	)		$	5,656		$	8			$	(993	)

⁽¹⁾ Consists of $7 of pledged JGBs and $1 of cash.

- Definition

Tabular disclosure of credit derivatives which includes information by sellers of credit derivatives, about each credit derivative, or each group of similar credit derivatives, including (a) the nature of the credit derivative - its term, how it arose, the events or circumstances that would require the seller to perform under the credit derivative, and the current status of the payment/performance risk of the credit derivative; (b) the maximum potential amount of future payments (undiscounted) the seller could be required to make under the credit derivative; (c) the current fair value of the credit derivative; and (d) the nature of any recourse provisions under the credit derivative, and any assets held either as collateral or by third parties. A credit derivative is a derivative instrument (1) in which one or more of its underlyings are related to the credit risk of a specified entity (or a group of entities) or an index based on the credit risk of a group of entities and (2) that exposes the seller to potential loss from credit-risk-related events specified in the contract. Examples of credit derivatives within the scope of this paragraph include, but are not limited to, credit default swaps, credit spread options, and credit index products; also includes a hybrid instrument that has an embedded credit derivative (for example, but not limited to, a credit-linked note).

+ References+ Details