FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2017

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 as of December 31.



	2017
(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		$	30,109		$	1,121		$	0		$	31,230
Municipalities		0			1,370			0			1,370
Mortgage- and asset-backed securities		0			269			175			444
Public utilities		0			7,886			68			7,954
Sovereign and supranational		0			1,909			0			1,909
Banks/financial institutions		0			7,352			25			7,377
Other corporate		0			32,094			146			32,240
Total fixed maturities		30,109			52,001			414			82,524
Perpetual securities:
Banks/financial institutions		0			1,556			0			1,556
Other corporate		0			233			0			233
Total perpetual securities		0			1,789			0			1,789
Equity securities		1,001			6			16			1,023
Other assets:
Foreign currency swaps		0			146			150			296
Foreign currency forwards		0			22			0			22
Foreign currency options		0			12			0			12
Credit default swaps		0			0			1			1
Total other assets		0			180			151			331
Other investments		57			0			0			57
Cash and cash equivalents		3,491			0			0			3,491
Total assets		$	34,658		$	53,976		$	581		$	89,215
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	69		$	128		$	197
Foreign currency forwards		0			274			0			274
Foreign currency options		0			3			0			3
Total liabilities		$	0		$	346		$	128		$	474



	2016
(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		$	25,387		$	827		$	0		$	26,214
Municipalities		0			1,295			0			1,295
Mortgage- and asset-backed securities		0			1,139			198			1,337
Public utilities		0			7,667			16			7,683
Sovereign and supranational		0			1,469			0			1,469
Banks/financial institutions		0			6,038			25			6,063
Other corporate		0			29,699			0			29,699
Total fixed maturities		25,387			48,134			239			73,760
Perpetual securities:
Banks/financial institutions		0			1,420			0			1,420
Other corporate		0			213			0			213
Total perpetual securities		0			1,633			0			1,633
Equity securities		1,300			6			3			1,309
Other assets:
Foreign currency swaps		0			365			125			490
Foreign currency forwards		0			672			0			672
Foreign currency options		0			43			0			43
Credit default swaps		0			0			2			2
Total other assets		0			1,080			127			1,207
Other investments		276			0			0			276
Cash and cash equivalents		4,859			0			0			4,859
Total assets		$	31,822		$	50,853		$	369		$	83,044
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	84		$	146		$	230
Foreign currency forwards		0			1,717			0			1,717
Foreign currency options		0			51			0			51
Total liabilities		$	0		$	1,852		$	146		$	1,998

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 as of December 31.



	2017
(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		$	21,331		$	26,491		$	0		$	0		$	26,491
Municipalities		357			0			462			0			462
Mortgage and asset-backed securities		26			0			8			19			27
Public utilities		3,300			0			3,698			0			3,698
Sovereign and supranational		1,523			0			1,835			0			1,835
Banks/financial institutions		2,206			0			2,387			0			2,387
Other corporate		2,687			0			3,172			0			3,172
Other investments ⁽¹⁾		3,017			0			15			2,987			3,002
Total assets		$	34,447		$	26,491		$	11,577		$	3,006		$	41,074
Liabilities:
Other policyholders’ funds		$	6,939		$	0		$	0		$	6,841		$	6,841
Notes payable (excluding capital leases)		5,267			0			5,288			265			5,553
Total liabilities		$	12,206		$	0		$	5,288		$	7,106		$	12,394

⁽¹⁾ Excludes policy loans of $210 and equity method investments of $118, at carrying value



				2016
(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		$	20,702		$	26,040		$	0		$	0		$	26,040
Municipalities		350			0			457			0			457
Mortgage and asset-backed securities		30			0			10			22			32
Public utilities		3,201			0			3,536			0			3,536
Sovereign and supranational		2,602			0			2,877			0			2,877
Banks/financial institutions		3,731			0			3,900			0			3,900
Other corporate		2,734			0			3,179			0			3,179
Other investments		1,174			0			0			1,142			1,142
Total assets		$	34,524		$	26,040		$	13,959		$	1,164		$	41,163
Liabilities:
Other policyholders’ funds		$	6,659		$	0		$	0		$	6,540		$	6,540
Notes payable (excluding capital leases)		5,339			0			0			5,530			5,530
Total liabilities		$	11,998		$	0		$	0		$	12,070		$	12,070

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

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



	2017
(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		$	30,109		$	1,121		$	0		$	31,230
Total government and agencies		30,109			1,121			0			31,230
Municipalities:
Third party pricing vendor		0			1,370			0			1,370
Total municipalities		0			1,370			0			1,370
Mortgage- and asset-backed securities:
Third party pricing vendor		0			269			0			269
Broker/other		0			0			175			175
Total mortgage- and asset-backed securities		0			269			175			444
Public utilities:
Third party pricing vendor		0			7,886			0			7,886
Broker/other		0			0			68			68
Total public utilities		0			7,886			68			7,954
Sovereign and supranational:
Third party pricing vendor		0			1,807			0			1,807
Broker/other		0			102			0			102
Total sovereign and supranational		0			1,909			0			1,909
Banks/financial institutions:
Third party pricing vendor		0			7,352			0			7,352
Broker/other		0			0			25			25
Total banks/financial institutions		0			7,352			25			7,377
Other corporate:
Third party pricing vendor		0			32,094			0			32,094
Broker/other		0			0			146			146
Total other corporate		0			32,094			146			32,240
Total fixed maturities		30,109			52,001			414			82,524
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			1,556			0			1,556
Total banks/financial institutions		0			1,556			0			1,556
Other corporate:
Third party pricing vendor		0			233			0			233
Total other corporate		0			233			0			233
Total perpetual securities		0			1,789			0			1,789
Equity securities:
Third party pricing vendor		1,001			6			0			1,007
Broker/other		0			0			16			16
Total equity securities		1,001			6			16			1,023
Total securities available for sale		$	31,110		$	53,796		$	430		$	85,336



	2016
(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		$	25,387		$	827		$	0		$	26,214
Total government and agencies		25,387			827			0			26,214
Municipalities:
Third party pricing vendor		0			1,295			0			1,295
Total municipalities		0			1,295			0			1,295
Mortgage- and asset-backed securities:
Third party pricing vendor		0			1,139			0			1,139
Broker/other		0			0			198			198
Total mortgage- and asset-backed securities		0			1,139			198			1,337
Public utilities:
Third party pricing vendor		0			7,667			0			7,667
Broker/other		0			0			16			16
Total public utilities		0			7,667			16			7,683
Sovereign and supranational:
Third party pricing vendor		0			1,469			0			1,469
Total sovereign and supranational		0			1,469			0			1,469
Banks/financial institutions:
Third party pricing vendor		0			6,038			0			6,038
Broker/other		0			0			25			25
Total banks/financial institutions		0			6,038			25			6,063
Other corporate:
Third party pricing vendor		0			29,699			0			29,699
Total other corporate		0			29,699			0			29,699
Total fixed maturities		25,387			48,134			239			73,760
Perpetual securities:
Banks/financial institutions:
Third party pricing vendor		0			1,420			0			1,420
Total banks/financial institutions		0			1,420			0			1,420
Other corporate:
Third party pricing vendor		0			213			0			213
Total other corporate		0			213			0			213
Total perpetual securities		0			1,633			0			1,633
Equity securities:
Third party pricing vendor		1,300			6			0			1,306
Broker/other		0			0			3			3
Total equity securities		1,300			6			3			1,309
Total securities available for sale		$	26,687		$	49,773		$	242		$	76,702

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



	2016
(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		$	26,040		$	0		$	0		$	26,040
Total government and agencies		26,040			0			0			26,040
Municipalities:
Third party pricing vendor		0			457			0			457
Total municipalities		0			457			0			457
Mortgage- and asset-backed securities:
Third party pricing vendor		0			10			0			10
Broker/other		0			0			22			22
Total mortgage- and asset-backed securities		0			10			22			32
Public utilities:
Third party pricing vendor		0			3,536			0			3,536
Total public utilities		0			3,536			0			3,536
Sovereign and supranational:
Third party pricing vendor		0			2,877			0			2,877
Total sovereign and supranational		0			2,877			0			2,877
Banks/financial institutions:
Third party pricing vendor		0			3,900			0			3,900
Total banks/financial institutions		0			3,900			0			3,900
Other corporate:
Third party pricing vendor		0			3,179			0			3,179
Total other corporate		0			3,179			0			3,179
Total securities held to maturity		$	26,040		$	13,959		$	22		$	40,021



	2017
(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		$	26,491		$	0		$	0		$	26,491
Total government and agencies		26,491			0			0			26,491
Municipalities:
Third party pricing vendor		0			462			0			462
Total municipalities		0			462			0			462
Mortgage- and asset-backed securities:
Third party pricing vendor		0			8			0			8
Broker/other		0			0			19			19
Total mortgage- and asset-backed securities		0			8			19			27
Public utilities:
Third party pricing vendor		0			3,698			0			3,698
Total public utilities		0			3,698			0			3,698
Sovereign and supranational:
Third party pricing vendor		0			1,835			0			1,835
Total sovereign and supranational		0			1,835			0			1,835
Banks/financial institutions:
Third party pricing vendor		0			2,387			0			2,387
Total banks/financial institutions		0			2,387			0			2,387
Other corporate:
Third party pricing vendor		0			3,172			0			3,172
Total other corporate		0			3,172			0			3,172
Total securities held to maturity		$	26,491		$	11,562		$	19		$	38,072

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

The following tables present the changes in fair value of the Company's available-for-sale investments and derivatives classified as Level 3 as of December 31.



2017
	Fixed Maturities													Equity Securities				Derivatives⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities				Banks/ Financial Institutions		Other Corporate								Foreign Currency Swaps			Credit Default Swaps			Total
Balance, beginning of period	$	198		$	16			$	25	$	0			$	3			$	(21	)	$	2		$	223
Realized investment gains (losses) included in earnings	0			0				0		0				0				43			(1		)	42
Unrealized gains (losses) included in other comprehensive income (loss)	3			0				0		2				0				0			0			5
Purchases, issuances, sales and settlements:
Purchases	0			76				0		122				16				0			0			214
Issuances	0			0				0		0				0				0			0			0
Sales	0			0				0		(2		)		(1		)		0			0			(3		)
Settlements	(26		)	0				0		0				0				0			0			(26		)
Transfers into Level 3	0			0				0		24			⁽²⁾	0				0			0			24
Transfers out of Level 3	0			(24		)	⁽²⁾	0		0				(2		)	⁽³⁾	0			0			(26		)
Balance, end of period	$	175		$	68			$	25	$	146			$	16			$	22		$	1		$	453
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			$	43		$	(1	)	$	42

⁽¹⁾Derivative assets and liabilities are presented net

⁽²⁾Transfer due to sector classification change

⁽³⁾Transfer due to change in accounting method



2016
	Fixed Maturities										Equity Securities		Derivatives⁽¹⁾
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Banks/ Financial Institutions			Other Corporate				Foreign Currency Swaps			Credit Default Swaps		Total
Balance, beginning of period	$	220		$	0	$	26		$	0	$	3	$	(192	)	$	1	$	58
Realized investment gains (losses) included in earnings	0			0		0			0		0		194			1		195
Unrealized gains (losses) included in other comprehensive income (loss)	38			0		(1		)	0		0		(22		)	0		15
Purchases, issuances, sales and settlements:
Purchases	0			16		0			0		0		0			0		16
Issuances	0			0		0			0		0		0			0		0
Sales	0			0		0			0		0		0			0		0
Settlements	(60		)	0		0			0		0		(1		)	0		(61		)
Transfers into Level 3	0			0		0			0		0		0			0		0
Transfers out of Level 3	0			0		0			0		0		0			0		0
Balance, end of period	$	198		$	16	$	25		$	0	$	3	$	(21	)	$	2	$	223
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	$	194		$	1	$	195

⁽¹⁾Derivative assets and liabilities are presented net

Fair Value Inputs Assets Quantitative Information

2016

(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

198

Consensus pricing

Offered quotes

N/A

^(d)

Public utilities

Discounted cash flow

Historical volatility

N/A

^(d)

Banks/financial institutions

Consensus pricing

Offered quotes

N/A

^(d)

Equity securities

Net asset value

Offered quotes

$1-$701 ($8)

Other assets:

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

2.34% - 2.59%

^(a)

Interest rates (JPY)

.22% - .80%

^(b)

CDS spreads

17 - 172 bps

Foreign exchange rates

21.47%

^(c)

Discounted cash flow

Interest rates (USD)

2.34% - 2.59%

^(a)

Interest rates (JPY)

.22% - .80%

^(b)

CDS spreads

16 - 88 bps

Discounted cash flow

Interest rates (USD)

2.34% - 2.59%

^(a)

Interest rates (JPY)

.22% - .80%

^(b)

Foreign exchange rates

21.47%

^(c)

Credit default swaps

Discounted cash flow

Base correlation

52.18% - 56.07%

^(e)

CDS spreads

54 bps

Recovery rate

36.69%

Total assets

369

(a) Inputs derived from U.S. long-term rates to accommodate long maturity nature of the Company's swaps

(b) Inputs derived from Japan long-term rates to accommodate long maturity nature of the Company's swaps

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

(e) Range of base correlation for the Company's bespoke tranche for attachment and detachment points corresponding to market indices

The following tables summarize the significant unobservable inputs used in the valuation of the Company's Level 3 available-for-sale investments and derivatives as of December 31. Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.

2017

(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

175

Consensus pricing

Offered quotes

N/A

^(c)

Public utilities

Discounted cash flow

Credit spreads

N/A

^(c)

Banks/financial institutions

Consensus pricing

Offered quotes

N/A

^(c)

Other corporate

146

Discounted cash flow

Credit spreads

N/A

^(d)

Equity securities

Net asset value

Offered quotes

N/A

^(c)

Other assets:

Foreign currency swaps

Discounted cash flow

Interest rates (USD)

2.40% - 2.54%

^(a)

Interest rates (JPY)

.26% - .85%

^(b)

CDS spreads

9 - 90 bps

Discounted cash flow

Interest rates (USD)

2.40% - 2.54%

^(a)

Interest rates (JPY)

.26% - .85%

^(b)

Credit default swaps

Discounted cash flow

Base correlation

46.33% - 49.65%

^(d)

CDS spreads

25 bps

Recovery rate

37.24%

Total assets

581

(a) Inputs derived from U.S. long-term rates to accommodate long maturity nature of the Company's swaps

(b) Inputs derived from Japan long-term rates to accommodate long maturity nature of the Company's swaps

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

(d) Range of base correlation for the Company's bespoke tranche for attachment and detachment points corresponding to market indices

Fair Value Inputs Liabilities Quantitative Information

2017

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Liabilities:

Other liabilities:

Foreign currency swaps

120

Discounted cash flow

Interest rates (USD)

2.40% - 2.54%

^(a)

Interest rates (JPY)

.26% - .85%

^(b)

CDS spreads

13 - 157 bps

Discounted cash flow

Interest rates (USD)

2.40% - 2.54%

^(a)

Interest rates (JPY)

.26% - .85%

^(b)

Total liabilities

128

(a) Inputs derived from U.S. long-term rates to accommodate long maturity nature of the Company's swaps

(b) Inputs derived from Japan long-term rates to accommodate long maturity nature of the Company's swaps

2016

(In millions)

Fair Value

Valuation Technique(s)

Unobservable Input

Range
(Weighted Average)

Liabilities:

Other liabilities:

Foreign currency swaps

113

Discounted cash flow

Interest rates (USD)

2.34% - 2.59%

^(a)

Interest rates (JPY)

.22% - .80%

^(b)

CDS spreads

17 - 172 bps

Foreign exchange rates

21.47%

^(c)

Discounted cash flow

Interest rates (USD)

2.34% - 2.59%

^(a)

Interest rates (JPY)

.22% - .80%

^(b)

CDS spreads

24 - 216 bps

Discounted cash flow

Interest rates (USD)

2.34% - 2.59%

^(a)

Interest rates (JPY)

.22% - .80%

^(b)

Foreign exchange rates

21.47%

^(c)

Total liabilities

146

(a) Inputs derived from U.S. long-term rates to accommodate long maturity nature of the Company's swaps

(b) Inputs derived from Japan long-term rates to accommodate long maturity nature of the Company's swaps