FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2011

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 at fair value on a recurring basis.


	June 30, 2011
(In millions)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
Government and agencies	$	19,189	$	678	$	0	$	19,867
Municipalities		0		1,025		0		1,025
Mortgage- and asset-backed securities		0		1,241		257		1,498
Public utilities		0		5,584		0		5,584
Collateralized debt obligations		0		0		4		4
Sovereign and supranational		0		2,277		0		2,277
Banks/financial institutions		0		7,518		398		7,916
Other corporate		0		14,335		0		14,335
Total fixed maturities		19,189		32,658		659		52,506
Perpetual securities:
Banks/financial institutions		0		6,746		0		6,746
Other corporate		0		357		0		357
Total perpetual securities		0		7,103		0		7,103
Equity securities		14		5		4		23
Other assets:
Interest rate swaps		0		125		0		125
Foreign currency swaps		0		150		220		370
Total other assets		0		275		220		495
Total assets	$	19,203	$	40,041	$	883	$	60,127

Liabilities:
Interest rate swaps	$	0	$	5	$	0	$	5
Foreign currency swaps		0		270		56		326
Credit default swaps		0		0		253		253
Total liabilities	$	0	$	275	$	309	$	584


	December 31, 2010
(In millions)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities:
Government and agencies	$	16,534	$	679	$	0	$	17,213
Municipalities		0		973		0		973
Mortgage- and asset-backed securities		0		1,539		267		1,806
Public utilities		0		5,369		0		5,369
Collateralized debt obligations		0		0		5		5
Sovereign and supranational		0		1,394		0		1,394
Banks/financial institutions		0		8,047		386		8,433
Other corporate		0		13,162		0		13,162
Total fixed maturities		16,534		31,163		658		48,355
Perpetual securities:
Banks/financial institutions		0		7,169		0		7,169
Other corporate		0		343		0		343
Total perpetual securities		0		7,512		0		7,512
Equity securities		14		5		4		23
Other assets:
Interest rate swaps		0		124		0		124
Foreign currency swaps		0		151		289		440
Total other assets		0		275		289		564
Total assets	$	16,548	$	38,955	$	951	$	56,454

Liabilities:
Interest rate swaps	$	0	$	70	$	0	$	70
Foreign currency swaps		0		280		48		328
Credit default swaps		0		0		343		343
Total liabilities	$	0	$	350	$	391	$	741

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

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


Three Months Ended June 30, 2011
	Fixed Maturities															Perpetual Securities		Equity Securities		Derivatives
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Collateralized Debt Obligations			Sovereign and Supranational		Banks/ Financial Institutions			Other Corporate		Banks/ Financial Institutions				Foreign Currency Swaps		Credit Default Swaps			Total

Balance, beginning of period	$	248		$	0	$	5		$	0	$	420		$	0	$	0	$	4	$	126	$	(338	)	$	465
Realized gains or losses included in earnings		0			0		(1	)		0		0			0		0		0		25		(43	)		(19	)
Unrealized gains or losses included in other comprehensive income		12			0		0			0		(22	)		0		0		0		13		0			3
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		0		128			125
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	$	257		$	0	$	4		$	0	$	398		$	0	$	0	$	4	$	164	$	(253	)	$	574

Change in unrealized gains (losses) still held⁽¹⁾	$	0		$	0	$	(1	)	$	0	$	0		$	0	$	0	$	0	$	25	$	(7	)	$	17

⁽¹⁾

Represents the amount of total gains or losses for the period, included in earnings, attributable to the change in unrealized gains (losses) relating to assets classified as Level 3 that were still held at June 30, 2011


Three Months Ended June 30, 2010
	Fixed Maturities																	Perpetual Securities			Equity Securities			Derivatives
(In millions)	Mortgage- and asset- backed securities			Public utilities			Collateralized debt obligations		Sovereign and supranational			Banks/ financial institutions			Other corporate			Banks/ financial institutions						Credit default swaps			Total

Balance, beginning of period	$	63		$	488		$	4	$	298		$	1,103		$	1,253		$	1,695		$	9		$	(291	)	$	4,622
Realized gains or losses included in earnings		0			0			0		0			0			0			125			0			(66	)		59
Unrealized gains or losses included in other comprehensive income		1			0			0		0			1			1			(125	)		0			0			(122	)
Purchases, issuances, sales and settlements:
Purchases		0			0			0		0			0			0			0			0			0			0
Issuances		0			0			0		0			0			0			0			0			0			0
Sales		(1	)		(2	)		0		0			0			0			(531	)		0			0			(534	)
Settlements		0			0			0		0			0			0			0			0			0			0
Transfers into Level 3⁽¹⁾		219			0			0		0			330			0			0			0			0			549
Transfers out of Level 3⁽²⁾		0			(459	)		0		(298	)		(1,082	)		(1,202	)		(1,164	)		(5	)		0			(4,210	)

Balance, end of period	$	282		$	27		$	4	$	0		$	352		$	52		$	0		$	4		$	(357	)	$	364

Change in unrealized gains (losses) still held⁽³⁾	$	0		$	0		$	0	$	0		$	0		$	0		$	0		$	0		$	(66	)	$	(66	)

⁽¹⁾

Due to a lack of visibility to observe significant inputs to price and credit downgrades of respective issuers of securities to below investment grade

⁽²⁾

A result of changing our pricing methodology to using a pricing index for estimating fair value instead of obtaining pricing of the securities from brokers or arrangers

⁽³⁾


Six Months Ended June 30, 2011
	Fixed Maturities														Perpetual Securities		Equity Securities		Derivatives
(In millions)	Mortgage- and Asset- Backed Securities			Public Utilities		Collateralized Debt Obligations			Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate		Banks/ Financial Institutions				Foreign Currency Swaps			Credit Default Swaps			Total

Balance, beginning of period	$	267		$	0	$	5		$	0	$	386	$	0	$	0	$	4	$	241		$	(343	)	$	560
Realized gains or losses included in earnings		(6	)		0		(1	)		0		1		0		0		0		(39	)		(38	)		(83	)
Unrealized gains or losses included in other comprehensive income		2			0		0			0		11		0		0		0		(38	)		0			(25	)
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		(6	)		0		0			0		0		0		0		0		0			128			122
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	$	257		$	0	$	4		$	0	$	398	$	0	$	0	$	4	$	164		$	(253	)	$	574

Change in unrealized gains (losses) still held⁽¹⁾	$	(6	)	$	0	$	(1	)	$	0	$	1	$	0	$	0	$	0	$	(39	)	$	(15	)	$	(60	)

⁽¹⁾


Six Months Ended June 30, 2010
	Fixed Maturities																		Perpetual Securities			Equity Securities			Derivatives
(In millions)	Mortgage- and asset- backed securities			Public utilities			Collateralized debt obligations			Sovereign and supranational			Banks/ financial institutions			Other corporate			Banks/ financial institutions						Credit default swaps			Total

Balance, beginning of period	$	62		$	497		$	267		$	293		$	1,240		$	1,248		$	1,441		$	9		$	0		$	5,057
Effect of change in accounting principle ⁽¹⁾		0			0			(263	)		0			0			0			0			0			(312	)		(575	)
Revised balance, beginning of period		62			497			4			293			1,240			1,248			1,441			9			(312	)		4,482
Realized gains or losses included in earnings		0			0			0			0			5			0			108			0			(45	)		68
Unrealized gains or losses included in other comprehensive income		2			(9	)		0			5			34			6			51			0			0			89
Purchases, issuances, sales and settlements:
Purchases		0			0			0			0			0			0			0			0			0			0
Issuances		0			0			0			0			0			0			0			0			0			0
Sales		(1	)		(2	)		0			0			(175	)		0			(585	)		0			0			(763	)
Settlements		0			0			0			0			0			0			0			0			0			0
Transfers into Level 3⁽²⁾		219			0			0			0			330			0			149			0			0			698
Transfers out of Level 3⁽³⁾		0			(459	)		0			(298	)		(1,082	)		(1,202	)		(1,164	)		(5	)		0			(4,210	)

Balance, end of period	$	282		$	27		$	4		$	0		$	352		$	52		$	0		$	4		$	(357	)	$	364

Change in unrealized gains (losses) still held⁽⁴⁾	$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	0		$	(45	)	$	(45	)

⁽¹⁾

Change in accounting for VIEs effective January 1, 2010. See Notes 1, 3, and 4 for additional information.

⁽²⁾

Due to a lack of visibility to observe significant inputs to price and credit downgrades of respective issuers of securities to below investment grade

⁽³⁾

A result of changing our pricing methodology to using a pricing index for estimating fair value instead of obtaining pricing of the securities from brokers or arrangers

⁽⁴⁾

Carrying Value and Fair Value of Financial Instruments Disclosure

The carrying values and estimated fair values of the Company’s financial instruments were as follows:


	June 30, 2011				December 31, 2010
(In millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed-maturity securities	$	78,669	$	78,785	$	72,570	$	72,999
Fixed-maturity securities - consolidated variable interest entities		5,745		5,703		5,869		5,825
Perpetual securities		5,559		5,559		5,974		5,974
Perpetual securities - consolidated variable interest entities		1,544		1,544		1,538		1,538
Equity securities		23		23		23		23
Interest rate, foreign currency, and credit default swaps		495		495		564		564
Liabilities:
Notes payable (excluding capitalized leases)		3,042		3,283		3,032		3,248
Interest rate, foreign currency, and credit default swaps		584		584		741		741
Obligation to Japanese policyholder protection corporation		89		89		108		108

Discounted Cash Flow Pricing Model Sensitivity Analysis

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		$(1,069	)	+50 bps		$(1,054	)	+50 %		$(248	)
-50 bps		1,140		-50 bps		1,122		-50 %		33

The fair values of our held-to-maturity fixed-maturity securities valued by our DCF pricing model totaled $27.2 billion at June 30, 2011. 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		$ (1,696	)	+50 bps		$(1,557	)	+50 %		$(385	)
-50 bps		1,747		-50 bps		1,572		-50 %		357

- 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, 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, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
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-Section 50
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 14
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
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-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15
-Subparagraph b-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13476-108611

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13467-108611

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 18
-Subparagraph c(2), d, e, f
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32
-Subparagraph a, c(1), c(2), c(3), d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 19
-Subparagraph a, b, c(1), d(1)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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