10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

FORM 10-Q

____________________

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2012

OR

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number:  1-6028

____________________

LINCOLN NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________

Indiana	35-1140070
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
150 N. Radnor Chester Road, Suite A305, Radnor, Pennsylvania	19087
(Address of principal executive offices)	(Zip Code)

(484) 583-1400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer x   Accelerated filer ¨Non-accelerated filer ¨(Do not check if a smaller reporting company)

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No x

As of July 31, 2012, there were 279,173,774 shares of the registrant’s common stock outstanding.

Lincoln National Corporation

Table of Contents

Item				Page
PART I
1.	Financial Statements			1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			45
		Forward-Looking Statements – Cautionary Language		45
		Introduction		46
			Executive Summary	46
			Critical Accounting Policies and Estimates	47
			Acquisitions and Dispositions	49
		Results of Consolidated Operations		49
		Results of Annuities		51
		Results of Retirement Plan Services		57
		Results of Life Insurance		63
		Results of Group Protection		70
		Results of Other Operations		73
		Realized Gain (Loss) and Benefit Ratio Unlocking		75
		Consolidated Investments		77
		Review of Consolidated Financial Condition		92
			Liquidity and Capital Resources	92
		Other Matters		96
			Other Factors Affecting Our Business	96
			Recent Accounting Pronouncements	96
3.	Quantitative and Qualitative Disclosures About Market Risk			96
4.	Controls and Procedures			100
PART II
1.	Legal Proceedings			100
1A.	Risk Factors			100
2.	Unregistered Sales of Equity Securities and Use of Proceeds			101
6.	Exhibits			102
	Signatures			103
	Exhibit Index for the Report on Form 10-Q			E-1

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

LINCOLN NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

						As of			As of
						June 30,		December 31,
						2012			2011
						(Unaudited)
ASSETS
Investments:
	Available-for-sale securities, at fair value:
		Fixed maturity securities (amortized cost: 2012 - $71,394; 2011 - $68,988)				$	79,191		$	75,433
		Variable interest entities' fixed maturity securities (amortized cost: 2012 - $675; 2011 - $673)					705			700
		Equity securities (cost: 2012 - $143; 2011 - $135)					154			139
	Trading securities						2,649			2,675
	Mortgage loans on real estate						6,804			6,942
	Real estate						116			137
	Policy loans						2,829			2,884
	Derivative investments						3,399			3,151
	Other investments						1,041			1,069
			Total investments				96,888			93,130
Cash and invested cash							5,257			4,510
Deferred acquisition costs and value of business acquired							6,505			6,776
Premiums and fees receivable							388			408
Accrued investment income							1,021			981
Reinsurance recoverables							6,601			6,526
Funds withheld reinsurance assets							863			874
Goodwill							2,273			2,273
Other assets							2,475			2,536
Separate account assets							88,839			83,477
					Total assets	$	211,110		$	201,491
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Future contract benefits						$	19,930		$	19,813
Other contract holder funds							70,422			69,466
Short-term debt							300			300
Long-term debt							5,719			5,391
Reinsurance related embedded derivatives							185			168
Funds withheld reinsurance liabilities							999			1,045
Deferred gain on business sold through reinsurance							356			394
Payables for collateral on investments							5,070			3,733
Variable interest entities' liabilities							158			193
Other liabilities							4,950			4,273
Separate account liabilities							88,839			83,477
				Total liabilities			196,928			188,253
Contingencies and Commitments (See Note 8)
Stockholders' Equity
Preferred stock - 10,000,000 shares authorized; Series A - 9,632 and 10,072 shares issued and outstanding as of June 30, 2012, and December 31, 2011, respectively							-			-
Common stock - 800,000,000 shares authorized; 279,168,971 and 291,319,222 shares issued and outstanding as of June 30, 2012, and December 31, 2011, respectively							7,310			7,590
Retained earnings							3,493			2,969
Accumulated other comprehensive income (loss)							3,379			2,679
				Total stockholders' equity			14,182			13,238
					Total liabilities and stockholders' equity	$	211,110		$	201,491

See accompanying Notes to Consolidated Financial Statements

1

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in millions, except per share data)

						For the Three						For the Six
						Months Ended						Months Ended
						June 30,						June 30,
						2012			2011			2012			2011
Revenues
Insurance premiums						$	630		$	594		$	1,219		$	1,162
Insurance fees							887			900			1,794			1,718
Net investment income							1,197			1,181			2,362			2,372
Realized gain (loss):
	Total other-than-temporary impairment losses on securities						(50	)		(47	)		(147	)		(91	)
	Portion of loss recognized in other comprehensive income						17			16			67			19
		Net other-than-temporary impairment losses on securities recognized in earnings					(33	)		(31	)		(80	)		(72	)
		Realized gain (loss), excluding other-than-temporaryimpairment losses on securities					76			22			37			65
			Total realized gain (loss)				43			(9	)		(43	)		(7	)
Amortization of deferred gain on business sold through reinsurance							18			19			38			37
Other revenues and fees							124			122			244			244
		Total revenues					2,899			2,807			5,614			5,526
Expenses
Interest credited							616			625			1,241			1,239
Benefits							945			1,027			1,804			1,862
Commissions and other expenses							828			674			1,684			1,443
Interest and debt expense							68			72			135			144
	Total expenses						2,457			2,398			4,864			4,688
		Income (loss) from continuing operations before taxes					442			409			750			838
		Federal income tax expense (benefit)					118			105			180			221
			Income (loss) from continuing operations				324			304			570			617
			Income (loss) from discontinued operations, net of federal income taxes				-			-			(1	)		-
				Net income (loss)			324			304			569			617
				Other comprehensive income (loss), net of tax			757			354			700			376
					Comprehensive income (loss)	$	1,081		$	658		$	1,269		$	993
Earnings (Loss) Per Common Share - Basic
Income (loss) from continuing operations						$	1.15		$	0.98		$	1.99		$	1.97
Income (loss) from discontinued operations							-			-			-			-
	Net income (loss)					$	1.15		$	0.98		$	1.99		$	1.97
Earnings (Loss) Per Common Share - Diluted
Income (loss) from continuing operations						$	1.10		$	0.95		$	1.94		$	1.92
Income (loss) from discontinued operations							-			-			-			-
	Net income (loss)					$	1.10		$	0.95		$	1.94		$	1.92

See accompanying Notes to Consolidated Financial Statements

2

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in millions, except per share data)

			For the Six
			Months Ended
			June 30,
			2012			2011
Common Stock
Balance as of beginning-of-year			$	7,590		$	8,124
Stock compensation/issued for benefit plans				20			9
Retirement of common stock/cancellation of shares				(300	)		(195	)
	Balance as of end-of-period			7,310			7,938
Retained Earnings
Balance as of beginning-of-year				2,969			3,934
Cumulative effect from adoption of new accounting standards				-			(1,095	)
Net income (loss)				569			617
Retirement of common stock				-			(31	)
Dividends declared:  Common (2012 - $0.160; 2011 - $0.100)				(45	)		(32	)
	Balance as of end-of-period			3,493			3,393
Accumulated Other Comprehensive Income (Loss)
Balance as of beginning-of-year				2,679			748
Cumulative effect from adoption of new accounting standards				-			103
Other comprehensive income (loss), net of tax				700			376
	Balance as of end-of-period			3,379			1,227
		Total stockholders' equity as of end-of-period	$	14,182		$	12,558

See accompanying Notes to Consolidated Financial Statements

3

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

			For the Six
			Months Ended
			June 30,
			2012			2011
Cash Flows from Operating Activities
Net income (loss)			$	569		$	617
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Deferred acquisition costs, value of business acquired, deferred sales inducements
		and deferred front-end loads deferrals and interest, net of amortization		(114	)		(215	)
	Trading securities purchases, sales and maturities, net			67			26
	Change in premiums and fees receivable			20			(35	)
	Change in accrued investment income			(40	)		(61	)
	Change in future contract benefits and other contract holder funds			120			371
	Change in reinsurance related assets and liabilities			(111	)		(72	)
	Change in federal income tax accruals			197			297
	Realized (gain) loss			43			7
	(Income) loss attributable to equity method investments			(81	)		(75	)
	Amortization of deferred gain on business sold through reinsurance			(38	)		(37	)
	(Gain) loss on disposal of discontinued operations			1			-
	Other			(19	)		55
		Net cash provided by (used in) operating activities		614			878
Cash Flows from Investing Activities
Purchases of available-for-sale securities				(5,717	)		(5,901	)
Sales of available-for-sale securities				369			1,042
Maturities of available-for-sale securities				2,983			2,857
Purchases of other investments				(1,398	)		(1,701	)
Sales or maturities of other investments				1,451			1,527
Increase (decrease) in payables for collateral on investments				1,337			146
Other				(47	)		(42	)
		Net cash provided by (used in) investing activities		(1,022	)		(2,072	)
Cash Flows from Financing Activities
Issuance of long-term debt, net of issuance costs				298			298
Increase (decrease) in commercial paper, net				-			(100	)
Deposits of fixed account values, including the fixed portion of variable				4,979			5,335
Withdrawals of fixed account values, including the fixed portion of variable				(2,611	)		(2,515	)
Transfers to and from separate accounts, net				(1,160	)		(1,391	)
Common stock issued for benefit plans and excess tax benefits				(5	)		(5	)
Repurchase of common stock				(300	)		(226	)
Dividends paid to common and preferred stockholders				(46	)		(31	)
		Net cash provided by (used in) financing activities		1,155			1,365
Net increase (decrease) in cash and invested cash, including discontinued operations				747			171
Cash and invested cash, including discontinued operations, as of beginning-of-year				4,510			2,741
	Cash and invested cash, including discontinued operations, as of end-of-period		$	5,257		$	2,912

See accompanying Notes to Consolidated Financial Statements

4

LINCOLN NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.  Nature of Operations and Basis of Presentation

Nature of Operations

Lincoln National Corporation and its majority-owned subsidiaries (“LNC” or the “Company,” which also may be referred to as “we,” “our” or “us”) operate multiple insurance businesses through four business segments.  See Note 13 for additional details.  The collective group of businesses uses “Lincoln Financial Group” as its marketing identity.  Through our business segments, we sell a wide range of wealth protection, accumulation and retirement income products.  These products include institutional and/or retail fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, term life insurance, mutual funds and group life, disability and dental.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (“2011 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements.

Certain GAAP policies, which significantly affect the determination of financial position, results of operations and cash flows, are summarized in our 2011 Form 10-K.

In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results.  Operating results for the six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2012.  All material intercompany accounts and transactions have been eliminated in consolidation.

See Note 2 “Financial Services – Insurance Industry Topic” below for information about the retrospective restatement of amounts due to the adoption of new accounting guidance.  In addition, certain amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the presentation adopted in the current year.  These reclassifications had no effect on net income or stockholders’ equity of the prior years.

2.  New Accounting Standards

Adoption of New Accounting Standards

Comprehensive Income Topic

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), with an objective of increasing the prominence of items reported in other comprehensive income (“OCI”); however, in December 2011, the FASB deferred a portion of the presentation requirements by issuing ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011- 12”).  For a more detailed description of ASU 2011-05 and ASU 2011-12, see “Future Adoption of New Accounting Standards – Comprehensive Income Topic” in Note 2 of our 2011 Form 10-K.  We adopted the provisions of ASU 2011-05 as of January 1, 2012, after considering the deferral in ASU 2011-12, and have included a single continuous statement of comprehensive income in Item 1 of this quarterly report on Form 10-Q for the quarterly period ended June 30, 2012.

Fair Value Measurements and Disclosures Topic

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards” (“ASU 2011-04”), which was issued to create a consistent framework for the application of fair value measurement across jurisdictions.  For a more detailed description of ASU 2011-04 see “Future Adoption of New Accounting Standards – Fair Value Measurements and Disclosures Topic” in Note 2 of our 2011 Form 10-K.  We adopted the provisions of ASU 2011-04 effective January 1, 2012, and have included the additional disclosures required for fair value measurements in Note 12 for the quarterly period ended June 30, 2012.

5

Financial Services – Insurance Industry Topic

In October 2010, the FASB issued ASU No. 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts” (“ASU 2010-26”), which clarifies the types of costs incurred by an insurance entity that can be capitalized in the acquisition of insurance contracts.  Only those costs incurred that result directly from and are essential to the successful acquisition of new or renewal insurance contracts may be capitalized as deferrable acquisition costs.  The determination of deferability must be made on a contract-level basis.

Prior to the adoption of ASU 2010-26, we defined deferred acquisition costs (“DAC”) as commissions and other costs of acquiring UL insurance, VUL insurance, traditional life insurance, annuities and other investments contracts that vary with and are related primarily to new or renewal business, regardless of whether the acquisition efforts were successful or unsuccessful.  Upon the adoption of ASU 2010-26, we revised our accounting policy to only defer acquisition costs directly related to successful contract acquisitions or renewals, and excluded from DAC those costs incurred for soliciting potential customers, market research, training, administration, management of distribution and underwriting functions, unsuccessful acquisition or renewal efforts and product development.  In addition, indirect acquisition costs including administrative costs, rent, depreciation, occupancy costs, equipment costs and other general overhead are excluded from DAC.  The costs that are considered non-deferrable acquisition costs under ASU 2010-26 are expensed in the period incurred.

We adopted the provisions of ASU 2010-26 as of January 1, 2012, and elected to retrospectively restate all prior periods.  The following summarizes the prior period increases (decreases) (in millions) reflected in our Consolidated Balance Sheets and Consolidated Statements of Stockholders’ Equity related to the adoption:

				As of December 31,
				2011			2010
Assets
Deferred acquisition costs				$	(1,415	)	$	(1,516	)
Liabilities and Stockholders' Equity
Other liabilities - deferred income taxes				$	(490	)	$	(524	)
Stockholders' equity:
	Retained earnings				(1,157	)		(1,095	)
	Accumulated other comprehensive income (loss)				232			103
		Total stockholders' equity			(925	)		(992	)
			Total liabilities and stockholders' equity	$	(1,415	)	$	(1,516	)

6

The following summarizes the prior period increases (decreases) to income from continuing operations and earnings (loss) per share (“EPS”) (in millions, except per share data) reflected in our Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2011, related to the adoption:

			For the Three				For the Six
				Months			Months
				Ended			Ended
				June 30,			June 30,
				2011			2011
Revenues
Realized gain (loss)				$	4		$	8
Expenses
Commissions and other expenses					(37	)		(81	)
	Income (loss) from continuing operations before taxes				(33	)		(73	)
	Federal income tax expense (benefit)				12			26
		Income (loss) from continuing operations		$	(21	)	$	(47	)
Earnings (Loss) Per Common Share - Basic				$	(0.07	)	$	(0.15	)
Earnings (Loss) Per Common Share - Diluted				$	(0.07	)	$	(0.15	)

Intangibles – Goodwill and Other Topic

In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”), which provides an option to first assess qualitative factors to determine if it is necessary to complete the two-step goodwill impairment test.  For a more detailed description of ASU 2011-08, see “Future Adoption of New Accounting Standards – Intangibles – Goodwill and Other Topic” in Note 2 of our 2011 Form 10-K.  We adopted the provisions of ASU 2011-08 effective January 1, 2012.  The adoption did not have a material effect on our consolidated financial condition and results of operations.

Transfers and Servicing Topic

In April 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements” (“ASU 2011-03”), which revises the criteria for assessing effective control for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.  For a more detailed description of ASU 2011-03, see “Future Adoption of New Accounting Standards – Transfers and Servicing Topic” in Note 2 of our 2011 Form 10-K.  We adopted the provisions of ASU 2011-03 effective January 1, 2012.  The adoption did not have a material effect on our consolidated financial condition and results of operations.

Future Adoption of New Accounting Standards

Balance Sheet Topic

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), to address certain comparability issues between financial statements prepared in accordance with GAAP and those prepared in accordance with International Financial Reporting Standards.  For a more detailed description of ASU 2011-11, see “Future Adoption of New Accounting Standards – Balance Sheet Topic” in Note 2 of our 2011 Form 10-K.  We will adopt the disclosure requirements in ASU 2011-11 beginning with our first quarter 2013 financial statements and are currently evaluating the appropriate location for these disclosures in the notes to our financial statements.

3.  Variable Interest Entities (“VIEs”)

Consolidated VIEs

See Note 4 in our 2011 Form 10-K for a detailed discussion of our consolidated VIEs, which information is incorporated herein by reference.

7

The following summarizes information regarding the credit-linked note (“CLN”) structures (dollars in millions) as of June 30, 2012:

	Amount and Date of Issuance
		$400		$200
		December		April
		2006		2007
Original attachment point (subordination)		5.50	%	2.05	%
Current attachment point (subordination)		4.17	%	1.48	%
Maturity		12/20/2016		3/20/2017
Current rating of tranche		BB-		Ba2
Current rating of underlying collateral pool		Aa1-B3		Aaa-Caa1
Number of defaults in underlying collateral pool		2		2
Number of entities		123		99
Number of countries		20		22

The following summarizes the exposure of the CLN structures’ underlying collateral by industry and rating as of June 30, 2012:

		AAA		AA		A		BBB		BB		B		CCC		Total
Industry
Telecommunications		-	%	-	%	5.5	%	4.5	%	0.7	%	0.5	%	-	%	11.2	%
Financial intermediaries		-	%	2.1	%	7.5	%	0.9	%	-	%	-	%	-	%	10.5	%
Oil and gas		-	%	1.8	%	1.0	%	4.6	%	-	%	-	%	-	%	7.4	%
Utilities		-	%	-	%	2.6	%	2.0	%	-	%	-	%	-	%	4.6	%
Chemicals and plastics		-	%	-	%	2.3	%	1.2	%	0.3	%	-	%	-	%	3.8	%
Drugs		0.3	%	2.7	%	0.7	%	-	%	-	%	-	%	-	%	3.7	%
Retailers (except food and drug)		-	%	-	%	2.1	%	0.9	%	0.5	%	-	%	-	%	3.5	%
Industrial equipment		-	%	-	%	3.0	%	0.3	%	-	%	-	%	-	%	3.3	%
Sovereign		-	%	0.7	%	1.6	%	1.0	%	-	%	-	%	-	%	3.3	%
Conglomerates		-	%	2.3	%	0.9	%	-	%	-	%	-	%	-	%	3.2	%
Forest products		-	%	-	%	-	%	1.6	%	1.4	%	-	%	-	%	3.0	%
Other		-	%	3.9	%	16.0	%	17.7	%	3.7	%	0.9	%	0.3	%	42.5	%
	Total	0.3	%	13.5	%	43.2	%	34.7	%	6.6	%	1.4	%	0.3	%	100.0	%

8

Asset and liability information (dollars in millions) for these consolidated VIEs included on our Consolidated Balance Sheets was as follows:

				As of June 30, 2012							As of December 31, 2011
				Number							Number
				of		Notional		Carrying			of		Notional		Carrying
				Instruments		Amounts		Value			Instruments		Amounts		Value
Assets
Fixed maturity securities:
	Asset-backed credit card loans				N/A	$	-	$	595			N/A	$	-	$	592
	U.S. government bonds				N/A		-		110			N/A		-		108
Excess mortality swap					1		100		-			1		100		-
			Total assets (1)		1	$	100	$	705			1	$	100	$	700
Liabilities
Non-qualifying hedges:
	Credit default swaps				2	$	600	$	234			2	$	600	$	295
	Contingent forwards				2		-		(3	)		2		-		(4	)
		Total non-qualifying hedges			4		600		231			4		600		291
Federal income tax					N/A		-		(73	)		N/A		-		(98	)
			Total liabilities (2)		4	$	600	$	158			4	$	600	$	193

(1)   Reported in VIEs’ fixed maturity securities on our Consolidated Balance Sheets.

(2)   Reported in VIEs’ liabilities on our Consolidated Balance Sheets.

For details related to the fixed maturity available-for-sale (“AFS”) securities for these VIEs, see Note 4.

As described more fully in Note 1 of our 2011 Form 10-K, we regularly review our investment holdings for other-than-temporary impairment (“OTTI”).  Based upon this review, we believe that the fixed maturity securities were not other-than-temporarily impaired as of June 30, 2012.

The gains (losses) for these consolidated VIEs (in millions) recorded on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

		For the Three						For the Six
		Months Ended						Months Ended
		June 30,						June 30,
		2012			2011			2012			2011
Non-Qualifying Hedges
Credit default swaps		$	(10	)	$	6		$	61		$	13
Contingent forwards			-			(1	)		(2	)		(3	)
	Total non-qualifying hedges (1)	$	(10	)	$	5		$	59		$	10

(1)   Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

Unconsolidated VIEs

See Note 4 in our 2011 Form 10-K for a detailed discussion of our unconsolidated VIEs, which information is incorporated herein by reference.

9

4.  Investments

AFS Securities

Pursuant to the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards CodificationTM (“ASC”), we have categorized AFS securities into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3), as described in Note 1 in our 2011 Form 10-K, which also includes additional disclosures regarding our fair value measurements.

The amortized cost, gross unrealized gains, losses and OTTI and fair value of AFS securities (in millions) were as follows:

			As of June 30, 2012
			Amortized		Gross Unrealized						Fair
			Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
	Corporate bonds		$	57,342	$	7,068	$	393	$	103	$	63,914
	U.S. Government bonds			449		68		-		-		517
	Foreign government bonds			583		81		-		-		664
	Residential mortgage-backed securities ("RMBS")			6,808		522		41		92		7,197
	Commercial mortgage-backed securities ("CMBS")			1,304		71		43		25		1,307
	Collateralized debt obligations ("CDOs")			135		-		15		-		120
	State and municipal bonds			3,525		767		8		-		4,284
	Hybrid and redeemable preferred securities			1,248		63		123		-		1,188
	VIEs' fixed maturity securities			675		30		-		-		705
		Total fixed maturity securities		72,069		8,670		623		220		79,896
Equity securities				143		19		8		-		154
		Total AFS securities	$	72,212	$	8,689	$	631	$	220	$	80,050

			As of December 31, 2011
			Amortized		Gross Unrealized						Fair
			Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
	Corporate bonds		$	53,661	$	6,185	$	517	$	68	$	59,261
	U.S. Government bonds			439		55		-		-		494
	Foreign government bonds			668		65		-		-		733
	RMBS			7,690		548		73		126		8,039
	CMBS			1,642		73		106		9		1,600
	CDOs			121		-		19		-		102
	State and municipal bonds			3,490		566		9		-		4,047
	Hybrid and redeemable preferred securities			1,277		50		170		-		1,157
	VIEs' fixed maturity securities			673		27		-		-		700
		Total fixed maturity securities		69,661		7,569		894		203		76,133
Equity securities				135		16		12		-		139
		Total AFS securities	$	69,796	$	7,585	$	906	$	203	$	76,272

10

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities (in millions) as of June 30, 2012, were as follows:

			Amortized		Fair
			Cost		Value
Due in one year or less			$	2,931	$	2,989
Due after one year through five years				12,188		13,136
Due after five years through ten years				23,651		26,185
Due after ten years				25,052		28,962
	Subtotal			63,822		71,272
Mortgage-backed securities ("MBS")				8,112		8,504
CDOs				135		120
		Total fixed maturity AFS securities	$	72,069	$	79,896

Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations.

The fair value and gross unrealized losses, including the portion of OTTI recognized in OCI, of AFS securities (dollars in millions), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

				As of June 30, 2012
				Less Than or Equal				Greater Than
				to Twelve Months				Twelve Months				Total
						Gross				Gross				Gross
						Unrealized				Unrealized				Unrealized
				Fair		Losses and		Fair		Losses and		Fair		Losses and
				Value		OTTI		Value		OTTI		Value		OTTI
Fixed maturity securities:
	Corporate bonds			$	2,389	$	175	$	1,293	$	321	$	3,682	$	496
	RMBS				521		90		314		43		835		133
	CMBS				110		25		146		43		256		68
	CDOs				-		-		68		15		68		15
	State and municipal bonds				5		-		22		8		27		8
	Hybrid and redeemable preferred securities				125		4		425		119		550		123
		Total fixed maturity securities			3,150		294		2,268		549		5,418		843
Equity securities					10		1		4		7		14		8
			Total AFS securities	$	3,160	$	295	$	2,272	$	556	$	5,432	$	851
Total number of AFS securities in an unrealized loss position															734

11

				As of December 31, 2011
				Less Than or Equal				Greater Than
				to Twelve Months				Twelve Months				Total
						Gross				Gross				Gross
						Unrealized				Unrealized				Unrealized
				Fair		Losses and		Fair		Losses and		Fair		Losses and
				Value		OTTI		Value		OTTI		Value		OTTI
Fixed maturity securities:
	Corporate bonds			$	2,848	$	162	$	1,452	$	423	$	4,300	$	585
	RMBS				565		125		429		74		994		199
	CMBS				178		15		146		100		324		115
	CDOs				9		1		80		18		89		19
	State and municipal bonds				31		-		30		9		61		9
	Hybrid and redeemable preferred securities				324		23		353		147		677		170
		Total fixed maturity securities			3,955		326		2,490		771		6,445		1,097
Equity securities					38		12		-		-		38		12
			Total AFS securities	$	3,993	$	338	$	2,490	$	771	$	6,483	$	1,109
Total number of AFS securities in an unrealized loss position															897

For information regarding our investments in VIEs, see Note 3.

We perform detailed analysis on the AFS securities backed by pools of residential and commercial mortgages that are most at risk of impairment based on factors discussed in Note 1 in our 2011 Form 10-K.  Selected information for these securities in a gross unrealized loss position (in millions) was as follows:

		As of June 30, 2012
		Amortized		Fair		Unrealized
		Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages		$	1,734	$	1,363	$	371
AFS securities backed by pools of commercial mortgages			355		274		81
	Total	$	2,089	$	1,637	$	452
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages		$	1,724	$	1,353	$	371
AFS securities backed by pools of commercial mortgages			79		42		37
	Total	$	1,803	$	1,395	$	408

		As of December 31, 2011
		Amortized		Fair		Unrealized
		Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages		$	2,023	$	1,553	$	470
AFS securities backed by pools of commercial mortgages			472		344		128
	Total	$	2,495	$	1,897	$	598
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages		$	2,015	$	1,545	$	470
AFS securities backed by pools of commercial mortgages			126		61		65
	Total	$	2,141	$	1,606	$	535

12

For the six months ended June 30, 2012 and 2011, we recorded OTTI for AFS securities backed by pools of residential and commercial mortgages of $34 million and $44 million, pre-tax, respectively, and before associated amortization expense for DAC, value of business acquired (“VOBA”), deferred sales inducements (“DSI”) and deferred front-end loads (“DFEL”), of which $(3) million and $4 million, respectively, was recognized in OCI and $37 million and $40 million, respectively, was recognized in net income (loss).

The fair value, gross unrealized losses, the portion of OTTI recognized in OCI (in millions) and number of AFS securities where the fair value had declined and remained below amortized cost by greater than 20% were as follows:

		As of June 30, 2012
								Number
		Fair		Gross Unrealized				of
		Value		Losses		OTTI		Securities		(1)
Less than six months		$	115	$	41	$	2		25
Six months or greater, but less than nine months			13		4		1		4
Nine months or greater, but less than twelve months			104		40		12		17
Twelve months or greater			584		342		165		167
	Total	$	816	$	427	$	180		213

		As of December 31, 2011
								Number
		Fair		Gross Unrealized				of
		Value		Losses		OTTI		Securities		(1)
Less than six months		$	385	$	125	$	31		56
Six months or greater, but less than nine months			53		30		12		18
Nine months or greater, but less than twelve months			2		-		1		7
Twelve months or greater			615		470		111		175
	Total	$	1,055	$	625	$	155		256

(1)   We may reflect a security in more than one aging category based on various purchase dates.

We regularly review our investment holdings for OTTI.  Our gross unrealized losses on AFS securities decreased $258 million for the six months ended June 30, 2012.  As discussed further below, we believe the unrealized loss position as of June 30, 2012, did not represent OTTI as we did not intend to sell these fixed maturity AFS securities, it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis, the estimated future cash flows were equal to or greater than the amortized cost basis of the debt securities, or we had the ability and intent to hold the equity AFS securities for a period of time sufficient for recovery.

Based upon this evaluation as of June 30, 2012, management believed we had the ability to generate adequate amounts of cash from our normal operations (e.g., insurance premiums and fees and investment income) to meet cash requirements with a prudent margin of safety without requiring the sale of our temporarily-impaired securities.

As of June 30, 2012, the unrealized losses associated with our corporate bond securities were attributable primarily to securities that were backed by commercial loans and individual issuer companies.  For our corporate bond securities with commercial loans as the underlying collateral, we evaluated the projected credit losses in the underlying collateral and concluded that we had sufficient subordination or other credit enhancement when compared with our estimate of credit losses for the individual security and we expected to recover the entire amortized cost for each security.  For individual issuers, we performed detailed analysis of the financial performance of the issuer and determined that we expected to recover the entire amortized cost for each security.

As of June 30, 2012, the unrealized losses associated with our MBS and CDOs were attributable primarily to collateral losses and credit spreads.  We assessed for credit impairment using a cash flow model as discussed above.  The key assumptions included default rates, severities and prepayment rates.  We estimated losses for a security by forecasting the underlying loans in each transaction.  The forecasted loan performance was used to project cash flows to the various tranches in the structure, as applicable.  Our forecasted cash flows also considered, as applicable, independent industry analyst reports and forecasts, sector credit ratings and other independent market data.  Based upon our assessment of the expected credit losses of the security given the performance of the underlying collateral compared to our subordination or other credit enhancement, we expected to recover the entire amortized cost basis of each security.

13

As of June 30, 2012, the unrealized losses associated with our hybrid and redeemable preferred securities were attributable primarily to wider credit spreads caused by illiquidity in the market and subordination within the capital structure, as well as credit risk of specific issuers.  For our hybrid and redeemable preferred securities, we evaluated the financial performance of the issuer based upon credit performance and investment ratings and determined we expected to recover the entire amortized cost of each security.

Changes in the amount of credit loss of OTTI recognized in net income (loss) where the portion related to other factors was recognized in OCI (in millions) on fixed maturity AFS securities were as follows:

			For the Three						For the Six
			Months Ended						Months Ended
			June 30,						June 30,
			2012			2011			2012			2011
Balance as of beginning-of-period			$	410		$	352		$	390		$	319
Increases attributable to:
	Credit losses on securities for which an OTTI was not previously recognized			21			3			56			29
	Credit losses on securities for which an OTTI was previously recognized			19			19			42			40
Decreases attributable to:
	Securities sold			(35	)		(34	)		(73	)		(48	)
		Balance as of end-of-period	$	415		$	340		$	415		$	340

During 2012 and 2011, we recorded credit losses on securities for which an OTTI was not previously recognized as we determined the cash flows expected to be collected would not be sufficient to recover the entire amortized cost basis of the debt security.  The credit losses we recorded on securities for which an OTTI was not previously recognized were attributable primarily to one or a combination of the following reasons:

·   Failure of the issuer of the security to make scheduled payments;

·   Deterioration of creditworthiness of the issuer;

·   Deterioration of conditions specifically related to the security;

·   Deterioration of fundamentals of the industry in which the issuer operates;

·   Deterioration of fundamentals in the economy including, but not limited to, higher unemployment and lower housing prices; and

·   Deterioration of the rating of the security by a rating agency.

We recognize the OTTI attributed to the noncredit portion as a separate component in OCI referred to as unrealized OTTI on AFS securities.

Details of the amount of credit loss of OTTI recognized in net income (loss) where the portion related to other factors was recognized in OCI (in millions), were as follows:

		As of June 30, 2012
				Gross Unrealized						OTTI in
		Amortized				Losses and		Fair		Credit
		Cost		Gains		OTTI		Value		Losses
Corporate bonds		$	239	$	1	$	104	$	136	$	73
RMBS			697		5		91		611		268
CMBS			46		-		24		22		74
	Total	$	982	$	6	$	219	$	769	$	415

14

		As of December 31, 2011
				Gross Unrealized						OTTI in
		Amortized				Losses and		Fair		Credit
		Cost		Gains		OTTI		Value		Losses
Corporate bonds		$	169	$	1	$	67	$	103	$	51
RMBS			690		1		128		563		301
CMBS			17		-		10		7		38
	Total	$	876	$	2	$	205	$	673	$	390

Mortgage Loans on Real Estate

Mortgage loans on real estate principally involve commercial real estate.  The commercial loans are geographically diversified throughout the U.S. with the largest concentrations in California and Texas, which accounted for 31% and 32% of mortgage loans on real estate as of June 30, 2012, and December 31, 2011, respectively.

The following provides the current and past due composition of our mortgage loans on real estate (in millions):

		As of			As of
		June 30,		December 31,
		2012			2011
Current		$	6,736		$	6,858
60 to 90 days past due			3			26
Greater than 90 days past due			80			76
Valuation allowance associated with impaired mortgage loans on real estate			(26	)		(31	)
Unamortized premium (discount)			11			13
	Total carrying value	$	6,804		$	6,942

The number of impaired mortgage loans on real estate, each of which had an associated specific valuation allowance, and the carrying value of impaired mortgage loans on real estate (dollars in millions) were as follows:

		As of			As of
		June 30,		December 31,
		2012			2011
Number of impaired mortgage loans on real estate		9			12
Principal balance of impaired mortgage loans on real estate		$	66		$	100
Valuation allowance associated with impaired mortgage loans on real estate			(26	)		(31	)
	Carrying value of impaired mortgage loans on real estate	$	40		$	69

The average carrying value on the impaired mortgage loans on real estate (in millions) was as follows:

	For the Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Average carrying value for impaired mortgage loans on real estate	$	49	$	53	$	56	$	54
Interest income recognized on impaired mortgage loans on real estate		-		-		-		1
Interest income collected on impaired mortgage loans on real estate		-		1		-		2

15

As described in Note 1 in our 2011 Form 10-K, we use the loan-to-value and debt-service coverage ratios as credit quality indicators for our mortgage loans, which were as follows (dollars in millions):

		As of June 30, 2012							As of December 31, 2011
							Debt-							Debt-
							Service							Service
		Principal		% of			Coverage		Principal		% of			Coverage
Loan-to-Value		Amount		Total			Ratio		Amount		Total			Ratio
Less than 65%		$	5,395		79.1	%		1.63	$	5,338		76.7	%		1.61
65% to 74%			1,008		14.8	%		1.41		1,198		17.2	%		1.37
75% to 100%			334		4.9	%		0.90		308		4.4	%		0.92
Greater than 100%			82		1.2	%		0.32		116		1.7	%		0.36
	Total mortgage loans on real estate	$	6,819		100.0	%			$	6,960		100.0	%

Alternative Investments 

As of June 30, 2012, and December 31, 2011, alternative investments included investments in 97 and 96 different partnerships, respectively, and the portfolio represented less than 1% of our overall invested assets.

Realized Gain (Loss) Related to Certain Investments

The detail of the realized gain (loss) related to certain investments (in millions) was as follows:

			For the Three						For the Six
			Months Ended						Months Ended
			June 30,						June 30,
			2012			2011			2012			2011
Fixed maturity AFS securities:
	Gross gains		$	3		$	31		$	8		$	67
	Gross losses			(49	)		(51	)		(112	)		(114	)
Equity AFS securities:
	Gross gains			-			1			1			9
Gain (loss) on other investments				(5	)		(8	)		2			5
Associated amortization of DAC, VOBA, DSI and DFEL and changes in other contract holder funds				-			(5	)		2			(14	)
		Total realized gain (loss) related to certain investments	$	(51	)	$	(32	)	$	(99	)	$	(47	)

16

Details underlying write-downs taken as a result of OTTI (in millions) that were recognized in net income (loss) and included in realized gain (loss) on AFS securities above, and the portion of OTTI recognized in OCI (in millions) were as follows:

			For the Three						For the Six
			Months Ended						Months Ended
			June 30,						June 30,
			2012			2011			2012			2011
OTTI Recognized in Net Income (Loss)
Corporate bonds			$	(10	)	$	(2	)	$	(29	)	$	(6	)
RMBS				(14	)		(23	)		(32	)		(43	)
CMBS				(16	)		(15	)		(36	)		(39	)
CDOs				-			-			-			(1	)
Hybrid and redeemable preferred securities				-			-			-			(2	)
	Gross OTTI recognized in net income (loss)			(40	)		(40	)		(97	)		(91	)
	Associated amortization of DAC, VOBA, DSI and DFEL			7			9			17			19
		Net OTTI recognized in net income (loss), pre-tax	$	(33	)	$	(31	)	$	(80	)	$	(72	)
Portion of OTTI Recognized in OCI
Gross OTTI recognized in OCI			$	21		$	19		$	79		$	27
Change in DAC, VOBA, DSI and DFEL				(4	)		(3	)		(12	)		(8	)
	Net portion of OTTI recognized in OCI, pre-tax		$	17		$	16		$	67		$	19

Determination of Credit Losses on Corporate Bonds and CDOs

As of June 30, 2012, and December 31, 2011, we reviewed our corporate bond and CDO portfolios for potential shortfall in contractual principal and interest based on numerous subjective and objective inputs.  The factors used to determine the amount of credit loss for each individual security, include, but are not limited to, near term risk, substantial discrepancy between book and market value, sector or company-specific volatility, negative operating trends and trading levels wider than peers.

Credit ratings express opinions about the credit quality of a security.  Securities rated investment grade, that is those rated BBB- or higher by Standard & Poor’s (“S&P”) Rating Services or Baa3 or higher by Moody’s Investors Service (“Moody’s”), are generally considered by the rating agencies and market participants to be low credit risk.  As of June 30, 2012, and December 31, 2011, 96% of the fair value of our corporate bond portfolio was rated investment grade.  As of June 30, 2012, and December 31, 2011, the portion of our corporate bond portfolio rated below investment grade had an amortized cost of $2.7 billion and $2.6 billion and a fair value of $2.5 billion and $2.4 billion, respectively.  As of June 30, 2012, and December 31, 2011, 98% and 97%, respectively, of the fair value of our CDO portfolio was rated investment grade.  As of June 30, 2012, and December 31, 2011, the portion of our CDO portfolio rated below investment grade had an amortized cost and fair value of $3 million.  Based upon the analysis discussed above, we believed as of June 30, 2012, and December 31, 2011, that we would recover the amortized cost of each investment grade corporate bond and CDO security.

For securities where we recorded an OTTI recognized in net income (loss) for the six months ended June 30, 2012 and 2011, the recovery as a percentage of amortized cost was 92% and 98%, respectively, for corporate bonds and 0% for CDOs.

Determination of Credit Losses on MBS

As of June 30, 2012, and December 31, 2011, default rates were projected by considering underlying MBS loan performance and collateral type.  Projected default rates on existing delinquencies vary between 25% to 100% depending on loan type and severity of delinquency status.  In addition, we estimate the potential contributions of currently performing loans that may become delinquent in the future based on the change in delinquencies and loan liquidations experienced in the recent history.  Finally, we develop a default rate timing curve by aggregating the defaults for all loans (delinquent loans, foreclosure and real estate owned and new delinquencies from currently performing loans) in the pool to project the future expected cash flows. 

We use certain available loan characteristics such as lien status, loan sizes and occupancy to estimate the loss severity of loans.  Second lien loans are assigned 100% severity, if defaulted.  For first lien loans, we assume a minimum of 30% severity with higher severity assumed for investor properties and further housing price depreciation.

17

Payables for Collateral on Investments

The carrying values of the payables for collateral on investments (in millions) included on our Consolidated Balance Sheets and the fair value of the related investments or collateral consisted of the following:

		As of June 30, 2012				As of December 31, 2011
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
		of Payables		of Collateral		of Payables		of Collateral
Collateral payable held for derivative investments (1)		$	3,441	$	3,441	$	2,980	$	2,980
Securities pledged under securities lending agreements (2)			200		194		200		193
Securities pledged under reverse repurchase agreements (3)			280		293		280		294
Securities pledged for Term Asset-Backed Securities Loan Facility ("TALF") (4)			49		66		173		199
Investments pledged for Federal Home Loan Bank of Indianapolis ("FHLBI") (5)			1,100		2,013		100		142
	Total payables for collateral on investments	$	5,070	$	6,007	$	3,733	$	3,808

(1)   We obtain collateral based upon contractual provisions with our counterparties.  These agreements take into consideration the counterparties’ credit rating as compared to ours, the fair value of the derivative investments and specified thresholds that if exceeded result in the receipt of cash that is typically invested in cash and invested cash.  See Note 6 for details about maximum collateral potentially required to post on our credit default swaps.

(2)   Our pledged securities under securities lending agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We generally obtain collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively.  We value collateral daily and obtain additional collateral when deemed appropriate.  The cash received in our securities lending program is typically invested in cash and invested cash or fixed maturity AFS securities.

(3)   Our pledged securities under reverse repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We obtain collateral in an amount equal to 95% of the fair value of the securities, and our agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary.  The cash received in our reverse repurchase program is typically invested in fixed maturity AFS securities.

(4)   Our pledged securities for TALF are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We obtain collateral in an amount that has typically averaged 90% of the fair value of the TALF securities.  The cash received in these transactions is invested in fixed maturity AFS securities.

(5)   Our pledged investments for FHLBI are included in fixed maturity AFS securities and mortgage loans on real estate on our Consolidated Balance Sheets.  The collateral requirements are generally 105% to 115% of the fair value for fixed maturity AFS securities and 155% to 175% of the fair value for mortgage loans on real estate.  The cash received in these transactions is primarily invested in cash and invested cash or fixed maturity AFS securities.

Increase (decrease) in payables for collateral on investments (in millions) included on the Consolidated Statements of Cash Flows consisted of the following:

		For the Six
		Months Ended
		June 30,
		2012			2011
Collateral payable held for derivative investments		$	461		$	223
Securities pledged under securities lending agreements			-			1
Securities pledged for TALF			(124	)		(78	)
Investments pledged for FHLBI			1,000			-
	Total increase (decrease) in payables for collateral on investments	$	1,337		$	146

Investment Commitments

As of June 30, 2012, our investment commitments were $754 million, which included $233 million of limited partnerships (“LPs”), $339 million of private placements and $182 million of mortgage loans on real estate.

18

Concentrations of Financial Instruments

As of June 30, 2012, and December 31, 2011, our most significant investments in one issuer were our investments in securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $4.5 billion and $5.0 billion, respectively, or 5% of our invested assets portfolio and our investments in securities issued by Fannie Mae with a fair value of $2.5 billion and $2.6 billion, respectively, or 3% of our invested assets portfolio.  These investments are included in corporate bonds in the tables above.

As of June 30, 2012, and December 31, 2011, our most significant investments in one industry were our investment securities in the electric industry with a fair value of $8.1 billion and $7.7 billion, respectively, or 8% of our invested assets portfolio, and our investment securities in the collateralized mortgage obligations industry with a fair value of $5.0 billion and $5.6 billion, or 5% and 6% of our invested assets portfolio, respectively.  We utilized the industry classifications to obtain the concentration of financial instruments amount; as such, this amount will not agree to the AFS securities table above.

5.  Derivative Instruments

We maintain an overall risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate risk, foreign currency exchange risk, equity market risk, default risk, basis risk and credit risk.  See Note 1 in our 2011 Form 10-K for a detailed discussion of the accounting treatment for derivative instruments.  See Note 6 in our 2011 Form 10-K for a detailed discussion of our derivative instruments and use of them in our overall risk management strategy which information is incorporated herein by reference.  In addition, we have entered into forward-starting interest rate swaps that hedge the interest rate risk of floating rate bond coupon payments by replicating a fixed rate bond.  See Note 12 for additional disclosures related to the fair value of our derivative instruments and Note 3 for derivative instruments related to our consolidated VIEs.

We have derivative instruments with off-balance-sheet risks whose notional or contract amounts exceed the credit exposure.  Outstanding derivative instruments with off-balance-sheet risks (in millions) were as follows:

			As of June 30, 2012							As of December 31, 2011
			Notional		Fair Value					Notional		Fair Value
			Amounts		Asset			Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
	Interest rate contracts (1)		$	3,418	$	190		$	-	$	2,512	$	130	$	-
	Foreign currency contracts (1)			420		37			-		340		38		-
		Total cash flow hedges		3,838		227			-		2,852		168		-
Fair value hedges:
	Interest rate contracts (1)			1,175		325			-		1,675		319		-
	Equity collar (1)			9		-			-		-		-		-
		Total fair value hedges		1,184		325			-		1,675		319		-
Non-Qualifying Hedges
Interest rate contracts (1)				36,599		777			-		30,232		568		-
Foreign currency contracts (1)				196		-			-		4		-		-
Equity market contracts (1)				19,182		2,071			-		16,401		2,096		-
Credit contracts (1)				46		(1	)		-		48		-		-
Credit contracts (2)				148		-			11		148		-		16
Embedded derivatives:
	Indexed annuity contracts (3)			-		-			431		-		-		399
	Guaranteed living benefits ("GLB") reserves (3)			-		-			1,926		-		-		2,217
	Reinsurance related (4)			-		-			185		-		-		168
		Total derivative instruments	$	61,193	$	3,399		$	2,553	$	51,360	$	3,151	$	2,800

(1)   Reported in derivative investments on our Consolidated Balance Sheets.

(2)   Reported in other liabilities on our Consolidated Balance Sheets.

(3)   Reported in future contract benefits on our Consolidated Balance Sheets.

(4)   Reported in reinsurance related embedded derivatives on our Consolidated Balance Sheets.

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The maturity of the notional amounts of derivative instruments (in millions) was as follows:

		Remaining Life as of June 30, 2012
		Less Than		1 – 5		6 – 10		11 – 30		Over 30
		1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)		$	3,389	$	11,942	$	14,478	$	10,169	$	1,213	$	41,191
Foreign currency contracts (2)			196		179		130		111		-		616
Equity market contracts			9,978		3,305		5,881		24		3		19,191
Credit contracts			40		155		-		-		-		195
	Total derivative instruments with notional amounts	$	13,603	$	15,581	$	20,489	$	10,304	$	1,216	$	61,193

(1)   As of June 30, 2012, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was April 2067.

(2)   As of June 30, 2012, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was April 2028.

The change in our unrealized gain (loss) on derivative instruments in accumulated OCI (in millions) was as follows:

						For the Six
						Months Ended
						June 30,
						2012			2011
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year						$	119		$	(15	)
Other comprehensive income (loss):
	Cumulative effect from adoption of new accounting standards						-			3
	Unrealized holding gains (losses) arising during the year:
		Cash flow hedges:
			Interest rate contracts				38			(41	)
			Foreign currency contracts				(3	)		5
		Fair value hedges:
			Interest rate contracts				2			2
	Change in foreign currency exchange rate adjustment						2			(14	)
	Change in DAC, VOBA, DSI and DFEL						4			-
	Income tax benefit (expense)						(16	)		18
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss):
			Cash flow hedges:
				Interest rate contracts (1)			(11	)		(5	)
				Interest rate contracts (2)			-			1
				Foreign currency contracts (1)			2			(7	)
			Fair value hedges:
				Interest rate contracts (2)			2			2
		Associated amortization of DAC, VOBA, DSI and DFEL					1			1
		Income tax benefit (expense)					2			3
					Balance as of end-of-period	$	150		$	(37	)

(1)   The OCI offset is reported within net investment income on our Consolidated Statements of Comprehensive Income (Loss).

(2)   The OCI offset is reported within interest and debt expense on our Consolidated Statements of Comprehensive Income (Loss).

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The gains (losses) on derivative instruments (in millions) recorded within income (loss) from continuing operations on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	(4	)	$	(4	)	$	(11	)	$	(5	)
Foreign currency contracts (1)		-			(1	)		2			1
Total cash flow hedges		(4	)		(5	)		(9	)		(4	)
Fair value hedges:
Interest rate contracts (2)		11			13			23			25
Non-Qualifying Hedges
Interest rate contracts (1)		(16	)		(10	)		(18	)		(16	)
Interest rate contracts (3)		622			88			208			27
Foreign currency contracts (3)		-			(1	)		(4	)		(5	)
Equity market contracts (3)		241			64			(430	)		(135	)
Equity market contracts (4)		26			(15	)		(109	)		(34	)
Credit contracts (1)		(1	)		-			(2	)		-
Credit contracts (3)		1			(1	)		6			3
Embedded derivatives:
Indexed annuity contracts (3)		23			6			(80	)		54
GLB reserves (3)		(862	)		(160	)		291			130
Reinsurance related (3)		(27	)		(28	)		(18	)		(18	)
AFS securities (1)		-			-			-			1
Total derivative instruments	$	14		$	(49	)	$	(142	)	$	28

(1)   Reported in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

(2)   Reported in interest and debt expense on our Consolidated Statements of Comprehensive Income (Loss).

(3)   Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

(4)   Reported in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

Gains (losses) (in millions) on derivative instruments designated and qualifying as cash flow hedges were as follows:

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Gain (loss) recognized as a component of OCI with the offset to net investment income	$	(6	)	$	(4	)	$	(10	)	$	(4	)

As of June 30, 2012, $21 million of the deferred net losses on derivative instruments in accumulated OCI were expected to be reclassified to earnings during the next 12 months.  This reclassification would be due primarily to the interest rate variances related to the interest rate swap agreements.

For the three and six months ended June 30, 2012 and 2011, there were no material reclassifications to earnings due to hedged firm commitments no longer deemed probable or due to hedged forecasted transactions that had not occurred by the end of the originally specified time period.

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Gains (losses) (in millions) on derivative instruments designated and qualifying as fair value hedges were as follows:

	For the Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Gain (loss) recognized as a component of OCI with the offset to interest expense	$	1	$	1	$	2	$	2

Information related to our open credit default swap liabilities for which we are the seller (dollars in millions) was as follows:

	As of June 30, 2012
					Credit
			Reason	Nature	Rating of		Number				Maximum
			for	of	Underlying		of		Fair		Potential
Maturity			Entering	Recourse	Obligation (1)		Instruments		Value (2)		Payout
12/20/2012		(3)	(5)	(6)		BBB+		4	$	-	$	40
12/20/2016		(4)	(5)	(6)		BBB		3		(8)		68
03/20/2017		(4)	(5)	(6)		BBB		2		(3)		40
								9	$	(11)	$	148

	As of December 31, 2011
					Credit
			Reason	Nature	Rating of		Number				Maximum
			for	of	Underlying		of		Fair		Potential
Maturity			Entering	Recourse	Obligation (1)		Instruments		Value (2)		Payout
12/20/2012		(3)	(5)	(6)		BBB+		4	$	-	$	40
12/20/2016		(4)	(5)	(6)		BBB+		3		(12)		68
03/20/2017		(4)	(5)	(6)		BBB		2		(4)		40
								9	$	(16)	$	148

(1)   Represents average credit ratings based on the midpoint of the applicable ratings among Moody’s, S&P and Fitch Ratings, as scaled to the corresponding S&P ratings.

(2)   Broker quotes are used to determine the market value of credit default swaps.

(3)   These credit default swaps were sold to our contract holders prior to 2007, where we determined there was a spread versus premium mismatch.

(4)   These credit default swaps were sold to a counter-party of the consolidated VIEs as discussed in Note 4 in our 2011 Form 10-K.

(5)   Credit default swaps were entered into in order to generate income by providing default protection in return for a quarterly payment.

(6)   Sellers do not have the right to demand indemnification or compensation from third parties in case of a loss (payment) on the contract.

Details underlying the associated collateral of our open credit default swaps for which we are the seller, if credit risk related contingent features were triggered (in millions), are as follows:

				As of		As of
			June 30,			December 31,
				2012		2011
Maximum potential payout				$	148	$	148
Less:
	Counterparty thresholds				-		-
		Maximum collateral potentially required to post		$	148	$	148

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Certain of our credit default swap agreements contain contractual provisions that allow for the netting of collateral with our counterparties related to all of our collateralized financing transactions that we have outstanding.  If these netting agreements were not in place, we would have been required to post approximately $11 million as of June 30, 2012, after considering the fair values of the associated investments counterparties’ credit ratings as compared to ours and specified thresholds that once exceeded result in the payment of cash.

Credit Risk

We are exposed to credit loss in the event of nonperformance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or nonperformance risk.  The nonperformance risk is based upon assumptions for each counterparty’s credit spread over the estimated weighted average life of the counterparty exposure less collateral held. As of June 30, 2012, the nonperformance risk adjustment was $6 million. The credit risk associated with such agreements is minimized by purchasing such agreements from financial institutions with long-standing, superior performance records.  Additionally, we maintain a policy of requiring all derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement.  We are required to maintain minimum ratings as a matter of routine practice in negotiating ISDA agreements.  Under some ISDA agreements, our insurance subsidiaries have agreed to maintain certain financial strength or claims-paying ratings.  A downgrade below these levels could result in termination of derivative contracts, at which time any amounts payable by us would be dependent on the market value of the underlying derivative contracts.  In certain transactions, we and the counterparty have entered into a collateral support agreement requiring either party to post collateral when net exposures exceed pre-determined thresholds.  These thresholds vary by counterparty and credit rating.  The amount of such exposure is essentially the net replacement cost or market value less collateral held for such agreements with each counterparty if the net market value is in our favor.  As of June 30, 2012, our exposure was $47 million.

The amounts recognized (in millions) by S&P credit rating of counterparty, for which we had the right to reclaim cash collateral or were obligated to return cash collateral, were as follows:

	As of June 30, 2012					As of December 31, 2011
	Collateral		Collateral			Collateral		Collateral
	Posted by		Posted by			Posted by		Posted by
S&P	Counter-		LNC			Counter-		LNC
Credit	Party		(Held by			Party		(Held by
Rating of	(Held by		Counter-			(Held by		Counter-
Counterparty	LNC)		Party)			LNC)		Party)
AA	$	43	$	-		$	35	$	-
AA-		121		-			219		-
A+		908		-			848		-
A		845		(109	)		1,681		(120	)
A-		1,529		-			387		-
	$	3,446	$	(109	)	$	3,170	$	(120	)

6.  Federal Income Taxes

The effective tax rate is a ratio of tax expense over pre-tax income (loss).  The effective tax rate was 27% and 24% for the three and six months ended June 30, 2012, respectively.  The effective tax rate was 26% for the three and six months ended June 30, 2011.  The effective tax rate on pre-tax income from continuing operations was lower than the prevailing corporate federal income tax rate.  Differences in the effective rates and the U.S. statutory rate of 35% were the result of certain tax preferred investment income, separate account dividends-received deduction, foreign tax credits and other tax preference items.

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7.  Guaranteed Benefit Features

Information on the guaranteed death benefit (“GDB”) features outstanding (dollars in millions) was as follows (our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive):

	As of			As of
	June 30,		December 31,
	2012			2011
Return of Net Deposits
Total account value	$	58,260		$	54,004
Net amount at risk (1)		812			1,379
Average attained age of contract holders		59 years			59 years
Minimum Return
Total account value	$	151		$	155
Net amount at risk (1)		42			48
Average attained age of contract holders		72 years			72 years
Guaranteed minimum return		5	%		5	%
Anniversary Contract Value
Total account value	$	22,255		$	21,648
Net amount at risk (1)		1,963			2,939
Average attained age of contract holders		67 years			67 years

(1)   Represents the amount of death benefit in excess of the account balance.  The decrease in net amount at risk when comparing June 30, 2012, to December 31, 2011, was attributable primarily to the increase in the equity markets during the first six months of 2012.

The determination of GDB liabilities is based on models that involve a range of scenarios and assumptions, including those regarding expected market rates of return and volatility, contract surrender rates and mortality experience.  The following summarizes the balances of and changes in the liabilities for GDB (in millions), which were recorded in future contract benefits on our Consolidated Balance Sheets:

			For the Six
			Months Ended
			June 30,
			2012			2011
Balance as of beginning-of-year			$	84		$	44
	Changes in reserves			7			16
	Benefits paid			(24	)		(19	)
		Balance as of end-of-period	$	67		$	41

Account balances of variable annuity contracts with guarantees (in millions) were invested in separate account investment options as follows:

		As of			As of
		June 30,		December 31,
		2012			2011
Asset Type
Domestic equity		$	34,700		$	34,286
International equity			13,194			13,095
Bonds			18,148			17,735
Money market			5,948			5,892
	Total	$	71,990		$	71,008
Percent of total variable annuity separate account values			93	%		98	%

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Future contract benefits also includes reserves for our products with secondary guarantees for our products sold through our Life Insurance segment.  These UL and VUL products with secondary guarantees represented 38% of permanent life insurance in force as of June 30, 2012, and 34% and 33% of total sales for these products for the three and six months ended June 30, 2012, respectively.

8.  Contingencies and Commitments

Regulatory bodies, such as state insurance departments, the SEC, Financial Industry Regulatory Authority and other regulatory bodies, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, laws governing the activities of broker-dealers, registered investment advisors and unclaimed property laws.

LNC and its subsidiaries are involved in various pending or threatened legal or regulatory proceedings, including purported class actions, arising from the conduct of business both in the ordinary course and otherwise.  In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought.  Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief.  Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court.  In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters.  This variability in pleadings, together with the actual experiences of LNC in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

Due to the unpredictable nature of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time is normally difficult to ascertain.  Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal.  Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

We establish liabilities for litigation and regulatory loss contingencies when information related to the loss contingencies shows both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.  It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of June 30, 2012.  While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on LNC’s financial position.

See Note 13 to the consolidated financial statements in our 2011 Form 10-K for a discussion of commitments and contingencies, which information is incorporated herein by reference.

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9.  Shares and Stockholders’ Equity

Common and Preferred Shares

The changes in our preferred and common stock (number of shares) were as follows:

		For the Three						For the Six
		Months Ended						Months Ended
		June 30,						June 30,
		2012			2011			2012			2011
Series A Preferred Stock
Balance as of beginning-of-period			9,632			10,914			10,072			10,914
Conversion of convertible preferred stock (1)			-			(60	)		(440	)		(60	)
	Balance as of end-of-period		9,632			10,854			9,632			10,854
Common Stock
Balance as of beginning-of-period			285,412,303			313,456,824			291,319,222			315,718,554
Conversion of convertible preferred stock (1)			-			960			7,040			960
Stock compensation/issued for benefit plans			230,198			30,772			334,395			182,906
Retirement/cancellation of shares			(6,473,530	)		(5,149,393	)		(12,491,686	)		(7,563,257	)
	Balance as of end-of-period		279,168,971			308,339,163			279,168,971			308,339,163
Common Stock as of End-of-Period
Assuming conversion of preferred stock			279,323,083			308,512,827			279,323,083			308,512,827
Diluted basis			286,820,300			316,821,550			286,820,300			316,821,550

(1) Represents the conversion of Series A preferred stock into common stock.

Our common and Series A preferred stocks are without par value.

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Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted EPS was as follows:

		For the Three						For the Six
		Months Ended						Months Ended
		June 30,						June 30,
		2012			2011			2012			2011
Weighted-average shares, as used in basic calculation			282,085,602			311,391,263			285,570,764			313,192,667
Shares to cover exercise of outstanding warrants			10,150,192			10,150,292			10,150,231			10,150,292
Shares to cover conversion of preferred stock			154,112			174,603			154,305			174,613
Shares to cover non-vested stock			1,110,662			816,834			1,060,676			794,095
Average stock options outstanding during the period			507,944			633,711			554,614			796,792
Assumed acquisition of shares with assumed proceeds from exercising outstanding warrants			(4,887,102	)		(3,846,217	)		(4,760,822	)		(3,758,105	)
Assumed acquisition of shares with assumed proceeds and benefits from exercising stock options (at average market price for the period)			(346,700	)		(400,374	)		(380,239	)		(517,329	)
Shares repurchaseable from measured but unrecognized stock option expense			(1,768	)		(36,857	)		(8,224	)		(104,962	)
Average deferred compensation shares			1,187,598			1,031,814			1,206,501			1,053,100
	Weighted-average shares, as used in diluted calculation		289,960,540			319,915,069			293,547,806			321,781,163

In the event the average market price of LNC common stock exceeds the issue price of stock options and the options have a dilutive effect to our EPS, such options will be shown in the table above.

We have participants in our deferred compensation plans who selected LNC stock as the measure for the investment return attributable to their deferral amounts.  For the three and six months ended June 30, 2012 and 2011, the effect of settling this obligation in LNC stock (“equity classification”) was more dilutive than the scenario of settling it in cash (“liability classification”).  Therefore, for our EPS calculation for these periods, we added these shares to the denominator and adjusted the numerator to present net income as if the shares had been accounted for under equity classification by removing the mark-to-market adjustment included in net income attributable to these deferred units of LNC stock.  The amount of this adjustment was $4 million and $(2) million for the three and six months ended June 30, 2012, respectively, and $1 million for the three months ended June 30, 2011.

The income used in the calculation of our diluted EPS is our net income (loss), reduced by preferred stock dividends and accretion of discount.  These amounts are presented on our Consolidated Statements of Comprehensive Income (Loss).

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Accumulated OCI

The following summarizes the components and changes in accumulated OCI (in millions):

				For the Six
				Months Ended
				June 30,
				2012			2011
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year				$	2,947		$	1,072
	Cumulative effect from adoption of new accounting standards				-			105
	Unrealized holding gains (losses) arising during the period				1,276			627
	Change in foreign currency exchange rate adjustment				(6	)		22
	Change in DAC, VOBA, DSI and other contract holder funds				(261	)		(168	)
	Income tax benefit (expense)				(395	)		(136	)
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(103	)		(38	)
		Associated amortization of DAC, VOBA, DSI and DFEL			1			(15	)
		Income tax benefit (expense)			36			19
			Balance as of end-of-period	$	3,627		$	1,556
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year				$	(110	)	$	(129	)
	(Increases) attributable to:
		Cumulative effect from adoption of new accounting standards			-			(5	)
		Gross OTTI recognized in OCI during the period			(79	)		(27	)
		Change in DAC, VOBA, DSI and other contract holder funds			12			8
		Income tax benefit (expense)			26			7
	Decreases attributable to:
		Sales, maturities or other settlements of AFS securities			62			67
		Change in DAC, VOBA, DSI and other contract holder funds			(8	)		(13	)
		Income tax benefit (expense)			(20	)		(19	)
			Balance as of end-of-period	$	(117	)	$	(111	)
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year				$	119		$	(15	)
	Cumulative effect from adoption of new accounting standards				-			3
	Unrealized holding gains (losses) arising during the period				37			(34	)
	Change in foreign currency exchange rate adjustment				2			(14	)
	Change in DAC, VOBA, DSI and DFEL				4			-
	Income tax benefit (expense)				(16	)		18
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(7	)		(9	)
		Associated amortization of DAC, VOBA, DSI and DFEL			1			1
		Income tax benefit (expense)			2			3
			Balance as of end-of-period	$	150		$	(37	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year				$	1		$	1
	Foreign currency translation adjustment arising during the period				(8	)		(6	)
	Income tax benefit (expense)				3			2
		Balance as of end-of-period		$	(4	)	$	(3	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year				$	(278	)	$	(181	)
	Adjustment arising during the period				1			5
	Income tax benefit (expense)				-			(2	)
		Balance as of end-of-period		$	(277	)	$	(178	)

28

10.  Realized Gain (Loss)

Details underlying realized gain (loss) (in millions) reported on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

			For the Three						For the Six
			Months Ended						Months Ended
			June 30,						June 30,
			2012			2011			2012			2011
Total realized gain (loss) related to certain investments (1)			$	(51	)	$	(32	)	$	(99	)	$	(47	)
Realized gain (loss) on the mark-to-market on certain instruments (2)				(19	)		(1	)		39			9
Indexed annuity net derivative results: (3)
	Gross gain (loss)			(3	)		1			19			7
	Associated amortization of DAC, VOBA, DSI and DFEL			1			-			(5	)		(2	)
Variable annuity net derivatives results: (4)
	Gross gain (loss)			148			34			14			44
	Associated amortization of DAC, VOBA, DSI and DFEL			(33	)		(11	)		(11	)		(18	)
		Total realized gain (loss)	$	43		$	(9	)	$	(43	)	$	(7	)

(1)   See “Realized Gain (Loss) Related to Certain Investments” section in Note 4.

(2)   Represents changes in the fair values of certain derivative investments (including those associated with our consolidated VIEs), total return swaps (embedded derivatives that are theoretically included in our various modified coinsurance and coinsurance with funds withheld reinsurance arrangements that have contractual returns related to various assets and liabilities associated with these arrangements) and trading securities.

(3)   Represents the net difference between the change in the fair value of the S&P 500 call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity products along with changes in the fair value of embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products.

(4)   Includes the net difference in the change in embedded derivative reserves of our GLB products and the change in the fair value of the derivative instruments we own to hedge GDB and GLB products, including the cost of purchasing the hedging instruments.

11.  Stock-Based Incentive Compensation Plans

We sponsor various incentive plans for our employees and directors and for the employees and agents of our subsidiaries that provide for the issuance of stock options, performance shares (performance-vested shares as opposed to time-vested shares), stock appreciation rights (“SARs”) and restricted stock units.  We have a policy of issuing new shares to satisfy option exercises.

LNC stock-based awards granted were as follows:

		For the		For the
		Three		Six
		Months		Months
		Ended		Ended
		June 30,		June 30,
		2012		2012
Awards
10-year LNC stock options			41,536		870,210
Performance shares			15,815		294,758
SARs			-		80,225
Restricted stock units			82,004		686,230
Non-employee:
	Agent stock options		90		99,178
	Director stock options		-		51,140
	Director restricted stock units		12,218		22,346

29

12.  Fair Value of Financial Instruments

The carrying values and estimated fair values of our financial instruments (in millions) were as follows:

		As of June 30, 2012						As of December 31, 2011
		Carrying			Fair			Carrying			Fair
		Value			Value			Value			Value
Assets
AFS securities:
	Fixed maturity securities	$	79,191		$	79,191		$	75,433		$	75,433
	VIEs' fixed maturity securities		705			705			700			700
	Equity securities		154			154			139			139
Trading securities			2,649			2,649			2,675			2,675
Mortgage loans on real estate			6,804			7,463			6,942			7,608
Derivative investments			3,399			3,399			3,151			3,151
Other investments			1,041			1,041			1,069			1,069
Cash and invested cash			5,257			5,257			4,510			4,510
Separate account assets			88,839			88,839			83,477			83,477
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives		(431	)		(431	)		(399	)		(399	)
	GLB reserves embedded derivatives		(1,926	)		(1,926	)		(2,217	)		(2,217	)
Other contract holder funds:
	Remaining guaranteed interest and similar contracts		(1,034	)		(1,034	)		(1,114	)		(1,114	)
	Account values of certain investment contracts		(27,916	)		(31,554	)		(27,468	)		(30,812	)
Short-term debt (1)			(300	)		(302	)		(300	)		(309	)
Long-term debt			(5,719	)		(6,659	)		(5,391	)		(5,345	)
Reinsurance related embedded derivatives			(185	)		(185	)		(168	)		(168	)
VIEs' liabilities - derivative instruments			(231	)		(231	)		(291	)		(291	)
Other liabilities:
	Deferred compensation plans		(358	)		(358	)		(354	)		(354	)
	Credit default swaps		(11	)		(11	)		(16	)		(16	)

(1)   The difference between the carrying value and fair value of short-term debt as of June 30, 2012, and December 31, 2011, related to current maturities of long-term debt.

Valuation Methodologies and Associated Inputs for Financial Instruments Not Carried at Fair Value

The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value on our Consolidated Balance Sheets.  Considerable judgment is required to develop these assumptions used to measure fair value.  Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.

Mortgage Loans on Real Estate

The fair value of mortgage loans on real estate is established using a discounted cash flow method based on credit rating, maturity and future income.  The ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt-service coverage, loan-to-value, quality of tenancy, borrower and payment record.  The fair value for impaired mortgage loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s market price or the fair value of the collateral if the loan is collateral dependent.  The inputs used to measure the fair value of our mortgage loans on real estate are classified as Level 2 within the fair value hierarchy.

30

Other Investments

The carrying value of our assets classified as other investments approximates fair value.  Other investments include LPs and other privately held investments that are accounted for using the equity method of accounting and the carrying value is based on our proportional share of the net assets of the LPs.  The inputs used to measure the fair value of our other investments are classified as Level 3 within the fair value hierarchy.

Other Contract Holder Funds

Other contract holder funds include remaining guaranteed interest and similar contracts and account values of certain investment contracts.  The fair value for the remaining guaranteed interest and similar contracts is estimated using discounted cash flow calculations as of the balance sheet date.  These calculations are based on interest rates currently offered on similar contracts with maturities that are consistent with those remaining for the contracts being valued.  As of June 30, 2012, and December 31, 2011, the remaining guaranteed interest and similar contracts carrying value approximated fair value.  The fair value of the account values of certain investment contracts is based on their approximate surrender value as of the balance sheet date.  The inputs used to measure the fair value of our other contract holder funds are classified as Level 3 within the fair value hierarchy.

Short-Term and Long-Term Debt

The fair value of long-term debt is based on quoted market prices.  For short-term debt, excluding current maturities of long-term debt, the carrying value approximates fair value.  The inputs used to measure the fair value of our short-term and long-term debt are classified as Level 2 within the fair value hierarchy.

31

Financial Instruments Carried at Fair Value

We did not have any assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2012, or December 31, 2011, and we noted no changes in our valuation methodologies between these periods.

The following summarizes our financial instruments carried at fair value (in millions) on a recurring basis by the fair value hierarchy levels described  in “Summary of Significant Accounting Policies” in Note 1 of our 2011 Form 10-K:

				As of June 30, 2012
				Quoted
				Prices
				in Active
				Markets for			Significant			Significant
				Identical		Observable				Unobservable			Total
				Assets			Inputs			Inputs			Fair
				(Level 1)			(Level 2)			(Level 3)			Value
Assets
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	62		$	62,174		$	1,678		$	63,914
		U.S. government bonds			482			34			1			517
		Foreign government bonds			-			562			102			664
		RMBS			-			7,013			184			7,197
		CMBS			-			1,268			39			1,307
		CDOs			-			-			120			120
		State and municipal bonds			-			4,252			32			4,284
		Hybrid and redeemable preferred securities			20			1,039			129			1,188
	VIEs' fixed maturity securities				110			595			-			705
	Equity AFS securities				45			24			85			154
	Trading securities				2			2,575			72			2,649
	Derivative investments				-			882			2,517			3,399
Cash and invested cash					-			5,257			-			5,257
Separate account assets					-			88,839			-			88,839
			Total assets	$	721		$	174,514		$	4,959		$	180,194
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives			$	-		$	-		$	(431	)	$	(431	)
	GLB reserves embedded derivatives				-			-			(1,926	)		(1,926	)
Long-term debt					-			(1,203	)		-			(1,203	)
Reinsurance related embedded derivatives					-			(185	)		-			(185	)
VIEs' liabilities - derivative instruments					-			-			(231	)		(231	)
Other liabilities:
	Deferred compensation plans				-			-			(358	)		(358	)
	Credit default swaps				-			-			(11	)		(11	)
			Total liabilities	$	-		$	(1,388	)	$	(2,957	)	$	(4,345	)

32

				As of December 31, 2011
				Quoted
				Prices
				in Active
				Markets for			Significant			Significant
				Identical		Observable				Unobservable			Total
				Assets			Inputs			Inputs			Fair
				(Level 1)			(Level 2)			(Level 3)			Value
Assets
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	63		$	57,310		$	1,888		$	59,261
		U.S. government bonds			475			18			1			494
		Foreign government bonds			-			636			97			733
		RMBS			-			7,881			158			8,039
		CMBS			-			1,566			34			1,600
		CDOs			-			-			102			102
		State and municipal bonds			-			4,047			-			4,047
		Hybrid and redeemable preferred securities			15			1,042			100			1,157
	VIEs' fixed maturity securities				108			592			-			700
	Equity AFS securities				37			46			56			139
	Trading securities				2			2,605			68			2,675
	Derivative investments				-			681			2,470			3,151
Cash and invested cash					-			4,510			-			4,510
Separate account assets					-			83,477			-			83,477
			Total assets	$	700		$	164,411		$	4,974		$	170,085
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives			$	-		$	-		$	(399	)	$	(399	)
	GLB reserves embedded derivatives				-			-			(2,217	)		(2,217	)
Long-term debt					-			(1,688	)		-			(1,688	)
Reinsurance related embedded derivatives					-			(168	)		-			(168	)
VIEs' liabilities - derivative instruments					-			-			(291	)		(291	)
Other liabilities:
	Deferred compensation plans				-			-			(354	)		(354	)
	Credit default swaps				-			-			(16	)		(16	)
			Total liabilities	$	-		$	(1,856	)	$	(3,277	)	$	(5,133	)

33

The following summarizes changes to our financial instruments carried at fair value (in millions) and classified within Level 3 of the fair value hierarchy.  This summary excludes any effect of amortization of DAC, VOBA, DSI and DFEL.  The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology.

				For the Three Months Ended June 30, 2012
												Purchases,
										Gains		Issuances,				Transfers
							Items			(Losses)			Sales,			In or
							Included			in		Maturities,				Out
				Beginning			in			OCI		Settlements,				of			Ending
				Fair			Net			and			Calls,			Level 3,			Fair
				Value			Income			Other (1)			Net			Net (2)			Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds		$	1,932		$	(4	)	$	(11	)	$	45		$	(284	)	$	1,678
		U.S. government bonds			1			-			-			-			-			1
		Foreign government bonds			99			-			3			-			-			102
		RMBS			98			-			1			98			(13	)		184
		CMBS			32			(2	)		2			(1	)		8			39
		CDOs			102			-			-			18			-			120
		State and municipal bonds			-			-			-			32			-			32
		Hybrid and redeemable preferred securities			116			-			(3	)		-			16			129
	Equity AFS securities				61			-			(1	)		25			-			85
	Trading securities				68			1			-			2			1			72
	Derivative investments				2,037			228			155			97			-			2,517
Future contract benefits: (4)
	Indexed annuity contracts embedded derivatives				(480	)		24			-			25			-			(431	)
	GLB reserves embedded derivatives				(1,064	)		(862	)		-			-			-			(1,926	)
VIEs' liabilities - derivative instruments (5)					(221	)		(10	)		-			-			-			(231	)
Other liabilities:
	Deferred compensation plans (6)				(375	)		10			-			7			-			(358	)
	Credit default swaps (7)				(10	)		(1	)		-			-			-			(11	)
			Total, net	$	2,396		$	(616	)	$	146		$	348		$	(272	)	$	2,002

34

				For the Three Months Ended June 30, 2011
													Purchases,
										Gains			Issuances,			Transfers
							Items			(Losses)			Sales			In or
							Included			in			Maturities,			Out
				Beginning			in			OCI			Settlements,			of			Ending
				Fair			Net			and			Calls,			Level 3,			Fair
				Value			Income			Other (1)			Net			Net (2)			Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds		$	1,806		$	23		$	33		$	(200	)	$	(89	)	$	1,573
		U.S. government bonds			2			-			-			-			-			2
		Foreign government bonds			100			-			(4	)		-			-			96
		RMBS			115			(1	)		3			44			-			161
		CMBS			64			(22	)		24			(12	)		(1	)		53
		CDOs			136			-			2			(12	)		-			126
		Hybrid and redeemable preferred securities			124			-			4			-			(22	)		106
	Equity AFS securities:				96			-			(2	)		2			-			96
	Trading securities				71			-			4			(1	)		(3	)		71
	Derivative investments				1,439			62			7			(16	)		-			1,492
Future contract benefits: (4)
	Indexed annuity contracts embedded derivatives				(528	)		6			-			16			-			(506	)
	GLB reserves embedded derivatives				(118	)		(160	)		-			-			-			(278	)
VIEs' liabilities - derivative instruments (5)					(203	)		5			-			-			-			(198	)
Other liabilities:
	Deferred compensation plans (6)				(357	)		(5	)		-			2			-			(360	)
	Credit default swaps (7)				(6	)		(1	)		-			-			-			(7	)
			Total, net	$	2,741		$	(93	)	$	71		$	(177	)	$	(115	)	$	2,427

35

				For the Six Months Ended June 30, 2012
													Purchases,
										Gains			Issuances,			Transfers
							Items			(Losses)			Sales,			In or
							Included			in			Maturities,			Out
				Beginning			in			OCI			Settlements,			of			Ending
				Fair			Net			and			Calls,			Level 3,			Fair
				Value			Income			Other (1)			Net			Net (2)			Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds		$	1,888		$	(17	)	$	(5	)	$	25		$	(213	)	$	1,678
		U.S. government bonds			1			-			-			-			-			1
		Foreign government bonds			97			-			4			-			1			102
		RMBS			158			(3	)		3			94			(68	)		184
		CMBS			34			(5	)		9			(8	)		9			39
		CDOs			102			-			4			14			-			120
		State and municipal bonds			-			-			-			32			-			32
		Hybrid and redeemable preferred securities			100			-			3			-			26			129
	Equity AFS securities				56			-			4			25			-			85
	Trading securities				68			1			1			-			2			72
	Derivative investments				2,470			(289	)		67			269			-			2,517
Future contract benefits: (4)
	Indexed annuity contracts embedded derivatives				(399	)		(80	)		-			48			-			(431	)
	GLB reserves embedded derivatives				(2,217	)		291			-			-			-			(1,926	)
VIEs' liabilities - derivative instruments (5)					(291	)		60			-			-			-			(231	)
Other liabilities:
	Deferred compensation plans (6)				(354	)		(18	)		-			14			-			(358	)
	Credit default swaps (7)				(16	)		5			-			-			-			(11	)
			Total, net	$	1,697		$	(55	)	$	90		$	513		$	(243	)	$	2,002

36

				For the Six Months Ended June 30, 2011
													Purchases,
										Gains			Issuances,			Transfers
							Items			(Losses)			Sales,			In or
							Included			in			Maturities,			Out
				Beginning			in			OCI			Settlements,			of			Ending
				Fair			Net			and			Calls,			Level 3,			Fair
				Value			Income			Other (1)			Net			Net (2)			Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds		$	1,816		$	23		$	44		$	(221	)	$	(89	)	$	1,573
		U.S. government bonds			2			-			-			-			-			2
		Foreign government bonds			113			-			3			(3	)		(17	)		96
		RMBS			119			(3	)		4			41			-			161
		CMBS			109			(45	)		54			(64	)		(1	)		53
		CDOs			172			14			(9	)		(51	)		-			126
		Hybrid and redeemable preferred securities			119			(1	)		5			-			(17	)		106
	Equity AFS securities				92			8			1			(7	)		2			96
	Trading securities				76			-			2			(3	)		(4	)		71
	Derivative investments				1,495			(84	)		(11	)		92			-			1,492
Future contract benefits: (4)
	Indexed annuity contracts embedded derivatives				(497	)		54			-			(63	)		-			(506	)
	GLB reserves embedded derivatives				(408	)		130			-			-			-			(278	)
VIEs' liabilities - derivative instruments (5)					(209	)		11			-			-			-			(198	)
Other liabilities:
	Deferred compensation plans (6)				(363	)		(13	)		-			16			-			(360	)
	Credit default swaps (7)				(16	)		2			-			7			-			(7	)
			Total, net	$	2,620		$	96		$	93		$	(256	)	$	(126	)	$	2,427

(1)   The changes in fair value of the interest rate swaps are offset by an adjustment to derivative investments (see Note 5).

(2)   Transfers in or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-period.  For AFS and trading securities, the difference between beginning-of-period amortized cost and beginning-of-period fair value was included in OCI and earnings, respectively, in prior periods.

(3)   Amortization and accretion of premiums and discounts are included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).  Gains (losses) from sales, maturities, settlements and calls and OTTI are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

(4)   Gains (losses) from sales, maturities, settlements and calls are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

(5)   The changes in fair value of the credit default swaps and contingency forwards are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

(6)   Deferrals and subsequent changes in fair value for the participants’ investment options are reported in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

(7)   Gains (losses) from sales, maturities, settlements and calls are included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

37

The following provides the components of the items included in issuances, sales, maturities, settlements, calls, net, excluding any effect of amortization of DAC, VOBA, DSI and DFEL and changes in future contract benefits, (in millions) as reported above:

				For the Three Months Ended June 30, 2012
				Issuances			Sales			Maturities			Settlements			Calls			Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	80		$	(26	)	$	-		$	(8	)	$	(1	)	$	45
		RMBS			103			-			-			(5	)		-			98
		CMBS			-			-			-			(1	)		-			(1	)
		CDOs			23			-			-			(5	)		-			18
		State and municipal bonds			32			-			-			-			-			32
	Equity AFS securities				25			-			-			-			-			25
	Trading securities				2			-			-			-			-			2
	Derivative investments				165			(10	)		(58	)		-			-			97
Future contract benefits:
	Indexed annuity contracts embedded derivatives				(25	)		-			-			50			-			25
Other liabilities:
	Deferred compensation plans				-			-			-			7			-			7
			Total, net	$	405		$	(36	)	$	(58	)	$	38		$	(1	)	$	348

				For the Three Months Ended June 30, 2011
				Issuances			Sales			Maturities			Settlements			Calls			Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	22		$	(125	)	$	-		$	(9	)	$	(88	)	$	(200	)
		RMBS			47			-			-			(3	)		-			44
		CMBS			-			(9	)		-			(3	)		-			(12	)
		CDOs			-			-			-			(12	)		-			(12	)
	Equity AFS securities				2			-			-			-			-			2
	Trading securities				-			(1	)		-			-			-			(1	)
	Derivative investments				107			(25	)		(98	)		-			-			(16	)
Future contract benefits:
	Indexed annuity contracts embedded derivatives				(20	)		-			-			36			-			16
Other liabilities:
	Deferred compensation plans				-			-			-			2			-			2
			Total, net	$	158		$	(160	)	$	(98	)	$	11		$	(88	)	$	(177	)

38

				For the Six Months Ended June 30, 2012
				Issuances			Sales			Maturities			Settlements			Calls			Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	91		$	(27	)	$	-		$	(35	)	$	(4	)	$	25
		RMBS			103			-			-			(9	)		-			94
		CMBS			-			-			-			(8	)		-			(8	)
		CDOs			23			-			-			(9	)		-			14
		State and municipal bonds			32			-			-			-			-			32
	Equity AFS securities				25			-			-			-			-			25
	Trading securities				2			-			-			(2	)		-			-
	Derivative investments				373			3			(107	)		-			-			269
Future contract benefits:
	Indexed annuity contracts embedded derivatives				(35	)		-			-			83			-			48
Other liabilities:
	Deferred compensation plans				-			-			-			14			-			14
			Total, net	$	614		$	(24	)	$	(107	)	$	34		$	(4	)	$	513

				For the Six Months Ended June 30, 2011
				Issuances			Sales			Maturities			Settlements			Calls			Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	38		$	(133	)	$	(1	)	$	(36	)	$	(89	)	$	(221	)
		Foreign government bonds			-			(3	)		-			-			-			(3	)
		RMBS			48			-			-			(7	)		-			41
		CMBS			-			(53	)		-			(11	)		-			(64	)
		CDOs			-			(33	)		-			(18	)		-			(51	)
	Equity AFS securities				8			(15	)		-			-			-			(7	)
	Trading securities				-			(1	)		-			(2	)		-			(3	)
	Derivative investments				275			(27	)		(156	)		-			-			92
Future contract benefits:
	Indexed annuity contracts embedded derivatives				(38	)		-			-			(25	)		-			(63	)
Other liabilities:
	Deferred compensation plans				-			-			-			16			-			16
	Credit Default swaps				-			7			-			-			-			7
			Total, net	$	331		$	(258	)	$	(157	)	$	(83	)	$	(89	)	$	(256	)

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The following summarizes changes in unrealized gains (losses) included in net income, excluding any effect of amortization of DAC, VOBA, DSI and DFEL and changes in future contract benefits, related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

			For the Three						For the Six
			Months Ended						Months Ended
			June 30,						June 30,
			2012			2011			2012			2011
Investments: (1)
	Derivative investments		$	240		$	62		$	(332	)	$	(94	)
Future contract benefits: (1)
	Indexed annuity contracts embedded derivatives			(3	)		-			19			(4	)
	GLB reserves embedded derivatives			(814	)		(108	)		369			229
VIEs' liabilities - derivative instruments (1)				(10	)		5			60			11
Other liabilities:
	Deferred compensation plans (2)			(10	)		5			18			13
	Credit default swaps (3)			(1	)		(1	)		5			1
		Total, net	$	(598	)	$	(37	)	$	139		$	156

(1)   Included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

(2)   Included in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

(3)   Included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

The following provides the components of the transfers in and out of Level 3 (in millions) as reported above:

				For the Three Months								For the Three Months
				Ended June 30, 2012								Ended June 30, 2011
				Transfers		Transfers						Transfers		Transfers
				In to		Out of						In to		Out of
				Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	90	$	(374	)	$	(284	)	$	21	$	(110	)	$	(89	)
		RMBS			-		(13	)		(13	)		-		-			-
		CMBS			8		-			8			-		(1	)		(1	)
		Hybrid and redeemable preferred securities			16		-			16			-		(22	)		(22	)
	Trading securities				1		-			1			-		(3	)		(3	)
			Total, net	$	115	$	(387	)	$	(272	)	$	21	$	(136	)	$	(115	)

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				For the Six Months								For the Six Months
				Ended June 30, 2012								Ended June 30, 2011
				Transfers		Transfers						Transfers		Transfers
				In to		Out of						In to		Out of
				Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	146	$	(359	)	$	(213	)	$	34	$	(123	)	$	(89	)
		Foreign government bonds			1		-			1			-		(17	)		(17	)
		RMBS			-		(68	)		(68	)		-		-			-
		CMBS			9		-			9			-		(1	)		(1	)
		Hybrid and redeemable preferred securities			35		(9	)		26			4		(21	)		(17	)
	Equity AFS securities				-		-			-			2		-			2
	Trading securities				2		-			2			-		(4	)		(4	)
			Total, net	$	193	$	(436	)	$	(243	)	$	40	$	(166	)	$	(126	)

Transfers in and out of Level 3 are generally the result of observable market information on a security no longer being available or becoming available to our pricing vendors.  For the three and six months ended June 30, 2012 and 2011, our corporate bonds transfers in and out were attributable primarily to the securities’ observable market information no longer being available or becoming available, respectively.  Transfers in and out of Levels 1 and 2 are generally the result of a change in the type of input used to measure the fair value of an asset or liability at the end of the reporting period.  When quoted prices in active markets become available or when these prices become unavailable, but we are able to employ a valuation methodology using significant observable inputs, transfers between Levels 1 and 2 will result.  For the three and six months ended June 30, 2012 and 2011, the transfers between Levels 1 and 2 of the fair value hierarchy were less than $1 million for our financial instruments carried at fair value.

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The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements that were developed as of June 30, 2012:

				Fair			Valuation	Significant
				Value			Technique	Unobservable Inputs	Range
Assets
Investments:
	Fixed maturity AFS and trading
		securities
			Corporate bonds	$	899		Discounted cash flow	Liquidity/duration adjustment (1)	1.1% - 13.2%
			Foreign government bonds		52		Discounted cash flow	Liquidity/duration adjustment (1)	2.7% - 6.1%
			Hybrid and redeemable preferred stock		21		Discounted cash flow	Liquidity/duration adjustment (1)	2.7% - 2.7%
	Equity AFS and trading securities				11		Discounted cash flow	Liquidity/duration adjustment (1)	4.3% - 4.5%
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives				(431	)	Discounted cash flow	Lapse rate (2)	1.0% - 15.0%
								Mortality rate (3)	(8)
	GLB reserves embedded derivatives				(1,926	)	Monte Carlo simulation	Long-term lapse rate (2)	0.3% - 13.1%
								Wait period (5)	0 - 25 years (or years
									until the eligible age)
								Percent of maximum withdrawal amount (6)	95.0% - 100.0%
								Non-performance risk ("NPR") (7)	0.22% - 0.55%
								Mortality rate (3)	(8)
								Volatility (4)	1.0% - 35.0%

(1)   The liquidity/duration adjustment input represents an estimated market participant composite of adjustments attributable to liquidity premiums, expected durations, structures and credit quality that would be applied to the market observable information of an investment.

(2)   The lapse rate input represents the estimated probability of a contract surrendering during a year, and thereby forgoing any future benefits.  The range represents the lapse rates during the surrender charge period for indexed annuity contracts.

(3)   The mortality rate input represents the estimated probability of when an individual belonging to a particular group, categorized according to age or some other factor such as occupation, will die.

(4)   The volatility input represents overall volatilities assumed for the underlying variable annuity funds, which include a mixture of equity and fixed income assets.  Fair value of the variable annuity GLB embedded derivatives would increase if higher volatilities were used for valuation.

(5)   The wait period input represents the estimated period a contract holder would wait to withdraw after becoming eligible.

(6)   The percent of maximum withdrawal amount input represents the estimated ratio of contract withdrawal amount to the maximum withdrawal amount specified.

(7)   The NPR input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract.

(8)   Based on the “Annuity 2000 Mortality Table” developed by the Society of Actuaries Committee on Life Insurance Research that was adopted by the National Association of Insurance Commissioners in 1996 for our mortality input.

From the table above, we have excluded Level 3 fair value measurements obtained from independent, third-party pricing sources.  We do not develop the significant inputs used to measure the fair value of these assets and liabilities, and the information regarding the significant inputs is not readily available to us.  Independent broker-quoted fair values are non-binding quotes developed by market makers or broker-dealers obtained from third-party sources recognized as market participants.  The fair value of a broker-quoted asset or liability is based solely on the receipt of an updated quote from a single market maker or a broker-dealer recognized

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as a market participant as we do not adjust broker quotes when used as the fair value measurement for an asset or liability.  Significant increases or decreases in any of the quotes received from a third-party broker-dealer may result in a significantly higher or lower fair value measurement.

Changes in any of the significant inputs presented in the table above may result in a significant change in the fair value measurement of the asset or liability as follows:

·   Investments – An increase in the liquidity/duration input would result in a decrease in the fair value measurement.

·   Indexed annuity contracts embedded derivatives – An increase in the lapse rate or mortality rate inputs would result in a decrease in the fair value measurement.

·   GLB reserves embedded derivatives – An increase in our lapse rate, wait period, NPR or mortality rate inputs would result in a decrease in the fair value measurement.  An increase in the percent of maximum withdrawal amount input would result in an increase in the fair value measurement.

For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input will not affect the other inputs.

As part of our on-going valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary.  For more information, see “Summary of Significant Accounting Policies” in Note 1 of our 2011 Form 10-K.

13.  Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments.  We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments.  Our reporting segments reflect the manner by which our chief operating decision makers view and manage the business.  See Note 22 of our 2011 Form 10-K for a brief description of these segments and Other Operations.

Segment operating revenues and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments.  Income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable:

·   Realized gains and losses associated with the following (“excluded realized gain (loss)”):

§   Sales or disposals of securities;

§   Impairments of securities;

§   Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities;

§   Changes in the fair value of the derivatives we own to hedge our GDB riders within our variable annuities;

§   Changes in the fair value of the embedded derivatives of our GLB riders accounted for at fair value, net of the change in the fair value of the derivatives we own to hedge them; and

§   Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for at fair value;

·   Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders;

·   Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;

·   Gains (losses) on early extinguishment of debt;

·   Losses from the impairment of intangible assets;

·   Income (loss) from discontinued operations; and

·   Income (loss) from the initial adoption of new accounting standards.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

·   Excluded realized gain (loss);

·   Revenue adjustments from the initial adoption of new accounting standards;

·   Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and

·   Amortization of deferred gains arising from the reserve changes on business sold through reinsurance.

We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the

43

most comparable GAAP measure.  Operating revenues and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

Segment information (in millions) was as follows:

			For the Three						For the Six
			Months Ended						Months Ended
			June 30,						June 30,
			2012			2011			2012			2011
Revenues
Operating revenues:
	Annuities		$	734		$	735		$	1,465		$	1,468
	Retirement Plan Services			258			260			510			523
	Life Insurance			1,237			1,229			2,469			2,376
	Group Protection			540			501			1,043			979
	Other Operations			113			114			220			232
Excluded realized gain (loss), pre-tax				18			(33	)		(95	)		(53	)
Amortization of deferred gain arising from reserve changes on business sold through reinsurance, pre-tax				-			1			1			1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax				(1	)		-			1			-
		Total revenues	$	2,899		$	2,807		$	5,614		$	5,526

				For the Three						For the Six
				Months Ended						Months Ended
				June 30,						June 30,
				2012			2011			2012			2011
Net Income (Loss)
Income (loss) from operations:
	Annuities			$	158		$	145		$	294		$	289
	Retirement Plan Services				38			41			72			90
	Life Insurance				138			136			281			279
	Group Protection				27			26			43			50
	Other Operations				(39	)		(22	)		(73	)		(60	)
Excluded realized gain (loss), after-tax					12			(21	)		(61	)		(34	)
Benefit ratio unlocking, after-tax					(10	)		(1	)		14			3
		Income (loss) from continuing operations, after-tax			324			304			570			617
		Income (loss) from discontinued operations, after-tax			-			-			(1	)		-
			Net income (loss)	$	324		$	304		$	569		$	617

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the financial condition as of June 30, 2012, compared with December 31, 2011, and the results of operations for the three and six months ended June 30, 2012, compared with the corresponding periods in 2011 of Lincoln National Corporation and its consolidated subsidiaries.  Unless otherwise stated or the context otherwise requires, “LNC,” “Lincoln,” “Company,” “we,” “our” or “us” refers to Lincoln National Corporation and its consolidated subsidiaries.  The MD&A is provided as a supplement to, and should be read in conjunction with our consolidated financial statements and the accompanying notes to the consolidated financial statements (“Notes”) presented in “Part I – Item 1. Financial Statements”; our Form 10-K for the year ended December 31, 2011 (“2011 Form 10-K”), including the sections entitled “Part I – Item 1A. Risk Factors,” as updated in “Part II – Item 1A. Risk Factors” below, “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II – Item 8. Financial Statements and Supplementary Data”; our quarterly reports on Form 10-Q filed in 2012; and our current reports on Form 8-K filed in 2012.

In this report, in addition to providing consolidated revenues and net income (loss), we also provide segment operating revenues and income (loss) from operations because we believe they are meaningful measures of revenues and the profitability of our operating segments.  Financial information that follows is presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”), unless otherwise indicated.  See Note 1 in our 2011 Form 10-K for a discussion of GAAP.

Operating revenues and income (loss) from operations are the financial performance measures we use to evaluate and assess the results of our segments.  Accordingly, we define and report operating revenues and income (loss) from operations by segment in Note 13.  Our management believes that operating revenues and income (loss) from operations explain the results of our ongoing businesses in a manner that allows for a better understanding of the underlying trends in our current businesses because the excluded items are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and, in many instances, decisions regarding these items do not necessarily relate to the operations of the individual segments.  In addition, we believe that our definitions of operating revenues and income (loss) from operations will provide investors with a more valuable measure of our performance because it better reveals trends in our business.

Certain reclassifications have been made to prior periods’ financial information.

FORWARD-LOOKING STATEMENTS – CAUTIONARY LANGUAGE

Certain statements made in this report and in other written or oral statements made by us or on our behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”).  A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like:  “believe,” “anticipate,” “expect,” “estimate,” “project,” “will,” “shall” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance.  In particular, these include statements relating to future actions, trends in our businesses, prospective services or products, future performance or financial results and the outcome of contingencies, such as legal proceedings.  We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the results contained in the forward-looking statements.  Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements, include, among others:

    · Deterioration in general economic and business conditions that may affect account values, investment results, guaranteed benefit liabilities, premium levels, claims experience and the level of pension benefit costs, funding and investment results;

    · Adverse global capital and credit market conditions could affect our ability to raise capital, if necessary, and may cause us to realize impairments on investments and certain intangible assets, including goodwill and a valuation allowance against deferred tax assets, which may reduce future earnings and/or affect our financial condition and ability to raise additional capital or refinance existing debt as it matures;

    · Because of our holding company structure, the inability of our subsidiaries to pay dividends to the holding company in sufficient amounts could harm the holding company’s ability to meet its obligations;

    · Legislative, regulatory or tax changes, both domestic and foreign, that affect the cost of, or demand for, our subsidiaries’ products, the required amount of reserves and/or surplus, or otherwise affect our ability to conduct business, including changes to statutory reserve requirements related to secondary guarantees under universal life, such as a change to reserve calculations under Actuarial Guideline 38 (also known as The Application of the Valuation of Life Insurance Policies Model Regulation, or “AG38”), and variable annuity products under Actuarial Guideline 43 (also known as Commissioners Annuity Reserve Valuation Method for Variable Annuities, or “AG43”); restrictions on revenue sharing and 12b-1 payments; and the potential for U.S. federal tax reform;

45

    · Uncertainty about the effect of rules and regulations to be promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act on us and the economy and the financial services sector in particular;

    · The initiation of legal or regulatory proceedings against us, and the outcome of any legal or regulatory proceedings, such as:  adverse actions related to present or past business practices common in businesses in which we compete; adverse decisions in significant actions including, but not limited to, actions brought by federal and state authorities and class action cases; new decisions that result in changes in law; and unexpected trial court rulings;

    · Declines in or sustained low interest rates causing a reduction in investment income, the interest margins of our businesses, estimated gross profits and demand for our products;

    · A decline in the equity markets causing a reduction in the sales of our subsidiaries’ products, a reduction of asset-based fees that our subsidiaries charge on various investment and insurance products, an acceleration of the net amortization of deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales inducements (“DSI”) and deferred front-end loads (“DFEL”) and an increase in liabilities related to guaranteed benefit features of our subsidiaries’ variable annuity products;

    · Ineffectiveness of our risk management policies and procedures, including various hedging strategies used to offset the effect of changes in the value of liabilities due to changes in the level and volatility of the equity markets and interest rates;

    · A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates or equity market returns from the assumptions used in pricing our subsidiaries’ products, in establishing related insurance reserves and in the net amortization of DAC, VOBA, DSI and DFEL, which may reduce future earnings;

    · Changes in GAAP, including the potential incorporation of International Financial Reporting Standards (“IFRS”) into the U.S. financial reporting system, that may result in unanticipated changes to our net income;

    · Lowering of one or more of our debt ratings issued by nationally recognized statistical rating organizations and the adverse effect such action may have on our ability to raise capital and on our liquidity and financial condition;

    · Lowering of one or more of the insurer financial strength ratings of our insurance subsidiaries and the adverse effect such action may have on the premium writings, policy retention, profitability of our insurance subsidiaries and liquidity;

    · Significant credit, accounting, fraud, corporate governance or other issues that may adversely affect the value of certain investments in our portfolios, as well as counterparties to which we are exposed to credit risk, requiring that we realize losses on investments;

    · Inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others;

    · Ineffectiveness of risk management policies and procedures in identifying, monitoring and managing material risks;

    · Interruption in telecommunication, information technology or other operational systems or failure to safeguard the confidentiality or privacy of sensitive data on such systems;

    · The effect of acquisitions and divestitures, restructurings, product withdrawals and other unusual items;

    · The adequacy and collectibility of reinsurance that we have purchased;

    · Acts of terrorism, a pandemic, war or other man-made and natural catastrophes that may adversely affect our businesses and the cost and availability of reinsurance;

    · Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that our subsidiaries can charge for their products;

    · The unknown effect on our subsidiaries’ businesses resulting from changes in the demographics of their client base, as aging baby-boomers move from the asset-accumulation stage to the asset-distribution stage of life; and

    · Loss of key management, financial planners or wholesalers.

The risks included here are not exhaustive.  Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the Securities and Exchange Commission (“SEC”) include additional factors that could affect our businesses and financial performance.  Moreover, we operate in a rapidly changing and competitive environment.  New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.

Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.  In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this report.

INTRODUCTION

Executive Summary

We are a holding company that operates multiple insurance and retirement businesses through subsidiary companies.  Through our business segments, we sell a wide range of wealth protection, accumulation and retirement income products and solutions.  These products include fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance

46

(“VUL”), linked-benefit UL, term life insurance, employer-sponsored defined contribution retirement plans, mutual funds and group life, disability and dental.

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments.  We also have Other Operations.  These segments and Other Operations are described in “Part I – Item 1. Business” of our 2011 Form 10-K.

For information on how we derive our revenues, see the discussion in results of operations by segment below.

Our current market conditions, significant operational matters, industry trends, issues and outlook are described in “Introduction – Executive Summary” of our 2011 Form 10-K.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

Critical Accounting Policies and Estimates

The MD&A included in our 2011 Form 10-K contains a detailed discussion of our critical accounting policies and estimates.  The following information updates the “Critical Accounting Policies and Estimates” provided in our 2011 Form 10-K and, accordingly, should be read in conjunction with the “Critical Accounting Policies and Estimates” discussed in our 2011 Form 10-K.

DAC, VOBA, DSI and DFEL

New DAC Methodology

In October 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts” (referred to herein as the “new DAC methodology”), which clarifies the types of costs incurred by an insurance entity that can be capitalized in the acquisition of insurance contracts.  Only those costs incurred that result directly from and are essential to the successful acquisition of new or renewal insurance contracts may be capitalized as deferrable acquisition costs.  This determination of deferability must be made on a contract-level basis.  This new DAC methodology contrasts to the prior guidance we followed that defined deferrable acquisition costs as costs that vary with and are related primarily to new or renewal business, regardless of whether the acquisition efforts were successful or unsuccessful.

Some examples of acquisition costs that remain subject to deferral as part of the new DAC methodology include the following:

    · Employee, agent or broker commissions for successful contract acquisitions;

    · Wholesaler production bonuses for successful contract acquisitions;

    · Renewal commissions and bonuses to agents or brokers;

    · Medical and inspection fees for successful contract acquisitions;

    · Premium-related taxes and assessments; and

    · A portion of the salaries and benefits of certain employees involved in the underwriting, contract issuance and processing, medical and inspection and sales force contract selling functions related to the successful issuance or renewal of an insurance contract.

All other acquisition-related costs, including costs incurred by the insurer for soliciting potential customers, market research, training, administration, management of distribution and underwriting functions, unsuccessful acquisition or renewal efforts and product development, are considered non-deferrable acquisition costs and must be expensed in the period incurred.

In addition, the following indirect costs are considered non-deferrable acquisition costs as part of the new DAC methodology and must be charged to expense in the period incurred:

    · Administrative costs;

    · Rent;

    · Depreciation;

    · Occupancy costs;

    · Equipment costs (including data processing equipment dedicated to acquiring insurance contracts); and

    · Other general overhead.

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We adopted the new DAC methodology as of January 1, 2012, and elected to apply the guidance retrospectively.  The retrospective adoption resulted in the restatement of all periods presented with a cumulative effect adjustment to the opening balance of retained earnings and accumulated other comprehensive income (loss) (“AOCI”) for the earliest period presented.  Further, our adoption of the new DAC methodology resulted in an overall reduction in deferrable acquisition costs, partially offset by lower DAC amortization, in each of our business segments.  See Note 2 for more discussion of the effect of adoption.

Reversion to the Mean (“RTM”)

As equity markets do not move in a systematic manner, we reset the baseline of account values from which estimated gross profits (“EGPs) are projected, which we refer to as our RTM process, as discussed in our 2011 Form 10-K.

Our long-term variable fund growth rate assumption, which is used in the determination of DAC, VOBA, DSI and DFEL amortization for our variable annuity and VUL products, is an immediate drop of approximately 9% followed by growth going forward of 8% to 9% depending on the block of business and reflecting differences in contract holder fund allocations between fixed income and equity-type investments.  If we were to have unlocked our RTM assumption in the corridor as of June 30, 2012, we would have recorded a favorable prospective unlocking of approximately $170 million, pre-tax, for Annuities, approximately $15 million, pre-tax, for Retirement Plan Services, and approximately $15 million, pre-tax, for Life Insurance.

Investments

Investment Valuation

The following summarizes our available-for-sale (“AFS”) and trading securities and derivative investments carried at fair value by pricing source and fair value hierarchy level (in millions):

			As of June 30, 2012
		Quoted
		Prices
		in Active
		Markets for				Significant		Significant
		Identical				Observable		Unobservable				Total
		Assets				Inputs		Inputs				Fair
			(Level 1)			(Level 2)			(Level 3)			Value
Priced by third party pricing services			$	721		$	70,177		$	-		$	70,898
Priced by independent broker quotations				-			-			3,976			3,976
Priced by matrices				-			10,241			-			10,241
Priced by other methods (1)				-			-			983			983
	Total		$	721		$	80,418		$	4,959		$	86,098
Percent of total				1	%		93	%		6	%		100	%

(1) Represents primarily securities for which pricing models were used to compute fair value.

For more information about the valuation of our financial instruments carried at fair value, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Critical Accounting Policies and Estimates – Investments – Investment Valuation” in our 2011 Form 10-K and Note 12.

As of June 30, 2012, we evaluated the markets that our securities trade in and concluded that none were inactive.  We will continue to re-evaluate this conclusion, as needed, based on market conditions.  We use unobservable inputs to measure the fair value of securities trading in less liquid or illiquid markets with limited or no pricing information.  We obtain broker quotes for securities such as synthetic convertibles, index-linked certificates of deposit and collateralized debt obligations (“CDOs”) when sufficient security structure or other market information is not available to produce an evaluation.  For broker-quoted only securities, non-binding quotes from market makers or broker-dealers are obtained from sources recognized as market participants.  Broker-quoted securities are based solely on receipt of updated quotes from a single market maker or a broker-dealer recognized as a market participant.  Our broker-quoted only securities are generally classified as Level 3 of the fair value hierarchy.  As of June 30, 2012, we used broker quotes for 105 securities as our final price source, representing 2% of total securities owned.

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Derivatives

Our accounting policies for derivatives and the potential effect on interest spreads in a falling rate environment are discussed in Note 5 of this report and “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2011 Form 10-K.

Guaranteed Living Benefits

Approximately 49% of our variable annuity account values contained a guaranteed withdrawal benefit (“GWB”) rider as of June 30, 2012.  Declines in the equity markets increase our exposure to potential benefits under the GWB contracts, leading to an increase in our existing liability for those benefits.  For example, a GWB contract is “in the money” if the contract holder’s account balance falls below the guaranteed amount.  As of June 30, 2012 and 2011, 65% and 34%, respectively, of all GWB in-force contracts were “in the money,” and our exposure to the guaranteed amounts, after reinsurance, as of June 30, 2012 and 2011, was $1.8 billion and $853 million, respectively.  Our exposure before reinsurance for these same periods was $2.0 billion and $968 million, respectively.  However, the only way the GWB contract holder can monetize the excess of the guaranteed amount over the account value of the contract is upon death or through a series of withdrawals that do not exceed a specific percentage per year of the guaranteed amount.  If, after the series of withdrawals, the account value is exhausted, the contract holder will receive a series of annuity payments equal to the remaining guaranteed amount, and, for our lifetime GWB products, the annuity payments can continue beyond the guaranteed amount.  The account value can also fluctuate with equity market returns on a daily basis resulting in increases or decreases in the excess of the guaranteed amount over account value.

For information on our variable annuity hedge program performance, see our discussion in “Realized Gain (Loss) and Benefit Ratio Unlocking – Variable Annuity Net Derivatives Results” below.

Acquisitions and Dispositions

The loss from discontinued operations for the six months ended June 30, 2012, related to a purchase price adjustment associated with the termination of a portion of the investment advisory agreement with Delaware Management Holdings, Inc., our former subsidiary.

For information about acquisitions and divestitures, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Acquisitions and Dispositions” and Note 3 in our 2011 Form 10-K.

RESULTS OF CONSOLIDATED OPERATIONS

Details underlying the consolidated results, deposits, net flows and account values (in millions) were as follows:

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Net Income (Loss)
Income (loss) from operations:
	Annuities			$	158		$	145			9	%	$	294		$	289			2	%
	Retirement Plan Services				38			41			-7	%		72			90			-20	%
	Life Insurance				138			136			1	%		281			279			1	%
	Group Protection				27			26			4	%		43			50			-14	%
	Other Operations				(39	)		(22	)		-77	%		(73	)		(60	)		-22	%
Excluded realized gain (loss), after-tax					12			(21	)		157	%		(61	)		(34	)		-79	%
Benefit ratio unlocking, after-tax					(10	)		(1	)		NM			14			3			NM
		Income (loss) from continuing operations, after-tax			324			304			7	%		570			617			-8	%
		Income (loss) from discontinued operations, after-tax			-			-			NM			(1	)		-			NM
			Net income (loss)	$	324		$	304			7	%	$	569		$	617			-8	%

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		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2012		2011			Change			2012		2011			Change
Deposits
Annuities		$	2,867	$	2,927			-2	%	$	5,347	$	5,566			-4	%
Retirement Plan Services			1,291		1,199			8	%		2,802		2,540			10	%
Life Insurance			1,137		1,274			-11	%		2,297		2,544			-10	%
	Total deposits	$	5,295	$	5,400			-2	%	$	10,446	$	10,650			-2	%
Net Flows
Annuities		$	701	$	700			0	%	$	994	$	1,183			-16	%
Retirement Plan Services			194		(178	)		209	%		406		(44	)		NM
Life Insurance			723		868			-17	%		1,474		1,689			-13	%
	Total net flows	$	1,618	$	1,390			16	%	$	2,874	$	2,828			2	%

		As of June 30,
		2012		2011		Change
Account Values
Annuities		$	90,377	$	88,840		2	%
Retirement Plan Services			41,397		40,287		3	%
Life Insurance			36,121		34,567		4	%
	Total account values	$	167,895	$	163,694		3	%

Comparison of the Three Months Ended June 30, 2012 to 2011

Net income increased due primarily to the following:

    · Widening of our credit spreads during 2012 leading to realized gains related to our non-performance risk (“NPR”) on guaranteed living benefit (“GLB”) liabilities; and

    · Growth in account values, insurance in force and group earned premiums.

The increase in net income was partially offset by the following:

    · Spread compression due to new money rates averaging below our portfolio yields, partially offset by actions implemented to reduce interest crediting rates; and

    · Investments in strategic initiatives related to expanding distribution and support and updating information technology, partially offset by aggressively managing expenses.

Comparison of the Six Months Ended June 30, 2012 to 2011

Net income decreased due primarily to the following:

    · Higher gross realized gains during 2011 originating from asset sales to reposition the investment portfolio;

    · Spread compression due to new money rates averaging below our portfolio yields, partially offset by actions implemented to reduce interest crediting rates; and

    · Investments in strategic initiatives related to expanding distribution and support and updating information technology, partially offset by aggressively managing expenses.

The decrease in net income was partially offset by growth in account values, insurance in force and group earned premiums.

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RESULTS OF ANNUITIES

Income (Loss) from Operations

Details underlying the results for Annuities (in millions) were as follows:

			For the Three							For the Six
			Months Ended							Months Ended
			June 30,							June 30,
			2012		2011		Change			2012		2011		Change
Operating Revenues
Insurance premiums (1)			$	18	$	22		-18	%	$	35	$	45		-22	%
Insurance fees				323		321		1	%		648		631		3	%
Net investment income				279		278		0	%		551		566		-3	%
Operating realized gain (loss)				25		23		9	%		53		46		15	%
Other revenues and fees (2)				89		91		-2	%		178		180		-1	%
	Total operating revenues			734		735		0	%		1,465		1,468		0	%
Operating Expenses
Interest credited				163		178		-8	%		333		352		-5	%
Benefits				49		43		14	%		95		78		22	%
Commissions and other expenses				326		335		-3	%		679		675		1	%
	Total operating expenses			538		556		-3	%		1,107		1,105		0	%
Income (loss) from operations before taxes				196		179		9	%		358		363		-1	%
Federal income tax expense (benefit)				38		34		12	%		64		74		-14	%
		Income (loss) from operations	$	158	$	145		9	%	$	294	$	289		2	%

(1) Includes primarily our single-premium immediate annuities (“SPIA”), which have a corresponding offset in benefits for changes in reserves.

(2) Consists primarily of fees attributable to broker-dealer services that are subject to market volatility.

Comparison of the Three Months Ended June 30, 2012 to 2011

Income from operations for this segment increased due primarily to the following:

    · Higher net investment income, net of interest credited, driven by:

§ Higher average fixed account values since the second quarter of 2011 (see the “Other Information” table within “Net Investment Income and Interest Credited” below for drivers of changes in our account values); and

§ More favorable investment income on alternative investments within our surplus portfolio (see “Consolidated Investments – Alternative Investments” below for more information);

partially offset by:

§ Spread compression due to new money rates averaging below our portfolio yields, partially offset by actions implemented to reduce interest crediting rates; and

    · Lower commissions and other expenses driven by higher average equity markets than our model projections assumed resulting in higher projected EGPs and a lower amortization rate, partially offset by higher trail commissions and investments in strategic initiatives related to expanding distribution and support and updating information technology during 2012.

The increase in income from operations was partially offset by higher benefits due to an increase in the growth in benefit reserves from higher than expected GLB and guaranteed death benefit payments.

Comparison of the Six Months Ended June 30, 2012 to 2011

Income from operations for this segment increased due primarily to the following:

    · Higher insurance fees driven by higher average daily variable account values since the second quarter of 2011 (see the “Account Value Information” table within “Insurance Fees” below for drivers of changes in our account values);

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    · More favorable tax items recorded in 2012 than in 2011 driven by tax preferred investments and other items;

    · Higher net investment income, net of interest credited, driven by:

§ Higher average fixed account values since the second quarter of 2011 (see the “Other Information” table within “Net Investment Income and Interest Credited” below for drivers of changes in our account values); and

§ More favorable investment income on alternative investments within our surplus portfolio (see “Consolidated Investments – Alternative Investments” below for more information);

partially offset by:

§ Spread compression due to new money rates averaging below our portfolio yields, partially offset by actions implemented to reduce interest crediting rates; and

§ Lower prepayment and bond makewhole premiums (See “Consolidated Investments – Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums” below for more information).

The increase in income from operations was partially offset by the following:

    · Higher benefits attributable to the following:

§ Unfavorable mortality experience on SPIA during 2012 as compared to favorable experience during 2011; and

§ An increase in the growth in benefit reserves from higher than expected GLB payments; and

    · Higher commissions and other expenses due to higher trail commissions and investments in strategic initiatives related to updating information technology and expanding distribution and support during 2012, partially offset by higher average equity markets than our model projections assumed resulting in higher projected EGPs and a lower amortization rate.

Additional Information

In the third quarter of each year, we conduct our annual comprehensive review of the assumptions and models used for our estimates of future gross profits underlying the amortization of DAC, VOBA, DSI and DFEL and the calculations of the embedded derivatives and reserves for annuity products with living benefit and death benefit guarantees.  See “DAC, VOBA, DSI and DFEL” in Note 1 of our 2011 Form 10-K for a detailed discussion of our prospective unlocking process.

New deposits are an important component of net flows and key to our efforts to grow our business.  Although deposits do not significantly affect current period income from operations, they are an important indicator of future profitability.

The other component of net flows relates to the retention of the business.  An important measure of retention is the lapse rate, which compares the amount of withdrawals to the average account values.  The overall lapse rate for our annuity products was 7% and 8% for the three and six months ended June 30, 2012, respectively, compared to 8% for the corresponding periods in 2011.

Our fixed annuity business includes products with discretionary crediting rates that are reset on an annual basis and are not subject to surrender charges.  Our ability to retain annual reset annuities will be subject to current competitive conditions at the time interest rates for these products reset.  We expect to manage the effects of spreads on near-term income from operations through portfolio management and, to a lesser extent, crediting rate actions, which assumes no significant changes in net flows into or out of our fixed accounts or other changes that may cause interest rate spreads to differ from our expectations.  For information on interest rate spreads, see “Part I – Item 3. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” herein.  For information on the interest rate risk due to falling interest rates, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” and “Part I – Item 1A. Risk Factors – Market Conditions – Changes in interest rates and sustained low interest rates may cause interest rate spreads to decrease and changes in interest rates may also result in increased contract withdrawals” in our 2011 Form 10-K.

We provide information about this segment’s operating revenue and operating expense line items, the period in which amounts are recognized, key drivers of changes and historical details underlying the line items and their associated drivers below.  For detail on the operating realized gain (loss), see “Realized Gain (Loss) and Benefit Ratio Unlocking” below.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

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Insurance Fees

Details underlying insurance fees, account values and net flows (in millions) were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Insurance Fees
Mortality, expense and other assessments			$	323		$	325			-1	%	$	642		$	636			1	%
Surrender charges				4			10			-60	%		10			20			-50	%
DFEL:
	Deferrals			(7	)		(19	)		63	%		(13	)		(35	)		63	%
	Amortization, net of interest			3			5			-40	%		9			10			-10	%
		Total insurance fees	$	323		$	321			1	%	$	648		$	631			3	%

		As of or For the Three									As of or For the Six
		Months Ended									Months Ended
		June 30,									June 30,
		2012			2011			Change			2012			2011			Change
Account Value Information
Variable annuity deposits (1)		$	1,631		$	1,620			1	%	$	3,103		$	3,143			-1	%
Increases (decreases) in variable annuity account values:
	Net flows (1)		11			(82	)		113	%		(155	)		(202	)		23	%
	Change in market value (1)		(2,154	)		147		NM				3,390			2,364			43	%
	Transfers to the variable portion of variable annuity products from the fixed portion of variable annuity products		696			699		0		%		1,368			1,531			-11	%
Variable annuity account values (1)			69,615			68,551			2	%		69,615			68,551			2	%
Average daily variable annuity account values (1)			69,222			68,262			1	%		69,113			67,365			3	%
Average daily S&P 500			1,350.01			1,318.52			2	%		1,348.13			1,310.42			3	%

(1) Excludes the fixed portion of variable.

We charge contract holders mortality and expense assessments on variable annuity accounts to cover insurance and administrative expenses.  These assessments are a function of the rates priced into the product and the average daily variable account values.  Average daily account values are driven by net flows and the equity markets.  In addition, for our fixed annuity contracts and for some variable contracts, we collect surrender charges when contract holders surrender their contracts during their surrender charge periods to protect us from premature withdrawals.  Insurance fees include charges on both our variable and fixed annuity products, but exclude the attributed fees on our GLB products; see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Realized Gain (Loss) and Benefit Ratio Unlocking – Operating Realized Gain (Loss)” in our 2011 Form 10-K for discussion of these attributed fees.

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Net Investment Income and Interest Credited

Details underlying net investment income, interest credited (in millions) and our interest rate spread were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Net Investment Income
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses			$	237		$	245			-3	%	$	475		$	493			-4	%
Commercial mortgage loan prepayment and bond makewhole premiums (1)				4			5			-20	%		6			17			-65	%
Alternative investments (2)				-			-		NM				1			-		NM
Surplus investments (3)				38			28			36	%		69			56			23	%
	Total net investment income		$	279		$	278			0	%	$	551		$	566			-3	%
Interest Credited
Amount provided to contract holders			$	163		$	176			-7	%	$	329		$	346			-5	%
DSI deferrals				(10	)		(9	)		-11	%		(18	)		(18	)		0	%
	Interest credited before DSI amortization			153			167			-8	%		311			328			-5	%
DSI amortization				10			11			-9	%		22			24			-8	%
		Total interest credited	$	163		$	178			-8	%	$	333		$	352			-5	%

(1) See “Consolidated Investments – Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums” below for additional information.

(2) See “Consolidated Investments – Alternative Investments” below for additional information.

(3) Represents net investment income on the required statutory surplus for this segment and includes the effect of investment income on alternative investments for such assets that are held in the portfolios supporting statutory surplus versus the portfolios supporting product liabilities.

			For the Three									For the Six
			Months Ended						Basis			Months Ended						Basis
			June 30,						Point			June 30,						Point
			2012			2011			Change			2012			2011			Change
Interest Rate Spread
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses				4.86	%		5.19	%		(33	)		4.89	%		5.24	%		(35	)
Commercial mortgage loan prepayment and bond makewhole premiums				0.07	%		0.11	%		(4	)		0.06	%		0.18	%		(12	)
Alternative investments				0.01	%		0.00	%		1			0.01	%		0.00	%		1
	Net investment income yield on reserves			4.94	%		5.30	%		(36	)		4.96	%		5.42	%		(46	)
	Interest rate credited to contract holders			3.03	%		3.38	%		(35	)		3.09	%		3.34	%		(25	)
		Interest rate spread		1.91	%		1.92	%		(1	)		1.87	%		2.08	%		(21	)

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		As of or For the Three									As of or For the Six
		Months Ended									Months Ended
		June 30,									June 30,
		2012			2011			Change			2012			2011			Change
Other Information
Fixed annuity deposits (1)		$	1,236		$	1,307			-5	%	$	2,244		$	2,423			-7	%
Increases (decreases) in fixed annuity account values:
	Net flows (1)		690			782			-12	%		1,149			1,385			-17	%
	Transfers from the fixed portion of variable annuity products to the variable portion of variable annuity products		(696	)		(699	)		0	%		(1,368	)		(1,531	)		11	%
	Reinvested interest credited (1)		138			185			-25	%		408			400			2	%
Fixed annuity account values (1)			20,762			20,289			2	%		20,762			20,289			2	%
Average fixed account values (1)			20,668			20,170			2	%		20,601			20,080			3	%
Average invested assets on reserves			19,554			18,892			4	%		19,538			18,841			4	%

(1) Includes the fixed portion of variable.

A portion of our investment income earned is credited to the contract holders of our fixed annuity products, including the fixed portion of variable annuity contracts.  We expect to earn a spread between what we earn on the underlying general account investments supporting the fixed annuity product line, including the fixed portion of variable annuity contracts, and what we credit to our fixed annuity contract holders’ accounts, including the fixed portion of variable annuity contracts.  Changes in commercial mortgage loan prepayments and bond makewhole premiums, investment income on alternative investments and surplus investment income can vary significantly from period to period due to a number of factors and, therefore, may contribute to investment income results that are not indicative of the underlying trends.

Benefits

Benefits for this segment include changes in reserves of immediate annuity account values driven by premiums, changes in benefit reserves and our expected costs associated with purchases of derivatives used to hedge our benefit ratio unlocking.

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Commissions and Other Expenses

Details underlying commissions and other expenses (in millions) were as follows:

					For the Three								For the Six
					Months Ended								Months Ended
					June 30,								June 30,
					2012			2011			Change		2012			2011			Change
Commissions and Other Expenses
Commissions:
	Deferrable				$	132		$	125		6	%	$	243		$	237		3	%
	Non-deferrable					70			68		3	%		142			133		7	%
General and administrative expenses						96			93		3	%		193			180		7	%
Taxes, licenses and fees						6			7		-14	%		14			15		-7	%
		Total expenses incurred, excluding broker-dealer				304			293		4	%		592			565		5	%
DAC deferrals						(149	)		(141	)	-6	%		(273	)		(268	)	-2	%
			Total pre-broker-dealer expenses incurred, excluding amortization, net of interest			155			152		2	%		319			297		7	%
DAC and VOBA amortization, net of interest						86			93		-8	%		184			196		-6	%
Broker-dealer expenses incurred						85			90		-6	%		176			182		-3	%
				Total commissions and other expenses	$	326		$	335		-3	%	$	679		$	675		1	%
DAC Deferrals
As a percentage of sales/deposits						5.2	%		4.8	%				5.1	%		4.8	%

Commissions and other costs that result directly from and are essential to the successful acquisition of new or renewal business are deferred to the extent recoverable and are amortized over the lives of the contracts in relation to EGPs.  Certain of our commissions, such as trail commissions that are based on account values, are expensed as incurred rather than deferred and amortized.

Broker-dealer expenses that vary with and are related to sales are expensed as incurred and not deferred and amortized.  Fluctuations in these expenses correspond with fluctuations in other revenues and fees.

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RESULTS OF RETIREMENT PLAN SERVICES

Income (Loss) from Operations

Details underlying the results for Retirement Plan Services (in millions) were as follows:

			For the Three							For the Six
			Months Ended							Months Ended
			June 30,							June 30,
			2012		2011		Change			2012		2011		Change
Operating Revenues
Insurance fees			$	53	$	55		-4	%	$	105	$	110		-5	%
Net investment income				202		200		1	%		399		405		-1	%
Other revenues and fees (1)				3		5		-40	%		6		8		-25	%
	Total operating revenues			258		260		-1	%		510		523		-2	%
Operating Expenses
Interest credited				112		109		3	%		223		217		3	%
Commissions and other expenses				96		93		3	%		190		178		7	%
	Total operating expenses			208		202		3	%		413		395		5	%
Income (loss) from operations before taxes				50		58		-14	%		97		128		-24	%
Federal income tax expense (benefit)				12		17		-29	%		25		38		-34	%
		Income (loss) from operations	$	38	$	41		-7	%	$	72	$	90		-20	%

(1) Consists primarily of mutual fund account program fees for mid to large employers.

Comparison of the Three and Six Months Ended June 30, 2012 to 2011

Income from operations for this segment decreased due primarily to the following:

    · Lower net investment income, net of interest credited, driven by:

§ Lower prepayment and bond makewhole premiums (see “Consolidated Investments – Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums” below for more information); and

§ Spread compression due to new money rates averaging below our portfolio yields, partially offset by actions implemented to reduce interest crediting rates;

partially offset by:

§ Higher average fixed account values since the second quarter of 2011 (see the “Other Information” table within “Net Investment Income and Interest Credited” below for drivers of changes in our account values); and

§ More favorable investment income on alternative investments within our surplus portfolio (see “Consolidated Investments – Alternative Investments” below for more information);

    · Higher commissions and other expenses due to investments in strategic initiatives related to expanding distribution and support and updating information technology during 2012; and

    · Lower insurance fees driven by lower average daily variable account values since the second quarter of 2011 (see the “Account Value Information” table within “Insurance Fees” below for drivers of changes in our account values).

The decrease in income from operations was partially offset by more favorable tax items recorded in 2012 than in 2011.

Additional Information

In the third quarter of each year, we conduct our annual comprehensive review of the assumptions and models used for our estimates of future gross profits underlying the amortization of DAC, VOBA and DSI.  See “DAC, VOBA, DSI and DFEL” in Note 1 of our 2011 Form 10-K for a detailed discussion of our prospective unlocking process.

Net flows in this business fluctuate based on the timing of larger plans rolling onto our platform and rolling off over the course of the year, and we expect this trend will continue during 2012.

New deposits are an important component of net flows and key to our efforts to grow our business.  Although deposits do not

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significantly affect current period income from operations, they are an important indicator of future profitability.  The other component of net flows relates to the retention of the business.  An important measure of retention is the lapse rate, which compares the amount of withdrawals to the average account values.  The overall lapse rate for our annuity andmutualfund products was 11% and 12% for the three and six months ended June 30, 2012, respectively, compared to 14% and 13% for the corresponding periods in 2011. 

Our lapse rate is negatively affected by the continued net outflows from our oldest blocks of annuities business (as presented on our Account Value Roll Forward table below as “Total Multi-Fund® and Other Variable Annuities”), which are also our higher margin product lines in this segment, due to the fact that they are mature blocks with much of the account values out of their surrender charge period.  The proportion of these products to our total account values was 38% and 41% as of June 30, 2012, and 2011, respectively.  Due to this expected overall shift in business mix toward products with lower returns, a significant increase in new deposit production will be necessary to maintain earnings at current levels.

Our fixed annuity business includes products with discretionary and index-based crediting rates that are reset on a quarterly basis.  Our ability to retain quarterly reset annuities will be subject to current competitive conditions at the time interest rates for these products reset.  We expect to manage the effects of spreads on near-term income from operations through portfolio management and, to a lesser extent, crediting rate actions, which assumes no significant changes in net flows into or out of our fixed accounts or other changes that may cause interest rate spreads to differ from our expectations.  For information on interest rate spreads, see “Part I – Item 3. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” herein.  For information on the interest rate risk due to falling interest rates, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” and “Part I – Item 1A. Risk Factors – Market Conditions – Changes in interest rates and sustained low interest rates may cause interest rate spreads to decrease and changes in interest rates may also result in increased contract withdrawals” in our 2011 Form 10-K.

We provide information about this segment’s operating revenue and operating expense line items, the period in which amounts are recognized, key drivers of changes and historical details underlying the line items and their associated drivers below.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

Insurance Fees

Details underlying insurance fees, account values and net flows (in millions) were as follows:

			For the Three							For the Six
			Months Ended							Months Ended
			June 30,							June 30,
			2012		2011		Change			2012		2011		Change
Insurance Fees
Annuity expense assessments			$	44	$	46		-4	%	$	88	$	93		-5	%
Mutual fund fees				9		8		13	%		16		16		0	%
	Total expense assessments			53		54		-2	%		104		109		-5	%
Surrender charges				-		1		-100	%		1		1		0	%
		Total insurance fees	$	53	$	55		-4	%	$	105	$	110		-5	%

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			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Account Value Roll Forward – By Product
Total Micro – Small Segment:
Balance as of beginning-of-period			$	6,641		$	6,594			1	%	$	6,167		$	6,396			-4	%
Gross deposits				372			315			18	%		790			641			23	%
Withdrawals and deaths				(368	)		(325	)		-13	%		(780	)		(709	)		-10	%
	Net flows			4			(10	)		140	%		10			(68	)		115	%
Transfers between fixed and variable accounts				-			-			NM			(11	)		(6	)		-83	%
Investment increase and change in market value				(175	)		(18	)		NM			304			244			25	%
		Balance as of end-of-period	$	6,470		$	6,566			-1	%	$	6,470		$	6,566			-1	%
Total Mid – Large Segment:
Balance as of beginning-of-period			$	19,199		$	17,224			11	%	$	17,435		$	16,207			8	%
Gross deposits				740			704			5	%		1,660			1,535			8	%
Withdrawals and deaths				(395	)		(657	)		40	%		(900	)		(1,055	)		15	%
	Net flows			345			47			NM			760			480			58	%
Transfers between fixed and variable accounts				(5	)		(17	)		71	%		(7	)		(38	)		82	%
Investment increase and change in market value				(406	)		79			NM			945			684			38	%
		Balance as of end-of-period	$	19,133		$	17,333			10	%	$	19,133		$	17,333			10	%
Total Multi-Fund® and Other Variable Annuities:
Balance as of beginning-of-period			$	16,180		$	16,490			-2	%	$	15,531		$	16,221			-4	%
Gross deposits				179			180			-1	%		352			364			-3	%
Withdrawals and deaths				(334	)		(395	)		15	%		(716	)		(820	)		13	%
	Net flows			(155	)		(215	)		28	%		(364	)		(456	)		20	%
Investment increase and change in market value				(231	)		113			NM			627			623			1	%
		Balance as of end-of-period	$	15,794		$	16,388			-4	%	$	15,794		$	16,388			-4	%
Total Annuities and Mutual Funds:
Balance as of beginning-of-period			$	42,020		$	40,308			4	%	$	39,133		$	38,824			1	%
Gross deposits				1,291			1,199			8	%		2,802			2,540			10	%
Withdrawals and deaths				(1,097	)		(1,377	)		20	%		(2,396	)		(2,584	)		7	%
	Net flows			194			(178	)		209	%		406			(44	)		NM
Transfers between fixed and variable accounts				(5	)		(17	)		71	%		(18	)		(44	)		59	%
Investment increase and change in market value				(812	)		174			NM			1,876			1,551			21	%
		Balance as of end-of-period (1)	$	41,397		$	40,287			3	%	$	41,397		$	40,287			3	%

(1) Includes mutual fund account values and other third-party trustee-held assets.  These items are not included in the separate accounts reported on our Consolidated Balance Sheets as we do not have any ownership interest in them.

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		As of or For the Three									As of or For the Six
		Months Ended									Months Ended
		June 30,									June 30,
		2012			2011			Change			2012			2011			Change
Account Value Information
Variable annuity deposits (1)		$	409		$	393			4	%	$	877		$	808			9	%
Increases (decreases) in variable annuity account values:
	Net flows (1)		(83	)		(123	)		33	%		(188	)		(295	)		36	%
	Change in market value (1)		(484	)		16		NM				773			712			9	%
	Transfers from the variable portion of variable annuity products to the fixed portion of variable annuity products		(53	)		(40	)		-33	%		(114	)		(90	)		-27	%
Variable annuity account values (1)			13,338			14,254			-6	%		13,338			14,254			-6	%
Average daily variable annuity account values (1)			13,373			14,284			-6	%		13,481			14,231			-5	%
Average daily S&P 500			1,350.01			1,318.52			2	%		1,348.13			1,310.42			3	%

(1) Excludes the fixed portion of variable.

We charge expense assessments to cover insurance and administrative expenses.  Expense assessments are generally equal to a percentage of the daily variable account values.  Average daily account values are driven by net flows and the equity markets.  Our expense assessments include fees we earn for the services that we provide to our mutual fund programs.  In addition, for both our fixed and variable annuity contracts, we collect surrender charges when contract holders surrender their contracts during the surrender charge periods to protect us from premature withdrawals.

Net Investment Income and Interest Credited

Details underlying net investment income, interest credited (in millions) and our interest rate spread were as follows:

		For the Three							For the Six
		Months Ended							Months Ended
		June 30,							June 30,
		2012		2011		Change			2012		2011		Change
Net Investment Income
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses		$	182	$	179		2	%	$	364	$	356		2	%
Commercial mortgage loan prepayment and bond makewhole premiums (1)			1		7		-86	%		2		18		-89	%
Alternative investments (2)			1		-	NM				1		1		0	%
Surplus investments (3)			18		14		29	%		32		30		7	%
	Total net investment income	$	202	$	200		1	%	$	399	$	405		-1	%
Interest Credited		$	112	$	109		3	%	$	223	$	217		3	%

(1) See “Consolidated Investments – Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums” below for additional information.

(2) See “Consolidated Investments – Alternative Investments” below for additional information.

(3) Represents net investment income on the required statutory surplus for this segment and includes the effect of investment income on alternative investments for such assets that are held in the portfolios supporting statutory surplus versus the portfolios supporting product liabilities.

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			For the Three									For the Six
			Months Ended						Basis			Months Ended						Basis
			June 30,						Point			June 30,						Point
			2012			2011			Change			2012			2011			Change
Interest Rate Spread
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses				5.28	%		5.55	%		(27	)		5.30	%		5.58	%		(28	)
Commercial mortgage loan prepayment and bond makewhole premiums				0.02	%		0.23	%		(21	)		0.03	%		0.29	%		(26	)
Alternative investments				0.02	%		0.01	%		1			0.02	%		0.02	%		-
	Net investment income yield on reserves			5.32	%		5.79	%		(47	)		5.35	%		5.89	%		(54	)
	Interest rate credited to contract holders			3.22	%		3.34	%		(12	)		3.22	%		3.35	%		(13	)
		Interest rate spread		2.10	%		2.45	%		(35	)		2.13	%		2.54	%		(41	)

		As of or For the Three									As of or For the Six
		Months Ended									Months Ended
		June 30,									June 30,
		2012			2011			Change			2012			2011			Change
Other Information
Fixed annuity deposits (1)		$	346		$	319			8	%	$	716		$	664			8	%
Increases (decreases) in fixed annuity account values:
	Net flows (1)		(23	)		(118	)		81	%		(58	)		(109	)		47	%
	Transfers to the fixed portion of variable annuity products from the variable portion of variable annuity products		53			40			33	%		114			90			27	%
	Reinvested interest credited (1)		112			109			3	%		222			216			3	%
Fixed annuity account values (1)			14,003			13,025			8	%		14,003			13,025			8	%
Average fixed account values (1)			13,903			13,000			7	%		13,812			12,933			7	%
Average invested assets on reserves			13,800			12,830			8	%		13,695			12,738			8	%

(1) Includes the fixed portion of variable.

A portion of our investment income earned is credited to the contract holders of our fixed annuity products, including the fixed portion of variable annuity contracts.  We expect to earn a spread between what we earn on the underlying general account investments supporting the fixed annuity product line, including the fixed portion of variable annuity contracts, and what we credit to our fixed annuity contract holders’ accounts, including the fixed portion of variable annuity contracts.  Commercial mortgage loan prepayments and bond makewhole premiums, investment income on alternative investments and surplus investment income can vary significantly from period to period due to a number of factors and, therefore, may contribute to investment income results that are not indicative of the underlying trends.

Benefits

Benefits for this segment include changes in benefit reserves and our expected costs associated with purchases of derivatives used to hedge our benefit ratio unlocking.

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Commissions and Other Expenses

Details underlying commissions and other expenses (in millions) were as follows:

					For the Three									For the Six
					Months Ended									Months Ended
					June 30,									June 30,
					2012			2011			Change			2012			2011			Change
Commissions and Other Expenses
Commissions:
	Deferrable				$	5		$	5			0	%	$	10		$	10			0	%
	Non-deferrable					12			12			0	%		25			24			4	%
General and administrative expenses						75			71			6	%		147			134			10	%
Taxes, licenses and fees						3			4			-25	%		8			9			-11	%
		Total expenses incurred				95			92			3	%		190			177			7	%
DAC deferrals						(9	)		(9	)		0	%		(19	)		(17	)		-12	%
			Total expenses recognized before amortization			86			83			4	%		171			160			7	%
DAC and VOBA amortization, net of interest						10			10			0	%		19			18			6	%
				Total commissions and other expenses	$	96		$	93			3	%	$	190		$	178			7	%
DAC Deferrals
As a percentage of annuity sales/deposits						1.2	%		1.3	%					1.2	%		1.2	%

Commissions and other costs that result directly from and are essential to the successful acquisition of new or renewal business are deferred to the extent recoverable and are amortized over the lives of the contracts in relation to EGPs.  Certain of our commissions, such as trail commissions that are based on account values, are expensed as incurred rather than deferred and amortized.  We do not pay commissions on sales of our mutual fund products, and distribution expenses associated with the sale of these mutual fund products are expensed as incurred.

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RESULTS OF LIFE INSURANCE

Income (Loss) from Operations

Details underlying the results for Life Insurance (in millions) were as follows:

			For the Three							For the Six
			Months Ended							Months Ended
			June 30,							June 30,
			2012		2011		Change			2012		2011		Change
Operating Revenues
Insurance premiums			$	114	$	112		2	%	$	222	$	220		1	%
Insurance fees				511		523		-2	%		1,040		975		7	%
Net investment income				606		588		3	%		1,195		1,167		2	%
Other revenues and fees				6		6		0	%		12		14		-14	%
	Total operating revenues			1,237		1,229		1	%		2,469		2,376		4	%
Operating Expenses
Interest credited				311		307		1	%		622		610		2	%
Benefits				477		609		-22	%		952		1,056		-10	%
Commissions and other expenses				248		111		123	%		486		298		63	%
	Total operating expenses			1,036		1,027		1	%		2,060		1,964		5	%
Income (loss) from operations before taxes				201		202		0	%		409		412		-1	%
Federal income tax expense (benefit)				63		66		-5	%		128		133		-4	%
		Income (loss) from operations	$	138	$	136		1	%	$	281	$	279		1	%

Comparison of the Three and Six Months Ended June 30, 2012 to 2011

Income from operations for this segment increased due primarily to the following:

    · Lower benefits attributable to the effect of prospective unlocking during 2011, partially offset by higher death claims and surrender benefits and continued growth in our secondary guarantee life insurance business;

    · Higher insurance fees due to growth in insurance in force; and

    · Higher net investment income, net of interest credited, driven by:

§ Growth in business in force;

partially offset by:

§ Less favorable investment income on alternative investments (see “Consolidated Investments – Alternative Investments” below for more information); and

§ Spread compression due to new money rates averaging below our portfolio yields, partially offset by lower interest crediting rates.

The increase in income from operations was partially offset by higher commissions and other expenses attributable to the effect of prospective unlocking during 2011.

When comparing the three months ended June 30, 2012 to 2011, the decrease in insurance fees was due to lower surrender charges and the effect of prospective unlocking during 2011, partially offset by growth in business in force.

Strategies to Address Statutory Reserve Strain

Our insurance subsidiaries have statutory surplus and risk-based capital (“RBC”) levels above current regulatory required levels.  Products containing secondary guarantees require reserves calculated under AG38.  Our insurance subsidiaries are employing strategies to reduce the strain of increasing AG38 and Valuation of Life Insurance Policies Model Regulation (“XXX”) statutory reserves associated with secondary guarantee UL and term products.  As discussed below, we have been successful in executing reinsurance solutions to release capital to Other Operations.  We expect to regularly execute transactions designed to release capital as we continue to sell products that are subject to these reserving requirements.  We also plan to refinance prior transactions with long-term structured solutions.

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Included in the letters of credit (“LOCs”) issued as of June 30, 2012, was approximately $1.9 billion of long-dated LOCs issued to support inter-company reinsurance arrangements, of which approximately $65 million and $1.0 billion was issued for UL business with secondary guarantees through 2015 and 2031, respectively, and approximately $855 million was issued for term business through 2023.  We have also used the proceeds from senior note issuances of approximately $1.1 billion to execute long-term structured solutions supporting secondary guarantee UL and term business.  LOCs and related capital market alternatives lower the capital effect of secondary guarantee UL products.  An inability to obtain the necessary LOC capacity or other capital market alternatives could affect our returns on our in-force secondary guarantee UL business.  However, we believe that our insurance subsidiaries have sufficient capital to support the increase in statutory reserves, based on our current reserve projections, if such structures are not available.  See “Part I – Item 1A. Risk Factors – Legislative, Regulatory and Tax – Changes to the calculation of reserves and attempts to mitigate the impact of Regulation XXX and Actuarial Guideline 38 may fail in whole or in part resulting in an adverse effect on our financial condition and results of operations” as updated in “Part II – Item 1A. Risk Factors” below for further information on XXX and AG38 reserves.  See the table in “Commissions and Other Expenses” below for the presentation of our expenses associated with reserve financing.

Additional Information

In the third quarter of each year, we conduct our annual comprehensive review of the assumptions and models used for our estimates of future gross profits underlying the amortization of DAC, VOBA, DFEL and secondary guarantee life insurance product reserves.  See “DAC, VOBA, DSI and DFEL” in Note 1 of our 2011 Form 10-K for a detailed discussion of our prospective unlocking process.

We expect to manage the effects of spreads on near-term income from operations through portfolio management, which assumes no significant changes in net flows into or out of our fixed accounts or other changes that may cause interest rate spreads to differ from our expectations.

For information on interest rate spreads, see “Part I – Item 3. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” herein.  For information on the interest rate risk due to falling interest rates, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” and “Part I – Item 1A. Risk Factors – Market Conditions – Changes in interest rates and sustained low interest rates may cause interest rate spreads to decrease and changes in interest rates may also result in increased contract withdrawals” in our 2011 Form 10-K.

Sales are not recorded as a component of revenues (other than for traditional products) and do not have a significant effect on current quarter income from operations but are indicators of future profitability.  Generally, we have higher sales during the second half of the year with the fourth quarter being our strongest.  However, we face conditions in the marketplace as discussed in “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Executive Summary – Current Market Conditions” in our 2011 Form 10-K that may challenge our sales volume for the remainder of 2012.  For example, we are implementing pricing changes to our products that reflect the current low interest rate environment that we believe will lower our sales volumes and could potentially reduce our market share until competitive conditions change.

We provide information about this segment’s operating revenue and operating expense line items, the period in which amounts are recognized, key drivers of changes and historical details underlying the line items and their associated drivers below.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

Insurance Premiums

Insurance premiums relate to traditional products and are a function of the rates priced into the product and the level of insurance in force.  Insurance in force, in turn, is driven by sales, persistency and mortality experience.

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Insurance Fees

Details underlying insurance fees, sales, net flows, account values and in-force face amount (in millions) were as follows:

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Insurance Fees
Mortality assessments				$	329		$	327			1	%	$	667		$	651			2	%
Expense assessments					205			234			-12	%		411			464			-11	%
Surrender charges					20			29			-31	%		43			53			-19	%
DFEL:
	Deferrals				(82	)		(116	)		29	%		(165	)		(242	)		32	%
	Amortization, net of interest:
		Prospective unlocking - assumption changes			-			19			-100	%		-			17			-100	%
		Prospective unlocking - model refinements			-			(14	)		100	%		(6	)		(32	)		81	%
		Amortization, net of interest, excluding unlocking			39			44			-11	%		90			64			41	%
			Total insurance fees	$	511		$	523			-2	%	$	1,040		$	975			7	%

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Sales by Product
UL:
	Excluding MoneyGuard®			$	51		$	83			-39	%	$	98		$	168			-42	%
	MoneyGuard®				41			39			5	%		82			73			12	%
		Total UL			92			122			-25	%		180			241			-25	%
VUL					12			11			9	%		21			21			0	%
COLI and BOLI					11			10			10	%		22			27			-19	%
Term					13			14			-7	%		26			27			-4	%
			Total sales	$	128		$	157			-18	%	$	249		$	316			-21	%
Net Flows
Deposits				$	1,137		$	1,274			-11	%	$	2,297		$	2,544			-10	%
Withdrawals and deaths					(414	)		(406	)		-2	%		(823	)		(855	)		4	%
	Net flows			$	723		$	868			-17	%	$	1,474		$	1,689			-13	%
Contract Holder Assessments				$	800		$	815			-2	%	$	1,605		$	1,622			-1	%

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		As of June 30,
		2012		2011		Change
Account Values
UL		$	28,607	$	26,990		6	%
VUL			5,230		5,300		-1	%
Interest-sensitive whole life			2,284		2,277		0	%
	Total account values	$	36,121	$	34,567		4	%
In-Force Face Amount
UL and other		$	308,763	$	302,205		2	%
Term insurance			273,305		268,520		2	%
	Total in-force face amount	$	582,068	$	570,725		2	%

Insurance fees relate only to interest-sensitive products and include mortality assessments, expense assessments (net of deferrals and amortization related to DFEL) and surrender charges.  Mortality and expense assessments are deducted from our contract holders’ account values.  These amounts are a function of the rates priced into the product and premiums received, face amount in force and account values.  Insurance in force, in turn, is driven by sales, persistency and mortality experience.  In-force growth should be considered independently with respect to term products versus UL and other products, as term products have a lower profitability relative to face amount compared to interest-sensitive and other products.

Sales in the table above and as discussed above were reported as follows:

    · MoneyGuard® (our linked-benefit product) – 15% of single premium deposits;

    · MoneyGuard® (flexible premium option), UL (excluding linked-benefit products) and VUL (including corporate-owned UL and VUL (“COLI”) and bank-owned UL and VUL (“BOLI”)) – first year commissionable premiums plus 5% of excess premiums received, including an adjustment for internal replacements of approximately 50% of commissionable premiums; and

    · Term – 100% of first year paid premiums.

UL and VUL products with secondary guarantees represented 38% of interest-sensitive life insurance in force as of June 30, 2012, and 34% and 33% of sales for the three and six months ended June 30, 2012, respectively, as compared to 51% and 50% of sales for the corresponding periods in 2011.  Changes in the marketplace and continuing efforts to increase sales of higher return products are resulting in a shift in our business mix away from UL products with secondary guarantees to products like Indexed UL, VUL and term.  Actuarial Guideline 37, or Variable Life Reserves for Guaranteed Minimum Death Benefits, and AG38 impose additional statutory reserve requirements for these products.

Net Investment Income and Interest Credited

Details underlying net investment income, interest credited (in millions) and our interest rate spread were as follows:

		For the Three							For the Six
		Months Ended							Months Ended
		June 30,							June 30,
		2012		2011		Change			2012		2011		Change
Net Investment Income
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses		$	547	$	522		5	%	$	1,089	$	1,040		5	%
Commercial mortgage loan prepayment and bond makewhole premiums (1)			6		11		-45	%		8		15		-47	%
Alternative investments (2)			13		23		-43	%		27		48		-44	%
Surplus investments (3)			40		32		25	%		71		64		11	%
	Total net investment income	$	606	$	588		3	%	$	1,195	$	1,167		2	%
Interest Credited		$	311	$	307		1	%	$	622	$	610		2	%

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(1) See “Consolidated Investments – Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums” below for additional information.

(2) See “Consolidated Investments – Alternative Investments” below for additional information.

(3) Represents net investment income on the required statutory surplus for this segment and includes the effect of investment income on alternative investments for such assets that are held in the portfolios supporting statutory surplus versus the portfolios supporting product liabilities.

			For the Three									For the Six
			Months Ended						Basis			Months Ended						Basis
			June 30,						Point			June 30,						Point
			2012			2011			Change			2012			2011			Change
Interest Rate Yields and Spread
Attributable to interest-sensitive products:
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses				5.75	%		5.82	%		(7	)		5.75	%		5.86	%		(11	)
Commercial mortgage loan prepayment and bond makewhole premiums				0.07	%		0.14	%		(7	)		0.05	%		0.09	%		(4	)
Alternative investments				0.15	%		0.29	%		(14	)		0.16	%		0.31	%		(15	)
	Net investment income yield on reserves			5.97	%		6.25	%		(28	)		5.96	%		6.26	%		(30	)
Interest rate credited to contract holders				3.92	%		4.09	%		(17	)		3.94	%		4.09	%		(15	)
		Interest rate spread		2.05	%		2.16	%		(11	)		2.02	%		2.17	%		(15	)
Attributable to traditional products:
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses				5.79	%		6.00	%		(21	)		5.76	%		5.95	%		(19	)
Commercial mortgage loan prepayment and bond makewhole premiums				0.04	%		0.00	%		4			0.02	%		0.05	%		(3	)
Alternative investments				0.02	%		0.00	%		2			0.01	%		0.01	%		-
	Net investment income yield on reserves			5.85	%		6.00	%		(15	)		5.79	%		6.01	%		(22	)

	For the Three							For the Six
	Months Ended							Months Ended
	June 30,							June 30,
	2012		2011		Change			2012		2011		Change
Averages
Attributable to interest-sensitive products:
Invested assets on reserves	$	33,809	$	31,488		7	%	$	33,540	$	31,140		8	%
Account values - universal and whole life		31,450		29,817		5	%		31,330		29,629		6	%
Attributable to traditional products:
Invested assets on reserves		4,273		4,285		0	%		4,278		4,279		0	%

A portion of the investment income earned for this segment is credited to contract holder accounts.  Invested assets will typically grow at a faster rate than account values because of the AG38 reserve requirements, which cause statutory reserves to grow at a faster rate than account values.  Invested assets are based upon the statutory reserve liabilities and are, therefore, affected by various reserve adjustments, including capital transactions providing relief from AG38 reserve requirements, which leads to a transfer of invested assets from this segment to Other Operations for use in other corporate purposes.  We expect to earn a spread

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between what we earn on the underlying general account investments and what we credit to our contract holders’ accounts.  We use our investment income to offset the earnings effect of the associated build of our policy reserves for traditional products.  Commercial mortgage loan prepayments and bond makewhole premiums and investment income on alternative investments can vary significantly from period to period due to a number of factors, and, therefore, may contribute to investment income results that are not indicative of the underlying trends.

Benefits

Details underlying benefits (dollars in millions) were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Benefits
Death claims direct and assumed			$	777		$	721			8	%	$	1,580		$	1,420			11	%
Death claims ceded				(370	)		(351	)		-5	%		(785	)		(669	)		-17	%
Reserves released on death				(136	)		(105	)		-30	%		(242	)		(237	)		-2	%
	Net death benefits			271			265			2	%		553			514			8	%
Change in secondary guarantee life insurance product reserves:
	Prospective unlocking - assumption changes			-			18			-100	%		-			29			-100	%
	Prospective unlocking - model refinements			-			129			-100	%		9			162			-94	%
	Change in reserves, excluding unlocking			126			125			1	%		245			234			5	%
Other benefits (1)				80			72			11	%		145			117			24	%
		Total benefits	$	477		$	609			-22	%	$	952		$	1,056			-10	%
Death claims per $1,000 of in-force				1.87			1.86			1	%		1.91			1.81			6	%

(1) Includes primarily traditional product changes in reserves and dividends.

Benefits for this segment includes claims incurred during the period in excess of the associated reserves for its interest-sensitive and traditional products.  In addition, benefits includes the change in secondary guarantee life insurance product reserves.  The reserve for secondary guarantees is affected by changes in expected future trends of expense assessments causing prospective unlocking adjustments to this liability similar to DAC, VOBA and DFEL.

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Commissions and Other Expenses

Details underlying commissions and other expenses (in millions) were as follows:

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Commissions and Other Expenses
Commissions				$	126		$	166			-24	%	$	256		$	339			-24	%
General and administrative expenses					116			114			2	%		239			227			5	%
Expenses associated with reserve financing					16			14			14	%		32			28			14	%
Taxes, licenses and fees					35			35			0	%		69			70			-1	%
	Total expenses incurred				293			329			-11	%		596			664			-10	%
DAC and VOBA deferrals					(143	)		(192	)		26	%		(289	)		(386	)		25	%
		Total expenses recognized before amortization			150			137			9	%		307			278			10	%
DAC and VOBA amortization, net of interest:
	Prospective unlocking - assumption changes				-			(4	)		100	%		-			(11	)		100	%
	Prospective unlocking - model refinements				-			(134	)		100	%		(33	)		(203	)		84	%
	Amortization, net of interest, excluding unlocking				97			111			-13	%		210			232			-9	%
	Other intangible amortization				1			1			0	%		2			2			0	%
			Total commissions and other expenses	$	248		$	111			123	%	$	486		$	298			63	%
DAC and VOBA Deferrals
As a percentage of sales					111.7	%		122.3	%					116.1	%		122.2	%

Commissions and costs that result directly from and are essential to successful acquisition of new or renewal business are deferred to the extent recoverable and for our interest-sensitive products are generally amortized over the lives of the contracts in relation to EGPs.  For our traditional products, DAC and VOBA are amortized on either a straight-line basis or as a level percent of premium of the related contracts, depending on the block of business.

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RESULTS OF GROUP PROTECTION

Income (Loss) from Operations

Details underlying the results for Group Protection (in millions) were as follows:

			For the Three							For the Six
			Months Ended							Months Ended
			June 30,							June 30,
			2012		2011		Change			2012		2011		Change
Operating Revenues
Insurance premiums			$	495	$	460		8	%	$	958	$	897		7	%
Net investment income				42		39		8	%		80		78		3	%
Other revenues and fees				3		2		50	%		5		4		25	%
	Total operating revenues			540		501		8	%		1,043		979		7	%
Operating Expenses
Interest credited				1		1		0	%		2		2		0	%
Benefits				368		345		7	%		718		672		7	%
Commissions and other expenses				129		115		12	%		257		228		13	%
	Total operating expenses			498		461		8	%		977		902		8	%
Income (loss) from operations before taxes				42		40		5	%		66		77		-14	%
Federal income tax expense (benefit)				15		14		7	%		23		27		-15	%
		Income (loss) from operations	$	27	$	26		4	%	$	43	$	50		-14	%

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Income (Loss) from Operations by Product Line
Life			$	10		$	9			11	%	$	13		$	17			-24	%
Disability				17			17			0	%		30			33			-9	%
Dental				(1	)		(1	)		0	%		(2	)		(3	)		33	%
	Total non-medical			26			25			4	%		41			47			-13	%
Medical				1			1			0	%		2			3			-33	%
		Income (loss) from operations	$	27		$	26			4	%	$	43		$	50			-14	%

Comparison of the Three Months Ended June 30, 2012 to 2011

Income from operations for this segment increased due primarily to the following:

    · More favorable non-medical loss ratio experience;

    · Growth in insurance premiums driven by normal, organic business growth in our non-medical products; and

    · More favorable investment income on alternative investments (see “Consolidated Investments – Alternative Investments” below for more information).

The increase in income from operations was partially offset by higher commissions and other expenses attributable to an increase in business and investments in strategic initiatives associated with enhancements to sales and distribution processes and improvements to technology platforms.

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Comparison of the Six Months Ended June 30, 2012 to 2011

Income from operations for this segment decreased due primarily to higher commissions and other expenses attributable to an increase in business and investments in strategic initiatives associated with enhancements to sales and distribution processes and improvements to technology platforms.

The decrease in income from operations was partially offset by growth in insurance premiums driven by normal, organic business growth in our non-medical products and more favorable investment income on alternative investments (see “Consolidated Investments – Alternative Investments” below for more information).

Additional Information

Management compares trends in actual loss ratios to pricing expectations because group-underwriting risks change over time.  We expect normal fluctuations in our composite non-medical loss ratios of this segment, as claims experience is inherently uncertain.  Non-medical loss ratios in general are likely to remain within our long-term expectation of 71% to 74% during 2012.  For every one percent increase in the loss ratio above our expectation, we would expect an approximate annual $10 million to $12 million decrease to income from operations.

We are evaluating the potential effects that health care reform may have on the value and profitability of this segment’s products and income from operations, including, but not limited to, potential changes to traditional sources of income for our brokers who may seek additional portfolio options and/or modification to compensation structures.

For information on the effects of current interest rates on our long-term disability claim reserves, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Interest Rate Risk on Fixed Insurance Businesses – Falling Rates” in our 2011 Form 10-K.

Sales relate to long-duration contracts sold to new contract holders and new programs sold to existing contract holders.  We believe that the trend in sales is an important indicator of development of business in force over time.

We provide information about this segment’s operating revenue and operating expense line items, the period in which amounts are recognized, key drivers of changes and historical details underlying the line items and their associated drivers below.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

Insurance Premiums

Details underlying insurance premiums (in millions) were as follows:

			For the Three							For the Six
			Months Ended							Months Ended
			June 30,							June 30,
			2012		2011		Change			2012		2011		Change
Insurance Premiums by Product Line
Life			$	191	$	174		10	%	$	377	$	344		10	%
Disability				204		190		7	%		402		376		7	%
Dental				47		45		4	%		93		92		1	%
	Total non-medical			442		409		8	%		872		812		7	%
Medical				53		51		4	%		86		85		1	%
		Total insurance premiums	$	495	$	460		8	%	$	958	$	897		7	%
		Sales	$	89	$	67		33	%	$	156	$	113		38	%

Our cost of insurance and policy administration charges are embedded in the premiums charged to our customers.  The premiums are a function of the rates priced into the product and our business in force.  Business in force, in turn, is driven by sales and persistency experience.  Sales in the table above are the combined annualized premiums for our life, disability and dental products.

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Net Investment Income

We use our investment income to offset the earnings effect of the associated build of our policy reserves, which are a function of our insurance premiums and the yields on our invested assets.

Benefits and Interest Credited

Details underlying benefits and interest credited (in millions) and loss ratios by product line were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Benefits and Interest Credited by Product Line
Life			$	143		$	132			8	%	$	289		$	261			11	%
Disability				142			132			8	%		281			263			7	%
Dental				36			36			0	%		74			75			-1	%
	Total non-medical			321			300			7	%		644			599			8	%
Medical				48			46			4	%		76			75			1	%
		Total benefits and interest credited	$	369		$	346			7	%	$	720		$	674			7	%
Loss Ratios by Product Line
Life				75.0	%		76.1	%					76.6	%		76.0	%
Disability				69.6	%		69.4	%					69.8	%		69.7	%
Dental				76.5	%		79.9	%					79.2	%		81.8	%
	Total non-medical			72.7	%		73.4	%					73.8	%		73.7	%
Medical				89.7	%		89.4	%					88.9	%		88.1	%

Commissions and Other Expenses

Details underlying commissions and other expenses (in millions) were as follows:

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Commissions and Other Expenses
Commissions				$	53		$	49			8	%	$	107		$	100			7	%
General and administrative expenses					69			57			21	%		130			107			21	%
Taxes, licenses and fees					13			10			30	%		25			21			19	%
	Total expenses incurred				135			116			16	%		262			228			15	%
DAC deferrals					(17	)		(10	)		-70	%		(28	)		(19	)		-47	%
		Total expenses recognized before amortization			118			106			11	%		234			209			12	%
DAC and VOBA amortization, net of interest					11			9			22	%		23			19			21	%
			Total commissions and other expenses	$	129		$	115			12	%	$	257		$	228			13	%
DAC Deferrals
As a percentage of insurance premiums					3.4	%		2.2	%					2.9	%		2.1	%

Commissions and other costs that result directly from and are essential to the successful acquisition of new or renewal business are

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deferred to the extent recoverable and are amortized on either a straight-line basis or as a level percent of premium of the related contracts depending on the block of business.  Certain broker commissions that vary with and are related to paid premiums are expensed as incurred.  The level of expenses is an important driver of profitability for this segment as group insurance contracts are offered within an environment that competes on the basis of price and service.

RESULTS OF OTHER OPERATIONS

Income (Loss) from Operations

Details underlying the results for Other Operations (in millions) were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Operating Revenues
Insurance premiums			$	3		$	-		NM			$	4		$	-		NM
Net investment income				68			76			-11	%		137			156			-12	%
Amortization of deferred gain on business sold through reinsurance				18			18			0	%		36			36			0	%
Media revenues (net)				21			19			11	%		38			36			6	%
Other revenues and fees				3			1			200	%		5			4			25	%
	Total operating revenues			113			114			-1	%		220			232			-5	%
Operating Expenses
Interest credited				30			29			3	%		61			58			5	%
Benefits				35			28			25	%		63			62			2	%
Media expenses				16			17			-6	%		32			34			-6	%
Other expenses				15			3		NM				36			29			24	%
Interest and debt expense				68			72			-6	%		135			144			-6	%
	Total operating expenses			164			149			10	%		327			327			0	%
Income (loss) from operations before taxes				(51	)		(35	)		-46	%		(107	)		(95	)		-13	%
Federal income tax expense (benefit)				(12	)		(13	)		8	%		(34	)		(35	)		3	%
		Income (loss) from operations	$	(39	)	$	(22	)		-77	%	$	(73	)	$	(60	)		-22	%

Comparison of the Three and Six Months Ended June 30, 2012 to 2011

Loss from operations for Other Operations increased due primarily to the following:

    · Lower net investment income, net of interest credited, attributable to:

§ New money rates averaging below our portfolio yields; and

§ Repurchases of common stock, net cash used in operating activities due to interest payments and transfers to other segments for other-than-temporary impairment (“OTTI”) resulting in lower average invested assets;

    · Higher other expenses due to timing of general and administrative expenses, such as branding; and

    · Less favorable tax items recorded in 2012 than in 2011 driven by tax preferred investments and other items.

The increase in loss from operations was partially offset by lower interest and debt expenses attributable to a decline in the rate on outstanding debt during 2012.

Additional Information

We provide information about Other Operations’ operating revenue and operating expense line items, the period in which amounts are recognized, key drivers of changes and historical details underlying the line items and their associated drivers below.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A.

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Risk Factors” below.

Net Investment Income and Interest Credited

We utilize an internal formula to determine the amount of capital that is allocated to our business segments.  Investment income on capital in excess of the calculated amounts is reported in Other Operations.  If regulations require increases in our insurance segments’ statutory reserves and surplus, the amount of capital retained by Other Operations would decrease and net investment income would be negatively affected.

Write-downs for OTTI decrease the recorded value of our invested assets owned by our business segments.  These write-downs are not included in the income from operations of our operating segments.  When impairment occurs, assets are transferred to the business segments’ portfolios and will reduce the future net investment income for Other Operations, but should not have an effect on a consolidated basis unless the impairments are related to defaulted securities.  Statutory reserve adjustments for our business segments can also cause allocations of invested assets between the affected segments and Other Operations.

The majority of our interest credited relates to our reinsurance operations sold to Swiss Re in 2001.  A substantial amount of the business was sold through indemnity reinsurance transactions, which is still recorded in our consolidated financial statements.  The interest credited corresponds to investment income earnings on the assets we continue to hold for this business.  There is no effect to income or loss in Other Operations or on a consolidated basis for these amounts because interest earned on the blocks that continue to be reinsured is passed through to Swiss Re in the form of interest credited.

Benefits

Benefits are recognized when incurred for Institutional Pension products and disability income business.

Other Expenses

Details underlying other expenses (in millions) were as follows:

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Other Expenses
General and administrative expenses:
	Legal			$	-		$	(7	)		100	%	$	1		$	2			-50	%
	Branding				9			5			80	%		17			10			70	%
	Other (1)				13			10			30	%		27			24			13	%
		Total general and administrative expenses			22			8			175	%		45			36			25	%
Taxes, licenses and fees					(4	)		(3	)		-33	%		(3	)		(3	)		0	%
Inter-segment reimbursement associated with reserve financing and LOC expenses (2)					(3	)		(2	)		-50	%		(6	)		(4	)		-50	%
			Total other expenses	$	15		$	3		NM			$	36		$	29			24	%

(1) Includes expenses that are corporate in nature including charitable contributions, amortization of media intangible assets with a definite life, other expenses not allocated to our business segments and inter-segment expense eliminations.

(2) Consists of reimbursements to Other Operations from the Life Insurance segment for the use of proceeds from certain issuances of senior notes that were used as long-term structured solutions, net of expenses incurred by Other Operations for its use of LOCs.

Interest and Debt Expense

Our current level of interest expense may not be indicative of the future due to, among other things, the timing of the use of cash, the availability of funds from our inter-company cash management program and the future cost of capital.  For additional information on our financing activities, see “Review of Consolidated Financial Condition – Liquidity and Capital Resources – Sources of Liquidity and Cash Flow – Financing Activities” below.

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REALIZED GAIN (LOSS) AND BENEFIT RATIO UNLOCKING

Details underlying realized gain (loss), after-DAC (1) and benefit ratio unlocking (in millions) were as follows:

				For the Three									For the Six
				Months Ended									Months Ended
				June 30,									June 30,
				2012			2011			Change			2012			2011			Change
Components of Realized Gain (Loss), Pre-Tax
Total operating realized gain (loss)				$	25		$	24			4	%	$	52		$	46			13	%
Total excluded realized gain (loss)					18			(33	)		155	%		(95	)		(53	)		-79	%
		Total realized gain (loss), pre-tax		$	43		$	(9	)	NM			$	(43	)	$	(7	)	NM
Reconciliation of Excluded Realized Gain (Loss) Net of Benefit Ratio Unlocking, After-Tax
Total excluded realized gain (loss)				$	12		$	(21	)		157	%	$	(61	)	$	(34	)		-79	%
Benefit ratio unlocking					(10	)		(1	)	NM				13			3		NM
		Excluded realized gain (loss) net of benefit ratio unlocking, after-tax		$	2		$	(22	)		109	%	$	(48	)	$	(31	)		-55	%
Components of Excluded Realized Gain (Loss) Net of Benefit Ratio Unlocking, After-Tax
Realized gain (loss) related to certain investments				$	(33	)	$	(21	)	NM			$	(64	)	$	(31	)	NM
Gain (loss) on the mark-to-market on certain instruments					(12	)		(1	)	NM				25			6		NM
Variable annuity net derivatives results:
	Hedge program performance				(38	)		(11	)	NM				(20	)		(29	)		31	%
	GLB NPR component				86			11		NM				2			21			-90	%
		Total variable annuity net derivatives results			48			-		NM				(18	)		(8	)	NM
Indexed annuity forward-starting option					(1	)		-		NM				9			2		NM
			Excluded realized gain (loss) net of benefit ratio unlocking, after-tax	$	2		$	(22	)		109	%	$	(48	)	$	(31	)		-55	%

(1) DAC refers to the associated amortization of DAC, VOBA, DSI and DFEL and changes in other contract holder funds and funds withheld reinsurance liabilities.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

For information on our counterparty exposure, see “Part I – Item 3. Quantitative and Qualitative Disclosures About Market Risk.”

Comparison of the Three Months Ended June 30, 2012 to 2011

We had realized gains during 2012 as compared to losses during 2011 due primarily to gains on variable annuity net derivatives results attributable to widening of our credit spreads during 2012 resulting in a more favorable GLB NPR component (see

75

“Variable Annuity Net Derivatives Results” below for a discussion of how our NPR adjustment is determined), partially offset by more volatile capital markets during 2012 resulting in less favorable hedge program performance.

The realized gains were partially offset by the following:

    · Higher gross realized gains during 2011 originating from asset sales to reposition the investment portfolio (see “Consolidated Investments – Realized Gain (Loss) Related to Certain Investments” below for more information); and

    · Higher losses on the mark-to-market on certain instruments attributable to spreads widening on corporate credit default swaps, partially offset by declines in interest rates leading to an increase in the value of our trading securities.

Comparison of the Six Months Ended June 30, 2012 to 2011

We had higher realized losses during 2012 as compared to 2011 due primarily to the following:

    · Higher gross realized gains during 2011 originating from asset sales to reposition the investment portfolio; and

    · Higher losses on variable annuity net derivatives results attributable to:

§ Narrowing of our credit spreads during 2012 resulting in a less favorable GLB NPR component;

partially offset by:

§ Less volatile capital markets during 2012 resulting in more favorable hedge program performance.

The higher realized losses during 2012 were partially offset by higher gains on the mark-to-market on certain instruments attributable to spreads narrowing on corporate credit default swaps, partially offset by increases in interest rates leading to a decrease in the value of our trading securities.

Operating Realized Gain (Loss)

See “Realized Gain (Loss) and Benefit Ratio Unlocking – Operating Realized Gain (Loss)” in our 2011 Form 10-K for a discussion of our operating realized gain (loss).

Realized Gain (Loss) Related to Certain Investments

See “Consolidated Investments – Realized Gain (Loss) Related to Certain Investments” below.

Gain (Loss) on the Mark-to-Market on Certain Instruments

See “Realized Gain (Loss) and Benefit Ratio Unlocking – Gain (Loss) on the Mark-to-Market on Certain Instruments” in our 2011 Form 10-K for a discussion on the mark-to-market on certain instruments and Note 3 for information about consolidated variable interest entities.

Variable Annuity Net Derivatives Results

See “Realized Gain (Loss) and Benefit Ratio Unlocking – Variable Annuity Net Derivatives Results” in our 2011 Form 10-K for a discussion of our variable annuity net derivatives results.

The variable annuity hedge program ended the second quarter of 2012 with assets of $2.7 billion, which were in excess of the estimated liability of $2.3 billion as of June 30, 2012.

As of June 30, 2012, the net effect of the NPR resulted in a $200 million decrease in the liability for our GLB embedded derivative reserves.

Details underlying the NPR component and associated effect to our GLB embedded derivative reserves (dollars in millions) were as follows:

	As of			As of				As of				As of			As of
	June 30,			March 31,			December 31,				September 30,				June 30,
	2012			2012				2011				2011			2011
10-year CDS spread		3.48	%		2.40	%			3.65	%			4.42	%		2.02	%
NPR factor related to 10-year CDS spread		0.45	%		0.25	%			0.43	%			0.51	%		0.24	%
Unadjusted embedded derivative liability	$	2,116		$	1,083			$	2,418			$	2,642		$	306

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Estimating what the absolute amount of the NPR effect will be period to period is difficult due to the utilization of all cash flows and the shape of the spread curve.  Currently, we estimate that if the NPR factors as of June 30, 2012, were to have been zero along all points on the spread curve, then the NPR offset to the unadjusted liability would have resulted in an unfavorable effect to net income of approximately $330 million, pre-DAC and pre-tax.Under this scenario, the effect of the NPR would result in an increase rather than a decrease to the unadjusted embedded derivative liability.Alternatively, if the NPR factors were 20 basis points higher along all points on the spread curve as of June 30, 2012, then there would have been a favorable effect to net income of approximately $120 million, pre-DAC and pre-tax.  In the preceding two sentences, “DAC” refers to the associated amortization of DAC, VOBA, DSI and DFEL.  Changing market conditions could cause this relationship to deviate significantly in future periods.  Sensitivity within this range is primarily a result of volatility in our credit default swap (“CDS”) spreads and the slope of the CDS spread term structure.

For additional information on our guaranteed benefits, see “Critical Accounting Policies and Estimates – Derivatives – Guaranteed Living Benefits” above.

Indexed Annuity Forward-Starting Option

See “Realized Gain (Loss) and Benefit Ratio Unlocking – Indexed Annuity Forward-Starting Option” in our 2011 Form 10-K for a discussion of our indexed annuity forward-starting option.

CONSOLIDATED INVESTMENTS

Details underlying our consolidated investment balances (in millions) were as follows:

									Percentage of
									Total Investments
				As of			As of		As of			As of
				June 30,		December 31,			June 30,		December 31,
				2012			2011		2012			2011
Investments
AFS securities:
	Fixed maturity			$	79,191		$	75,433		81.8	%		81.0	%
	VIEs' fixed maturity				705			700		0.7	%		0.8	%
		Total fixed maturity			79,896			76,133		82.5	%		81.8	%
	Equity				154			139		0.2	%		0.1	%
Trading securities					2,649			2,675		2.7	%		2.9	%
Mortgage loans on real estate					6,804			6,942		7.0	%		7.4	%
Real estate					116			137		0.1	%		0.1	%
Policy loans					2,829			2,884		3.0	%		3.1	%
Derivative investments					3,399			3,151		3.5	%		3.4	%
Alternative investments					802			807		0.8	%		0.9	%
Other investments					239			262		0.2	%		0.3	%
			Total investments	$	96,888		$	93,130		100.0	%		100.0	%

Investment Objective

Invested assets are an integral part of our operations.  We follow a balanced approach to investing for both current income and prudent risk management, with an emphasis on generating sufficient current income, net of income tax, to meet our obligations to customers, as well as other general liabilities.  This balanced approach requires the evaluation of expected return and risk of each asset class utilized, while still meeting our income objectives.  This approach is important to our asset-liability management because decisions can be made based upon both the economic and current investment income considerations affecting assets and liabilities.  For a discussion on our risk management process, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2011 Form 10-K.

Investment Portfolio Composition and Diversification

Fundamental to our investment policy is diversification across asset classes.  Our investment portfolio, excluding cash and invested cash, is composed of fixed maturity securities, mortgage loans on real estate, real estate (either wholly-owned or in joint ventures)

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and other long-term investments.  We purchase investments for our segmented portfolios that have yield, duration and other characteristics that take into account the liabilities of the products being supported.

We have the ability to maintain our investment holdings throughout credit cycles because of our capital position, the long-term nature of our liabilities and the matching of our portfolios of investment assets with the liabilities of our various products.

Fixed Maturity and Equity Securities Portfolios

Fixed maturity securities and equity securities consist of portfolios classified as AFS and trading.  Mortgage-backed and private securities are included in both of the AFS and trading portfolios.

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Details underlying our fixed maturity and equity securities portfolios by industry classification (in millions) are presented in the tables below.  These tables agree in total with the presentation of AFS securities in Note 4; however, the categories below represent a more detailed breakout of the AFS portfolio.  Therefore, the investment classifications listed below do not agree to the investment categories provided in Note 4.

					As of June 30, 2012
							Gross Unrealized						%
					Amortized				Losses		Fair		Fair
					Cost		Gains		and OTTI		Value		Value
Fixed Maturity AFS Securities
Industry corporate bonds:
	Financial services				$	9,065	$	831	$	100	$	9,796		12.3	%
	Basic industry					3,669		374		21		4,022		5.0	%
	Capital goods					4,300		528		26		4,802		6.0	%
	Communications					3,543		429		34		3,938		4.9	%
	Consumer cyclical					3,484		408		37		3,855		4.8	%
	Consumer non-cyclical					8,846		1,344		3		10,187		12.8	%
	Energy					5,483		725		4		6,204		7.8	%
	Technology					1,923		212		2		2,133		2.7	%
	Transportation					1,501		180		1		1,680		2.1	%
	Industrial other					951		85		1		1,035		1.3	%
	Utilities					11,266		1,596		25		12,837		16.1	%
Collateralized mortgage and other obligations ("CMOs"):
	Agency backed					2,805		325		-		3,130		3.9	%
	Non-agency backed					1,348		19		133		1,234		1.5	%
Mortgage pass through securities ("MPTS"):
	Agency backed					2,654		178		-		2,832		3.6	%
	Non-agency backed					1		-		-		1		0.0	%
Commercial mortgage-backed securities ("CMBS"):
	Non-agency backed					1,304		71		68		1,307		1.6	%
Corporate asset-backed securities ("ABS"):
	CDOs					104		-		3		101		0.1	%
	Commercial real estate ("CRE") CDOs					31		-		12		19		0.0	%
	Credit card					665		46		-		711		0.9	%
	Home equity					845		4		238		611		0.8	%
	Manufactured housing					77		5		1		81		0.1	%
	Auto loan					23		-		-		23		0.0	%
	Other					292		28		2		318		0.4	%
Municipals:
	Taxable					3,488		764		8		4,244		5.3	%
	Tax-exempt					37		3		-		40		0.1	%
Government and government agencies:
	United States					1,465		250		-		1,715		2.1	%
	Foreign					1,651		202		1		1,852		2.3	%
Hybrid and redeemable preferred securities						1,248		63		123		1,188		1.5	%
		Total fixed maturity AFS securities				72,069		8,670		843		79,896		100.0	%
Equity AFS Securities						143		19		8		154
			Total AFS securities			72,212		8,689		851		80,050
Trading Securities (1)						2,258		420		29		2,649
				Total AFS and trading securities	$	74,470	$	9,109	$	880	$	82,699

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					As of December 31, 2011
							Gross Unrealized						%
					Amortized				Losses		Fair		Fair
					Cost		Gains		and OTTI		Value		Value
Fixed Maturity AFS Securities
Industry corporate bonds:
	Financial services				$	8,926	$	607	$	158	$	9,375		12.3	%
	Basic industry					3,394		323		27		3,690		4.8	%
	Capital goods					3,933		455		9		4,379		5.8	%
	Communications					3,247		364		37		3,574		4.7	%
	Consumer cyclical					3,226		345		36		3,535		4.6	%
	Consumer non-cyclical					7,956		1,190		1		9,145		12.0	%
	Energy					5,026		690		6		5,710		7.5	%
	Technology					1,682		192		3		1,871		2.5	%
	Transportation					1,360		166		1		1,525		2.0	%
	Industrial other					755		74		3		826		1.1	%
	Utilities					10,644		1,457		27		12,074		15.8	%
CMOs:
	Agency backed					3,226		357		-		3,583		4.7	%
	Non-agency backed					1,481		12		199		1,294		1.7	%
MPTS:
	Agency backed					2,982		179		-		3,161		4.2	%
	Non-agency backed					1		-		-		1		0.0	%
CMBS:
	Non-agency backed					1,642		73		115		1,600		2.1	%
ABS:
	CDOs					88		-		6		82		0.1	%
	CRE CDOs					33		-		13		20		0.0	%
	Credit card					790		47		-		837		1.1	%
	Home equity					905		3		271		637		0.8	%
	Manufactured housing					85		5		1		89		0.1	%
	Auto loan					52		1		-		53		0.1	%
	Other					246		29		1		274		0.4	%
Municipals:
	Taxable					3,452		565		9		4,008		5.3	%
	Tax-exempt					38		1		-		39		0.1	%
Government and government agencies:
	United States					1,468		232		-		1,700		2.2	%
	Foreign					1,746		152		4		1,894		2.5	%
Hybrid and redeemable preferred securities						1,277		50		170		1,157		1.5	%
		Total fixed maturity AFS securities				69,661		7,569		1,097		76,133		100.0	%
Equity AFS Securities						135		16		12		139
			Total AFS securities			69,796		7,585		1,109		76,272
Trading Securities (1)						2,301		408		34		2,675
				Total AFS and trading securities	$	72,097	$	7,993	$	1,143	$	78,947

(1) Certain of our trading securities support our modified coinsurance arrangements (“Modco”), and the investment results are passed directly to the reinsurers.  Refer to “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Consolidated Investments – Fixed Maturity and Equity Securities Portfolios – Trading Securities” in our 2011 Form 10-K for further details.

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AFS Securities

In accordance with the AFS accounting guidance, we reflect stockholders’ equity as if unrealized gains and losses were actually recognized and consider all related accounting adjustments that would occur upon such a hypothetical recognition of unrealized gains and losses.  Such related balance sheet effects include adjustments to the balances of DAC, VOBA, DFEL, other contract holder funds and deferred income taxes.  Adjustments to each of these balances are charged or credited to AOCI.  For instance, DAC is adjusted upon the recognition of unrealized gains or losses because the amortization of DAC is based upon an assumed emergence of gross profits on certain insurance business.  Deferred income tax balances are also adjusted because unrealized gains or losses do not affect actual taxes currently paid.

The quality of our AFS fixed maturity securities portfolio, as measured at estimated fair value and by the percentage of fixed maturity securities invested in various ratings categories, relative to the entire fixed maturity AFS security portfolio (in millions) was as follows:

			Rating Agency	As of June 30, 2012								As of December 31, 2011
NAIC			Equivalent	Amortized			Fair			% of		Amortized			Fair			% of
Designation (1)			Designation (1)	Cost			Value			Total		Cost			Value			Total
Investment Grade Securities
1			Aaa / Aa / A	$	42,102		$	48,004		60.1	%	$	42,436		$	47,490		62.4	%
2			Baa		26,153			28,438		35.6	%		23,323			25,237		33.1	%
	Total investment grade securities				68,255			76,442		95.7	%		65,759			72,727		95.5	%
Below Investment Grade Securities
3			Ba		2,504			2,439		3.0	%		2,466			2,350		3.1	%
4			B		884			723		0.9	%		960			750		1.0	%
5			Caa and lower		315			211		0.3	%		318			218		0.3	%
6			In or near default		111			81		0.1	%		158			88		0.1	%
	Total below investment grade securities				3,814			3,454		4.3	%		3,902			3,406		4.5	%
		Total fixed maturity AFS securities		$	72,069		$	79,896		100.0	%	$	69,661		$	76,133		100.0	%
Total securities below investment grade as a percentage of total fixed maturity AFS securities					5.3	%		4.3	%				5.6	%		4.5	%

(1) Based upon the rating designations determined and provided by the National Association of Insurance Commissioners (“NAIC”) or the major credit rating agencies (Fitch Ratings (“Fitch”), Moody’s Investors Service (“Moody’s”) and Standard & Poor’s (“S&P”)).  For securities where the ratings assigned by the major credit agencies are not equivalent, the second highest rating assigned is used.  For those securities where ratings by the major credit rating agencies are not available, which does not represent a significant amount of our total fixed maturity AFS securities, we base the ratings disclosed upon internal ratings.

Comparisons between the NAIC ratings and rating agency designations are published by the NAIC.  The NAIC assigns securities quality ratings and uniform valuations, which are used by insurers when preparing their annual statements.  The NAIC ratings are similar to the rating agency designations of the Nationally Recognized Statistical Rating Organizations for marketable bonds.  NAIC ratings 1 and 2 include bonds generally considered investment grade (rated Baa3 or higher by Moody’s, or rated BBB- or higher by S&P and Fitch), by such ratings organizations.  However, securities rated NAIC 1 and NAIC 2 could be deemed below investment grade by the rating agencies as a result of the current RBC rules for residential mortgage-backed securities (“RMBS”) and CMBS for statutory reporting.  NAIC ratings 3 through 6 include bonds generally considered below investment grade (rated Ba1 or lower by Moody’s, or rated BB+ or lower by S&P and Fitch).

We have identified exposure to select countries in Europe that are currently experiencing stress in the credit markets, notably Greece, Ireland, Italy, Portugal, Spain, Hungary and Cyprus.  These countries were identified due to high credit spreads and political and economic uncertainty in these countries.  The exposure was determined by country of domicile, provided that a meaningful portion of revenues is generated from the country of domicile.  As of June 30, 2012, we had direct sovereign exposure only to Italy with an amortized cost and fair value of $3 million.  We had no exposure to any issuers, sovereign or non-sovereign, located in Greece, Hungary or Cyprus.  Our exposure to banks in Greece, Ireland, Italy, Portugal, Spain, Hungary and Cyprus is limited to two large Spanish banks where our investments are in subsidiaries located outside of Spain with an amortized cost and fair value of $63 million.

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Our total non-banking and non-sovereign AFS securities exposure to Ireland, Italy, Portugal, Greece and Spain had an amortized cost of $756 million and a fair value of $752 million as of June 30, 2012, of which 51% was related to large multinational companies domiciled in those countries.  The detailed breakout by country (in millions) as of June 30, 2012, was as follows:

		Amortized		Fair
		Cost		Value
Spain		$	361	$	365
Ireland			215		207
Italy			140		148
Portugal			40		32
Greece			-		-
	Total	$	756	$	752

We purchased a European subordinated investment grade financial index hedge in the amount of €35 million with a maturity of June 20, 2017, to provide some protection on possible defaults on our European investments.

We manage European and other investment risks through our internal investment department and outside asset managers.  The risk management is focused on monitoring spreads, pricing and monitoring of global economic developments.  We have incorporated these risks into our stress testing.

As of June 30, 2012, and December 31, 2011, 67.9% and 67.4%, respectively, of the total publicly traded and private securities in an unrealized loss status were rated as investment grade.  See Note 4 for maturity date information for our fixed maturity investment portfolio.  Our gross unrealized losses on AFS securities as of June 30, 2012, decreased $258 million.  As more fully described in Note 1 in our 2011 Form 10-K, we regularly review our investment holdings for OTTI.  We believe the unrealized loss position as of June 30, 2012, does not represent OTTI as we do not intend to sell these debt securities, it is not more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis, the estimated future cash flows are equal to or greater than the amortized cost basis of the debt securities, or we have the ability and intent to hold the equity securities for a period of time sufficient for recovery.  For further information on our unrealized losses on AFS securities see “Composition by Industry Categories of our Unrealized Losses on AFS Securities” below.

Selected information for certain AFS securities in a gross unrealized loss position (dollars in millions) as of June 30, 2012, was as follows:

Gross

Estimated

Estimated

Unrealized

Years

Average

Losses

until Call

Years

Fair

and

or

Until

Subordination Level

Value

OTTI

Maturity

Recovery

Current

Origination

CMBS

$

256

$

68

1 to 41

28

29.0

%

17.0

%

Hybrid and redeemable preferred securities

550

123

1 to 54

30

N/A

N/A

As provided in the table above, many of the securities in these categories are long-dated with some of the preferred securities being perpetual.  This is purposeful as it matches the long-term nature of our liabilities associated with our life insurance and annuity products.  See “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2011 Form 10-K where we present information related to maturities of securities and the expected cash flows for rate sensitive liabilities and maturities of our holding company debt, which also demonstrates the long-term nature of the cash flows associated with these items.  Because of this relationship, we do not believe it will be necessary to sell these securities before they recover or mature.  For these securities, the estimated range and average period until recovery is the call or maturity period.  It is difficult to predict or project when the securities will recover as it is dependent upon a number of factors including the overall economic climate.  We do not believe it is necessary to impair these securities as long as the expected future cash flows are projected to be sufficient to recover the amortized cost of these securities.

The actual range and period until recovery could vary significantly depending on a variety of factors, many of which are out of our control.  There are several items that could affect the length of the period until recovery, such as the pace of economic recovery, level of delinquencies, performance of the underlying collateral, changes in market interest rates, exposures to various industry or geographic conditions, market behavior and other market conditions.

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We concluded that it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis, that the estimated future cash flows are equal to or greater than the amortized cost basis of the debt securities, and that we have the ability to hold the equity AFS securities for a period of time sufficient for recovery.  This conclusion is consistent with our asset-liability management process.  Management considers the following as part of the evaluation:

    · The current economic environment and market conditions;

    · Our business strategy and current business plans;

    · The nature and type of security, including expected maturities and exposure to general credit, liquidity, market and interest rate risk;

    · Our analysis of data from financial models and other internal and industry sources to evaluate the current effectiveness of our hedging and overall risk management strategies;

    · The current and expected timing of contractual maturities of our assets and liabilities, expectations of prepayments on investments and expectations for surrenders and withdrawals of life insurance policies and annuity contracts;

    · The capital risk limits approved by management; and

    · Our current financial condition and liquidity demands.

To determine the recoverability of a debt security, we consider the facts and circumstances surrounding the underlying issuer including, but not limited to, the following:

    · Historical and implied volatility of the security;

    · Length of time and extent to which the fair value has been less than amortized cost;

    · Adverse conditions specifically related to the security or to specific conditions in an industry or geographic area;

    · Failure, if any, of the issuer of the security to make scheduled payments; and

    · Recoveries or additional declines in fair value subsequent to the balance sheet date.

As reported on our Consolidated Balance Sheets, we had $102.1 billion of investments and cash, which exceeded the liabilities for our future obligations under insurance policies and contracts, net of amounts recoverable from reinsurers, which totaled $83.8 billion as of June 30, 2012.  If it were necessary to liquidate securities prior to maturity or call to meet cash flow needs, we would first look to those securities that are in an unrealized gain position, which had a fair value of $73.9 billion, excluding consolidated variable interest entities (“VIEs”) in the amount of $705 million, as of June 30, 2012, rather than selling securities in an unrealized loss position.  The amount of cash that we have on hand at any point of time takes into account our liquidity needs in the future, other sources of cash, such as the maturities of investments, interest and dividends we earn on our investments and the on-going cash flows from new and existing business.

See “AFS Securities – Evaluation for Recovery of Amortized Cost” in Note 1 in our 2011 Form 10-K and Note 4 for additional discussion.

As of June 30, 2012, and December 31, 2011, the estimated fair value for all private securities was $10.5 billion and $9.3 billion, respectively, representing 11% and 10%, respectively, of total invested assets.

For information regarding our VIEs’ fixed maturity securities, see Note 3 in this report and Note 4 in our 2011 Form 10-K.

Mortgage-Backed Securities (“MBS”) (Included in AFS and Trading Securities)

See “Consolidated Investments – Mortgage-Backed Securities” in our 2011 Form 10-K for a discussion of our MBS.

Our RMBS had a market value of $7.4 billion and an unrealized gain of $406 million, or 6%, as of June 30, 2012.

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The market value of AFS and trading securities backed by subprime loans was $422 million and represented less than 1% of our total investment portfolio as of June 30, 2012.  AFS securities represented $409 million, or 97%, and trading securities represented $13 million, or 3%, of the subprime exposure as of June 30, 2012.  AFS and trading securities rated A or above represented 39% of the subprime investments and $216 million in market value of our subprime investments was backed by loans originating in 2005 and forward as of June 30, 2012.  The table below summarizes our investments in AFS securities backed by pools of residential mortgages (in millions) as of June 30, 2012:

		Prime Agency				Prime/ Non-Agency				Alt-A				Subprime				Total
		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair			Amortized
		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value			Cost
Type
RMBS		$	5,962	$	5,458	$	789	$	821	$	446	$	529	$	-	$	-	$	7,197		$	6,808
ABS home equity			4		4		-		-		199		262		408		579		611			845
	Total by type (1)(2)	$	5,966	$	5,462	$	789	$	821	$	645	$	791	$	408	$	579	$	7,808		$	7,653
Rating
AAA		$	5,900	$	5,401	$	36	$	35	$	4	$	4	$	30	$	31	$	5,970		$	5,471
AA			52		48		48		46		11		11		62		69		173			174
A			14		13		45		44		45		44		61		62		165			163
BBB			-		-		54		56		52		54		38		41		144			151
BB and below			-		-		606		640		533		678		217		376		1,356			1,694
	Total by rating (1)(2)(3)	$	5,966	$	5,462	$	789	$	821	$	645	$	791	$	408	$	579	$	7,808		$	7,653
Origination Year
2004 and prior		$	1,181	$	1,079	$	191	$	191	$	214	$	238	$	196	$	244	$	1,782		$	1,752
2005			776		691		112		125		239		282		158		222		1,285			1,320
2006			230		204		153		159		157		219		53		111		593			693
2007			1,039		923		333		346		35		52		1		2		1,408			1,323
2008			208		188		-		-		-		-		-		-		208			188
2009			1,026		952		-		-		-		-		-		-		1,026			952
2010			933		874		-		-		-		-		-		-		933			874
2011			445		423		-		-		-		-		-		-		445			423
2012			128		128		-		-		-		-		-		-		128			128
	Total by origination year (1)(2)	$	5,966	$	5,462	$	789	$	821	$	645	$	791	$	408	$	579	$	7,808		$	7,653
Total AFS RMBS as a percentage of total AFS securities																			9.8	%		10.6	%
Total prime/non-agency, Alt-A and subprime as a percentage of total AFS securities																			2.3	%		3.0	%

(1) Does not include the fair value of trading securities totaling $238 million, which support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  The $238 million in trading securities consisted of $215 million prime, $10 million Alt-A and $13 million subprime.

(2) Does not include the amortized cost of trading securities totaling $226 million, which support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  The $226 million in trading securities consisted of $199 million prime, $12 million Alt-A and $15 million subprime.

(3) Based upon the rating designations determined and provided by the major credit rating agencies (Fitch, Moody’s and S&P).  For securities where the ratings assigned by the major credit agencies are not equivalent, the second highest rating assigned is used.  For those securities where ratings by the major credit rating agencies are not available, which does not represent a significant amount of our total fixed maturity AFS securities, we base the ratings disclosed upon internal ratings.

None of these investments included any direct investments in subprime lenders or mortgages.  We are not aware of material exposure to subprime loans in our alternative asset portfolio.

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The following summarizes our investments in AFS securities backed by pools of commercial mortgages (in millions) as of June 30, 2012:

		Multiple Property				Single Property				CRE CDOs				Total
		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair			Amortized
		Value		Cost		Value		Cost		Value		Cost		Value			Cost
Type
CMBS		$	1,263	$	1,235	$	44	$	69	$	-	$	-	$	1,307		$	1,304
CRE CDOs			-		-		-		-		19		31		19			31
	Total by type (1)(2)	$	1,263	$	1,235	$	44	$	69	$	19	$	31	$	1,326		$	1,335
Rating
AAA		$	817	$	760	$	13	$	13	$	-	$	-	$	830		$	773
AA			137		135		10		10		-		-		147			145
A			134		131		6		6		-		-		140			137
BBB			91		92		5		6		6		7		102			105
BB and below			84		117		10		34		13		24		107			175
	Total by rating (1)(2)(3)	$	1,263	$	1,235	$	44	$	69	$	19	$	31	$	1,326		$	1,335
Origination Year
2004 and prior		$	620	$	615	$	23	$	23	$	3	$	3	$	646		$	641
2005			312		294		20		44		6		7		338			345
2006			137		134		1		2		10		21		148			157
2007			136		138		-		-		-		-		136			138
2010			58		54		-		-		-		-		58			54
	Total by origination year (1)(2)	$	1,263	$	1,235	$	44	$	69	$	19	$	31	$	1,326		$	1,335
Total AFS securities backed by pools of commercial mortgages as a percentage of total AFS securities															1.7	%		1.8	%

(1) Does not include the fair value of trading securities totaling $24 million, which support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  The $24 million in trading securities consisted of $21 million CMBS and $3 million CRE CDOs.

(2) Does not include the amortized cost of trading securities totaling $28 million, which support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  The $28 million in trading securities consisted of $25 million CMBS and $3 million CRE CDOs.

(3) Based upon the rating designations determined and provided by the major credit rating agencies (Fitch, Moody’s and S&P).  For securities where the ratings assigned by the major credit agencies are not equivalent, the second highest rating assigned is used.  For those securities where ratings by the major credit rating agencies are not available, which does not represent a significant amount of our total fixed maturity AFS securities, we base the ratings disclosed upon internal ratings.

As of June 30, 2012, the amortized cost and fair value of our AFS exposure to Monoline insurers was $553 million and $507 million, respectively.

Composition by Industry Categories of our Unrealized Losses on AFS Securities

When considering unrealized gain and loss information, it is important to recognize that the information relates to the status of securities at a particular point in time and may not be indicative of the status of our investment portfolios subsequent to the balance sheet date.  Further, because the timing of the recognition of realized investment gains and losses through the selection of which securities are sold is largely at management’s discretion, it is important to consider the information provided below within the context of the overall unrealized gain or loss position of our investment portfolios.  These are important considerations that should be included in any evaluation of the potential effect of unrealized loss securities on our future earnings.

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The composition by industry categories of all securities in unrealized loss status (in millions) as of June 30, 2012, was as follows:

																	%
														Gross			Gross
					%						%			Unrealized			Unrealized
		Fair			Fair			Amortized			Amortized			Losses			Losses
		Value			Value			Cost			Cost			and OTTI			and OTTI
ABS		$	655			12.0	%	$	911			14.5	%	$	256			30.1	%
Banking			740			13.6	%		921			14.6	%		181			21.3	%
CMOs			818			15.0	%		951			15.1	%		133			15.6	%
CMBS			256			4.7	%		324			5.1	%		68			8.0	%
Retailers			79			1.5	%		105			1.7	%		26			3.1	%
Property and casualty insurers			116			2.1	%		141			2.2	%		25			2.9	%
Media - non-cable			186			3.4	%		209			3.3	%		23			2.7	%
Electric			242			4.4	%		264			4.2	%		22			2.6	%
Diversified manufacturing			244			4.5	%		266			4.2	%		22			2.6	%
Wirelines			174			3.2	%		189			3.0	%		15			1.8	%
Paper			113			2.1	%		127			2.0	%		14			1.6	%
Local authorities			29			0.5	%		39			0.6	%		10			1.2	%
Industries with unrealized losses less than $10 million			1,799			33.0	%		1,855			29.5	%		56			6.5	%
	Total by industry	$	5,451			100.0	%	$	6,302			100.0	%	$	851			100.0	%
Total by industry as a percentage of total AFS securities			6.8	%					8.7	%					100.0	%

As of June 30, 2012, the amortized cost and fair value of securities subject to enhanced analysis and monitoring for potential changes in unrealized loss status was $947 million and $652 million, respectively.

Mortgage Loans on Real Estate

The following tables summarize key information on mortgage loans on real estate (in millions):

		As of June 30, 2012					As of December 31, 2011
		Carrying					Carrying
		Value		%			Value		%
Credit Quality Indicator
Current		$	6,743		99.1	%	$	6,854		98.7	%
Delinquent and in foreclosure (1)			61		0.9	%		88		1.3	%
	Total mortgage loans on real estate	$	6,804		100.0	%	$	6,942		100.0	%

(1) As of June 30, 2012, and December 31, 2011, there were 14 and 16 mortgage loans on real estate, respectively, that were delinquent and in foreclosure.

		As of			As of
		June 30,		December 31,
		2012			2011
By Segment
Annuities		$	1,310		$	1,341
Retirement Plan Services			1,087			1,080
Life Insurance			3,670			3,731
Group Protection			274			278
Other Operations			463			512
	Total mortgage loans on real estate	$	6,804		$	6,942

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		As of
		June 30,
		2012
Allowance for Losses
Balance as of beginning-of-year		$	31
Additions			6
Charge-offs, net of recoveries			(11	)
	Balance as of end-of-period	$	26

		As of June 30, 2012							As of June 30, 2012
		Carrying							Carrying
		Value		%					Value		%
Property Type							State Exposure
Office building		$	2,135		31.4	%	CA		$	1,491		21.9	%
Industrial			1,722		25.3	%	TX			642		9.4	%
Retail			1,549		22.8	%	MD			454		6.7	%
Apartment			1,016		14.9	%	VA			344		5.1	%
Mixed use			150		2.2	%	TN			279		4.1	%
Hotel/Motel			126		1.8	%	NC			276		4.1	%
Other commercial			106		1.6	%	WA			260		3.8	%
	Total	$	6,804		100.0	%	FL			260		3.8	%
							GA			223		3.3	%
Geographic Region							AZ			217		3.2	%
Pacific		$	1,873		27.5	%	IN			206		3.0	%
South Atlantic			1,690		24.9	%	NY			191		2.8	%
West South Central			662		9.7	%	IL			189		2.8	%
East North Central			654		9.6	%	NV			176		2.6	%
Mountain			543		8.0	%	OH			164		2.4	%
Middle Atlantic			460		6.8	%	PA			156		2.3	%
East South Central			443		6.5	%	MN			145		2.1	%
West North Central			340		5.0	%	Other states under 2%			1,131		16.6	%
New England			139		2.0	%		Total	$	6,804		100.0	%
	Total	$	6,804		100.0	%

		As of June 30, 2012							As of June 30, 2012
		Principal							Principal
		Amount		%					Amount		%
Origination Year							Future Principal Payments
2004 and prior		$	2,254		33.0	%	2012		$	151	2.2	%
2005			732		10.7	%	2013			365	5.4	%
2006			629		9.2	%	2014			388	5.7	%
2007			863		12.7	%	2015			572	8.4	%
2008			788		11.6	%	2016			508	7.4	%
2009			147		2.2	%	2017 and thereafter			4,835	70.9	%
2010			276		4.0	%		Total	$	6,819	100.0	%
2011			901		13.2	%
2012			229		3.4	%
	Total	$	6,819		100.0	%

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The global financial markets and credit market conditions experienced a period of extreme volatility and disruption that began in the second half of 2007 and continued and substantially increased throughout 2008 that led to a decrease in the overall liquidity and availability of capital in the mortgage loan market, and in particular a decrease in activity by securitization lenders.  These conditions and the overall economic downturn put pressure on the fundamentals of mortgage loans through rising vacancies, falling rents and falling property values.

See Note 4 for information regarding our loan-to-value and debt-service coverage ratios.

There were 9 and 12 impaired mortgage loans on real estate, or less than 1% and 1% of the total dollar amount of mortgage loans on real estate as of June 30, 2012, and December 31, 2011, respectively.  The carrying value on the mortgage loans on real estate that were two or more payments delinquent as of June 30, 2012, was $61 million, or less than 1% of total mortgage loans on real estate.  The total principal and interest past due on the mortgage loans on real estate that were two or more payments delinquent as of June 30, 2012, was $48 million.  The carrying value on the mortgage loans on real estate that were two or more payments delinquent as of December 31, 2011, was $76 million, or 1% of total mortgage loans on real estate.  The total principal and interest past due on the mortgage loans on real estate that were two or more payments delinquent as of December 31, 2011, was $41 million.  See Note 1 in our 2011 Form 10-K for more information regarding our accounting policy relating to the impairment of mortgage loans on real estate.

Alternative Investments

Investment income (loss) on alternative investments by business segment (in millions) was as follows:

		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2012		2011			Change			2012		2011		Change
Annuities		$	13	$	4			225	%	$	19	$	9		111	%
Retirement Plan Services			7		2			250	%		10		6		67	%
Life Insurance			25		27			-7	%		46		57		-19	%
Group Protection			4		1			300	%		5		3		67	%
Other Operations			1		(1	)		200	%		1		-	NM
	Total (1)	$	50	$	33			52	%	$	81	$	75		8	%

(1) Includes net investment income on the alternative investments supporting the required statutory surplus of our insurance businesses.

As of June 30, 2012, and December 31, 2011, alternative investments included investments in 97 and 96 different partnerships, respectively, and the portfolio represented less than 1% of our overall invested assets.  The partnerships do not represent off-balance sheet financing and generally involve several third-party partners.  Some of our partnerships contain capital calls, which require us to contribute capital upon notification by the general partner.  These capital calls are contemplated during the initial investment decision and are planned for well in advance of the call date.  The capital calls are not material in size and are not material to our liquidity.  Alternative investments are accounted for using the equity method of accounting and are included in other investments on our Consolidated Balance Sheets.

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As discussed in “Critical Accounting Policies and Estimates – Investments – Valuation of Alternative Investments” in our 2011 Form 10-K, we update the carrying value of our alternative investment portfolio whenever audited financial statements of the investees for the preceding year become available.  Net investment income (loss) derived from our consolidated alternative investments by segment (in millions) related to the effect of preceding year audit adjustments recorded during the indicated year at the investee was as follows:

		For the Three							For the Six
		Months Ended							Months Ended
		June 30,							June 30,
		2012		2011		Change			2012		2011		Change
Annuities		$	1	$	1		0	%	$	5	$	4		25	%
Retirement Plan Services			-		-	NM				2		2		0	%
Life Insurance			10		9		11	%		23		30		-23	%
Group Protection			-		-	NM				2		2		0	%
	Total	$	11	$	10		10	%	$	32	$	38		-16	%

Non-Income Producing Investments

As of June 30, 2012, and December 31, 2011, the carrying amount of fixed maturity securities, mortgage loans on real estate and real estate that were non-income producing was $16 million and $14 million, respectively.

Net Investment Income

Details underlying net investment income (in millions) and our investment yield were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Net Investment Income
Fixed maturity AFS securities			$	980		$	961			2	%	$	1,949		$	1,914			2	%
VIEs' fixed maturity AFS securities				4			3			33	%		8			6			33	%
Equity AFS securities				1			1			0	%		3			3			0	%
Trading securities				37			39			-5	%		75			77			-3	%
Mortgage loans on real estate				100			101			-1	%		201			204			-1	%
Real estate				4			6			-33	%		8			13			-38	%
Standby real estate equity commitments				-			-		NM				-			1			-100	%
Policy loans				42			43			-2	%		87			84			4	%
Invested cash				1			1			0	%		2			2			0	%
Commercial mortgage loan prepayment and bond makewhole premiums (1)				12			25			-52	%		18			59			-69	%
Alternative investments (2)				50			33			52	%		81			75			8	%
Consent fees				1			2			-50	%		1			2			-50	%
Other investments				(10	)		(7	)		-43	%		(19	)		(12	)		-58	%
	Investment income			1,222			1,208			1	%		2,414			2,428			-1	%
Investment expense				(25	)		(27	)		7	%		(52	)		(56	)		7	%
		Net investment income	$	1,197		$	1,181			1	%	$	2,362		$	2,372			0	%

(1) See “Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums” below for additional information.

(2) See “Alternative Investments” above for additional information.

89

		For the Three									For the Six
		Months Ended						Basis			Months Ended					Basis
		June 30,						Point			June 30,					Point
		2012			2011			Change			2012		2011			Change
Interest Rate Yield
Fixed maturity securities, mortgage loans on real estate and other, net of investment expenses			5.34	%		5.53	%		(19	)	5.37	%		5.55	%		(18	)
Commercial mortgage loan prepayment and bond makewhole premiums			0.06	%		0.12	%		(6	)	0.04	%		0.15	%		(11	)
Alternative investments			0.24	%		0.16	%		8		0.19	%		0.19	%		-
Consent fees			0.00	%		0.01	%		(1	)	0.00	%		0.00	%		-
	Net investment income yield on invested assets		5.64	%		5.82	%		(18	)	5.60	%		5.89	%		(29	)

	For the Three							For the Six
	Months Ended							Months Ended
	June 30,							June 30,
	2012		2011		Change			2012		2011		Change
Average invested assets at amortized cost	$	84,958	$	81,102		5	%	$	84,420	$	80,549		5	%

We earn investment income on our general account assets supporting fixed annuity, term life, whole life, UL, interest-sensitive whole life and fixed portion of retirement plan and VUL products.  The profitability of our fixed annuity and life insurance products is affected by our ability to achieve target spreads, or margins, between the interest income earned on the general account assets and the interest credited to the contract holder on our average fixed account values, including the fixed portion of variable.  Net investment income and the interest rate yield table each include commercial mortgage loan prepayments and bond makewhole premiums, alternative investments and contingent interest and standby real estate equity commitments.  These items can vary significantly from period to period due to a number of factors and, therefore, can provide results that are not indicative of the underlying trends.

Commercial Mortgage Loan Prepayment and Bond Makewhole Premiums

Prepayment and makewhole premiums are collected when borrowers elect to call or prepay their debt prior to the stated maturity.  A prepayment or makewhole premium allows investors to attain the same yield as if the borrower made all scheduled interest payments until maturity.  These premiums are designed to make investors indifferent to prepayment.

The decrease in prepayment and makewhole premiums when comparing 2012 to 2011 was attributable primarily to abnormally high prepayments and makewhole premiums during 2011 due to a rapid decline in interest rates leading to increased refinancing activity.

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Realized Gain (Loss) Related to Certain Investments

The detail of the realized gain (loss) related to certain investments (in millions) was as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
Fixed maturity AFS securities:
	Gross gains		$	3		$	31			-90	%	$	8		$	67		-88	%
	Gross losses			(49	)		(51	)		4	%		(112	)		(114	)	2	%
Equity AFS securities:
	Gross gains			-			1			-100	%		1			9		-89	%
Gain (loss) on other investments				(5	)		(8	)		38	%		2			5		-60	%
Associated amortization of DAC, VOBA, DSI, and DFEL and changes in other contract holder funds				-			(5	)		100	%		2			(14	)	114	%
		Total realized gain (loss) related to certain investments, pre-tax	$	(51	)	$	(32	)		-59	%	$	(99	)	$	(47	)	NM

Amortization of DAC, VOBA, DSI and DFEL and changes in other contract holder funds reflect an assumption for an expected level of credit-related investment losses.  When actual credit-related investment losses are realized, we recognize a true-up to our DAC, VOBA, DSI and DFEL amortization and changes in other contract holder funds within realized loss reflecting the incremental effect of actual versus expected credit-related investment losses.  These actual to expected amortization adjustments could create volatility in net realized gains and losses.  The write-down for impairments includes both credit-related and interest-rate related impairments.

Realized gains and losses generally originate from asset sales to reposition the portfolio or to respond to product experience.  During the first six months of 2012 and 2011, we sold securities for gains and losses.  In the process of evaluating whether a security with an unrealized loss reflects declines that are other-than-temporary, we consider our ability and intent to sell the security prior to a recovery of value.  However, subsequent decisions on securities sales are made within the context of overall risk monitoring, assessing value relative to other comparable securities and overall portfolio maintenance.  Although our portfolio managers may, at a given point in time, believe that the preferred course of action is to hold securities with unrealized losses that are considered temporary until such losses are recovered, the dynamic nature of portfolio management may result in a subsequent decision to sell.  These subsequent decisions are consistent with the classification of our investment portfolio as AFS.  We expect to continue to manage all non-trading invested assets within our portfolios in a manner that is consistent with the AFS classification.

We consider economic factors and circumstances within countries and industries where recent write-downs have occurred in our assessment of the status of securities we own of similarly situated issuers.  While it is possible for realized or unrealized losses on a particular investment to affect other investments, our risk management has been designed to identify correlation risks and other risks inherent in managing an investment portfolio.  Once identified, strategies and procedures are developed to effectively monitor and manage these risks.  The areas of risk correlation that we pay particular attention to are risks that may be correlated within specific financial and business markets, risks within specific industries and risks associated with related parties.

When the detailed analysis by our credit analysts and investment portfolio managers leads us to the conclusion that a security’s decline in fair value is other-than-temporary, the security is written down to estimated recovery value.  In instances where declines are considered temporary, the security will continue to be carefully monitored.  See “Critical Accounting Policies and Estimates” in our 2011 Form 10-K for additional information on our portfolio management strategy.

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Details underlying write-downs taken as a result of OTTI (in millions) were as follows:

			For the Three									For the Six
			Months Ended									Months Ended
			June 30,									June 30,
			2012			2011			Change			2012			2011			Change
OTTI Recognized in Net Income (Loss)
Corporate bonds			$	(10	)	$	(2	)	NM			$	(29	)	$	(6	)	NM
RMBS				(14	)		(23	)		39	%		(32	)		(43	)		26	%
CMBS				(16	)		(15	)		-7	%		(36	)		(39	)		8	%
CDOs				-			-		NM				-			(1	)		100	%
Hybrid and redeemable preferred securities				-			-		NM				-			(2	)		100	%
	Gross OTTI recognized in net income (loss)			(40	)		(40	)		0	%		(97	)		(91	)		-7	%
	Associated amortization of DAC, VOBA, DSI and DFEL			7			9			-22	%		17			19			-11	%
		Net OTTI recognized in net income (loss), pre-tax	$	(33	)	$	(31	)		-6	%	$	(80	)	$	(72	)		-11	%
Portion of OTTI Recognized in OCI
Gross OTTI recognized in OCI			$	21		$	19			11	%	$	79		$	27			193	%
Change in DAC, VOBA, DSI and DFEL				(4	)		(3	)		-33	%		(12	)		(8	)		-50	%
	Net portion of OTTI recognized in OCI, pre-tax		$	17		$	16			6	%	$	67		$	19			253	%

The increase in write-downs for OTTI when comparing 2012 to 2011 was primarily due to structured interest only corporate bonds with floating rate coupons where the projected cash flows were less than expected based on current and expected future Libor rates.  The $176 million of impairments taken during 2012 were split between $97 million of credit-related impairments and $79 million of noncredit-related impairments.  The credit-related impairments were largely attributable to our RMBS and CMBS holdings primarily as a result of continued weakness within the commercial and residential real estate market that affected select RMBS and CMBS holdings.  The noncredit-related impairments were incurred due to declines in values of securities for which we do not have an intent to sell or it is not more likely than not that we will be required to sell the securities before recovery.

REVIEW OF CONSOLIDATED FINANCIAL CONDITION

Liquidity and Capital Resources

Sources of Liquidity and Cash Flow

Liquidity refers to the ability of an enterprise to generate adequate amounts of cash from its normal operations to meet cash requirements with a prudent margin of safety.  Our principal sources of cash flow from operating activities are insurance premiums and fees and investment income, while sources of cash flows from investing activities result from maturities and sales of invested assets.  Our operating activities provided cash of $614 million and $878 million for the first six months of 2012 and 2011, respectively.  When considering our liquidity and cash flow, it is important to distinguish between the needs of our insurance subsidiaries and the needs of the holding company, LNC.  As a holding company with no operations of its own, LNC derives its cash primarily from its operating subsidiaries.

The sources of liquidity of the holding company are principally comprised of dividends and interest payments from subsidiaries, augmented by holding company short-term investments, bank lines of credit and the ongoing availability of long-term public financing under an SEC-filed shelf registration statement.  These sources of liquidity and cash flow support the general corporate needs of the holding company, including its common and preferred stock dividends, interest and debt service, funding of callable securities, securities repurchases, acquisitions and investment in core businesses.  Our cash flows associated with collateral received from and posted with counterparties change as the market value of the underlying derivative contract changes.  As the value of a derivative asset declines (or increases), the collateral required to be posted by our counterparties would also decline (or increase).

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Likewise, when the value of a derivative liability declines (or increases), the collateral we are required to post for our counterparties’ benefit would also decline (or increase).  During the first six months of 2012, our payables for collateral on derivative investments increased by $461 million attributable primarily to increased notional amounts, volatility in the equity markets and declining interest rates, which increased the fair values of the associated derivative investments.  For additional information, see “Credit Risk” in Note 5.

Details underlying the primary sources of our holding company cash flows (in millions) were as follows:

	For the Three									For the Six
	Months Ended									Months Ended
	June 30,									June 30,
	2012			2011			Change			2012			2011			Change
Dividends from Subsidiaries
The Lincoln National Life Insurance Company	$	200		$	150			33	%	$	350		$	300			17	%
Other		-			7			-100	%		-			12			-100	%
Loan Repayments and Interest from Subsidiaries
Interest on inter-company notes		31			30			3	%		64			62			3	%
	$	231		$	187			24	%	$	414		$	374			11	%
Other Cash Flow and Liquidity Items
Increase (decrease) in commercial paper, net	$	-		$	(100	)		100	%	$	-		$	(100	)		100	%
Net capital received from (paid for taxes on) stock option exercises and restricted stock		(3	)		-		NM				(3	)		(1	)	NM
	$	(3	)	$	(100	)		97	%	$	(3	)	$	(101	)		97	%

The table above focuses on significant and recurring cash flow items and excludes the effects of certain financing activities, namely the periodic issuance and retirement of debt and cash flows related to our inter-company cash management program (discussed below).  Taxes have been eliminated from the analysis due to a tax sharing agreement among our primary subsidiaries resulting in a modest effect on net cash flows at the holding company.  Also excluded from this analysis is the modest amount of investment income on short-term investments of the holding company.

Subsidiaries’ Statutory Reserving and Surplus

For discussion of our strategies to lessen the burden of increased AG38 and XXX statutory reserves associated with certain UL products and other products with secondary guarantees on our insurance subsidiaries, see “Results of Life Insurance – Income (Loss) from Operations – Strategies to Address Statutory Reserve Strain.”

Financing Activities

Although our subsidiaries currently generate adequate cash flow to meet the needs of our normal operations, periodically we may issue debt or equity securities to maintain ratings and increase liquidity, as well as to fund internal growth, acquisitions and the retirement of our debt and equity securities.

We currently have an effective shelf registration statement, which allows us to issue, in unlimited amounts, securities, including debt securities, preferred stock, common stock, warrants, stock purchase contracts, stock purchase units, depository shares and trust preferred securities of our affiliated trusts.

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Details underlying debt and financing activities (in millions) were as follows:

		For the Six Months Ended June 30, 2012
								Change
						Maturities		in Fair
		Beginning				and		Value		Other		Ending
		Balance		Issuance		Repayments		Hedges		Changes (1)		Balance
Short-Term Debt
Current maturities of long-term debt (2)		$	300	$	-	$	-	$	-	$	-	$	300
	Total short-term debt	$	300	$	-	$	-	$	-	$	-	$	300
Long-Term Debt
Senior notes		$	3,730	$	300	$	-	$	27	$	1	$	4,058
Bank borrowing			200		-		-		-		-		200
Federal Home Loan Bank of Indianapolis advance			250		-		-		-		-		250
Capital securities			1,211		-		-		-		-		1,211
	Total long-term debt	$	5,391	$	300	$	-	$	27	$	1	$	5,719

(1) Includes the net increase (decrease) in commercial paper, non-cash reclassification of long-term debt to current maturities of long-term debt, accretion of discounts and (amortization) of premiums, as applicable.

(2) Consisted of a $300 million 5.65% fixed rate senior note that matures in less than one year.

On March 29, 2012, we completed the issuance and sale of $300 million aggregate principal amount of our 4.20% senior notes due 2022.  We expect to repay the $300 million 5.65% fixed rate senior note maturing on August 27, 2012, with these proceeds.  In addition to the maturing note discussed above, within the next two years, we have a $200 million floating rate senior note maturing on July 18, 2013; a $300 million 4.75% senior note maturing on January 30, 2014; and a $200 million 4.75% senior note maturing on February 14, 2014.  The specific resources or combination of resources that we will use to meet these maturities will depend upon, among other things, the financial market conditions present at the time of maturity.  As of June 30, 2012, the holding company had approximately $1 billion in cash and cash equivalents and $25 million invested in fixed maturity corporate bonds; however, as discussed below, it had a $50 million payable under the inter-company cash management program.

For information about our short-term and long-term debt and our credit facilities and LOCs, see Note 12 in our 2011 Form 10-K.

We have not accounted for repurchase agreements, securities lending transactions, or other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets as sales and do not have any other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets.  For information about our collateralized financing transactions on our investments, see “Payables for Collateral on Investments” in Note 4.

If current credit ratings and claims-paying ratings were downgraded in the future, terms in our derivative agreements may be triggered, which could negatively affect overall liquidity.  For the majority of our counterparties, there is a termination event should the long-term senior debt ratings of LNC drop below BBB-/Baa3 (S&P/Moody’s).  Our long-term senior debt held a rating of A-/Baa2 (S&P/Moody’s) as of June 30, 2012.  In addition, contractual selling agreements with intermediaries could be negatively affected, which could have an adverse effect on overall sales of annuities, life insurance and investment products.  See “Part I – Item 1A. Risk Factors – Liquidity and Capital Position – A decrease in the capital and surplus of our insurance subsidiaries may result in a downgrade to our credit and insurer financial strength ratings” and “Part I – Item 1A. Risk Factors –Covenants and Ratings – A downgrade in our financial strength or credit ratings could limit our ability to market products, increase the number or value of policies being surrendered and/or hurt our relationships with creditors” in our 2011 Form 10-K for more information.  See “Part I – Item 1. Business – Financial Strength Ratings” in our 2011 Form 10-K for additional information on our current financial strength ratings.

See “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Review of Consolidated Financial Condition – Liquidity and Capital Resources – Financing Activities” in our 2011 Form 10-K for information on our credit ratings.

Alternative Sources of Liquidity

In order to manage our capital more efficiently, we have an inter-company cash management program where certain subsidiaries can lend to or borrow from the holding company to meet short-term borrowing needs.  The cash management program is

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essentially a series of demand loans, which are permitted under applicable insurance laws, among LNC and its affiliates that reduces overall borrowing costs by allowing LNC and its subsidiaries to access internal resources instead of incurring third-party transaction costs.  For our Indiana-domiciled insurance subsidiaries, the borrowing and lending limit is currently the lesser of 3% of the insurance company’s admitted assets and 25% of its surplus, in both cases, as of its most recent year end.  The holding company did not borrow from the cash management program during the second quarter of 2012; however, it had an outstanding payable of $50 million to certain subsidiaries resulting from amounts placed by the subsidiaries in the inter-company cash management account in excess of funds borrowed by those subsidiaries as of June 30, 2012.  Any increase (decrease) in either of these holding company cash management program payable balances results in an immediate and equal increase (decrease) to holding company cash and cash equivalents.

Our insurance subsidiaries, by virtue of their investment holdings, can access liquidity through investments pledged programs and repurchase agreements.  As of June 30, 2012, our insurance subsidiaries had investments with a carrying value of $1.6 billion out on loan or subject to reverse-repurchase agreements.  The cash received in our investments pledged programs and repurchase agreements is typically invested in cash equivalents, short-term investments or fixed maturity securities.  For additional details, see “Payables for Collateral on Investments” in Note 4.

For factors that could cause actual results to differ materially from those set forth in this section, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

Divestitures

For a discussion of our divestitures, see Note 3 in our 2011 Form 10-K.

Uses of Capital

Our principal uses of cash are to pay policy claims and benefits, operating expenses, commissions and taxes, to purchase new investments, to purchase reinsurance, to fund policy surrenders and withdrawals, to pay dividends to our stockholders and to repurchase our stock and debt securities.

Return of Capital to Common Stockholders

One of the Company’s primary goals is to provide a return to our common stockholders through share price accretion, dividends and stock repurchases.  In determining dividends, the Board takes into consideration items such as current and expected earnings, capital needs, rating agency considerations and requirements for financial flexibility.  The amount and timing of share repurchase depends on key capital ratios, rating agency expectations, the generation of free cash flow and an evaluation of the costs and benefits associated with alternative uses of capital.  Free cash flow for the holding company generally represents the amount of dividends and interest received from subsidiaries less interest paid on debt.

Details underlying this activity (in millions, except per share data), were as follows:

		For the Three							For the Six
		Months Ended							Months Ended
		June 30,							June 30,
		2012		2011		Change			2012		2011		Change
Common dividends to stockholders		$	23	$	16		44	%	$	46	$	31		48	%
Repurchase of common stock			150		151		-1	%		300		226		33	%
	Total cash returned to stockholders	$	173	$	167		4	%	$	346	$	257		35	%
Number of shares repurchased			6.474		5.149		26	%		12.492		7.563		65	%
Average price per share		$	23.19	$	29.15		-20	%	$	24.04	$	29.77		-19	%

On November 10, 2011, our Board of Directors approved an increase of the quarterly dividend on our common stock from $0.05 to $0.08 per share.  Additionally, we expect to repurchase additional shares of common stock during 2012 depending on market conditions and alternative uses of capital.  For more information regarding share repurchases, see “Part II – Item 2(c)” below.

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Other Uses of Capital

In addition to the amounts in the table above in “Return of Capital to Common Stockholders,” other uses of holding company cash flow (in millions) were as follows:

		For the Three							For the Six
		Months Ended							Months Ended
		June 30,							June 30,
		2012		2011		Change			2012		2011		Change
Debt service (interest paid)		$	74	$	80		-8	%	$	131	$	142		-8	%
Capital contribution to subsidiaries			-		8		-100	%		-		16		-100	%
	Total	$	74	$	88		-16	%	$	131	$	158		-17	%

The above table focuses on significant and recurring cash flow items and excludes the effects of certain financing activities, namely the periodic retirement of debt and cash flows related to our inter-company cash management account.  Taxes have been eliminated from the analysis due to a tax sharing agreement among our primary subsidiaries resulting in a modest effect on net cash flows at the holding company.

Significant Trends in Sources and Uses of Cash Flow

As stated above, LNC’s cash flow, as a holding company, is largely dependent upon the dividend capacity of its insurance company subsidiaries as well as their ability to advance funds to it through inter-company borrowing arrangements, which may be affected by factors influencing the insurance subsidiaries’ RBC and statutory earnings performance.  We currently expect to be able to meet the holding company’s ongoing cash needs and to have sufficient capital to offer downside protection in the event that the capital and credit markets experience another period of extreme volatility and disruption.  A decline in capital market conditions, which reduces our insurance subsidiaries’ statutory surplus and RBC, may require them to retain more capital and may pressure our subsidiaries’ dividends to the holding company, which may lead us to take steps to preserve or raise additional capital.  For factors that could affect our expectations for liquidity and capital, see “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below.

OTHER MATTERS

Other Factors Affecting Our Business

In general, our businesses are subject to a changing social, economic, legal, legislative and regulatory environment.  Some of the changes include initiatives to require more reserves to be carried by our insurance subsidiaries.  Although the eventual effect on us of the changing environment in which we operate remains uncertain, these factors and others could have a material effect on our results of operations, liquidity and capital resources.  For factors that could cause actual results to differ materially from those set forth in this section, see “Part I – Item 1A. Risk Factors” in our 2011 Form 10-K, as updated in “Part II – Item 1A. Risk Factors” below, and “Forward-Looking Statements – Cautionary Language” above.

Recent Accounting Pronouncements

See Note 2 for a discussion of recent accounting pronouncements that have been implemented during the periods presented or that have been issued and are to be implemented in the future.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We analyze and manage the risks arising from market exposures of financial instruments, as well as other risks, in an integrated asset-liability management process that takes diversification into account.  By aggregating the potential effect of market and other risks on the entire enterprise, we estimate, review and in some cases manage the risk to our earnings and shareholder value.  We have exposures to several market risks including interest rate risk, equity market risk, default risk, basis risk, credit risk and, to a lesser extent, foreign currency exchange risk.  The exposures of financial instruments to market risks, and the related risk management processes, are most important to our business where most of the invested assets support accumulation and investment-oriented insurance products.  As an important element of our integrated asset-liability management processes, we use derivatives to minimize the effects of changes in interest levels, the shape of the yield curve, currency movements and volatility.  In this context, derivatives are designated as a hedge and serve to minimize interest rate risk by mitigating the effect of significant increases in interest rates on our earnings.  Additional market exposures exist in our other general account insurance products and in our debt structure and derivatives positions.  Our primary sources of market risk are:  substantial, relatively rapid and sustained increases or decreases in interest rates or a sharp drop in equity market values.  These market risks are discussed in detail in the

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following pages and should be read in conjunction with our consolidated financial statements and the accompanying notes to the consolidated financial statements (“Notes”) presented in “Item 1. Financial Statements,” as well as “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).”

Interest Rate Risk

Interest Rate Risk on Fixed Insurance Businesses – Falling Rates

In periods of declining interest rates, we have to reinvest the cash we receive as interest or return of principal on our investments in lower yielding instruments.  Moreover, borrowers may prepay fixed income securities, commercial mortgages and mortgage-backed securities in our general accounts in order to borrow at lower market rates, which exacerbates this risk.  Because we are entitled to reset the interest rates on our fixed rate annuities only at limited, pre-established intervals, and because many of our contracts have guaranteed minimum interest or crediting rates, our spreads could decrease and potentially become negative.

Prolonged historically low rates are not healthy for our business fundamentals.  However, we have recognized this threat and have been proactive in our investment strategies, product designs, crediting rate strategies and overall asset-liability practices to mitigate the risk of unfavorable consequences in this type of environment.  For some time now, new products have been sold with low minimum crediting floors, and we apply disciplined asset-liability management standards, such as locking in spreads on these products at the time of issue.

If we were to assume a hypothetical stress scenario where the 10-year U.S. Treasury rate remains static at approximately 150 basis points through the end of 2014 as compared to a hypothetical scenario where our current portfolio yields remain flat, we estimate the difference between these hypothetical scenarios would result in an approximate unfavorable earnings effect of $10 million for the remainder of 2012, $75 million in 2013 and $140 million in 2014.  The earnings drag from this hypothetical stress scenario related to the effect of continued low new money rates is largely concentrated in our Life Insurance and Retirement Plan Services segments.

The estimates above are based upon hypothetical scenarios and are only representative of the effects of assumptions around rates through 2014 keeping all else equal and does not give consideration to the aggregate effect of other factors, including but not limited to:  contract holder activity; sales; hedge positions; changing equity markets; shifts in implied volatilities; and changes in other capital market sectors as well as actions we might take to mitigate the effect of the low rate environment.  In addition, the scenarios only illustrated the effect to spreads and certain unlocking and reserve changes.  Other potential effects of the scenarios were not considered in the analysis.  See “Part I – Item 1A. Risk Factors – Market Conditions – Changes in interest rates and sustained low interest rates may cause interest rate spreads to decrease and changes in interest rates may also result in increased contract withdrawals” in our 2011 Form 10-K for additional information on interest rates.

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The following provides detail on the percentage differences between the June 30, 2012, interest rates being credited to contract holders based on the second quarter of 2012 declared rates and the respective minimum guaranteed policy rate (in millions), broken out by contract holder account values reported within our segments:

				Account Values
							Retirement			Life						%
							Plan			Insurance						Account
				Annuities			Services			(1)			Total			Values
Excess of Crediting Rates over Contract Minimums
Discretionary rate setting products (2)(3)
	No difference			$	7,352		$	9,648		$	25,952		$	42,952			69.0	%
	Up to 0.10%				85			2			-			87			0.1	%
	0.11% to 0.20%				75			79			-			154			0.3	%
	0.21% to 0.30%				110			1			270			381			0.6	%
	0.31% to 0.40%				123			4			-			127			0.2	%
	0.41% to 0.50%				105			184			111			400			0.7	%
	0.51% to 0.60%				64			-			-			64			0.1	%
	0.61% to 0.70%				52			-			-			52			0.1	%
	0.71% to 0.80%				45			-			-			45			0.1	%
	0.81% to 0.90%				38			-			-			38			0.1	%
	0.91% to 1.00%				24			101			103			228			0.4	%
	1.01% to 1.50%				86			60			-			146			0.2	%
	1.51% to 2.00%				6			-			146			152			0.2	%
	2.01% to 2.50%				2			1			-			3			0.0	%
	2.51% to 3.00%				5			-			-			5			0.0	%
	3.01% and above				-			1			-			1			0.0	%
	Multi-year guarantee and indexed annuity products (4)				11,277			-			-			11,277			18.1	%
		Total discretionary rate setting products			19,449			10,081			26,582			56,112			90.2	%
Other contracts (5)					2,184			3,922			-			6,106			9.8	%
			Total account values	$	21,633		$	14,003		$	26,582		$	62,218			100.0	%
Percentage of discretionary rate setting product account values at minimum guaranteed rates					37.8	%		95.7	%		97.6	%		76.5	%

(1) Excludes policy loans.

(2) Contracts currently within new money rate bands are grouped according to the corresponding portfolio rate band in which they will fall upon their first anniversary.

(3) The average crediting rates for discretionary rate setting products were 63 basis points, 3 basis points and 2 basis points in excess of average minimum guaranteed rates for our Annuities, Retirement Plan Services and Life Insurance segments, respectively.

(4) The average crediting rates were 166 basis points in excess of average minimum guaranteed rates for multi-year guarantee products; 14%, 13% and 73% of our total multi-year guarantee account values are scheduled to reset in 2012, 2013 and 2014 and beyond, respectively.  Our indexed renewal business resets either annually or bi-annually.  Upon reset, we are able to adjust product features to reflect changes in option prices.

(5) For Annuities, this amount relates primarily to immediate annuity and short-term dollar cost averaging business.  For Retirement Plan Services, this amount relates to indexed-based rate setting products in which the average crediting rates were 3 basis points in excess of average minimum guaranteed rates and 91% of account values were already at their minimum guaranteed rates.

The maturity structure and call provisions of the related portfolios are structured to afford protection against erosion of investment portfolio yields during periods of declining interest rates.  We devote extensive effort to evaluating the risks associated with falling interest rates by simulating asset and liability cash flows for a wide range of interest rate scenarios.  We seek to manage these exposures by maintaining a suitable maturity structure and by limiting our exposure to call risk in each respective investment portfolio.

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Derivatives

See Note 5 for information on our derivatives used to hedge our exposure to changes in interest rates.

Equity Market Risk

Our revenues, assets, liabilities and derivatives are exposed to equity market risk.  Due to the use of our reversion to the mean (“RTM”) process and our hedging strategies, we expect that, in general, short-term fluctuations in the equity markets should not have a significant effect on our quarterly earnings from unlocking of assumptions for deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads.  However, earnings are affected by equity market movements on account values and assets under management and the related fees we earn on those assets.  Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Critical Accounting Policies and Estimates – DAC, VOBA, DSI and DFEL”  in our 2011 Form 10-K for further discussion on the effects of equity markets on our RTM.

Effect of Equity Market Sensitivity

The following presents our estimate of the effect on income (loss) from operations (in millions), from the change in asset-based fees and related expenses, if the level of the Standard & Poor’s (“S&P”) 500 Index® (“S&P 500”), which ended at 1362 as of June 30, 2012, were to decrease to 1090 over six months after June 30, 2012, and remain at that level through the next six months or increase to 1634 over six months after June 30, 2012, and remain at that level through the next six months, excluding any effect related to sales, prospective unlocking, persistency, hedge program performance or customer behavior caused by the equity market change:

	S&P 500		S&P 500
	at 1090 (1)		at 1634 (1)
Segment
Annuities	$	(92)	$	41
Retirement Plan Services		(15)		17

(1) The baseline for these effects assumes a 4% annual equity market growth rate, depending on the block of business, beginning on July 1, 2012.  The baseline is then compared to scenarios of the S&P 500 at the 1090 and 1634 levels, which assume the index moves to those levels over six months and remains at those levels through the next six months.  The difference between the baseline and the S&P 500 at the 1090 and 1634 level scenarios is presented in the table.

Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Critical Accounting Policies and Estimates – DAC, VOBA, DSI and DFEL – Reversion to the Mean” in our 2011 Form 10-K for discussion of the effects of equity markets on our RTM.

The effect on earnings summarized above is a hypothetical scenario for the next 12 months.  The effect of quarterly equity market changes upon fee revenues and asset-based expenses is generally not fully recognized in the first quarter of the change because fee revenues are earned and related expenses are incurred based upon daily variable account values.  The difference between the current period average daily variable account values compared to the end of period variable account values affects fee revenues in subsequent periods.  Additionally, the effect on earnings may not necessarily be symmetrical with comparable increases in the equity markets.  This discussion concerning the estimated effects of ongoing equity market volatility on the fees we earn from account values and assets under management is intended to be illustrative.  Actual effects may vary depending on a variety of factors, many of which are outside of our control, such as changing customer behaviors that might result in changes in the mix of our business between variable and fixed annuity contracts, switching among investment alternatives available within variable products, changes in sales production levels or changes in policy persistency.  For purposes of this guidance, the change in account values is assumed to correlate with the change in the relevant index.
 

Credit-Related Derivatives

We use credit-related derivatives to minimize our exposure to credit-related events and we also sell credit default swaps to offer credit protection to our contract holders and investors.  See Note 5 for additional information.

Credit Risk

See Note 5 for information on our credit risk.

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In addition to the information provided about our counterparty exposure in Note 5, the fair value of our exposure by rating (in millions) was as follows:

			As of		As of
		June 30,			December 31,
			2012		2011
Rating
AA			$	10	$	23
A				37		56
BBB				-		2
	Total		$	47	$	81

Item 4.  Controls and Procedures

Conclusions Regarding Disclosure Controls and Procedures

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period required by this report, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act).  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic reports under the Exchange Act.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system’s objectives will be met.  Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

Information regarding reportable legal proceedings is contained in Note 8 to the consolidated financial statements in “Part I – Item 1.”

Item 1A.  Risk Factors

The risk factors set forth below update those set forth in Lincoln National Corporation and its majority-owned subsidiaries’ (“LNC” or the “Company,” which also may be referred to as “we,” “our” or “us”) Form 10-K for the year ended December 31, 2011.  You should carefully consider the risks described in our Form 10-K and those described below, as well as other information contained in the Form 10-K and this Form 10-Q, including our financial statements and the notes thereto, before making an investment decision.  The risks and uncertainties described in our Form 10-K and below are not the only ones facing our company.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks actually occur, our business, financial condition and results of operations could be materially affected. In that case, the value of our securities could decline substantially.

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Legislative, Regulatory and Tax

Changes to the calculation of reserves and attempts to mitigate the impact of Regulation XXX and Actuarial Guideline 38 may fail in whole or in part resulting in an adverse effect on our financial condition and results of operations.

The Valuation of Life Insurance Policies Model Regulation (“XXX”) requires insurers to establish additional statutory reserves for term life insurance policies with long-term premium guarantees and UL policies with secondary guarantees.  In addition, Actuarial Guideline 38 (“AG38”), commonly known as “AXXX,” clarifies the application of XXX with respect to certain universal life (“UL”) insurance policies with secondary guarantees.  Virtually all of our newly issued term and the majority of our newly issued UL insurance products are now affected by XXX and AG38.  The application of both AG38 and XXX involve numerous interpretations.  In the fourth quarter of 2011, the Life Actuarial Task Force, an advisory group to the Life Insurance and Annuities (A) Committee of the National Association of Insurance Commissioners (“NAIC”), submitted a draft statement on the application of AG38 (the “Statement”) to the Committee.  The NAIC’s Executive Committee set up a joint working group (the “Joint Working Group”) comprised of members of the Life Insurance and Annuities (A) Committee and the Financial Condition (E) Committee to review the Statement and the current application of AG38 to determine whether new interim guidelines should be developed for the products within the scope of AG38.  On July 17, 2012, the Joint Working Group exposed for comment draft proposals for the reserving of in-force and new business.  Reserves on in-force business would be subject to a floor calculation based on assumptions consistent with the principles-based reserving framework developed by the NAIC.  Reserves on new business written after December 31, 2012, would be calculated using a modified formulaic approach.  Because the draft proposals contain many open issues, we cannot predict the impact on our statutory reserves.  However, a change to the method for calculating reserves may require us to significantly increase our statutory reserves for UL policies with secondary guarantees.  Further, changes in the method of calculating reserves may also impact the future profitability and sales of our UL insurance policies with secondary guarantees.

We have implemented reinsurance and capital management actions to mitigate the capital impact of XXX and AG38, including the use of letters of credit to support the reinsurance provided by captive reinsurance subsidiaries.  These arrangements are subject to review by state insurance regulators and rating agencies.  For example, the NAIC has established a subgroup to study the use of captives and special purpose vehicles to transfer insurance risk in relation to existing state laws and regulations.  Therefore, we cannot provide assurance regarding what, if any, regulatory, rating agency or other reactions may be to the actions we have taken to date or the impact of any potential reactions.

We also cannot provide assurance that we will be able to continue to implement actions to mitigate the impact of XXX or AG38 on future sales of term and UL insurance products.  If we are unable to continue to implement those actions, we may have lower returns on such products sold than we currently anticipate and/or reduce our sales of these products.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c)  The following table summarizes purchases of equity securities by the issuer during the quarter ended June 30, 2012 (dollars in millions, except per share data):

	(a) Total				(c) Total Number		(d) Approximate Dollar
	Number		(b) Average		of Shares (or Units)		Value of Shares (or
	of Shares		Price Paid		Purchased as Part of		Units) that May Yet Be
	(or Units)		per Share		Publicly Announced		Purchased Under the
Period	Purchased (1)		(or Unit)		Plans or Programs (2)		Plans or Programs (3)
4/1/12 - 4/30/12		1,091	$	27.43		-	$	390
5/1/12 - 5/31/12		6,582,408		23.16		6,473,530		240
6/1/12 - 6/30/12		337		24.33		-		240

(1) Of the total number of shares purchased, no shares were received in connection with the exercise of stock options and related taxes and 110,306 shares were withheld for taxes on the vesting of restricted stock units.  For the quarter ended June 30, 2012, there were 6,473,530 shares purchased as part of publicly announced plans or programs.

(2) On February 23, 2007, our Board approved a $2.0 billion increase to our securities repurchase authorization, bringing the total authorization at that time to $2.6 billion.  As of June 30, 2012, our remaining security repurchase authorization was $240 million.  The security repurchase authorization does not have an expiration date.  The amount and timing of share repurchase depends on key capital ratios, rating agency expectations, the generation of free cash flow and an evaluation of the costs and benefits associated with alternative uses of capital.  The shares repurchased in connection with the awards described in Note 20 to the consolidated financial statements of our 2011 Form 10-K are not included in our security repurchase.

(3) As of the last day of the applicable month.

101

Item 6.  Exhibits

The Exhibits included in this report are listed in the Exhibit Index beginning on page E-1, which is incorporated herein by reference.

102

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LINCOLN NATIONAL CORPORATION
	By:	/s/  RANDAL J. FREITAG
		Randal J. Freitag Executive Vice President and Chief Financial Officer
	By:	/s/  DOUGLAS N. MILLER
		Douglas N. Miller Senior Vice President and Chief Accounting Officer
Dated:  August 2, 2012

103

LINCOLN NATIONAL CORPORATION

Exhibit Index for the Report on Form 10-Q

For the Quarter Ended June 30, 2012

12	Historical Ratio of Earnings to Fixed Charges.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

E-1

EX-12.0

Exhibit 12

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES

(dollars in millions)

			For the Six
			Months Ended
			June 30,
			2012		2011
Income (loss) from continuing operations before taxes			$	750	$	838
Sub-total of fixed charges				140		156
	Sub-total of adjusted income (loss)			890		994
Interest on annuities and financial products				1,237		1,234
		Adjusted income (loss) base	$	2,127	$	2,228
Fixed Charges
Interest and debt expense			$	135	$	144
Interest expense related to uncertain tax positions				1		5
Portion of rent expense representing interest				4		7
	Sub-total of fixed charges excluding interest on annuities and financial products			140		156
Interest on annuities and financial products				1,237		1,234
		Total fixed charges	$	1,377	$	1,390
Ratio of sub-total of adjusted income (loss) to sub-total of fixed charges excluding interest on annuities and financial products				6.36		6.37
Ratio of adjusted income (loss) base to total fixed charges				1.54		1.60

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

______________

I, Dennis R. Glass, President and Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lincoln National Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 2, 2012                                                        /s/ Dennis R. Glass                                           

Name:  Dennis R. Glass

Title:  President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

______________

I, Randal J. Freitag, Executive Vice President and Chief Financial Officer, certify that:

1.         I have reviewed this quarterly report on Form 10-Q of Lincoln National Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 2, 2012                                                        /s/ Randal J. Freitag                                                                    

Name:  Randal J. Freitag

Title:  Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

Of the Sarbanes-Oxley Act of 2002

______________

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Lincoln National Corporation (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 2, 2012                                                        /s/ Dennis R. Glass                                            

Name:  Dennis R. Glass

Title:  President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required under Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

Of the Sarbanes-Oxley Act of 2002

______________

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Lincoln National Corporation (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 2, 2012                                                        /s/ Randal J. Freitag                                                                    

Name:  Randal J. Freitag

Title:  Executive Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required under Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Stock-Based Incentive Compensation Plans (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Stock options [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	41,536	870,210
Performance Shares [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	15,815	294,758
Stock Appreciation Rights [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	0	80,225
Restricted Stock Units [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	82,004	686,230
Non-employee Agent Stock Options [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	90	99,178
Non-employee Director Stock Options [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	0	51,140
Non-employee Director Restricted Stock Units [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	12,218	22,346

XML

Investments (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Total OTTI for AFS securities backed by pools of residential and commercial mortgages			$ 34,000,000	$ 44,000,000
OTTI for AFS securities backed by pools of residential and commercial mortgages recognized in OCI			(3,000,000)	4,000,000
OTTI for AFS securities backed by pools of residential and commercial mortgages recognized in net income (loss)			37,000,000	40,000,000
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Fair Value	816,000,000		816,000,000		1,055,000,000
Gross Unrealized Losses	427,000,000		427,000,000		625,000,000
Gross Unrealized OTTI	180,000,000		180,000,000		155,000,000
Number of securities	213		213		256
Decrease in gross AFS securities unrealized losses			258,000,000
Balance as of beginning of year	410,000,000	352,000,000	390,000,000	319,000,000
Increases attributable to:
Credit losses on securities for which an OTTI was not previously recognized	21,000,000	3,000,000	56,000,000	29,000,000
Credit losses on securities for which an OTTI was previously recognized	19,000,000	19,000,000	42,000,000	40,000,000
Decreases attributable to:
Securities sold	(35,000,000)	(34,000,000)	(73,000,000)	(48,000,000)
Balance as of end of year	415,000,000	340,000,000	415,000,000	340,000,000
Other Than Temporary Impairments Credit Losses [Line Items]
Amortized Cost	982,000,000		982,000,000		876,000,000
Gross Unrealized Gains	6,000,000		6,000,000		2,000,000
Gross Unrealized Losses and OTTI	(219,000,000)		(219,000,000)		(205,000,000)
Fair Value	769,000,000		769,000,000		673,000,000
OTTI in Credit Losses	415,000,000	340,000,000	415,000,000	340,000,000
Mortgage Loans On Real Estate Aging [Abstract]
Current	6,736,000,000		6,736,000,000		6,858,000,000
Sixty to ninety days past due	3,000,000		3,000,000		26,000,000
Greater than ninety days past due	80,000,000		80,000,000		76,000,000
Valuation allowance associated with impaired mortgage loans on real estate	26,000,000		26,000,000
Unamortized premium (discount)	11,000,000		11,000,000		13,000,000
Total carrying value	6,804,000,000		6,804,000,000		6,942,000,000
Information about impaired mortgage loans on real estate
Number of impaired mortgage loans on real estate	9		9		12
Principal balance of impaired mortgage loans on real estate	66,000,000		66,000,000		100,000,000
Valuation allowance associated with impaired mortgage loans on real estate	26,000,000		26,000,000
Carrying value of impaired mortgage loans on real estate	40,000,000		40,000,000		69,000,000
Average carrying value for impaired loans on real estate	49,000,000	53,000,000	56,000,000	54,000,000
Recognized interest income on impaired mortgage loans on real estate	0	0	0	1,000,000
Amount of interest income collected on impaired mortgage loans on real estate	0	1,000,000	0	2,000,000
Largest mortgage loan concentration in geographic region	31.00%		31.00%		32.00%
Financing Receivable Allowance For Credit Losses [Roll Forward]
Balance as of beginning-of-year			(31,000,000)
Balance as of end-of-period	(26,000,000)		(26,000,000)
Mortgage Loans Credit Quality [Line Items]
Principal amount of mortgage loans on real estate	6,819,000,000		6,819,000,000		6,960,000,000
Percentage of total mortgage loans on real estate	100.00%		100.00%		100.00%
Alternative investments [Abstract]
Number of partnerships in alternative investment portfolio	97		97		96
Realized gain (loss) related to certain investments
Fixed maturity AFS securities, Gross gains	3,000,000	31,000,000	8,000,000	67,000,000
Fixed maturity AFS securities, Gross losses	(49,000,000)	(51,000,000)	(112,000,000)	(114,000,000)
Equity AFS securities, Gross gains	0	1,000,000	1,000,000	9,000,000
Gain (loss) on other investments	(5,000,000)	(8,000,000)	2,000,000	5,000,000
Associated amortization expense of DAC, VOBA, DSI and DFEL and changes in other contract holder funds	0	(5,000,000)	2,000,000	(14,000,000)
Total realized gain (loss) related to certain investments	(51,000,000)	(32,000,000)	(99,000,000)	(47,000,000)
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	(40,000,000)	(40,000,000)	(97,000,000)	(91,000,000)
Associated amortization expense of DAC, VOBA, DSI and DFEL	7,000,000	9,000,000	17,000,000	19,000,000
Net OTTI recognized in net income (loss), pre-tax	(33,000,000)	(31,000,000)	(80,000,000)	(72,000,000)
Portion of OTTI Recognized in OCI
Gross OTTI recognized in OCI	21,000,000	19,000,000	79,000,000	27,000,000
Change in DAC, VOBA, DSI and DFEL	(4,000,000)	(3,000,000)	(12,000,000)	(8,000,000)
Net portion of OTTI recognized in OCI, pre-tax	17,000,000	16,000,000	67,000,000	19,000,000
Carrying Value Of Payables For Collateral On Investments [Abstract]
Collateral payable held for derivative investments	3,441,000,000		3,441,000,000		2,980,000,000
Securities pledged under securities lending agreements	200,000,000		200,000,000		200,000,000
Securities pledged under reverse repurchase agreements	280,000,000		280,000,000		280,000,000
Securities pledged for Treasury Asset-Backed Securities Loan Facility ('TALF')	49,000,000		49,000,000		173,000,000
Investments pledged for Federal Home Loan Bank of Indianapolis ('FHLBI')	1,100,000,000		1,100,000,000		100,000,000
Total payables for collateral on investments	5,070,000,000		5,070,000,000		3,733,000,000
Fair Value Of Related Investments Or Collateral [Abstract]
Collateral payable held for derivative investments	3,441,000,000		3,441,000,000		2,980,000,000
Securities pledged under securities lending agreements	194,000,000		194,000,000		193,000,000
Securities pledged under reverse repurchase agreements	293,000,000		293,000,000		294,000,000
Securities pledged for Treasury Asset-Backed Securities Loan Facility ('TALF')	66,000,000		66,000,000		199,000,000
Investments pledged for Federal Home Loan Bank of Indianapolis('FHLBI')	2,013,000,000		2,013,000,000		142,000,000
Total payables for collateral on investments	6,007,000,000		6,007,000,000		3,808,000,000
Percentage of the fair value of domestic securities obtained as collateral under securities lending agreements	102.00%		102.00%		102.00%
Percentage of the fair value of foreign securities obtained as collateral under securities lending agreements	105.00%		105.00%		105.00%
Percentage of the fair value of securities obtained as collateral under reverse repurchase agreements	95.00%		95.00%		95.00%
Percentage of the fair value of TALF securities obtained as collateral under securities pledged for TALF	90.00%		90.00%		90.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for AFS Securities (low end of range)	105.00%		105.00%		105.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for AFS Securities (high end of range)	115.00%		115.00%		115.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for mortgage loan (low end of range)	155.00%		155.00%		155.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for mortgage loan (high end of range)	175.00%		175.00%		175.00%
Increase (decrease) in payables for collateral on investments
Collateral payable held for derivative investments			461,000,000	223,000,000
Securities pledged under securities lending agreements			0	1,000,000
Securities pledged for TALF			(124,000,000)	(78,000,000)
Securities pledged for FHLBI			1,000,000,000	0
Total increase (decrease) in payables for collateral on investments			1,337,000,000	146,000,000
Investment commitments	754,000,000		754,000,000
Investment commitments for limited partnerships	233,000,000		233,000,000
Investment commitments for private placements	399,000,000		399,000,000
Investment commitments for mortgage loans on real estate	182,000,000		182,000,000
Federal Home Loan Mortgage Corporation [Member]
Concentration Risk [Line Items]
Fair value	4,500,000,000		4,500,000,000		5,000,000,000
Concentration risk, percentage	5.00%		5.00%		5.00%
Fannie Mae [Member]
Concentration Risk [Line Items]
Fair value	2,500,000,000		2,500,000,000		2,600,000,000
Concentration risk, percentage	3.00%		3.00%		3.00%
Cmo Industry [Member]
Concentration Risk [Line Items]
Fair value	5,000,000,000		5,000,000,000		5,600,000,000
Concentration risk, percentage	5.00%		5.00%		6.00%
Electric Industry [Member]
Concentration Risk [Line Items]
Fair value	8,100,000,000		8,100,000,000		7,700,000,000
Concentration risk, percentage	8.00%		8.00%		8.00%
Corporate bonds [Member]
Evaluation Of Credit Losses [Line Items]
Percentage of fair value rated as investment grade	96.00%		96.00%		96.00%
Amortized cost of portfolio rated below investment grade	2,700,000,000		2,700,000,000		2,600,000,000
Fair value of portfolio rated below investment grade	2,500,000,000		2,500,000,000		2,400,000,000
OTTI securities recognized in net income (loss), Recovery percentage of amortized cost	92.00%	98.00%	92.00%	98.00%
CDOs [Member]
Evaluation Of Credit Losses [Line Items]
Percentage of fair value rated as investment grade	98.00%		98.00%		97.00%
Amortized cost of portfolio rated below investment grade	3,000,000		3,000,000		3,000,000
Fair value of portfolio rated below investment grade	3,000,000		3,000,000		3,000,000
OTTI securities recognized in net income (loss), Recovery percentage of amortized cost	0.00%	0.00%	0.00%	0.00%
MBS [Member]
Evaluation Of Credit Losses [Line Items]
Projected default rate on existing delinquencies on MBS (low end of range)	25.00%		25.00%		25.00%
Projected default rate on existing delinquencies on MBS (high end of range)	100.00%		100.00%		100.00%
Severity of second lien loans	100.00%		100.00%		100.00%
Severity of first lien loans	30.00%		30.00%		30.00%
Fixed maturity securities [Member] | Corporate bonds [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	(10,000,000)	(2,000,000)	(29,000,000)	(6,000,000)
Fixed maturity securities [Member] | CDOs [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	0	0	0	(1,000,000)
Fixed maturity securities [Member] | Hybrid and redeemable preferred securities [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	0	0	0	(2,000,000)
Fixed maturity securities [Member] | CMBS [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	(16,000,000)	(15,000,000)	(36,000,000)	(39,000,000)
Fixed maturity securities [Member] | RMBS [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	(14,000,000)	(23,000,000)	(32,000,000)	(43,000,000)
Loan to value ratio less than sixty five [Member]
Mortgage Loans Credit Quality [Line Items]
Principal amount of mortgage loans on real estate	5,395,000,000		5,395,000,000		5,338,000,000
Percentage of total mortgage loans on real estate	79.10%		79.10%		76.70%
Debt-service coverage ratio	1.63		1.63		1.61
Loan to value ratio sixty five to seventy four [Member]
Mortgage Loans Credit Quality [Line Items]
Principal amount of mortgage loans on real estate	1,008,000,000		1,008,000,000		1,198,000,000
Percentage of total mortgage loans on real estate	14.80%		14.80%		17.20%
Debt-service coverage ratio	1.41		1.41		1.37
Loan to value ratio seventy five to one hundred [Member]
Mortgage Loans Credit Quality [Line Items]
Principal amount of mortgage loans on real estate	334,000,000		334,000,000		308,000,000
Percentage of total mortgage loans on real estate	4.90%		4.90%		4.40%
Debt-service coverage ratio	0.90		0.90		0.92
Loan to value ratio, greater than one hundred [Member]
Mortgage Loans Credit Quality [Line Items]
Principal amount of mortgage loans on real estate	82,000,000		82,000,000		116,000,000
Percentage of total mortgage loans on real estate	1.20%		1.20%		1.70%
Debt-service coverage ratio	0.32		0.32		0.36
Corporate bonds [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Balance as of beginning of year					51,000,000
Decreases attributable to:
Balance as of end of year	73,000,000		73,000,000		51,000,000
Other Than Temporary Impairments Credit Losses [Line Items]
Amortized Cost	239,000,000		239,000,000		169,000,000
Gross Unrealized Gains	1,000,000		1,000,000		1,000,000
Gross Unrealized Losses and OTTI	(104,000,000)		(104,000,000)		(67,000,000)
Fair Value	136,000,000		136,000,000		103,000,000
OTTI in Credit Losses	73,000,000		73,000,000		51,000,000
RMBS [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Balance as of beginning of year					301,000,000
Decreases attributable to:
Balance as of end of year	268,000,000		268,000,000		301,000,000
Other Than Temporary Impairments Credit Losses [Line Items]
Amortized Cost	697,000,000		697,000,000		690,000,000
Gross Unrealized Gains	5,000,000		5,000,000		1,000,000
Gross Unrealized Losses and OTTI	(91,000,000)		(91,000,000)		(128,000,000)
Fair Value	611,000,000		611,000,000		563,000,000
OTTI in Credit Losses	268,000,000		268,000,000		301,000,000
CMBS [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Balance as of beginning of year					38,000,000
Decreases attributable to:
Balance as of end of year	74,000,000		74,000,000		38,000,000
Other Than Temporary Impairments Credit Losses [Line Items]
Amortized Cost	46,000,000		46,000,000		17,000,000
Gross Unrealized Gains	0		0		0
Gross Unrealized Losses and OTTI	(24,000,000)		(24,000,000)		(10,000,000)
Fair Value	22,000,000		22,000,000		7,000,000
OTTI in Credit Losses	74,000,000		74,000,000		38,000,000
Available For Sale Securities Continuous Unrealized Loss Position Less Than 6 Months [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Fair Value	115,000,000		115,000,000		385,000,000
Gross Unrealized Losses	41,000,000		41,000,000		125,000,000
Gross Unrealized OTTI	2,000,000		2,000,000		31,000,000
Number of securities	25		25		56
Available For Sale Securities Continuous Unrealized Loss Position More Than 6 Months And Less Than 9 Months [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Fair Value	13,000,000		13,000,000		53,000,000
Gross Unrealized Losses	4,000,000		4,000,000		30,000,000
Gross Unrealized OTTI	1,000,000		1,000,000		12,000,000
Number of securities	4		4		18
Available For Sale Securities Continuous Unrealized Loss Position Less Than 12 Months [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Fair Value	104,000,000		104,000,000		2,000,000
Gross Unrealized Losses	40,000,000		40,000,000		0
Gross Unrealized OTTI	12,000,000		12,000,000		1,000,000
Number of securities	17		17		7
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer [Member]
Available For Sale Securities In Unrealized Loss Position With Loss Severity Greater Than 20 Percent [Line Items]
Fair Value	584,000,000		584,000,000		615,000,000
Gross Unrealized Losses	342,000,000		342,000,000		470,000,000
Gross Unrealized OTTI	165,000,000		165,000,000		111,000,000
Number of securities	167		167		175
Total Available For Sale Securities Backed By Pools Of Residential Mortgages At Risk [Member]
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Amortized Cost	1,734,000,000		1,734,000,000		2,023,000,000
Fair Value	1,363,000,000		1,363,000,000		1,553,000,000
Unrealized Loss	(371,000,000)		(371,000,000)		(470,000,000)
Total Available For Sale Securities Backed By Pools Of Commercial Mortgages At Risk [Member]
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Amortized Cost	355,000,000		355,000,000		472,000,000
Fair Value	274,000,000		274,000,000		344,000,000
Unrealized Loss	(81,000,000)		(81,000,000)		(128,000,000)
Total Available For Sale Securities Backed By Pools Of Residential And Commercial Mortgages At Risk [Member]
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Amortized Cost	2,089,000,000		2,089,000,000		2,495,000,000
Fair Value	1,637,000,000		1,637,000,000		1,897,000,000
Unrealized Loss	(452,000,000)		(452,000,000)		(598,000,000)
Available For Sale Securities Backed By Pools Of Residential Mortgages Subject To Detailed Analysis [Member]
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Amortized Cost	1,724,000,000		1,724,000,000		2,015,000,000
Fair Value	1,353,000,000		1,353,000,000		1,545,000,000
Unrealized Loss	(371,000,000)		(371,000,000)		(470,000,000)
Available For Sale Securities Backed By Pools Of Commercial Mortgages Subject To Detailed Analysis [Member]
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Amortized Cost	79,000,000		79,000,000		126,000,000
Fair Value	42,000,000		42,000,000		61,000,000
Unrealized Loss	(37,000,000)		(37,000,000)		(65,000,000)
Available For Sale Securities Backed By Pools Of Residential And Commercial Mortgages Subject To Detailed Analysis [Member]
Schedule Of Available For Sale Securities Residential And Commercial Mortgage At Risk [Line Items]
Amortized Cost	1,803,000,000		1,803,000,000		2,141,000,000
Fair Value	1,395,000,000		1,395,000,000		1,606,000,000
Unrealized Loss	(408,000,000)		(408,000,000)		(535,000,000)
Investment Type [Domain]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	72,212,000,000		72,212,000,000		69,796,000,000
Gross unrealized gains	8,689,000,000		8,689,000,000		7,585,000,000
Gross unrealized losses	(631,000,000)		(631,000,000)		(906,000,000)
Gross unrealized OTTI	(220,000,000)		(220,000,000)		(203,000,000)
Fair Value	80,050,000,000		80,050,000,000		76,272,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	3,160,000,000		3,160,000,000		3,993,000,000
Greater Than Twelve Months	2,272,000,000		2,272,000,000		2,490,000,000
Continuous Unrealized Loss Position, Total	5,432,000,000		5,432,000,000		6,483,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	295,000,000		295,000,000		338,000,000
Greater Than Twelve Months	556,000,000		556,000,000		771,000,000
Gross Unrealized Losses and OTTI, Total	851,000,000		851,000,000		1,109,000,000
Available For Sale Securities In Unrealized Loss Position Qualitative Disclosure Number Of Positions	734		734		897
MBS [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost
Subtotal - Amortized Cost	8,112,000,000		8,112,000,000
Available-for-sale Securities, Debt Maturities, Fair Value
Subtotal - Fair Value	8,504,000,000		8,504,000,000
CDOs [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost
Subtotal - Amortized Cost	135,000,000		135,000,000
Available-for-sale Securities, Debt Maturities, Fair Value
Subtotal - Fair Value	120,000,000		120,000,000
Fixed maturity securities [Member] | Investment Type [Domain]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	72,069,000,000		72,069,000,000		69,661,000,000
Gross unrealized gains	8,670,000,000		8,670,000,000		7,569,000,000
Gross unrealized losses	(623,000,000)		(623,000,000)		(894,000,000)
Gross unrealized OTTI	(220,000,000)		(220,000,000)		(203,000,000)
Fair Value	79,896,000,000		79,896,000,000		76,133,000,000
Available-for-sale Securities, Debt Maturities, Amortized Cost
Due in one year or less	2,931,000,000		2,931,000,000
Due after one year through five years	12,188,000,000		12,188,000,000
Due after five years through ten years	23,651,000,000		23,651,000,000
Due after ten years	25,052,000,000		25,052,000,000
Subtotal - Amortized Cost	63,822,000,000		63,822,000,000
Available-for-sale Securities, Debt Maturities, Fair Value
Due in one year or less	2,989,000,000		2,989,000,000
Due after one year through five years	13,136,000,000		13,136,000,000
Due after five years through ten years	26,185,000,000		26,185,000,000
Due after ten years	28,962,000,000		28,962,000,000
Subtotal - Fair Value	71,272,000,000		71,272,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	3,150,000,000		3,150,000,000		3,955,000,000
Greater Than Twelve Months	2,268,000,000		2,268,000,000		2,490,000,000
Continuous Unrealized Loss Position, Total	5,418,000,000		5,418,000,000		6,445,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	294,000,000		294,000,000		326,000,000
Greater Than Twelve Months	549,000,000		549,000,000		771,000,000
Gross Unrealized Losses and OTTI, Total	843,000,000		843,000,000		1,097,000,000
Fixed maturity securities [Member] | Corporate bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	57,342,000,000		57,342,000,000		53,661,000,000
Gross unrealized gains	7,068,000,000		7,068,000,000		6,185,000,000
Gross unrealized losses	(393,000,000)		(393,000,000)		(517,000,000)
Gross unrealized OTTI	(103,000,000)		(103,000,000)		(68,000,000)
Fair Value	63,914,000,000		63,914,000,000		59,261,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	2,389,000,000		2,389,000,000		2,848,000,000
Greater Than Twelve Months	1,293,000,000		1,293,000,000		1,452,000,000
Continuous Unrealized Loss Position, Total	3,682,000,000		3,682,000,000		4,300,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	175,000,000		175,000,000		162,000,000
Greater Than Twelve Months	321,000,000		321,000,000		423,000,000
Gross Unrealized Losses and OTTI, Total	496,000,000		496,000,000		585,000,000
Fixed maturity securities [Member] | U.S. government bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	449,000,000		449,000,000		439,000,000
Gross unrealized gains	68,000,000		68,000,000		55,000,000
Gross unrealized losses	0		0		0
Gross unrealized OTTI	0		0		0
Fair Value	517,000,000		517,000,000		494,000,000
Fixed maturity securities [Member] | Foreign government bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	583,000,000		583,000,000		668,000,000
Gross unrealized gains	81,000,000		81,000,000		65,000,000
Gross unrealized losses	0		0		0
Gross unrealized OTTI	0		0		0
Fair Value	664,000,000		664,000,000		733,000,000
Fixed maturity securities [Member] | RMBS [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	6,808,000,000		6,808,000,000		7,690,000,000
Gross unrealized gains	522,000,000		522,000,000		548,000,000
Gross unrealized losses	(41,000,000)		(41,000,000)		(73,000,000)
Gross unrealized OTTI	(92,000,000)		(92,000,000)		(126,000,000)
Fair Value	7,197,000,000		7,197,000,000		8,039,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	521,000,000		521,000,000		565,000,000
Greater Than Twelve Months	314,000,000		314,000,000		429,000,000
Continuous Unrealized Loss Position, Total	835,000,000		835,000,000		994,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	90,000,000		90,000,000		125,000,000
Greater Than Twelve Months	43,000,000		43,000,000		74,000,000
Gross Unrealized Losses and OTTI, Total	133,000,000		133,000,000		199,000,000
Fixed maturity securities [Member] | CMBS [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	1,304,000,000		1,304,000,000		1,642,000,000
Gross unrealized gains	71,000,000		71,000,000		73,000,000
Gross unrealized losses	(43,000,000)		(43,000,000)		(106,000,000)
Gross unrealized OTTI	(25,000,000)		(25,000,000)		(9,000,000)
Fair Value	1,307,000,000		1,307,000,000		1,600,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	110,000,000		110,000,000		178,000,000
Greater Than Twelve Months	146,000,000		146,000,000		146,000,000
Continuous Unrealized Loss Position, Total	256,000,000		256,000,000		324,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	25,000,000		25,000,000		15,000,000
Greater Than Twelve Months	43,000,000		43,000,000		100,000,000
Gross Unrealized Losses and OTTI, Total	68,000,000		68,000,000		115,000,000
Fixed maturity securities [Member] | CDOs [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	135,000,000		135,000,000		121,000,000
Gross unrealized gains	0		0		0
Gross unrealized losses	(15,000,000)		(15,000,000)		(19,000,000)
Gross unrealized OTTI	0		0		0
Fair Value	120,000,000		120,000,000		102,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	0		0		9,000,000
Greater Than Twelve Months	68,000,000		68,000,000		80,000,000
Continuous Unrealized Loss Position, Total	68,000,000		68,000,000		89,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	0		0		1,000,000
Greater Than Twelve Months	15,000,000		15,000,000		18,000,000
Gross Unrealized Losses and OTTI, Total	15,000,000		15,000,000		19,000,000
Fixed maturity securities [Member] | State and municipal bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	3,525,000,000		3,525,000,000		3,490,000,000
Gross unrealized gains	767,000,000		767,000,000		566,000,000
Gross unrealized losses	(8,000,000)		(8,000,000)		(9,000,000)
Gross unrealized OTTI	0		0		0
Fair Value	4,284,000,000		4,284,000,000		4,047,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	5,000,000		5,000,000		31,000,000
Greater Than Twelve Months	22,000,000		22,000,000		30,000,000
Continuous Unrealized Loss Position, Total	27,000,000		27,000,000		61,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	0		0		0
Greater Than Twelve Months	8,000,000		8,000,000		9,000,000
Gross Unrealized Losses and OTTI, Total	8,000,000		8,000,000		9,000,000
Fixed maturity securities [Member] | Hybrid and redeemable preferred securities [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	1,248,000,000		1,248,000,000		1,277,000,000
Gross unrealized gains	63,000,000		63,000,000		50,000,000
Gross unrealized losses	(123,000,000)		(123,000,000)		(170,000,000)
Gross unrealized OTTI	0		0		0
Fair Value	1,188,000,000		1,188,000,000		1,157,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	125,000,000		125,000,000		324,000,000
Greater Than Twelve Months	425,000,000		425,000,000		353,000,000
Continuous Unrealized Loss Position, Total	550,000,000		550,000,000		677,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	4,000,000		4,000,000		23,000,000
Greater Than Twelve Months	119,000,000		119,000,000		147,000,000
Gross Unrealized Losses and OTTI, Total	123,000,000		123,000,000		170,000,000
Fixed maturity securities [Member] | VIEs' fixed maturity securities
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	675,000,000		675,000,000		673,000,000
Gross unrealized gains	30,000,000		30,000,000		27,000,000
Gross unrealized losses	0		0		0
Gross unrealized OTTI	0		0		0
Fair Value	705,000,000		705,000,000		700,000,000
Equity securities [Member] | Investment Type [Domain]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost	143,000,000		143,000,000		135,000,000
Gross unrealized gains	19,000,000		19,000,000		16,000,000
Gross unrealized losses	(8,000,000)		(8,000,000)		(12,000,000)
Gross unrealized OTTI	0		0		0
Fair Value	154,000,000		154,000,000		139,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	10,000,000		10,000,000		38,000,000
Greater Than Twelve Months	4,000,000		4,000,000		0
Continuous Unrealized Loss Position, Total	14,000,000		14,000,000		38,000,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	1,000,000		1,000,000		12,000,000
Greater Than Twelve Months	7,000,000		7,000,000		0
Gross Unrealized Losses and OTTI, Total	$ 8,000,000		$ 8,000,000		$ 12,000,000

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Shares and Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Changes in preferred and common stock (number of shares)

		For the Three		For the Six
		Months Ended		Months Ended
		June 30,		June 30,
		2012	2011	2012	2011
Series A Preferred Stock
Balance as of beginning-of-period		9,632	10,914	10,072	10,914
Conversion of convertible preferred stock (1)		-	(60)	(440)	(60)
	Balance as of end-of-period	9,632	10,854	9,632	10,854
Common Stock
Balance as of beginning-of-period		285,412,303	313,456,824	291,319,222	315,718,554
Conversion of convertible preferred stock (1)		-	960	7,040	960
Stock compensation/issued for benefit plans		230,198	30,772	334,395	182,906
Retirement/cancellation of shares		(6,473,530)	(5,149,393)	(12,491,686)	(7,563,257)
	Balance as of end-of-period	279,168,971	308,339,163	279,168,971	308,339,163
Common Stock as of End-of-Period
Assuming conversion of preferred stock		279,323,083	308,512,827	279,323,083	308,512,827
Diluted basis		286,820,300	316,821,550	286,820,300	316,821,550

Reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share

			For the Three		For the Six
			Months Ended		Months Ended
			June 30,		June 30,
			2012	2011	2012	2011
Weighted-average shares, as used in basic calculation			282,085,602	311,391,263	285,570,764	313,192,667
Shares to cover exercise of outstanding warrants			10,150,192	10,150,292	10,150,231	10,150,292
Shares to cover conversion of preferred stock			154,112	174,603	154,305	174,613
Shares to cover non-vested stock			1,110,662	816,834	1,060,676	794,095
Average stock options outstanding during the period			507,944	633,711	554,614	796,792
Assumed acquisition of shares with assumed
	proceeds from exercising outstanding warrants		(4,887,102)	(3,846,217)	(4,760,822)	(3,758,105)
Assumed acquisition of shares with assumed
	proceeds and benefits from exercising stock
	options (at average market price for the period)		(346,700)	(400,374)	(380,239)	(517,329)
Shares repurchaseable from measured but
	unrecognized stock option expense		(1,768)	(36,857)	(8,224)	(104,962)
Average deferred compensation shares			1,187,598	1,031,814	1,206,501	1,053,100
		Weighted-average shares, as used in diluted calculation	289,960,540	319,915,069	293,547,806	321,781,163

Components and changes in accumulated OCI

				For the Six
				Months Ended
				June 30,
				2012		2011
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year				$	2,947	$	1,072
	Cumulative effect from adoption of new accounting standards				-		105
	Unrealized holding gains (losses) arising during the period				1,276		627
	Change in foreign currency exchange rate adjustment				(6)		22
	Change in DAC, VOBA, DSI and other contract holder funds				(261)		(168)
	Income tax benefit (expense)				(395)		(136)
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(103)		(38)
		Associated amortization of DAC, VOBA, DSI and DFEL			1		(15)
		Income tax benefit (expense)			36		19
			Balance as of end-of-period	$	3,627	$	1,556
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year				$	(110)	$	(129)
	(Increases) attributable to:
		Cumulative effect from adoption of new accounting standards			-		(5)
		Gross OTTI recognized in OCI during the period			(79)		(27)
		Change in DAC, VOBA, DSI and other contract holder funds			12		8
		Income tax benefit (expense)			26		7
	Decreases attributable to:
		Sales, maturities or other settlements of AFS securities			62		67
		Change in DAC, VOBA, DSI and other contract holder funds			(8)		(13)
		Income tax benefit (expense)			(20)		(19)
			Balance as of end-of-period	$	(117)	$	(111)
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year				$	119	$	(15)
	Cumulative effect from adoption of new accounting standards				-		3
	Unrealized holding gains (losses) arising during the period				37		(34)
	Change in foreign currency exchange rate adjustment				2		(14)
	Change in DAC, VOBA, DSI and DFEL				4		-
	Income tax benefit (expense)				(16)		18
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(7)		(9)
		Associated amortization of DAC, VOBA, DSI and DFEL			1		1
		Income tax benefit (expense)			2		3
			Balance as of end-of-period	$	150	$	(37)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year				$	1	$	1
	Foreign currency translation adjustment arising during the period				(8)		(6)
	Income tax benefit (expense)				3		2
		Balance as of end-of-period		$	(4)	$	(3)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year				$	(278)	$	(181)
	Adjustment arising during the period				1		5
	Income tax benefit (expense)				-		(2)
		Balance as of end-of-period		$	(277)	$	(178)

XML

Document Information	6 Months Ended
	Jun. 30, 2012
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false

XML

Shares and Stockholders' Equity (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share Table
Weighted-average shares, as used in basic calculation (in shares)	282,085,602	311,391,263	285,570,764	313,192,667
Shares to cover exercise of outstanding warrants (in shares)	10,150,192	10,150,292	10,150,231	10,150,292
Shares to cover conversion of preferred stock (in shares)	154,112	174,603	154,305	174,613
Shares to cover non-vested stock (in shares)	1,110,662	816,834	1,060,676	794,095
Average stock options outstanding during the period (in shares)	507,944	633,711	554,614	796,792
Assumed acquisition of shares with assumed proceeds from exercising outstanding warrants (in shares)	(4,887,102)	(3,846,217)	(4,760,822)	(3,758,105)
Assumed acquisition of shares with assumed proceeds and benefits from exercising stock options (at average market price for the year) (in shares)	(346,700)	(400,374)	(380,239)	(517,329)
Shares repurchaseable from measured but unrecognized stock option expense (in shares)	(1,768)	(36,857)	(8,224)	(104,962)
Average deferred compensation shares (in shares)	1,187,598	1,031,814	1,206,501	1,053,100
Weighted-average shares, as used in diluted calculation (in shares)	289,960,540	319,915,069	293,547,806	321,781,163
Deferred compensation plan mark to market adjustment	$ 4	$ 1	$ (2)	$ 0
Unrealized Gain (Loss) on AFS Securities [Member]
Components And Changes In Accumulated Other Comprehensive Income [Line Items]
Balance as of beginning-of-year			2,947	1,072
Cumulative effect from adoption of new accounting standards	0	105	0	105
Unrealized holding gains (losses) arising during the period			1,276	627
Change in foreign currency exchange rate adjustment			(6)	22
Change in DAC, VOBA, DSI and other contract holder funds			(261)	(168)
Income tax benefit (expense)			(395)	(136)
Less: Reclassification adjustment for gains (losses) included in net income (loss)			(103)	(38)
Less: Associated amortization of DAC, VOBA, DSI, and DFEL			1	(15)
Less: Income tax benefit (expense)			36	19
Balance as of end-of-period	3,627	1,556	3,627	1,556
Unrealized Other Than Temporary Impairment on Available For Sale Securities [Member]
Components And Changes In Accumulated Other Comprehensive Income [Line Items]
Balance as of beginning-of-year			(110)	(129)
Cumulative effect from adoption of new accounting standards	0	(5)	0	(5)
Increases attributable to: Gross OTTI recognized in OCI during the period			(79)	(27)
Increases attributable to: Change in DAC, VOBA, DSI and DFEL			12	8
Increases attributable to: Income tax benefit (expense)			26	7
Decreases attributable to: Sales, maturities or other settlements of AFS Securities			62	67
Decreases attributable to: Change in DAC, VOBA, DSI, and DFEL			(8)	(13)
Decreases attributable to: Income tax benefit (expense)			(20)	(19)
Balance as of end-of-period	(117)	(111)	(117)	(111)
Unrealized Gain (Loss) on Derivative Instruments [Member]
Components And Changes In Accumulated Other Comprehensive Income [Line Items]
Balance as of beginning-of-year			119	(15)
Cumulative effect from adoption of new accounting standards	0	3	0	3
Unrealized holding gains (losses) arising during the period			37	(34)
Change in foreign currency exchange rate adjustment			2	(14)
Less: Reclassification adjustment for gains (losses) included in net income (loss)			(7)	(9)
Change in DAC, VOBA, DSI and DFEL			4	0
Income tax benefit (expense)			(16)	18
Less: Associated amortization of DAC, VOBA, DSI and DFEL			1	1
Less: Income tax benefit (expense)			2	3
Balance as of end-of-period	150	(37)	150	(37)
Foreign Currency Translation Adjustment [Member]
Components And Changes In Accumulated Other Comprehensive Income [Line Items]
Balance as of beginning-of-year			1	1
Foreign currency translation adjustment arising during the period			(8)	(6)
Income tax benefit (expense)			3	2
Balance as of end-of-period	(4)	(3)	(4)	(3)
Funded Status of Employee Benefit Plans [Member]
Components And Changes In Accumulated Other Comprehensive Income [Line Items]
Balance as of beginning-of-year			(278)	(181)
Adjustment arising during the period			1	5
Income tax benefit (expense)			0	(2)
Balance as of end-of-period	$ (277)	$ (178)	$ (277)	$ (178)
Series A Preferred Stock [Member]
Changes In Preferred And Common Stock Number Of Shares [Line Items]
Balance as of beginning-of-period	9,632	10,914	10,072	10,914
Conversion of convertible preferred stock (in shares)	0	(60)	(440)	(60)
Balance as of end-of-period (in shares)	9,632	10,854	9,632	10,854
Common stock [Member]
Changes In Preferred And Common Stock Number Of Shares [Line Items]
Balance as of beginning-of-period	285,412,303	313,456,824	291,319,222	315,718,554
Conversion of convertible preferred stock (in shares)	0	960	7,040	960
Stock compensation/issued for benefit plans (in shares)	230,198	30,772	334,395	182,906
Retirement/cancellation of shares (in shares)	(6,473,530)	(5,149,393)	(12,491,686)	(7,563,257)
Balance as of end-of-period (in shares)	279,168,971	308,339,163	279,168,971	308,339,163
Common stock as of end-of-year:
Assuming conversion of preferred stock (in shares)	279,323,083	308,512,827	279,323,083	308,512,827
Diluted basis (in shares)	286,820,300	316,821,550	286,820,300	316,821,550

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Variable Interest Entities

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Consolidated Variable Interest Entities

3. Variable Interest Entities (“VIEs”)

Consolidated VIEs

See Note 4 in our 2011 Form 10-K for a detailed discussion of our consolidated VIEs, which information is incorporated herein by reference.

The following summarizes information regarding the credit-linked note (“CLN”) structures (dollars in millions) as of June 30, 2012:

	Amount and Date of Issuance
		$400		$200
		December		April
		2006		2007
Original attachment point (subordination)		5.50	%	2.05	%
Current attachment point (subordination)		4.17	%	1.48	%
Maturity	12/20/2016			3/20/2017
Current rating of tranche		BB-		Ba2
Current rating of underlying collateral pool		Aa1-B3		Aaa-Caa1
Number of defaults in underlying collateral pool		2		2
Number of entities		123		99
Number of countries		20		22

The following summarizes the exposure of the CLN structures' underlying collateral by industry and rating as of June 30, 2012:

			AAA		AA		A		BBB		BB		B		CCC		Total
Industry
Telecommunications			0.0	%	0.0	%	5.5	%	4.5	%	0.7	%	0.5	%	0.0	%	11.2	%
Financial intermediaries			0.0	%	2.1	%	7.5	%	0.9	%	0.0	%	0.0	%	0.0	%	10.5	%
Oil and gas			0.0	%	1.8	%	1.0	%	4.6	%	0.0	%	0.0	%	0.0	%	7.4	%
Utilities			0.0	%	0.0	%	2.6	%	2.0	%	0.0	%	0.0	%	0.0	%	4.6	%
Chemicals and plastics			0.0	%	0.0	%	2.3	%	1.2	%	0.3	%	0.0	%	0.0	%	3.8	%
Drugs			0.3	%	2.7	%	0.7	%	0.0	%	0.0	%	0.0	%	0.0	%	3.7	%
Retailers (except food
	and drug)		0.0	%	0.0	%	2.1	%	0.9	%	0.5	%	0.0	%	0.0	%	3.5	%
Industrial equipment			0.0	%	0.0	%	3.0	%	0.3	%	0.0	%	0.0	%	0.0	%	3.3	%
Sovereign			0.0	%	0.7	%	1.6	%	1.0	%	0.0	%	0.0	%	0.0	%	3.3	%
Conglomerates			0.0	%	2.3	%	0.9	%	0.0	%	0.0	%	0.0	%	0.0	%	3.2	%
Forest products			0.0	%	0.0	%	0.0	%	1.6	%	1.4	%	0.0	%	0.0	%	3.0	%
Other			0.0	%	3.9	%	16.0	%	17.7	%	3.7	%	0.9	%	0.3	%	42.5	%
		Total	0.3	%	13.5	%	43.2	%	34.7	%	6.6	%	1.4	%	0.3	%	100.0	%

					As of June 30, 2012							As of December 31, 2011
					Number							Number
					of		Notional		Carrying			of		Notional		Carrying
				Instruments			Amounts		Value		Instruments			Amounts		Value
Assets
Fixed maturity securities:
	Asset-backed credit card loans					N/A	$	-	$	595			N/A	$	-	$	592
	U.S. government bonds					N/A		-		110			N/A		-		108
Excess mortality swap						1		100		-			1		100		-
			Total assets (1)			1	$	100	$	705			1	$	100	$	700
Liabilities
Non-qualifying hedges:
	Credit default swaps					2	$	600	$	234			2	$	600	$	295
	Contingent forwards					2		-		(3)			2		-		(4)
		Total non-qualifying hedges				4		600		231			4		600		291
Federal income tax						N/A		-		(73)			N/A		-		(98)
			Total liabilities (2)			4	$	600	$	158			4	$	600	$	193

• Reported in VIEs'fixed maturity securities on our Consolidated Balance Sheets.
• Reported in VIEs' liabilities on our Consolidated Balance Sheets.

For details related to the fixed maturity available-for-sale (“AFS”)securities for these VIEs, see Note 4.

As described more fully in Note 1 of our2011 Form 10-K, we regularly review our investment holdings for other-than-temporary impairment (“OTTI”). Based upon this review, we believe that the fixed maturity securities were not other-than-temporarily impaired as of June 30, 2012.

The gains (losses) for these consolidated VIEs (in millions) recorded on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Non-Qualifying Hedges
Credit default swaps		$	(10)	$	6	$	61	$	13
Contingent forwards			-		(1)		(2)		(3)
	Total non-qualifying hedges (1)	$	(10)	$	5	$	59	$	10

• Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

Unconsolidated VIEs

See Note 4 in our 2011 Form 10-K for a detailed discussion of our unconsolidated VIEs

Unconsolidated VIEs

See Note 4 in our 2010 Form 10-K for a detailed discussion of our unconsolidated VIEs.

XML

Entity Information (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jul. 31, 2012	Jun. 30, 2011
Entity Registrant Name	LINCOLN NATIONAL CORP
Entity Central Index Key	0000059558
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 8,800
Entity Common Stock, Shares Outstanding		279,173,774
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Reconciliation Of Revenue From Segments To Consolidated

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Revenues
Operating revenues:
	Annuities		$	734	$	735	$	1,465	$	1,468
	Retirement Plan Services			258		260		510		523
	Life Insurance			1,237		1,229		2,469		2,376
	Group Protection			540		501		1,043		979
	Other Operations			113		114		220		232
Excluded realized gain (loss), pre-tax				18		(33)		(95)		(53)
Amortization of deferred gain arising from reserve changes on business
	sold through reinsurance, pre-tax			-		1		1		1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax				(1)		-		1		-
		Total revenues	$	2,899	$	2,807	$	5,614	$	5,526

Reconciliation of income (loss) from operations by segment to consolidated net income (loss)

				For the Three				For the Six
				Months Ended				Months Ended
				June 30,				June 30,
				2012		2011		2012		2011
Net Income (Loss)
Income (loss) from operations:
	Annuities			$	158	$	145	$	294	$	289
	Retirement Plan Services				38		41		72		90
	Life Insurance				138		136		281		279
	Group Protection				27		26		43		50
	Other Operations				(39)		(22)		(73)		(60)
Excluded realized gain (loss), after-tax					12		(21)		(61)		(34)
Benefit ratio unlocking, after-tax					(10)		(1)		14		3
		Income (loss) from continuing operations, after-tax			324		304		570		617
		Income (loss) from discontinued operations, after-tax			-		-		(1)		-
			Net income (loss)	$	324	$	304	$	569	$	617

XML

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Carrying and Estimated Fair Values of Financial Instruments

		As of June 30, 2012				As of December 31, 2011
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Assets
AFS securities:
	Fixed maturity securities	$	79,191	$	79,191	$	75,433	$	75,433
	VIEs' fixed maturity securities		705		705		700		700
	Equity securities		154		154		139		139
Trading securities			2,649		2,649		2,675		2,675
Mortgage loans on real estate			6,804		7,463		6,942		7,608
Derivative investments			3,399		3,399		3,151		3,151
Other investments			1,041		1,041		1,069		1,069
Cash and invested cash			5,257		5,257		4,510		4,510
Separate account assets			88,839		88,839		83,477		83,477
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives		(431)		(431)		(399)		(399)
	GLB reserves embedded derivatives		(1,926)		(1,926)		(2,217)		(2,217)
Other contract holder funds:
	Remaining guaranteed interest and similar contracts		(1,034)		(1,034)		(1,114)		(1,114)
	Account values of certain investment contracts		(27,916)		(31,554)		(27,468)		(30,812)
Short-term debt (1)			(300)		(302)		(300)		(309)
Long-term debt			(5,719)		(6,659)		(5,391)		(5,345)
Reinsurance related embedded derivatives			(185)		(185)		(168)		(168)
VIEs' liabilities - derivative instruments			(231)		(231)		(291)		(291)
Other liabilities:
	Deferred compensation plans		(358)		(358)		(354)		(354)
	Credit default swaps		(11)		(11)		(16)		(16)

Fair Value of Assets and Liabilities on a Recurring Basis

					As of June 30, 2012
					Quoted
					Prices
					in Active
				Markets for				Significant			Significant
					Identical		Observable			Unobservable			Total
					Assets			Inputs			Inputs		Fair
					(Level 1)			(Level 2)			(Level 3)		Value
Assets
Investments:
	Fixed maturity AFS securities:
		Corporate bonds			$	62		$	62,174		$	1,678	$	63,914
		U.S. government bonds				482			34			1		517
		Foreign government bonds				-			562			102		664
		RMBS				-			7,013			184		7,197
		CMBS				-			1,268			39		1,307
		CDOs				-			-			120		120
		State and municipal bonds				-			4,252			32		4,284
		Hybrid and redeemable preferred securities				20			1,039			129		1,188
	VIEs' fixed maturity securities					110			595			-		705
	Equity AFS securities					45			24			85		154
	Trading securities					2			2,575			72		2,649
	Derivative investments					-			882			2,517		3,399
Cash and invested cash						-			5,257			-		5,257
Separate account assets						-			88,839			-		88,839
			Total assets		$	721		$	174,514		$	4,959	$	180,194
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives				$	-		$	-		$	(431)	$	(431)
	GLB reserves embedded derivatives					-			-			(1,926)		(1,926)
Long-term debt						-			(1,203)			-		(1,203)
Reinsurance related embedded derivatives						-			(185)			-		(185)
VIEs' liabilities - derivative instruments						-			-			(231)		(231)
Other liabilities:
	Deferred compensation plans					-			-			(358)		(358)
	Credit default swaps					-			-			(11)		(11)
			Total liabilities		$	-		$	(1,388)		$	(2,957)	$	(4,345)

					As of December 31, 2011
					Quoted
					Prices
					in Active
				Markets for				Significant			Significant
					Identical		Observable			Unobservable			Total
					Assets			Inputs			Inputs		Fair
					(Level 1)			(Level 2)			(Level 3)		Value
Assets
Investments:
	Fixed maturity AFS securities:
		Corporate bonds			$	63		$	57,310		$	1,888	$	59,261
		U.S. government bonds				475			18			1		494
		Foreign government bonds				-			636			97		733
		RMBS				-			7,881			158		8,039
		CMBS				-			1,566			34		1,600
		CDOs				-			-			102		102
		State and municipal bonds				-			4,047			-		4,047
		Hybrid and redeemable preferred securities				15			1,042			100		1,157
	VIEs' fixed maturity securities					108			592			-		700
	Equity AFS securities					37			46			56		139
	Trading securities					2			2,605			68		2,675
	Derivative investments					-			681			2,470		3,151
Cash and invested cash						-			4,510			-		4,510
Separate account assets						-			83,477			-		83,477
			Total assets		$	700		$	164,411		$	4,974	$	170,085
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives				$	-		$	-		$	(399)	$	(399)
	GLB reserves embedded derivatives					-			-			(2,217)		(2,217)
Long-term debt						-			(1,688)			-		(1,688)
Reinsurance related embedded derivatives						-			(168)			-		(168)
VIEs' liabilities - derivative instruments						-			-			(291)		(291)
Other liabilities:
	Deferred compensation plans					-			-			(354)		(354)
	Credit default swaps					-			-			(16)		(16)
			Total liabilities		$	-		$	(1,856)		$	(3,277)	$	(5,133)

					For the Three Months Ended June 30, 2012
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)			Sales,		In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,932	$	(4)	$	(11)		$	45	$	(284)	$	1,678
		U.S. government bonds				1		-		-			-		-		1
		Foreign government bonds				99		-		3			-		-		102
		RMBS				98		-		1			98		(13)		184
		CMBS				32		(2)		2			(1)		8		39
		CDOs				102		-		-			18		-		120
		State and municipal bonds				-		-		-			32		-		32
		Hybrid and redeemable
			preferred securities			116		-		(3)			-		16		129
	Equity AFS securities					61		-		(1)			25		-		85
	Trading securities					68		1		-			2		1		72
	Derivative investments					2,037		228		155			97		-		2,517
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(480)		24		-			25		-		(431)
	GLB reserves embedded derivatives					(1,064)		(862)		-			-		-		(1,926)
VIEs' liabilities - derivative
	instruments (5)					(221)		(10)		-			-		-		(231)
Other liabilities:
	Deferred compensation plans (6)					(375)		10		-			7		-		(358)
	Credit default swaps (7)					(10)		(1)		-			-		-		(11)
				Total, net	$	2,396	$	(616)	$	146		$	348	$	(272)	$	2,002

					For the Three Months Ended June 30, 2011
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)			Sales		In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,806	$	23	$	33		$	(200)	$	(89)	$	1,573
		U.S. government bonds				2		-		-			-		-		2
		Foreign government bonds				100		-		(4)			-		-		96
		RMBS				115		(1)		3			44		-		161
		CMBS				64		(22)		24			(12)		(1)		53
		CDOs				136		-		2			(12)		-		126
		Hybrid and redeemable
			preferred securities			124		-		4			-		(22)		106
	Equity AFS securities:					96		-		(2)			2		-		96
	Trading securities					71		-		4			(1)		(3)		71
	Derivative investments					1,439		62		7			(16)		-		1,492
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(528)		6		-			16		-		(506)
	GLB reserves embedded derivatives					(118)		(160)		-			-		-		(278)
VIEs' liabilities - derivative
	instruments (5)					(203)		5		-			-		-		(198)
Other liabilities:
	Deferred compensation plans (6)					(357)		(5)		-			2		-		(360)
	Credit default swaps (7)					(6)		(1)		-			-		-		(7)
				Total, net	$	2,741	$	(93)	$	71		$	(177)	$	(115)	$	2,427

					For the Six Months Ended June 30, 2012
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)		Sales,			In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,888	$	(17)	$	(5)		$	25	$	(213)	$	1,678
		U.S. government bonds				1		-		-			-		-		1
		Foreign government bonds				97		-		4			-		1		102
		RMBS				158		(3)		3			94		(68)		184
		CMBS				34		(5)		9			(8)		9		39
		CDOs				102		-		4			14		-		120
		State and municipal bonds				-		-		-			32		-		32
		Hybrid and redeemable
			preferred securities			100		-		3			-		26		129
	Equity AFS securities					56		-		4			25		-		85
	Trading securities					68		1		1			-		2		72
	Derivative investments					2,470		(289)		67			269		-		2,517
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(399)		(80)		-			48		-		(431)
	GLB reserves embedded derivatives					(2,217)		291		-			-		-		(1,926)
VIEs' liabilities - derivative
	instruments (5)					(291)		60		-			-		-		(231)
Other liabilities:
	Deferred compensation plans (6)					(354)		(18)		-			14		-		(358)
	Credit default swaps (7)					(16)		5		-			-		-		(11)
				Total, net	$	1,697	$	(55)	$	90		$	513	$	(243)	$	2,002

					For the Six Months Ended June 30, 2011
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)		Sales,			In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,816	$	23	$	44		$	(221)	$	(89)	$	1,573
		U.S. government bonds				2		-		-			-		-		2
		Foreign government bonds				113		-		3			(3)		(17)		96
		RMBS				119		(3)		4			41		-		161
		CMBS				109		(45)		54			(64)		(1)		53
		CDOs				172		14		(9)			(51)		-		126
		Hybrid and redeemable
			preferred securities			119		(1)		5			-		(17)		106
	Equity AFS securities					92		8		1			(7)		2		96
	Trading securities					76		-		2			(3)		(4)		71
	Derivative investments					1,495		(84)		(11)			92		-		1,492
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(497)		54		-			(63)		-		(506)
	GLB reserves embedded derivatives					(408)		130		-			-		-		(278)
	VIEs' liabilities - derivative
		instruments (5)				(209)		11		-			-		-		(198)
Other liabilities:
	Deferred compensation plans (6)					(363)		(13)		-			16		-		(360)
	Credit default swaps (7)					(16)		2		-			7		-		(7)
				Total, net	$	2,620	$	96	$	93		$	(256)	$	(126)	$	2,427

Level 3 Unobservable Input Reconciliation

				For the Three Months Ended June 30, 2012
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	80	$	(26)	$	-		$	(8)	$	(1)	$	45
		RMBS			103		-		-			(5)		-		98
		CMBS			-		-		-			(1)		-		(1)
		CDOs			23		-		-			(5)		-		18
		State and municipal bonds			32		-		-			-		-		32
	Equity AFS securities				25		-		-			-		-		25
	Trading securities				2		-		-			-		-		2
	Derivative investments				165		(10)		(58)			-		-		97
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(25)		-		-			50		-		25
Other liabilities:
	Deferred compensation plans				-		-		-			7		-		7
			Total, net	$	405	$	(36)	$	(58)		$	38	$	(1)	$	348

				For the Three Months Ended June 30, 2011
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	22	$	(125)	$	-		$	(9)	$	(88)	$	(200)
		RMBS			47		-		-			(3)		-		44
		CMBS			-		(9)		-			(3)		-		(12)
		CDOs			-		-		-			(12)		-		(12)
	Equity AFS securities				2		-		-			-		-		2
	Trading securities				-		(1)		-			-		-		(1)
	Derivative investments				107		(25)		(98)			-		-		(16)
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(20)		-		-			36		-		16
Other liabilities:
	Deferred compensation plans				-		-		-			2		-		2
			Total, net	$	158	$	(160)	$	(98)		$	11	$	(88)	$	(177)

				For the Six Months Ended June 30, 2012
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	91	$	(27)	$	-		$	(35)	$	(4)	$	25
		RMBS			103		-		-			(9)		-		94
		CMBS			-		-		-			(8)		-		(8)
		CDOs			23		-		-			(9)		-		14
		State and municipal bonds			32		-		-			-		-		32
	Equity AFS securities				25		-		-			-		-		25
	Trading securities				2		-		-			(2)		-		-
	Derivative investments				373		3		(107)			-		-		269
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(35)		-		-			83		-		48
Other liabilities:
	Deferred compensation plans				-		-		-			14		-		14
			Total, net	$	614	$	(24)	$	(107)		$	34	$	(4)	$	513

				For the Six Months Ended June 30, 2011
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	38	$	(133)	$	(1)		$	(36)	$	(89)	$	(221)
		Foreign government bonds			-		(3)		-			-		-		(3)
		RMBS			48		-		-			(7)		-		41
		CMBS			-		(53)		-			(11)		-		(64)
		CDOs			-		(33)		-			(18)		-		(51)
	Equity AFS securities				8		(15)		-			-		-		(7)
	Trading securities				-		(1)		-			(2)		-		(3)
	Derivative investments				275		(27)		(156)			-		-		92
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(38)		-		-			(25)		-		(63)
Other liabilities:
	Deferred compensation plans				-		-		-			16		-		16
	Credit Default swaps				-		7		-			-		-		7
			Total, net	$	331	$	(258)	$	(157)		$	(83)	$	(89)	$	(256)

Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Investments: (1)
	Derivative investments		$	240	$	62	$	(332)	$	(94)
Future contract benefits: (1)
	Indexed annuity contracts embedded derivatives			(3)		-		19		(4)
	GLB reserves embedded derivatives			(814)		(108)		369		229
VIEs' liabilities - derivative instruments (1)				(10)		5		60		11
Other liabilities:
	Deferred compensation plans (2)			(10)		5		18		13
	Credit default swaps (3)			(1)		(1)		5		1
		Total, net	$	(598)	$	(37)	$	139	$	156

Fair Value Assets And Liabilities Transfers In And Out Of Level 3 [Text Block]

				For the Three Months						For the Three Months
				Ended June 30, 2012						Ended June 30, 2011
				Transfers		Transfers				Transfers		Transfers
				In to		Out of				In to		Out of
				Level 3		Level 3		Total		Level 3		Level 3		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	90	$	(374)	$	(284)	$	21	$	(110)	$	(89)
		RMBS			-		(13)		(13)		-		-		-
		CMBS			8		-		8		-		(1)		(1)
		Hybrid and redeemable preferred securities			16		-		16		-		(22)		(22)
	Trading securities				1		-		1		-		(3)		(3)
			Total, net	$	115	$	(387)	$	(272)	$	21	$	(136)	$	(115)

					For the Six Months						For the Six Months
					Ended June 30, 2012						Ended June 30, 2011
					Transfers		Transfers				Transfers		Transfers
					In to		Out of				In to		Out of
					Level 3		Level 3		Total		Level 3		Level 3		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds			$	146	$	(359)	$	(213)	$	34	$	(123)	$	(89)
		Foreign government bonds				1		-		1		-		(17)		(17)
		RMBS				-		(68)		(68)		-		-		-
		CMBS				9		-		9		-		(1)		(1)
		Hybrid and redeemable preferred
			securities			35		(9)		26		4		(21)		(17)
	Equity AFS securities					-		-		-		2		-		2
	Trading securities					2		-		2		-		(4)		(4)
				Total, net	$	193	$	(436)	$	(243)	$	40	$	(166)	$	(126)

Fair Value Inputs Assets Quantitative Information Table [Text Block]

					Fair		Valuation	Significant
					Value		Technique	Unobservable Inputs	Range
Assets
Investments:
	Fixed maturity AFS and trading
		securities
			Corporate bonds		$	899	Discounted cash flow	Liquidity/duration adjustment (1)	1.1% - 13.2%
			Foreign government bonds			52	Discounted cash flow	Liquidity/duration adjustment (1)	2.7% - 6.1%
			Hybrid and redeemable
				preferred stock		21	Discounted cash flow	Liquidity/duration adjustment (1)	2.7% - 2.7%
	Equity AFS and trading
		securities				11	Discounted cash flow	Liquidity/duration adjustment (1)	4.3% - 4.5%

Fair Value Inputs Liabilities Quantitative Information Table [Text Block]

			Fair		Valuation	Significant
			Value		Technique	Unobservable Inputs		Range
Liabilities
Future contract benefits:
	Indexed annuity contracts
		embedded derivatives		(431)	Discounted cash flow	Lapse rate (2)		1.0% - 15.0%
						Mortality rate (3)		(8)
	GLB reserves embedded
		derivatives		(1,926)	Monte Carlo simulation	Long-term lapse rate (2)		0.3% - 13.1%
						Wait period (5)		0 - 25 years (or
								years until the
								eligible age)
						Percent of maximum
							withdrawal amount (6)	95.0% - 100.0%
						Non-performance risk ("NPR") (7)		0.22% - 0.55%
						Mortality rate (3)		(8)
						Volatility (4)		1.0% - 35.0%

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New Accounting Standards (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2011 Accounting for costs associated with acquiring or renewing insurance contracts [Member]	Jun. 30, 2011 Accounting for costs associated with acquiring or renewing insurance contracts [Member]	Dec. 31, 2011 Accounting for costs associated with acquiring or renewing insurance contracts [Member]	Dec. 31, 2010 Accounting for costs associated with acquiring or renewing insurance contracts [Member]
Assets
Deferred acquisition cost							$ (1,415)	$ (1,516)
Liabilities
Other liabilities - deferred income taxes							(490)	(524)
Stockholders Equity
Retained earnings							(1,157)	(1,095)
Accumulated other comprehensive income (loss)							232	103
Total stockholders' equity							(925)	(992)
Total liabilities and stockholders' equity							(1,415)	(1,516)
Revenues	2,899	2,807	5,614	5,526
Realized gain (loss)					4	8
Benefits and Expenses
Commissions and other expenses					(37)	(81)
Income (loss) from continuing operations					(21)	(47)
Income (loss) from continuing operations before taxes					(33)	(73)
Federal income tax expense (benefit)					$ 12	$ 26
Earnings (Loss) Per Common Share - Basic					$ (0)	$ (0)
Earnings (Loss) Per Common Share - Diluted					$ (0)	$ (0)

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Dispositions (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended
	Jan. 04, 2010
Discontinued Investment Management Operations [Abstract]
Cash received	$ 405

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New Accounting Standards

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

New Accounting Standards

2.  New Accounting Standards

Adoption of New Accounting Standards

Comprehensive Income Topic

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), with an objective of increasing the prominence of items reported in other comprehensive income (“OCI”); however, in December 2011, the FASB deferred a portion of the presentation requirements by issuing ASU No. 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011- 12”). For a more detailed description of ASU 2011-05 and ASU 2011-12, see “Future Adoption of New Accounting Standards – Comprehensive Income Topic” in Note 2 of our 2011 Form 10-K. We adopted the provisions of ASU 2011-05 as of January 1, 2012, after considering the deferral in ASU 2011-12, and have included a single continuous statement of comprehensive income in Item 1 of this quarterly report on Form 10-Q for the quarterly period ended June 30, 2012.

Fair Value Measurements and Disclosures Topic

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards” (“ASU 2011-04”), which was issued to create a consistent framework for the application of fair value measurement across jurisdictions. For a more detailed description of ASU 2011-04 see “Future Adoption of New Accounting Standards – Fair Value Measurements and Disclosures Topic” in Note 2 of our 2011 Form 10-K. We adopted the provisions of ASU 2011-04 effective January 1, 2012, and have included the additional disclosures required for fair value measurements in Note 12 for the quarterly period ended June 30, 2012.

Financial Services – Insurance Industry Topic

In October 2010, the FASB issued ASU No. 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts” (“ASU 2010-26”), which clarifies the types of costs incurred by an insurance entity that can be capitalized in the acquisition of insurance contracts. Only those costs incurred that result directly from and are essential to the successful acquisition of new or renewal insurance contracts may be capitalized as deferrable acquisition costs. The determination of deferability must be made on a contract-level basis.

Prior to the adoption of ASU 2010-26, we defined deferred acquisition costs (“DAC”) as commissions and other costs of acquiring UL insurance, VUL insurance, traditional life insurance, annuities and other investments contracts that vary with and are related primarily to new or renewal business, regardless of whether the acquisition efforts were successful or unsuccessful. Upon the adoption of ASU 2010-26, we revised our accounting policy to only defer acquisition costs directly related to successful contract acquisitions or renewals, and excluded from DAC those costs incurred for soliciting potential customers, market research, training, administration, management of distribution and underwriting functions, unsuccessful acquisition or renewal efforts and product development. In addition, indirect acquisition costs including administrative costs, rent, depreciation, occupancy costs, equipment costs and other general overhead are excluded from DAC. The costs that are considered non-deferrable acquisition costs under ASU 2010-26 are expensed in the period incurred.

We adopted the provisions of ASU 2010-26 as of January 1, 2012, and elected to retrospectively restate all prior periods. The following summarizes the prior period increases (decreases) (in millions) reflected in our Consolidated Balance Sheets and Consolidated Statements of Stockholders' Equity related to the adoption:

				As of December 31,
				2011		2010
Assets
Deferred acquisition costs				$	(1,415)	$	(1,516)
Liabilities and Stockholders' Equity
Other liabilities - deferred income taxes				$	(490)	$	(524)
Stockholders' equity:
	Retained earnings				(1,157)		(1,095)
	Accumulated other comprehensive income (loss)				232		103
		Total stockholders' equity			(925)		(992)
			Total liabilities and stockholders' equity	$	(1,415)	$	(1,516)

The following summarizes the prior period increases (decreases) to income from continuing operations and earnings (loss) per share (“EPS”) (in millions, except per share data) reflected in our Consolidated Statements of Comprehensive Income (Loss) for the three andsixmonths ended June 30, 2011, related to the adoption:

			For the Three				For the Six
			Months			Months
			Ended			Ended
			June 30,			June 30,
			2011			2011
Revenues
Realized gain (loss)				$	4		$	8
Expenses
Commissions and other expenses					(37)			(81)
	Income (loss) from continuing operations before taxes				(33)			(73)
	Federal income tax expense (benefit)				12			26
		Income (loss) from continuing operations		$	(21)		$	(47)
Earnings (Loss) Per Common Share - Basic				$	(0.07)		$	(0.15)
Earnings (Loss) Per Common Share - Diluted				$	(0.07)		$	(0.15)

Intangibles – Goodwill and Other Topic

In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”), which provides an option to first assess qualitative factors to determine if it is necessary to complete the two-step goodwill impairment test. For a more detailed description of ASU 2011-08, see “Future Adoption of New Accounting Standards – Intangibles – Goodwill and Other Topic” in Note 2 of our 2011 Form 10-K. We adopted the provisions of ASU 2011-08 effective January 1, 2012. The adoption did not have a material effect on our consolidated financial condition and results of operations.

Transfers and Servicing Topic

In April 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements” (“ASU 2011-03”), which revises the criteria for assessing effective control for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. For a more detailed description of ASU 2011-03, see “Future Adoption of New Accounting Standards – Transfers and Servicing Topic” in Note 2 of our 2011 Form 10-K. We adopted the provisions of ASU 2011-03 effective January 1, 2012. The adoption did not have a material effect on our consolidated financial condition and results of operations.

Future Adoption of New Accounting Standards

Balance Sheet Topic

In December 2011, the FASB issued ASU No. 2011-11, “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”), to address certain comparability issues between financial statements prepared in accordance with GAAP and those prepared in accordance with International Financial Reporting Standards. For a more detailed description of ASU 2011-11, see “Future Adoption of New Accounting Standards – Balance Sheet Topic” in Note 2 of our 2011 Form 10-K. We will adopt the disclosure requirements in ASU 2011-11 beginning with our first quarter 2013 financial statements and are currently evaluating the appropriate location for these disclosures in the notes to our financial statements.

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Variable Interest Entities (Details) (USD $) In Millions, unless otherwise specified									6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012 External Credit Rating AAA [Member]	Jun. 30, 2012 External Credit Rating AA [Member]	Jun. 30, 2012 External Credit Rating A [Member]	Jun. 30, 2012 External Credit Rating BBB [Member]	Jun. 30, 2012 External Credit Rating BB [Member]	Jun. 30, 2012 External Credit Rating B [Member]	Jun. 30, 2012 External Credit Rating CCC [Member]	Jun. 30, 2012 Credit Linked Note Structure December 2006 [Member]	Jun. 30, 2012 Credit Linked Note Structure April 2007 [Member]	Jun. 30, 2012 Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2011 Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2012 Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2011 Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2012 Credit default swaps [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2011 Credit default swaps [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2012 Credit default swaps [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2011 Credit default swaps [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2012 Contingent Forwards [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2011 Contingent Forwards [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2012 Contingent Forwards [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2011 Contingent Forwards [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Jun. 30, 2012 Federal Income Tax Liability [Member]	Dec. 31, 2011 Federal Income Tax Liability [Member]	Jun. 30, 2012 Assets	Dec. 31, 2011 Assets	Jun. 30, 2012 Assets Fixed maturity corporate asset-backed credit card loan securities [Member]	Dec. 31, 2011 Assets Fixed maturity corporate asset-backed credit card loan securities [Member]	Jun. 30, 2012 Assets U.S. government bonds [Member]	Dec. 31, 2011 Assets U.S. government bonds [Member]	Jun. 30, 2012 Assets Excess mortality swap [Member]	Dec. 31, 2011 Assets Excess mortality swap [Member]	Jun. 30, 2012 Liabilities	Dec. 31, 2011 Liabilities	Jun. 30, 2012 Liabilities Credit default swaps [Member]	Dec. 31, 2011 Liabilities Credit default swaps [Member]	Jun. 30, 2012 Liabilities Contingent Forwards [Member]	Dec. 31, 2011 Liabilities Contingent Forwards [Member]	Jun. 30, 2012 Liabilities Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]	Dec. 31, 2011 Liabilities Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Disclosure Of Variable Interest Entities Assets And Liabilities [Line Items]
Number of Instruments																									1	1					1	1	4	4	2	2	2	2	4	4
Notional Amounts																							$ 0	$ 0	$ 100	$ 100	$ 0	$ 0	$ 0	$ 0	$ 100	$ 100	$ 600	$ 600	$ 600	$ 600	$ 0	$ 0	$ 600	$ 600
Carrying Value																							(73)	(98)	705	700	595	592	110	108	0	0	158	193	234	295	(3)	(4)	231	291
Consolidated Variable Interest Entity Settlement Payments And Mark To Market Adjustments [Line Items]
Gains (losses) for consolidated variable interest entities											(10)	5	59	10	(10)	6	61	13	0	(1)	(2)	(3)
Credit Linked Notes Structures Summary Information [Line Items]
Amount of Issuance									$ 400	$ 200
Date of Issuance									December 2006	April 2007
Original attachment point (subordination)									5.50%	2.05%
Current attachment point (subordination)									4.17%	1.48%
Maturity									12/20/2016	3/20/2017
Current rating of tranche									BB-	Ba2
Current rating of underlying collateral pool, high end of range									Aa1	Aaa
Current rating of underlying collateral pool, low end of range									B3	Caa1
Number of defaults in underlying collateral pool									2	2
Number of entities									123	99
Number of countries									20	22
Credit Linked Notes By Industry And Ratings [Line Items]
Telecommunications	11.20%	0.00%	0.00%	5.50%	4.50%	0.70%	0.50%	0.00%
Financial intermediaries	10.50%	0.00%	2.10%	7.50%	0.90%	0.00%	0.00%	0.00%
Oil and gas	7.40%	0.00%	1.80%	1.00%	4.60%	0.00%	0.00%	0.00%
Utilities	4.60%	0.00%	0.00%	2.60%	2.00%	0.00%	0.00%	0.00%
Chemicals and plastics	3.80%	0.00%	0.00%	2.30%	1.20%	0.30%	0.00%	0.00%
Drugs	3.70%	0.30%	2.70%	0.70%	0.00%	0.00%	0.00%	0.00%
Retailers (except food and drug)	3.50%	0.00%	0.00%	2.10%	0.90%	0.50%	0.00%	0.00%
Industrial equipment	3.30%	0.00%	0.00%	3.00%	0.30%	0.00%	0.00%	0.00%
Sovereign	3.30%	0.00%	0.70%	1.60%	1.00%	0.00%	0.00%	0.00%
Conglomerates	3.20%	0.00%	2.30%	0.90%	0.00%	0.00%	0.00%	0.00%
Forest products	3.00%	0.00%	0.00%	0.00%	1.60%	1.40%	0.00%	0.00%
Other	42.50%	0.00%	3.90%	16.00%	17.70%	3.70%	0.90%	0.30%
Total by Industry	100.00%	0.30%	13.50%	43.20%	34.70%	6.60%	1.40%	0.30%

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Fair Value of Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
AFS securities:
Derivative investments	$ 3,399		$ 3,399		$ 3,151
Fixed maturity AFS securities:
Corporate bonds	63,914		63,914		59,261
U.S. Government bonds	517		517		494
Foreign government bonds	664		664		733
RMBS	7,197		7,197		8,039
CMBS	1,307		1,307		1,600
CDOs	120		120		102
State and municipal bonds	4,284		4,284		4,047
Hybrid and redeemable preferred securities	1,188		1,188		1,157
VIEs' fixed maturity AFS securities	705		705		700
Equity AFS securities	154		154		139
Trading securities	2,649		2,649		2,675
Derivative investments	3,399		3,399		3,151
Cash and invested cash	5,257		5,257		4,510
Separate account assets	88,839		88,839		83,477
Total assets	180,194		180,194		170,085
Future contract benefits:
Indexed annuity contracts embedded derivatives	(431)		(431)		(399)
GLB reserves embedded derivatives	(1,926)		(1,926)		(2,217)
Long-term debt - interest rate swap agreements	(1,203)		(1,203)		(1,688)
Reinsurance related embedded derivatives	(185)		(185)		(168)
Variable interest entities' liabilities - derivatives instruments	(231)		(231)		(291)
Other liabilities:
Deferred compensation plans	(358)		(358)		(354)
Credit default swaps	(11)		(11)		(16)
Total liabilities	(4,345)		(4,345)		(5,133)
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	2,396	2,741	1,697	2,620
Items Included in Net Income	(616)	(93)	(55)	96
Gains (Losses) in OCI and other	146	71	90	93
Sales, Issuances, Maturities, Settlements, Calls, Net	348	(177)	513	(256)
Transfers In or Out of Level 3, Net	(272)	(115)	(243)	(126)
Ending Fair Value	2,002	2,427	2,002	2,427
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	405	158	614	331
Sales	(36)	(160)	(24)	(258)
Maturities	(58)	(98)	(107)	(157)
Settlements	38	11	34	(83)
Calls	(1)	(88)	(4)	(89)
Sales, Issuances, Maturities, Settlements, Calls, Net	348	(177)	513	(256)
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	(598)	(37)	139	156
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3	115	21	193	40
Transfers Out of Level 3	(387)	(136)	(436)	(166)
Transfers In or Out of Level 3, Net	(272)	(115)	(243)	(126)
Indexed Annuity Contracts [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Liabilities Fair Value Disclosure [Abstract]
Liabilities Fair Value Disclosure	(431)		(431)
Indexed Annuity Contracts [Member] | Maximum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Liabilities Fair Value Disclosure [Abstract]
Lapse Rate	15.00%		15.00%
Indexed Annuity Contracts [Member] | Minimum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Liabilities Fair Value Disclosure [Abstract]
Lapse Rate	1.00%		1.00%
Guaranteed Living Benefits Embedded Derivative Reserves [Member] | Monte Carlo Simulation Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Liabilities Fair Value Disclosure [Abstract]
Liabilities Fair Value Disclosure	(1,926)		(1,926)
Guaranteed Living Benefits Embedded Derivative Reserves [Member] | Maximum [Member] | Monte Carlo Simulation Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Liabilities Fair Value Disclosure [Abstract]
Lapse Rate	13.10%		13.10%
Wait Period	25		25
Percent of maximum withdrawal amount	100.00%		100.00%
NPR	0.55%		0.55%
Fair Value Assumptions Expected Volatility Rate			0.35
Guaranteed Living Benefits Embedded Derivative Reserves [Member] | Minimum [Member] | Monte Carlo Simulation Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Liabilities Fair Value Disclosure [Abstract]
Lapse Rate	0.30%		0.30%
Wait Period	0		0
Percent of maximum withdrawal amount	95.00%		95.00%
NPR	0.22%		0.22%
Fair Value Assumptions Expected Volatility Rate			0.01
Corporate bonds [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	899		899
Corporate bonds [Member] | Maximum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			13.20%
Corporate bonds [Member] | Minimum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			1.10%
Foreign government bonds [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	52		52
Foreign government bonds [Member] | Maximum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			6.10%
Foreign government bonds [Member] | Minimum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			2.70%
Hybrid and redeemable preferred securities [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	21		21
Hybrid and redeemable preferred securities [Member] | Maximum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			2.70%
Hybrid and redeemable preferred securities [Member] | Minimum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			2.70%
Equity securities [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	11		11
Equity securities [Member] | Maximum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			4.50%
Equity securities [Member] | Minimum [Member] | Discounted Cash Flow Valuation Technique [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Liquidity Duration Adjustment			4.30%
Corporate bonds [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	1,932	1,806	1,888	1,816
Items Included in Net Income	(4)	23	(17)	23
Gains (Losses) in OCI and other	(11)	33	(5)	44
Sales, Issuances, Maturities, Settlements, Calls, Net	45	(200)	25	(221)
Transfers In or Out of Level 3, Net	(284)	(89)	(213)	(89)
Ending Fair Value	1,678	1,573	1,678	1,573
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	80	22	91	38
Sales	(26)	(125)	(27)	(133)
Maturities	0	0	0	(1)
Settlements	(8)	(9)	(35)	(36)
Calls	(1)	(88)	(4)	(89)
Sales, Issuances, Maturities, Settlements, Calls, Net	45	(200)	25	(221)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3	90	21	146	34
Transfers Out of Level 3	(374)	(110)	(359)	(123)
Transfers In or Out of Level 3, Net	(284)	(89)	(213)	(89)
U.S. government bonds [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	1	2	1	2
Items Included in Net Income	0	0	0	0
Gains (Losses) in OCI and other	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	1	2	1	2
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Foreign government bonds [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	99	100	97	113
Items Included in Net Income	0	0	0	0
Gains (Losses) in OCI and other	3	(4)	4	3
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	(3)
Transfers In or Out of Level 3, Net	0	0	1	(17)
Ending Fair Value	102	96	102	96
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances				0
Sales				(3)
Maturities				0
Settlements				0
Calls				0
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	(3)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3			1	0
Transfers Out of Level 3			0	(17)
Transfers In or Out of Level 3, Net	0	0	1	(17)
RMBS [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	98	115	158	119
Items Included in Net Income	0	(1)	(3)	(3)
Gains (Losses) in OCI and other	1	3	3	4
Sales, Issuances, Maturities, Settlements, Calls, Net	98	44	94	41
Transfers In or Out of Level 3, Net	(13)	0	(68)	0
Ending Fair Value	184	161	184	161
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	103	47	103	48
Sales	0	0	0	0
Maturities	0	0	0	0
Settlements	(5)	(3)	(9)	(7)
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	98	44	94	41
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3	0	0	0	0
Transfers Out of Level 3	(13)	0	(68)	0
Transfers In or Out of Level 3, Net	(13)	0	(68)	0
CMBS [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	32	64	34	109
Items Included in Net Income	(2)	(22)	(5)	(45)
Gains (Losses) in OCI and other	2	24	9	54
Sales, Issuances, Maturities, Settlements, Calls, Net	(1)	(12)	(8)	(64)
Transfers In or Out of Level 3, Net	8	(1)	9	(1)
Ending Fair Value	39	53	39	53
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	0	0	0	0
Sales	0	(9)	0	(53)
Maturities	0	0	0	0
Settlements	(1)	(3)	(8)	(11)
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	(1)	(12)	(8)	(64)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3	8	0	9	0
Transfers Out of Level 3	0	(1)	0	(1)
Transfers In or Out of Level 3, Net	8	(1)	9	(1)
CDOs [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	102	136	102	172
Items Included in Net Income	0	0	0	14
Gains (Losses) in OCI and other	0	2	4	(9)
Sales, Issuances, Maturities, Settlements, Calls, Net	18	(12)	14	(51)
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	120	126	120	126
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	23	0	23	0
Sales	0	0	0	(33)
Maturities	0	0	0	0
Settlements	(5)	(12)	(9)	(18)
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	18	(12)	14	(51)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
State and municipal bonds [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	0		0
Items Included in Net Income	0		0
Gains (Losses) in OCI and other	0		0
Sales, Issuances, Maturities, Settlements, Calls, Net	32		32
Transfers In or Out of Level 3, Net	0		0
Ending Fair Value	32		32
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	32		32
Sales	0		0
Maturities	0		0
Settlements	0		0
Calls	0		0
Sales, Issuances, Maturities, Settlements, Calls, Net	32		32
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0		0
Hybrid and redeemable preferred securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	116	124	100	119
Items Included in Net Income	0	0	0	(1)
Gains (Losses) in OCI and other	(3)	4	3	5
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Transfers In or Out of Level 3, Net	16	(22)	26	(17)
Ending Fair Value	129	106	129	106
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3	16	0	35	4
Transfers Out of Level 3	0	(22)	(9)	(21)
Transfers In or Out of Level 3, Net	16	(22)	26	(17)
Trading securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	68	71	68	76
Items Included in Net Income	1	0	1	0
Gains (Losses) in OCI and other	0	4	1	2
Sales, Issuances, Maturities, Settlements, Calls, Net	2	(1)	0	(3)
Transfers In or Out of Level 3, Net	1	(3)	2	(4)
Ending Fair Value	72	71	72	71
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	2	0	2	0
Sales	0	(1)	0	(1)
Maturities	0	0	0	0
Settlements	0	0	(2)	(2)
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	2	(1)	0	(3)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3	1	0	2	0
Transfers Out of Level 3	0	(3)	0	(4)
Transfers In or Out of Level 3, Net	1	(3)	2	(4)
Derivative Financial Instruments, Assets [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	2,037	1,439	2,470	1,495
Items Included in Net Income	228	62	(289)	(84)
Gains (Losses) in OCI and other	155	7	67	(11)
Sales, Issuances, Maturities, Settlements, Calls, Net	97	(16)	269	92
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	2,517	1,492	2,517	1,492
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	165	107	373	275
Sales	(10)	(25)	3	(27)
Maturities	(58)	(98)	(107)	(156)
Settlements	0	0	0	0
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	97	(16)	269	92
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	240	62	(332)	(94)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Indexed Annuity Contracts Embedded Derivatives [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	(480)	(528)	(399)	(497)
Items Included in Net Income	24	6	(80)	54
Gains (Losses) in OCI and other	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	25	16	48	(63)
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	(431)	(506)	(431)	(506)
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	(25)	(20)	(35)	(38)
Sales	0	0	0	0
Maturities	0	0	0	0
Settlements	50	36	83	(25)
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	25	16	48	(63)
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	(3)	0	19	(4)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Guaranteed Living Benefits Embedded Derivative Reserves [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	(1,064)	(118)	(2,217)	(408)
Items Included in Net Income	(862)	(160)	291	130
Gains (Losses) in OCI and other	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	(1,926)	(278)	(1,926)	(278)
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	(814)	(108)	369	229
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Variable Interest Entities Liabilities - Derivative Instruments [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	(221)	(203)	(291)	(209)
Items Included in Net Income	(10)	5	60	11
Gains (Losses) in OCI and other	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	(231)	(198)	(231)	(198)
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	0
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	(10)	5	60	11
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Deferred Compensation Plans Embedded Derivatives [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	(375)	(357)	(354)	(363)
Items Included in Net Income	10	(5)	(18)	(13)
Gains (Losses) in OCI and other	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	7	2	14	16
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	(358)	(360)	(358)	(360)
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	0	0	0	0
Sales	0	0	0	0
Maturities	0	0	0	0
Settlements	7	2	14	16
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	7	2	14	16
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	(10)	5	18	13
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Credit default swaps [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	(10)	(6)	(16)	(16)
Items Included in Net Income	(1)	(1)	5	2
Gains (Losses) in OCI and other	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	7
Transfers In or Out of Level 3, Net	0	0	0	0
Ending Fair Value	(11)	(7)	(11)	(7)
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances				0
Sales				7
Maturities				0
Settlements				0
Calls				0
Sales, Issuances, Maturities, Settlements, Calls, Net	0	0	0	7
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held	(1)	(1)	5	1
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In or Out of Level 3, Net	0	0	0	0
Equity AFS securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	61	96	56	92
Items Included in Net Income	0	0	0	8
Gains (Losses) in OCI and other	(1)	(2)	4	1
Sales, Issuances, Maturities, Settlements, Calls, Net	25	2	25	(7)
Transfers In or Out of Level 3, Net	0	0	0	2
Ending Fair Value	85	96	85	96
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	25	2	25	8
Sales	0	0	0	(15)
Maturities	0	0	0	0
Settlements	0	0	0	0
Calls	0	0	0	0
Sales, Issuances, Maturities, Settlements, Calls, Net	25	2	25	(7)
Fair Value Assets And Liabilities Measured On Recurring Basis Transfers Into And Out Of Level 3 [Abstract]
Transfers In to Level 3			0	2
Transfers Out of Level 3			0	0
Transfers In or Out of Level 3, Net	0	0	0	2
Quoted Price in Active Markets for Identical Assets (Level 1) [Member]
Fixed maturity AFS securities:
Corporate bonds	62		62		63
U.S. Government bonds	482		482		475
Foreign government bonds	0		0		0
RMBS	0		0		0
CMBS	0		0		0
CDOs	0		0		0
State and municipal bonds	0		0		0
Hybrid and redeemable preferred securities	20		20		15
VIEs' fixed maturity AFS securities	110		110		108
Equity AFS securities	45		45		37
Trading securities	2		2		2
Derivative investments	0		0		0
Cash and invested cash	0		0		0
Separate account assets	0		0		0
Total assets	721		721		700
Future contract benefits:
Indexed annuity contracts embedded derivatives	0		0		0
GLB reserves embedded derivatives	0		0		0
Long-term debt - interest rate swap agreements	0		0		0
Reinsurance related embedded derivatives	0		0		0
Variable interest entities' liabilities - derivatives instruments	0		0		0
Other liabilities:
Deferred compensation plans	0		0		0
Credit default swaps	0		0		0
Total liabilities	0		0		0
Significant Observable Inputs (Level 2) [Member]
Fixed maturity AFS securities:
Corporate bonds	62,174		62,174		57,310
U.S. Government bonds	34		34		18
Foreign government bonds	562		562		636
RMBS	7,013		7,013		7,881
CMBS	1,268		1,268		1,566
CDOs	0		0		0
State and municipal bonds	4,252		4,252		4,047
Hybrid and redeemable preferred securities	1,039		1,039		1,042
VIEs' fixed maturity AFS securities	595		595		592
Equity AFS securities	24		24		46
Trading securities	2,575		2,575		2,605
Derivative investments	882		882		681
Cash and invested cash	5,257		5,257		4,510
Separate account assets	88,839		88,839		83,477
Total assets	174,514		174,514		164,411
Future contract benefits:
Indexed annuity contracts embedded derivatives	0		0		0
GLB reserves embedded derivatives	0		0		0
Long-term debt - interest rate swap agreements	(1,203)		(1,203)		(1,688)
Reinsurance related embedded derivatives	(185)		(185)		(168)
Variable interest entities' liabilities - derivatives instruments	0		0		0
Other liabilities:
Deferred compensation plans	0		0		0
Credit default swaps	0		0		0
Total liabilities	(1,388)		(1,388)		(1,856)
Significant Unobservable Inputs (Level 3) [Member]
Fixed maturity AFS securities:
Corporate bonds	1,678		1,678		1,888
U.S. Government bonds	1		1		1
Foreign government bonds	102		102		97
RMBS	184		184		158
CMBS	39		39		34
CDOs	120		120		102
State and municipal bonds	32		32		0
Hybrid and redeemable preferred securities	129		129		100
VIEs' fixed maturity AFS securities	0		0		0
Equity AFS securities	85		85		56
Trading securities	72		72		68
Derivative investments	2,517		2,517		2,470
Cash and invested cash	0		0		0
Separate account assets	0		0		0
Total assets	4,959		4,959		4,974
Future contract benefits:
Indexed annuity contracts embedded derivatives	(431)		(431)		(399)
GLB reserves embedded derivatives	(1,926)		(1,926)		(2,217)
Long-term debt - interest rate swap agreements	0		0		0
Reinsurance related embedded derivatives	0		0		0
Variable interest entities' liabilities - derivatives instruments	(231)		(231)		(291)
Other liabilities:
Deferred compensation plans	(358)		(358)		(354)
Credit default swaps	(11)		(11)		(16)
Total liabilities	(2,957)		(2,957)		(3,277)
Carrying Value [Member]
AFS securities:
Fixed maturity securities	79,191		79,191		75,433
VIEs' fixed maturity securities	705		705		700
Equity securities	154		154		139
Trading Securities, Fair Value Disclosure	2,649		2,649		2,675
Mortgage loans on real estate	6,804		6,804		6,942
Derivative investments	3,399		3,399		3,151
Other investments	1,041		1,041		1,069
Cash and invested cash, fair value	5,257		5,257		4,510
Separate account assets	88,839		88,839		83,477
Future contract benefits:
Indexed annuity contracts embedded derivatives	(431)		(431)		(399)
GLB reserves embedded derivatives	(1,926)		(1,926)		(2,217)
Other contract holder funds:
Remaining guaranteed interest and similar contracts	(1,034)		(1,034)		(1,114)
Account value of certain investment contracts	(27,916)		(27,916)		(27,468)
Short-term debt	(300)		(300)		(300)
Long-term debt	(5,719)		(5,719)		(5,391)
Reinsurance related embedded derivatives	(185)		(185)		(168)
Variable interest entities' liabilities - derivative instruments	(231)		(231)		(291)
Other liabilities:
Deferred compensation plans	(358)		(358)		(354)
Credit default swaps	(11)		(11)		(16)
Fair Value [Member]
AFS securities:
Fixed maturity securities	79,191		79,191		75,433
VIEs' fixed maturity securities	705		705		700
Equity securities	154		154		139
Trading Securities, Fair Value Disclosure	2,649		2,649		2,675
Mortgage loans on real estate	7,463		7,463		7,608
Derivative investments	3,399		3,399		3,151
Other investments	1,041		1,041		1,069
Cash and invested cash, fair value	5,257		5,257		4,510
Separate account assets	88,839		88,839		83,477
Future contract benefits:
Indexed annuity contracts embedded derivatives	(431)		(431)		(399)
GLB reserves embedded derivatives	(1,926)		(1,926)		(2,217)
Other contract holder funds:
Remaining guaranteed interest and similar contracts	(1,034)		(1,034)		(1,114)
Account value of certain investment contracts	(31,554)		(31,554)		(30,812)
Short-term debt	(302)		(302)		(309)
Long-term debt	(6,659)		(6,659)		(5,345)
Reinsurance related embedded derivatives	(185)		(185)		(168)
Variable interest entities' liabilities - derivative instruments	(231)		(231)		(291)
Other liabilities:
Deferred compensation plans	(358)		(358)		(354)
Credit default swaps	$ (11)		$ (11)		$ (16)

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Available-for-sale securities, at fair value:
Fixed maturity securities (amortized cost)	$ 71,394	$ 68,988
Variable interest entities' fixed maturity securities (amortized cost)	675	673
Equity securities (cost)	$ 143	$ 135
Stockholders Equity
Preferred stock - shares authorized (in shares)	10,000,000	10,000,000
Series A preferred stock - shares issued (in shares)	9,632	10,072
Series A preferred stock - shares outstanding (in shares)	9,632	10,072
Common stock - shares authorized (in shares)	800,000,000	800,000,000
Common stock - shares issued (in shares)	279,168,971	291,319,222
Common stock - shares outstanding (in shares)	279,168,971	291,319,222

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash Flows from Operating Activities
Net income (loss)	$ 569	$ 617
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads deferrals and interest, net of amortization	(114)	(215)
Trading securities purchases, sales and maturities, net	67	26
Change in premiums and fees receivable	20	(35)
Change in accrued investment income	(40)	(61)
Change in future contract benefits and other contract holder funds	120	371
Change in reinsurance related assets and liabilities	(111)	(72)
Change in federal income tax accruals	197	297
Realized gain (loss)	43	7
(Income) loss attributable to equity method investments	(81)	(75)
Amortization of deferred gain on business sold through reinsurance	(38)	(37)
(Gain) loss on disposal of discontinued operations	1	0
Other	(19)	55
Net cash provided by (used in) operating activities	614	878
Cash Flows from Investing Activities
Purchases of available-for-sale securities	(5,717)	(5,901)
Sales of available-for-sale securities	369	1,042
Maturities of available-for-sale securities	2,983	2,857
Purchases of other investments	(1,398)	(1,701)
Sales or maturities of other investments	1,451	1,527
Increase (decrease) in payables for collateral on investments	1,337	146
Other	(47)	(42)
Net cash provided by (used in) investing activities	(1,022)	(2,072)
Cash Flows from Financing Activities
Issuance of long-term debt, net of issuance costs	298	298
Increase (decrease) in commercial paper, net	0	(100)
Deposits of fixed account values, including the fixed portion of variable	4,979	5,335
Withdrawals of fixed account values, including the fixed portion of variable	(2,611)	(2,515)
Transfers to and from separate accounts, net	(1,160)	(1,391)
Common stock issued for benefit plans and excess tax benefits	(5)	(5)
Repurchase of common stock	(300)	(226)
Dividends paid to common and preferred stockholders	(46)	(31)
Net cash provided by (used in) financing activities	1,155	1,365
Net increase (decrease) in cash and invested cash, including discontinued operations	747	171
Cash and invested cash, including discontinued operations, as of beginning-of-year	4,510	2,741
Cash and invested cash, including discontinued operations, as of end-of-period	$ 5,257	$ 2,912

XML

Federal Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reconciliation of effective tax rate differences [Abstract]
Effective tax rate	27.00%	26.00%	24.00%	26.00%
U.S. Statutory rate	35.00%	35.00%	35.00%	35.00%
Federal income tax expense (benefit)	$ 118	$ 105	$ 180	$ 221
Pre-tax income (loss)	$ 442	$ 409	$ 750	$ 838

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Available for Sale Securities

				As of June 30, 2012
				Amortized		Gross Unrealized						Fair
				Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
	Corporate bonds			$	57,342	$	7,068	$	393	$	103	$	63,914
	U.S. Government bonds				449		68		-		-		517
	Foreign government bonds				583		81		-		-		664
	Residential mortgage-backed securities ("RMBS")				6,808		522		41		92		7,197
	Commercial mortgage-backed securities ("CMBS")				1,304		71		43		25		1,307
	Collateralized debt obligations ("CDOs")				135		-		15		-		120
	State and municipal bonds				3,525		767		8		-		4,284
	Hybrid and redeemable preferred securities				1,248		63		123		-		1,188
	VIEs' fixed maturity securities				675		30		-		-		705
		Total fixed maturity securities			72,069		8,670		623		220		79,896
Equity securities					143		19		8		-		154
			Total AFS securities	$	72,212	$	8,689	$	631	$	220	$	80,050

				As of December 31, 2011
				Amortized		Gross Unrealized						Fair
				Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
	Corporate bonds			$	53,661	$	6,185	$	517	$	68	$	59,261
	U.S. Government bonds				439		55		-		-		494
	Foreign government bonds				668		65		-		-		733
	RMBS				7,690		548		73		126		8,039
	CMBS				1,642		73		106		9		1,600
	CDOs				121		-		19		-		102
	State and municipal bonds				3,490		566		9		-		4,047
	Hybrid and redeemable preferred securities				1,277		50		170		-		1,157
	VIEs' fixed maturity securities				673		27		-		-		700
		Total fixed maturity securities			69,661		7,569		894		203		76,133
Equity securities					135		16		12		-		139
			Total AFS securities	$	69,796	$	7,585	$	906	$	203	$	76,272

			Amortized		Fair
			Cost		Value
Due in one year or less			$	2,931	$	2,989
Due after one year through five years				12,188		13,136
Due after five years through ten years				23,651		26,185
Due after ten years				25,052		28,962
	Subtotal			63,822		71,272
Mortgage-backed securities ("MBS")				8,112		8,504
CDOs				135		120
		Total fixed maturity AFS securities	$	72,069	$	79,896

					As of June 30, 2012
					Less Than or Equal				Greater Than
					to Twelve Months				Twelve Months				Total
							Gross				Gross				Gross
							Unrealized				Unrealized				Unrealized
					Fair		Losses and		Fair		Losses and		Fair		Losses and
					Value		OTTI		Value		OTTI		Value		OTTI
Fixed maturity securities:
	Corporate bonds				$	2,389	$	175	$	1,293	$	321	$	3,682	$	496
	RMBS					521		90		314		43		835		133
	CMBS					110		25		146		43		256		68
	CDOs					-		-		68		15		68		15
	State and municipal bonds					5		-		22		8		27		8
	Hybrid and redeemable
		preferred securities				125		4		425		119		550		123
			Total fixed maturity securities			3,150		294		2,268		549		5,418		843
Equity securities						10		1		4		7		14		8
				Total AFS securities	$	3,160	$	295	$	2,272	$	556	$	5,432	$	851
Total number of AFS securities in an unrealized loss position																734

					As of December 31, 2011
					Less Than or Equal				Greater Than
					to Twelve Months				Twelve Months				Total
							Gross				Gross				Gross
							Unrealized				Unrealized				Unrealized
					Fair		Losses and		Fair		Losses and		Fair		Losses and
					Value		OTTI		Value		OTTI		Value		OTTI
Fixed maturity securities:
	Corporate bonds				$	2,848	$	162	$	1,452	$	423	$	4,300	$	585
	RMBS					565		125		429		74		994		199
	CMBS					178		15		146		100		324		115
	CDOs					9		1		80		18		89		19
	State and municipal bonds					31		-		30		9		61		9
	Hybrid and redeemable
		preferred securities				324		23		353		147		677		170
			Total fixed maturity securities			3,955		326		2,490		771		6,445		1,097
Equity securities						38		12		-		-		38		12
				Total AFS securities	$	3,993	$	338	$	2,490	$	771	$	6,483	$	1,109
Total number of AFS securities in an unrealized loss position																897

		As of June 30, 2012
		Amortized		Fair		Unrealized
		Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages		$	1,734	$	1,363	$	371
AFS securities backed by pools of commercial mortgages			355		274		81
	Total	$	2,089	$	1,637	$	452
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages		$	1,724	$	1,353	$	371
AFS securities backed by pools of commercial mortgages			79		42		37
	Total	$	1,803	$	1,395	$	408

		As of December 31, 2011
		Amortized		Fair		Unrealized
		Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages		$	2,023	$	1,553	$	470
AFS securities backed by pools of commercial mortgages			472		344		128
	Total	$	2,495	$	1,897	$	598
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages		$	2,015	$	1,545	$	470
AFS securities backed by pools of commercial mortgages			126		61		65
	Total	$	2,141	$	1,606	$	535

		As of June 30, 2012
								Number
		Fair		Gross Unrealized				of
		Value		Losses		OTTI		Securities (1)
Less than six months		$	115	$	41	$	2		25
Six months or greater, but less than nine months			13		4		1		4
Nine months or greater, but less than twelve months			104		40		12		17
Twelve months or greater			584		342		165		167
	Total	$	816	$	427	$	180		213

		As of December 31, 2011
								Number
		Fair		Gross Unrealized				of
		Value		Losses		OTTI		Securities (1)
Less than six months		$	385	$	125	$	31		56
Six months or greater, but less than nine months			53		30		12		18
Nine months or greater, but less than twelve months			2		-		1		7
Twelve months or greater			615		470		111		175
	Total	$	1,055	$	625	$	155		256

				For the Three				For the Six
				Months Ended				Months Ended
				June 30,				June 30,
				2012		2011		2012		2011
Balance as of beginning-of-period				$	410	$	352	$	390	$	319
Increases attributable to:
	Credit losses on securities for which an OTTI was not previously
		recognized			21		3		56		29
	Credit losses on securities for which an OTTI was previously
		recognized			19		19		42		40
Decreases attributable to:
	Securities sold				(35)		(34)		(73)		(48)
			Balance as of end-of-period	$	415	$	340	$	415	$	340

		As of June 30, 2012
				Gross Unrealized						OTTI in
		Amortized				Losses and		Fair		Credit
		Cost		Gains		OTTI		Value		Losses
Corporate bonds		$	239	$	1	$	104	$	136	$	73
RMBS			697		5		91		611		268
CMBS			46		-		24		22		74
	Total	$	982	$	6	$	219	$	769	$	415

		As of December 31, 2011
				Gross Unrealized						OTTI in
		Amortized				Losses and		Fair		Credit
		Cost		Gains		OTTI		Value		Losses
Corporate bonds		$	169	$	1	$	67	$	103	$	51
RMBS			690		1		128		563		301
CMBS			17		-		10		7		38
	Total	$	876	$	2	$	205	$	673	$	390

Schedule of impaired mortgage loans

			As of			As of
		June 30,			December 31,
			2012			2011
Current			$	6,736		$	6,858
60 to 90 days past due				3			26
Greater than 90 days past due				80			76
Valuation allowance associated with impaired mortgage loans on real estate				(26)			(31)
Unamortized premium (discount)				11			13
	Total carrying value		$	6,804		$	6,942

			As of			As of
		June 30,			December 31,
			2012			2011
Number of impaired mortgage loans on real estate			9			12
Principal balance of impaired mortgage loans on real estate			$	66		$	100
Valuation allowance associated with impaired mortgage loans on real estate				(26)			(31)
	Carrying value of impaired mortgage loans on real estate		$	40		$	69

	For the Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Average carrying value for impaired mortgage loans on real estate	$	49	$	53	$	56	$	54
Interest income recognized on impaired mortgage loans on real estate		-		-		-		1
Interest income collected on impaired mortgage loans on real estate		-		1		-		2

Credit quality indicators for mortgage loans

		As of June 30, 2012					As of December 31, 2011
						Debt-					Debt-
						Service					Service
		Principal		% of		Coverage	Principal		% of		Coverage
Loan-to-Value		Amount		Total		Ratio	Amount		Total		Ratio
Less than 65%		$	5,395	79.1	%	1.63	$	5,338	76.7	%	1.61
65% to 74%			1,008	14.8	%	1.41		1,198	17.2	%	1.37
75% to 100%			334	4.9	%	0.90		308	4.4	%	0.92
Greater than 100%			82	1.2	%	0.32		116	1.7	%	0.36
	Total mortgage loans on real estate	$	6,819	100.0	%		$	6,960	100.0	%

Realized gain (loss) related to certain investments

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Fixed maturity AFS securities:
	Gross gains		$	3	$	31	$	8	$	67
	Gross losses			(49)		(51)		(112)		(114)
Equity AFS securities:
	Gross gains			-		1		1		9
Gain (loss) on other investments				(5)		(8)		2		5
Associated amortization of DAC, VOBA, DSI and DFEL
	and changes in other contract holder funds			-		(5)		2		(14)
		Total realized gain (loss) related to certain investments	$	(51)	$	(32)	$	(99)	$	(47)

OTTI Recognized in Net Income (Loss) and OCI

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
OTTI Recognized in Net Income (Loss)
Corporate bonds			$	(10)	$	(2)	$	(29)	$	(6)
RMBS				(14)		(23)		(32)		(43)
CMBS				(16)		(15)		(36)		(39)
CDOs				-		-		-		(1)
Hybrid and redeemable preferred securities				-		-		-		(2)
	Gross OTTI recognized in net income (loss)			(40)		(40)		(97)		(91)
	Associated amortization of DAC, VOBA, DSI and DFEL			7		9		17		19
		Net OTTI recognized in net income (loss), pre-tax	$	(33)	$	(31)	$	(80)	$	(72)
Portion of OTTI Recognized in OCI
Gross OTTI recognized in OCI			$	21	$	19	$	79	$	27
Change in DAC, VOBA, DSI and DFEL				(4)		(3)		(12)		(8)
	Net portion of OTTI recognized in OCI, pre-tax		$	17	$	16	$	67	$	19

Payables for collateral on investments

			As of June 30, 2012				As of December 31, 2011
			Carrying		Fair		Carrying		Fair
			Value		Value		Value		Value
Collateral payable held for derivative investments (1)			$	3,441	$	3,441	$	2,980	$	2,980
Securities pledged under securities lending agreements (2)				200		194		200		193
Securities pledged under reverse repurchase agreements (3)				280		293		280		294
Securities pledged for Term Asset-Backed Securities
	Loan Facility ("TALF") (4)			49		66		173		199
Investments pledged for Federal Home Loan Bank of
	Indianapolis ("FHLBI") (5)			1,100		2,013		100		142
		Total payables for collateral on investments	$	5,070	$	6,007	$	3,733	$	3,808

		For the Six
		Months Ended
		June 30,
		2012		2011
Collateral payable held for derivative investments		$	461	$	223
Securities pledged under securities lending agreements			-		1
Securities pledged for TALF			(124)		(78)
Investments pledged for FHLBI			1,000		-
	Total increase (decrease) in payables for collateral on investments	$	1,337	$	146

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Guaranteed Benefit Features (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended											6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 Domestic Equity [Member]	Dec. 31, 2011 Domestic Equity [Member]	Jun. 30, 2012 International Equity [Member]	Dec. 31, 2011 International Equity [Member]	Jun. 30, 2012 Bonds [Member]	Dec. 31, 2011 Bonds [Member]	Jun. 30, 2012 Money Market [Member]	Dec. 31, 2011 Money Market [Member]	Jun. 30, 2012 Return of Net Deposits [Member]	Dec. 31, 2011 Return of Net Deposits [Member]	Jun. 30, 2012 Minimum Return [Member]	Dec. 31, 2011 Minimum Return [Member]	Jun. 30, 2012 Anniversary Contract Value [Member]	Dec. 31, 2011 Anniversary Contract Value [Member]
Net Amount at Risk by Product and Guarantee [Line Items]
Total Account Value													$ 58,260	$ 54,004	$ 151	$ 155	$ 22,255	$ 21,648
Net amount at risk													812	1,379	42	48	1,963	2,939
Average attained age of contract holders													59	59	72	72	67	67
Guaranteed minimum return															5.00%	5.00%
Balance as of beginning-of-year		84	44
Changes in reserves		7	16
Benefits paid		(24)	(19)
Balance as of end-of-period	67	67	41
Net Amount at Risk by Product and Guarantee [Line Items]
Total Account Value													58,260	54,004	151	155	22,255	21,648
Net amount at risk													812	1,379	42	48	1,963	2,939
Average attained age of contract holders													59	59	72	72	67	67
Guaranteed minimum return															5.00%	5.00%
Balance as of beginning-of-year		84	44
Changes in reserves		7	16
Benefits paid		(24)	(19)
Balance as of end-of-period	67	67	41
Asset type
Total	$ 71,990	$ 71,990		$ 71,008	$ 34,700	$ 34,286	$ 13,194	$ 13,095	$ 18,148	$ 17,735	$ 5,948	$ 5,892
Percent of total variable annuity separate account values	93.00%	93.00%		98.00%
Percent of permanent life insurance in force	38.00%	38.00%
Percent of permanent life insurance sales	34.00%	33.00%

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Guaranteed Benefit Features (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Information on guaranteed death benefit features

	As of				As of
	June 30,			December 31,
	2012				2011
Return of Net Deposits
Total account value	$	58,260			$	54,004
Net amount at risk (1)		812				1,379
Average attained age of contract holders		59 years				59 years
Minimum Return
Total account value	$	151			$	155
Net amount at risk (1)		42				48
Average attained age of contract holders		72 years				72 years
Guaranteed minimum return		5	%			5	%
Anniversary Contract Value
Total account value	$	22,255			$	21,648
Net amount at risk (1)		1,963				2,939
Average attained age of contract holders		67 years				67 years

Summary of guaranteed death benefit liabilities

			For the Six
			Months Ended
			June 30,
			2012		2011
Balance as of beginning-of-year			$	84	$	44
	Changes in reserves			7		16
	Benefits paid			(24)		(19)
		Balance as of end-of-period	$	67	$	41

Account balances of variable annuity contracts with guarantees invested in separate accounts

			As of				As of
		June 30,				December 31,
			2012				2011
Asset Type
Domestic equity			$	34,700			$	34,286
International equity				13,194				13,095
Bonds				18,148				17,735
Money market				5,948				5,892
	Total		$	71,990			$	71,008
Percent of total variable annuity separate account values				93	%			98	%

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Nature of Operations and Basis of Presentation

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Nature of Operations and Basis of Presentation

1. Nature of Operations and Basis of Presentation

Nature of Operations

Lincoln National Corporation and its majority-owned subsidiaries (“LNC” or the “Company,” which also may be referred to as “we,” “our” or “us”) operate multiple insurance businesses through four business segments. See Note 13 for additional details. The collective group of businesses uses “Lincoln Financial Group” as its marketing identity. Through our business segments, we sell a wide range of wealth protection, accumulation and retirement income products. These products include institutional and/or retail fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, term life insurance, mutual funds and group life, disability and dental.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (“2011 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements.

Certain GAAP policies, which significantly affect the determination of financial position, results of operations and cash flows, are summarized in our2011 Form 10-K.

In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Company's results. Operating results for the six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2012. All material intercompany accounts and transactions have been eliminated in consolidation.

See Note 2 “Financial Services – Insurance Industry Topic” below for information aboutthe retrospective restatement of amounts due to the adoption of new accounting guidance. In addition, certain amounts reported in prior years' consolidated financial statements have been reclassified to conform to the presentation adopted in the current year. These reclassifications had no effect on net income or stockholders' equity of the prior years.

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CONSOLIDATED STATEMENTS OF INCOME (LOSS) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues:
Insurance premiums	$ 630	$ 594	$ 1,219	$ 1,162
Insurance fees	887	900	1,794	1,718
Net investment income	1,197	1,181	2,362	2,372
Realized gain (loss):
Total other-than-temporary impairment losses on securities	(50)	(47)	(147)	(91)
Portion of loss recognized in other comprehensive income	17	16	67	19
Net other-than-temporary impairment losses on securities recognized in earnings	(33)	(31)	(80)	(72)
Realized gain (loss), excluding other-than-temporary impairment losses on securities	76	22	37	65
Total realized gain (loss)	(43)	9	43	7
Amortization of deferred gain on business sold through reinsurance	18	19	38	37
Other revenues and fees	124	122	244	244
Total revenues	2,899	2,807	5,614	5,526
Expenses
Interest credited	616	625	1,241	1,239
Benefits	945	1,027	1,804	1,862
Commissions and other expenses	828	674	1,684	1,443
Interest and debt expense	68	72	135	144
Total expenses	2,457	2,398	4,864	4,688
Income (loss) from continuing operations before taxes	442	409	750	838
Federal income tax expense (benefit)	118	105	180	221
Income (loss) from continuing operations	324	304	570	617
Income (loss) from discontinued operations, net of federal income taxes	0	0	(1)	0
Net income (loss)	324	304	569	617
Other comprehensive income, net of tax	757	354	700	376
Comprehensive income	$ 1,081	$ 658	$ 1,269	$ 993
Earnings (Loss) Per Common Share - Basic
Income (loss) from continuing operations (in dollars per share)	$ 1.15	$ 0.98	$ 1.99	$ 1.97
Income (loss) from discontinued operations (in dollars per share)	$ 0	$ 0	$ 0	$ 0
Net income (loss) (in dollars per share)	$ 1.15	$ 0.98	$ 1.99	$ 1.97
Earnings (Loss) Per Common Share - Diluted
Income (loss) from continuing operations (in dollars per share)	$ 1.10	$ 0.95	$ 1.94	$ 1.92
Income (loss) from discontinued operations (in dollars per share)	$ 0	$ 0	$ 0	$ 0
Net income (loss) (in dollars per share)	$ 1.10	$ 0.95	$ 1.94	$ 1.92

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Stock-Based Incentive Compensation Plans

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Stock based incentive compensation plans

11. Stock-Based Incentive Compensation Plans

We sponsor various incentive plans for our employees and directors and for the employees and agents of our subsidiaries that provide for the issuance of stock options, performance shares (performance-vested shares as opposed to time-vested shares), stock appreciation rights (“SARs”) and restricted stock units. We have a policy of issuing new shares to satisfy option exercises.

LNC stock-based awards granted were as follows:

		For the		For the
		Three		Six
		Months		Months
		Ended		Ended
		June 30,		June 30,
		2012		2012
Awards
10-year LNC stock options			41,536		870,210
Performance shares			15,815		294,758
SARs			-		80,225
Restricted stock units			82,004		686,230
Non-employee:
	Agent stock options		90		99,178
	Director stock options		-		51,140
	Director restricted stock units		12,218		22,346

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Available-for-sale securities, at fair value:
Fixed maturity securities (amortized cost: 2012 - $71,394; 2011 - $68,988)	$ 79,191	$ 75,433
Variable interest entities' fixed maturity securities (amortized cost: 2012 - $675; 2011 - $673)	705	700
Equity securities (cost: 2012 - $143; 2011 - $135)	154	139
Trading securities	2,649	2,675
Mortgage loans on real estate	6,804	6,942
Real estate	116	137
Policy loans	2,829	2,884
Derivative investments	3,399	3,151
Other investments	1,041	1,069
Total investments	96,888	93,130
Cash and invested cash	5,257	4,510
Deferred acquisition costs and value of business acquired	6,505	6,776
Premiums and fees receivable	388	408
Accrued investment income	1,021	981
Reinsurance recoverables	6,601	6,526
Funds withheld reinsurance assets	863	874
Goodwill	2,273	2,273
Other assets	2,475	2,536
Separate account assets	88,839	83,477
Total assets	211,110	201,491
Liabilities
Future contract benefits	19,930	19,813
Other contract holder funds	70,422	69,466
Short-term debt	300	300
Long-term debt	5,719	5,391
Reinsurance related embedded derivatives	185	168
Funds withheld reinsurance liabilities	999	1,045
Deferred gain on business sold through reinsurance	356	394
Payables for collateral on investments	5,070	3,733
Variable interest entities' liabilities	158	193
Other liabilities	4,950	4,273
Separate account liabilities	88,839	83,477
Total liabilities	196,928	188,253
Contingencies and Commitments (See Note 8)
Stockholders Equity
Preferred stock - 10,000,000 shares authorized; Series A - 9,632 and 10,072 shares issued and outstanding as of June 30, 2012, and December 31, 2011, respectively	0	0
Common stock - 800,000,000 shares authorized; 279,168,971 and 291,319,222 shares issued and outstanding as of June 30, 2012, and December 31, 2011, respectively	7,310	7,590
Retained earnings	3,493	2,969
Accumulated other comprehensive income (loss)	3,379	2,679
Total stockholders' equity	14,182	13,238
Total liabilities and stockholders' equity	$ 211,110	$ 201,491

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Fair Value of Financial Instruments

12. Fair Value of Financial Instruments

The carrying values and estimated fair values of our financial instruments (in millions) were as follows:

		As of June 30, 2012				As of December 31, 2011
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Assets
AFS securities:
	Fixed maturity securities	$	79,191	$	79,191	$	75,433	$	75,433
	VIEs' fixed maturity securities		705		705		700		700
	Equity securities		154		154		139		139
Trading securities			2,649		2,649		2,675		2,675
Mortgage loans on real estate			6,804		7,463		6,942		7,608
Derivative investments			3,399		3,399		3,151		3,151
Other investments			1,041		1,041		1,069		1,069
Cash and invested cash			5,257		5,257		4,510		4,510
Separate account assets			88,839		88,839		83,477		83,477
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives		(431)		(431)		(399)		(399)
	GLB reserves embedded derivatives		(1,926)		(1,926)		(2,217)		(2,217)
Other contract holder funds:
	Remaining guaranteed interest and similar contracts		(1,034)		(1,034)		(1,114)		(1,114)
	Account values of certain investment contracts		(27,916)		(31,554)		(27,468)		(30,812)
Short-term debt (1)			(300)		(302)		(300)		(309)
Long-term debt			(5,719)		(6,659)		(5,391)		(5,345)
Reinsurance related embedded derivatives			(185)		(185)		(168)		(168)
VIEs' liabilities - derivative instruments			(231)		(231)		(291)		(291)
Other liabilities:
	Deferred compensation plans		(358)		(358)		(354)		(354)
	Credit default swaps		(11)		(11)		(16)		(16)

• The difference between the carrying value and fair value of short-term debt as of June 30, 2012, and December 31, 2011, related to current maturities of long-term debt.

Valuation Methodologies and Associated Inputs for Financial Instruments Not Carried at Fair Value

The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value on our Consolidated Balance Sheets. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.

Mortgage Loans on Real Estate

The fair value of mortgage loans on real estate is established using a discounted cash flow method based on credit rating, maturity and future income. The ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt-service coverage, loan-to-value, quality of tenancy, borrower and payment record. The fair value for impaired mortgage loans is based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's market price or the fair value of the collateral if the loan is collateral dependent. The inputs used to measure the fair value of our mortgage loans on real estate are classified as Level 2 within the fair value hierarchy.

Other Investments

The carrying value of our assets classified as other investments approximates fair value. Other investments include LPs and other privately held investments that are accounted for using the equity method of accounting and the carrying value is based on our proportional share of the net assets of the LPs. The inputs used to measure the fair value of our other investments are classified as Level 3 within the fair value hierarchy.

Other Contract Holder Funds

Other contract holder funds include remaining guaranteed interest and similar contracts and account values of certain investment contracts. The fair value for the remaining guaranteed interest and similar contracts is estimated using discounted cash flow calculations as of the balance sheet date. These calculations are based on interest rates currently offered on similar contracts with maturities that are consistent with those remaining for the contracts being valued. As of June 30, 2012, and December 31, 2011, the remaining guaranteed interest and similar contracts carrying value approximated fair value. The fair value of the account values of certain investment contracts is based on their approximate surrender value as of the balance sheet date. The inputs used to measure the fair value of our other contract holder funds are classified as Level 3 within the fair value hierarchy.

Short-Term and Long-Term Debt

The fair value of long-term debt is based on quoted market prices. For short-term debt, excluding current maturities of long-term debt, the carrying value approximates fair value. The inputs used to measure the fair value of our short-term and long-term debt are classified as Level 2 within the fair value hierarchy.

Financial Instruments Carried at Fair Value

We did not have any assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2012, or December 31, 2011, and we noted no changes in our valuation methodologies between these periods.

The following summarizes our financial instruments carried at fair value (in millions) on a recurring basis by the fair value hierarchy levels described in “Summary of Significant Accounting Policies” in Note 1 of our2011 Form 10-K:

					As of June 30, 2012
					Quoted
					Prices
					in Active
				Markets for				Significant			Significant
					Identical		Observable			Unobservable			Total
					Assets			Inputs			Inputs		Fair
					(Level 1)			(Level 2)			(Level 3)		Value
Assets
Investments:
	Fixed maturity AFS securities:
		Corporate bonds			$	62		$	62,174		$	1,678	$	63,914
		U.S. government bonds				482			34			1		517
		Foreign government bonds				-			562			102		664
		RMBS				-			7,013			184		7,197
		CMBS				-			1,268			39		1,307
		CDOs				-			-			120		120
		State and municipal bonds				-			4,252			32		4,284
		Hybrid and redeemable preferred securities				20			1,039			129		1,188
	VIEs' fixed maturity securities					110			595			-		705
	Equity AFS securities					45			24			85		154
	Trading securities					2			2,575			72		2,649
	Derivative investments					-			882			2,517		3,399
Cash and invested cash						-			5,257			-		5,257
Separate account assets						-			88,839			-		88,839
			Total assets		$	721		$	174,514		$	4,959	$	180,194
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives				$	-		$	-		$	(431)	$	(431)
	GLB reserves embedded derivatives					-			-			(1,926)		(1,926)
Long-term debt						-			(1,203)			-		(1,203)
Reinsurance related embedded derivatives						-			(185)			-		(185)
VIEs' liabilities - derivative instruments						-			-			(231)		(231)
Other liabilities:
	Deferred compensation plans					-			-			(358)		(358)
	Credit default swaps					-			-			(11)		(11)
			Total liabilities		$	-		$	(1,388)		$	(2,957)	$	(4,345)

					As of December 31, 2011
					Quoted
					Prices
					in Active
				Markets for				Significant			Significant
					Identical		Observable			Unobservable			Total
					Assets			Inputs			Inputs		Fair
					(Level 1)			(Level 2)			(Level 3)		Value
Assets
Investments:
	Fixed maturity AFS securities:
		Corporate bonds			$	63		$	57,310		$	1,888	$	59,261
		U.S. government bonds				475			18			1		494
		Foreign government bonds				-			636			97		733
		RMBS				-			7,881			158		8,039
		CMBS				-			1,566			34		1,600
		CDOs				-			-			102		102
		State and municipal bonds				-			4,047			-		4,047
		Hybrid and redeemable preferred securities				15			1,042			100		1,157
	VIEs' fixed maturity securities					108			592			-		700
	Equity AFS securities					37			46			56		139
	Trading securities					2			2,605			68		2,675
	Derivative investments					-			681			2,470		3,151
Cash and invested cash						-			4,510			-		4,510
Separate account assets						-			83,477			-		83,477
			Total assets		$	700		$	164,411		$	4,974	$	170,085
Liabilities
Future contract benefits:
	Indexed annuity contracts embedded derivatives				$	-		$	-		$	(399)	$	(399)
	GLB reserves embedded derivatives					-			-			(2,217)		(2,217)
Long-term debt						-			(1,688)			-		(1,688)
Reinsurance related embedded derivatives						-			(168)			-		(168)
VIEs' liabilities - derivative instruments						-			-			(291)		(291)
Other liabilities:
	Deferred compensation plans					-			-			(354)		(354)
	Credit default swaps					-			-			(16)		(16)
			Total liabilities		$	-		$	(1,856)		$	(3,277)	$	(5,133)

The following summarizes changes to our financial instruments carried at fair value (in millions) and classified within Level 3 of the fair value hierarchy. This summary excludes any effect of amortization of DAC, VOBA, DSI and DFEL. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology.

					For the Three Months Ended June 30, 2012
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)			Sales,		In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,932	$	(4)	$	(11)		$	45	$	(284)	$	1,678
		U.S. government bonds				1		-		-			-		-		1
		Foreign government bonds				99		-		3			-		-		102
		RMBS				98		-		1			98		(13)		184
		CMBS				32		(2)		2			(1)		8		39
		CDOs				102		-		-			18		-		120
		State and municipal bonds				-		-		-			32		-		32
		Hybrid and redeemable
			preferred securities			116		-		(3)			-		16		129
	Equity AFS securities					61		-		(1)			25		-		85
	Trading securities					68		1		-			2		1		72
	Derivative investments					2,037		228		155			97		-		2,517
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(480)		24		-			25		-		(431)
	GLB reserves embedded derivatives					(1,064)		(862)		-			-		-		(1,926)
VIEs' liabilities - derivative
	instruments (5)					(221)		(10)		-			-		-		(231)
Other liabilities:
	Deferred compensation plans (6)					(375)		10		-			7		-		(358)
	Credit default swaps (7)					(10)		(1)		-			-		-		(11)
				Total, net	$	2,396	$	(616)	$	146		$	348	$	(272)	$	2,002

					For the Three Months Ended June 30, 2011
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)			Sales		In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,806	$	23	$	33		$	(200)	$	(89)	$	1,573
		U.S. government bonds				2		-		-			-		-		2
		Foreign government bonds				100		-		(4)			-		-		96
		RMBS				115		(1)		3			44		-		161
		CMBS				64		(22)		24			(12)		(1)		53
		CDOs				136		-		2			(12)		-		126
		Hybrid and redeemable
			preferred securities			124		-		4			-		(22)		106
	Equity AFS securities:					96		-		(2)			2		-		96
	Trading securities					71		-		4			(1)		(3)		71
	Derivative investments					1,439		62		7			(16)		-		1,492
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(528)		6		-			16		-		(506)
	GLB reserves embedded derivatives					(118)		(160)		-			-		-		(278)
VIEs' liabilities - derivative
	instruments (5)					(203)		5		-			-		-		(198)
Other liabilities:
	Deferred compensation plans (6)					(357)		(5)		-			2		-		(360)
	Credit default swaps (7)					(6)		(1)		-			-		-		(7)
				Total, net	$	2,741	$	(93)	$	71		$	(177)	$	(115)	$	2,427

					For the Six Months Ended June 30, 2012
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)		Sales,			In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,888	$	(17)	$	(5)		$	25	$	(213)	$	1,678
		U.S. government bonds				1		-		-			-		-		1
		Foreign government bonds				97		-		4			-		1		102
		RMBS				158		(3)		3			94		(68)		184
		CMBS				34		(5)		9			(8)		9		39
		CDOs				102		-		4			14		-		120
		State and municipal bonds				-		-		-			32		-		32
		Hybrid and redeemable
			preferred securities			100		-		3			-		26		129
	Equity AFS securities					56		-		4			25		-		85
	Trading securities					68		1		1			-		2		72
	Derivative investments					2,470		(289)		67			269		-		2,517
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(399)		(80)		-			48		-		(431)
	GLB reserves embedded derivatives					(2,217)		291		-			-		-		(1,926)
VIEs' liabilities - derivative
	instruments (5)					(291)		60		-			-		-		(231)
Other liabilities:
	Deferred compensation plans (6)					(354)		(18)		-			14		-		(358)
	Credit default swaps (7)					(16)		5		-			-		-		(11)
				Total, net	$	1,697	$	(55)	$	90		$	513	$	(243)	$	2,002

					For the Six Months Ended June 30, 2011
											Purchases,
									Gains		Issuances,			Transfers
							Items		(Losses)		Sales,			In or
							Included		in		Maturities,			Out
					Beginning		in		OCI		Settlements,			of		Ending
					Fair		Net		and			Calls,		Level 3,		Fair
					Value		Income		Other (1)			Net		Net (2)		Value
Investments: (3)
	Fixed maturity AFS securities:
		Corporate bonds			$	1,816	$	23	$	44		$	(221)	$	(89)	$	1,573
		U.S. government bonds				2		-		-			-		-		2
		Foreign government bonds				113		-		3			(3)		(17)		96
		RMBS				119		(3)		4			41		-		161
		CMBS				109		(45)		54			(64)		(1)		53
		CDOs				172		14		(9)			(51)		-		126
		Hybrid and redeemable
			preferred securities			119		(1)		5			-		(17)		106
	Equity AFS securities					92		8		1			(7)		2		96
	Trading securities					76		-		2			(3)		(4)		71
	Derivative investments					1,495		(84)		(11)			92		-		1,492
Future contract benefits: (4)
	Indexed annuity contracts embedded
		derivatives				(497)		54		-			(63)		-		(506)
	GLB reserves embedded derivatives					(408)		130		-			-		-		(278)
	VIEs' liabilities - derivative
		instruments (5)				(209)		11		-			-		-		(198)
Other liabilities:
	Deferred compensation plans (6)					(363)		(13)		-			16		-		(360)
	Credit default swaps (7)					(16)		2		-			7		-		(7)
				Total, net	$	2,620	$	96	$	93		$	(256)	$	(126)	$	2,427

• The changes in fair value of the interest rate swaps are offset by an adjustment to derivative investments (see Note 5).
• Transfers in or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-period. For AFS and trading securities, the difference between beginning-of-period amortized cost and beginning-of-period fair value was included in OCI and earnings, respectively, in prior periods.
• Amortization and accretion of premiums and discounts are included in net investment income on our Consolidated Statements of Comprehensive Income (Loss). Gains (losses) from sales, maturities, settlements and calls and OTTI are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).
• Gains (losses) from sales, maturities, settlements and calls are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).
• The changes in fair value of the credit default swaps andcontingency forwards are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).
• Deferrals and subsequent changes in fair value for the participants' investment options are reported in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).
• Gains (losses) from sales, maturities, settlements and calls are included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

The following provides the components of the items included in issuances, sales, maturities, settlements, calls, net, excluding any effect of amortization of DAC, VOBA, DSI and DFEL and changes in future contract benefits, (in millions) as reported above:

				For the Three Months Ended June 30, 2012
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	80	$	(26)	$	-		$	(8)	$	(1)	$	45
		RMBS			103		-		-			(5)		-		98
		CMBS			-		-		-			(1)		-		(1)
		CDOs			23		-		-			(5)		-		18
		State and municipal bonds			32		-		-			-		-		32
	Equity AFS securities				25		-		-			-		-		25
	Trading securities				2		-		-			-		-		2
	Derivative investments				165		(10)		(58)			-		-		97
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(25)		-		-			50		-		25
Other liabilities:
	Deferred compensation plans				-		-		-			7		-		7
			Total, net	$	405	$	(36)	$	(58)		$	38	$	(1)	$	348

				For the Three Months Ended June 30, 2011
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	22	$	(125)	$	-		$	(9)	$	(88)	$	(200)
		RMBS			47		-		-			(3)		-		44
		CMBS			-		(9)		-			(3)		-		(12)
		CDOs			-		-		-			(12)		-		(12)
	Equity AFS securities				2		-		-			-		-		2
	Trading securities				-		(1)		-			-		-		(1)
	Derivative investments				107		(25)		(98)			-		-		(16)
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(20)		-		-			36		-		16
Other liabilities:
	Deferred compensation plans				-		-		-			2		-		2
			Total, net	$	158	$	(160)	$	(98)		$	11	$	(88)	$	(177)

				For the Six Months Ended June 30, 2012
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	91	$	(27)	$	-		$	(35)	$	(4)	$	25
		RMBS			103		-		-			(9)		-		94
		CMBS			-		-		-			(8)		-		(8)
		CDOs			23		-		-			(9)		-		14
		State and municipal bonds			32		-		-			-		-		32
	Equity AFS securities				25		-		-			-		-		25
	Trading securities				2		-		-			(2)		-		-
	Derivative investments				373		3		(107)			-		-		269
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(35)		-		-			83		-		48
Other liabilities:
	Deferred compensation plans				-		-		-			14		-		14
			Total, net	$	614	$	(24)	$	(107)		$	34	$	(4)	$	513

				For the Six Months Ended June 30, 2011
				Issuances		Sales		Maturities		Settlements			Calls		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	38	$	(133)	$	(1)		$	(36)	$	(89)	$	(221)
		Foreign government bonds			-		(3)		-			-		-		(3)
		RMBS			48		-		-			(7)		-		41
		CMBS			-		(53)		-			(11)		-		(64)
		CDOs			-		(33)		-			(18)		-		(51)
	Equity AFS securities				8		(15)		-			-		-		(7)
	Trading securities				-		(1)		-			(2)		-		(3)
	Derivative investments				275		(27)		(156)			-		-		92
Future contract benefits:
	Indexed annuity contracts embedded
		derivatives			(38)		-		-			(25)		-		(63)
Other liabilities:
	Deferred compensation plans				-		-		-			16		-		16
	Credit Default swaps				-		7		-			-		-		7
			Total, net	$	331	$	(258)	$	(157)		$	(83)	$	(89)	$	(256)

The following summarizes changes in unrealized gains (losses) included in net income, excluding any effect of amortization of DAC, VOBA, DSI and DFEL and changes in future contract benefits, related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Investments: (1)
	Derivative investments		$	240	$	62	$	(332)	$	(94)
Future contract benefits: (1)
	Indexed annuity contracts embedded derivatives			(3)		-		19		(4)
	GLB reserves embedded derivatives			(814)		(108)		369		229
VIEs' liabilities - derivative instruments (1)				(10)		5		60		11
Other liabilities:
	Deferred compensation plans (2)			(10)		5		18		13
	Credit default swaps (3)			(1)		(1)		5		1
		Total, net	$	(598)	$	(37)	$	139	$	156

• Included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).
• Included in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).
• Included in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

The following provides the components of the transfers in and out of Level 3 (in millions) as reported above:

				For the Three Months						For the Three Months
				Ended June 30, 2012						Ended June 30, 2011
				Transfers		Transfers				Transfers		Transfers
				In to		Out of				In to		Out of
				Level 3		Level 3		Total		Level 3		Level 3		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds		$	90	$	(374)	$	(284)	$	21	$	(110)	$	(89)
		RMBS			-		(13)		(13)		-		-		-
		CMBS			8		-		8		-		(1)		(1)
		Hybrid and redeemable preferred securities			16		-		16		-		(22)		(22)
	Trading securities				1		-		1		-		(3)		(3)
			Total, net	$	115	$	(387)	$	(272)	$	21	$	(136)	$	(115)

					For the Six Months						For the Six Months
					Ended June 30, 2012						Ended June 30, 2011
					Transfers		Transfers				Transfers		Transfers
					In to		Out of				In to		Out of
					Level 3		Level 3		Total		Level 3		Level 3		Total
Investments:
	Fixed maturity AFS securities:
		Corporate bonds			$	146	$	(359)	$	(213)	$	34	$	(123)	$	(89)
		Foreign government bonds				1		-		1		-		(17)		(17)
		RMBS				-		(68)		(68)		-		-		-
		CMBS				9		-		9		-		(1)		(1)
		Hybrid and redeemable preferred
			securities			35		(9)		26		4		(21)		(17)
	Equity AFS securities					-		-		-		2		-		2
	Trading securities					2		-		2		-		(4)		(4)
				Total, net	$	193	$	(436)	$	(243)	$	40	$	(166)	$	(126)

Transfers in and out of Level 3 are generally the result of observable market information on a security no longer being available or becoming available to our pricing vendors. For the three andsixmonths ended June 30, 2012 and 2011, our corporate bonds transfers in and out were attributable primarily to the securities' observable market information no longer being available or becoming available, respectively. Transfers in and out of Levels 1 and 2 are generally the result of a change in the type of input used to measure the fair value of an asset or liability at the end of the reporting period. When quoted prices in active markets become available or when these prices become unavailable, but we are able to employ a valuation methodology using significant observable inputs, transfers between Levels 1 and 2 will result. For the three andsix months ended June 30, 2012 and 2011, the transfers between Levels 1 and 2 of the fair value hierarchy were less than $1 million for our financial instruments carried at fair value.

The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements that were developed as of June 30, 2012:

					Fair		Valuation	Significant
					Value		Technique	Unobservable Inputs	Range
Assets
Investments:
	Fixed maturity AFS and trading
		securities
			Corporate bonds		$	899	Discounted cash flow	Liquidity/duration adjustment (1)	1.1% - 13.2%
			Foreign government bonds			52	Discounted cash flow	Liquidity/duration adjustment (1)	2.7% - 6.1%
			Hybrid and redeemable
				preferred stock		21	Discounted cash flow	Liquidity/duration adjustment (1)	2.7% - 2.7%
	Equity AFS and trading
		securities				11	Discounted cash flow	Liquidity/duration adjustment (1)	4.3% - 4.5%

			Fair		Valuation	Significant
			Value		Technique	Unobservable Inputs		Range
Liabilities
Future contract benefits:
	Indexed annuity contracts
		embedded derivatives		(431)	Discounted cash flow	Lapse rate (2)		1.0% - 15.0%
						Mortality rate (3)		(8)
	GLB reserves embedded
		derivatives		(1,926)	Monte Carlo simulation	Long-term lapse rate (2)		0.3% - 13.1%
						Wait period (5)		0 - 25 years (or
								years until the
								eligible age)
						Percent of maximum
							withdrawal amount (6)	95.0% - 100.0%
						Non-performance risk ("NPR") (7)		0.22% - 0.55%
						Mortality rate (3)		(8)
						Volatility (4)		1.0% - 35.0%

• The liquidity/duration adjustment input represents an estimated market participant composite of adjustments attributable to liquidity premiums, expected durations, structures and credit quality that would be applied to the market observable information of an investment.
• The lapse rate input represents the estimated probability of a contract surrendering during a year, and thereby forgoing any future benefits. The range represents the lapse rates during the surrender charge period for indexed annuity contracts.
• The mortality rate input represents the estimated probability of when an individual belonging to a particular group, categorized according to age or some other factor such as occupation, will die.
• The volatility input represents overall volatilities assumed for the underlying variable annuity funds, which include a mixture of equity and fixed income assets. Fair value of the variable annuity GLB embedded derivatives would increase if higher volatilities were used for valuation.
• The wait period input represents the estimated period a contract holder would wait to withdraw after becoming eligible.
• The percent of maximum withdrawal amount input represents the estimated ratio of contract withdrawal amount to the maximum withdrawal amount specified.
• The NPR input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract.
• Based on the “Annuity 2000 Mortality Table” developed by the Society of Actuaries Committee on Life Insurance Research that was adopted by the National Association of Insurance Commissioners in 1996 for our mortality input.

From the table above, we have excluded Level 3 fair value measurements obtained from independent, third-party pricing sources. We do not develop the significant inputs used to measure the fair value of these assets and liabilities, and the information regarding the significant inputs is not readily available to us. Independent broker-quoted fair values are non-binding quotes developed by market makers or broker-dealers obtained from third-party sources recognized as market participants. The fair value of a broker-quoted asset or liability is based solely on the receipt of an updated quote from a single market maker or a broker-dealer recognized as a market participant as we do not adjust broker quotes when used as the fair value measurement for an asset or liability. Significant increases or decreases in any of the quotes received from a third-party broker-dealer may result in a significantly higher or lower fair value measurement.

Changes in any of the significant inputs presented in the table above may result in a significant change in the fair value measurement of the asset or liability as follows:

• Investments – An increase in the liquidity/duration input would result in a decrease in the fair value measurement.

• Indexed annuity contracts embedded derivatives – An increase in the lapse rate or mortality rate inputs would result in a decrease in the fair value measurement.
• GLB reserves embedded derivatives– An increase in our lapse rate, wait period, NPR or mortality rate inputs would result in a decrease in the fair value measurement. An increase in the percent of maximum withdrawal amountinput would result in an increase in the fair value measurement.

For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input will not affect the other inputs.

As part of our on-going valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary. For more information, see “Summary of Significant Accounting Policies” in Note 1 of our 2011 Form 10-K.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Millions	Total	Common stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance as of beginning-of-year at Dec. 31, 2010		$ 8,124	$ 3,934	$ 748
Stock compensation/issued for benefit plans		9
Retirement of common stock/cancellation of shares		(195)
Cumulative effect from adoption of new accounting standards			(1,095)	103
Comprehensive income	993
Other comprehensive income (loss), net of tax	376			376
Net income (loss)	617		617
Retirement of common stock			(31)
Dividends declared: Common (2012 - $0.160; 2011 - $0.100)			(32)
Balance as of end-of-period at Jun. 30, 2011	12,558	7,938	3,393	1,227
Balance as of beginning-of-year at Dec. 31, 2011	13,238	7,590	2,969	2,679
Stock compensation/issued for benefit plans		20
Retirement of common stock/cancellation of shares		(300)
Cumulative effect from adoption of new accounting standards			0	0
Comprehensive income	1,269
Other comprehensive income (loss), net of tax	700			700
Net income (loss)	569		569
Retirement of common stock			0
Dividends declared: Common (2012 - $0.160; 2011 - $0.100)			(45)
Balance as of end-of-period at Jun. 30, 2012	$ 14,182	$ 7,310	$ 3,493	$ 3,379

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Federal Income Taxes

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Federal Income Taxes

6. Federal Income Taxes

The effective tax rate is a ratio of tax expense over pre-tax income (loss). The effective tax rate was 27% and 24% for the three and six months ended June 30, 2012, respectively. The effective tax rate was 26%for the three and six months ended June 30, 2011.The effective tax rate on pre-tax income from continuing operations was lower than the prevailing corporate federal income tax rate. Differences in the effective rates and the U.S. statutory rate of 35% were the result of certain tax preferred investment income, separate account dividends-received deduction, foreign tax credits and other tax preference items.

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Derivative Instruments

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Derivative Instruments

5. Derivative Instruments

We maintain an overall risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate risk, foreign currency exchange risk, equity market risk, default risk, basis risk and credit risk. See Note 1 in our 2011 Form 10-K for a detailed discussion of the accounting treatment for derivative instruments. See Note 6 in our 2011 Form 10-K for a detailed discussion of our derivative instruments and use of them in our overall risk management strategy which information is incorporated herein by reference. In addition, we have entered into forward-starting interest rate swaps that hedge the interest rate risk of floating rate bond coupon payments by replicating a fixed rate bond.  See Note 12 for additional disclosures related to the fair value of our derivative instruments and Note 3 for derivative instruments related to our consolidated VIEs.

We have derivative instruments with off-balance-sheet risks whose notional or contract amounts exceed the credit exposure. Outstanding derivative instruments with off-balance-sheet risks (in millions) were as follows:

				As of June 30, 2012						As of December 31, 2011
				Notional		Fair Value				Notional		Fair Value
				Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
	Interest rate contracts (1)			$	3,418	$	190	$	-	$	2,512	$	130	$	-
	Foreign currency contracts (1)				420		37		-		340		38		-
		Total cash flow hedges			3,838		227		-		2,852		168		-
Fair value hedges:
	Interest rate contracts (1)				1,175		325		-		1,675		319		-
	Equity collar (1)				9		-		-		-		-		-
		Total fair value hedges			1,184		325		-		1,675		319		-
Non-Qualifying Hedges
Interest rate contracts (1)					36,599		777		-		30,232		568		-
Foreign currency contracts (1)					196		-		-		4		-		-
Equity market contracts (1)					19,182		2,071		-		16,401		2,096		-
Credit contracts (1)					46		(1)		-		48		-		-
Credit contracts (2)					148		-		11		148		-		16
Embedded derivatives:
	Indexed annuity contracts (3)				-		-		431		-		-		399
	Guaranteed living benefits ("GLB")
		reserves (3)			-		-		1,926		-		-		2,217
	Reinsurance related (4)				-		-		185		-		-		168
			Total derivative instruments	$	61,193	$	3,399	$	2,553	$	51,360	$	3,151	$	2,800

• Reported in derivative investments on our Consolidated Balance Sheets.
• Reported in other liabilities on our Consolidated Balance Sheets.
• Reported in future contract benefits on our Consolidated Balance Sheets.
• Reported in reinsurance related embedded derivatives on our Consolidated Balance Sheets.

The maturity of the notional amounts of derivative instruments (in millions) was as follows:

			Remaining Life as of June 30, 2012
			Less Than		1 – 5		6 – 10		11 – 30		Over 30
			1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)			$	3,389	$	11,942	$	14,478	$	10,169	$	1,213	$	41,191
Foreign currency contracts (2)				196		179		130		111		-		616
Equity market contracts				9,978		3,305		5,881		24		3		19,191
Credit contracts				40		155		-		-		-		195
	Total derivative instruments
		with notional amounts	$	13,603	$	15,581	$	20,489	$	10,304	$	1,216	$	61,193

• As of June 30, 2012, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was April 2067.
• As of June 30, 2012, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was April 2028.

The change in our unrealized gain (loss) on derivative instruments in accumulated OCI (in millions) was as follows:

						For the Six
						Months Ended
						June 30,
						2012		2011
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year						$	119	$	(15)
Other comprehensive income (loss):
	Cumulative effect from adoption of new accounting standards						-		3
	Unrealized holding gains (losses) arising during the year:
		Cash flow hedges:
			Interest rate contracts				38		(41)
			Foreign currency contracts				(3)		5
		Fair value hedges:
			Interest rate contracts				2		2
	Change in foreign currency exchange rate adjustment						2		(14)
	Change in DAC, VOBA, DSI and DFEL						4		-
	Income tax benefit (expense)						(16)		18
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss):
			Cash flow hedges:
				Interest rate contracts (1)			(11)		(5)
				Interest rate contracts (2)			-		1
				Foreign currency contracts (1)			2		(7)
			Fair value hedges:
				Interest rate contracts (2)			2		2
		Associated amortization of DAC, VOBA, DSI and DFEL					1		1
		Income tax benefit (expense)					2		3
					Balance as of end-of-period	$	150	$	(37)

• The OCI offset is reported within net investment income on our Consolidated Statements of Comprehensive Income (Loss).
• The OCI offset is reported within interest and debt expense on our Consolidated Statements of Comprehensive Income (Loss).

The gains (losses) on derivative instruments (in millions) recorded within income (loss) from continuing operations on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

				For the Three				For the Six
				Months Ended				Months Ended
				June 30,				June 30,
				2012		2011		2012		2011
Qualifying Hedges
Cash flow hedges:
	Interest rate contracts (1)			$	(4)	$	(4)	$	(11)	$	(5)
	Foreign currency contracts (1)				-		(1)		2		1
		Total cash flow hedges			(4)		(5)		(9)		(4)
Fair value hedges:
	Interest rate contracts (2)				11		13		23		25
Non-Qualifying Hedges
Interest rate contracts (1)					(16)		(10)		(18)		(16)
Interest rate contracts (3)					622		88		208		27
Foreign currency contracts (3)					-		(1)		(4)		(5)
Equity market contracts (3)					241		64		(430)		(135)
Equity market contracts (4)					26		(15)		(109)		(34)
Credit contracts (1)					(1)		-		(2)		-
Credit contracts (3)					1		(1)		6		3
Embedded derivatives:
	Indexed annuity contracts (3)				23		6		(80)		54
	GLB reserves (3)				(862)		(160)		291		130
	Reinsurance related (3)				(27)		(28)		(18)		(18)
	AFS securities (1)				-		-		-		1
			Total derivative instruments	$	14	$	(49)	$	(142)	$	28

• Reported in net investment income on our Consolidated Statements of Comprehensive Income (Loss).
• Reported in interest and debt expense on our Consolidated Statements of Comprehensive Income (Loss).
• Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).
• Reported in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

Gains (losses) (in millions) on derivative instruments designated and qualifying as cash flow hedges were as follows:

		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Gain (loss) recognized as a component of OCI with
	the offset to net investment income	$	(6)	$	(4)	$	(10)	$	(4)

As of June 30, 2012, $21 million of the deferred net losses on derivative instruments in accumulated OCI were expected to be reclassified to earnings during the next 12 months. This reclassification would be due primarily to the interest rate variances related to the interest rate swap agreements.

For thethree and six months ended June 30, 2012and 2011, there were no material reclassifications to earnings due to hedged firm commitments no longer deemed probable or due to hedged forecasted transactions that had not occurred by the end of the originally specified time period.

Gains (losses) (in millions) on derivative instruments designated and qualifying as fair value hedges were as follows:

		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Gain (loss) recognized as a component of OCI with
	the offset to interest expense	$	1	$	1	$	2	$	2

Information related to our open credit default swap liabilities for which we are the seller (dollars in millions) was as follows:

As of June 30, 2012
				Credit
	Reason	Nature		Rating of		Number			Maximum
	for	of	Underlying			of	Fair		Potential
Maturity	Entering	Recourse	Obligation (1)		Instruments		Value (2)		Payout
12/20/2012 (3)	(5)	(6)		BBB+		4	$	-	$	40
12/20/2016 (4)	(5)	(6)		BBB		3		(8)		68
03/20/2017 (4)	(5)	(6)		BBB		2		(3)		40
						9	$	(11)	$	148

As of December 31, 2011
				Credit
	Reason	Nature		Rating of		Number			Maximum
	for	of	Underlying			of	Fair		Potential
Maturity	Entering	Recourse	Obligation (1)		Instruments		Value (2)		Payout
12/20/2012 (3)	(5)	(6)		BBB+		4	$	-	$	40
12/20/2016 (4)	(5)	(6)		BBB+		3		(12)		68
03/20/2017 (4)	(5)	(6)		BBB		2		(4)		40
						9	$	(16)	$	148

• Represents average credit ratings based on the midpoint of the applicable ratings among Moody's, S&P and Fitch Ratings, as scaled to the corresponding S&P ratings.
• Broker quotes are used to determine the market value of credit default swaps.
• These credit default swaps were sold to our contract holders prior to 2007, where we determined there was a spread versus premium mismatch.
• These credit default swaps were sold to a counter-party of the consolidated VIEs as discussed in Note 4 in our 2011 Form 10-K.
• Credit default swapswere entered into in order to generate income by providing default protection in return for a quarterly payment.
• Sellers do not have the right to demand indemnification or compensation from third parties in case of a loss (payment) on the contract.

Details underlying the associated collateral of our open credit default swaps for which we are the seller, if credit risk related contingent features were triggered (in millions), are as follows:

				As of			As of
			June 30,			December 31,
				2012			2011
Maximum potential payout				$	148		$	148
Less:
	Counterparty thresholds				-			-
		Maximum collateral potentially required to post		$	148		$	148

Certain of our credit default swap agreements contain contractual provisions that allow for the netting of collateral with our counterparties related to all of our collateralized financing transactions that we have outstanding. If these netting agreements were not in place, we would have been required to post approximately $11 million as of June 30, 2012, after considering the fair values of the associated investments counterparties' credit ratings as compared to ours and specified thresholds that once exceeded result in the payment of cash.

Credit Risk

We are exposed to credit loss in the event of nonperformance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or nonperformance risk. The nonperformance risk is based upon assumptions for each counterparty's credit spread over the estimated weighted average life of the counterparty exposure less collateral held. As of June 30, 2012, the nonperformance risk adjustment was $6 million.The credit risk associated with such agreements is minimized by purchasing such agreements from financial institutions with long-standing, superior performance records. Additionally, we maintain a policy of requiring all derivative contracts to be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement. We are required to maintain minimum ratings as a matter of routine practice in negotiating ISDA agreements. Under some ISDA agreements, our insurance subsidiaries have agreed to maintain certain financial strength or claims-paying ratings. A downgrade below these levels could result in termination of derivative contracts, at which time any amounts payable by us would be dependent on the market value of the underlying derivative contracts. In certain transactions, we and the counterparty have entered into a collateral support agreement requiring either party to post collateral when net exposures exceed pre-determined thresholds. These thresholds vary by counterparty and credit rating. The amount of such exposure is essentially the net replacement cost or market value less collateral held for such agreements with each counterparty if the net market value is in our favor. As of June 30, 2012, our exposure was $47 million.

The amounts recognized (in millions) by S&P credit rating of counterparty, for which we had the right to reclaim cash collateral or were obligated to return cash collateral, were as follows:

	As of June 30, 2012				As of December 31, 2011
	Collateral		Collateral		Collateral		Collateral
	Posted by		Posted by		Posted by		Posted by
S&P	Counter-		LNC		Counter-		LNC
Credit	Party		(Held by		Party		(Held by
Rating of	(Held by		Counter-		(Held by		Counter-
Counterparty	LNC)		Party)		LNC)		Party)
AA	$	43	$	-	$	35	$	-
AA-		121		-		219		-
A+		908		-		848		-
A		845		(109)		1,681		(120)
A-		1,529		-		387		-
	$	3,446	$	(109)	$	3,170	$	(120)

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Outstanding derivative instruments with off-balance-sheet risks

				As of June 30, 2012						As of December 31, 2011
				Notional		Fair Value				Notional		Fair Value
				Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
	Interest rate contracts (1)			$	3,418	$	190	$	-	$	2,512	$	130	$	-
	Foreign currency contracts (1)				420		37		-		340		38		-
		Total cash flow hedges			3,838		227		-		2,852		168		-
Fair value hedges:
	Interest rate contracts (1)				1,175		325		-		1,675		319		-
	Equity collar (1)				9		-		-		-		-		-
		Total fair value hedges			1,184		325		-		1,675		319		-
Non-Qualifying Hedges
Interest rate contracts (1)					36,599		777		-		30,232		568		-
Foreign currency contracts (1)					196		-		-		4		-		-
Equity market contracts (1)					19,182		2,071		-		16,401		2,096		-
Credit contracts (1)					46		(1)		-		48		-		-
Credit contracts (2)					148		-		11		148		-		16
Embedded derivatives:
	Indexed annuity contracts (3)				-		-		431		-		-		399
	Guaranteed living benefits ("GLB")
		reserves (3)			-		-		1,926		-		-		2,217
	Reinsurance related (4)				-		-		185		-		-		168
			Total derivative instruments	$	61,193	$	3,399	$	2,553	$	51,360	$	3,151	$	2,800

Maturity of the notional amounts of derivative financial instruments

			Remaining Life as of June 30, 2012
			Less Than		1 – 5		6 – 10		11 – 30		Over 30
			1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)			$	3,389	$	11,942	$	14,478	$	10,169	$	1,213	$	41,191
Foreign currency contracts (2)				196		179		130		111		-		616
Equity market contracts				9,978		3,305		5,881		24		3		19,191
Credit contracts				40		155		-		-		-		195
	Total derivative instruments
		with notional amounts	$	13,603	$	15,581	$	20,489	$	10,304	$	1,216	$	61,193

Change in our unrealized gain on derivative instruments in accumulated OCI

						For the Six
						Months Ended
						June 30,
						2012		2011
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year						$	119	$	(15)
Other comprehensive income (loss):
	Cumulative effect from adoption of new accounting standards						-		3
	Unrealized holding gains (losses) arising during the year:
		Cash flow hedges:
			Interest rate contracts				38		(41)
			Foreign currency contracts				(3)		5
		Fair value hedges:
			Interest rate contracts				2		2
	Change in foreign currency exchange rate adjustment						2		(14)
	Change in DAC, VOBA, DSI and DFEL						4		-
	Income tax benefit (expense)						(16)		18
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss):
			Cash flow hedges:
				Interest rate contracts (1)			(11)		(5)
				Interest rate contracts (2)			-		1
				Foreign currency contracts (1)			2		(7)
			Fair value hedges:
				Interest rate contracts (2)			2		2
		Associated amortization of DAC, VOBA, DSI and DFEL					1		1
		Income tax benefit (expense)					2		3
					Balance as of end-of-period	$	150	$	(37)

Gains (losses) on derivative instruments recorded within income (loss) from continuing operations

				For the Three				For the Six
				Months Ended				Months Ended
				June 30,				June 30,
				2012		2011		2012		2011
Qualifying Hedges
Cash flow hedges:
	Interest rate contracts (1)			$	(4)	$	(4)	$	(11)	$	(5)
	Foreign currency contracts (1)				-		(1)		2		1
		Total cash flow hedges			(4)		(5)		(9)		(4)
Fair value hedges:
	Interest rate contracts (2)				11		13		23		25
Non-Qualifying Hedges
Interest rate contracts (1)					(16)		(10)		(18)		(16)
Interest rate contracts (3)					622		88		208		27
Foreign currency contracts (3)					-		(1)		(4)		(5)
Equity market contracts (3)					241		64		(430)		(135)
Equity market contracts (4)					26		(15)		(109)		(34)
Credit contracts (1)					(1)		-		(2)		-
Credit contracts (3)					1		(1)		6		3
Embedded derivatives:
	Indexed annuity contracts (3)				23		6		(80)		54
	GLB reserves (3)				(862)		(160)		291		130
	Reinsurance related (3)				(27)		(28)		(18)		(18)
	AFS securities (1)				-		-		-		1
			Total derivative instruments	$	14	$	(49)	$	(142)	$	28

Gains (losses) on derivative instruments designated as cash flow hedges

		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Gain (loss) recognized as a component of OCI with
	the offset to net investment income	$	(6)	$	(4)	$	(10)	$	(4)

Gains (losses) on derivative instruments designated as fair value hedges

		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Gain (loss) recognized as a component of OCI with
	the offset to interest expense	$	1	$	1	$	2	$	2

Open credit default swap liabilities

As of June 30, 2012
				Credit
	Reason	Nature		Rating of		Number			Maximum
	for	of	Underlying			of	Fair		Potential
Maturity	Entering	Recourse	Obligation (1)		Instruments		Value (2)		Payout
12/20/2012 (3)	(5)	(6)		BBB+		4	$	-	$	40
12/20/2016 (4)	(5)	(6)		BBB		3		(8)		68
03/20/2017 (4)	(5)	(6)		BBB		2		(3)		40
						9	$	(11)	$	148

As of December 31, 2011
				Credit
	Reason	Nature		Rating of		Number			Maximum
	for	of	Underlying			of	Fair		Potential
Maturity	Entering	Recourse	Obligation (1)		Instruments		Value (2)		Payout
12/20/2012 (3)	(5)	(6)		BBB+		4	$	-	$	40
12/20/2016 (4)	(5)	(6)		BBB+		3		(12)		68
03/20/2017 (4)	(5)	(6)		BBB		2		(4)		40
						9	$	(16)	$	148

Collateral support agreements

				As of			As of
			June 30,			December 31,
				2012			2011
Maximum potential payout				$	148		$	148
Less:
	Counterparty thresholds				-			-
		Maximum collateral potentially required to post		$	148		$	148

	As of June 30, 2012				As of December 31, 2011
	Collateral		Collateral		Collateral		Collateral
	Posted by		Posted by		Posted by		Posted by
S&P	Counter-		LNC		Counter-		LNC
Credit	Party		(Held by		Party		(Held by
Rating of	(Held by		Counter-		(Held by		Counter-
Counterparty	LNC)		Party)		LNC)		Party)
AA	$	43	$	-	$	35	$	-
AA-		121		-		219		-
A+		908		-		848		-
A		845		(109)		1,681		(120)
A-		1,529		-		387		-
	$	3,446	$	(109)	$	3,170	$	(120)

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Segment Information

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Segment Information

13. Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments. We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments. Our reporting segments reflect the manner by which our chief operating decision makers view and manage the business. See Note 22 of our 2011 Form 10-K for a brief description of these segments and Other Operations.

Segment operating revenues and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments. Income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable:

• Realized gains and losses associated with the following (“excluded realized gain (loss)”):

• Sales or disposals of securities;
• Impairments of securities;
• Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities;
• Changes in the fair value of the derivatives we own to hedge our GDB riders within our variable annuities;
• Changes in the fair value of the embedded derivatives of our GLB riders accounted for at fair value, net of the change in the fair value of the derivatives we own to hedge them; and
• Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for at fair value;

• Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders;
• Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;
• Gains (losses) on early extinguishment of debt;
• Losses from the impairment of intangible assets;
• Income (loss) from discontinued operations; and
• Income (loss) from the initial adoption of new accounting standards.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

• Excluded realized gain (loss);
• Revenue adjustments from the initial adoption of new accounting standards;
• Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and
• Amortization of deferred gains arising from the reserve changes on business sold through reinsurance.

We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. Operating revenues and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

Segment information (in millions) was as follows:

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Revenues
Operating revenues:
	Annuities		$	734	$	735	$	1,465	$	1,468
	Retirement Plan Services			258		260		510		523
	Life Insurance			1,237		1,229		2,469		2,376
	Group Protection			540		501		1,043		979
	Other Operations			113		114		220		232
Excluded realized gain (loss), pre-tax				18		(33)		(95)		(53)
Amortization of deferred gain arising from reserve changes on business
	sold through reinsurance, pre-tax			-		1		1		1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax				(1)		-		1		-
		Total revenues	$	2,899	$	2,807	$	5,614	$	5,526

				For the Three				For the Six
				Months Ended				Months Ended
				June 30,				June 30,
				2012		2011		2012		2011
Net Income (Loss)
Income (loss) from operations:
	Annuities			$	158	$	145	$	294	$	289
	Retirement Plan Services				38		41		72		90
	Life Insurance				138		136		281		279
	Group Protection				27		26		43		50
	Other Operations				(39)		(22)		(73)		(60)
Excluded realized gain (loss), after-tax					12		(21)		(61)		(34)
Benefit ratio unlocking, after-tax					(10)		(1)		14		3
		Income (loss) from continuing operations, after-tax			324		304		570		617
		Income (loss) from discontinued operations, after-tax			-		-		(1)		-
			Net income (loss)	$	324	$	304	$	569	$	617

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Shares and Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Shares and Stockholders' Equity

9. Shares and Stockholders' Equity

Common and Preferred Shares

The changes in our preferred and common stock (number of shares) were as follows:

		For the Three		For the Six
		Months Ended		Months Ended
		June 30,		June 30,
		2012	2011	2012	2011
Series A Preferred Stock
Balance as of beginning-of-period		9,632	10,914	10,072	10,914
Conversion of convertible preferred stock (1)		-	(60)	(440)	(60)
	Balance as of end-of-period	9,632	10,854	9,632	10,854
Common Stock
Balance as of beginning-of-period		285,412,303	313,456,824	291,319,222	315,718,554
Conversion of convertible preferred stock (1)		-	960	7,040	960
Stock compensation/issued for benefit plans		230,198	30,772	334,395	182,906
Retirement/cancellation of shares		(6,473,530)	(5,149,393)	(12,491,686)	(7,563,257)
	Balance as of end-of-period	279,168,971	308,339,163	279,168,971	308,339,163
Common Stock as of End-of-Period
Assuming conversion of preferred stock		279,323,083	308,512,827	279,323,083	308,512,827
Diluted basis		286,820,300	316,821,550	286,820,300	316,821,550

(1)        Represents the conversion of Series A preferred stock into common stock.

Our common and Series A preferred stocks are without par value.

Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted EPS was as follows:

			For the Three		For the Six
			Months Ended		Months Ended
			June 30,		June 30,
			2012	2011	2012	2011
Weighted-average shares, as used in basic calculation			282,085,602	311,391,263	285,570,764	313,192,667
Shares to cover exercise of outstanding warrants			10,150,192	10,150,292	10,150,231	10,150,292
Shares to cover conversion of preferred stock			154,112	174,603	154,305	174,613
Shares to cover non-vested stock			1,110,662	816,834	1,060,676	794,095
Average stock options outstanding during the period			507,944	633,711	554,614	796,792
Assumed acquisition of shares with assumed
	proceeds from exercising outstanding warrants		(4,887,102)	(3,846,217)	(4,760,822)	(3,758,105)
Assumed acquisition of shares with assumed
	proceeds and benefits from exercising stock
	options (at average market price for the period)		(346,700)	(400,374)	(380,239)	(517,329)
Shares repurchaseable from measured but
	unrecognized stock option expense		(1,768)	(36,857)	(8,224)	(104,962)
Average deferred compensation shares			1,187,598	1,031,814	1,206,501	1,053,100
		Weighted-average shares, as used in diluted calculation	289,960,540	319,915,069	293,547,806	321,781,163

In the event the average market price of LNC common stock exceeds the issue price of stock options and the options have a dilutive effect to our EPS, such options will be shown in the table above.

We have participants in our deferred compensation plans who selected LNC stock as the measure for the investment return attributable to their deferral amounts.  For the three and six months ended June 30, 2012 and 2011, the effect of settling this obligation in LNC stock (“equity classification”) was more dilutive than the scenario of settling it in cash (“liability classification”).  Therefore, for our EPS calculation for these periods, we added these shares to the denominator and adjusted the numerator to present net income as if the shares had been accounted for under equity classification by removing the mark-to-market adjustment included in net income attributable to these deferred units of LNC stock.  The amount of this adjustment was $4 million and $(2) million for the three and six months ended June 30, 2012, respectively, and $1 million for the three months ended June 30, 2011.

The income used in the calculation of our diluted EPS is our net income (loss), reduced by preferred stock dividends and accretion of discount. These amounts are presented on our Consolidated Statements of Comprehensive Income (Loss).

Accumulated OCI

The following summarizes the components and changes in accumulated OCI (in millions):

				For the Six
				Months Ended
				June 30,
				2012		2011
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year				$	2,947	$	1,072
	Cumulative effect from adoption of new accounting standards				-		105
	Unrealized holding gains (losses) arising during the period				1,276		627
	Change in foreign currency exchange rate adjustment				(6)		22
	Change in DAC, VOBA, DSI and other contract holder funds				(261)		(168)
	Income tax benefit (expense)				(395)		(136)
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(103)		(38)
		Associated amortization of DAC, VOBA, DSI and DFEL			1		(15)
		Income tax benefit (expense)			36		19
			Balance as of end-of-period	$	3,627	$	1,556
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year				$	(110)	$	(129)
	(Increases) attributable to:
		Cumulative effect from adoption of new accounting standards			-		(5)
		Gross OTTI recognized in OCI during the period			(79)		(27)
		Change in DAC, VOBA, DSI and other contract holder funds			12		8
		Income tax benefit (expense)			26		7
	Decreases attributable to:
		Sales, maturities or other settlements of AFS securities			62		67
		Change in DAC, VOBA, DSI and other contract holder funds			(8)		(13)
		Income tax benefit (expense)			(20)		(19)
			Balance as of end-of-period	$	(117)	$	(111)
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year				$	119	$	(15)
	Cumulative effect from adoption of new accounting standards				-		3
	Unrealized holding gains (losses) arising during the period				37		(34)
	Change in foreign currency exchange rate adjustment				2		(14)
	Change in DAC, VOBA, DSI and DFEL				4		-
	Income tax benefit (expense)				(16)		18
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(7)		(9)
		Associated amortization of DAC, VOBA, DSI and DFEL			1		1
		Income tax benefit (expense)			2		3
			Balance as of end-of-period	$	150	$	(37)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year				$	1	$	1
	Foreign currency translation adjustment arising during the period				(8)		(6)
	Income tax benefit (expense)				3		2
		Balance as of end-of-period		$	(4)	$	(3)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year				$	(278)	$	(181)
	Adjustment arising during the period				1		5
	Income tax benefit (expense)				-		(2)
		Balance as of end-of-period		$	(277)	$	(178)

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Guaranteed Benefit Features

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Guaranteed Benefit Features

7. Guaranteed Benefit Features

Information on the guaranteed death benefit (“GDB”) features outstanding (dollars in millions) was as follows (our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive):

	As of				As of
	June 30,			December 31,
	2012				2011
Return of Net Deposits
Total account value	$	58,260			$	54,004
Net amount at risk (1)		812				1,379
Average attained age of contract holders		59 years				59 years
Minimum Return
Total account value	$	151			$	155
Net amount at risk (1)		42				48
Average attained age of contract holders		72 years				72 years
Guaranteed minimum return		5	%			5	%
Anniversary Contract Value
Total account value	$	22,255			$	21,648
Net amount at risk (1)		1,963				2,939
Average attained age of contract holders		67 years				67 years

• Represents the amount of death benefit in excess of the account balance.  The decrease in net amount at risk when comparing June 30, 2012, to December 31, 2011, was attributable primarily to the increase in the equity markets during the first six months of 2012.

The determination of GDB liabilities is based on models that involve a range of scenarios and assumptions, including those regarding expected market rates of return and volatility, contract surrender rates and mortality experience. The following summarizes the balances of and changes in the liabilities for GDB (in millions), which were recorded in future contract benefits on our Consolidated Balance Sheets:

			For the Six
			Months Ended
			June 30,
			2012		2011
Balance as of beginning-of-year			$	84	$	44
	Changes in reserves			7		16
	Benefits paid			(24)		(19)
		Balance as of end-of-period	$	67	$	41

Account balances of variable annuity contracts with guarantees (in millions) were invested in separate account investment options as follows:

			As of				As of
		June 30,				December 31,
			2012				2011
Asset Type
Domestic equity			$	34,700			$	34,286
International equity				13,194				13,095
Bonds				18,148				17,735
Money market				5,948				5,892
	Total		$	71,990			$	71,008
Percent of total variable annuity separate account values				93	%			98	%

Future contract benefits also includes reserves for our products with secondary guarantees for our products sold through our Life Insurance segment. These UL and VUL products with secondary guarantees represented 38% of permanent life insurance in force as ofJune 30, 2012,and34% and 33%of total sales for these products for the three andsix months ended June 30, 2012, respectively.

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Contingencies and Commitments

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Contingencies and Commitments

8. Contingencies and Commitments

Regulatory bodies, such as state insurance departments, the SEC, Financial Industry Regulatory Authority and other regulatory bodies, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, laws governing the activities of broker-dealers, registered investment advisors and unclaimed property laws.

LNC and its subsidiaries are involved in various pending or threatened legal or regulatory proceedings, including purported class actions, arising from the conduct of business both in the ordinary course and otherwise. In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experiences of LNC in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

Due to the unpredictable nature of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time is normally difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

We establish liabilities for litigation and regulatory loss contingencies when information related to the loss contingencies shows both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as ofJune 30, 2012. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on LNC's financial position.

See Note 13 to the consolidated financial statements in our 2011 Form 10-K for a discussion of commitments and contingencies, which information is incorporated herein by reference.

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Realized (Gain) Loss

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Realized (Gain) Loss

10. Realized Gain (Loss)

Details underlying realized gain (loss) (in millions) reported on our Consolidated Statements of Comprehensive Income (Loss) were as follows:

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Total realized gain (loss) related to certain investments (1)			$	(51)	$	(32)	$	(99)	$	(47)
Realized gain (loss) on the mark-to-market on certain instruments (2)				(19)		(1)		39		9
Indexed annuity net derivative results: (3)
	Gross gain (loss)			(3)		1		19		7
	Associated amortization of DAC, VOBA, DSI and DFEL			1		-		(5)		(2)
Variable annuity net derivatives results: (4)
	Gross gain (loss)			148		34		14		44
	Associated amortization of DAC, VOBA, DSI and DFEL			(33)		(11)		(11)		(18)
		Total realized gain (loss)	$	43	$	(9)	$	(43)	$	(7)

• See “Realized Gain (Loss) Related to Certain Investments” section in Note 4.
• Represents changes in the fair values of certain derivative investments (including those associated with our consolidatedVIEs), total return swaps (embedded derivatives that are theoretically included in our various modified coinsurance and coinsurance with funds withheld reinsurance arrangements that have contractual returns related to various assets and liabilities associated with these arrangements) and trading securities.
• Represents the net difference between the change in the fair value of the S&P 500 call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity products along with changes in the fair value of embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products.
• Includes the net difference in the change in embedded derivative reserves of our GLB products and the change in the fair value of the derivative instruments we own to hedge GDB and GLB products, including the cost of purchasing the hedging instruments.

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Derivatives (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended			6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended												6 Months Ended		12 Months Ended	6 Months Ended						6 Months Ended												3 Months Ended		6 Months Ended							3 Months Ended		6 Months Ended				6 Months Ended						3 Months Ended		6 Months Ended				6 Months Ended				3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended					3 Months Ended		6 Months Ended				6 Months Ended		3 Months Ended		6 Months Ended							3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended					3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended						3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 Maturity 12 20 2012 [Member]	Dec. 31, 2011 Maturity 12 20 2012 [Member]	Jun. 30, 2012 Maturity 12 20 2016 [Member]	Dec. 31, 2011 Maturity 12 20 2016 [Member]	Jun. 30, 2012 Maturity 3 20 2017 [Member]	Dec. 31, 2011 Maturity 3 20 2017 [Member]	Jun. 30, 2012 BBB plus average credit rating [Member] Maturity 12 20 2012 [Member]	Dec. 31, 2011 BBB plus average credit rating [Member] Maturity 12 20 2012 [Member]	Dec. 31, 2011 BBB plus average credit rating [Member] Maturity 12 20 2016 [Member]	Jun. 30, 2012 AA [Member]	Dec. 31, 2011 AA [Member]	Jun. 30, 2012 AA- [Member]	Dec. 31, 2011 AA- [Member]	Jun. 30, 2012 A plus [Member]	Dec. 31, 2011 A plus [Member]	Jun. 30, 2012 A [Member]	Dec. 31, 2011 A [Member]	Jun. 30, 2012 A- [Member]	Dec. 31, 2011 A- [Member]	Jun. 30, 2012 BBB [Member] Maturity 12 20 2016 [Member]	Jun. 30, 2012 BBB [Member] Maturity 3 20 2017 [Member]	Dec. 31, 2011 BBB [Member] Maturity 3 20 2017 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[Member]	Jun. 30, 2011 Foreign Currency Translation Adjustment [Member]	Dec. 31, 2010 Foreign Currency Translation Adjustment [Member]	Jun. 30, 2012 Funded Status of Employee Benefit Plans [Member]	Dec. 31, 2011 Funded Status of Employee Benefit Plans [Member]	Jun. 30, 2011 Funded Status of Employee Benefit Plans [Member]	Dec. 31, 2010 Funded Status of Employee Benefit Plans [Member]	Jun. 30, 2012 Cash flow hedges [Member]	Jun. 30, 2011 Cash flow hedges [Member]	Jun. 30, 2012 Cash flow hedges [Member]	Jun. 30, 2011 Cash flow hedges [Member]	Jun. 30, 2012 Cash flow hedges [Member] Derivative investments [Member]	Dec. 31, 2011 Cash flow hedges [Member] Derivative investments [Member]	Jun. 30, 2012 Fair value hedges [Member] Derivative investments [Member]	Dec. 31, 2011 Fair value hedges [Member] Derivative investments [Member]	Jun. 30, 2012 Interest Rate Contract [Member]	Jun. 30, 2012 Interest Rate Contract [Member] Cash flow hedges [Member] Net investment income [Member]	Jun. 30, 2011 Interest Rate Contract [Member] Cash flow hedges [Member] Net investment income [Member]	Jun. 30, 2012 Interest Rate Contract [Member] Cash flow hedges [Member] Net investment income [Member]	Jun. 30, 2011 Interest Rate Contract [Member] Cash flow hedges [Member] Net investment income [Member]	Jun. 30, 2012 Interest Rate Contract [Member] Cash flow hedges [Member] Derivative investments [Member]	Dec. 31, 2011 Interest Rate Contract [Member] Cash flow hedges [Member] Derivative investments [Member]	Jun. 30, 2012 Interest Rate Contract [Member] Cash flow hedges [Member] Unrealized Gain (Loss) on Derivative Instruments [Member]	Jun. 30, 2011 Interest Rate Contract [Member] Cash flow hedges [Member] Unrealized Gain (Loss) on Derivative Instruments [Member]	Jun. 30, 2012 Interest Rate Contract [Member] Cash flow hedges [Member] Unrealized Gain (Loss) on Derivative Instruments [Member] Interest Expense [Member]	Jun. 30, 2011 Interest Rate Contract [Member] Cash flow hedges [Member] 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Equity Market Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 Equity Market Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Underwriting, acquisition, insurance and other expenses [Member]	Jun. 30, 2011 Equity Market Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Underwriting, acquisition, insurance and other expenses [Member]	Jun. 30, 2012 Equity Market Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Underwriting, acquisition, insurance and other expenses [Member]	Jun. 30, 2011 Equity Market Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Underwriting, acquisition, insurance and other expenses [Member]	Jun. 30, 2012 Equity Market Contract [Member] 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Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Other Liabilities [Member]	Dec. 31, 2011 Credit Risk Contract [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Other Liabilities [Member]	Jun. 30, 2012 Indexed Annuity Contracts Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2011 Indexed Annuity Contracts Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 Indexed Annuity Contracts Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2011 Indexed Annuity Contracts Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 Indexed Annuity Contracts Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Future contract benefits [Member]	Dec. 31, 2011 Indexed Annuity Contracts Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Future contract benefits [Member]	Jun. 30, 2012 GLB Embedded Derivative Reserves [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2011 GLB Embedded Derivative Reserves [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 GLB Embedded Derivative Reserves [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2011 GLB Embedded Derivative Reserves [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 GLB Embedded Derivative Reserves [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Future contract benefits [Member]	Dec. 31, 2011 GLB Embedded Derivative Reserves [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Future contract benefits [Member]	Jun. 30, 2012 Available For Sale Securities Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Net investment income [Member]	Jun. 30, 2011 Available For Sale Securities Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Net investment income [Member]	Jun. 30, 2012 Available For Sale Securities Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Net investment income [Member]	Jun. 30, 2011 Available For Sale Securities Embedded Derivatives [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Net investment income [Member]	Jun. 30, 2012 Reinsurance Related [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2011 Reinsurance Related [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 Reinsurance Related [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2011 Reinsurance Related [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Realized gain (loss) [Member]	Jun. 30, 2012 Reinsurance Related [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Reinsurance Related Embedded Derivatives [Member]	Dec. 31, 2011 Reinsurance Related [Member] Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] Reinsurance Related Embedded Derivatives [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	$ 61,193		$ 61,193		$ 51,360																																													$ 3,838	$ 2,852	$ 1,184	$ 1,675						$ 3,418	$ 2,512											$ 1,175	$ 1,675													$ 36,599	$ 30,232						$ 420	$ 340							$ 196	$ 4		$ 9	$ 0									$ 19,182	$ 16,401										$ 46	$ 48	$ 148	$ 148					$ 0	$ 0					$ 0	$ 0									$ 0	$ 0
Asset Carrying or Fair Value	3,399		3,399		3,151																																													227	168	325	319						190	130											325	319													777	568						37	38							0	0		0	0									2,071	2,096										(1)	0	0	0					0	0					0	0									0	0
Liability Carrying or Fair Value Loss	2,553		2,553		2,800																																													0	0	0	0						0	0											0	0													0	0						0	0							0	0		0	0									0	0										0	0	11	16					431	399					1,926	2,217									185	168
Maturity of the notional amounts of derivative financial instruments
Remaining Life Less Than 1 Year	13,603		13,603																																																			3,389																																	196															9,978													40
Remaining Life - 1 - 5 Years	15,581		15,581																																																			11,942																																	179															3,305													155
Remaining Life - 6 - 10 Years	20,489		20,489																																																			14,478																																	130															5,881													0
Remaining Life - 11 - 30 Years	10,304		10,304																																																			10,169																																	111															24													0
Remaining Life Over - 30 Years	1,216		1,216																																																			1,213																																	0															3													0
Remaining Life - Total Years	61,193		61,193																																																			41,191																																	616															19,191													195
Change in our unrealized gain on derivative instruments in accumulated OCI
Balance as of beginning-of-year																												2,947	1,072	(117)	(110)	(111)	(129)	119	(15)			(4)	1	(3)	1	(277)	(278)	(178)	(181)
Cumulative effect from adoption of new accounting standard																																		0	3
Unrealized holding gains (losses) arising during the period																																																													38	(41)											2	2																				(3)	5
Change in foreign currency exchange rate adjustment																												(6)	22					2	(14)
Change in DAC, VOBA, DSI and DFEL																																		4	0
Income tax benefit (expense)																																		(16)	18
Less: Reclassification adjustment for gains (losses) included in net income (loss)																																				2	(7)																										0	1	(11)	(5)									2	2
Less: Associated amortization of DAC, VOBA, DSI and DFEL																																		1	1
Less: Income tax benefit (expense)																																		2	3
Balance as of end-of-period																												3,627	1,556	(117)	(110)	(111)	(129)	150	(37)			(4)	1	(3)	1	(277)	(278)	(178)	(181)
Gains (losses)
Gains (losses)	14	(49)	(142)	28																																										(4)	(5)	(9)	(4)						(4)	(4)	(11)	(5)									11	13	23	25							(16)	(10)	(18)	(16)	622	88	208	27				0	(1)	2	1					0	(1)	(4)	(5)						241	64	(430)	(135)	26	(15)	(109)	(34)				(1)	0	(2)	0	1	(1)	6	3					23	6	(80)	54			(862)	(160)	291	130			0	0	0	1	(27)	(28)	(18)	(18)
Gains (losses) on derivative instruments designated as cash flow hedges
Gain (loss) recognized as a component of other comprehensive income with the offset to net investment income	(6)	(4)	(10)	(4)
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months			21
Information related to fair value hedges
Gain (loss) recognized as a component of OCI with the offset to interest expense	1	1	2	2
Open credit default swap liabilities
Credit rating of underlying obligation												BBB+	BBB+	BBB+											BBB	BBB	BBB
Maturity date of open credit default swap liabilities						Dec. 20, 2012	Dec. 20, 2012	Dec. 20, 2016	Dec. 20, 2016	Mar. 20, 2017	Mar. 20, 2017
Credit default swaps, number of instruments	9		9		9	4	4	3	3	2	2
Fair Value of open credit default swap liabilities	(11)		(11)		(16)	0	0	(8)	(12)	(3)	(4)
Maximum potential payout of open credit default swap liabilities	148		148		148	40	40	68	68	40	40
Credit risk related contingent features collateral
Maximum potential payout	148		148		148	40	40	68	68	40	40
Less: Counterparty thresholds	0		0		0
Collateral requirement if netting agreements not in place	11		11
Nonperformance risk adjustment	6		6
Exposure associated with collateralization events	47		47
Collateral support agreements
Collateral Posted by Counterparty (Held by Entity)	3,446		3,446		3,170										43	35	121	219	908	848	845	1,681	1,529	387
Collateral Posted by LNC (Held by Counterparty)	$ (109)		$ (109)		$ (120)										$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ (109)	$ (120)	$ 0	$ 0

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Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Consolidated Variable Interest Entity Asset and Liability information

					As of June 30, 2012							As of December 31, 2011
					Number							Number
					of		Notional		Carrying			of		Notional		Carrying
				Instruments			Amounts		Value		Instruments			Amounts		Value
Assets
Fixed maturity securities:
	Asset-backed credit card loans					N/A	$	-	$	595			N/A	$	-	$	592
	U.S. government bonds					N/A		-		110			N/A		-		108
Excess mortality swap						1		100		-			1		100		-
			Total assets (1)			1	$	100	$	705			1	$	100	$	700
Liabilities
Non-qualifying hedges:
	Credit default swaps					2	$	600	$	234			2	$	600	$	295
	Contingent forwards					2		-		(3)			2		-		(4)
		Total non-qualifying hedges				4		600		231			4		600		291
Federal income tax						N/A		-		(73)			N/A		-		(98)
			Total liabilities (2)			4	$	600	$	158			4	$	600	$	193

Consolidated Variable Interest Entity Settlement Payments and Mark-to-Market Adjustments

		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2012		2011		2012		2011
Non-Qualifying Hedges
Credit default swaps		$	(10)	$	6	$	61	$	13
Contingent forwards			-		(1)		(2)		(3)
	Total non-qualifying hedges (1)	$	(10)	$	5	$	59	$	10

CLN structures summary information

	Amount and Date of Issuance
		$400		$200
		December		April
		2006		2007
Original attachment point (subordination)		5.50	%	2.05	%
Current attachment point (subordination)		4.17	%	1.48	%
Maturity	12/20/2016			3/20/2017
Current rating of tranche		BB-		Ba2
Current rating of underlying collateral pool		Aa1-B3		Aaa-Caa1
Number of defaults in underlying collateral pool		2		2
Number of entities		123		99
Number of countries		20		22

CLN structures' underlying collateral by industry and rating

			AAA		AA		A		BBB		BB		B		CCC		Total
Industry
Telecommunications			0.0	%	0.0	%	5.5	%	4.5	%	0.7	%	0.5	%	0.0	%	11.2	%
Financial intermediaries			0.0	%	2.1	%	7.5	%	0.9	%	0.0	%	0.0	%	0.0	%	10.5	%
Oil and gas			0.0	%	1.8	%	1.0	%	4.6	%	0.0	%	0.0	%	0.0	%	7.4	%
Utilities			0.0	%	0.0	%	2.6	%	2.0	%	0.0	%	0.0	%	0.0	%	4.6	%
Chemicals and plastics			0.0	%	0.0	%	2.3	%	1.2	%	0.3	%	0.0	%	0.0	%	3.8	%
Drugs			0.3	%	2.7	%	0.7	%	0.0	%	0.0	%	0.0	%	0.0	%	3.7	%
Retailers (except food
	and drug)		0.0	%	0.0	%	2.1	%	0.9	%	0.5	%	0.0	%	0.0	%	3.5	%
Industrial equipment			0.0	%	0.0	%	3.0	%	0.3	%	0.0	%	0.0	%	0.0	%	3.3	%
Sovereign			0.0	%	0.7	%	1.6	%	1.0	%	0.0	%	0.0	%	0.0	%	3.3	%
Conglomerates			0.0	%	2.3	%	0.9	%	0.0	%	0.0	%	0.0	%	0.0	%	3.2	%
Forest products			0.0	%	0.0	%	0.0	%	1.6	%	1.4	%	0.0	%	0.0	%	3.0	%
Other			0.0	%	3.9	%	16.0	%	17.7	%	3.7	%	0.9	%	0.3	%	42.5	%
		Total	0.3	%	13.5	%	43.2	%	34.7	%	6.6	%	1.4	%	0.3	%	100.0	%

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Realized Gain (Loss) (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Details underlying realized (gain) loss

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Total realized gain (loss) related to certain investments (1)			$	(51)	$	(32)	$	(99)	$	(47)
Realized gain (loss) on the mark-to-market on certain instruments (2)				(19)		(1)		39		9
Indexed annuity net derivative results: (3)
	Gross gain (loss)			(3)		1		19		7
	Associated amortization of DAC, VOBA, DSI and DFEL			1		-		(5)		(2)
Variable annuity net derivatives results: (4)
	Gross gain (loss)			148		34		14		44
	Associated amortization of DAC, VOBA, DSI and DFEL			(33)		(11)		(11)		(18)
		Total realized gain (loss)	$	43	$	(9)	$	(43)	$	(7)

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Segment Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Notes to Financial Statements [Abstract]
Federal income tax rate	35.00%	35.00%	35.00%	35.00%
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	$ 2,899	$ 2,807	$ 5,614	$ 5,526
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	324	304	570	617
Income (loss) from discontinued operations, after-tax	0	0	(1)	0
Net income (loss)	324	304	569	617
Annuities Segment [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	734	735	1,465	1,468
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	158	145	294	289
Retirement Plan Services Segment [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	258	260	510	523
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	38	41	72	90
Life Segment [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	1,237	1,229	2,469	2,376
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	138	136	281	279
Group Protection Segment [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	540	501	1,043	979
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	27	26	43	50
Other Operations [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	113	114	220	232
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	(39)	(22)	(73)	(60)
Excluded Realized Gain Loss Tax Reconciling Item [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	18	(33)	(95)	(53)
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	12	(21)	(61)	(34)
Benefit Ratio Unlocking Tax Reconciling Item [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Income (loss) from continuing operations	(10)	(1)	14	3
Amortization of Deferred Gains From Reserve Changes On Business Sold Through Reinsurance, Pre Tax, Reconciling Item [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	0	1	1	1
Amortization Income of DFEL Associated With Benefit Ratio Unlocking, Pre Tax, Reconciling Item [Member]
Schedule Of Segment Reporting And Reconcilliation [Line Items]
Total revenues	$ (1)	$ 0	$ 1	$ 0

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Statement of Stockholders' Equity [Abstract]
Common dividends declared per share (in dollars per share)	$ 0.160	$ 0.100

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Investments

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Investments

4. Investments

AFS Securities

Pursuant to the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards CodificationTM (“ASC”), we have categorized AFS securities into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3), as described in Note 1 in our 2011 Form 10-K, which also includes additional disclosures regarding our fair value measurements.

The amortized cost, gross unrealized gains, losses and OTTI and fair value of AFS securities (in millions) were as follows:

				As of June 30, 2012
				Amortized		Gross Unrealized						Fair
				Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
	Corporate bonds			$	57,342	$	7,068	$	393	$	103	$	63,914
	U.S. Government bonds				449		68		-		-		517
	Foreign government bonds				583		81		-		-		664
	Residential mortgage-backed securities ("RMBS")				6,808		522		41		92		7,197
	Commercial mortgage-backed securities ("CMBS")				1,304		71		43		25		1,307
	Collateralized debt obligations ("CDOs")				135		-		15		-		120
	State and municipal bonds				3,525		767		8		-		4,284
	Hybrid and redeemable preferred securities				1,248		63		123		-		1,188
	VIEs' fixed maturity securities				675		30		-		-		705
		Total fixed maturity securities			72,069		8,670		623		220		79,896
Equity securities					143		19		8		-		154
			Total AFS securities	$	72,212	$	8,689	$	631	$	220	$	80,050

				As of December 31, 2011
				Amortized		Gross Unrealized						Fair
				Cost		Gains		Losses		OTTI		Value
Fixed maturity securities:
	Corporate bonds			$	53,661	$	6,185	$	517	$	68	$	59,261
	U.S. Government bonds				439		55		-		-		494
	Foreign government bonds				668		65		-		-		733
	RMBS				7,690		548		73		126		8,039
	CMBS				1,642		73		106		9		1,600
	CDOs				121		-		19		-		102
	State and municipal bonds				3,490		566		9		-		4,047
	Hybrid and redeemable preferred securities				1,277		50		170		-		1,157
	VIEs' fixed maturity securities				673		27		-		-		700
		Total fixed maturity securities			69,661		7,569		894		203		76,133
Equity securities					135		16		12		-		139
			Total AFS securities	$	69,796	$	7,585	$	906	$	203	$	76,272

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities (in millions) as of June 30, 2012, were as follows:

			Amortized		Fair
			Cost		Value
Due in one year or less			$	2,931	$	2,989
Due after one year through five years				12,188		13,136
Due after five years through ten years				23,651		26,185
Due after ten years				25,052		28,962
	Subtotal			63,822		71,272
Mortgage-backed securities ("MBS")				8,112		8,504
CDOs				135		120
		Total fixed maturity AFS securities	$	72,069	$	79,896

Actual maturities may differ from contractual maturities because issuers may have the right to call or pre-pay obligations.

The fair value and gross unrealized losses, including the portion of OTTI recognized in OCI, of AFS securities (dollars in millions), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

					As of June 30, 2012
					Less Than or Equal				Greater Than
					to Twelve Months				Twelve Months				Total
							Gross				Gross				Gross
							Unrealized				Unrealized				Unrealized
					Fair		Losses and		Fair		Losses and		Fair		Losses and
					Value		OTTI		Value		OTTI		Value		OTTI
Fixed maturity securities:
	Corporate bonds				$	2,389	$	175	$	1,293	$	321	$	3,682	$	496
	RMBS					521		90		314		43		835		133
	CMBS					110		25		146		43		256		68
	CDOs					-		-		68		15		68		15
	State and municipal bonds					5		-		22		8		27		8
	Hybrid and redeemable
		preferred securities				125		4		425		119		550		123
			Total fixed maturity securities			3,150		294		2,268		549		5,418		843
Equity securities						10		1		4		7		14		8
				Total AFS securities	$	3,160	$	295	$	2,272	$	556	$	5,432	$	851
Total number of AFS securities in an unrealized loss position																734

					As of December 31, 2011
					Less Than or Equal				Greater Than
					to Twelve Months				Twelve Months				Total
							Gross				Gross				Gross
							Unrealized				Unrealized				Unrealized
					Fair		Losses and		Fair		Losses and		Fair		Losses and
					Value		OTTI		Value		OTTI		Value		OTTI
Fixed maturity securities:
	Corporate bonds				$	2,848	$	162	$	1,452	$	423	$	4,300	$	585
	RMBS					565		125		429		74		994		199
	CMBS					178		15		146		100		324		115
	CDOs					9		1		80		18		89		19
	State and municipal bonds					31		-		30		9		61		9
	Hybrid and redeemable
		preferred securities				324		23		353		147		677		170
			Total fixed maturity securities			3,955		326		2,490		771		6,445		1,097
Equity securities						38		12		-		-		38		12
				Total AFS securities	$	3,993	$	338	$	2,490	$	771	$	6,483	$	1,109
Total number of AFS securities in an unrealized loss position																897

For information regarding our investments in VIEs, see Note 3.

We perform detailed analysis on the AFS securities backed by pools of residential and commercial mortgages that are most at risk of impairment based on factors discussed in Note 1 in our 2011 Form 10-K. Selected information for these securities in a gross unrealized loss position (in millions) was as follows:

		As of June 30, 2012
		Amortized		Fair		Unrealized
		Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages		$	1,734	$	1,363	$	371
AFS securities backed by pools of commercial mortgages			355		274		81
	Total	$	2,089	$	1,637	$	452
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages		$	1,724	$	1,353	$	371
AFS securities backed by pools of commercial mortgages			79		42		37
	Total	$	1,803	$	1,395	$	408

		As of December 31, 2011
		Amortized		Fair		Unrealized
		Cost		Value		Loss
Total
AFS securities backed by pools of residential mortgages		$	2,023	$	1,553	$	470
AFS securities backed by pools of commercial mortgages			472		344		128
	Total	$	2,495	$	1,897	$	598
Subject to Detailed Analysis
AFS securities backed by pools of residential mortgages		$	2,015	$	1,545	$	470
AFS securities backed by pools of commercial mortgages			126		61		65
	Total	$	2,141	$	1,606	$	535

For the sixmonths ended June 30, 2012 and 2011, we recorded OTTI for AFS securities backed by pools of residential and commercial mortgages of $34 million and $44 million, pre-tax,respectively, and before associated amortization expense for DAC, value of business acquired (“VOBA”), deferred sales inducements (“DSI”) and deferred front-end loads (“DFEL”), of which $(3) million and $4 million, respectively, was recognized in OCI and $37 millionand $40 million, respectively, was recognized in net income (loss).

The fair value, gross unrealized losses, the portion of OTTI recognized in OCI (in millions) and number of AFS securities where the fair value had declined and remained below amortized cost by greater than 20% were as follows:

		As of June 30, 2012
								Number
		Fair		Gross Unrealized				of
		Value		Losses		OTTI		Securities (1)
Less than six months		$	115	$	41	$	2		25
Six months or greater, but less than nine months			13		4		1		4
Nine months or greater, but less than twelve months			104		40		12		17
Twelve months or greater			584		342		165		167
	Total	$	816	$	427	$	180		213

		As of December 31, 2011
								Number
		Fair		Gross Unrealized				of
		Value		Losses		OTTI		Securities (1)
Less than six months		$	385	$	125	$	31		56
Six months or greater, but less than nine months			53		30		12		18
Nine months or greater, but less than twelve months			2		-		1		7
Twelve months or greater			615		470		111		175
	Total	$	1,055	$	625	$	155		256

• We may reflect a security in more than one aging category based on various purchase dates.

We regularly review our investment holdings for OTTI. Our gross unrealized losses on AFS securities decreased $258millionfor the six months ended June 30, 2012. As discussed further below, we believe the unrealized loss position as of June 30, 2012,did not represent OTTI as we did not intend to sell these fixed maturity AFS securities, it is not more likely than not that we will be required to sell the fixed maturity AFS securities before recovery of their amortized cost basis, the estimated future cash flows were equal to or greater than the amortized cost basis of the debt securities, or we had the ability and intent to hold the equity AFS securities for a period of time sufficient for recovery.

Based upon this evaluation as of June 30, 2012, management believed we had the ability to generate adequate amounts of cash from our normal operations (e.g., insurance premiums and fees and investment income) to meet cash requirements with a prudent margin of safety without requiring the sale of our temporarily-impaired securities.

As of June 30, 2012, the unrealized losses associated with our corporate bond securities were attributable primarily to securities that were backed by commercial loans and individual issuer companies. For our corporate bond securities with commercial loans as the underlying collateral, we evaluated the projected credit losses in the underlying collateral and concluded that we had sufficient subordination or other credit enhancement when compared with our estimate of credit losses for the individual security and we expected to recover the entire amortized cost for each security. For individual issuers, we performed detailed analysis of the financial performance of the issuer and determined that we expected to recover the entire amortized cost for each security.

As of June 30, 2012, the unrealized losses associated with our MBS and CDOs were attributable primarily to collateral losses and credit spreads. We assessed for credit impairment using a cash flow model as discussed above. The key assumptions included default rates, severities and prepayment rates. We estimated losses for a security by forecasting the underlying loans in each transaction. The forecasted loan performance was used to project cash flows to the various tranches in the structure, as applicable. Our forecasted cash flows also considered, as applicable, independent industry analyst reports and forecasts, sector credit ratings and other independent market data. Based upon our assessment of the expected credit losses of the security given the performance of the underlying collateral compared to our subordination or other credit enhancement, we expected to recover the entire amortized cost basis of each security.

As of June 30, 2012, the unrealized losses associated with our hybrid and redeemable preferred securities were attributable primarily to wider credit spreads caused by illiquidity in the market and subordination within the capital structure, as well as credit risk of specific issuers. For our hybrid and redeemable preferred securities, we evaluated the financial performance of the issuer based upon credit performance and investment ratings and determined we expected to recover the entire amortized cost of each security.

Changes in the amount of credit loss of OTTI recognized in net income (loss) where the portion related to other factors was recognized in OCI (in millions) on fixed maturity AFS securities were as follows:

				For the Three				For the Six
				Months Ended				Months Ended
				June 30,				June 30,
				2012		2011		2012		2011
Balance as of beginning-of-period				$	410	$	352	$	390	$	319
Increases attributable to:
	Credit losses on securities for which an OTTI was not previously
		recognized			21		3		56		29
	Credit losses on securities for which an OTTI was previously
		recognized			19		19		42		40
Decreases attributable to:
	Securities sold				(35)		(34)		(73)		(48)
			Balance as of end-of-period	$	415	$	340	$	415	$	340

During 2012 and 2011, we recorded credit losses on securities for which an OTTI was not previously recognized as we determined the cash flows expected to be collected would not be sufficient to recover the entire amortized cost basis of the debt security. The credit losses we recorded on securities for which an OTTI was not previously recognized were attributable primarily to one or a combination of the following reasons:

• Failure of the issuer of the security to make scheduled payments;
• Deterioration of creditworthiness of the issuer;
• Deterioration of conditions specifically related to the security;
• Deterioration of fundamentals of the industry in which the issuer operates;
• Deterioration of fundamentals in the economy including, but not limited to, higher unemployment and lower housing prices; and
• Deterioration of the rating of the security by a rating agency.

We recognize the OTTI attributed to the noncredit portion as a separate component in OCI referred to as unrealized OTTI on AFS securities.

Details of the amount of credit loss of OTTI recognized in net income (loss) where the portion related to other factors was recognized in OCI (in millions), were as follows:

		As of June 30, 2012
				Gross Unrealized						OTTI in
		Amortized				Losses and		Fair		Credit
		Cost		Gains		OTTI		Value		Losses
Corporate bonds		$	239	$	1	$	104	$	136	$	73
RMBS			697		5		91		611		268
CMBS			46		-		24		22		74
	Total	$	982	$	6	$	219	$	769	$	415

		As of December 31, 2011
				Gross Unrealized						OTTI in
		Amortized				Losses and		Fair		Credit
		Cost		Gains		OTTI		Value		Losses
Corporate bonds		$	169	$	1	$	67	$	103	$	51
RMBS			690		1		128		563		301
CMBS			17		-		10		7		38
	Total	$	876	$	2	$	205	$	673	$	390

Mortgage Loans on Real Estate

Mortgage loans on real estate principally involve commercial real estate. The commercial loans are geographically diversified throughout the U.S. with the largest concentrations in California and Texas, which accounted for 31% and 32% of mortgage loans on real estate as of June 30, 2012, and December 31, 2011, respectively.

The following provides the current and past due composition of our mortgage loans on real estate (in millions):

			As of			As of
		June 30,			December 31,
			2012			2011
Current			$	6,736		$	6,858
60 to 90 days past due				3			26
Greater than 90 days past due				80			76
Valuation allowance associated with impaired mortgage loans on real estate				(26)			(31)
Unamortized premium (discount)				11			13
	Total carrying value		$	6,804		$	6,942

The number of impaired mortgage loans on real estate, each of which had an associated specific valuation allowance, and the carrying value of impaired mortgage loans on real estate (dollars in millions) were as follows:

			As of			As of
		June 30,			December 31,
			2012			2011
Number of impaired mortgage loans on real estate			9			12
Principal balance of impaired mortgage loans on real estate			$	66		$	100
Valuation allowance associated with impaired mortgage loans on real estate				(26)			(31)
	Carrying value of impaired mortgage loans on real estate		$	40		$	69

The average carrying value on the impaired mortgage loans on real estate (in millions) was as follows:

	For the Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Average carrying value for impaired mortgage loans on real estate	$	49	$	53	$	56	$	54
Interest income recognized on impaired mortgage loans on real estate		-		-		-		1
Interest income collected on impaired mortgage loans on real estate		-		1		-		2

As described in Note 1 in our 2011 Form 10-K, we use the loan-to-value and debt-service coverage ratios as credit quality indicators for our mortgage loans, which were as follows (dollars in millions):

		As of June 30, 2012					As of December 31, 2011
						Debt-					Debt-
						Service					Service
		Principal		% of		Coverage	Principal		% of		Coverage
Loan-to-Value		Amount		Total		Ratio	Amount		Total		Ratio
Less than 65%		$	5,395	79.1	%	1.63	$	5,338	76.7	%	1.61
65% to 74%			1,008	14.8	%	1.41		1,198	17.2	%	1.37
75% to 100%			334	4.9	%	0.90		308	4.4	%	0.92
Greater than 100%			82	1.2	%	0.32		116	1.7	%	0.36
	Total mortgage loans on real estate	$	6,819	100.0	%		$	6,960	100.0	%

Alternative Investments 

As of June 30, 2012, and December 31, 2011, alternative investments included investments in 97 and 96 different partnerships, respectively, and the portfolio represented less than 1% of our overall invested assets.

Realized Gain (Loss) Related to Certain Investments

The detail of the realized gain (loss) related to certain investments (in millions) was as follows:

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
Fixed maturity AFS securities:
	Gross gains		$	3	$	31	$	8	$	67
	Gross losses			(49)		(51)		(112)		(114)
Equity AFS securities:
	Gross gains			-		1		1		9
Gain (loss) on other investments				(5)		(8)		2		5
Associated amortization of DAC, VOBA, DSI and DFEL
	and changes in other contract holder funds			-		(5)		2		(14)
		Total realized gain (loss) related to certain investments	$	(51)	$	(32)	$	(99)	$	(47)

Details underlying write-downs taken as a result of OTTI (in millions) that were recognized in net income (loss) and included in realized gain (loss) on AFS securities above, and the portion of OTTI recognized in OCI (in millions) were as follows:

			For the Three				For the Six
			Months Ended				Months Ended
			June 30,				June 30,
			2012		2011		2012		2011
OTTI Recognized in Net Income (Loss)
Corporate bonds			$	(10)	$	(2)	$	(29)	$	(6)
RMBS				(14)		(23)		(32)		(43)
CMBS				(16)		(15)		(36)		(39)
CDOs				-		-		-		(1)
Hybrid and redeemable preferred securities				-		-		-		(2)
	Gross OTTI recognized in net income (loss)			(40)		(40)		(97)		(91)
	Associated amortization of DAC, VOBA, DSI and DFEL			7		9		17		19
		Net OTTI recognized in net income (loss), pre-tax	$	(33)	$	(31)	$	(80)	$	(72)
Portion of OTTI Recognized in OCI
Gross OTTI recognized in OCI			$	21	$	19	$	79	$	27
Change in DAC, VOBA, DSI and DFEL				(4)		(3)		(12)		(8)
	Net portion of OTTI recognized in OCI, pre-tax		$	17	$	16	$	67	$	19

Determination of Credit Losses on Corporate Bonds and CDOs

As of June 30, 2012, and December 31, 2011, we reviewed our corporate bond and CDO portfolios for potential shortfall in contractual principal and interest based on numerous subjective and objective inputs. The factors used to determine the amount of credit loss for each individual security, include, but are not limited to, near term risk, substantial discrepancy between book and market value, sector or company-specific volatility, negative operating trends and trading levels wider than peers.

Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, that is those rated BBB- or higher by Standard & Poor's (“S&P”) Rating Services or Baa3 or higher by Moody's Investors Service (“Moody's”), are generally considered by the rating agencies and market participants to be low credit risk. As of June 30, 2012, and December 31, 2011, 96%of the fair value of our corporate bond portfolio was rated investment grade. As of June 30, 2012, and December 31, 2011, the portion of our corporate bond portfolio rated below investment grade had an amortized cost of $2.7billionand $2.6 billionand a fair value of $2.5 billion and $2.4billion, respectively. As of June 30, 2012, and December 31, 2011,98% and 97%, respectively,of the fair value of our CDO portfolio was rated investment grade. As of June 30, 2012, and December 31, 2011, the portion of our CDO portfolio rated below investment grade had an amortized costand fair value of $3 million. Based upon the analysis discussed above, we believed as of June 30, 2012, and December 31, 2011, that we would recover the amortized cost of each investment grade corporate bond and CDO security.

For securities where we recorded an OTTI recognized in net income (loss) for the six months ended June 30, 2012 and 2011, the recovery as a percentage of amortized cost was 92% and 98%, respectively, for corporate bondsand 0%for CDOs.

Determination of Credit Losses on MBS

As of June 30, 2012, and December 31, 2011, default rates were projected by considering underlying MBS loan performance and collateral type. Projected default rates on existing delinquencies vary between 25% to 100% depending on loan type and severity of delinquency status.  In addition, we estimate the potential contributions of currently performing loans that may become delinquent in the future based on the change in delinquencies and loan liquidations experienced in the recent history. Finally, we develop a default rate timing curve by aggregating the defaults for all loans (delinquent loans, foreclosure and real estate owned and new delinquencies from currently performing loans) in the pool to project the future expected cash flows. 

We use certain available loan characteristics such as lien status, loan sizes and occupancy to estimate the loss severity of loans. Second lien loans are assigned 100% severity, if defaulted.  For first lien loans, we assume a minimum of 30% severity with higher severity assumed for investor properties and further housing price depreciation.

Payables for Collateral on Investments

The carrying values of the payables for collateral on investments (in millions) included on our Consolidated Balance Sheets and the fair value of the related investments or collateral consisted of the following:

			As of June 30, 2012				As of December 31, 2011
			Carrying		Fair		Carrying		Fair
			Value		Value		Value		Value
Collateral payable held for derivative investments (1)			$	3,441	$	3,441	$	2,980	$	2,980
Securities pledged under securities lending agreements (2)				200		194		200		193
Securities pledged under reverse repurchase agreements (3)				280		293		280		294
Securities pledged for Term Asset-Backed Securities
	Loan Facility ("TALF") (4)			49		66		173		199
Investments pledged for Federal Home Loan Bank of
	Indianapolis ("FHLBI") (5)			1,100		2,013		100		142
		Total payables for collateral on investments	$	5,070	$	6,007	$	3,733	$	3,808

• We obtain collateral based upon contractual provisions with our counterparties. These agreements take into consideration the counterparties' credit rating as compared to ours, the fair value of the derivative investments and specified thresholds that if exceeded result in the receipt of cash that is typically invested in cash and invested cash. See Note 6 for details about maximum collateral potentially required to post on our credit default swaps.
• Our pledged securities under securities lending agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets. We generally obtain collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities, respectively. We value collateral daily and obtain additional collateral when deemed appropriate. The cash received in our securities lending program is typically invested in cash and invested cash or fixed maturity AFS securities.
• Our pledged securities under reverse repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets. We obtain collateral in an amount equal to 95% of the fair value of the securities, and our agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary. The cash received in our reverse repurchase program is typically invested in fixed maturity AFS securities.
• Our pledged securities for TALF are included in fixed maturity AFS securities on our Consolidated Balance Sheets. We obtain collateral in an amount that has typically averaged 90% of the fair value of the TALF securities. The cash received in these transactions is invested in fixed maturity AFS securities.
• Our pledged investments for FHLBI are included in fixed maturity AFS securities and mortgage loans on real estate on our Consolidated Balance Sheets.  The collateral requirements are generally 105% to 115% of the fair value for fixed maturity AFS securities and 155% to 175% of the fair value for mortgage loans on real estate.  The cash received in these transactions is primarily invested in cash and invested cash or fixed maturity AFS securities.

Increase (decrease) in payables for collateral on investments (in millions) included on the Consolidated Statements of Cash Flows consisted of the following:

		For the Six
		Months Ended
		June 30,
		2012		2011
Collateral payable held for derivative investments		$	461	$	223
Securities pledged under securities lending agreements			-		1
Securities pledged for TALF			(124)		(78)
Investments pledged for FHLBI			1,000		-
	Total increase (decrease) in payables for collateral on investments	$	1,337	$	146

Investment Commitments

As of June 30, 2012, our investment commitments were $754million, which included $233 million of limited partnerships (“LPs”),$339million of private placements and $182 million of mortgage loans on real estate.

Concentrations of Financial Instruments

As of June 30, 2012, and December 31, 2011, our most significant investments in one issuer were our investments in securities issued by the Federal Home Loan Mortgage Corporation with a fair value of $4.5 billion and $5.0 billion, respectively, or 5%of our invested assets portfolioand our investments in securities issued by Fannie Mae with a fair value of $2.5 billion and $2.6 billion, respectively, or 3%of our invested assets portfolio. These investments are included in corporate bonds in the tables above.

As of June 30, 2012, and December 31, 2011, our most significant investments in one industry were our investment securities in the electric industry with a fair value of $8.1 billion and $7.7 billion, respectively, or 8%of our invested assets portfolio,and our investment securities in the collateralized mortgage obligationsindustry with a fair value of $5.0 billion and $5.6 billion,or 5% and 6%of our invested assets portfolio, respectively.We utilized the industry classifications to obtain the concentration of financial instruments amount; as such, this amount will not agree to the AFS securities table above.

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Stock-Based Incentive Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Stock Based Awards Granted Table [Text Block]

		For the		For the
		Three		Six
		Months		Months
		Ended		Ended
		June 30,		June 30,
		2012		2012
Awards
10-year LNC stock options			41,536		870,210
Performance shares			15,815		294,758
SARs			-		80,225
Restricted stock units			82,004		686,230
Non-employee:
	Agent stock options		90		99,178
	Director stock options		-		51,140
	Director restricted stock units		12,218		22,346

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Realized (Gain) Loss (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Details underlying realized gain (loss)
Total Realized Gain Loss Related To Certain Investments	$ (51)	$ (32)	$ (99)	$ (47)
Realized gain (loss) on the mark-to-market on certain instruments	(19)	(1)	39	9
Indexed annuity net derivative results
Gross gain (loss)	(3)	1	19	7
Associated amortization of DAC, VOBA, DSI, and DFEL	1	0	(5)	(2)
Variable annuity net derivatives results
Gross gain (loss)	148	34	14	44
Associated amortization of DAC, VOBA, DSI, and DFEL	(33)	(11)	(11)	(18)
Realized gain (loss)	$ 43	$ (9)	$ (43)	$ (7)

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New Accounting Standards (Tables)

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements [Abstract]

Accounting for costs associated with acquiring or renewing insurance contracts cumulative effect adjustment [Text Block]

				As of December 31,
				2011		2010
Assets
Deferred acquisition costs				$	(1,415)	$	(1,516)
Liabilities and Stockholders' Equity
Other liabilities - deferred income taxes				$	(490)	$	(524)
Stockholders' equity:
	Retained earnings				(1,157)		(1,095)
	Accumulated other comprehensive income (loss)				232		103
		Total stockholders' equity			(925)		(992)
			Total liabilities and stockholders' equity	$	(1,415)	$	(1,516)

			For the Three				For the Six
			Months			Months
			Ended			Ended
			June 30,			June 30,
			2011			2011
Revenues
Realized gain (loss)				$	4		$	8
Expenses
Commissions and other expenses					(37)			(81)
	Income (loss) from continuing operations before taxes				(33)			(73)
	Federal income tax expense (benefit)				12			26
		Income (loss) from continuing operations		$	(21)		$	(47)
Earnings (Loss) Per Common Share - Basic				$	(0.07)		$	(0.15)
Earnings (Loss) Per Common Share - Diluted				$	(0.07)		$	(0.15)