10-Q

__________________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

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

For the quarterly period ended September 30, 2018

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 ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes ☒    No ☐

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

Large accelerated filer ☒Accelerated filer ☐

Non-accelerated filer ☐Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of October 30, 2018, there were 213,604,724 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		48
		Forward-Looking Statements – Cautionary Language	48
		Introduction	49
		Executive Summary	49
		Critical Accounting Policies and Estimates	50
		Results of Consolidated Operations	52
		Results of Annuities	54
		Results of Retirement Plan Services	60
		Results of Life Insurance	64
		Results of Group Protection	69
		Results of Other Operations	71
		Realized Gain (Loss) and Benefit Ratio Unlocking	74
		Consolidated Investments	76
		Review of Consolidated Financial Condition	88
		Liquidity and Capital Resources	88
3.	Quantitative and Qualitative Disclosures About Market Risk		92
4.	Controls and Procedures		92
PART II
1.	Legal Proceedings		93
2.	Unregistered Sales of Equity Securities and Use of Proceeds		93
6.	Exhibits		93
	Exhibit Index for the Report on Form 10-Q		94
	Signatures		95

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

LINCOLN NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

		As of			As of
	September 30,			December 31,
		2018			2017
	(Unaudited)
ASSETS
Investments:
Available-for-sale securities, at fair value:
Fixed maturity securities (amortized cost:  2018 – $90,808; 2017 – $86,993)		$	93,161		$	94,840
Equity securities (cost:  2017 – $247)			-			246
Trading securities			1,440			1,620
Equity securities			112			-
Mortgage loans on real estate			12,561			10,762
Real estate			12			11
Policy loans			2,490			2,399
Derivative investments			706			915
Other investments			2,204			2,296
Total investments			112,686			113,089
Cash and invested cash			1,460			1,628
Deferred acquisition costs and value of business acquired			10,014			8,403
Premiums and fees receivable			592			396
Accrued investment income			1,168			1,078
Reinsurance recoverables			18,271			4,907
Funds withheld reinsurance assets			566			593
Goodwill			1,757			1,368
Other assets			9,644			6,082
Separate account assets			147,692			144,219
Total assets		$	303,850		$	281,763
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Future contract benefits		$	33,988		$	22,887
Other contract holder funds			89,906			80,209
Short-term debt			-			450
Long-term debt			5,804			4,894
Reinsurance related embedded derivatives			20			57
Funds withheld reinsurance liabilities			1,733			1,761
Deferred gain on business sold through reinsurance			1			1
Payables for collateral on investments			4,212			4,417
Other liabilities			5,424			5,546
Separate account liabilities			147,692			144,219
Total liabilities			288,780			264,441
Contingencies and Commitments (See Note 10)
Stockholders’ Equity
Preferred stock – 10,000,000 shares authorized			-			-
Common stock – 800,000,000 shares authorized; 214,776,806 and 218,090,114 shares
issued and outstanding as of September 30, 2018, and December 31, 2017, respectively			5,619			5,693
Retained earnings			8,615			8,399
Accumulated other comprehensive income (loss)			836			3,230
Total stockholders’ equity			15,070			17,322
Total liabilities and stockholders’ equity		$	303,850		$	281,763

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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Revenues
Insurance premiums	$	1,323		$	774		$	3,265		$	2,382
Fee income		1,550			1,401			4,475			4,148
Net investment income		1,271			1,239			3,736			3,738
Realized gain (loss):
Total other-than-temporary impairment losses on securities		(2	)		(9	)		(5	)		(17	)
Portion of loss recognized in other comprehensive income		-			1			-			1
Net other-than-temporary impairment losses on securities
recognized in earnings		(2	)		(8	)		(5	)		(16	)
Realized gain (loss), excluding other-than-temporary
impairment losses on securities		(53	)		(48	)		(46	)		(89	)
Total realized gain (loss)		(55	)		(56	)		(51	)		(105	)
Amortization of deferred gain on business sold through reinsurance		-			-			1			22
Other revenues		175			153			467			403
Total revenues		4,264			3,511			11,893			10,588
Expenses
Interest credited		652			647			1,952			1,940
Benefits		1,626			1,261			4,646			3,839
Commissions and other expenses		1,367			1,020			3,600			3,068
Interest and debt expense		69			63			228			190
Strategic digitization expense		18			10			49			33
Total expenses		3,732			3,001			10,475			9,070
Income (loss) before taxes		532			510			1,418			1,518
Federal income tax expense (benefit)		42			92			176			254
Net income (loss)		490			418			1,242			1,264
Other comprehensive income (loss), net of tax		(365	)		148			(3,036	)		1,293
Comprehensive income (loss)	$	125		$	566		$	(1,794	)	$	2,557
Net Income (Loss) Per Common Share
Basic	$	2.27		$	1.89		$	5.71		$	5.66
Diluted		2.24			1.87			5.59			5.58
Cash Dividends Declared Per Common Share	$	0.33		$	0.29		$	0.99		$	0.87

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 Nine
	Months Ended
	September 30,
	2018			2017
Common Stock
Balance as of beginning-of-year	$	5,693		$	5,869
Stock compensation/issued for benefit plans		33			75
Retirement of common stock/cancellation of shares		(107	)		(227	)
Balance as of end-of-period		5,619			5,717
Retained Earnings
Balance as of beginning-of-year		8,399			7,043
Cumulative effect from adoption of new accounting standards		(642	)		-
Net income (loss)		1,242			1,264
Retirement of common stock		(168	)		(373	)
Common stock dividends declared		(216	)		(196	)
Balance as of end-of-period		8,615			7,738
Accumulated Other Comprehensive Income (Loss)
Balance as of beginning-of-year		3,230			1,566
Cumulative effect from adoption of new accounting standards		642			-
Other comprehensive income (loss), net of tax		(3,036	)		1,293
Balance as of end-of-period		836			2,859
Total stockholders’ equity as of end-of-period	$	15,070		$	16,314

See accompanying Notes to Consolidated Financial Statements

3

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

	For the Nine
	Months Ended
	September 30,
	2018			2017
Cash Flows from Operating Activities
Net income (loss)	$	1,242		$	1,264
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred acquisition costs, value of business acquired, deferred sales inducements
and deferred front-end loads deferrals and interest, net of amortization		86			38
Trading securities purchases, sales and maturities, net		162			83
Change in premiums and fees receivable		(109	)		60
Change in accrued investment income		(66	)		(75	)
Change in future contract benefits and other contract holder funds		(997	)		(1,152	)
Change in reinsurance related assets and liabilities		426			80
Change in accrued expenses		73			(21	)
Change in federal income tax accruals		86			154
Realized (gain) loss		51			105
Amortization of deferred gain on business sold through reinsurance		(1	)		(22	)
Other		81			95
Net cash provided by (used in) operating activities		1,034			609
Cash Flows from Investing Activities
Purchases of available-for-sale securities and equity securities		(8,816	)		(7,465	)
Sales of available-for-sale securities and equity securities		2,678			1,104
Maturities of available-for-sale securities		4,714			4,100
Purchase of common stock in acquisition, net of cash acquired		(1,410	)		-
Sale of business, net		(12	)		-
Purchases of alternative investments		(234	)		(228	)
Sales and repayments of alternative investments		115			140
Issuance of mortgage loans on real estate		(2,035	)		(1,342	)
Repayment and maturities of mortgage loans on real estate		842			849
Issuance and repayment of policy loans, net		40			34
Net change in collateral on investments, derivatives and related settlements		22			90
Other		(144	)		(66	)
Net cash provided by (used in) investing activities		(4,240	)		(2,784	)
Cash Flows from Financing Activities
Payment of long-term debt, including current maturities		(537	)		-
Issuance of long-term debt, net of issuance costs		1,094			-
Payment related to early extinguishment of debt		(23	)		-
Proceeds from sales leaseback transaction		51			45
Deposits of fixed account values, including the fixed portion of variable		9,426			7,625
Withdrawals of fixed account values, including the fixed portion of variable		(4,466	)		(4,309	)
Transfers to and from separate accounts, net		(2,008	)		(1,183	)
Common stock issued for benefit plans		(7	)		38
Repurchase of common stock		(275	)		(600	)
Dividends paid to common stockholders		(217	)		(198	)
Net cash provided by (used in) financing activities		3,038			1,418
Net increase (decrease) in cash, invested cash and restricted cash		(168	)		(757	)
Cash, invested cash and restricted cash as of beginning-of-year		1,628			2,722
Cash, invested cash and restricted cash as of end-of-period	$	1,460		$	1,965

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 15 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 and solutions.  These products primarily include fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, indexed universal life insurance (“IUL”), term life insurance, employer-sponsored retirement plans and services, 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.  As discussed in Note 3, on May 1, 2018, LNC and The Lincoln National Life Insurance Company (“LNL”) completed the acquisition of Liberty Life Assurance Company of Boston (“Liberty Life”).  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, 2017 (“2017 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 condition, results of operations and cash flows, are summarized in our 2017 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 nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018.  All material inter-company accounts and transactions have been eliminated in consolidation.

5

2.  New Accounting Standards

Adoption of New Accounting Standards

The following table provides a description of our adoption of new Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board and the impact of the adoption on our financial statements.  ASUs not listed below were assessed and determined to be either not applicable or not material in presentation or amount.

Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2014-09, Revenue from Contracts with Customers and all related amendments	This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods and services and defines a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligation.  Although the standard and all related amendments supersede nearly all existing revenue recognition guidance under GAAP, the guidance does not amend the accounting for insurance and investment contracts recognized in accordance with Accounting Standards Codification™(“ASC”) Topic 944, Financial Services – Insurance, leases, financial instruments and guarantees.	January 1, 2018	We adopted the standard and all related amendments using the modified retrospective method.  Our primary sources of revenue are recognized in accordance with ASC Topic 944, Financial Services – Insurance; as such, revenue within the scope of the new standard primarily includes commissions and advisory fees earned by our broker dealer operation.  The adoption did not have a material impact on our consolidated financial condition, results of operations, stockholders’ equity or cash flows.  There were no material changes in the timing or measurement of revenues based upon the guidance.  As a result, there is no cumulative effect on retained earnings.  For more information, see Note 15.

6

Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities	These amendments require, among other things, the fair value measurement of investments in equity securities and certain other ownership interests that do not result in consolidation and are not accounted for under the equity method of accounting.  The change in fair value of the impacted investments in equity securities must be recognized in net income in the period of the change in fair value.  In addition, the amendments include certain enhancements to the presentation and disclosure requirements for financial assets and financial liabilities.  The guidance does not apply to Federal Home Loan Bank (“FHLB”) stock.  Early adoption of the ASU is generally not permitted, except as defined in the ASU.  The amendments were adopted in the financial statements through a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption.	January 1, 2018	At the time of adoption, we had equity securities classified as available-for-sale (“AFS”) with a total carrying value of $246 million.  We classified, prospectively, $110 million of equity securities within the scope of this ASU in a separate line on our Consolidated Balance Sheets.  The remaining securities, consisting of $136 million of FHLB stock, are classified in other investments on our Consolidated Balance Sheets and carried at cost. The cumulative-effect adjustment of adopting this ASU was $1 million.
ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income	These amendments require a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects associated with the change in the federal corporate income tax rate in the Tax Cuts and Jobs Act (“Tax Act”) of 2017.  The amount of the reclassification is equal to the impact of the change in deferred taxes related to amounts recorded in AOCI resulting from the change in the statutory corporate tax rate from 35% to 21%.  Early adoption is permitted and retrospective application is required.	January 1, 2018	We retrospectively reclassified $641 million of stranded tax effects from AOCI to retained earnings in the period of adoption.

7

Future Adoption of New Accounting Standards

The following table provides a description of future adoptions of new accounting standards that may have an impact on our financial statements when adopted:

Standard	Description	Projected Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-02, Leases	This standard establishes a new accounting model for leases.  Lessees will recognize most leases on the balance sheet as a right-of-use asset and a related lease liability.  The lease liability is measured as the present value of the lease payments over the lease term with the right-of-use asset measured at the lease liability amount and including adjustments for certain lease incentives and initial direct costs.  Lease expense recognition will continue to differentiate between finance leases and operating leases resulting in a similar pattern of lease expense recognition as under current GAAP.  This ASU permits a modified retrospective adoption approach that includes a number of optional practical expedients that entities may elect upon adoption.  Early adoption is permitted.	January 1, 2019	We continue to gather information to determine our leases that are within the scope of this standard.  We do not expect there to be a significant difference in our pattern of lease expense recognition under this ASU.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	These amendments adopt a new model to measure and recognize credit losses for most financial assets.  The method used to measure estimated credit losses for AFS debt securities will be unchanged from current GAAP; however, the amendments require credit losses to be recognized through an allowance rather than as a reduction to the amortized cost of those debt securities.  The amendments will permit entities to recognize improvements in credit loss estimates on AFS debt securities by reducing the allowance account immediately through earnings.  The amendments will be adopted through a cumulative effect adjustment to the beginning balance of retained earnings as of the first reporting period in which the amendments are effective.  Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein.	January 1, 2020	We are currently evaluating the impact of adopting this ASU on our consolidated financial condition and results of operations, with a primary focus on our fixed maturity securities, mortgage loans and reinsurance recoverables.
ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities	These amendments require an entity to shorten the amortization period for certain callable debt securities held at a premium so that the premium is amortized to the earliest call date.  Early adoption is permitted, and the ASU requires adoption under a modified retrospective basis through a cumulative-effect adjustment to the beginning balance of retained earnings.	January 1, 2019	We are currently evaluating the impact of adopting this ASU on our consolidated financial condition and results of operations.
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	These amendments change both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.  These amendments retain the threshold of highly effective for hedging relationships, remove the requirement to bifurcate between the portions of the hedging relationship that are effective and ineffective, record hedge item and hedging instrument results in the same financial statement line item, require quantitative assessment initially for all hedging relationships unless the hedging relationship meets the definition of either the shortcut method or critical terms match method and allow the contractual specified index rate to be designated as the hedged risk in a cash flow hedge of interest rate risk of a variable rate financial instrument.  These amendments also eliminate the benchmark interest rate concept for variable rate instruments.  Early adoption is permitted.	January 1, 2019	We do not currently expect the adoption of this guidance to have a material impact on our consolidated financial condition and results of operations.

8

Standard	Description	Projected Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts	These amendments make changes to the accounting and reporting for long-duration contracts issued by an insurance entity that will significantly change how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs (“DAC”).  Under this ASU insurers will be required to review cash flow assumptions at least annually and update them if necessary.  They also will have to make quarterly updates to the discount rate assumptions they use to measure the liability for future policyholder benefits.  The ASU creates a new category of market risk benefits (i.e., features that protect the contract holder from capital market risk and expose the insurer to that risk) that insurers will have to measure at fair value.  The ASU provides various transition methods by topic that entities may elect upon adoption.  Early adoption is permitted.	January 1, 2021	We are currently evaluating the impact of adopting this ASU on our consolidated financial condition and results of operations.

3. Acquisition

As previously announced, on May 1, 2018, we completed the acquisition of 100% of the capital stock of Liberty Life, which operates a group benefits business (“Liberty Group Business”) and individual life and individual and group annuity business (the “Liberty Life Business”), from Liberty Mutual Insurance Company in a transaction accounted for under the acquisition method of accounting pursuant to Business Combinations Topic 805 (“Topic 805”).  The acquisition enables us to increase our market share within the group protection marketplace.

In connection with the acquisition and pursuant to the Master Transaction Agreement (“MTA”), dated January 18, 2018, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 22, 2018, Liberty Life sold the Liberty Life Business on May 1, 2018, by entering into reinsurance agreements and related ancillary documents (including administrative services agreements and transition services agreements) with Protective Life Insurance Company and its wholly-owned subsidiary, Protective Life and Annuity Insurance Company (together with Protective Life Insurance Company, “Protective”), providing for the reinsurance and administration of the Liberty Life Business.

Liberty Life’s excess capital of $1.8 billion was paid to Liberty Mutual Insurance Company through an extraordinary dividend at the acquisition date.  We paid $1.5 billion of cash to Liberty Mutual Insurance Company to acquire the Liberty Group Business. 

We recognized $10 million and $60 million of acquisition-related costs, pre-tax, for the three and nine months ended September 30, 2018, respectively.  These costs are included in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

9

The acquisition date fair values of certain assets and liabilities, including future contract benefits, intangible assets and related weighted average expected lives, commercial mortgage loans, reinsurance recoverables and deferred income taxes, are provisional and subject to revision within one year of the acquisition date.  Under the terms of the MTA, a final balance sheet will be agreed upon at a later date.  As such, our estimates of fair values are pending finalization, which may result in adjustments to goodwill.  The following table presents the preliminary fair values (in millions) of the net assets acquired related to the Liberty Group Business as of the acquisition date:

	Preliminary
	Fair Value
Assets
Investments	$	2,493
Mortgage loans on real estate		658
Cash and invested cash		107
Reinsurance recoverables		76
Premiums and fees receivable		83
Accrued investment income		24
Other intangible assets acquired		640
Other assets acquired		142
Separate account assets		99
Total assets acquired	$	4,322
Liabilities
Future contract benefits	$	2,930
Other contract holder funds		46
Other liabilities acquired		120
Separate account liabilities		99
Total liabilities assumed	$	3,195
Net identifiable assets acquired	$	1,127
Goodwill		390
Net assets acquired	$	1,517

Identifiable Intangible Assets

The following table presents the fair value of identifiable intangible assets acquired (dollars in millions):

			Weighted-
			Average
			Amortization
	Fair Value		Period
Value of customer relationships acquired	$	576	20
Value of distribution agreements		31	13
Value of business acquired		30	3
Insurance licenses		3	N/A
Total identifiable intangible assets	$	640

The value of customer relationships acquired (“VOCRA”) and value of distribution agreements (“VODA”), included in other assets on our Consolidated Balance Sheets, reflects the estimated fair value of the customer relationships acquired and distribution agreements of the Liberty Group Business as of May 1, 2018.  The value of the identifiable intangible assets was estimated using a discounted cash flow method.  Significant inputs to the valuation models include estimates of expected premiums, persistency rates, investment returns, claim costs, expenses and discount rates based on a weighted average cost of capital.  Similar to other specifically identifiable intangible assets, the carrying values of VOCRA and VODA will be amortized using a straight-line method and reviewed at least annually for indicators of impairment in value that are other-than-temporary. 

For information on value of business acquired (“VOBA”), see Notes 1 and 8 in our 2017 Form 10-K.

The value of insurance licenses was estimated using the comparable transaction method under the market approach based on arms-length transactions in which certificate authority companies with life and health insurance licenses were purchased.  The value of insurance licenses has an indefinite useful life.

10

Goodwill

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from assets acquired and liabilities assumed that could not be individually identified.  The goodwill recorded as part of the acquisition includes the expected synergies and other benefits that management believes will result from the acquisition, including an increase in distribution strength.  The goodwill resulting from the acquisition was allocated to the Group Protection segment.  The goodwill is not expected to be deductible for income tax purposes.For more information on goodwill, see Notes 1 and 10 in our 2017 Form 10-K.

Future Contract Benefits

Unpaid claims acquired reflected within future contract benefits were recorded at estimated fair value.  The reserve discount rate was based on the investment yield of the assets acquired with adjustments for risk margin.  The actuarial classifications and methodologies were adjusted to be consistent with our accounting policies and reserve methodologies.

Financial Information

Since the acquisition date of May 1, 2018, the revenues and net income of the business acquired have been included in our Consolidated Statements of Comprehensive Income (Loss) in the Group Protection segment and were $929 million and $26 million, respectively. 

The following unaudited pro forma condensed consolidated results of operations of the Company assume that the acquisition of Liberty Life was completed on January 1, 2017 (in millions):

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenue	$	4,263	$	3,989	$	12,632	$	12,030
Net income		497		396		1,287		1,201

Pro forma adjustments include the revenue and net income of the acquired business for each period as well as amortization of identifiable intangible assets acquired and the fair value adjustment to acquired insurance reserves and investments.  Other pro forma adjustments include the incremental increase to interest expense attributable to financing the acquisition; and the impact of reflecting acquisition and integration costs and investment expenses directly attributable to the business combination in 2017 instead of in 2018.  Pro forma adjustments do not include retrospective adjustments to defer and amortize acquisition costs as would be recorded under our accounting policy.

Reinsurance

Pursuant to the reinsurance agreements, we sold the Liberty Life Business to Protective for a ceding commission of $423 million.  Our amounts recoverable from reinsurers increased significantly to $18.3 billion as of September 30, 2018, from $4.9 billion as of December 31, 2017, primarily as a result of this reinsurance transaction.  As such, Protective now represents our largest reinsurance exposure.  As we are not relieved of our liability, the liabilities and obligations associated with the reinsured policies remain on our Consolidated Balance Sheets with a corresponding reinsurance recoverable from Protective.  To support its obligations under the reinsurance agreements, Protective has established trust accounts for our benefit that fully collateralize the related reinsurance recoverable.  We recorded a deferred tax asset attributed to a tax loss carryforward arising from the reinsurance transaction with Protective. 

4.  Variable Interest Entities

Consolidated VIEs

See Note 4 in our 2017 Form 10-K for a detailed discussion of our consolidated variable interest entities (“VIEs”), which information is incorporated herein by reference.

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

		As of September 30, 2018							As of December 31, 2017
		Number							Number
		of		Notional		Carrying			of		Notional		Carrying
	Instruments			Amounts		Value		Instruments			Amounts		Value
Assets
Total return swap			1		587		-			1		573		-
Total assets			1	$	587	$	-			1	$	573	$	-

As of September 30, 2018, and December 31, 2017, there were no gains or losses for consolidated VIEs recognized on our Consolidated Statements of Comprehensive Income (Loss).

Unconsolidated VIEs

See Note 4 in our 2017 Form 10-K for a detailed discussion of our unconsolidated VIEs, which information is incorporated herein by reference.

Limited Partnerships and Limited Liability Companies

We invest in certain limited partnerships (“LPs”) and limited liability companies (“LLCs”), including qualified affordable housing projects, that we have concluded are VIEs.  We do not hold any substantive kick-out or participation rights in the LPs and LLCs, and we do not receive any performance fees or decision maker fees from the LPs and LLCs.  Based on our analysis of the LPs and LLCs, we are not the primary beneficiary of the VIEs as we do not have the power to direct the most significant activities of the LPs and LLCs. 

The carrying amounts of our investments in the LPs and LLCs are recognized in other investments on our Consolidated Balance Sheets and were $1.7 billion and $1.5 billion as of September 30, 2018, and December 31, 2017, respectively.  Included in these carrying amounts are our investments in qualified affordable housing projects, which were $25 million and $31 million as of September 30, 2018, and December 31, 2017, respectively.  We do not have any contingent commitments to provide additional capital funding to these qualified affordable housing projects.  We received returns from these qualified affordable housing projects in the form of income tax credits and other tax benefits that were $1 million and $2 million for the nine months ended September 30, 2018 and 2017, respectively, which were recognized in federal income tax expense (benefit) on our Consolidated Statements of Comprehensive Income (Loss).

Our exposure to loss is limited to the capital we invest in the LPs and LLCs, and there have been no indicators of impairment that would require us to recognize an impairment loss related to the LPs and LLCs as of September 30, 2018.

5.  Investments

AFS Securities

See Note 1 in our 2017 Form 10-K for information regarding our accounting policy relating to AFS securities, which also includes additional disclosures regarding our fair value measurements.  In addition, we adopted ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, in 2018 that resulted in a new classification and measurement of our equity securities.  See Note 2 for additional information.

The amortized cost, gross unrealized gains, losses and other-than-temporary impairment (“OTTI”) and fair value of AFS securities (in millions) were as follows:

	As of September 30, 2018
	Amortized		Gross Unrealized							Fair
	Cost		Gains		Losses		OTTI (1)			Value
Fixed maturity AFS securities:
Corporate bonds	$	78,496	$	3,299	$	1,724	$	(9	)	$	80,080
Asset-backed securities ("ABS")		934		41		7		(17	)		985
U.S. government bonds		392		23		6		-			409
Foreign government bonds		418		41		-		-			459
Residential mortgage-backed securities ("RMBS")		3,267		113		114		(21	)		3,287
Commercial mortgage-backed securities ("CMBS")		766		2		23		(3	)		748
Collateralized loan obligations ("CLOs")		1,371		-		14		(5	)		1,362
State and municipal bonds		4,588		656		26		-			5,218
Hybrid and redeemable preferred securities		576		62		25		-			613
Total AFS securities	$	90,808	$	4,237	$	1,939	$	(55	)	$	93,161

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	As of December 31, 2017
	Amortized		Gross Unrealized							Fair
	Cost		Gains		Losses		OTTI (1)			Value
Fixed maturity AFS securities:
Corporate bonds	$	75,701	$	6,862	$	354	$	(7	)	$	82,216
ABS		903		51		7		(27	)		974
U.S. government bonds		527		41		1		-			567
Foreign government bonds		395		56		-		-			451
RMBS		3,327		155		39		(22	)		3,465
CMBS		590		10		2		(2	)		600
CLOs		803		2		2		(5	)		808
State and municipal bonds		4,172		953		6		-			5,119
Hybrid and redeemable preferred securities		575		87		22		-			640
Total fixed maturity securities		86,993		8,217		433		(63	)		94,840
Equity AFS securities		247		16		17		-			246
Total AFS securities	$	87,240	$	8,233	$	450	$	(63	)	$	95,086

⁽¹⁾ Includes unrealized (gains) and losses on impaired securities related to changes in the fair value of such securities subsequent to the impairment measurement date.

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities (in millions) as of September 30, 2018, were as follows:

	Amortized		Fair
	Cost		Value
Due in one year or less	$	3,631	$	3,669
Due after one year through five years		17,430		17,509
Due after five years through ten years		17,493		17,440
Due after ten years		45,916		48,161
Subtotal		84,470		86,779
Structured securities (ABS, MBS, CLOs)		6,338		6,382
Total fixed maturity AFS securities	$	90,808	$	93,161

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 other comprehensive income (loss) (“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 September 30, 2018
	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 AFS securities:
Corporate bonds	$	33,196		$	1,188	$	4,690		$	538	$	37,886		$	1,726
ABS		252			3		129			12		381			15
U.S. government bonds		169			4		18			2		187			6
RMBS		836			43		603			73		1,439			116
CMBS		624			18		57			5		681			23
CLOs		1,062			14		34			-		1,096			14
State and municipal bonds		724			15		75			11		799			26
Hybrid and redeemable
preferred securities		31			2		132			22		163			24
Total AFS securities	$	36,894		$	1,287	$	5,738		$	663	$	42,632		$	1,950
Total number of AFS securities in an unrealized loss position															3,480

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	As of December 31, 2017
	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 AFS securities:
Corporate bonds	$	4,854		$	68	$	4,893		$	288	$	9,747		$	356
ABS		62			1		151			15		213			16
U.S. government bonds		156			-		19			1		175			1
RMBS		302			4		641			36		943			40
CMBS		113			-		60			3		173			3
CLOs		281			2		72			-		353			2
State and municipal bonds		34			-		93			6		127			6
Hybrid and redeemable
preferred securities		20			-		126			22		146			22
Total fixed maturity securities		5,822			75		6,055			371		11,877			446
Equity AFS securities		22			14		8			3		30			17
Total AFS securities	$	5,844		$	89	$	6,063		$	374	$	11,907		$	463
Total number of AFS securities in an unrealized loss position															1,128

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 September 30, 2018
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	131	$	47	$	-			20
Six months or greater, but less than nine months		21		16		-			3
Nine months or greater, but less than twelve months		39		16		-			4
Twelve months or greater		123		50		8			29
Total	$	314	$	129	$	8			56

	As of December 31, 2017
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	156	$	57	$	1			26
Six months or greater, but less than nine months		2		1		-			4
Nine months or greater, but less than twelve months		15		8		-			7
Twelve months or greater		215		78		10			49
Total	$	388	$	144	$	11			86

⁽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, including the portion of OTTI recognized in OCI, on fixed maturity AFS securities increased by $1.5 billion for the nine months ended September 30, 2018.  As discussed further below, we believe the unrealized loss position as of September 30, 2018, did not represent OTTI as (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell these fixed maturity AFS securities before recovery of their amortized cost basis; and (iii) the estimated future cash flows were equal to or greater than the amortized cost basis of the debt securities. 

Based upon this evaluation as of September 30, 2018, management believes we have 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.

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As of September 30, 2018, the unrealized losses associated with our corporate bond securities were attributable primarily to widening credit spreads and rising interest rates since purchase.  We performed a detailed analysis of the financial performance of the underlying issuers and determined that we expected to recover the entire amortized cost for each temporarily-impaired security.

As of September 30, 2018, the unrealized losses associated with our mortgage-backed securities (“MBS”) and ABS were attributable primarily to widening credit spreads and rising interest rates since purchase.  We assessed for credit impairment using a cash flow model that incorporates key assumptions including 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 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 of each temporarily-impaired security.

As of September 30, 2018, 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 underlying issuers.  For our hybrid and redeemable preferred securities, we evaluated the financial performance of the underlying issuers based upon credit performance and investment ratings and determined that we expected to recover the entire amortized cost of each temporarily-impaired 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance as of beginning-of-period	$	375		$	390		$	378		$	430
Increases attributable to:
Credit losses on securities for which an
OTTI was not previously recognized		2			8			4			13
Credit losses on securities for which an
OTTI was previously recognized		-			1			1			4
Decreases attributable to:
Securities sold, paid down or matured		(5	)		(21	)		(11	)		(69	)
Balance as of end-of-period	$	372		$	378		$	372		$	378

During the nine months ended September 30, 2018 and 2017, 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; 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 fixed maturity AFS securities. 

Mortgage Loans on Real Estate

See Note 1 in our 2017 Form 10-K for information regarding our accounting policy relating to 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, which accounted for 22% and 21%of mortgage loans on real estate as of September 30, 2018, and December 31, 2017, respectively, and Texas which accounted for 12% of mortgage loans on real estate as of September 30, 2018, and December 31, 2017.

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

	As of				As of
	September 30,				December 31,
		2018				2017
Current		$	12,578			$	10,762
60 to 90 days past due			-				-
Greater than 90 days past due			1				3
Valuation allowance associated with impaired mortgage loans on real estate			(1	)			(3	)
Unamortized premium (discount)			(17	)			-
Total carrying value		$	12,561			$	10,762

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
	September 30,				December 31,
		2018				2017
Number of impaired mortgage loans on real estate		1				3
Principal balance of impaired mortgage loans on real estate		$	4			$	11
Valuation allowance associated with impaired mortgage loans on real estate			(1	)			(3	)
Carrying value of impaired mortgage loans on real estate		$	3			$	8

The changes in the valuation allowance associated with impaired mortgage loans on real estate (in millions) were as follows:

	For the Three					For the Nine
	Months Ended					Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
Balance as of beginning-of-period	$	2		$	2	$	3		$	2
Additions		-			-		-			-
Charge-offs, net of recoveries		(1	)		-		(2	)		-
Balance as of end-of-period	$	1		$	2	$	1		$	2

Additional information related to impaired mortgage loans on real estate (in millions) was as follows:

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Average carrying value for impaired mortgage loans on real estate	$	5	$	5	$	6	$	5
Interest income recognized on impaired mortgage loans on real estate		-		-		-		-
Interest income collected on impaired mortgage loans on real estate		-		-		-		-

As described in Note 1 in our 2017 Form 10-K, we use the loan-to-value and debt-service coverage ratios as credit quality indicators for our mortgage loans on real estate, which were as follows (dollars in millions):

	As of September 30, 2018				As of December 31, 2017
				Debt-				Debt-
				Service				Service
	Carrying		% of	Coverage	Carrying		% of	Coverage
Loan-to-Value Ratio	Value		Total	Ratio	Value		Total	Ratio
Less than 65%	$	11,297	89.9%	2.30	$	9,642	89.6%	2.26
65% to 74%		1,187	9.5%	1.79		1,000	9.3%	1.94
75% to 100%		74	0.6%	0.95		112	1.0%	0.97
Greater than 100%		3	0.0%	0.21		8	0.1%	0.82
Total mortgage loans on real estate	$	12,561	100.0%		$	10,762	100.0%

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Alternative Investments 

As of September 30, 2018, and December 31, 2017, alternative investments included investments in 239 and 224 different partnerships, respectively, and the portfolios represented approximately 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fixed maturity AFS securities: (1)
Gross gains	$	14		$	7		$	30		$	19
Gross losses		(21	)		(22	)		(65	)		(47	)
Equity AFS securities:
Gross gains		-			1			-			2
Gain (loss) on other investments (2)		1			-			6			(6	)
Associated amortization of DAC, VOBA, DSI and DFEL
and changes in other contract holder funds		(5	)		(5	)		(16	)		(17	)
Total realized gain (loss) related to certain investments, pre-tax	$	(11	)	$	(19	)	$	(45	)	$	(49	)

⁽¹⁾ These amounts are represented net of related fair value hedging activity.  See Note 6 for more information.

⁽²⁾ Includes market adjustments on equity securities still held of less than $1 million and $2 million for the three and nine months ended September 30, 2018, respectively.

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, were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
OTTI Recognized in Net Income (Loss)
Fixed maturity AFS securities:
Corporate bonds	$	(2	)	$	(8	)	$	(4	)	$	(13	)
ABS		-			(1	)		-			(2	)
RMBS		-			-			(1	)		(1	)
State and municipal bonds		-			-			-			(1	)
Gross OTTI recognized in net income (loss)		(2	)		(9	)		(5	)		(17	)
Associated amortization of DAC, VOBA, DSI and DFEL		-			1			-			1
Net OTTI recognized in net income (loss), pre-tax	$	(2	)	$	(8	)	$	(5	)	$	(16	)

We recognized less than $1 million of OTTI in OCI for the three and nine months ended September 30, 2018.  We recognized $1 million of OTTI in OCI for the three and nine months ended September 30, 2017.

Determination of Credit Losses on Corporate Bonds and ABS

As of September 30, 2018, and December 31, 2017, we reviewed our corporate bond and ABS 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 September 30, 2018, and December 31, 2017,  96% of the fair value of our corporate bond portfolio was rated investment grade.  As of September 30, 2018, and December 31, 2017, the portion of our corporate bond portfolio rated below investment grade had an amortized cost of$3.2 billion and $3.5 billion, respectively, and a fair value of $3.1 billion and $3.5 billion, respectively.  As of September 30, 2018, and December 31, 2017, 98% of the fair value of our ABS portfolio was rated investment grade.  As of September 30, 2018, and December 31, 2017, the portion of our ABS portfolio rated below investment grade had an amortized cost of $46 million and a fair value of $43 million.  Based upon the analysis discussed above, we

17

believe as of September 30, 2018, and December 31, 2017, that we would recover the amortized cost of each investment grade corporate bond and ABS security.

Determination of Credit Losses on MBS

As of September 30, 2018, and December 31, 2017, default rates were projected by considering underlying MBS loan performance and collateral type.  Projected default rates on existing delinquencies vary between 10% 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 in the pool (delinquent loans, foreclosure and real estate owned and new delinquencies from currently performing loans) and the associated loan-level loss severities. 

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 adjusted by housing price assumptions.  With the default rate timing curve and loan-level loss severity, we derive the future expected credit losses.

Payables for Collateral on Investments

The carrying value 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 September 30, 2018				As of December 31, 2017
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Collateral payable for derivative investments (1)	$	366	$	366	$	765	$	765
Securities pledged under securities lending agreements (2)		117		113		222		213
Securities pledged under repurchase agreements (3)		149		185		530		588
Investments pledged for Federal Home Loan Bank of
Indianapolis (“FHLBI”) (4)		3,580		5,413		2,900		4,235
Total payables for collateral on investments	$	4,212	$	6,077	$	4,417	$	5,801

⁽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 additional information.

⁽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 repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We generally obtain collateral in an amount between 80% 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 repurchase program is typically invested in fixed maturity AFS securities.

⁽⁴⁾ 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) consisted of the following:

	For the Nine
	Months Ended
	September 30,
	2018			2017
Collateral payable for derivative investments	$	(399	)	$	41
Securities pledged under securities lending agreements		(105	)		(16	)
Securities pledged under repurchase agreements		(381	)		(2	)
Investments pledged for FHLBI		680			(50	)
Total increase (decrease) in payables for collateral on investments	$	(205	)	$	(27	)

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We have elected not to offset our repurchase agreements and securities lending transactions in our financial statements.  The remaining contractual maturities of repurchase agreements and securities lending transactions accounted for as secured borrowings (in millions) were as follows:

	As of September 30, 2018
	Overnight and Continuous		Up to 30 Days		30 -  90 Days		Greater Than 90 Days		Total
Repurchase Agreements
Corporate bonds	$	-	$	-	$	-	$	149	$	149
Total		-		-		-		149		149
Securities Lending
Corporate bonds		117		-		-		-		117
Total		117		-		-		-		117
Total gross secured borrowings	$	117	$	-	$	-	$	149	$	266

	As of December 31, 2017
	Overnight and Continuous		Up to 30 Days		30 -  90 Days		Greater Than 90 Days		Total
Repurchase Agreements
Corporate bonds	$	-	$	100	$	280	$	150	$	530
Total		-		100		280		150		530
Securities Lending
Corporate bonds		222		-		-		-		222
Total		222		-		-		-		222
Total gross secured borrowings	$	222	$	100	$	280	$	150	$	752

We accept collateral in the form of securities in connection with repurchase agreements.  In instances where we are permitted to sell or re-pledge the securities received, we report the fair value of the collateral received and a related obligation to return the collateral in the financial statements.  In addition, we receive securities in connection with securities borrowing agreements, which we are permitted to sell or re-pledge.  As of September 30, 2018, the fair value of all collateral received that we are permitted to sell or re-pledge was $528 million.  As of September 30, 2018, we have re-pledged $502 million of this collateral to cover initial margin on certain derivative investments.

Investment Commitments

As of September 30, 2018, our investment commitments were $1.5 billion, which included $815 million of LPs, $379 million of mortgage loans on real estate and $334 million of private placement securities.

Concentrations of Financial Instruments

As of September 30, 2018, and December 31, 2017, 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 $1.4 billion and $1.3 billion, respectively, or 1% of our invested assets portfolio, and our investments in securities issued by the Federal National Mortgage Association with a fair value of $1.2 billion and $1.0 billion, respectively, or1% of our invested assets portfolio.  These concentrations include fixed maturity AFS, trading and equity securities.  

As of September 30, 2018,  our most significant investments in one industry were our investments in securities in the consumer non-cyclical industry and the financial services industry with a fair value of $14.5 billion and $13.7 billion, respectively, or 13% and 12%, respectively, of our invested assets portfolio.  As of December 31, 2017, our most significant investments in one industry were our investments in securities in the consumer non-cyclical industry and the utilities industry with a fair value of $15.0 billion and $14.3 billion, respectively, or 13% of our invested assets portfolio.  These concentrations include fixed maturity AFS, trading and equity securities.

6.  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, basis risk and credit risk.  See Note 1 in our 2017 Form 10-K for a detailed discussion of the accounting treatment for derivative instruments.  See Note 6 in our 2017 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.  See Note 14 for additional disclosures related to the fair value of our derivative instruments.

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

	As of September 30, 2018						As of December 31, 2017
	Notional		Fair Value				Notional		Fair Value
	Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	2,827	$	121	$	42	$	3,007	$	46	$	84
Foreign currency contracts (1)		2,085		104		71		1,804		79		79
Total cash flow hedges		4,912		225		113		4,811		125		163
Fair value hedges:
Interest rate contracts (1)		1,268		30		112		1,438		254		174
Non-Qualifying Hedges
Interest rate contracts (1)		90,138		318		233		72,937		657		127
Foreign currency contracts (1)		87		-		-		22		-		-
Equity market contracts (1)		24,967		534		140		31,090		562		557
Credit contracts (1)		-		-		-		52		-		-
Embedded derivatives:
Guaranteed living benefit ("GLB")
direct (2)		-		1,648		-		-		903		-
GLB ceded (2) (3)		-		35		193		-		51		67
Reinsurance related (4)		-		-		20		-		-		57
Indexed annuity and IUL contracts (2) (5)		-		44		1,571		-		11		1,418
Total derivative instruments	$	121,372	$	2,834	$	2,382	$	110,350	$	2,563	$	2,563

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

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

⁽³⁾ Reported in other liabilities on our Consolidated Balance Sheets.

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

⁽⁵⁾ Reported in future contract benefits on our Consolidated Balance Sheets.

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

	Remaining Life as of September 30, 2018
	Less Than		1 - 5		6 - 10		11 - 30		Over 30
	1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)	$	10,907	$	14,802	$	47,193	$	20,118	$	1,213	$	94,233
Foreign currency contracts (2)		141		256		635		1,130		10		2,172
Equity market contracts		18,103		3,615		115		14		3,120		24,967
Total derivative instruments
with notional amounts	$	29,151	$	18,673	$	47,943	$	21,262	$	4,343	$	121,372

⁽¹⁾ As of September 30, 2018, 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 September 30, 2018, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was September 2049.

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

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(29	)	$	49
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period:
Cumulative effect from adoption of
new accounting standard		(6	)		-
Cash flow hedges:
Interest rate contracts		117			(15	)
Foreign currency contracts		(19	)		46
Change in foreign currency exchange rate adjustment		69			(119	)
Change in DAC, VOBA, DSI and DFEL		8			(3	)
Income tax benefit (expense)		(37	)		32
Less:
Reclassification adjustment for gains (losses)
included in net income (loss):
Cash flow hedges:
Interest rate contracts (1)		3			3
Interest rate contracts (2)		(6	)		(13	)
Foreign currency contracts (1)		18			12
Foreign currency contracts (3)		-			5
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)
Income tax benefit (expense)		(3	)		(2	)
Balance as of end-of-period	$	92		$	(14	)

⁽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).

⁽³⁾ The OCI offset is reported within realized gain (loss) 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	1		$	2		$	3		$	3
Interest rate contracts (2)		(4	)		(5	)		(6	)		(13	)
Foreign currency contracts (1)		7			4			18			12
Foreign currency contracts (3)		-			-			-			5
Total cash flow hedges		4			1			15			7
Fair value hedges:
Interest rate contracts (1)		(2	)		(5	)		(11	)		(18	)
Interest rate contracts (2)		5			6			11			21
Interest rate contracts (3)		17			2			64			2
Total fair value hedges		20			3			64			5
Non-Qualifying Hedges
Interest rate contracts (3)		(167	)		18			(577	)		161
Foreign currency contracts (3)		-			1			2			1
Equity market contracts (3)		(199	)		(347	)		(280	)		(1,163	)
Equity market contracts (4)		10			6			11			21
Embedded derivatives:					-						-
GLB (3)		333			233			603			784
Reinsurance related (3)		5			3			37			3
Indexed annuity and IUL contracts (3)		(164	)		(46	)		(175	)		(230	)
Total derivative instruments	$	(158	)	$	(128	)	$	(300	)	$	(411	)

⁽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) recognized as a component of OCI (in millions) on derivative instruments designated and qualifying as cash flow hedges were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Offset to net investment income	$	8		$	6		$	21		$	15
Offset to realized gain (loss)		-			-			-			5
Offset to interest and debt expense		(4	)		(5	)		(6	)		(13	)

As of September 30, 2018,  $29 million of the deferred net gains (losses) on derivative instruments in AOCI were expected to be reclassified to earnings during the next 12 months.  This reclassification would be due primarily to interest rate variances related to our interest rate swap agreements.

For the nine months ended September 30, 2018 and 2017, 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.

As of September 30, 2018, we did not have any exposure related to credit default swaps for which we are the seller.

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As of December 31, 2017 information related to our credit default swaps for which we are the seller (dollars in millions) was as follows:

As of December 31, 2017
					Credit
		Reason	Nature		Rating of	Number			Maximum
		for	of	Underlying		of	Fair		Potential
Credit Contract Type	Maturity	Entering	Recourse	Obligation (1)		Instruments	Value (2)		Payout
Basket credit default swaps	12/20/2022	(3)	(4)		BBB+	1	$	1	$	52
						1	$	1	$	52

⁽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 our credit default swaps.

⁽³⁾ Credit default swaps were entered into in order to hedge the liability exposure on certain variable annuity products.

⁽⁴⁾ 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 credit default swaps for which we are the seller if credit risk-related contingent features were triggered (in millions) were as follows:

		As of			As of
	September 30,			December 31,
		2018			2017
Maximum potential payout		$	-		$	52
Less:  Counterparty thresholds			-			-
Maximum collateral potentially required to post		$	-		$	52

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 collateral if the market value was less than zero.

Credit Risk

We are exposed to credit losses in the event of non-performance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or non-performance risk (“NPR”).  The NPR 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 September 30, 2018, the NPR adjustment was zero.  The credit risk associated with such agreements is minimized by entering into agreements with financial institutions with long-standing, superior performance records.  Additionally, we maintain a policy of requiring 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 credit support annex 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 September 30, 2018,  and December 31, 2017, our exposure was zero.

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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 September 30, 2018					As of December 31, 2017
	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-	$	36	$	(22	)	$	116	$	(1	)
A+		177		(111	)		242		(453	)
A		40		(1	)		170		(120	)
A-		113		-			237		(3	)
BBB+		-		-			-		(4	)
	$	366	$	(134	)	$	765	$	(581	)

Balance Sheet Offsetting

Information related to the effects of offsetting (in millions) was as follows: 

		As of September 30, 2018
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	957			$	1,727	$	2,684
Gross amounts offset			(251	)			-		(251	)
Net amount of assets			706				1,727		2,433
Gross amounts not offset:
Cash collateral			(366	)			-		(366	)
Non-cash collateral			(80	)			-		(80	)
Net amount		$	260			$	1,727	$	1,987
Financial Liabilities
Gross amount of recognized liabilities		$	879			$	1,784	$	2,663
Gross amounts offset			(149	)			-		(149	)
Net amount of liabilities			730				1,784		2,514
Gross amounts not offset:
Cash collateral			(134	)			-		(134	)
Non-cash collateral			(420	)			-		(420	)
Net amount		$	176			$	1,784	$	1,960

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		As of December 31, 2017
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	1,301			$	965	$	2,266
Gross amounts offset			(386	)			-		(386	)
Net amount of assets			915				965		1,880
Gross amounts not offset:
Cash collateral			(765	)			-		(765	)
Net amount		$	150			$	965	$	1,115
Financial Liabilities
Gross amount of recognized liabilities		$	955			$	1,542	$	2,497
Gross amounts offset			(296	)			-		(296	)
Net amount of liabilities			659				1,542		2,201
Gross amounts not offset:
Cash collateral			(581	)			-		(581	)
Net amount		$	78			$	1,542	$	1,620

7.  Federal Income Taxes

The effective tax rate is the ratio of tax expense over pre-tax income (loss).  The effective tax rate was 8% and 12% for the three and nine months ended September 30, 2018, respectively, compared to 18% and 17% for the corresponding periods in 2017.  The effective tax rate on pre-tax income was lower than the prevailing corporate federal income tax rate.  Differences in the effective rates and the U.S. statutory rates of 21% and 35% for the three and nine months ended September 30, 2018 and 2017, respectively, were the result of the separate account dividends-received deduction, certain tax preferred investment income, foreign tax credits and other tax preference items.  The current quarter also includes a tax benefit to net income from the impact of the reduced corporate tax rate under the Tax Act on our adoption of a recent Internal Revenue Service pronouncement related to variable annuity contracts.

The SEC previously issued rules that allow for a one year measurement period after the enactment of the Tax Act to finalize calculations and recording of the related tax impacts.  Subsequent to the Tax Act, we have continued to review and analyze the provisions of the Tax Act, including the actual and potential impact of the reduction in the U.S. federal corporate income tax rate and the impact of specific life insurance provisions on our financial statements.  While we do not anticipate any significant changes to amounts currently recorded, any additional adjustments to amounts recorded as a result of the Tax Act will be made during 2018.

8.  Guaranteed Benefit Features

Information on the guaranteed death benefit (“GDB”) features outstanding (dollars in millions) was as follows:

	As of			As of
	September 30,			December 31,
		2018 (1)			2017 (1)
Return of Net Deposits
Total account value		$	98,623		$	96,941
Net amount at risk (2)			93			81
Average attained age of contract holders			64 years			64 years
Minimum Return
Total account value		$	103		$	108
Net amount at risk (2)			16			18
Average attained age of contract holders			76 years			76 years
Guaranteed minimum return			5%			5%
Anniversary Contract Value
Total account value		$	26,308		$	26,596
Net amount at risk (2)			438			417
Average attained age of contract holders			71 years			70 years

⁽¹⁾ Our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

⁽²⁾ Represents the amount of death benefit in excess of the account balance that is subject to market fluctuations.

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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 GDBs (in millions), which were recorded in future contract benefits on our Consolidated Balance Sheets:

	For the Nine
	Months Ended
	September 30,
	2018			2017
Balance as of beginning-of-year	$	100		$	110
Changes in reserves		18			4
Benefits paid		(11	)		(14	)
Balance as of end-of-period	$	107		$	100

Variable Annuity Contracts

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

	As of				As of
	September 30,			December 31,
		2018			2017
Asset Type
Domestic equity		$	61,732		$	59,647
International equity			20,598			20,837
Fixed income			40,529			40,626
Total		$	122,859		$	121,110
Percent of total variable annuity
separate account values			98%			99%

Secondary Guarantee Products

Future contract benefits and other contract holder funds include reserves for our secondary guarantee products sold through our Life Insurance segment.  These UL and VUL products with secondary guarantees represented 35% of total life insurance in-force reserves as of September 30, 2018, and December 31, 2017.  UL and VUL products with secondary guarantees represented 38% and 34% of total sales for the three and nine months ended September 30, 2018, respectively, compared to 26% and 27% for the corresponding periods in 2017. 

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9.  Liability for Unpaid Claims

Changes in the liability for unpaid claims (in millions), were as follows:

	For the Nine
	Months Ended
	September 30,
	2018			2017
Balance as of beginning-of-year	$	2,222		$	2,242
Reinsurance recoverable		57			69
Net balance as of beginning-of-year		2,165			2,173
Business acquired (1)		2,842			-
Incurred related to:
Current year		1,640			909
Prior years
Interest		85			53
All other incurred		(159	)		(85	)
Total incurred		1,566			877
Paid related to:
Current year		(663	)		(458	)
Prior years		(796	)		(440	)
Total paid		(1,459	)		(898	)
Net balance as of end-of-period		5,114			2,152
Reinsurance recoverable		141			57
Balance as of end-of-period	$	5,255		$	2,209

⁽¹⁾ Represents Liberty group life and disability reserves, net, as of May 1, 2018, subject to finalization of acquisition date fair values.  See Note 3 for additional information.

The majority of the reserves included in the roll forward are for long-term disability claims.  The interest rate assumption is an important part of the reserving process due to the long benefit period for these claims.  Interest accrued on prior year reserves has been calculated on the opening reserve balance less one-half of the prior year incurred period’s claim payments at our average reserve discount rate for the respective periods.

“Incurred related to prior years - All other incurred” reflected in the preceding table is primarily impacted by the level of claim resolutions in the period compared to that which is expected by the reserve assumption. A negative number implies a favorable result where claim resolutions were more favorable than assumed.  Our claim resolution rate assumption used in determining reserves is our expectation of the resolution rate we will experience over the long-term life of the block of claims.  It will vary from actual experience in any one period, both favorably and unfavorably.

 

A reconciliation of future contract benefits as reported in our Consolidated Balance Sheets to the liability for unpaid claims (in millions), was as follows:

	As of September 30,
	2018		2017
Future contract benefits	$	33,988	$	22,547
Less:
Life and annuity reserves and claims due		27,193		18,698
Accident and health active life reserves		1,540		1,640
Liability for unpaid claims	$	5,255	$	2,209

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10.  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 is 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 verdicts obtained 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 September 30, 2018.  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 condition.

For some matters, the Company is able to estimate a reasonably possible range of loss.  For such matters in which a loss is probable, an accrual has been made.  For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made.  Accordingly, the estimate contained in this paragraph reflects two types of matters.  For some matters included within this estimate, an accrual has been made, but there is a reasonable possibility that an exposure exists in excess of the amount accrued.  In these cases, the estimate reflects the reasonably possible range of loss in excess of the accrued amount.  For other matters included within this estimation, no accrual has been made because a loss, while potentially estimable, is believed to be reasonably possible but not probable.  In these cases, the estimate reflects the reasonably possible loss or range of loss.  As of September 30, 2018, we estimate the aggregate range of reasonably possible losses to be up to approximately $50million.

For other matters, we are not currently able to estimate the reasonably possible loss or range of loss.  We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts and the progress of settlement negotiations.  On a quarterly and annual basis, we review relevant information with respect to litigation contingencies and update our accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Certain reinsurers have sought rate increases on certain yearly renewable term treaties.  We are disputing the requested rate increases under these treaties.  We have initiated and will initiate arbitration proceedings, as necessary, under these treaties in order to protect our contractual rights.  Additionally, reinsurers may initiate arbitration proceedings against us.  We believe it is unlikely the outcome of these disputes will have a material adverse effect on our financial condition.  For more information about reinsurance, see Note 9 in our 2017 Form 10-K.

See Note 13 in our 2017 Form 10-K and Note 10 in our Form 10-Q for the quarters ended March 31, 2018, and June 30, 2018, for additional discussion of commitments and contingencies, which information is incorporated herein by reference.

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11.  Shares and Stockholders’ Equity

Common Shares

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

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Common Stock
Balance as of beginning-of-period	217,294,051		222,237,262		218,090,114		226,335,105
Stock issued for exercise of warrants	97,076		2,464		119,942		337,394
Stock compensation/issued for benefit plans	38,642		139,179		675,608		1,600,465
Retirement/cancellation of shares	(2,652,963	)	(2,834,287	)	(4,108,858	)	(8,728,346	)
Balance as of end-of-period	214,776,806		219,544,618		214,776,806		219,544,618
Common Stock as of End-of-Period
Basic basis	214,776,806		219,544,618		214,776,806		219,544,618
Diluted basis	217,390,897		222,701,021		217,390,897		222,701,021

Our common stock is without par value.

Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share was as follows:

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted-average shares, as used in basic calculation	215,901,268		220,813,693		217,413,480		223,311,993
Shares to cover exercise of outstanding warrants	579,882		668,103		620,580		795,312
Shares to cover non-vested stock	1,467,953		1,614,405		1,512,297		1,572,250
Average stock options outstanding during the period	1,700,026		2,275,826		1,807,340		2,432,171
Assumed acquisition of shares with assumed proceeds
from exercising outstanding warrants	(86,040	)	(94,338	)	(86,335	)	(116,577	)
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the period)	(1,082,651	)	(1,361,094	)	(1,090,868	)	(1,481,524	)
Shares repurchasable from measured but
unrecognized stock option expense	(11,209	)	(44,579	)	(17,381	)	(60,539	)
Average deferred compensation shares	-		-		936,355		926,612
Weighted-average shares, as used in diluted calculation	218,469,229		223,872,016		221,095,468		227,379,698

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 earnings per share (“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 all or a portion of their deferral amounts.  For the nine months ended September 30, 2018 and 2017, the effect of settling this obligation in LNC stock (“equity classification”) was more dilutive than the scenario of settling 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 $6 million and $(5) million for the nine months ended September 30, 2018 and 2017, respectively.

29

AOCI

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

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year	$	3,486		$	1,784
Cumulative effect from adoption of new accounting standards		674			-
Unrealized holding gains (losses) arising during the period		(5,520	)		2,385
Change in foreign currency exchange rate adjustment		(68	)		112
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		1,538			(468	)
Income tax benefit (expense)		858			(717	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(35	)		(26	)
Associated amortization of DAC, VOBA, DSI and DFEL		(15	)		(16	)
Income tax benefit (expense)		11			15
Balance as of end-of-period	$	1,007		$	3,123
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year	$	44		$	25
(Increases) attributable to:
Cumulative effect from adoption of new accounting standards		9			-
Gross OTTI recognized in OCI during the period		-			(1	)
Change in DAC, VOBA, DSI and DFEL		-			-
Income tax benefit (expense)		-			-
Decreases attributable to:
Changes in fair value, sales, maturities or other settlements of AFS securities		(8	)		29
Change in DAC, VOBA, DSI and DFEL		(10	)		(5	)
Income tax benefit (expense)		4			(8	)
Balance as of end-of-period	$	39		$	40
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(29	)	$	49
Cumulative effect from adoption of new accounting standard		(6	)		-
Unrealized holding gains (losses) arising during the period		98			31
Change in foreign currency exchange rate adjustment		69			(119	)
Change in DAC, VOBA, DSI and DFEL		8			(3	)
Income tax benefit (expense)		(37	)		32
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		15			7
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)
Income tax benefit (expense)		(3	)		(2	)
Balance as of end-of-period	$	92		$	(14	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(14	)	$	(27	)
Foreign currency translation adjustment arising during the period		(6	)		11
Balance as of end-of-period	$	(20	)	$	(16	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(257	)	$	(265	)
Cumulative effect from adoption of new accounting standard		(35	)		-
Adjustment arising during the period		10			(9	)
Balance as of end-of-period	$	(282	)	$	(274	)

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The following summarizes the reclassifications out of AOCI (in millions) and the associated line item in the Consolidated Statements of Comprehensive Income (Loss):

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on AFS Securities
Gross reclassification	$	(35	)	$	(26	)	Total realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		(15	)		(16	)	Total realized gain (loss)
Reclassification before income							Income (loss) from continuing
tax benefit (expense)		(50	)		(42	)	operations before taxes
Income tax benefit (expense)		11			15		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(39	)	$	(27	)	Net income (loss)
Unrealized OTTI on AFS Securities
Gross reclassification	$	(1	)	$	6		Total realized gain (loss)
Change in DAC, VOBA, DSI and DFEL		-			(1	)	Total realized gain (loss)
Reclassification before income							Income (loss) from continuing
tax benefit (expense)		(1	)		5		operations before taxes
Income tax benefit (expense)		-			(2	)	Federal income tax expense (benefit)
Reclassification, net of income tax	$	(1	)	$	3		Net income (loss)
Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	3		$	3		Net investment income
Interest rate contracts		(6	)		(13	)	Interest and debt expense
Foreign currency contracts		18			12		Net investment income
Foreign currency contracts		-			5		Total realized gain (loss)
Total gross reclassifications		15			7
Associated amortization of DAC,
VOBA, DSI and DFEL		(1	)		(1	)	Commissions and other expenses
Reclassifications before income							Income (loss) from continuing
tax benefit (expense)		14			6		operations before taxes
Income tax benefit (expense)		(3	)		(2	)	Federal income tax expense (benefit)
Reclassifications, net of income tax	$	11		$	4		Net income (loss)

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12.  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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Total realized gain (loss) related to certain investments (1)	$	(11	)	$	(19	)	$	(45	)	$	(49	)
Realized gain (loss) on the mark-to-market on certain instruments (2)		(10	)		(2	)		14			3
Indexed annuity and IUL contracts net derivatives results: (3)
Gross gain (loss)		(7	)		-			(14	)		(17	)
Associated amortization of DAC, VOBA, DSI and DFEL		(2	)		(1	)		(2	)		(1	)
Variable annuity net derivatives results: (4)
Gross gain (loss)		(32	)		(41	)		(10	)		(45	)
Associated amortization of DAC, VOBA, DSI and DFEL		7			7			6			4
Total realized gain (loss)	$	(55	)	$	(56	)	$	(51	)	$	(105	)

⁽¹⁾ See “Realized Gain (Loss) Related to Certain Investments” section in Note 5.

⁽²⁾ Represents changes in the fair values of certain derivative investments (not including those associated with our variable and indexed annuity and IUL contracts net derivatives results), reinsurance related embedded derivatives and trading securities.

⁽³⁾ Represents the net difference between the change in the fair value of the S&P 500 Index ® call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity and IUL contracts 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 riders and the change in the fair value of the derivative instruments we own to hedge the change in embedded derivative reserves on our GLB riders and the benefit ratio unlocking on our GLB and GDB riders, including the cost of purchasing the hedging instruments.

13.  Stock-Based Incentive Compensation Plans

We sponsor stock-based incentive compensation 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 service-vested shares), stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and deferred stock units (“DSUs”).  We issue new shares to satisfy option exercises and vested performance shares and RSUs.

LNC stock-based awards granted were as follows:

		For the		For the
		Three		Nine
		Months		Months
		Ended		Ended
	September 30,		September 30,
		2018		2018
10-year LNC stock options		-		481,404
Performance shares		-		156,676
RSUs		1,202		695,471
Non-employee:
SARs		-		14,692
Agent stock options		-		32,400
Director DSUs		7,184		21,682

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14.  Fair Value of Financial Instruments

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

	As of September 30, 2018						As of December 31, 2017
	Carrying			Fair			Carrying			Fair
	Value			Value			Value			Value
Assets
AFS securities:
Fixed maturity securities	$	93,161		$	93,161		$	94,840		$	94,840
Equity securities		-			-			246			246
Trading securities		1,440			1,440			1,620			1,620
Equity securities		112			112			-			-
Mortgage loans on real estate		12,561			12,239			10,762			10,877
Derivative investments (1)		706			706			915			915
Other investments		2,204			2,204			2,296			2,296
Cash and invested cash		1,460			1,460			1,628			1,628
Other assets:
GLB direct embedded derivatives		1,648			1,648			903			903
GLB ceded embedded derivatives		35			35			51			51
Indexed annuity ceded embedded derivatives		44			44			11			11
Separate account assets		147,692			147,692			144,219			144,219
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(1,571	)		(1,571	)		(1,418	)		(1,418	)
Other contract holder funds:
Remaining guaranteed interest and similar contracts		(562	)		(562	)		(592	)		(592	)
Account values of certain investment contracts		(33,684	)		(34,577	)		(32,370	)		(36,200	)
Short-term debt		-			-			(450	)		(452	)
Long-term debt		(5,804	)		(5,795	)		(4,894	)		(5,042	)
Reinsurance related embedded derivatives		(20	)		(20	)		(57	)		(57	)
Other liabilities:
Derivative liabilities (1)		(197	)		(197	)		(338	)		(338	)
GLB ceded embedded derivatives		(193	)		(193	)		(67	)		(67	)

⁽¹⁾ We have master netting agreements with each of our derivative counterparties, which allow for the netting of our derivative asset and liability positions by counterparty.

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 includes primarily 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.  Other investments also include FHLB stock carried at cost and periodically evaluated for impairment based on ultimate recovery of par value.  The inputs used to measure the fair value of our LPs, other privately held investments and FHLB stock are classified as Level 3 within the fair value hierarchy.  The remaining assets in other investments include

33

cash collateral receivables and securities that are not LPs or other privately held investments. The inputs used to measure the fair value of these assets are classified as Level 1 within the fair value hierarchy.

Separate Account Assets

Separate account assets are primarily carried at fair value.  A portion of our separate account assets includes LPs, which 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 the separate account asset LPs 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 September 30, 2018, and December 31, 2017, 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 short-term and long-term debt is based on quoted market prices.  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 September 30, 2018, or December 31, 2017, and we noted no changes in our valuation methodologies between these periods.

34

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 2017 Form 10-K:

		As of September 30, 2018
		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		$	-		$	76,871			$	3,209		$	80,080
ABS			-			954				31			985
U.S. government bonds			391			18				-			409
Foreign government bonds			-			351				108			459
RMBS			-			3,280				7			3,287
CMBS			-			725				23			748
CLOs			-			1,311				51			1,362
State and municipal bonds			-			5,218				-			5,218
Hybrid and redeemable preferred securities			74			462				77			613
Trading securities			43			1,379				18			1,440
Equity securities			28			58				26			112
Derivative investments (1)			-			572				535			1,107
Other investments			149			-				-			149
Cash and invested cash			-			1,460				-			1,460
Other assets:
GLB direct embedded derivatives			-			-				1,648			1,648
GLB ceded embedded derivatives			-			-				35			35
Indexed annuity ceded embedded derivatives			-			-				44			44
Separate account assets			764			146,894				-			147,658
Total assets		$	1,449		$	239,553			$	5,812		$	246,814
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,571	)	$	(1,571	)
Reinsurance related embedded derivatives			-			(20	)			-			(20	)
Other liabilities:
Derivative liabilities (1)			-			(417	)			(181	)		(598	)
GLB ceded embedded derivatives			-			-				(193	)		(193	)
Total liabilities		$	-		$	(437	)		$	(1,945	)	$	(2,382	)

35

		As of December 31, 2017
		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		$	-		$	79,125			$	3,091		$	82,216
ABS			-			947				27			974
U.S. government bonds			556			6				5			567
Foreign government bonds			-			341				110			451
RMBS			-			3,453				12			3,465
CMBS			-			594				6			600
CLOs			-			717				91			808
State and municipal bonds			-			5,119				-			5,119
Hybrid and redeemable preferred securities			71			493				76			640
Equity AFS securities			28			56				162			246
Trading securities			73			1,498				49			1,620
Derivative investments (1)			-			994				603			1,597
Other investments			150			-				-			150
Cash and invested cash			-			1,628				-			1,628
Other assets:
GLB direct embedded derivatives			-			-				903			903
GLB ceded embedded derivatives			-			-				51			51
Indexed annuity ceded embedded derivatives			-			-				11			11
Separate account assets			814			143,405				-			144,219
Total assets		$	1,692		$	238,376			$	5,197		$	245,265
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,418	)	$	(1,418	)
Long-term debt			-			(1,127	)			-			(1,127	)
Reinsurance related embedded derivatives			-			(57	)			-			(57	)
Other liabilities:
Derivative liabilities (1)			-			(447	)			(573	)		(1,020	)
GLB ceded embedded derivatives			-			-				(67	)		(67	)
Total liabilities		$	-		$	(1,631	)		$	(2,058	)	$	(3,689	)

⁽¹⁾ Derivative investment assets and liabilities presented within the fair value hierarchy are presented on a gross basis by derivative type and not on a master netting basis by counterparty.

36

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, deferred sales inducements (“DSI”) and deferred front-end loads (“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 September 30, 2018
							Gains		Issuances,				Transfers
				Items			(Losses)			Sales,			Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	3,181		$	1		$	(30	)	$	88		$	(31	)	$	3,209
ABS		31			-			-			-			-			31
Foreign government bonds		108			-			-			-			-			108
RMBS		-			-			-			7			-			7
CMBS		5			-			-			18			-			23
CLOs		145			-			-			17			(111	)		51
Hybrid and redeemable
preferred securities		78			-			(1	)		-			-			77
Trading securities		22			-			-			2			(6	)		18
Equity securities		26			-			-			-			-			26
Derivative investments		93			(115	)		(55	)		431			-			354
Other assets: (6)
GLB direct embedded derivatives		1,248			400			-			-			-			1,648
GLB ceded embedded derivatives		41			(6	)		-			-			-			35
Indexed annuity ceded embedded derivatives		29			4			-			11			-			44
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,400	)		(164	)		-			(7	)		-			(1,571	)
Other liabilities – GLB ceded embedded
derivatives (6)		(131	)		(62	)		-			-			-			(193	)
Total, net	$	3,476		$	58		$	(86	)	$	567		$	(148	)	$	3,867

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	For the Three Months Ended September 30, 2017
							Gains		Issuances,				Transfers
				Items			(Losses)			Sales			Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	2,517		$	4		$	35		$	(35	)	$	59		$	2,580
ABS		43			-			(1	)		-			(15	)		27
U.S. government bonds		5			-			-			-			-			5
Foreign government bonds		109			-			1			-			-			110
RMBS		7			-			-			6			-			13
CMBS		21			-			-			(1	)		(14	)		6
CLOs		28			-			-			15			(28	)		15
Hybrid and redeemable
preferred securities		82			-			3			-			(9	)		76
Equity AFS securities		183			-			(1	)		9			(1	)		190
Trading securities		59			-			-			(10	)		1			50
Derivative investments		155			(13	)		9			(85	)		-			66
Other assets: (6)
GLB direct embedded derivatives		298			272			-			-			-			570
GLB ceded embedded derivatives		85			(32	)		-			-			-			53
Indexed annuity ceded embedded derivatives		-			-			-			3			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,268	)		(47	)		-			(3	)		-			(1,318	)
Other liabilities – GLB ceded embedded
derivatives (6)		-			(7	)		-			-			-			(7	)
Total, net	$	2,324		$	177		$	46		$	(101	)	$	(7	)	$	2,439

38

	For the Nine Months Ended September 30, 2018
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net (2)			Net (3)(4)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	3,091		$	7		$	(137	)	$	319		$	(71	)	$	3,209
ABS		27			-			(1	)		5			-			31
U.S. government bonds		5			-			-			(5	)		-			-
Foreign government bonds		110			-			(2	)		-			-			108
RMBS		12			-			-			7			(12	)		7
CMBS		6			1			-			37			(21	)		23
CLOs		91			-			-			164			(204	)		51
Hybrid and redeemable
preferred securities		76			-			1			-			-			77
Equity AFS securities		162			-			-			-			(162	)		-
Trading securities		49			(5	)		-			(20	)		(6	)		18
Equity securities		-			-			-			-			26			26
Derivative investments		30			106			(113	)		331			-			354
Other assets: (6)
GLB direct embedded derivatives		903			745			-			-			-			1,648
GLB ceded embedded derivatives		51			(16	)		-			-			-			35
Indexed annuity ceded embedded derivatives		11			4			-			29			-			44
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,418	)		(175	)		-			22			-			(1,571	)
Other liabilities – GLB ceded embedded
derivatives (6)		(67	)		(126	)		-			-			-			(193	)
Total, net	$	3,139		$	541		$	(252	)	$	889		$	(450	)	$	3,867

39

	For the Nine Months Ended September 30, 2017
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	2,405		$	15		$	153		$	(182	)	$	189		$	2,580
ABS		33			-			-			-			(6	)		27
U.S. government bonds		-			-			-			-			5			5
Foreign government bonds		111			-			(1	)		-			-			110
RMBS		3			-			-			10			-			13
CMBS		7			-			1			54			(56	)		6
CLOs		68			-			-			33			(86	)		15
State and municipal bonds		-			(1	)		-			-			1			-
Hybrid and redeemable
preferred securities		76			-			14			-			(14	)		76
Equity AFS securities		177			1			(2	)		15			(1	)		190
Trading securities		65			2			8			(26	)		1			50
Derivative investments		(93	)		(25	)		97			87			-			66
Other assets: (6)
GLB direct embedded derivatives		-			570			-			-			-			570
GLB ceded embedded derivatives		203			(150	)		-			-			-			53
Indexed annuity ceded embedded derivatives		-			-			-			3			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,139	)		(230	)		-			51			-			(1,318	)
Other liabilities: (6)
GLB direct embedded derivatives		(371	)		371			-			-			-			-
GLB ceded embedded derivatives		-			(7	)		-			-			-			(7	)
Total, net	$	1,545		$	546		$	270		$	45		$	33		$	2,439

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

⁽²⁾ Net issuances, sales, maturities, settlements, calls, net include financial instruments acquired from Liberty Life as follows: corporate bonds of $67 million and ABS of $17 million.

⁽³⁾ Transfers into or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-year.  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 the prior period.

⁽⁴⁾ Transfers into or out of Level 3 for FHLB stock between equity securities and other investments at cost on our Consolidated Balance Sheets.

⁽⁵⁾ 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).

⁽⁶⁾ Gains (losses) from sales, maturities, settlements and calls are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

40

The following provides the components of the items included in issuances, sales, maturities, settlements and 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 September 30, 2018
	Issuances			Sales		Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	162		$	-	$	(1	)	$	(65	)	$	(8	)	$	88
RMBS		7			-		-			-			-			7
CMBS		18			-		-			-			-			18
CLOs		17			-		-			-			-			17
Trading securities		2			-		-			-			-			2
Derivative investments		96			455		(120	)		-			-			431
Other assets – indexed annuity ceded
embedded derivatives		11			-		-			-			-			11
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(83	)		-		-			76			-			(7	)
Total, net	$	230		$	455	$	(121	)	$	11		$	(8	)	$	567

	For the Three Months Ended September 30, 2017
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	167		$	(114	)	$	(19	)	$	(43	)	$	(26	)	$	(35	)
RMBS		6			-			-			-			-			6
CMBS		-			-			-			(1	)		-			(1	)
CLOs		15			-			-			-			-			15
Equity AFS securities		10			(1	)		-			-			-			9
Trading securities		-			(10	)		-			-			-			(10	)
Derivative investments		50			(23	)		(112	)		-			-			(85	)
Other assets – indexed annuity ceded
embedded derivatives		3			-			-			-			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(14	)		-			-			11			-			(3	)
Total, net	$	237		$	(148	)	$	(131	)	$	(33	)	$	(26	)	$	(101	)

41

	For the Nine Months Ended September 30, 2018
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	785		$	(156	)	$	(3	)	$	(238	)	$	(69	)	$	319
ABS		22			(17	)		-			-			-			5
U.S. government bonds		-			(5	)		-			-			-			(5	)
RMBS		7			-			-			-			-			7
CMBS		39			-			-			(2	)		-			37
CLOs		164			-			-			-			-			164
Trading securities		4			(24	)		-			-			-			(20	)
Equity securities		1			(1	)		-			-			-			-
Derivative investments		225			460			(354	)		-			-			331
Other assets – indexed annuity ceded
embedded derivatives		29			-			-			-			-			29
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(158	)		-			-			180			-			22
Total, net	$	1,118		$	257		$	(357	)	$	(60	)	$	(69	)	$	889

	For the Nine Months Ended September 30, 2017
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	367		$	(179	)	$	(66	)	$	(170	)	$	(134	)	$	(182	)
RMBS		10			-			-			-			-			10
CMBS		55			-			-			(1	)		-			54
CLOs		33			-			-			-			-			33
Equity AFS securities		18			(3	)		-			-			-			15
Trading securities		2			(27	)		-			(1	)		-			(26	)
Derivative investments		145			243			(301	)		-			-			87
Other assets – indexed annuity ceded
embedded derivatives		3			-			-			-			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(45	)		-			-			96			-			51
Total, net	$	588		$	34		$	(367	)	$	(76	)	$	(134	)	$	45

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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Derivative investments	$	(1	)	$	(83	)	$	105		$	(159	)
Embedded derivatives:
Indexed annuity and IUL contracts		(11	)		2			(18	)		(13	)
GLB		576			428			1,264			1,352
Total, net (1)	$	564		$	347		$	1,351		$	1,180

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

42

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

	For the Three								For the Three
	Months Ended								Months Ended
	September 30, 2018								September 30, 2017
	Transfers		Transfers						Transfers		Transfers
	Into		Out of						Into		Out of
	Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	11	$	(42	)	$	(31	)	$	116	$	(57	)	$	59
ABS		-		-			-			-		(15	)		(15	)
CMBS		-		-			-			-		(14	)		(14	)
CLOs		-		(111	)		(111	)		-		(28	)		(28	)
Hybrid and redeemable preferred
securities		-		-			-			-		(9	)		(9	)
Equity AFS securities		-		-			-			-		(1	)		(1	)
Trading securities		-		(6	)		(6	)		1		-			1
Total, net	$	11	$	(159	)	$	(148	)	$	117	$	(124	)	$	(7	)

	For the Nine								For the Nine
	Months Ended								Months Ended
	September 30, 2018								September 30, 2017
	Transfers		Transfers						Transfers		Transfers
	Into		Out of						Into		Out of
	Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	54	$	(125	)	$	(71	)	$	277	$	(88	)	$	189
ABS		-		-			-			15		(21	)		(6	)
U.S. government bonds		-		-			-			5		-			5
RMBS		-		(12	)		(12	)		-		-			-
CMBS		-		(21	)		(21	)		3		(59	)		(56	)
CLOs		-		(204	)		(204	)		30		(116	)		(86	)
State and municipal bonds		-		-			-			2		(1	)		1
Hybrid and redeemable preferred
securities		-		-			-			-		(14	)		(14	)
Equity AFS securities		-		(162	)		(162	)		-		(1	)		(1	)
Trading securities		-		(6	)		(6	)		4		(3	)		1
Equity securities		26		-			26			-		-			-
Total, net	$	80	$	(530	)	$	(450	)	$	336	$	(303	)	$	33

Transfers into 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 nine months ended September 30, 2018 and 2017, transfers in and out of Level 3 were attributable primarily to the securities’ observable market information no longer being available or becoming available.  In 2018, transfers into or out of Level 3 also include FHLB stock between equity securities and other investments at cost on our Consolidated Balance Sheets.  Transfers into 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, transfers from Level 2 to Level 1 will result.  When quoted prices in active markets become unavailable, but we are able to employ a valuation methodology using significant observable inputs, transfers from Level 1 to Level 2 will result.  For the three and nine months ended September 30, 2018 and 2017, 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.

43

The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements as of September 30, 2018:

	Fair			Valuation	Significant	Assumption or
	Value			Technique	Unobservable Inputs	Input Ranges
Assets
Investments:
Fixed maturity AFS and trading
securities:
Corporate bonds	$	2,445		Discounted cash flow	Liquidity/duration adjustment (1)	0.5	%	-	24.8	%
ABS		23		Discounted cash flow	Liquidity/duration adjustment (1)	3.0	%	-	3.0	%
Foreign government bonds		78		Discounted cash flow	Liquidity/duration adjustment (1)	1.1	%	-	2.8	%
Hybrid and redeemable
preferred securities		4		Discounted cash flow	Liquidity/duration adjustment (1)	1.8	%	-	1.8	%
Equity securities		21		Discounted cash flow	Liquidity/duration adjustment (1)	4.5	%	-	5.1	%
Other assets:
GLB direct and ceded
embedded derivatives		1,683		Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	85	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	80	%	-	115	%
					NPR (5)	0.01	%	-	0.32	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	29	%
Indexed annuity ceded
embedded derivatives		44		Discounted cash flow	Lapse rate (2)	1	%	-	9	%
					Mortality rate (6)				(8)
Liabilities
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives	$	(1,571	)	Discounted cash flow	Lapse rate (2)	1	%	-	9	%
					Mortality rate (6)				(8)
Other liabilities – GLB ceded
embedded derivatives		(193	)	Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	85	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	80	%	-	115	%
					NPR (5)	0.01	%	-	0.32	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	29	%

⁽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 for indexed annuity and IUL contracts represents the lapse rates during the surrender charge period.

⁽³⁾ The utilization of guaranteed withdrawals input represents the estimated percentage of contract holders that utilize the guaranteed withdrawal feature.

⁽⁴⁾ The utilization factors are applied to the present value of claims or premiums, as appropriate, in the GLB reserve calculation to estimate the impact of inefficient withdrawal behavior, including taking less than or more than the maximum guaranteed withdrawal.

⁽⁵⁾ The NPR input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract.

⁽⁶⁾ 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 gender, will die.

⁽⁷⁾ 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.

⁽⁸⁾ The mortality rate is based on a combination of company and industry experience, adjusted for improvement factors.

44

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 adjustment input would result in a decrease in the fair value measurement.

· Indexed annuity and IUL contracts embedded derivatives – For direct embedded derivatives, an increase in the lapse rate or mortality rate inputs would result in a decrease in the fair value measurement. 

· GLB embedded derivatives – Assuming our GLB direct embedded derivatives are in a liability position: an increase in our lapse rate, NPR or mortality rate inputs would result in a decrease in the fair value measurement; and an increase in the utilization of guaranteed withdrawal or volatility inputs 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 ongoing 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 2017 Form 10-K.

15.  Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments.  As discussed in Note 3, we completed the acquisition of Liberty Life during the second quarter of 2018.  Related results are included within the Group Protection segment.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 21 of our 2017 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 and 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 reflected within variable annuity net derivative results accounted for at fair value;

§ Changes in the fair value of the derivatives we own to hedge our GLB riders reflected within variable annuity net derivative results;

§ 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; and

§ Changes in the fair value of equity securities;

· 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;

· Acquisition and integration costs related to mergers and acquisitions; and

· Income (loss) from the initial adoption of new accounting standards, regulations, and policy changes including the net impact from the Tax Cuts and Jobs Act.

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

45

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

We use our prevailing corporate federal income tax rates of 21% and 35%, where applicable, 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Revenues
Operating revenues:
Annuities	$	1,118		$	1,073		$	3,297		$	3,211
Retirement Plan Services		294			291			878			863
Life Insurance		1,766			1,614			5,106			4,874
Group Protection		1,128			564			2,618			1,646
Other Operations		56			65			182			220
Excluded realized gain (loss), pre-tax		(98	)		(97	)		(188	)		(229	)
Amortization of deferred gain arising from reserve changes
on business sold through reinsurance, pre-tax		-			-			-			1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax		-			1			-			2
Total revenues	$	4,264		$	3,511		$	11,893		$	10,588

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Income (Loss)
Income (loss) from operations:
Annuities	$	302		$	277		$	844		$	809
Retirement Plan Services		40			35			125			109
Life Insurance		176			121			470			384
Group Protection		63			41			137			83
Other Operations		(71	)		(20	)		(171	)		(71	)
Excluded realized gain (loss), after-tax		(77	)		(63	)		(149	)		(149	)
Gain (loss) on early extinguishment of debt, after-tax		-			(3	)		(18	)		(3	)
Income (loss) from reserve changes (net of related amortization)
on business sold through reinsurance, after-tax		-			-			-			1
Benefit ratio unlocking, after-tax		33			30			32			101
Net impact from the Tax Cuts and Jobs Act		32			-			19			-
Acquisition and integration costs related to mergers
and acquisitions, after-tax		(8	)		-			(47	)		-
Net income (loss)	$	490		$	418		$	1,242		$	1,264

46

Revenue from Contracts with Customers

As discussed in Note 2, we adopted ASU 2014-09, Revenue from Contracts with Customers, as of January 1, 2018, that applies primarily to commissions and advisory fees earned by our broker dealer operation.  The following table illustrates the revenue recognized from contracts with customers reported within fee income and other revenues on our Consolidated Statements of Comprehensive Income (Loss) and timing of revenue recognition by segment (in millions):

	For the Three Months Ended September 30, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	137	$	42	$	6	$	-	$	-	$	185
Other revenues		120		5		2		41		-		168
Total revenue from contracts
with customers	$	257	$	47	$	8	$	41	$	-	$	353
Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	17	$	1	$	3	$	-	$	-	$	21
Transferred over time		240		46		5		41		-		332
Total revenue from contracts
with customers	$	257	$	47	$	8	$	41	$	-	$	353

	For the Nine Months Ended September 30, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	403	$	126	$	17	$	-	$	-	$	546
Other revenues		359		14		7		73		-		453
Total revenue from contracts
with customers	$	762	$	140	$	24	$	73	$	-	$	999
Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	53	$	3	$	6	$	-	$	-	$	62
Transferred over time		709		137		18		73		-		937
Total revenue from contracts
with customers	$	762	$	140	$	24	$	73	$	-	$	999

Revenue recognized from contracts with customers included in fee income consists primarily of wholesaling-related 12b-1 fees and net investment advisory fees.  The 12b-1 fees are received from separate account fund sponsors as compensation for servicing the underlying mutual funds.  The net investment advisory fees are related to asset management of certain separate account funds.  Such revenues are recorded based on a contractual percentage of the market value of mutual fund assets over the period shares are owned by customers, and on a contractual percentage of the customer’s managed assets over the period advisory services are provided, respectively. 

Revenue recognized from contracts with customers included in other revenues primarily relates to our retail sales network and consists of commission revenue for the sale of non-affiliated securities recorded on a trade-date basis and advisory fee income.  Advisory fee income is asset-based revenues recorded as earned based on a contractual percentage of customer account values. 

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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 September 30, 2018, compared with December 31, 2017, and the results of operations for the three and nine months ended September 30, 2018, compared with the corresponding periods in 2017 of Lincoln National Corporation and its consolidated subsidiaries.  Unless otherwise stated or the context otherwise requires, “LNC,” “Company,” “we,” “our” or “us” refers to Lincoln National Corporation and its consolidated subsidiaries. On May 1, 2018, we completed our acquisition of Liberty Life Assurance Company of Boston (“Liberty Life”).  Beginning on May 1, 2018, the results of operations and financial condition of Liberty Life, were consolidated with LNC.  Accordingly, all financial information presented herein for the three and nine months ended September 30, 2018, includes the accounts of LNC for these periods and the accounts of Liberty Life since May 1, 2018.

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, 2017 (“2017 Form 10-K”), including the sections entitled “Part I – Item 1A. Risk Factors,” “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 2018; and our current reports on Form 8-K filed in 2018.  For more detailed information on the risks and uncertainties associated with the Company’s business activities, see the risks described in “Part I – Item 1A. Risk Factors” in our 2017 Form 10-K as updated by “Part II – Item 1A. Risk Factors” in our first and second quarter 2018 Forms 10-Q.

In this report, in addition to providing consolidated revenues and net income (loss) that are United States of America generally accepted accounting principles (“GAAP”) financial measures, we also provide certain non-GAAP financial measures as we believe they are meaningful to evaluate and assess the results of our operating segments.  Operating revenues and income (loss) from operations are the primary non-GAAP financial measures our management believes that explain the results of our ongoing businesses in a manner that allows for a better understanding of the underlying trends in our current businesses. We have excluded certain GAAP items that 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.  These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures.  For additional information see Note 15.

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 the 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; our ability to conduct business and our captive reinsurance arrangements as well as restrictions on the payment of revenue sharing and 12b‑1 distribution fees; the impact of U.S. federal tax reform legislation on our business, earnings and capital; and the impact of the decision vacating the Department of Labor’s fiduciary regulation as well as any “best interest” standards of care adopted by the Securities and Exchange Commission (“SEC”) or other state regulators;

· Actions taken by reinsurers to raise rates on in-force business;

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

· Rapidly increasing interest rates causing contract holders to surrender life insurance and annuity policies, thereby causing realized investment losses, and reduced hedge performance related to variable annuities;

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· Uncertainty about the effect of continuing promulgation and implementation of rules and regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act on us, 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;

· 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 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;

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

· The effect of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including the successful implementation of integration strategies or the achievement of anticipated synergies and operational efficiencies related to an acquisition;

· The adequacy and collectability 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 evolving market preferences and the changing demographics of our client base; and

· The unanticipated 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 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 primarily include fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, indexed universal life insurance (“IUL”), term life insurance, employer-sponsored retirement plans and services, 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 2017 Form 10-K.  We provide information about our segments’ and Other Operations’ operating revenue and expense line items and realized gain (loss), key drivers of changes and historical details underlying the line items below.  As discussed in Note 3, on May 1, 2018, we completed our acquisition of 100% of the capital stock of Liberty Life, which operates a group benefits business and individual life and individual and group annuity business in a transaction accounted for under the acquisition method of accounting.  We ceded insurance policies relating to individual life and individual and group annuity business to third-party reinsurers.  The operating

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results of Liberty Life are included in our Group Protection segment beginning on May 1, 2018.  The acquisition enables us to increase our market share within the group protection marketplace.For factors that could cause actual results to differ materially from those set forth, see “Forward-Looking Statements – Cautionary Language” above and “Part I – Item 1A. Risk Factors” in our 2017 Form 10-K as updated by “Part II – Item 1A. Risk Factors” in our first and second quarter 2018 Forms 10-Q.

Our current market conditions, significant operational matters, industry trends, issues and outlook are described in “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Executive Summary” of our 2017 Form 10-K.

Critical Accounting Policies and Estimates

The MD&A included in our 2017 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 2017 Form 10-K, and therefore, should be read in conjunction with that disclosure.

DAC, VOBA, DSI and DFEL

Unlocking

As stated in “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical

Accounting Policies and Estimates – Unlocking” in our 2017 Form 10-K, we conduct our annual comprehensive review of the

assumptions and projection models underlying the amortization of DAC, VOBA, DSI, DFEL, embedded derivatives and reserves for life

insurance and annuity products in the third quarter of each year.  As a result of this review, we recorded unlocking that resulted in increases and decreases to the carrying values of these items.  See “DAC, VOBA, DSI and DFEL” in Note 1 of our 2017 Form 10-K for a detailed discussion of our unlocking process.

Details underlying the effect to net income (loss) from our unlocking as a result of our annual comprehensive review (in millions) were as follows:

	For the Three
	Months Ended
	September 30,
	2018			2017
Income (loss) from operations:
Annuities	$	13		$	15
Retirement Plan Services		(2	)		(1	)
Life Insurance		(20	)		(16	)
Excluded realized gain (loss)		8			(20	)
Net income (loss)	$	(1	)	$	(22	)

Unlocking was driven primarily by the following:

2018

· For Annuities, favorable unlocking was driven by updates to our capital markets and policyholder behavior assumptions and other items, partially offset by unfavorable updates to our interest rate assumptions.

· For Retirement Plan Services, unfavorable unlocking was driven by updates to our interest rate and maintenance expense assumptions, partially offset by favorable updates to our policyholder behavior assumptions and other items.

· For Life Insurance, unfavorable unlocking was driven by updates to our mortality margin and reinsurance assumptions and other items, partially offset by favorable updates to our investment allocation and performance, morbidity and policyholder behavior assumptions.

· For excluded realized gain (loss), favorable unlocking was driven by updates to our policyholder behavior and capital markets assumptions and other items, partially offset by unfavorable updates to our separate account fees assumptions.

2017

· For Annuities, favorable unlocking was driven by updates to our policyholder behavior and separate account fees assumptions and other items, partially offset by unfavorable updates to our interest rate assumptions.

· For Retirement Plan Services, unfavorable unlocking was driven by updates to our interest rate and separate account fees assumptions, partially offset by favorable updates to our maintenance expense assumptions and other items.

· For Life Insurance, unfavorable unlocking was driven by updates to our mortality margin and interest rate assumptions, partially offset by favorable updates to our policyholder behavior, morbidity and maintenance expense assumptions and other items.

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· For excluded realized gain (loss), unfavorable unlocking was driven by updates to our separate account fees and capital markets assumptions and other items.

Reversion to the Mean

As variable fund returns do not move in a systematic manner, we reset the baseline of account values from which EGPs are projected, which we refer to as our reversion to the mean (“RTM”) process, as discussed in our 2017 Form 10-K. 

If we had unlocked our RTM assumption as of September 30, 2018, we would have recorded a favorable unlocking of approximately $215 million, pre-tax, for Annuities, approximately $50 million, pre-tax, for Life Insurance and approximately $30 million, pre-tax, for Retirement Plan Services.

Investments

Investment Valuation

The following summarizes our fixed maturity available-for-sale (“AFS”) securities, trading securities and derivative investments carried at fair value by pricing source and fair value hierarchy level (in millions) as of September 30, 2018:

		Quoted
		Prices
		in Active
	Markets for			Significant			Significant
		Identical		Observable			Unobservable
		Assets			Inputs			Inputs		Total
		(Level 1)			(Level 2)			(Level 3)		Fair Value
Priced by third-party pricing services		$	685		$	78,463		$	-	$	79,148
Priced by independent broker quotations			-			-			1,333		1,333
Priced by matrices			-			12,319			-		12,319
Priced by other methods (1)			-			-			2,571		2,571
Total		$	685		$	90,782		$	3,904	$	95,371
Percent of total			1%			95%			4%		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 2017 Form 10-K and Note 14 herein.

Derivatives

Our accounting policies for derivatives and the potential effect on interest spreads in a falling rate environment are discussed in Note 6 of this report and “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2017 Form 10-K.

Guaranteed Living Benefits

Within our individual annuity business, 64% and 65% of our variable annuity account values contained guaranteed living benefits (“GLB”) features as of September 30, 2018 and 2017, respectively.  Underperforming equity markets increase our exposure to potential benefits with the GLB features.  A contract with a GLB feature is “in the money” if the contract holder’s account balance falls below the present value of guaranteed withdrawal or income benefits, assuming no lapses.  As of September 30, 2018 and 2017, 7% and 6%, respectively, of all in-force contracts with a GLB feature were “in the money,” and our exposure, after reinsurance, as of September 30, 2018 and 2017, was $451 million and $402 million, respectively.  However, the only way the contract holder can realize the excess of the present value of benefits over the account value of the contract is through a series of withdrawals or income payments that do not exceed a maximum amount.  If, after the series of withdrawals or income payments, the account value is exhausted, the contract holder will continue to receive a series of annuity payments.  The account value can also fluctuate with equity market returns on a daily basis resulting in increases or decreases in the excess of the present value of benefits 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.

For information on our estimates of the potential instantaneous effect to net income (loss) that could result from sudden changes that may occur in equity markets, interest rates and implied market volatilities, see our discussion in “Part II – Item 7. Management’s

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Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Critical Accounting Policies and Estimates – Derivatives – GLB” in our 2017 Form 10-K.

Acquisitions and Dispositions

For information about acquisitions and divestitures, see Notes 3 and 24 in our 2017 Form 10-K and Note 3 herein.

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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Income (Loss)
Income (loss) from operations:
Annuities	$	302		$	277		$	844		$	809
Retirement Plan Services		40			35			125			109
Life Insurance		176			121			470			384
Group Protection		63			41			137			83
Other Operations		(71	)		(20	)		(171	)		(71	)
Excluded realized gain (loss), after-tax		(77	)		(63	)		(149	)		(149	)
Gain (loss) on early extinguishment of debt, after-tax		-			(3	)		(18	)		(3	)
Income (loss) from reserve changes
(net of related amortization) on business
sold through reinsurance, after-tax		-			-			-			1
Benefit ratio unlocking, after-tax		33			30			32			101
Net impact from the Tax Cuts and Jobs Act		32			-			19			-
Acquisition and integration costs related to mergers
and acquisitions, after-tax		(8	)		-			(47	)		-
Net income (loss)	$	490		$	418		$	1,242		$	1,264

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Deposits
Annuities	$	3,080		$	1,916		$	8,589		$	5,924
Retirement Plan Services		3,328			1,908			7,905			6,138
Life Insurance		1,523			1,462			4,575			4,422
Total deposits	$	7,931		$	5,286		$	21,069		$	16,484
Net Flows
Annuities (1)	$	(81	)	$	(841	)	$	(814	)	$	(2,484	)
Retirement Plan Services (1)		1,411			442			2,373			1,003
Life Insurance		1,080			1,064			3,240			3,090
Total net flows (1)	$	2,410		$	665		$	4,799		$	1,609

⁽¹⁾ The prior year has been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

	As of September 30,
	2018		2017
Account Values
Annuities	$	139,285	$	133,664
Retirement Plan Services		72,505		64,829
Life Insurance		50,587		47,915
Total account values	$	262,377	$	246,408

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Comparison of the Three Months Ended September 30, 2018 to 2017

Net income increased due primarily to the following:

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

· Lower federal income tax expense.

· More favorable investment income on alternative investments.

· The effect of unlocking.

· The acquisition of Liberty Life effective May 1, 2018.

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

· Acquisition and integration costs incurred as part of our acquisition and higher strategic digitization expense.

· Spread compression due to average new money rates trailing our current portfolio yields, partially offset by actions implemented to reduce interest crediting rates.

· Lower prepayment and bond make-whole premiums.

Comparison of the Nine Months Ended September 30, 2018 to 2017

Net income decreased due primarily to the following:

· Higher losses on variable annuity net derivatives results.

· Acquisition and integration costs incurred as part of our acquisition and higher strategic digitization expense.

· Less favorable investment income on alternative investments and lower prepayment and bond make-whole premiums.

· Lower amortization of deferred gain on business sold through reinsurance in 2018 as a gain was fully amortized during the second quarter of 2017.

· Loss on the early extinguishment of debt.

· Spread compression due to average new money rates trailing our current portfolio yields, partially offset by actions implemented to reduce interest crediting rates.

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

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

· Lower federal income tax expense.

· The acquisition of Liberty Life effective May 1, 2018.

· The effect of unlocking.

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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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Operating Revenues
Insurance premiums (1)	$	102	$	82	$	282	$	312
Fee income		598		574		1,771		1,660
Net investment income		251		260		743		779
Operating realized gain (loss) (2)		46		44		142		134
Other revenues (3)		121		113		359		326
Total operating revenues		1,118		1,073		3,297		3,211
Operating Expenses
Interest credited		145		145		437		438
Benefits (1)		149		135		477		502
Commissions and other expenses		474		443		1,398		1,331
Total operating expenses		768		723		2,312		2,271
Income (loss) from operations before taxes		350		350		985		940
Federal income tax expense (benefit)		48		73		141		131
Income (loss) from operations	$	302	$	277	$	844	$	809

⁽¹⁾ Insurance premiums include primarily our income annuities that have a corresponding offset in benefits.  Benefits include changes in income annuity reserves driven by premiums.

⁽²⁾ See “Realized Gain (Loss) and Benefit Ratio Unlocking” below.

⁽³⁾ Consists primarily of revenues attributable to broker-dealer services that are subject to market volatility.

Comparison of the Three Months Ended September 30, 2018 to 2017

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

· Lower federal income tax expense due to the change in the marginal corporate income tax rate, partially offset by changes to the separate account dividends-received deduction (“DRD”), as a result of the Tax Cuts and Jobs Act (“Tax Act”).

· Higher fee income driven by higher average daily variable account values, partially offsetby the effect of unlocking.

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

· Higher commissions and other expenses due to the effect of unlocking and higher average account values, resulting in higher trail commissions.

· Lower net investment income, net of interest credited, driven by lower prepayments and bond make-whole premiums.

Comparison of the Nine Months Ended September 30, 2018 to 2017

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

· Higher fee income driven by higher average daily variable account values, partially offsetby the effect of unlocking.  

· Lower benefits due to the effect of unlocking.

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

· Higher commissions and other expenses due to higher average account values, resulting in higher trail commissions, and the effect of unlocking.

· Lower net investment income, net of interest credited, driven by spread compression due to average new money rates trailing our current portfolio yields, lower prepayments and bond make-whole premiums and less favorable investment income on alternative investments within our surplus portfolio.

See “Critical Accounting Policies and Estimates – DAC, VOBA, DSI and DFEL – Unlocking” above for more information about unlocking.

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Additional Information

For the nine months ended September 30, 2018, the federal income tax expense was primarily impacted by the lower marginal corporate income tax rate and tax law changes to the separate account DRD as a result of the Tax Act and other items.  For the nine months ended September 30, 2017, the federal income tax expense was driven by one-time and run-rate adjustments primarily associated with our separate account DRD.

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 can significantly impact future income from operations. 

The other component of net flows relates to the retention of the business.  An important measure of retention is the reduction in account values caused by full surrenders, deaths and other contract benefits.  These outflows as a percentage of average account values were 9% for the three and nine months ended September 30, 2018 and 2017.

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 and interest rate risk, 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 2017 Form 10-K.

Fee Income

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fee Income
Mortality, expense and other assessments	$	595		$	562		$	1,754		$	1,634
Surrender charges		7			7			23			24
DFEL:
Deferrals		(10	)		(9	)		(29	)		(28	)
Amortization, net of interest:
Amortization, net of interest, excluding unlocking		8			8			25			24
Unlocking		(2	)		6			(2	)		6
Total fee income	$	598		$	574		$	1,771		$	1,660

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	As of or For the Three						As of or For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Variable Account Value Information
Variable annuity deposits (1)	$	1,305		$	998		$	3,902		$	3,247
Increases (decreases) in variable annuity account values:
Net flows (1)(2)		(1,097	)		(1,148	)		(3,425	)		(3,413	)
Change in market value (1)(2)		3,378			3,928			4,886			12,414
Contract holder assessments (1)		(629	)		(598	)		(1,865	)		(1,765	)
Transfers to the variable portion of variable annuity
products from the fixed portion of variable
annuity products		721			472			2,238			1,202
Variable annuity account values (1)		116,177			111,354			116,177			111,354
Average daily variable annuity account values (1)		115,672			109,991			115,140			107,910
Average daily S&P 500 (3)		2,849			2,465			2,762			2,396

⁽¹⁾ Excludes the fixed portion of variable.

⁽²⁾ The prior year has been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

⁽³⁾ We generally use the Standard & Poor’s (“S&P”) 500 index as a benchmark for the performance of our variable account values.  The account values of our variable annuity contracts are invested by our policyholders in a variety of investment options including, but not limited to, domestic and international equity securities and fixed income, which do not necessarily align with S&P 500 index performance.  See Note 8 for additional information.

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 variable fund returns.  Charges on GLB riders are assessed based on a contractual rate that is applied either to the account value or the guaranteed amount.  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.  Fee income includes charges on both our variable and fixed annuity products, but excludes the attributed fees on our GLB riders; 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 2017 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, our interest rate spread and account values (in millions, except spread data) were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Investment Income
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	$	208		$	209		$	616		$	630
Commercial mortgage loan prepayment and bond
make-whole premiums (1)		6			15			18			31
Surplus investments (2)		37			36			109			118
Total net investment income	$	251		$	260		$	743		$	779
Interest Credited
Amount provided to contract holders	$	149		$	139		$	446		$	424
DSI deferrals		(11	)		(5	)		(33	)		(11	)
Interest credited before DSI amortization		138			134			413			413
DSI amortization:
Amortization, excluding unlocking		7			7			24			21
Unlocking		-			4			-			4
Total interest credited	$	145		$	145		$	437		$	438

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

⁽²⁾ 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.  See “Consolidated Investments – Alternative Investments” below for more information on alternative investments.

	For the Three		For the Nine
	Months Ended		Months Ended
	September 30,		September 30,
	2018	2017	2018	2017
Interest Rate Spread
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	3.89%	3.94%	3.86%	4.00%
Commercial mortgage loan prepayment and bond
make-whole premiums	0.13%	0.33%	0.11%	0.21%
Net investment income yield on reserves	4.02%	4.27%	3.97%	4.21%
Interest rate credited to contract holders	2.24%	2.29%	2.26%	2.36%
Interest rate spread	1.78%	1.98%	1.71%	1.85%

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	As of or For the Three						As of or For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fixed Account Value Information
Fixed annuity deposits (1)	$	1,775		$	919		$	4,687		$	2,677
Increases (decreases) in fixed annuity account values:
Net flows (1)(2)		1,016			307			2,611			929
Contract holder assessments (1)		(8	)		(8	)		(25	)		(23	)
Transfers from the fixed portion of variable annuity
products to the variable portion of variable
annuity products		(721	)		(472	)		(2,238	)		(1,202	)
Reinvested interest credited (1)		252			206			545			640
Fixed annuity account values (1)		23,108			22,311			23,108			22,311
Average fixed account values (1)		22,967			22,313			22,775			22,259
Average invested assets on reserves		18,308			18,326			18,417			18,278

⁽¹⁾ Includes the fixed portion of variable.

⁽²⁾ The prior year has been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

A portion of our investment income earned is credited to the contract holders of our deferred 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 make-whole 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

Details underlying benefits (in millions) were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Benefits
Net death and other benefits, excluding unlocking	$	175		$	152		$	503		$	519
Unlocking		(26	)		(17	)		(26	)		(17	)
Total benefits	$	149		$	135		$	477		$	502

Benefits for this segment include changes in income annuity reserves driven by premiums, changes in benefit reserves and costs associated with the hedging of our benefit ratio unlocking on benefit reserves associated with our variable annuity guaranteed death benefit and GLB riders.  For a corresponding offset of changes in income annuity reserves, see footnote 1 of “Income (Loss) from Operations” above.

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Commissions and Other Expenses

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Commissions and Other Expenses
Commissions:
Deferrable	$	129		$	76		$	353		$	243
Non-deferrable		149			140			434			419
General and administrative expenses		107			102			309			308
Inter-segment reimbursement associated with reserve
financing and LOC expenses (1)		1			1			3			3
Taxes, licenses and fees		8			7			25			25
Total expenses incurred, excluding broker-dealer		394			326			1,124			998
DAC deferrals		(147	)		(90	)		(401	)		(285	)
Total pre-broker-dealer expenses incurred,
excluding amortization, net of interest		247			236			723			713
DAC and VOBA amortization, net of interest:
Amortization, net of interest, excluding unlocking		103			101			318			300
Unlocking		7			(4	)		7			(4	)
Broker-dealer expenses incurred		117			110			350			322
Total commissions and other expenses	$	474		$	443		$	1,398		$	1,331
DAC Deferrals
As a percentage of sales/deposits		4.8%			4.7%			4.7%			4.8%

⁽¹⁾ Includes reimbursements to Annuities from the Life Insurance segment for reserve financing, net of expenses incurred by Annuities for its use of letters of credit (“LOCs”).  The inter-segment amounts are not reported on our Consolidated Statements of Comprehensive Income (Loss).

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 types of 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.

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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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Operating Revenues
Fee income	$	65	$	63	$	194	$	183
Net investment income		223		223		668		666
Other revenues (1)		6		5		16		14
Total operating revenues		294		291		878		863
Operating Expenses
Interest credited		140		136		414		401
Benefits		-		-		1		1
Commissions and other expenses		107		107		317		314
Total operating expenses		247		243		732		716
Income (loss) from operations before taxes		47		48		146		147
Federal income tax expense (benefit)		7		13		21		38
Income (loss) from operations	$	40	$	35	$	125	$	109

⁽¹⁾ Consists primarily of mutual fund account program revenues from mid to large employers.

Comparison of the Three and Nine Months Ended September 30, 2018 to 2017

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

· Lower federal income tax expense due to the change in the marginal corporate income tax rate as a result of the Tax Act.

· Higher fee income driven by higher average daily variable account values. 

The increase in income from operations was partially offset by lower net investment income, net of interest credited, driven by lower prepayment and bond make-whole premiums and spread compression due to average new money rates trailing our current portfolio yields.

When comparing the nine months ended September 30, 2018 to 2017, the increase in income from operations was also partially offset by less favorable investment income on alternative investments within our surplus portfolio.

See “Critical Accounting Policies and Estimates – DAC, VOBA, DSI and DFEL – Unlocking” above for information about unlocking.

Additional Information

Net flows in this business fluctuate based on the timing of larger plans being implemented on our platform and terminating over the course of the year.

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 can significantly impact future income from operations.  The other component of net flows relates to the retention of the business.  An important measure of retention is the reduction in account values caused primarily by plan sponsor terminations and participant withdrawals.  These outflows as a percentage of average account values were 11% for the three and nine months ended September 30, 2018 compared to 9% and 11% for the corresponding periods in 2017.

Our net flows are negatively affected by the continued net outflows from our oldest blocks of annuities business (as presented on our Net Flows By Market table below as “Multi-Fund® and other”), which are among our higher margin product lines in this segment, due to the fact that they are mature blocks with low distribution and servicing costs.  The proportion of these products to our total account values was 23% and 26% as of September 30, 2018 and 2017, respectively.  Due to this expected overall shift in business mix toward products with lower returns, new deposit production continues to 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 either a quarterly or semi-annual basis.  Our ability to retain quarterly or semi-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

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fixed accounts or other changes that may cause interest rate spreads to differ from our expectations.  For information on interest rate spreads and interest rate risk, see “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 2017 Form 10-K.

Fee Income

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

\

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Fee Income
Annuity expense assessments	$	49	$	47	$	145	$	135
Mutual fund fees		16		16		48		47
Total expense assessments		65		63		193		182
Surrender charges		-		-		1		1
Total fee income	$	65	$	63	$	194	$	183

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Flows By Market (1)
Small market	$	110		$	183		$	42		$	(47	)
Mid – large market		1,573			503			3,137			1,788
Multi-Fund® and other		(272	)		(244	)		(806	)		(738	)
Total net flows	$	1,411		$	442		$	2,373		$	1,003

⁽¹⁾ The prior year has been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

	As of or For the Three						As of or For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Variable Account Value Information
Variable annuity deposits (1)	$	402		$	474		$	1,321		$	1,392
Increases (decreases) in variable annuity account values:
Net flows (1)(2)		(135	)		6			(403	)		(628	)
Change in market value (1)(2)		688			600			1,036			1,819
Contract holder assessments (1)		(40	)		(38	)		(121	)		(113	)
Variable annuity account values (1)		16,487			15,445			16,487			15,445
Average daily variable annuity account values (1)		16,385			15,148			16,240			14,811
Average daily S&P 500		2,849			2,465			2,762			2,396

⁽¹⁾ Excludes the fixed portion of variable.

⁽²⁾ The prior year has been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

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	As of or For the Three				As of or For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Mutual Fund Account Value Information
Mutual fund deposits	$	2,222	$	1,019	$	5,027	$	3,065
Mutual fund net flows		1,284		416		2,624		1,306
Mutual fund account values (1)		36,507		30,758		36,507		30,758

⁽¹⁾ Mutual funds are not included in the separate accounts reported on our Consolidated Balance Sheets as we do not have any ownership interest in them.

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, our interest rate spread and account values (in millions, except spread data) were as follows:

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net Investment Income
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	$	200	$	198	$	601	$	588
Commercial mortgage loan prepayment and bond
make-whole premiums (1)		5		7		15		19
Surplus investments (2)		18		18		52		59
Total net investment income	$	223	$	223	$	668	$	666
Interest Credited	$	140	$	136	$	414	$	401

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

⁽²⁾ 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.  See “Consolidated Investments – Alternative Investments” below for more information on alternative investments.

	For the Three		For the Nine
	Months Ended		Months Ended
	September 30,		September 30,
	2018	2017	2018	2017
Interest Rate Spread
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	4.19%	4.31%	4.24%	4.32%
Commercial mortgage loan prepayment and bond
make-whole premiums	0.10%	0.15%	0.11%	0.14%
Net investment income yield on reserves	4.29%	4.46%	4.35%	4.46%
Interest rate credited to contract holders	2.90%	2.93%	2.90%	2.92%
Interest rate spread	1.39%	1.53%	1.45%	1.54%

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	As of or For the Three						As of or For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fixed Account Value Information
Fixed annuity deposits (1)	$	704		$	415		$	1,557		$	1,681
Increases (decreases) in fixed annuity account values:
Net flows (1)(2)		262			20			152			325
Reinvested interest credited (1)		140			136			413			405
Contract holder assessments (1)		(3	)		(2	)		(8	)		(7	)
Fixed annuity account values (1)		19,511			18,626			19,511			18,626
Average fixed account values (1)		19,294			18,525			19,015			18,269
Average invested assets on reserves		19,114			18,368			18,874			18,120

⁽¹⁾ Includes the fixed portion of variable.

⁽²⁾ The prior year has been restated to conform to the current year presentation, which has been modified to be consistent across our business segments.

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 make-whole 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.

Commissions and Other Expenses

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Commissions and Other Expenses
Commissions:
Deferrable	$	1		$	2		$	5		$	8
Non-deferrable		19			17			55			49
General and administrative expenses		79			82			236			245
Taxes, licenses and fees		4			4			14			14
Total expenses incurred		103			105			310			316
DAC deferrals		(5	)		(6	)		(15	)		(22	)
Total expenses recognized before amortization		98			99			295			294
DAC and VOBA amortization, net of interest:
Amortization, net of interest, excluding unlocking		6			6			19			18
Unlocking		3			2			3			2
Total commissions and other expenses	$	107		$	107		$	317		$	314
DAC Deferrals
As a percentage of annuity sales/deposits		0.5%			0.7%			0.5%			0.7%

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 types of commissions, such as trail commissions that are based on account values, are expensed as incurred rather than deferred and amortized.  Distribution expenses associated with the sale of 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Operating Revenues
Insurance premiums (1)	$	205		$	191		$	606		$	575
Fee income		886			764			2,510			2,301
Net investment income		671			655			1,979			1,984
Operating realized gain (loss) (2)		(3	)		(3	)		(5	)		(10	)
Other revenues		7			7			16			24
Total operating revenues		1,766			1,614			5,106			4,874
Operating Expenses
Interest credited		352			350			1,057			1,048
Benefits		742			808			2,431			2,411
Commissions and other expenses		455			281			1,044			859
Total operating expenses		1,549			1,439			4,532			4,318
Income (loss) from operations before taxes		217			175			574			556
Federal income tax expense (benefit)		41			54			104			172
Income (loss) from operations	$	176		$	121		$	470		$	384

⁽¹⁾ Includes term insurance premiums, which have a corresponding partial offset in benefits for changes in reserves.

⁽²⁾ See “Realized Gain (Loss) and Benefit Ratio Unlocking” below.

Comparison of the Three Months Ended September 30, 2018 to 2017

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

· Higher fee income due to growth in business in force and the effect of unlocking. 

· Lower benefits due to the effect of unlocking, partially offset by growth in business in force.

· Lower federal income tax expense due to the change in the marginal corporate income tax rate as a result of the Tax Act.

· Higher net investment income, net of interest credited, driven by favorable investment income on alternative investments, partially offset by spread compression due to average new money rates trailing our current portfolio yields.

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

Comparison of the Nine Months Ended September 30, 2018 to 2017

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

· Higher fee income due to growth in business in force and the effect of unlocking. 

· Lower federal income tax expense due to the change in the marginal corporate income tax rate as a result of the Tax Act.

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

· Higher commissions and other expenses due to the effect of unlocking.

· Higher benefits due to growth in business in force, partially offset by the effect of unlocking.

· Lower net investment income, net of interest credited, driven by less favorable investment income on alternative investments and spread compression due to average new money rates trailing our current portfolio yields.

See “Critical Accounting Policies and Estimates – DAC, VOBA, DSI and DFEL – Unlocking” above for more information about unlocking.

Strategies to Address Statutory Reserve Strain

Our insurance subsidiaries have statutory surplus and risk-based capital (“RBC”) levels above current regulatory required levels.  Term products and UL products containing secondary guarantees require reserves calculated pursuant to the Valuation of Life Insurance

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Policies Model Regulation (“XXX”) and Actuarial Guideline 38 (“AG38”).  For information on strategies we use to reduce the statutory reserve strain caused by XXX and AG38, see “Review of Consolidated Financial Condition – Liquidity and Capital Resources – Sources of Liquidity and Cash Flow – Insurance Subsidiaries’ Statutory Capital and Surplus” below.

Additional Information

During the third quarter of 2018, we experienced favorable mortality relative to our expectations for claims seasonality.

For information on interest rate spreads and interest rate risk, 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 2017 Form 10-K.

Insurance Premiums

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

Fee Income

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fee Income
Cost of insurance assessments	$	544		$	485		$	1,583		$	1,469
Expense assessments		375			361			1,119			1,073
Surrender charges		11			11			33			39
DFEL:
Deferrals		(204	)		(177	)		(595	)		(523	)
Amortization, net of interest:
Amortization, net of interest, excluding unlocking		106			87			316			246
Unlocking		54			(3	)		54			(3	)
Total fee income	$	886		$	764		$	2,510		$	2,301

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Sales by Product
UL	$	9		$	10		$	29		$	42
MoneyGuard®		53			65			168			203
IUL		13			19			41			53
VUL		62			45			164			131
Term		26			29			80			84
Total individual life sales		163			168			482			513
Executive Benefits		4			10			20			43
Total sales	$	167		$	178		$	502		$	556
Net Flows
Deposits	$	1,523		$	1,462		$	4,575		$	4,422
Withdrawals and deaths		(443	)		(398	)		(1,335	)		(1,332	)
Net flows	$	1,080		$	1,064		$	3,240		$	3,090
Contract Holder Assessments	$	1,211		$	1,162		$	3,608		$	3,444

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	As of September 30,
	2018		2017
Account Values
General account	$	36,371	$	35,850
Separate account		14,216		12,065
Total account values	$	50,587	$	47,915
In-Force Face Amount
UL and other	$	342,455	$	338,753
Term insurance		393,839		372,943
Total in-force face amount	$	736,294	$	711,696

Fee income relates only to interest-sensitive products and includes cost of insurance assessments, expense assessments and surrender charges.  Both cost of insurance and expense assessments can have deferrals and amortization related to DFEL.  Cost of insurance 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.  Business in force, in turn, is driven by sales, persistency and mortality experience. 

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. 

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

· MoneyGuard®, our linked-benefit product – 15% of total expected premium deposits;

· UL, IUL and VUL – first-year commissionable premiums plus 5% of excess premiums received;

· Executive Benefits – single premium bank-owned UL and VUL, 15% of single premium deposits, and corporate-owned UL and VUL, first-year commissionable premiums plus 5% of excess premium received; and

· Term – 100% of annualized first-year premiums.

We monitor the business environment, including but not limited to the regulatory and interest rate environments, and make changes to our product offerings and in-force products as needed, and as permitted under the terms of the policies, to sustain the future profitability of our segment. 

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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net Investment Income
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	$	586	$	585	$	1,766	$	1,747
Commercial mortgage loan prepayment and bond
make-whole premiums (1)		9		7		24		27
Alternative investments (2)		34		23		67		86
Surplus investments (3)		42		40		122		124
Total net investment income	$	671	$	655	$	1,979	$	1,984
Interest Credited	$	352	$	350	$	1,057	$	1,048

⁽¹⁾ See “Consolidated Investments – Commercial Mortgage Loan Prepayment and Bond Make-Whole 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 Nine
	Months Ended		Months Ended
	September 30,		September 30,
	2018	2017	2018	2017
Interest Rate Yields and Spread
Attributable to interest-sensitive products:
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	4.85%	5.06%	4.93%	5.07%
Commercial mortgage loan prepayment and bond
make-whole premiums	0.07%	0.06%	0.07%	0.08%
Alternative investments	0.31%	0.21%	0.20%	0.27%
Net investment income yield on reserves	5.23%	5.33%	5.20%	5.42%
Interest rate credited to contract holders	3.81%	3.83%	3.81%	3.83%
Interest rate spread	1.42%	1.50%	1.39%	1.59%

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Averages
Attributable to interest-sensitive products:
Invested assets on reserves	$	44,239	$	42,244	$	43,718	$	41,777
General account values		36,724		36,246		36,633		36,119
Attributable to traditional products:
Invested assets on reserves		4,154		4,348		4,122		4,356

A portion of the investment income earned for this segment is credited to contract holder accounts.  Statutory reserves will typically grow at a faster rate than account values because of the AG38 reserve requirements.  Invested assets are based upon the statutory reserve liabilities and are affected by various reserve adjustments, including financing transactions providing relief from AG38 reserve requirements.  These financing transactions lead to a transfer of invested assets from this segment to Other Operations.  We expect to earn a spread 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 growth of our policy reserves for traditional products.  Commercial mortgage loan prepayments and bond make-whole 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.

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Benefits

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Benefits
Death claims direct and assumed	$	1,010		$	1,003		$	3,195		$	3,424
Death claims ceded		(399	)		(408	)		(1,229	)		(1,492	)
Reserves released on death		(136	)		(147	)		(447	)		(485	)
Net death benefits		475			448			1,519			1,447
Change in secondary guarantee life insurance product
reserves:
Change in reserves, excluding unlocking		175			166			500			500
Unlocking		(61	)		52			(61	)		52
Change in MoneyGuard® reserves:
Change in reserves, excluding unlocking		99			84			283			230
Unlocking		(24	)		(19	)		(24	)		(19	)
Other benefits (1)		78			77			214			201
Total benefits	$	742		$	808		$	2,431		$	2,411
Death claims per $1,000 of in-force		2.59			2.53			2.78			2.75

⁽¹⁾ Includes primarily changes in reserves and dividends on traditional and other products.

Benefits for this segment include claims incurred during the period in excess of the associated reserves for its interest-sensitive and traditional products.  In addition, benefits include the change in secondary guarantee and linked-benefit life insurance product reserves.  These reserves are affected by changes in expected future trends of assessments and benefits causing unlocking adjustments to these liabilities similar to DAC, VOBA and DFEL.  Generally, we have higher mortality in the first quarter of the year due to the seasonality of claims.  See “Future Contract Benefits and Other Contract Holder Funds” in Note 1 of our 2017 Form 10-K for additional information.

Commissions and Other Expenses

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Commissions and Other Expenses
Commissions	$	173		$	176		$	519		$	541
General and administrative expenses		137			144			400			428
Expenses associated with reserve financing		23			22			68			68
Taxes, licenses and fees		42			38			132			116
Total expenses incurred		375			380			1,119			1,153
DAC and VOBA deferrals		(199	)		(201	)		(596	)		(619	)
Total expenses recognized before amortization		176			179			523			534
DAC and VOBA amortization, net of interest:
Amortization, net of interest, excluding unlocking		114			112			354			333
Unlocking		164			(11	)		164			(11	)
Other intangible amortization		1			1			3			3
Total commissions and other expenses	$	455		$	281		$	1,044		$	859
DAC and VOBA Deferrals
As a percentage of sales		119.2%			112.9%			118.7%			111.3%

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 life 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

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contracts, depending on the block of business.  When comparing DAC and VOBA deferrals as a percentage of sales for the three and nine months ended September 30, 2018, to the corresponding periods in 2017, the increase was primarily a result of changes in sales mix to products with higher commission rates.

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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Operating Revenues
Insurance premiums	$	1,011	$	500	$	2,366	$	1,488
Net investment income		76		41		179		127
Other revenues (1)		41		23		73		31
Total operating revenues		1,128		564		2,618		1,646
Operating Expenses
Interest credited		1		-		3		1
Benefits		744		334		1,686		1,009
Commissions and other expenses		304		167		756		509
Total operating expenses		1,049		501		2,445		1,519
Income (loss) from operations before taxes		79		63		173		127
Federal income tax expense (benefit)		16		22		36		44
Income (loss) from operations	$	63	$	41	$	137	$	83

⁽¹⁾ Consists of revenue from third-parties for administrative services performed, which has a corresponding partial offset in commissions and other expenses.

	For the Three					For the Nine
	Months Ended					Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
Income (Loss) from Operations by Product Line
Life	$	32		$	27	$	69		$	39
Disability		38			14		79			43
Dental		(7	)		-		(12	)		-
Total non-medical		63			41		136			82
Medical		-			-		1			1
Income (loss) from operations	$	63		$	41	$	137		$	83

Comparison of the Three and Nine Months Ended September 30, 2018 to 2017

Income from operations for this segment increased due primarily to the acquisition of Liberty Life (see “Additional Information” below for more information) and lower federal income tax expense due to the change in the marginal corporate income tax rate as a result of the Tax Act.

Additional Information

Income from operations for the nine months ended September 30, 2018, includes five months of activity from Liberty Life due to the acquisition that closed on May 1, 2018.  The acquisition resulted in increases in all pre-tax line items presented in the table above.  For more information about our acquisition, see Note 24 in our 2017 Form 10-K and Note 3 herein.

The increase in our life and disability loss ratios from 2017 to 2018 was driven primarily by our acquisition as we combined two blocks of business with loss ratios that are different based on case sizes. For information about the effect of the loss ratio sensitivity on our income (loss) from operations, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Group Protection – Additional Information” in our 2017 Form 10-K.

During the third quarter of 2017, we had higher other revenues due to the recapture of certain long-term disability business that was originally ceded to a reinsurer.

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For information on the effects of current interest rates on our long-term disability claim reserves, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk – Effect of Interest Rate Sensitivity” in our 2017 Form 10-K.

Insurance Premiums

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

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Insurance Premiums by Product Line
Life	$	367	$	207	$	877	$	619
Disability		569		227		1,266		677
Dental		75		66		223		192
Total insurance premiums	$	1,011	$	500	$	2,366	$	1,488
Sales by Product Line
Life	$	69	$	33	$	122	$	84
Disability		73		35		134		90
Dental		16		26		52		65
Total sales	$	158	$	94	$	308	$	239

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 relate 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.  Sales in the table above are the combined annualized premiums for our products. 

Net Investment Income

We use our investment income to offset the earnings effect of the associated build of our 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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Benefits and Interest Credited by Product Line
Life	$	259	$	115	$	596	$	401
Disability		432		174		929		475
Dental		54		45		164		134
Total benefits and interest credited	$	745	$	334	$	1,689	$	1,010
Loss Ratios by Product Line
Life		70.6%		55.8%		68.0%		64.8%
Disability (1)		75.8%		69.5%		73.5%		67.9%
Dental		72.2%		68.0%		73.4%		70.0%
Total (1)		73.6%		63.7%		71.4%		66.9%

(1) Excludes the impact of the recapture of certain long-term disability business in the third quarter of 2017.

Generally, we have higher mortality in the first quarter of the year due to the seasonality of claims.

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Commissions and Other Expenses

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Commissions and Other Expenses
Commissions	$	89		$	62		$	238		$	188
General and administrative expenses		189			98			430			265
Taxes, licenses and fees		29			9			69			36
Total expenses incurred		307			169			737			489
DAC deferrals		(25	)		(16	)		(55	)		(42	)
Total expenses recognized before amortization		282			153			682			447
DAC and VOBA amortization, net of interest		20			14			71			62
Other intangible amortization		2			-			3			-
Total commissions and other expenses	$	304		$	167		$	756		$	509
DAC Deferrals
As a percentage of insurance premiums		2.5%			3.2%			2.3%			2.8%

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 as a level percent of insurance premiums 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 rather than deferred and amortized.  Generally, we have higher amortization in the first quarter of the year due to a significant number of policies renewing in the quarter.

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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Operating Revenues
Insurance premiums (1)	$	4		$	1		$	12		$	7
Net investment income		50			60			167			182
Amortization of deferred gain on
business sold through reinsurance		-			-			1			22
Other revenues		2			4			2			9
Total operating revenues		56			65			182			220
Operating Expenses
Interest credited		14			15			43			51
Benefits		38			36			85			91
Other expenses		11			11			28			29
Interest and debt expense		69			63			205			190
Strategic digitization expense		18			10			49			33
Total operating expenses		150			135			410			394
Income (loss) from operations before taxes		(94	)		(70	)		(228	)		(174	)
Federal income tax expense (benefit)		(23	)		(50	)		(57	)		(103	)
Income (loss) from operations	$	(71	)	$	(20	)	$	(171	)	$	(71	)

⁽¹⁾ Includes our disability income business, which has a corresponding offset in benefits for changes in reserves.

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Comparison of the Three and Nine Months Ended September 30, 2018 to 2017

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

· Less favorable federal income tax benefit due to the change in the marginal corporate income tax rate as a result of the Tax Act.

· Higher strategic digitization expense as part of our strategic digitization initiative.

· Higher interest and debt expense driven by an increase in the average balance of outstanding debt.

· Lower net investment income, net of interest credited, related to lower average invested assets driven by distributable earnings to our segments.

When comparing the nine months ended September 30, 2018 to 2017, the increase in loss from operations was also driven by a decrease in amortization of deferred gain on business sold through reinsurance as a gain was fully amortized during the second quarter of 2017.

Additional Information

Benefits for the three and nine months ended September 30, 2018 and 2017, were elevated due to modifying certain assumptions on the reserves supporting our run-off institutional pension business.

For information on our strategic digitization initiative, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Executive Summary – Significant Operational Matters – Strategic Digitization Initiative” in our 2017 Form 10-K.

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 our business segments require increases in statutory reserves, surplus or investments, the amount of excess capital that is retained by Other Operations would decrease and net investment income would be negatively affected.

Write-downs for other-than-temporary impairment (“OTTI”) decrease the recorded value of our invested assets owned by the business segments.  These write-downs are not included in the income from operations of our business segments.  When impairment occurs, assets are transferred to the business segments’ portfolios and will reduce the future net investment income for Other Operations.  Statutory reserve adjustments for our business segments can also cause allocations of invested assets between the business segments and Other Operations.

The majority of our interest credited relates to our reinsurance operations sold to Swiss Re Life & Health America, Inc. (“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.

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Other Expenses

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
General and administrative expenses:
Legal	$	-		$	-		$	1		$	-
Branding		8			6			27			23
Other (1)		8			11			16			22
Total general and administrative expenses		16			17			44			45
Taxes, licenses and fees		(2	)		(3	)		(7	)		(7	)
Inter-segment reimbursement associated with reserve
financing and LOC expenses (2)		(3	)		(3	)		(9	)		(9	)
Total other expenses	$	11		$	11		$	28		$	29

⁽¹⁾ Includes expenses that are corporate in nature including charitable contributions, the portion of our deferred compensation plan expense attributable to participants’ selection of LNC stock as the measure for their investment return and other expenses not allocated to our business segments.

⁽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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Components of Realized Gain (Loss), Pre-Tax
Total operating realized gain (loss)	$	43		$	41		$	137		$	124
Total excluded realized gain (loss)		(98	)		(97	)		(188	)		(229	)
Total realized gain (loss), pre-tax	$	(55	)	$	(56	)	$	(51	)	$	(105	)
Reconciliation of Excluded Realized Gain (Loss)
Net of Benefit Ratio Unlocking, After-Tax
Total excluded realized gain (loss)	$	(77	)	$	(63	)	$	(149	)	$	(149	)
Benefit ratio unlocking		33			30			32			101
Excluded realized gain (loss) net of benefit
ratio unlocking, after-tax	$	(44	)	$	(33	)	$	(117	)	$	(48	)
Components of Excluded Realized Gain (Loss)
Net of Benefit Ratio Unlocking, After-Tax
Realized gain (loss) related to certain investments	$	(8	)	$	(13	)	$	(36	)	$	(32	)
Gain (loss) on the mark-to-market on certain instruments		(7	)		-			15			5
Variable annuity net derivatives results:
Hedge program performance, including unlocking
for GLB reserves hedged		(19	)		(5	)		(85	)		22
GLB NPR component		(5	)		(16	)		2			(34	)
Total variable annuity net derivatives results		(24	)		(21	)		(83	)		(12	)
Indexed annuity forward-starting option		(5	)		1			(13	)		(9	)
Excluded realized gain (loss) net of benefit
ratio unlocking, after-tax	$	(44	)	$	(33	)	$	(117	)	$	(48	)

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

Comparison of the Three Months Ended September 30, 2018 to 2017

We had higher realized losses due primarily to the following:

· Unfavorable variable annuity net derivatives results attributable to unfavorable hedge program performance due to more volatile capital markets, partially offset by the effect of unlocking and a favorable GLB non-performance risk (“NPR”) component due to widening of our credit spread.

· Losses on mark-to-market of certain instruments due to an increase in interest rates on trading securities that support our modified coinsurance arrangements (“Modco”) and higher interest rate volatility.

Comparison of the Nine Months Ended September 30, 2018 to 2017

We had higher realized losses due primarily to unfavorable variable annuity net derivatives results attributable to unfavorable hedge program performance due to more volatile capital markets, partially offset by the effect of unlocking and a favorable GLB NPR component due to widening of our credit spread and a smaller decrease in our associated reserves.

The above components of excluded realized gain (loss) are described net of benefit ratio unlocking, after-tax.

See “Critical Accounting Policies and Estimates – DAC, VOBA, DSI and DFEL – Unlocking” above for more information about

unlocking.

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Operating Realized Gain (Loss)

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 2017 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 “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Realized Gain (Loss) and Benefit Ratio Unlocking – Gain (Loss) on the Mark-to-Market on Certain Instruments” in our 2017 Form 10-K for a discussion of the mark-to-market on certain instruments and Note 4 for information about consolidated variable interest entities (“VIEs”). 

Variable Annuity Net Derivatives Results

See “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Realized Gain (Loss) and Benefit Ratio Unlocking – Variable Annuity Net Derivatives Results” in our 2017 Form 10-K for a discussion of our variable annuity net derivatives results and how our NPR adjustment is determined.

Details underlying our variable annuity hedging program (dollars in millions) were as follows:

		As of				As of				As of				As of				As of
	September 30,				June 30,				March 31,				December 31,				September 30,
		2018				2018				2018				2017				2017
Variable annuity hedge program assets (liabilities)		$	770			$	1,094			$	1,194			$	1,307			$	1,526
Variable annuity reserves – asset (liability):
Embedded derivative reserves, pre-NPR (1)		$	1,630			$	1,288			$	1,179			$	1,029			$	743
NPR			(140	)			(131	)			(135	)			(142	)			(127	)
Embedded derivative reserves			1,490				1,157				1,044				887				616
Insurance benefit reserves			(757	)			(781	)			(734	)			(665	)			(656	)
Total variable annuity reserves – asset (liability)		$	733			$	376			$	310			$	222			$	(40	)
10-year credit default swap ("CDS") spread			1.35%				1.24%				1.19%				1.05%				1.08%
NPR factor related to 10-year CDS spread			0.18%				0.18%				0.18%				0.14%				0.15%

⁽¹⁾ Embedded derivative reserves in an asset (liability) position indicate that we estimate the present value of future benefits to be less (greater) than the present value of future net valuation premiums. 

For information about the effect of changes in the NPR factor on our net income (loss), see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Realized Gain (Loss) and Benefit Ratio Unlocking – Variable Annuity Net Derivatives Results” in our 2017 Form 10-K.

See “Critical Accounting Policies and Estimates – Derivatives – GLB” above for additional information about our guaranteed benefits.

Indexed Annuity Forward-Starting Option

See “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Realized Gain (Loss) and Benefit Ratio Unlocking – Indexed Annuity Forward-Starting Option” in our 2017 Form 10-K for a discussion of our indexed annuity forward-starting option. 

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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
	September 30,			December 31,			September 30,		December 31,
		2018			2017			2018		2017
Investments
AFS securities:
Fixed maturity		$	93,161		$	94,840		82.7%		83.9%
Equity			-			246		0.0%		0.2%
Total AFS securities			93,161			95,086		82.7%		84.1%
Trading securities			1,440			1,620		1.3%		1.4%
Equity securities			112			-		0.1%		0.0%
Mortgage loans on real estate			12,561			10,762		11.1%		9.5%
Real estate			12			11		0.0%		0.0%
Policy loans			2,490			2,399		2.2%		2.1%
Derivative investments			706			915		0.6%		0.8%
Alternative investments			1,643			1,459		1.5%		1.3%
Other investments			561			837		0.5%		0.8%
Total investments		$	112,686		$	113,089		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 of our risk management process, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2017 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) 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.

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Fixed Maturity and Equity Securities Portfolios

We adopted Accounting Standards Update 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, in 2018 that resulted in a new classification and measurement of our equity securities.  See Note 2 for additional information.  Fixed maturity securities consist of portfolios classified as AFS and trading.  Details underlying our fixed maturity AFS securities by industry classification (in millions) are presented in the tables below.  These tables agree in total with the presentation of AFS securities in Note 5; 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 5.

	As of September 30, 2018
			Gross Unrealized							%
	Amortized				Losses and			Fair		Fair
	Cost		Gains		OTTI (1)			Value		Value
Fixed Maturity AFS Securities
Industry corporate bonds:
Financial services	$	13,346	$	495	$	285		$	13,556	14.6%
Basic industry		4,682		170		98			4,754	5.1%
Capital goods		6,489		261		148			6,602	7.1%
Communications		4,623		249		98			4,774	5.1%
Consumer cyclical		5,510		182		139			5,553	6.0%
Consumer non-cyclical		14,144		587		388			14,343	15.4%
Energy		6,317		292		120			6,489	7.0%
Technology		3,613		87		53			3,647	3.9%
Transportation		3,193		100		83			3,210	3.4%
Industrial other		1,155		21		36			1,140	1.2%
Utilities		13,105		716		219			13,602	14.6%
Government related entities		2,319		139		48			2,410	2.6%
Collateralized mortgage and other obligations ("CMOs"):
Agency backed		1,663		39		97			1,605	1.7%
Non-agency backed		766		58		(19	)		843	0.9%
Mortgage pass through securities ("MPTS"):
Agency backed		838		16		15			839	0.9%
Commercial mortgage-backed securities ("CMBS"):
Agency backed		22		-		-			22	0.0%
Non-agency backed		744		2		20			726	0.8%
Asset-backed securities ("ABS"):
Collateralized loan obligations ("CLOs")		1,360		-		14			1,346	1.5%
Commercial real estate ("CRE")
collateralized debt obligations (“CDOs”)		11		-		(5	)		16	0.0%
Credit card		77		15		-			92	0.1%
Equipment receivables		38		-		-			38	0.0%
Home equity		531		21		(13	)		565	0.6%
Manufactured housing		15		1		-			16	0.0%
Student loans		39		-		1			38	0.0%
Other		234		4		2			236	0.3%
Municipals:
Taxable		4,495		651		25			5,121	5.5%
Tax-exempt		93		5		1			97	0.1%
Government:
United States		392		23		6			409	0.4%
Foreign		418		41		-			459	0.5%
Hybrid and redeemable preferred securities		576		62		25			613	0.7%
Total AFS securities		90,808		4,237		1,884			93,161	100.0%
Trading Securities (2)		1,301		145		6			1,440
Equity Securities		109		7		4			112
Total AFS, trading and equity securities	$	92,218	$	4,389	$	1,894		$	94,713

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	As of December 31, 2017
			Gross Unrealized							%
	Amortized				Losses and			Fair		Fair
	Cost		Gains		OTTI (1)			Value		Value
Fixed Maturity AFS Securities
Industry corporate bonds:
Financial services	$	12,059	$	1,061	$	36		$	13,084	13.8%
Basic industry		4,855		413		14			5,254	5.5%
Capital goods		6,270		547		24			6,793	7.2%
Communications		4,151		406		21			4,536	4.8%
Consumer cyclical		5,649		444		28			6,065	6.4%
Consumer non-cyclical		13,680		1,242		74			14,848	15.7%
Energy		6,557		535		85			7,007	7.4%
Technology		3,443		218		9			3,652	3.9%
Transportation		2,927		220		7			3,140	3.3%
Industrial other		979		49		7			1,021	1.1%
Utilities		12,786		1,480		22			14,244	15.0%
Government related entities		2,345		247		20			2,572	2.7%
CMOs:
Agency backed		1,598		68		33			1,633	1.7%
Non-agency backed		880		53		(21	)		954	1.0%
MPTS:
Agency backed		849		34		5			878	0.9%
CMBS:
Agency backed		22		-		-			22	0.0%
Non-agency backed		568		10		-			578	0.6%
ABS:
CLOs		789		2		2			789	0.8%
CRE CDOs		14		-		(5	)		19	0.0%
Credit card		77		21		1			97	0.1%
Equipment receivables		40		-		-			40	0.0%
Home equity		587		22		(21	)		630	0.7%
Manufactured housing		17		1		-			18	0.0%
Other		182		7		-			189	0.2%
Municipals:
Taxable		4,009		937		6			4,940	5.2%
Tax-exempt		163		16		-			179	0.2%
Government:
United States		527		41		1			567	0.6%
Foreign		395		56		-			451	0.5%
Hybrid and redeemable preferred securities		575		87		22			640	0.7%
Total fixed maturity AFS securities		86,993		8,217		370			94,840	100.0%
Equity AFS Securities		247		16		17			246
Total AFS securities		87,240		8,233		387			95,086
Trading Securities (2)		1,425		203		8			1,620
Total AFS and trading securities	$	88,665	$	8,436	$	395		$	96,706

⁽¹⁾ Includes unrealized (gains) and losses on impaired securities related to changes in the fair value of such securities subsequent to the impairment measurement date.

⁽²⁾ Certain of our trading securities support our 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 2017 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, future contract benefits, other contract holder funds and deferred income taxes.  Adjustments to each of these balances are charged or credited to accumulated other comprehensive income (loss).  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 fixed maturity AFS securities portfolio, as measured at estimated fair value and by the percentage of fixed maturity AFS securities invested in various ratings categories, relative to the entire fixed maturity AFS security portfolio (in millions) was as follows:

	Rating Agency	As of September 30, 2018					As of December 31, 2017
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	$	48,575	$	50,569	54.3%	$	46,455	$	51,494	54.3%
2	BBB		38,702		39,158	42.0%		36,703		39,518	41.7%
Total investment grade securities			87,277		89,727	96.3%		83,158		91,012	96.0%
Below Investment Grade Securities
3	BB		2,573		2,550	2.8%		2,785		2,840	3.0%
4	B		829		787	0.8%		768		743	0.8%
5	CCC and lower		123		85	0.1%		271		229	0.2%
6	In or near default		6		12	0.0%		11		16	0.0%
Total below investment grade securities			3,531		3,434	3.7%		3,835		3,828	4.0%
Total fixed maturity AFS securities		$	90,808	$	93,161	100.0%	$	86,993	$	94,840	100.0%
Total securities below investment
grade as a percentage of total
fixed maturity AFS securities			3.9%		3.7%			4.4%		4.0%

⁽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 S&P).  For securities where the ratings assigned by the major credit rating agencies are not equivalent, the second lowest 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.  The average credit quality was A- as of September 30, 2018. 

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 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).

As of September 30, 2018, and December 31, 2017, 96% and 88%, respectively, of the total fixed maturity AFS securities in an unrealized loss position were investment grade.  Our gross unrealized losses, including the portion of OTTI recognized in other comprehensive income (loss) (“OCI”), on fixed maturity AFS securities as of September 30, 2018, increased by $1.5 billion since December 31, 2017.  As more fully described in Note 1 in our 2017 Form 10-K, we regularly review our investment holdings for OTTI.  We believe the unrealized loss position as of September 30, 2018, does not represent OTTI as: (i) we do not intend to sell the debt securities; (ii) it is not more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis; and (iii) the estimated future cash flows are equal to or greater than the amortized cost basis of the debt securities.  For further information on our unrealized losses on AFS securities, see “Composition by Industry Categories of our Unrealized Losses on AFS Securities” below.

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In our evaluation of OTTI, we concluded: (i) 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; and (ii) that the estimated future cash flows are equal to or greater than the amortized cost basis of the debt securities.  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 $114.1 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 $105.6 billion as of September 30, 2018.  If it were necessary to liquidate fixed maturity AFS securities prior to maturity or call to meet cash flow needs, we would first look to those fixed maturity AFS securities that are in an unrealized gain position, which had a fair value of $50.5 billion as of September 30, 2018, rather than selling fixed maturity AFS securities in an unrealized loss position.  The amount of cash that we have on hand at any point in 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 ongoing cash flows from new and existing business. 

See “AFS Securities – Evaluation for Recovery of Amortized Cost” in Note 5 in our 2017 Form 10-K and Note 5 herein for additional discussion.

As of September 30, 2018, and December 31, 2017, the estimated fair value for all private placement securities was $15.1 billion and $15.2 billion, respectively, representing 13% of total invested assets.

Mortgage-Backed Securities (Included in AFS and Trading Securities)

See “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Consolidated Investments – Mortgage-Backed Securities” in our 2017 Form 10-K for a discussion of our mortgage-backed securities (“MBS”). 

Our ABS home equity and RMBS had a market value of $3.9 billion and a net unrealized gain of $54 million as of September 30, 2018.

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The market value of AFS and trading securities backed by subprime loans was $472 million and represented less than 1% of our total investment portfolio as of September 30, 2018.  AFS securities represented $467 million, or 99%, and trading securities represented $5 million, or 1%, of the subprime exposure as of September 30, 2018.  The table below summarizes our investments in AFS securities backed by pools of residential mortgages (in millions) as of September 30, 2018:

																Subprime/
	Agency					Prime					Alt-A					Option ARM (1)					Total
	Fair		Amortized			Fair		Amortized			Fair		Amortized			Fair		Amortized			Fair		Amortized
	Value			Cost		Value			Cost		Value			Cost		Value			Cost		Value			Cost
Type
RMBS	$	2,436		$	2,494	$	272		$	252	$	247		$	228	$	332		$	293	$	3,287		$	3,267
ABS home equity		1			1		56			54		100			93		408			383		565			531
Total by type (2)(3)	$	2,437		$	2,495	$	328		$	306	$	347		$	321	$	740		$	676	$	3,852		$	3,798
Rating
AAA	$	2,203		$	2,257	$	7		$	8	$	-		$	-	$	16		$	16	$	2,226		$	2,281
AA		225			229		2			2		1			1		14			13		242			245
A		8			8		1			1		13			13		72			70		94			92
BBB		-			-		28			27		23			22		30			29		81			78
BB and below		1			1		290			268		310			285		608			548		1,209			1,102
Total by rating (2)(3)(4)	$	2,437		$	2,495	$	328		$	306	$	347		$	321	$	740		$	676	$	3,852		$	3,798
Origination Year
2008 and prior	$	508		$	473	$	327		$	305	$	346		$	320	$	740		$	676	$	1,921		$	1,774
2009		195			187		-			-		-			-		-			-		195			187
2010		258			252		-			-		-			-		-			-		258			252
2011		157			157		-			-		-			-		-			-		157			157
2012		45			48		-			-		-			-		-			-		45			48
2013		250			261		-			-		-			-		-			-		250			261
2014		65			67		1			1		-			-		-			-		66			68
2015		141			151		-			-		-			-		-			-		141			151
2016		488			553		-			-		1			1		-			-		489			554
2017		228			242		-			-		-			-		-			-		228			242
2018		102			104		-			-		-			-		-			-		102			104
Total by origination
year (2)(3)	$	2,437		$	2,495	$	328		$	306	$	347		$	321	$	740		$	676	$	3,852		$	3,798
Total AFS securities backed by pools of residential mortgages a percentage of total AFS Securities																						4.1%			4.2%
Total prime, Alt-A and subprime/option ARM as a percentage of total AFS securities																						1.5%			1.4%

⁽¹⁾ Includes the fair value and amortized cost of option adjustable rate mortgages (“ARM”) within RMBS, totaling $273 million and $237 million, respectively.

⁽²⁾ Does not include the fair value of trading securities totaling $84 million that primarily support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  The $84 million in trading securities consisted of $76 million prime, $3 million Alt-A and $5 million subprime.

⁽³⁾ Does not include the amortized cost of trading securities totaling $84 million that primarily support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  The $84 million in trading securities consisted of $76 million prime, $3 million Alt-A and $5 million subprime. 

⁽⁴⁾ 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 rating 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.

81

The following summarizes our investments in AFS securities backed by pools of commercial mortgages (in millions) as of September 30, 2018:

	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	$	735	$	753	$	13	$	13	$	-	$	-	$	748	$	766
CRE CDOs		-		-		-		-		16		11		16		11
Total by type (1)(2)	$	735	$	753	$	13	$	13	$	16	$	11	$	764	$	777
Rating
AAA	$	708	$	730	$	-	$	-	$	-	$	-	$	708	$	730
AA		6		6		6		6		-		-		12		12
A		5		5		7		7		-		-		12		12
BBB		-		-		-		-		-		-		-		-
BB and below		16		12		-		-		16		11		32		23
Total by rating (1)(2)(3)	$	735	$	753	$	13	$	13	$	16	$	11	$	764	$	777
Origination Year
2008 and prior	$	35	$	30	$	13	$	13	$	16	$	11	$	64	$	54
2010		3		3		-		-		-		-		3		3
2011		11		11		-		-		-		-		11		11
2012		27		27		-		-		-		-		27		27
2013		156		159		-		-		-		-		156		159
2015		10		10		-		-		-		-		10		10
2016		81		87		-		-		-		-		81		87
2017		311		324		-		-		-		-		311		324
2018		101		102		-		-		-		-		101		102
Total by origination year (1)(2)	$	735	$	753	$	13	$	13	$	16	$	11	$	764	$	777
Total AFS securities backed by pools of commercial mortgages as a percentage of total AFS securities														0.8%		0.9%

⁽¹⁾ Does not include the fair value of trading securities totaling less than $1 million that primarily support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  Thesetrading securities consisted entirely of CMBS.  

⁽²⁾ Does not include the amortized cost of trading securities totaling less than  $1 million that primarily support our Modco reinsurance agreements because investment results for these agreements are passed directly to the reinsurers.  These trading securities consisted entirely of CMBS.   

⁽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 lowest 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 September 30, 2018, the fair value and amortized cost of our AFS exposure to monoline insurers was $429 million and $403 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 position of securities at a particular point in time and may not be indicative of the position 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 securities in an unrealized loss position on our future earnings. 

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The composition by industry categories of all securities in an unrealized loss position (in millions) as of September 30, 2018, was as follows:

									%
							Gross		Gross
			%			%	Unrealized		Unrealized
	Fair		Fair	Amortized		Amortized	Losses		Losses
	Value		Value	Cost		Cost	and OTTI		and OTTI
Banking	$	3,569	8.4%	$	3,725	8.4%	$	156	8.0%
Electric		3,381	7.9%		3,530	8.0%		149	7.6%
Food and beverage		2,301	5.4%		2,433	5.5%		132	6.8%
Pharmaceuticals		2,008	4.7%		2,114	4.7%		106	5.4%
Healthcare		1,989	4.7%		2,075	4.7%		86	4.4%
Chemicals		1,671	3.9%		1,752	3.9%		81	4.2%
Diversified manufacturing		1,678	3.9%		1,757	3.9%		79	4.0%
Technology		2,046	4.8%		2,100	4.7%		54	2.8%
Transportation services		1,110	2.6%		1,156	2.6%		46	2.4%
MBS		420	1.0%		466	1.0%		46	2.4%
Media – entertainment		855	2.0%		898	2.0%		43	2.2%
Property and casualty		775	1.8%		817	1.8%		42	2.2%
Independent		943	2.2%		984	2.2%		41	2.1%
Consumer products		661	1.6%		702	1.6%		41	2.1%
Retailers		755	1.8%		794	1.8%		39	2.0%
CMO		603	1.4%		641	1.4%		38	1.9%
Industrial  –  other		706	1.7%		743	1.7%		37	1.9%
Midstream		994	2.3%		1,029	2.3%		35	1.8%
Railroads		589	1.4%		622	1.4%		33	1.7%
Natural gas		746	1.7%		777	1.7%		31	1.6%
Aerospace		646	1.5%		677	1.5%		31	1.6%
Automotive		791	1.9%		821	1.9%		30	1.5%
Industries with unrealized losses
less than $30 million		13,395	31.4%		13,969	31.3%		574	29.4%
Total by industry	$	42,632	100.0%	$	44,582	100.0%	$	1,950	100.0%
Total by industry as a percentage
of total AFS securities		45.8%			49.1%			100.0%

As of September 30, 2018, the fair value and amortized cost of securities subject to enhanced analysis and monitoring for potential changes in unrealized loss position was $108 million and $138 million, respectively.  

Mortgage Loans on Real Estate

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

	As of September 30, 2018			As of December 31, 2017
	Carrying			Carrying
	Value		%	Value		%
Credit Quality Indicator
Current	$	12,560	100.0%	$	10,760	100.0%
Delinquent (1)		1	0.0%		-	0.0%
Foreclosure (2)		-	0.0%		2	0.0%
Total mortgage loans on real estate	$	12,561	100.0%	$	10,762	100.0%

⁽¹⁾ As of September 30, 2018, and December 31, 2017, there were 10 and zero mortgage loans on real estate that were delinquent, respectively.

⁽²⁾ As of September 30, 2018, and December 31, 2017, there were zero and one mortgage loans on real estate that were in foreclosure, respectively.

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As of September 30, 2018, and December 31, 2017, there were one and three impaired mortgage loans on real estate, respectively, or less than 1% of the total dollar amount of mortgage loans on real estate.  The total outstanding principal and interest on the mortgage loans on real estate that were two or more payments delinquent as of September 30, 2018, and December 31, 2017, was $1 million and $4 million, respectively.  See Note 1 in our 2017 Form 10-K for more information regarding our accounting policy relating to the impairment of mortgage loans on real estate.

	As of			As of
	September 30,			December 31,
		2018			2017
By Segment
Annuities		$	3,719		$	3,244
Retirement Plan Services			3,507			3,141
Life Insurance			3,721			3,628
Group Protection			1,072			332
Other Operations			542			417
Total mortgage loans on real estate		$	12,561		$	10,762

	As of September 30, 2018				As of September 30, 2018
	Carrying				Carrying
	Value		%		Value		%
Property Type				State Exposure
Apartment	$	4,075	32.5%	CA	$	2,709	21.6%
Office building		3,102	24.7%	TX		1,507	12.0%
Retail		2,414	19.2%	MD		659	5.3%
Industrial		2,277	18.1%	FL		582	4.6%
Other commercial		438	3.5%	OH		529	4.2%
Mixed use		178	1.4%	GA		508	4.0%
Hotel/motel		77	0.6%	VA		496	3.9%
Total	$	12,561	100.0%	NY		492	3.9%
Geographic Region				WA		470	3.7%
Pacific	$	3,458	27.5%	TN		460	3.7%
South Atlantic		2,958	23.5%	PA		421	3.4%
West South Central		1,602	12.8%	NC		368	2.9%
East North Central		1,409	11.2%	WI		326	2.6%
Middle Atlantic		958	7.6%	IL		326	2.6%
Mountain		685	5.5%	OR		280	2.2%
East South Central		606	4.8%	AZ		273	2.2%
West North Central		519	4.1%	MA		263	2.1%
New England		366	3.0%	Other states under 2%		1,892	15.1%
Total	$	12,561	100.0%	Total	$	12,561	100.0%

	As of September 30, 2018				As of September 30, 2018
	Principal				Principal
	Amount		%		Amount		%
Origination Year				Future Principal Payments
2013 and prior	$	3,264	25.9%	2018	$	172	1.4%
2014		1,275	10.1%	2019		501	4.0%
2015		1,872	14.9%	2020		480	3.8%
2016		2,066	16.4%	2021		872	6.9%
2017		2,075	16.6%	2022		802	6.4%
2018		2,027	16.1%	2023 and thereafter		9,752	77.5%
Total	$	12,579	100.0%	Total	$	12,579	100.0%

See Note 5 for information regarding our loan-to-value and debt-service coverage ratios and our allowance for loan losses.

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Alternative Investments

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

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Annuities	$	6	$	5	$	15	$	19
Retirement Plan Services		3		2		8		10
Life Insurance		41		28		81		103
Group Protection		3		2		7		7
Other Operations		1		1		3		3
Total (1)	$	54	$	38	$	114	$	142

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

As of September 30, 2018, and December 31, 2017, alternative investments included investments in 239 and 224 different partnerships, respectively, and the portfolio represented approximately 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.

Non-Income Producing Investments

The carrying amount of fixed maturity securities, mortgage loans on real estate and real estate that were non-income producing as of September 30, 2018, and December 31, 2017, was $6 million and $9 million, respectively.

Net Investment Income

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Investment Income
Fixed maturity AFS securities	$	1,050		$	1,038		$	3,137		$	3,120
Equity AFS securities		-			3			-			7
Trading securities		21			23			64			71
Equity securities		1			-			1			-
Mortgage loans on real estate		128			110			364			328
Real estate		-			1			1			2
Policy loans		23			33			90			101
Invested cash		6			4			17			8
Commercial mortgage loan prepayment
and bond make-whole premiums (1)		25			33			67			87
Alternative investments (2)		54			38			114			142
Consent fees		1			2			3			4
Other investments		7			-			16			1
Investment income		1,316			1,285			3,874			3,871
Investment expense		(45	)		(46	)		(138	)		(133	)
Net investment income	$	1,271		$	1,239		$	3,736		$	3,738

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

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

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	For the Three		For the Nine
	Months Ended		Months Ended
	September 30,		September 30,
	2018	2017	2018	2017
Interest Rate Yield
Fixed maturity securities, mortgage loans on real estate
and other, net of investment expenses	4.37%	4.52%	4.45%	4.57%
Commercial mortgage loan prepayment and bond
make-whole premiums	0.09%	0.13%	0.08%	0.11%
Alternative investments	0.20%	0.15%	0.14%	0.18%
Net investment income yield on invested assets	4.66%	4.80%	4.67%	4.86%

		For the Three			For the Nine
		Months Ended			Months Ended
		September 30,			September 30,
		2018		2017	2018		2017
Average invested assets at amortized cost	$	109,034	$	103,163	$	106,616	$	102,476

We earn investment income on our general account assets supporting fixed annuity, term life, whole life, UL, interest-sensitive whole life and the 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 make-whole 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 Make-Whole Premiums

Prepayment and make-whole premiums are collected when borrowers elect to call or prepay their debt prior to the stated maturity.  A prepayment or make-whole 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.

Realized Gain (Loss) Related to Certain Investments

Details of the realized gain (loss) related to certain investments (in millions) were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fixed maturity AFS securities: (1)
Gross gains	$	14		$	7		$	30		$	19
Gross losses		(21	)		(22	)		(65	)		(47	)
Equity AFS securities:
Gross gains		-			1			1			2
Gain (loss) on other investments (2)		1			-			6			(6	)
Associated amortization of DAC, VOBA,
DSI and DFEL and changes in
other contract holder funds		(5	)		(5	)		(16	)		(17	)
Total realized gain (loss) related to
certain investments, pre-tax	$	(11	)	$	(19	)	$	(45	)	$	(49	)

⁽¹⁾ These amounts are represented net of related fair value hedging activity.  See Note 6 for more information.

⁽²⁾ Includes market adjustments on equity securities still held of less than $1 million and $2 million for the three and nine months ended September 30, 2018, respectively.

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 losses reflecting the incremental effect of actual

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versus expected credit-related investment losses.  These actual to expected amortization adjustments could create volatility in net realized gains and losses.

Realized gains and losses generally originate from asset sales to reposition the portfolio or to respond to product experience.  During the first nine months of 2018 and 2017, 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 industries and countries where recent write-downs have occurred in our assessment of the position 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 strategy 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 external asset managers 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 “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Introduction – Critical Accounting Policies and Estimates – Investments – Write-downs for OTTI and Allowance for Losses” in our 2017 Form 10-K for additional information on our portfolio management strategy.

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

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
OTTI Recognized in Net Income (Loss)
Fixed maturity AFS securities:
Corporate bonds	$	(2	)	$	(8	)	$	(4	)	$	(13	)
ABS		-			(1	)		-			(2	)
RMBS		-			-			(1	)		(1	)
State and municipal bonds		-			-			-			(1	)
Gross OTTI recognized in net income (loss)		(2	)		(9	)		(5	)		(17	)
Associated amortization of DAC,
VOBA, DSI and DFEL		-			1			-			1
Net OTTI recognized in net income
(loss), pre-tax	$	(2	)	$	(8	)	$	(5	)	$	(16	)

The $5 million of impairments recognized in net income taken during the first nine months of 2018 were all credit-related impairments.  The decrease in write-downs for OTTI when comparing the first nine months of 2018 to the corresponding period in 2017 was primarily attributable to the stabilization of certain corporate and municipal bond holdings as well as gradual recovery of RMBS and ABS investments.  We recognized less than $1 million of OTTI in OCI for the three and nine months ended September 30, 2018.  We recognized $1 million of OTTI in OCI for the three and nine months ended September 30, 2017.

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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 $1.0 billion and $609 million for the nine months ended September 30, 2018 and 2017, 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 stock dividends, interest and debt service, funding of callable securities, securities repurchases, acquisitions and investment in core businesses. 

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

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Dividends from Subsidiaries
The Lincoln National Life Insurance Company	$	225	$	300	$	225	$	754
First Penn-Pacific		-		-		-		20
Lincoln Investment Management Company		15		-		15		-
Lincoln National Management Corporation		-		-		-		65
Total dividends from subsidiaries	$	240	$	300	$	240	$	839
Loan Repayments and Interest from Subsidiaries
Interest on inter-company notes	$	34	$	12	$	94	$	92
Other Cash Flow Items
Amounts received from (paid for taxes on)
stock option exercises and restricted stock, net	$	-	$	7	$	2	$	49

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.  For information regarding limits on the dividends that our insurance subsidiaries may pay without prior approval, 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 – Restrictions on Dividends from Subsidiaries” in our 2017 Form 10-K.

Insurance Subsidiaries’ Statutory Capital and Surplus

Our regulatory capital levels are also affected by statutory accounting rules, which are subject to change by each applicable insurance regulator.  Our term products and UL products containing secondary guarantees require reserves calculated pursuant to XXX and AG38, respectively.  As discussed in “Part I – Item 1A. Risk Factors – Legislative, Regulatory, and Tax – 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 result of operations” in our 2017 Form 10-K, our insurance subsidiaries employ strategies to reduce the strain caused by XXX and AG38 by reinsuring the business to insurance captives.  Our captive reinsurance and reinsurance subsidiaries provide a mechanism for financing a portion of the excess reserve amounts in a more efficient manner.  We use long-dated LOCs and debt financing as well as other financing strategies to finance those reserves.  Included in the LOCs issued as of September 30, 2018, was approximately $2.3 billion of long-dated LOCs issued to support inter-company reinsurance arrangements for UL products containing secondary guarantees ($350 million will expire in 2019 and $1.9 billion relates to arrangements that will expire by 2031).  For information on the LOCs, see the credit facilities table in Note 12 in our 2017 Form 10-K.  Our captive reinsurance and reinsurance subsidiaries have also issued long-term notes of $3.1 billion to finance a portion of the excess reserves as of September 30, 2018; of this amount, $2.1 billion involve exposure to VIEs. 

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For information on these long-term notes issued by our captive reinsurance and reinsurance subsidiaries, see Note 4 in our 2017 Form 10-K.  We have also used the proceeds from senior note issuances of $875 million to execute long-term structured solutions primarily supporting reinsurance of UL products containing secondary guarantees.  LOCs and related capital market solutions lower the capital effect of term products and UL products containing secondary guarantees.  An inability to obtain appropriate capital market solutions could affect our returns on our in-force term products and UL products containing secondary guarantees.  However, we believe that we have sufficient capital to support the increase in statutory reserves, based on our current reserve projections, if such structures were no longer available.

Our captive reinsurance and reinsurance subsidiaries free up capital the insurance subsidiaries can use for any number of purposes, including paying dividends to the holding company.  The NAIC’s adoption of the new Valuation Manual that defines a principles-based reserving framework for newly issued life insurance policies was effective January 1, 2017.  Principles-based reserving places a greater weight on our past experience and anticipated future experience as well as considers current economic conditions in calculating life insurance product reserves in accordance with statutory accounting principles.  We adopted the new framework for our newly issued term business in 2017 and will phase in the framework prior to January 1, 2020, for all other newly issued life insurance products.  We believe that these changes may reduce our future use of captive reinsurance and reinsurance subsidiaries for reserve financing transactions for our life insurance business.  For more information on principles-based reserving, see “Part I – Item 1. Business – Regulatory – Insurance Regulation” in our 2017 Form 10-K.

Statutory reserves established for variable annuity contracts and riders are sensitive to changes in the equity markets and are affected by the level of account values relative to the level of any guarantees, product design and reinsurance arrangements.  As a result, the relationship between reserve changes and equity market performance is non-linear during any given reporting period.  Market conditions greatly influence the ultimate capital required due to its effect on the valuation of reserves and derivative assets hedging these reserves.  We also utilize inter-company reinsurance arrangements to manage our hedge program for variable annuity guarantees.  The NAIC is expected to adopt changes to the statutory reserving, capital and accounting framework for variable annuities that will go into effect as of January 1, 2020.

We continue to analyze the use of our existing captive reinsurance structures, as well as additional third-party reinsurance arrangements, and our current hedging strategies relative to managing the effects of equity markets and interest rates on the statutory reserves, statutory capital and the dividend capacity of our life insurance subsidiaries.

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 and depository shares. 

Details underlying debt and financing activities (in millions) for the nine months ended September 30, 2018, were as follows:

					Maturities,				Change
					Repayments				in Fair
	Beginning				and				Value				Other			Ending
	Balance		Issuance		Refinancing				Hedges			Changes (1)				Balance
Short-Term Debt
Current maturities of long-term debt	$	450	$	-		$	(450	)	$	-			$	-		$	-
Long-Term Debt
Senior notes	$	3,687	$	1,100		$	(287	)	$	(99	)		$	(4	)	$	4,397
Bank borrowing (2)		-		200			-			-				-			200
Capital securities (3)		1,207		-			-			-				-			1,207
Total long-term debt	$	4,894	$	1,300		$	(287	)	$	(99	)		$	(4	)	$	5,804

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

⁽²⁾ We refinanced a $250 million floating rate loan that was scheduled to mature on June 6, 2018, into a $200 million floating rate loan maturing on June 6, 2023.

⁽³⁾ To hedge the variability in rates, we have purchased forward starting interest rate swaps to lock in a fixed rate of approximately 5% over the remaining terms of the capital securities.

On February 12, 2018, we completed the issuance and sale of $150 million aggregate principal amount of our 4.00% senior notes due 2023 and $450 million aggregate principal amount of our 4.35% senior notes due 2048.  We used these proceeds to repurchase $200 million of our 7.00% senior notes due 2018 and $287 million of our 8.75% senior notes due 2019.  In addition, on February 12, 2018, we completed the issuance and sale of $500 million aggregate principal amount of our 3.80% senior notes due 2028.  We used these

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proceeds, together with cash on hand and other arrangements, to fund our acquisition as described in Note 3.  As of September 30, 2018, the holding company had available liquidity of $465 million.  Available liquidity consists of cash and invested cash, excluding cash held as collateral, and certain short-term investments that can be readily converted into cash, net of commercial paper outstanding.

For more information about our short-term and long-term debt and our credit facilities and LOCs, see Notes 12 and 24 in our 2017 Form 10-K as updated by Note 9 in our first quarter 2018 Form 10-Q.

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.  For information about our collateralized financing transactions on our investments, see “Payables for Collateral on Investments” in Note 5.

If current credit ratings or 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 with respect to LNC if its long-term senior debt ratings drop below BBB-/Baa3 (S&P/Moody’s); or with respect to Lincoln National Life Insurance Company (“LNL”) if its financial strength ratings drop below BBB-/Baa3 (S&P/Moody’s).  Our long-term senior debt held a rating of A-/Baa1 (S&P/Moody’s) as of September 30, 2018.  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 2017 Form 10-K for more information.  See “Part I – Item 1. Business – Financial Strength Ratings” in our 2017 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 2017 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 essentially a series of demand loans between LNC and participating subsidiaries that reduces overall borrowing costs by allowing LNC and its subsidiaries to access internal resources instead of incurring third-party transaction costs.  As of September 30, 2018, the holding company had a net outstanding receivable (payable) of $187 million from (to) certain subsidiaries resulting from loans made by subsidiaries in excess of amounts placed (borrowed) by the holding company and subsidiaries in the inter-company cash management account.  Any change in holding company cash management program balances is offset by the immediate and equal change in holding company cash and invested cash.  Loans under the cash management program are permitted under applicable insurance laws subject to certain restrictions.  For our Indiana-domiciled insurance subsidiaries, the borrowing and lending limit is currently 3% of the insurance company’s admitted assets as of its most recent year end.  For our New York-domiciled insurance subsidiary, it may borrow from LNC less than 2% of its admitted assets as of the last year end but may not lend any amounts to LNC.

Our insurance subsidiaries, by virtue of their general account fixed-income investment holdings, can access liquidity through securities lending programs and repurchase agreements.  Our primary insurance subsidiary, LNL, is a member of the Federal Home Loan Bank of Indianapolis (“FHLBI”).  Membership allows LNL access to the FHLBI’s financial services, including the ability to obtain loans and to issue funding agreements as an alternative source of liquidity that are collateralized by qualifying mortgage-related assets, agency securities or U.S. Treasury securities.  LNL had an estimated maximum borrowing capacity of $5.0 billion under the FHLBI facility as of September 30, 2018.  Borrowings under this facility are subject to the FHLBI’s discretion and require the availability of qualifying assets at LNL.  As of September 30, 2018, our insurance subsidiaries had investments with a carrying value of $3.8 billion out on loan or subject to repurchase agreements.  The cash received in our securities lending 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 5.

Cash Flows from Collateral on Derivatives

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 decreases (or increases), the collateral required to be posted by our counterparties would also decrease (or increase).  Likewise, when the value of a derivative liability decreases (or increases), the collateral we are required to post to our counterparties would also decrease (or increase).  For the nine months ended September 30, 2018, our collateral payable for derivative investments decreased due primarily to increasing interest rates that decreased the fair values of our associated derivative investments.  In the event of adverse changes in fair value of our derivative instruments, we may need to post collateral with a counterparty if our net derivative liability position reaches certain contractual levels.  If we do not have sufficient high quality securities or cash and invested cash to provide as collateral, we have liquidity sources, as discussed above, to leverage that would be eligible for collateral posting.  For additional information, see “Credit Risk” in Note 6.

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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, to repurchase our stock and to repay debt.

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 of Directors 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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Dividends to common stockholders	$	72	$	64	$	216	$	195
Repurchase of common stock		175		200		275		600
Total cash returned to stockholders	$	247	$	264	$	491	$	795
Number of shares repurchased		2.653		2.834		4.109		8.728
Average price per share	$	65.99	$	70.59	$	66.95	$	69.45

On October 31, 2018, our Board of Directors approved an increase of the quarterly dividend on our common stock from $0.33 to $0.37 per share.  Additionally, we expect to repurchase additional shares of common stock during the remainder of 2018 depending on market conditions and alternative uses of capital.  For more information regarding share repurchases, see “Part II – Item 2(c)” below.

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 Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Debt service (interest paid)	$	63	$	67	$	204	$	194
Capital contribution to subsidiaries		-		-		502		60
Total	$	63	$	67	$	706	$	254

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.

We made an investment in our Group business through our acquisition of Liberty Life, a subsidiary of LNL, which impacted our liquidity and capital position.  For additional information on our acquisition, see “Introduction – Executive Summary” above and Note 3 herein.

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 a 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 2017 Form 10-K as updated by “Part II – Item 1A. Risk Factors” in our first and second quarter 2018 Form 10-Q.

91

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 2017 Form 10-K as updated by “Part II – Item 1A. Risk Factors” in our first and second quarter 2018 Form 10-Q.

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 considers diversification.  We have exposures to several market risks including interest rate risk, equity market risk, credit risk and, to a lesser extent, foreign currency exchange risk.  As of September 30, 2018, there have been no material changes in our economic exposure to these market risks since December 31, 2017.  For information on these market risks, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our 2017 Form 10-K.

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 September 30, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  We acquired Liberty Life Assurance Company of Boston (“Liberty Life”) on May 1, 2018, and have not yet included Liberty Life in our assessment of the effectiveness of our internal control over financial reporting.  Accordingly, pursuant to the SEC’s general guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our disclosure controls and procedures does not include Liberty Life.  See Note 3 for additional information.

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.

92

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

Information regarding reportable legal proceedings is contained in Note 10 in “Part I – Item 1.”

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

(c)  The following table summarizes purchases of equity securities by the Company during the quarter ended September 30, 2018 (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 (2)(3)
7/1/18 – 7/31/18		652,254	$	64.76		652,254	$	819
8/1/18 – 8/31/18		1,619,631		66.31		1,619,631		712
9/1/18 – 9/30/18		381,078		66.70		381,078		687

⁽¹⁾ Of the total number of shares purchased, no shares were received in connection with the exercise of stock options and related taxes.  For the quarter ended September 30, 2018, there were 2,652,963 shares purchased as part of publicly announced plans or programs. 

⁽²⁾ On November 9, 2017, our Board of Directors authorized an increase in our securities repurchase authorization, bringing the total aggregate repurchase authorization to $1.0 billion.  As of September 30, 2018, our remaining security repurchase authorization was $687 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.  Our stock repurchases may be effected from time to time through open market purchases or in privately negotiated transactions and may be made pursuant to a Rule 10b5-1 plan. 

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

Item 6.  Exhibits

The Exhibits included in this report are listed in the Exhibit Index beginning on page 94, which is incorporated herein by reference.

93

LINCOLN NATIONAL CORPORATION

Exhibit Index for the Report on Form 10-Q

For the Quarter Ended September 30, 2018

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.

94

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/  CHRISTINE A. JANOFSKY
		Christine A. Janofsky Senior Vice President and Chief Accounting Officer
Dated:  November 2, 2018

95

EX-12

Exhibit 12

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES

(dollars in millions)

	For the Nine
	Months Ended
	September 30,
	2018		2017
Income (loss) from continuing operations before taxes	$	1,418	$	1,518
Sub-total of fixed charges		217		201
Sub-total of adjusted income (loss)		1,635		1,719
Interest on annuities and financial products		1,964		1,933
Adjusted income (loss) base	$	3,599	$	3,652
Fixed Charges
Interest and debt expense (1)	$	205	$	190
Portion of rent expense representing interest		12		11
Sub-total of fixed charges excluding interest on
annuities and financial products		217		201
Interest on annuities and financial products		1,964		1,933
Total fixed charges	$	2,181	$	2,134
Ratio of sub-total of adjusted income (loss) to sub-total
of fixed charges excluding interest on annuities and
financial products		7.53		8.55
Ratio of adjusted income (loss) base to total fixed
charges		1.65		1.71

⁽¹⁾ Interest and debt expense excludes a $23 million loss related to the early retirement of debt in 2018.

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:  November 2, 2018	/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:  November 2, 2018	/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 September 30, 2018, (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:  November 2, 2018	/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 September 30, 2018, (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:  November 2, 2018	/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

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018
Entity Registrant Name	LINCOLN NATIONAL CORP
Entity Central Index Key	0000059558
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		213,604,724

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Available-for-sale securities, at fair value:
Fixed maturity securities (amortized cost: 2018 – $90,808; 2017 – $86,993)	$ 93,161	$ 94,840
Equity securities (cost: 2017 – $247)		246
Trading securities	1,440	1,620
Equity securities	112
Mortgage loans on real estate	12,561	10,762
Real estate	12	11
Policy loans	2,490	2,399
Derivative investments	706	915
Other investments	2,204	2,296
Total investments	112,686	113,089
Cash and invested cash	1,460	1,628
Deferred acquisition costs and value of business acquired	10,014	8,403
Premiums and fees receivable	592	396
Accrued investment income	1,168	1,078
Reinsurance recoverables	18,271	4,907
Funds withheld reinsurance assets	566	593
Goodwill	1,757	1,368
Other assets	9,644	6,082
Separate account assets	147,692	144,219
Total assets	303,850	281,763
Liabilities
Future contract benefits	33,988	22,887
Other contract holder funds	89,906	80,209
Short-term debt		450
Long-term debt	5,804	4,894
Reinsurance related embedded derivatives	20	57
Funds withheld reinsurance liabilities	1,733	1,761
Deferred gain on business sold through reinsurance	1	1
Payables for collateral on investments	4,212	4,417
Other liabilities	5,424	5,546
Separate account liabilities	147,692	144,219
Total liabilities	288,780	264,441
Contingencies and Commitments (See Note 10)
Stockholders' Equity
Preferred stock - 10,000,000 shares authorized
Common stock – 800,000,000 shares authorized; 214,776,806 and 218,090,114 shares issued and outstanding as of September 30, 2018, and December 31, 2017, respectively	5,619	5,693
Retained earnings	8,615	8,399
Accumulated other comprehensive income (loss)	836	3,230
Total stockholders' equity	15,070	17,322
Total liabilities and stockholders' equity	$ 303,850	$ 281,763

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Available-for-sale securities, at fair value:
Fixed maturity securities (amortized cost)	$ 90,808	$ 86,993
Equity securities (cost)		$ 247
Stockholders' Equity
Preferred stock - shares authorized (in shares)	10,000,000	10,000,000
Common stock - shares authorized (in shares)	800,000,000	800,000,000
Common stock - shares issued (in shares)	214,776,806	218,090,114
Common stock - shares outstanding (in shares)	214,776,806	218,090,114

XML

Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues
Insurance premiums	$ 1,323	$ 774	$ 3,265	$ 2,382
Fee income	1,550	1,401	4,475	4,148
Net investment income	1,271	1,239	3,736	3,738
Realized gain (loss):
Total other-than-temporary impairment losses on securities	(2)	(9)	(5)	(17)
Portion of loss recognized in other comprehensive income		1		1
Net other-than-temporary impairment losses on securities recognized in earnings	(2)	(8)	(5)	(16)
Realized gain (loss), excluding other-than-temporary impairment losses on securities	(53)	(48)	(46)	(89)
Total realized gain (loss)	(55)	(56)	(51)	(105)
Amortization of deferred gain on business sold through reinsurance			1	22
Other revenues	175	153	467	403
Total revenues	4,264	3,511	11,893	10,588
Expenses
Interest credited	652	647	1,952	1,940
Benefits	1,626	1,261	4,646	3,839
Commissions and other expenses	1,367	1,020	3,600	3,068
Interest and debt expense	69	63	228	190
Strategic digitization expense	18	10	49	33
Total expenses	3,732	3,001	10,475	9,070
Income (loss) before taxes	532	510	1,418	1,518
Federal income tax expense (benefit)	42	92	176	254
Net income (loss)	490	418	1,242	1,264
Other comprehensive income (loss), net of tax	(365)	148	(3,036)	1,293
Comprehensive income (loss)	$ 125	$ 566	$ (1,794)	$ 2,557
Net Income (Loss) Per Common Share
Basic (in dollars per share)	$ 2.27	$ 1.89	$ 5.71	$ 5.66
Diluted (in dollars per share)	2.24	1.87	5.59	5.58
Cash Dividends Declared Per Common Share	$ 0.33	$ 0.29	$ 0.99	$ 0.87

XML

Consolidated Statements Of Stockholders' Equity - USD ($) $ in Millions	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance as of beginning-of-year at Dec. 31, 2016	$ 5,869	$ 7,043	$ 1,566
Stock compensation/issued for benefit plans	75
Net income (loss)		1,264		$ 1,264
Retirement of common stock/cancellation of shares	(227)	(373)
Common stock dividends declared		(196)
Other comprehensive income (loss), net of tax			1,293	1,293
Balance as of end-of-period at Sep. 30, 2017	5,717	7,738	2,859	16,314
Balance as of beginning-of-year at Dec. 31, 2017	5,693	8,399	3,230	17,322
Cumulative effect from adoption of new accounting standards at Dec. 31, 2017		(642)	642
Stock compensation/issued for benefit plans	33
Net income (loss)		1,242		1,242
Retirement of common stock/cancellation of shares	(107)	(168)
Common stock dividends declared		(216)
Other comprehensive income (loss), net of tax			(3,036)	(3,036)
Balance as of end-of-period at Sep. 30, 2018	$ 5,619	$ 8,615	$ 836	$ 15,070

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities
Net income (loss)	$ 1,242	$ 1,264
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Deferred acquisition costs, value of business acquired, deferred sales inducements and deferred front-end loads deferrals and interest, net of amortization	86	38
Trading securities purchases, sales and maturities, net	162	83
Change in premiums and fees receivable	(109)	60
Change in accrued investment income	(66)	(75)
Change in future contract benefits and other contract holder funds	(997)	(1,152)
Change in reinsurance related assets and liabilities	426	80
Change in accrued expenses	73	(21)
Change in federal income tax accruals	86	154
Realized (gain) loss	51	105
Amortization of deferred gain on business sold through reinsurance	(1)	(22)
Other	81	95
Net cash provided by (used in) operating activities	1,034	609
Cash Flows from Investing Activities
Purchases of available-for-sale securities and equity securities	(8,816)	(7,465)
Sales of available-for-sale securities and equity securities	2,678	1,104
Maturities of available-for-sale securities	4,714	4,100
Purchase of common stock in acquisition, net of cash acquired	(1,410)
Sale of business, net	(12)
Purchases of alternative investments	(234)	(228)
Sales and repayments of alternative investments	115	140
Issuance of mortgage loans on real estate	(2,035)	(1,342)
Repayment and maturities of mortgage loans on real estate	842	849
Issuance and repayment of policy loans, net	40	34
Net change in collateral on investments, derivatives and related settlements	22	90
Other	(144)	(66)
Net cash provided by (used in) investing activities	(4,240)	(2,784)
Cash Flows from Financing Activities
Payment of long-term debt, including current maturities	(537)
Issuance of long-term debt, net of issuance costs	1,094
Payment related to early extinguishment of debt	(23)
Proceeds from sales leaseback transaction	51	45
Deposits of fixed account values, including the fixed portion of variable	9,426	7,625
Withdrawals of fixed account values, including the fixed portion of variable	(4,466)	(4,309)
Transfers to and from separate accounts, net	(2,008)	(1,183)
Common stock issued for benefit plans	(7)	38
Repurchase of common stock	(275)	(600)
Dividends paid to common stockholders	(217)	(198)
Net cash provided by (used in) financing activities	3,038	1,418
Net increase (decrease) in cash, invested cash and restricted cash	(168)	(757)
Cash, invested cash and restricted cash as of beginning-of-year	1,628	2,722
Cash, invested cash and restricted cash as of end-of-period	$ 1,460	$ 1,965

XML

Nature Of Operations And Basis Of Presentation

9 Months Ended

Sep. 30, 2018

Nature Of Operations And Basis Of Presentation

Nature Of Operations And Basis Of Presentation

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 15 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 and solutions.  These products primarily include fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, indexed universal life insurance (“IUL”), term life insurance, employer-sponsored retirement plans and services, 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.  As discussed in Note 3, on May 1, 2018, LNC and The Lincoln National Life Insurance Company (“LNL”) completed the acquisition of Liberty Life Assurance Company of Boston (“Liberty Life”).  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, 2017 (“2017 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 condition, results of operations and cash flows, are summarized in our 2017 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 nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018.  All material inter-company accounts and transactions have been eliminated in consolidation.

XML

New Accounting Standards

9 Months Ended

Sep. 30, 2018

New Accounting Standards [Abstract]

New Accounting Standards

2.  New Accounting Standards

Adoption of New Accounting Standards

The following table provides a description of our adoption of new Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board and the impact of the adoption on our financial statements.  ASUs not listed below were assessed and determined to be either not applicable or not material in presentation or amount.

Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2014-09, Revenue from Contracts with Customers and all related amendments	This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods and services and defines a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligation.  Although the standard and all related amendments supersede nearly all existing revenue recognition guidance under GAAP, the guidance does not amend the accounting for insurance and investment contracts recognized in accordance with Accounting Standards Codification™(“ASC”) Topic 944, Financial Services – Insurance, leases, financial instruments and guarantees.	January 1, 2018	We adopted the standard and all related amendments using the modified retrospective method.  Our primary sources of revenue are recognized in accordance with ASC Topic 944, Financial Services – Insurance; as such, revenue within the scope of the new standard primarily includes commissions and advisory fees earned by our broker dealer operation.  The adoption did not have a material impact on our consolidated financial condition, results of operations, stockholders’ equity or cash flows.  There were no material changes in the timing or measurement of revenues based upon the guidance.  As a result, there is no cumulative effect on retained earnings.  For more information, see Note 15.
Standard	Description	Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities	These amendments require, among other things, the fair value measurement of investments in equity securities and certain other ownership interests that do not result in consolidation and are not accounted for under the equity method of accounting.  The change in fair value of the impacted investments in equity securities must be recognized in net income in the period of the change in fair value.  In addition, the amendments include certain enhancements to the presentation and disclosure requirements for financial assets and financial liabilities.  The guidance does not apply to Federal Home Loan Bank (“FHLB”) stock.  Early adoption of the ASU is generally not permitted, except as defined in the ASU.  The amendments were adopted in the financial statements through a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption.	January 1, 2018	At the time of adoption, we had equity securities classified as available-for-sale (“AFS”) with a total carrying value of $246 million.  We classified, prospectively, $110 million of equity securities within the scope of this ASU in a separate line on our Consolidated Balance Sheets.  The remaining securities, consisting of $136 million of FHLB stock, are classified in other investments on our Consolidated Balance Sheets and carried at cost. The cumulative-effect adjustment of adopting this ASU was $1 million.
ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income	These amendments require a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects associated with the change in the federal corporate income tax rate in the Tax Cuts and Jobs Act (“Tax Act”) of 2017.  The amount of the reclassification is equal to the impact of the change in deferred taxes related to amounts recorded in AOCI resulting from the change in the statutory corporate tax rate from 35% to 21%.  Early adoption is permitted and retrospective application is required.	January 1, 2018	We retrospectively reclassified $641 million of stranded tax effects from AOCI to retained earnings in the period of adoption.

Future Adoption of New Accounting Standards

The following table provides a description of future adoptions of new accounting standards that may have an impact on our financial statements when adopted:

Standard	Description	Projected Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2016-02, Leases	This standard establishes a new accounting model for leases.  Lessees will recognize most leases on the balance sheet as a right-of-use asset and a related lease liability.  The lease liability is measured as the present value of the lease payments over the lease term with the right-of-use asset measured at the lease liability amount and including adjustments for certain lease incentives and initial direct costs.  Lease expense recognition will continue to differentiate between finance leases and operating leases resulting in a similar pattern of lease expense recognition as under current GAAP.  This ASU permits a modified retrospective adoption approach that includes a number of optional practical expedients that entities may elect upon adoption.  Early adoption is permitted.	January 1, 2019	We continue to gather information to determine our leases that are within the scope of this standard.  We do not expect there to be a significant difference in our pattern of lease expense recognition under this ASU.
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	These amendments adopt a new model to measure and recognize credit losses for most financial assets.  The method used to measure estimated credit losses for AFS debt securities will be unchanged from current GAAP; however, the amendments require credit losses to be recognized through an allowance rather than as a reduction to the amortized cost of those debt securities.  The amendments will permit entities to recognize improvements in credit loss estimates on AFS debt securities by reducing the allowance account immediately through earnings.  The amendments will be adopted through a cumulative effect adjustment to the beginning balance of retained earnings as of the first reporting period in which the amendments are effective.  Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein.	January 1, 2020	We are currently evaluating the impact of adopting this ASU on our consolidated financial condition and results of operations, with a primary focus on our fixed maturity securities, mortgage loans and reinsurance recoverables.
ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities	These amendments require an entity to shorten the amortization period for certain callable debt securities held at a premium so that the premium is amortized to the earliest call date.  Early adoption is permitted, and the ASU requires adoption under a modified retrospective basis through a cumulative-effect adjustment to the beginning balance of retained earnings.	January 1, 2019	We are currently evaluating the impact of adopting this ASU on our consolidated financial condition and results of operations.
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	These amendments change both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.  These amendments retain the threshold of highly effective for hedging relationships, remove the requirement to bifurcate between the portions of the hedging relationship that are effective and ineffective, record hedge item and hedging instrument results in the same financial statement line item, require quantitative assessment initially for all hedging relationships unless the hedging relationship meets the definition of either the shortcut method or critical terms match method and allow the contractual specified index rate to be designated as the hedged risk in a cash flow hedge of interest rate risk of a variable rate financial instrument.  These amendments also eliminate the benchmark interest rate concept for variable rate instruments.  Early adoption is permitted.	January 1, 2019	We do not currently expect the adoption of this guidance to have a material impact on our consolidated financial condition and results of operations.
Standard	Description	Projected Date of Adoption	Effect on Financial Statements or Other Significant Matters
ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts	These amendments make changes to the accounting and reporting for long-duration contracts issued by an insurance entity that will significantly change how insurers account for long-duration contracts, including how they measure, recognize and make disclosures about insurance liabilities and deferred acquisition costs (“DAC”).  Under this ASU insurers will be required to review cash flow assumptions at least annually and update them if necessary.  They also will have to make quarterly updates to the discount rate assumptions they use to measure the liability for future policyholder benefits.  The ASU creates a new category of market risk benefits (i.e., features that protect the contract holder from capital market risk and expose the insurer to that risk) that insurers will have to measure at fair value.  The ASU provides various transition methods by topic that entities may elect upon adoption.  Early adoption is permitted.	January 1, 2021	We are currently evaluating the impact of adopting this ASU on our consolidated financial condition and results of operations.

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Acquisition

9 Months Ended

Sep. 30, 2018

Acquisition [Abstract]

Acquisitions

3. Acquisition

As previously announced, on May 1, 2018, we completed the acquisition of 100% of the capital stock of Liberty Life, which operates a group benefits business (“Liberty Group Business”) and individual life and individual and group annuity business (the “Liberty Life Business”), from Liberty Mutual Insurance Company in a transaction accounted for under the acquisition method of accounting pursuant to Business Combinations Topic 805 (“Topic 805”).  The acquisition enables us to increase our market share within the group protection marketplace.

In connection with the acquisition and pursuant to the Master Transaction Agreement (“MTA”), dated January 18, 2018, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 22, 2018, Liberty Life sold the Liberty Life Business on May 1, 2018, by entering into reinsurance agreements and related ancillary documents (including administrative services agreements and transition services agreements) with Protective Life Insurance Company and its wholly-owned subsidiary, Protective Life and Annuity Insurance Company (together with Protective Life Insurance Company, “Protective”), providing for the reinsurance and administration of the Liberty Life Business.

Liberty Life’s excess capital of $1.8 billion was paid to Liberty Mutual Insurance Company through an extraordinary dividend at the acquisition date.  We paid $1.5 billion of cash to Liberty Mutual Insurance Company to acquire the Liberty Group Business. 

We recognized $10 million and $60 million of acquisition-related costs, pre-tax, for the three and nine months ended September 30, 2018, respectively.  These costs are included in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).

The acquisition date fair values of certain assets and liabilities, including future contract benefits, intangible assets and related weighted average expected lives, commercial mortgage loans, reinsurance recoverables and deferred income taxes, are provisional and subject to revision within one year of the acquisition date.  Under the terms of the MTA, a final balance sheet will be agreed upon at a later date.  As such, our estimates of fair values are pending finalization, which may result in adjustments to goodwill.  The following table presents the preliminary fair values (in millions) of the net assets acquired related to the Liberty Group Business as of the acquisition date:

	Preliminary
	Fair Value
Assets
Investments	$	2,493
Mortgage loans on real estate		658
Cash and invested cash		107
Reinsurance recoverables		76
Premiums and fees receivable		83
Accrued investment income		24
Other intangible assets acquired		640
Other assets acquired		142
Separate account assets		99
Total assets acquired	$	4,322
Liabilities
Future contract benefits	$	2,930
Other contract holder funds		46
Other liabilities acquired		120
Separate account liabilities		99
Total liabilities assumed	$	3,195
Net identifiable assets acquired	$	1,127
Goodwill		390
Net assets acquired	$	1,517

Identifiable Intangible Assets

The following table presents the fair value of identifiable intangible assets acquired (dollars in millions):

			Weighted-
			Average
			Amortization
	Fair Value		Period
Value of customer relationships acquired	$	576	20
Value of distribution agreements		31	13
Value of business acquired		30	3
Insurance licenses		3	N/A
Total identifiable intangible assets	$	640

The value of customer relationships acquired (“VOCRA”) and value of distribution agreements (“VODA”), included in other assets on our Consolidated Balance Sheets, reflects the estimated fair value of the customer relationships acquired and distribution agreements of the Liberty Group Business as of May 1, 2018.  The value of the identifiable intangible assets was estimated using a discounted cash flow method.  Significant inputs to the valuation models include estimates of expected premiums, persistency rates, investment returns, claim costs, expenses and discount rates based on a weighted average cost of capital.  Similar to other specifically identifiable intangible assets, the carrying values of VOCRA and VODA will be amortized using a straight-line method and reviewed at least annually for indicators of impairment in value that are other-than-temporary. 

For information on value of business acquired (“VOBA”), see Notes 1 and 8 in our 2017 Form 10-K.

The value of insurance licenses was estimated using the comparable transaction method under the market approach based on arms-length transactions in which certificate authority companies with life and health insurance licenses were purchased.  The value of insurance licenses has an indefinite useful life.

Goodwill

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from assets acquired and liabilities assumed that could not be individually identified.  The goodwill recorded as part of the acquisition includes the expected synergies and other benefits that management believes will result from the acquisition, including an increase in distribution strength.  The goodwill resulting from the acquisition was allocated to the Group Protection segment.  The goodwill is not expected to be deductible for income tax purposes.For more information on goodwill, see Notes 1 and 10 in our 2017 Form 10-K.

Future Contract Benefits

Unpaid claims acquired reflected within future contract benefits were recorded at estimated fair value.  The reserve discount rate was based on the investment yield of the assets acquired with adjustments for risk margin.  The actuarial classifications and methodologies were adjusted to be consistent with our accounting policies and reserve methodologies.

Financial Information

Since the acquisition date of May 1, 2018, the revenues and net income of the business acquired have been included in our Consolidated Statements of Comprehensive Income (Loss) in the Group Protection segment and were $929 million and $26 million, respectively. 

The following unaudited pro forma condensed consolidated results of operations of the Company assume that the acquisition of Liberty Life was completed on January 1, 2017 (in millions):

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenue	$	4,263	$	3,989	$	12,632	$	12,030
Net income		497		396		1,287		1,201

Pro forma adjustments include the revenue and net income of the acquired business for each period as well as amortization of identifiable intangible assets acquired and the fair value adjustment to acquired insurance reserves and investments.  Other pro forma adjustments include the incremental increase to interest expense attributable to financing the acquisition; and the impact of reflecting acquisition and integration costs and investment expenses directly attributable to the business combination in 2017 instead of in 2018.  Pro forma adjustments do not include retrospective adjustments to defer and amortize acquisition costs as would be recorded under our accounting policy.

Reinsurance

Pursuant to the reinsurance agreements, we sold the Liberty Life Business to Protective for a ceding commission of $423 million.  Our amounts recoverable from reinsurers increased significantly to $18.3 billion as of September 30, 2018, from $4.9 billion as of December 31, 2017, primarily as a result of this reinsurance transaction.  As such, Protective now represents our largest reinsurance exposure.  As we are not relieved of our liability, the liabilities and obligations associated with the reinsured policies remain on our Consolidated Balance Sheets with a corresponding reinsurance recoverable from Protective.  To support its obligations under the reinsurance agreements, Protective has established trust accounts for our benefit that fully collateralize the related reinsurance recoverable.  We recorded a deferred tax asset attributed to a tax loss carryforward arising from the reinsurance transaction with Protective. 

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Variable Interest Entities

9 Months Ended

Sep. 30, 2018

Variable Interest Entities [Abstract]

Variable Interest Entities

4.  Variable Interest Entities

Consolidated VIEs

See Note 4 in our 2017 Form 10-K for a detailed discussion of our consolidated variable interest entities (“VIEs”), which information is incorporated herein by reference.

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

		As of September 30, 2018							As of December 31, 2017
		Number							Number
		of		Notional		Carrying			of		Notional		Carrying
	Instruments			Amounts		Value		Instruments			Amounts		Value
Assets
Total return swap			1		587		-			1		573		-
Total assets			1	$	587	$	-			1	$	573	$	-

As of September 30, 2018, and December 31, 2017, there were no gains or losses for consolidated VIEs recognized on our Consolidated Statements of Comprehensive Income (Loss).

Unconsolidated VIEs

See Note 4 in our 2017 Form 10-K for a detailed discussion of our unconsolidated VIEs, which information is incorporated herein by reference.

Limited Partnerships and Limited Liability Companies

We invest in certain limited partnerships (“LPs”) and limited liability companies (“LLCs”), including qualified affordable housing projects, that we have concluded are VIEs.  We do not hold any substantive kick-out or participation rights in the LPs and LLCs, and we do not receive any performance fees or decision maker fees from the LPs and LLCs.  Based on our analysis of the LPs and LLCs, we are not the primary beneficiary of the VIEs as we do not have the power to direct the most significant activities of the LPs and LLCs. 

The carrying amounts of our investments in the LPs and LLCs are recognized in other investments on our Consolidated Balance Sheets and were $1.7 billion and $1.5 billion as of September 30, 2018, and December 31, 2017, respectively.  Included in these carrying amounts are our investments in qualified affordable housing projects, which were $25 million and $31 million as of September 30, 2018, and December 31, 2017, respectively.  We do not have any contingent commitments to provide additional capital funding to these qualified affordable housing projects.  We received returns from these qualified affordable housing projects in the form of income tax credits and other tax benefits that were $1 million and $2 million for the nine months ended September 30, 2018 and 2017, respectively, which were recognized in federal income tax expense (benefit) on our Consolidated Statements of Comprehensive Income (Loss).

Our exposure to loss is limited to the capital we invest in the LPs and LLCs, and there have been no indicators of impairment that would require us to recognize an impairment loss related to the LPs and LLCs as of September 30, 2018.

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Investments

9 Months Ended

Sep. 30, 2018

Investments [Abstract]

Investments

5.  Investments

AFS Securities

See Note 1 in our 2017 Form 10-K for information regarding our accounting policy relating to AFS securities, which also includes additional disclosures regarding our fair value measurements.  In addition, we adopted ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, in 2018 that resulted in a new classification and measurement of our equity securities.  See Note 2 for additional information.

The amortized cost, gross unrealized gains, losses and other-than-temporary impairment (“OTTI”) and fair value of AFS securities (in millions) were as follows:

	As of September 30, 2018
	Amortized		Gross Unrealized							Fair
	Cost		Gains		Losses		OTTI (1)			Value
Fixed maturity AFS securities:
Corporate bonds	$	78,496	$	3,299	$	1,724	$	(9	)	$	80,080
Asset-backed securities ("ABS")		934		41		7		(17	)		985
U.S. government bonds		392		23		6		-			409
Foreign government bonds		418		41		-		-			459
Residential mortgage-backed securities ("RMBS")		3,267		113		114		(21	)		3,287
Commercial mortgage-backed securities ("CMBS")		766		2		23		(3	)		748
Collateralized loan obligations ("CLOs")		1,371		-		14		(5	)		1,362
State and municipal bonds		4,588		656		26		-			5,218
Hybrid and redeemable preferred securities		576		62		25		-			613
Total AFS securities	$	90,808	$	4,237	$	1,939	$	(55	)	$	93,161

	As of December 31, 2017
	Amortized		Gross Unrealized							Fair
	Cost		Gains		Losses		OTTI (1)			Value
Fixed maturity AFS securities:
Corporate bonds	$	75,701	$	6,862	$	354	$	(7	)	$	82,216
ABS		903		51		7		(27	)		974
U.S. government bonds		527		41		1		-			567
Foreign government bonds		395		56		-		-			451
RMBS		3,327		155		39		(22	)		3,465
CMBS		590		10		2		(2	)		600
CLOs		803		2		2		(5	)		808
State and municipal bonds		4,172		953		6		-			5,119
Hybrid and redeemable preferred securities		575		87		22		-			640
Total fixed maturity securities		86,993		8,217		433		(63	)		94,840
Equity AFS securities		247		16		17		-			246
Total AFS securities	$	87,240	$	8,233	$	450	$	(63	)	$	95,086

⁽¹⁾ Includes unrealized (gains) and losses on impaired securities related to changes in the fair value of such securities subsequent to the impairment measurement date.

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities (in millions) as of September 30, 2018, were as follows:

	Amortized		Fair
	Cost		Value
Due in one year or less	$	3,631	$	3,669
Due after one year through five years		17,430		17,509
Due after five years through ten years		17,493		17,440
Due after ten years		45,916		48,161
Subtotal		84,470		86,779
Structured securities (ABS, MBS, CLOs)		6,338		6,382
Total fixed maturity AFS securities	$	90,808	$	93,161

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 other comprehensive income (loss) (“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 September 30, 2018
	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 AFS securities:
Corporate bonds	$	33,196		$	1,188	$	4,690		$	538	$	37,886		$	1,726
ABS		252			3		129			12		381			15
U.S. government bonds		169			4		18			2		187			6
RMBS		836			43		603			73		1,439			116
CMBS		624			18		57			5		681			23
CLOs		1,062			14		34			-		1,096			14
State and municipal bonds		724			15		75			11		799			26
Hybrid and redeemable
preferred securities		31			2		132			22		163			24
Total AFS securities	$	36,894		$	1,287	$	5,738		$	663	$	42,632		$	1,950
Total number of AFS securities in an unrealized loss position															3,480

	As of December 31, 2017
	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 AFS securities:
Corporate bonds	$	4,854		$	68	$	4,893		$	288	$	9,747		$	356
ABS		62			1		151			15		213			16
U.S. government bonds		156			-		19			1		175			1
RMBS		302			4		641			36		943			40
CMBS		113			-		60			3		173			3
CLOs		281			2		72			-		353			2
State and municipal bonds		34			-		93			6		127			6
Hybrid and redeemable
preferred securities		20			-		126			22		146			22
Total fixed maturity securities		5,822			75		6,055			371		11,877			446
Equity AFS securities		22			14		8			3		30			17
Total AFS securities	$	5,844		$	89	$	6,063		$	374	$	11,907		$	463
Total number of AFS securities in an unrealized loss position															1,128

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 September 30, 2018
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	131	$	47	$	-			20
Six months or greater, but less than nine months		21		16		-			3
Nine months or greater, but less than twelve months		39		16		-			4
Twelve months or greater		123		50		8			29
Total	$	314	$	129	$	8			56

	As of December 31, 2017
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	156	$	57	$	1			26
Six months or greater, but less than nine months		2		1		-			4
Nine months or greater, but less than twelve months		15		8		-			7
Twelve months or greater		215		78		10			49
Total	$	388	$	144	$	11			86

⁽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, including the portion of OTTI recognized in OCI, on fixed maturity AFS securities increased by $1.5 billion for the nine months ended September 30, 2018.  As discussed further below, we believe the unrealized loss position as of September 30, 2018, did not represent OTTI as (i) we did not intend to sell these fixed maturity AFS securities; (ii) it is not more likely than not that we will be required to sell these fixed maturity AFS securities before recovery of their amortized cost basis; and (iii) the estimated future cash flows were equal to or greater than the amortized cost basis of the debt securities. 

Based upon this evaluation as of September 30, 2018, management believes we have 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 September 30, 2018, the unrealized losses associated with our corporate bond securities were attributable primarily to widening credit spreads and rising interest rates since purchase.  We performed a detailed analysis of the financial performance of the underlying issuers and determined that we expected to recover the entire amortized cost for each temporarily-impaired security.

As of September 30, 2018, the unrealized losses associated with our mortgage-backed securities (“MBS”) and ABS were attributable primarily to widening credit spreads and rising interest rates since purchase.  We assessed for credit impairment using a cash flow model that incorporates key assumptions including 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 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 of each temporarily-impaired security.

As of September 30, 2018, 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 underlying issuers.  For our hybrid and redeemable preferred securities, we evaluated the financial performance of the underlying issuers based upon credit performance and investment ratings and determined that we expected to recover the entire amortized cost of each temporarily-impaired 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance as of beginning-of-period	$	375		$	390		$	378		$	430
Increases attributable to:
Credit losses on securities for which an
OTTI was not previously recognized		2			8			4			13
Credit losses on securities for which an
OTTI was previously recognized		-			1			1			4
Decreases attributable to:
Securities sold, paid down or matured		(5	)		(21	)		(11	)		(69	)
Balance as of end-of-period	$	372		$	378		$	372		$	378

During the nine months ended September 30, 2018 and 2017, 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; 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 fixed maturity AFS securities. 

Mortgage Loans on Real Estate

See Note 1 in our 2017 Form 10-K for information regarding our accounting policy relating to 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, which accounted for 22% and 21%of mortgage loans on real estate as of September 30, 2018, and December 31, 2017, respectively, and Texas which accounted for 12% of mortgage loans on real estate as of September 30, 2018, and December 31, 2017.

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

	As of				As of
	September 30,				December 31,
		2018				2017
Current		$	12,578			$	10,762
60 to 90 days past due			-				-
Greater than 90 days past due			1				3
Valuation allowance associated with impaired mortgage loans on real estate			(1	)			(3	)
Unamortized premium (discount)			(17	)			-
Total carrying value		$	12,561			$	10,762

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
	September 30,				December 31,
		2018				2017
Number of impaired mortgage loans on real estate		1				3
Principal balance of impaired mortgage loans on real estate		$	4			$	11
Valuation allowance associated with impaired mortgage loans on real estate			(1	)			(3	)
Carrying value of impaired mortgage loans on real estate		$	3			$	8

The changes in the valuation allowance associated with impaired mortgage loans on real estate (in millions) were as follows:

	For the Three					For the Nine
	Months Ended					Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
Balance as of beginning-of-period	$	2		$	2	$	3		$	2
Additions		-			-		-			-
Charge-offs, net of recoveries		(1	)		-		(2	)		-
Balance as of end-of-period	$	1		$	2	$	1		$	2

Additional information related to impaired mortgage loans on real estate (in millions) was as follows:

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Average carrying value for impaired mortgage loans on real estate	$	5	$	5	$	6	$	5
Interest income recognized on impaired mortgage loans on real estate		-		-		-		-
Interest income collected on impaired mortgage loans on real estate		-		-		-		-

As described in Note 1 in our 2017 Form 10-K, we use the loan-to-value and debt-service coverage ratios as credit quality indicators for our mortgage loans on real estate, which were as follows (dollars in millions):

	As of September 30, 2018				As of December 31, 2017
				Debt-				Debt-
				Service				Service
	Carrying		% of	Coverage	Carrying		% of	Coverage
Loan-to-Value Ratio	Value		Total	Ratio	Value		Total	Ratio
Less than 65%	$	11,297	89.9%	2.30	$	9,642	89.6%	2.26
65% to 74%		1,187	9.5%	1.79		1,000	9.3%	1.94
75% to 100%		74	0.6%	0.95		112	1.0%	0.97
Greater than 100%		3	0.0%	0.21		8	0.1%	0.82
Total mortgage loans on real estate	$	12,561	100.0%		$	10,762	100.0%

Alternative Investments 

As of September 30, 2018, and December 31, 2017, alternative investments included investments in 239 and 224 different partnerships, respectively, and the portfolios represented approximately 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fixed maturity AFS securities: (1)
Gross gains	$	14		$	7		$	30		$	19
Gross losses		(21	)		(22	)		(65	)		(47	)
Equity AFS securities:
Gross gains		-			1			-			2
Gain (loss) on other investments (2)		1			-			6			(6	)
Associated amortization of DAC, VOBA, DSI and DFEL
and changes in other contract holder funds		(5	)		(5	)		(16	)		(17	)
Total realized gain (loss) related to certain investments, pre-tax	$	(11	)	$	(19	)	$	(45	)	$	(49	)

⁽¹⁾ These amounts are represented net of related fair value hedging activity.  See Note 6 for more information.

⁽²⁾ Includes market adjustments on equity securities still held of less than $1 million and $2 million for the three and nine months ended September 30, 2018, respectively.

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, were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
OTTI Recognized in Net Income (Loss)
Fixed maturity AFS securities:
Corporate bonds	$	(2	)	$	(8	)	$	(4	)	$	(13	)
ABS		-			(1	)		-			(2	)
RMBS		-			-			(1	)		(1	)
State and municipal bonds		-			-			-			(1	)
Gross OTTI recognized in net income (loss)		(2	)		(9	)		(5	)		(17	)
Associated amortization of DAC, VOBA, DSI and DFEL		-			1			-			1
Net OTTI recognized in net income (loss), pre-tax	$	(2	)	$	(8	)	$	(5	)	$	(16	)

We recognized less than $1 million of OTTI in OCI for the three and nine months ended September 30, 2018.  We recognized $1 million of OTTI in OCI for the three and nine months ended September 30, 2017.

Determination of Credit Losses on Corporate Bonds and ABS

As of September 30, 2018, and December 31, 2017, we reviewed our corporate bond and ABS 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 September 30, 2018, and December 31, 2017,  96% of the fair value of our corporate bond portfolio was rated investment grade.  As of September 30, 2018, and December 31, 2017, the portion of our corporate bond portfolio rated below investment grade had an amortized cost of$3.2 billion and $3.5 billion, respectively, and a fair value of $3.1 billion and $3.5 billion, respectively.  As of September 30, 2018, and December 31, 2017, 98% of the fair value of our ABS portfolio was rated investment grade.  As of September 30, 2018, and December 31, 2017, the portion of our ABS portfolio rated below investment grade had an amortized cost of $46 million and a fair value of $43 million.  Based upon the analysis discussed above, we believe as of September 30, 2018, and December 31, 2017, that we would recover the amortized cost of each investment grade corporate bond and ABS security.

Determination of Credit Losses on MBS

As of September 30, 2018, and December 31, 2017, default rates were projected by considering underlying MBS loan performance and collateral type.  Projected default rates on existing delinquencies vary between 10% 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 in the pool (delinquent loans, foreclosure and real estate owned and new delinquencies from currently performing loans) and the associated loan-level loss severities. 

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 adjusted by housing price assumptions.  With the default rate timing curve and loan-level loss severity, we derive the future expected credit losses.

Payables for Collateral on Investments

The carrying value 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 September 30, 2018				As of December 31, 2017
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Collateral payable for derivative investments (1)	$	366	$	366	$	765	$	765
Securities pledged under securities lending agreements (2)		117		113		222		213
Securities pledged under repurchase agreements (3)		149		185		530		588
Investments pledged for Federal Home Loan Bank of
Indianapolis (“FHLBI”) (4)		3,580		5,413		2,900		4,235
Total payables for collateral on investments	$	4,212	$	6,077	$	4,417	$	5,801

⁽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 additional information.

⁽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 repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We generally obtain collateral in an amount between 80% 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 repurchase program is typically invested in fixed maturity AFS securities.

⁽⁴⁾ 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) consisted of the following:

	For the Nine
	Months Ended
	September 30,
	2018			2017
Collateral payable for derivative investments	$	(399	)	$	41
Securities pledged under securities lending agreements		(105	)		(16	)
Securities pledged under repurchase agreements		(381	)		(2	)
Investments pledged for FHLBI		680			(50	)
Total increase (decrease) in payables for collateral on investments	$	(205	)	$	(27	)

We have elected not to offset our repurchase agreements and securities lending transactions in our financial statements.  The remaining contractual maturities of repurchase agreements and securities lending transactions accounted for as secured borrowings (in millions) were as follows:

	As of September 30, 2018
	Overnight and Continuous		Up to 30 Days		30 -  90 Days		Greater Than 90 Days		Total
Repurchase Agreements
Corporate bonds	$	-	$	-	$	-	$	149	$	149
Total		-		-		-		149		149
Securities Lending
Corporate bonds		117		-		-		-		117
Total		117		-		-		-		117
Total gross secured borrowings	$	117	$	-	$	-	$	149	$	266

	As of December 31, 2017
	Overnight and Continuous		Up to 30 Days		30 -  90 Days		Greater Than 90 Days		Total
Repurchase Agreements
Corporate bonds	$	-	$	100	$	280	$	150	$	530
Total		-		100		280		150		530
Securities Lending
Corporate bonds		222		-		-		-		222
Total		222		-		-		-		222
Total gross secured borrowings	$	222	$	100	$	280	$	150	$	752

We accept collateral in the form of securities in connection with repurchase agreements.  In instances where we are permitted to sell or re-pledge the securities received, we report the fair value of the collateral received and a related obligation to return the collateral in the financial statements.  In addition, we receive securities in connection with securities borrowing agreements, which we are permitted to sell or re-pledge.  As of September 30, 2018, the fair value of all collateral received that we are permitted to sell or re-pledge was $528 million.  As of September 30, 2018, we have re-pledged $502 million of this collateral to cover initial margin on certain derivative investments.

Investment Commitments

As of September 30, 2018, our investment commitments were $1.5 billion, which included $815 million of LPs, $379 million of mortgage loans on real estate and $334 million of private placement securities.

Concentrations of Financial Instruments

As of September 30, 2018, and December 31, 2017, 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 $1.4 billion and $1.3 billion, respectively, or 1% of our invested assets portfolio, and our investments in securities issued by the Federal National Mortgage Association with a fair value of $1.2 billion and $1.0 billion, respectively, or1% of our invested assets portfolio.  These concentrations include fixed maturity AFS, trading and equity securities.  

As of September 30, 2018,  our most significant investments in one industry were our investments in securities in the consumer non-cyclical industry and the financial services industry with a fair value of $14.5 billion and $13.7 billion, respectively, or 13% and 12%, respectively, of our invested assets portfolio.  As of December 31, 2017, our most significant investments in one industry were our investments in securities in the consumer non-cyclical industry and the utilities industry with a fair value of $15.0 billion and $14.3 billion, respectively, or 13% of our invested assets portfolio.  These concentrations include fixed maturity AFS, trading and equity securities.

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Derivative Instruments

9 Months Ended

Sep. 30, 2018

Derivative Instruments [Abstract]

Derivative Instruments

6.  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, basis risk and credit risk.  See Note 1 in our 2017 Form 10-K for a detailed discussion of the accounting treatment for derivative instruments.  See Note 6 in our 2017 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.  See Note 14 for additional disclosures related to the fair value of our derivative instruments.

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

	As of September 30, 2018						As of December 31, 2017
	Notional		Fair Value				Notional		Fair Value
	Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	2,827	$	121	$	42	$	3,007	$	46	$	84
Foreign currency contracts (1)		2,085		104		71		1,804		79		79
Total cash flow hedges		4,912		225		113		4,811		125		163
Fair value hedges:
Interest rate contracts (1)		1,268		30		112		1,438		254		174
Non-Qualifying Hedges
Interest rate contracts (1)		90,138		318		233		72,937		657		127
Foreign currency contracts (1)		87		-		-		22		-		-
Equity market contracts (1)		24,967		534		140		31,090		562		557
Credit contracts (1)		-		-		-		52		-		-
Embedded derivatives:
Guaranteed living benefit ("GLB")
direct (2)		-		1,648		-		-		903		-
GLB ceded (2) (3)		-		35		193		-		51		67
Reinsurance related (4)		-		-		20		-		-		57
Indexed annuity and IUL contracts (2) (5)		-		44		1,571		-		11		1,418
Total derivative instruments	$	121,372	$	2,834	$	2,382	$	110,350	$	2,563	$	2,563

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

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

⁽³⁾ Reported in other liabilities on our Consolidated Balance Sheets.

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

⁽⁵⁾ Reported in future contract benefits on our Consolidated Balance Sheets.

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

	Remaining Life as of September 30, 2018
	Less Than		1 - 5		6 - 10		11 - 30		Over 30
	1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)	$	10,907	$	14,802	$	47,193	$	20,118	$	1,213	$	94,233
Foreign currency contracts (2)		141		256		635		1,130		10		2,172
Equity market contracts		18,103		3,615		115		14		3,120		24,967
Total derivative instruments
with notional amounts	$	29,151	$	18,673	$	47,943	$	21,262	$	4,343	$	121,372

⁽¹⁾ As of September 30, 2018, 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 September 30, 2018, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was September 2049.

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

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(29	)	$	49
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period:
Cumulative effect from adoption of
new accounting standard		(6	)		-
Cash flow hedges:
Interest rate contracts		117			(15	)
Foreign currency contracts		(19	)		46
Change in foreign currency exchange rate adjustment		69			(119	)
Change in DAC, VOBA, DSI and DFEL		8			(3	)
Income tax benefit (expense)		(37	)		32
Less:
Reclassification adjustment for gains (losses)
included in net income (loss):
Cash flow hedges:
Interest rate contracts (1)		3			3
Interest rate contracts (2)		(6	)		(13	)
Foreign currency contracts (1)		18			12
Foreign currency contracts (3)		-			5
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)
Income tax benefit (expense)		(3	)		(2	)
Balance as of end-of-period	$	92		$	(14	)

⁽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).

⁽³⁾ The OCI offset is reported within realized gain (loss) 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	1		$	2		$	3		$	3
Interest rate contracts (2)		(4	)		(5	)		(6	)		(13	)
Foreign currency contracts (1)		7			4			18			12
Foreign currency contracts (3)		-			-			-			5
Total cash flow hedges		4			1			15			7
Fair value hedges:
Interest rate contracts (1)		(2	)		(5	)		(11	)		(18	)
Interest rate contracts (2)		5			6			11			21
Interest rate contracts (3)		17			2			64			2
Total fair value hedges		20			3			64			5
Non-Qualifying Hedges
Interest rate contracts (3)		(167	)		18			(577	)		161
Foreign currency contracts (3)		-			1			2			1
Equity market contracts (3)		(199	)		(347	)		(280	)		(1,163	)
Equity market contracts (4)		10			6			11			21
Embedded derivatives:					-						-
GLB (3)		333			233			603			784
Reinsurance related (3)		5			3			37			3
Indexed annuity and IUL contracts (3)		(164	)		(46	)		(175	)		(230	)
Total derivative instruments	$	(158	)	$	(128	)	$	(300	)	$	(411	)

⁽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) recognized as a component of OCI (in millions) on derivative instruments designated and qualifying as cash flow hedges were as follows:

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Offset to net investment income	$	8		$	6		$	21		$	15
Offset to realized gain (loss)		-			-			-			5
Offset to interest and debt expense		(4	)		(5	)		(6	)		(13	)

As of September 30, 2018,  $29 million of the deferred net gains (losses) on derivative instruments in AOCI were expected to be reclassified to earnings during the next 12 months.  This reclassification would be due primarily to interest rate variances related to our interest rate swap agreements.

For the nine months ended September 30, 2018 and 2017, 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.

As of September 30, 2018, we did not have any exposure related to credit default swaps for which we are the seller.

As of December 31, 2017 information related to our credit default swaps for which we are the seller (dollars in millions) was as follows:

As of December 31, 2017
					Credit
		Reason	Nature		Rating of	Number			Maximum
		for	of	Underlying		of	Fair		Potential
Credit Contract Type	Maturity	Entering	Recourse	Obligation (1)		Instruments	Value (2)		Payout
Basket credit default swaps	12/20/2022	(3)	(4)		BBB+	1	$	1	$	52
						1	$	1	$	52

⁽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 our credit default swaps.

⁽³⁾ Credit default swaps were entered into in order to hedge the liability exposure on certain variable annuity products.

⁽⁴⁾ 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 credit default swaps for which we are the seller if credit risk-related contingent features were triggered (in millions) were as follows:

		As of			As of
	September 30,			December 31,
		2018			2017
Maximum potential payout		$	-		$	52
Less:  Counterparty thresholds			-			-
Maximum collateral potentially required to post		$	-		$	52

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 collateral if the market value was less than zero.

Credit Risk

We are exposed to credit losses in the event of non-performance by our counterparties on various derivative contracts and reflect assumptions regarding the credit or non-performance risk (“NPR”).  The NPR 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 September 30, 2018, the NPR adjustment was zero.  The credit risk associated with such agreements is minimized by entering into agreements with financial institutions with long-standing, superior performance records.  Additionally, we maintain a policy of requiring 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 credit support annex 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 September 30, 2018,  and December 31, 2017, our exposure was zero.

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 September 30, 2018					As of December 31, 2017
	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-	$	36	$	(22	)	$	116	$	(1	)
A+		177		(111	)		242		(453	)
A		40		(1	)		170		(120	)
A-		113		-			237		(3	)
BBB+		-		-			-		(4	)
	$	366	$	(134	)	$	765	$	(581	)

Balance Sheet Offsetting

Information related to the effects of offsetting (in millions) was as follows: 

		As of September 30, 2018
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	957			$	1,727	$	2,684
Gross amounts offset			(251	)			-		(251	)
Net amount of assets			706				1,727		2,433
Gross amounts not offset:
Cash collateral			(366	)			-		(366	)
Non-cash collateral			(80	)			-		(80	)
Net amount		$	260			$	1,727	$	1,987
Financial Liabilities
Gross amount of recognized liabilities		$	879			$	1,784	$	2,663
Gross amounts offset			(149	)			-		(149	)
Net amount of liabilities			730				1,784		2,514
Gross amounts not offset:
Cash collateral			(134	)			-		(134	)
Non-cash collateral			(420	)			-		(420	)
Net amount		$	176			$	1,784	$	1,960

		As of December 31, 2017
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	1,301			$	965	$	2,266
Gross amounts offset			(386	)			-		(386	)
Net amount of assets			915				965		1,880
Gross amounts not offset:
Cash collateral			(765	)			-		(765	)
Net amount		$	150			$	965	$	1,115
Financial Liabilities
Gross amount of recognized liabilities		$	955			$	1,542	$	2,497
Gross amounts offset			(296	)			-		(296	)
Net amount of liabilities			659				1,542		2,201
Gross amounts not offset:
Cash collateral			(581	)			-		(581	)
Net amount		$	78			$	1,542	$	1,620

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Federal Income Taxes

9 Months Ended

Sep. 30, 2018

Federal Income Taxes [Abstract]

Federal Income Taxes

7.  Federal Income Taxes

The effective tax rate is the ratio of tax expense over pre-tax income (loss).  The effective tax rate was 8% and 12% for the three and nine months ended September 30, 2018, respectively, compared to 18% and 17% for the corresponding periods in 2017.  The effective tax rate on pre-tax income was lower than the prevailing corporate federal income tax rate.  Differences in the effective rates and the U.S. statutory rates of 21% and 35% for the three and nine months ended September 30, 2018 and 2017, respectively, were the result of the separate account dividends-received deduction, certain tax preferred investment income, foreign tax credits and other tax preference items.  The current quarter also includes a tax benefit to net income from the impact of the reduced corporate tax rate under the Tax Act on our adoption of a recent Internal Revenue Service pronouncement related to variable annuity contracts.

The SEC previously issued rules that allow for a one year measurement period after the enactment of the Tax Act to finalize calculations and recording of the related tax impacts.  Subsequent to the Tax Act, we have continued to review and analyze the provisions of the Tax Act, including the actual and potential impact of the reduction in the U.S. federal corporate income tax rate and the impact of specific life insurance provisions on our financial statements.  While we do not anticipate any significant changes to amounts currently recorded, any additional adjustments to amounts recorded as a result of the Tax Act will be made during 2018.

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Guaranteed Benefit Features

9 Months Ended

Sep. 30, 2018

Guaranteed Benefit Features [Abstract]

Guaranteed Benefit Features

8.  Guaranteed Benefit Features

Information on the guaranteed death benefit (“GDB”) features outstanding (dollars in millions) was as follows:

	As of			As of
	September 30,			December 31,
		2018 (1)			2017 (1)
Return of Net Deposits
Total account value		$	98,623		$	96,941
Net amount at risk (2)			93			81
Average attained age of contract holders			64 years			64 years
Minimum Return
Total account value		$	103		$	108
Net amount at risk (2)			16			18
Average attained age of contract holders			76 years			76 years
Guaranteed minimum return			5%			5%
Anniversary Contract Value
Total account value		$	26,308		$	26,596
Net amount at risk (2)			438			417
Average attained age of contract holders			71 years			70 years

⁽¹⁾ Our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

⁽²⁾ Represents the amount of death benefit in excess of the account balance that is subject to market fluctuations.

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 GDBs (in millions), which were recorded in future contract benefits on our Consolidated Balance Sheets:

	For the Nine
	Months Ended
	September 30,
	2018			2017
Balance as of beginning-of-year	$	100		$	110
Changes in reserves		18			4
Benefits paid		(11	)		(14	)
Balance as of end-of-period	$	107		$	100

Variable Annuity Contracts

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

	As of				As of
	September 30,			December 31,
		2018			2017
Asset Type
Domestic equity		$	61,732		$	59,647
International equity			20,598			20,837
Fixed income			40,529			40,626
Total		$	122,859		$	121,110
Percent of total variable annuity
separate account values			98%			99%

Secondary Guarantee Products

Future contract benefits and other contract holder funds include reserves for our secondary guarantee products sold through our Life Insurance segment.  These UL and VUL products with secondary guarantees represented 35% of total life insurance in-force reserves as of September 30, 2018, and December 31, 2017.  UL and VUL products with secondary guarantees represented 38% and 34% of total sales for the three and nine months ended September 30, 2018, respectively, compared to 26% and 27% for the corresponding periods in 2017.

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Liability For Unpaid Claims

9 Months Ended

Sep. 30, 2018

Liability For Unpaid Claims [Abstract]

Liability For Unpaid Claims

9.  Liability for Unpaid Claims

Changes in the liability for unpaid claims (in millions), were as follows:

	For the Nine
	Months Ended
	September 30,
	2018			2017
Balance as of beginning-of-year	$	2,222		$	2,242
Reinsurance recoverable		57			69
Net balance as of beginning-of-year		2,165			2,173
Business acquired (1)		2,842			-
Incurred related to:
Current year		1,640			909
Prior years
Interest		85			53
All other incurred		(159	)		(85	)
Total incurred		1,566			877
Paid related to:
Current year		(663	)		(458	)
Prior years		(796	)		(440	)
Total paid		(1,459	)		(898	)
Net balance as of end-of-period		5,114			2,152
Reinsurance recoverable		141			57
Balance as of end-of-period	$	5,255		$	2,209

⁽¹⁾ Represents Liberty group life and disability reserves, net, as of May 1, 2018, subject to finalization of acquisition date fair values.  See Note 3 for additional information.

The majority of the reserves included in the roll forward are for long-term disability claims.  The interest rate assumption is an important part of the reserving process due to the long benefit period for these claims.  Interest accrued on prior year reserves has been calculated on the opening reserve balance less one-half of the prior year incurred period’s claim payments at our average reserve discount rate for the respective periods.

“Incurred related to prior years - All other incurred” reflected in the preceding table is primarily impacted by the level of claim resolutions in the period compared to that which is expected by the reserve assumption. A negative number implies a favorable result where claim resolutions were more favorable than assumed.  Our claim resolution rate assumption used in determining reserves is our expectation of the resolution rate we will experience over the long-term life of the block of claims.  It will vary from actual experience in any one period, both favorably and unfavorably.

 

A reconciliation of future contract benefits as reported in our Consolidated Balance Sheets to the liability for unpaid claims (in millions), was as follows:

	As of September 30,
	2018		2017
Future contract benefits	$	33,988	$	22,547
Less:
Life and annuity reserves and claims due		27,193		18,698
Accident and health active life reserves		1,540		1,640
Liability for unpaid claims	$	5,255	$	2,209

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Contingencies and Commitments

9 Months Ended

Sep. 30, 2018

Contingencies and Commitments [Abstract]

Contingencies and Commitments

10.  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 is 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 verdicts obtained 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 September 30, 2018.  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 condition.

For some matters, the Company is able to estimate a reasonably possible range of loss.  For such matters in which a loss is probable, an accrual has been made.  For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made.  Accordingly, the estimate contained in this paragraph reflects two types of matters.  For some matters included within this estimate, an accrual has been made, but there is a reasonable possibility that an exposure exists in excess of the amount accrued.  In these cases, the estimate reflects the reasonably possible range of loss in excess of the accrued amount.  For other matters included within this estimation, no accrual has been made because a loss, while potentially estimable, is believed to be reasonably possible but not probable.  In these cases, the estimate reflects the reasonably possible loss or range of loss.  As of September 30, 2018, we estimate the aggregate range of reasonably possible losses to be up to approximately $50million.

For other matters, we are not currently able to estimate the reasonably possible loss or range of loss.  We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts and the progress of settlement negotiations.  On a quarterly and annual basis, we review relevant information with respect to litigation contingencies and update our accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Certain reinsurers have sought rate increases on certain yearly renewable term treaties.  We are disputing the requested rate increases under these treaties.  We have initiated and will initiate arbitration proceedings, as necessary, under these treaties in order to protect our contractual rights.  Additionally, reinsurers may initiate arbitration proceedings against us.  We believe it is unlikely the outcome of these disputes will have a material adverse effect on our financial condition.  For more information about reinsurance, see Note 9 in our 2017 Form 10-K.

See Note 13 in our 2017 Form 10-K and Note 10 in our Form 10-Q for the quarters ended March 31, 2018, and June 30, 2018, for additional discussion of commitments and contingencies, which information is incorporated herein by reference.

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Shares and Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Shares and Stockholders' Equity [Abstract]

Shares and Stockholders' Equity

11.  Shares and Stockholders’ Equity

Common Shares

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

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Common Stock
Balance as of beginning-of-period	217,294,051		222,237,262		218,090,114		226,335,105
Stock issued for exercise of warrants	97,076		2,464		119,942		337,394
Stock compensation/issued for benefit plans	38,642		139,179		675,608		1,600,465
Retirement/cancellation of shares	(2,652,963	)	(2,834,287	)	(4,108,858	)	(8,728,346	)
Balance as of end-of-period	214,776,806		219,544,618		214,776,806		219,544,618
Common Stock as of End-of-Period
Basic basis	214,776,806		219,544,618		214,776,806		219,544,618
Diluted basis	217,390,897		222,701,021		217,390,897		222,701,021

Our common stock is without par value.

Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share was as follows:

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted-average shares, as used in basic calculation	215,901,268		220,813,693		217,413,480		223,311,993
Shares to cover exercise of outstanding warrants	579,882		668,103		620,580		795,312
Shares to cover non-vested stock	1,467,953		1,614,405		1,512,297		1,572,250
Average stock options outstanding during the period	1,700,026		2,275,826		1,807,340		2,432,171
Assumed acquisition of shares with assumed proceeds
from exercising outstanding warrants	(86,040	)	(94,338	)	(86,335	)	(116,577	)
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the period)	(1,082,651	)	(1,361,094	)	(1,090,868	)	(1,481,524	)
Shares repurchasable from measured but
unrecognized stock option expense	(11,209	)	(44,579	)	(17,381	)	(60,539	)
Average deferred compensation shares	-		-		936,355		926,612
Weighted-average shares, as used in diluted calculation	218,469,229		223,872,016		221,095,468		227,379,698

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 earnings per share (“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 all or a portion of their deferral amounts.  For the nine months ended September 30, 2018 and 2017, the effect of settling this obligation in LNC stock (“equity classification”) was more dilutive than the scenario of settling 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 $6 million and $(5) million for the nine months ended September 30, 2018 and 2017, respectively.

AOCI

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

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year	$	3,486		$	1,784
Cumulative effect from adoption of new accounting standards		674			-
Unrealized holding gains (losses) arising during the period		(5,520	)		2,385
Change in foreign currency exchange rate adjustment		(68	)		112
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		1,538			(468	)
Income tax benefit (expense)		858			(717	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(35	)		(26	)
Associated amortization of DAC, VOBA, DSI and DFEL		(15	)		(16	)
Income tax benefit (expense)		11			15
Balance as of end-of-period	$	1,007		$	3,123
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year	$	44		$	25
(Increases) attributable to:
Cumulative effect from adoption of new accounting standards		9			-
Gross OTTI recognized in OCI during the period		-			(1	)
Change in DAC, VOBA, DSI and DFEL		-			-
Income tax benefit (expense)		-			-
Decreases attributable to:
Changes in fair value, sales, maturities or other settlements of AFS securities		(8	)		29
Change in DAC, VOBA, DSI and DFEL		(10	)		(5	)
Income tax benefit (expense)		4			(8	)
Balance as of end-of-period	$	39		$	40
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(29	)	$	49
Cumulative effect from adoption of new accounting standard		(6	)		-
Unrealized holding gains (losses) arising during the period		98			31
Change in foreign currency exchange rate adjustment		69			(119	)
Change in DAC, VOBA, DSI and DFEL		8			(3	)
Income tax benefit (expense)		(37	)		32
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		15			7
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)
Income tax benefit (expense)		(3	)		(2	)
Balance as of end-of-period	$	92		$	(14	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(14	)	$	(27	)
Foreign currency translation adjustment arising during the period		(6	)		11
Balance as of end-of-period	$	(20	)	$	(16	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(257	)	$	(265	)
Cumulative effect from adoption of new accounting standard		(35	)		-
Adjustment arising during the period		10			(9	)
Balance as of end-of-period	$	(282	)	$	(274	)

The following summarizes the reclassifications out of AOCI (in millions) and the associated line item in the Consolidated Statements of Comprehensive Income (Loss):

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on AFS Securities
Gross reclassification	$	(35	)	$	(26	)	Total realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		(15	)		(16	)	Total realized gain (loss)
Reclassification before income							Income (loss) from continuing
tax benefit (expense)		(50	)		(42	)	operations before taxes
Income tax benefit (expense)		11			15		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(39	)	$	(27	)	Net income (loss)
Unrealized OTTI on AFS Securities
Gross reclassification	$	(1	)	$	6		Total realized gain (loss)
Change in DAC, VOBA, DSI and DFEL		-			(1	)	Total realized gain (loss)
Reclassification before income							Income (loss) from continuing
tax benefit (expense)		(1	)		5		operations before taxes
Income tax benefit (expense)		-			(2	)	Federal income tax expense (benefit)
Reclassification, net of income tax	$	(1	)	$	3		Net income (loss)
Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	3		$	3		Net investment income
Interest rate contracts		(6	)		(13	)	Interest and debt expense
Foreign currency contracts		18			12		Net investment income
Foreign currency contracts		-			5		Total realized gain (loss)
Total gross reclassifications		15			7
Associated amortization of DAC,
VOBA, DSI and DFEL		(1	)		(1	)	Commissions and other expenses
Reclassifications before income							Income (loss) from continuing
tax benefit (expense)		14			6		operations before taxes
Income tax benefit (expense)		(3	)		(2	)	Federal income tax expense (benefit)
Reclassifications, net of income tax	$	11		$	4		Net income (loss)

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Realized Gain (Loss)

9 Months Ended

Sep. 30, 2018

Realized Gain (Loss) [Abstract]

Realized Gain (Loss)

12.  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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Total realized gain (loss) related to certain investments (1)	$	(11	)	$	(19	)	$	(45	)	$	(49	)
Realized gain (loss) on the mark-to-market on certain instruments (2)		(10	)		(2	)		14			3
Indexed annuity and IUL contracts net derivatives results: (3)
Gross gain (loss)		(7	)		-			(14	)		(17	)
Associated amortization of DAC, VOBA, DSI and DFEL		(2	)		(1	)		(2	)		(1	)
Variable annuity net derivatives results: (4)
Gross gain (loss)		(32	)		(41	)		(10	)		(45	)
Associated amortization of DAC, VOBA, DSI and DFEL		7			7			6			4
Total realized gain (loss)	$	(55	)	$	(56	)	$	(51	)	$	(105	)

⁽¹⁾ See “Realized Gain (Loss) Related to Certain Investments” section in Note 5.

⁽²⁾ Represents changes in the fair values of certain derivative investments (not including those associated with our variable and indexed annuity and IUL contracts net derivatives results), reinsurance related embedded derivatives and trading securities.

⁽³⁾ Represents the net difference between the change in the fair value of the S&P 500 Index ® call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity and IUL contracts 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 riders and the change in the fair value of the derivative instruments we own to hedge the change in embedded derivative reserves on our GLB riders and the benefit ratio unlocking on our GLB and GDB riders, including the cost of purchasing the hedging instruments.

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Stock-Based Incentive Compensation Plans

9 Months Ended

Sep. 30, 2018

Stock-Based Incentive Compensation Plans [Abstract]

Stock-Based Incentive Compensation Plans

13.  Stock-Based Incentive Compensation Plans

We sponsor stock-based incentive compensation 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 service-vested shares), stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and deferred stock units (“DSUs”).  We issue new shares to satisfy option exercises and vested performance shares and RSUs.

LNC stock-based awards granted were as follows:

		For the		For the
		Three		Nine
		Months		Months
		Ended		Ended
	September 30,		September 30,
		2018		2018
10-year LNC stock options		-		481,404
Performance shares		-		156,676
RSUs		1,202		695,471
Non-employee:
SARs		-		14,692
Agent stock options		-		32,400
Director DSUs		7,184		21,682

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2018

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

14.  Fair Value of Financial Instruments

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

	As of September 30, 2018						As of December 31, 2017
	Carrying			Fair			Carrying			Fair
	Value			Value			Value			Value
Assets
AFS securities:
Fixed maturity securities	$	93,161		$	93,161		$	94,840		$	94,840
Equity securities		-			-			246			246
Trading securities		1,440			1,440			1,620			1,620
Equity securities		112			112			-			-
Mortgage loans on real estate		12,561			12,239			10,762			10,877
Derivative investments (1)		706			706			915			915
Other investments		2,204			2,204			2,296			2,296
Cash and invested cash		1,460			1,460			1,628			1,628
Other assets:
GLB direct embedded derivatives		1,648			1,648			903			903
GLB ceded embedded derivatives		35			35			51			51
Indexed annuity ceded embedded derivatives		44			44			11			11
Separate account assets		147,692			147,692			144,219			144,219
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(1,571	)		(1,571	)		(1,418	)		(1,418	)
Other contract holder funds:
Remaining guaranteed interest and similar contracts		(562	)		(562	)		(592	)		(592	)
Account values of certain investment contracts		(33,684	)		(34,577	)		(32,370	)		(36,200	)
Short-term debt		-			-			(450	)		(452	)
Long-term debt		(5,804	)		(5,795	)		(4,894	)		(5,042	)
Reinsurance related embedded derivatives		(20	)		(20	)		(57	)		(57	)
Other liabilities:
Derivative liabilities (1)		(197	)		(197	)		(338	)		(338	)
GLB ceded embedded derivatives		(193	)		(193	)		(67	)		(67	)

⁽¹⁾ We have master netting agreements with each of our derivative counterparties, which allow for the netting of our derivative asset and liability positions by counterparty.

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 includes primarily 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.  Other investments also include FHLB stock carried at cost and periodically evaluated for impairment based on ultimate recovery of par value.  The inputs used to measure the fair value of our LPs, other privately held investments and FHLB stock are classified as Level 3 within the fair value hierarchy.  The remaining assets in other investments include cash collateral receivables and securities that are not LPs or other privately held investments. The inputs used to measure the fair value of these assets are classified as Level 1 within the fair value hierarchy.

Separate Account Assets

Separate account assets are primarily carried at fair value.  A portion of our separate account assets includes LPs, which 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 the separate account asset LPs 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 September 30, 2018, and December 31, 2017, 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 short-term and long-term debt is based on quoted market prices.  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 September 30, 2018, or December 31, 2017, 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 2017 Form 10-K:

		As of September 30, 2018
		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		$	-		$	76,871			$	3,209		$	80,080
ABS			-			954				31			985
U.S. government bonds			391			18				-			409
Foreign government bonds			-			351				108			459
RMBS			-			3,280				7			3,287
CMBS			-			725				23			748
CLOs			-			1,311				51			1,362
State and municipal bonds			-			5,218				-			5,218
Hybrid and redeemable preferred securities			74			462				77			613
Trading securities			43			1,379				18			1,440
Equity securities			28			58				26			112
Derivative investments (1)			-			572				535			1,107
Other investments			149			-				-			149
Cash and invested cash			-			1,460				-			1,460
Other assets:
GLB direct embedded derivatives			-			-				1,648			1,648
GLB ceded embedded derivatives			-			-				35			35
Indexed annuity ceded embedded derivatives			-			-				44			44
Separate account assets			764			146,894				-			147,658
Total assets		$	1,449		$	239,553			$	5,812		$	246,814
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,571	)	$	(1,571	)
Reinsurance related embedded derivatives			-			(20	)			-			(20	)
Other liabilities:
Derivative liabilities (1)			-			(417	)			(181	)		(598	)
GLB ceded embedded derivatives			-			-				(193	)		(193	)
Total liabilities		$	-		$	(437	)		$	(1,945	)	$	(2,382	)

		As of December 31, 2017
		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		$	-		$	79,125			$	3,091		$	82,216
ABS			-			947				27			974
U.S. government bonds			556			6				5			567
Foreign government bonds			-			341				110			451
RMBS			-			3,453				12			3,465
CMBS			-			594				6			600
CLOs			-			717				91			808
State and municipal bonds			-			5,119				-			5,119
Hybrid and redeemable preferred securities			71			493				76			640
Equity AFS securities			28			56				162			246
Trading securities			73			1,498				49			1,620
Derivative investments (1)			-			994				603			1,597
Other investments			150			-				-			150
Cash and invested cash			-			1,628				-			1,628
Other assets:
GLB direct embedded derivatives			-			-				903			903
GLB ceded embedded derivatives			-			-				51			51
Indexed annuity ceded embedded derivatives			-			-				11			11
Separate account assets			814			143,405				-			144,219
Total assets		$	1,692		$	238,376			$	5,197		$	245,265
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,418	)	$	(1,418	)
Long-term debt			-			(1,127	)			-			(1,127	)
Reinsurance related embedded derivatives			-			(57	)			-			(57	)
Other liabilities:
Derivative liabilities (1)			-			(447	)			(573	)		(1,020	)
GLB ceded embedded derivatives			-			-				(67	)		(67	)
Total liabilities		$	-		$	(1,631	)		$	(2,058	)	$	(3,689	)

⁽¹⁾ Derivative investment assets and liabilities presented within the fair value hierarchy are presented on a gross basis by derivative type and not on a master netting basis by counterparty.

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, deferred sales inducements (“DSI”) and deferred front-end loads (“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 September 30, 2018
							Gains		Issuances,				Transfers
				Items			(Losses)			Sales,			Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	3,181		$	1		$	(30	)	$	88		$	(31	)	$	3,209
ABS		31			-			-			-			-			31
Foreign government bonds		108			-			-			-			-			108
RMBS		-			-			-			7			-			7
CMBS		5			-			-			18			-			23
CLOs		145			-			-			17			(111	)		51
Hybrid and redeemable
preferred securities		78			-			(1	)		-			-			77
Trading securities		22			-			-			2			(6	)		18
Equity securities		26			-			-			-			-			26
Derivative investments		93			(115	)		(55	)		431			-			354
Other assets: (6)
GLB direct embedded derivatives		1,248			400			-			-			-			1,648
GLB ceded embedded derivatives		41			(6	)		-			-			-			35
Indexed annuity ceded embedded derivatives		29			4			-			11			-			44
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,400	)		(164	)		-			(7	)		-			(1,571	)
Other liabilities – GLB ceded embedded
derivatives (6)		(131	)		(62	)		-			-			-			(193	)
Total, net	$	3,476		$	58		$	(86	)	$	567		$	(148	)	$	3,867

	For the Three Months Ended September 30, 2017
							Gains		Issuances,				Transfers
				Items			(Losses)			Sales			Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	2,517		$	4		$	35		$	(35	)	$	59		$	2,580
ABS		43			-			(1	)		-			(15	)		27
U.S. government bonds		5			-			-			-			-			5
Foreign government bonds		109			-			1			-			-			110
RMBS		7			-			-			6			-			13
CMBS		21			-			-			(1	)		(14	)		6
CLOs		28			-			-			15			(28	)		15
Hybrid and redeemable
preferred securities		82			-			3			-			(9	)		76
Equity AFS securities		183			-			(1	)		9			(1	)		190
Trading securities		59			-			-			(10	)		1			50
Derivative investments		155			(13	)		9			(85	)		-			66
Other assets: (6)
GLB direct embedded derivatives		298			272			-			-			-			570
GLB ceded embedded derivatives		85			(32	)		-			-			-			53
Indexed annuity ceded embedded derivatives		-			-			-			3			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,268	)		(47	)		-			(3	)		-			(1,318	)
Other liabilities – GLB ceded embedded
derivatives (6)		-			(7	)		-			-			-			(7	)
Total, net	$	2,324		$	177		$	46		$	(101	)	$	(7	)	$	2,439

	For the Nine Months Ended September 30, 2018
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net (2)			Net (3)(4)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	3,091		$	7		$	(137	)	$	319		$	(71	)	$	3,209
ABS		27			-			(1	)		5			-			31
U.S. government bonds		5			-			-			(5	)		-			-
Foreign government bonds		110			-			(2	)		-			-			108
RMBS		12			-			-			7			(12	)		7
CMBS		6			1			-			37			(21	)		23
CLOs		91			-			-			164			(204	)		51
Hybrid and redeemable
preferred securities		76			-			1			-			-			77
Equity AFS securities		162			-			-			-			(162	)		-
Trading securities		49			(5	)		-			(20	)		(6	)		18
Equity securities		-			-			-			-			26			26
Derivative investments		30			106			(113	)		331			-			354
Other assets: (6)
GLB direct embedded derivatives		903			745			-			-			-			1,648
GLB ceded embedded derivatives		51			(16	)		-			-			-			35
Indexed annuity ceded embedded derivatives		11			4			-			29			-			44
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,418	)		(175	)		-			22			-			(1,571	)
Other liabilities – GLB ceded embedded
derivatives (6)		(67	)		(126	)		-			-			-			(193	)
Total, net	$	3,139		$	541		$	(252	)	$	889		$	(450	)	$	3,867

	For the Nine Months Ended September 30, 2017
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	2,405		$	15		$	153		$	(182	)	$	189		$	2,580
ABS		33			-			-			-			(6	)		27
U.S. government bonds		-			-			-			-			5			5
Foreign government bonds		111			-			(1	)		-			-			110
RMBS		3			-			-			10			-			13
CMBS		7			-			1			54			(56	)		6
CLOs		68			-			-			33			(86	)		15
State and municipal bonds		-			(1	)		-			-			1			-
Hybrid and redeemable
preferred securities		76			-			14			-			(14	)		76
Equity AFS securities		177			1			(2	)		15			(1	)		190
Trading securities		65			2			8			(26	)		1			50
Derivative investments		(93	)		(25	)		97			87			-			66
Other assets: (6)
GLB direct embedded derivatives		-			570			-			-			-			570
GLB ceded embedded derivatives		203			(150	)		-			-			-			53
Indexed annuity ceded embedded derivatives		-			-			-			3			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,139	)		(230	)		-			51			-			(1,318	)
Other liabilities: (6)
GLB direct embedded derivatives		(371	)		371			-			-			-			-
GLB ceded embedded derivatives		-			(7	)		-			-			-			(7	)
Total, net	$	1,545		$	546		$	270		$	45		$	33		$	2,439

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

⁽²⁾ Net issuances, sales, maturities, settlements, calls, net include financial instruments acquired from Liberty Life as follows: corporate bonds of $67 million and ABS of $17 million.

⁽³⁾ Transfers into or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-year.  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 the prior period.

⁽⁴⁾ Transfers into or out of Level 3 for FHLB stock between equity securities and other investments at cost on our Consolidated Balance Sheets.

⁽⁵⁾ 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).

⁽⁶⁾ Gains (losses) from sales, maturities, settlements and calls are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

The following provides the components of the items included in issuances, sales, maturities, settlements and 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 September 30, 2018
	Issuances			Sales		Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	162		$	-	$	(1	)	$	(65	)	$	(8	)	$	88
RMBS		7			-		-			-			-			7
CMBS		18			-		-			-			-			18
CLOs		17			-		-			-			-			17
Trading securities		2			-		-			-			-			2
Derivative investments		96			455		(120	)		-			-			431
Other assets – indexed annuity ceded
embedded derivatives		11			-		-			-			-			11
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(83	)		-		-			76			-			(7	)
Total, net	$	230		$	455	$	(121	)	$	11		$	(8	)	$	567

	For the Three Months Ended September 30, 2017
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	167		$	(114	)	$	(19	)	$	(43	)	$	(26	)	$	(35	)
RMBS		6			-			-			-			-			6
CMBS		-			-			-			(1	)		-			(1	)
CLOs		15			-			-			-			-			15
Equity AFS securities		10			(1	)		-			-			-			9
Trading securities		-			(10	)		-			-			-			(10	)
Derivative investments		50			(23	)		(112	)		-			-			(85	)
Other assets – indexed annuity ceded
embedded derivatives		3			-			-			-			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(14	)		-			-			11			-			(3	)
Total, net	$	237		$	(148	)	$	(131	)	$	(33	)	$	(26	)	$	(101	)

	For the Nine Months Ended September 30, 2018
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	785		$	(156	)	$	(3	)	$	(238	)	$	(69	)	$	319
ABS		22			(17	)		-			-			-			5
U.S. government bonds		-			(5	)		-			-			-			(5	)
RMBS		7			-			-			-			-			7
CMBS		39			-			-			(2	)		-			37
CLOs		164			-			-			-			-			164
Trading securities		4			(24	)		-			-			-			(20	)
Equity securities		1			(1	)		-			-			-			-
Derivative investments		225			460			(354	)		-			-			331
Other assets – indexed annuity ceded
embedded derivatives		29			-			-			-			-			29
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(158	)		-			-			180			-			22
Total, net	$	1,118		$	257		$	(357	)	$	(60	)	$	(69	)	$	889

	For the Nine Months Ended September 30, 2017
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	367		$	(179	)	$	(66	)	$	(170	)	$	(134	)	$	(182	)
RMBS		10			-			-			-			-			10
CMBS		55			-			-			(1	)		-			54
CLOs		33			-			-			-			-			33
Equity AFS securities		18			(3	)		-			-			-			15
Trading securities		2			(27	)		-			(1	)		-			(26	)
Derivative investments		145			243			(301	)		-			-			87
Other assets – indexed annuity ceded
embedded derivatives		3			-			-			-			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(45	)		-			-			96			-			51
Total, net	$	588		$	34		$	(367	)	$	(76	)	$	(134	)	$	45

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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Derivative investments	$	(1	)	$	(83	)	$	105		$	(159	)
Embedded derivatives:
Indexed annuity and IUL contracts		(11	)		2			(18	)		(13	)
GLB		576			428			1,264			1,352
Total, net (1)	$	564		$	347		$	1,351		$	1,180

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

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

	For the Three								For the Three
	Months Ended								Months Ended
	September 30, 2018								September 30, 2017
	Transfers		Transfers						Transfers		Transfers
	Into		Out of						Into		Out of
	Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	11	$	(42	)	$	(31	)	$	116	$	(57	)	$	59
ABS		-		-			-			-		(15	)		(15	)
CMBS		-		-			-			-		(14	)		(14	)
CLOs		-		(111	)		(111	)		-		(28	)		(28	)
Hybrid and redeemable preferred
securities		-		-			-			-		(9	)		(9	)
Equity AFS securities		-		-			-			-		(1	)		(1	)
Trading securities		-		(6	)		(6	)		1		-			1
Total, net	$	11	$	(159	)	$	(148	)	$	117	$	(124	)	$	(7	)

	For the Nine								For the Nine
	Months Ended								Months Ended
	September 30, 2018								September 30, 2017
	Transfers		Transfers						Transfers		Transfers
	Into		Out of						Into		Out of
	Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	54	$	(125	)	$	(71	)	$	277	$	(88	)	$	189
ABS		-		-			-			15		(21	)		(6	)
U.S. government bonds		-		-			-			5		-			5
RMBS		-		(12	)		(12	)		-		-			-
CMBS		-		(21	)		(21	)		3		(59	)		(56	)
CLOs		-		(204	)		(204	)		30		(116	)		(86	)
State and municipal bonds		-		-			-			2		(1	)		1
Hybrid and redeemable preferred
securities		-		-			-			-		(14	)		(14	)
Equity AFS securities		-		(162	)		(162	)		-		(1	)		(1	)
Trading securities		-		(6	)		(6	)		4		(3	)		1
Equity securities		26		-			26			-		-			-
Total, net	$	80	$	(530	)	$	(450	)	$	336	$	(303	)	$	33

Transfers into 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 nine months ended September 30, 2018 and 2017, transfers in and out of Level 3 were attributable primarily to the securities’ observable market information no longer being available or becoming available.  In 2018, transfers into or out of Level 3 also include FHLB stock between equity securities and other investments at cost on our Consolidated Balance Sheets.  Transfers into 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, transfers from Level 2 to Level 1 will result.  When quoted prices in active markets become unavailable, but we are able to employ a valuation methodology using significant observable inputs, transfers from Level 1 to Level 2 will result.  For the three and nine months ended September 30, 2018 and 2017, 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 as of September 30, 2018:

	Fair			Valuation	Significant	Assumption or
	Value			Technique	Unobservable Inputs	Input Ranges
Assets
Investments:
Fixed maturity AFS and trading
securities:
Corporate bonds	$	2,445		Discounted cash flow	Liquidity/duration adjustment (1)	0.5	%	-	24.8	%
ABS		23		Discounted cash flow	Liquidity/duration adjustment (1)	3.0	%	-	3.0	%
Foreign government bonds		78		Discounted cash flow	Liquidity/duration adjustment (1)	1.1	%	-	2.8	%
Hybrid and redeemable
preferred securities		4		Discounted cash flow	Liquidity/duration adjustment (1)	1.8	%	-	1.8	%
Equity securities		21		Discounted cash flow	Liquidity/duration adjustment (1)	4.5	%	-	5.1	%
Other assets:
GLB direct and ceded
embedded derivatives		1,683		Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	85	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	80	%	-	115	%
					NPR (5)	0.01	%	-	0.32	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	29	%
Indexed annuity ceded
embedded derivatives		44		Discounted cash flow	Lapse rate (2)	1	%	-	9	%
					Mortality rate (6)				(8)
Liabilities
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives	$	(1,571	)	Discounted cash flow	Lapse rate (2)	1	%	-	9	%
					Mortality rate (6)				(8)
Other liabilities – GLB ceded
embedded derivatives		(193	)	Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	85	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	80	%	-	115	%
					NPR (5)	0.01	%	-	0.32	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	29	%

⁽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 for indexed annuity and IUL contracts represents the lapse rates during the surrender charge period.

⁽³⁾ The utilization of guaranteed withdrawals input represents the estimated percentage of contract holders that utilize the guaranteed withdrawal feature.

⁽⁴⁾ The utilization factors are applied to the present value of claims or premiums, as appropriate, in the GLB reserve calculation to estimate the impact of inefficient withdrawal behavior, including taking less than or more than the maximum guaranteed withdrawal.

⁽⁵⁾ The NPR input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract.

⁽⁶⁾ 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 gender, will die.

⁽⁷⁾ 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.

⁽⁸⁾ The mortality rate is based on a combination of company and industry experience, adjusted for improvement factors.

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 adjustment input would result in a decrease in the fair value measurement.

· Indexed annuity and IUL contracts embedded derivatives – For direct embedded derivatives, an increase in the lapse rate or mortality rate inputs would result in a decrease in the fair value measurement. 

· GLB embedded derivatives – Assuming our GLB direct embedded derivatives are in a liability position: an increase in our lapse rate, NPR or mortality rate inputs would result in a decrease in the fair value measurement; and an increase in the utilization of guaranteed withdrawal or volatility inputs 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 ongoing 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 2017 Form 10-K.

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Segment Information

9 Months Ended

Sep. 30, 2018

Segment Information [Abstract]

Segment Information

15.  Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments.  As discussed in Note 3, we completed the acquisition of Liberty Life during the second quarter of 2018.  Related results are included within the Group Protection segment.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 21 of our 2017 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 and 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 reflected within variable annuity net derivative results accounted for at fair value;

§ Changes in the fair value of the derivatives we own to hedge our GLB riders reflected within variable annuity net derivative results;

§ 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; and

§ Changes in the fair value of equity securities;

· 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;

· Acquisition and integration costs related to mergers and acquisitions; and

· Income (loss) from the initial adoption of new accounting standards, regulations, and policy changes including the net impact from the Tax Cuts and Jobs Act.

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 reserve changes on business sold through reinsurance.

We use our prevailing corporate federal income tax rates of 21% and 35%, where applicable, 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Revenues
Operating revenues:
Annuities	$	1,118		$	1,073		$	3,297		$	3,211
Retirement Plan Services		294			291			878			863
Life Insurance		1,766			1,614			5,106			4,874
Group Protection		1,128			564			2,618			1,646
Other Operations		56			65			182			220
Excluded realized gain (loss), pre-tax		(98	)		(97	)		(188	)		(229	)
Amortization of deferred gain arising from reserve changes
on business sold through reinsurance, pre-tax		-			-			-			1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax		-			1			-			2
Total revenues	$	4,264		$	3,511		$	11,893		$	10,588

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Income (Loss)
Income (loss) from operations:
Annuities	$	302		$	277		$	844		$	809
Retirement Plan Services		40			35			125			109
Life Insurance		176			121			470			384
Group Protection		63			41			137			83
Other Operations		(71	)		(20	)		(171	)		(71	)
Excluded realized gain (loss), after-tax		(77	)		(63	)		(149	)		(149	)
Gain (loss) on early extinguishment of debt, after-tax		-			(3	)		(18	)		(3	)
Income (loss) from reserve changes (net of related amortization)
on business sold through reinsurance, after-tax		-			-			-			1
Benefit ratio unlocking, after-tax		33			30			32			101
Net impact from the Tax Cuts and Jobs Act		32			-			19			-
Acquisition and integration costs related to mergers
and acquisitions, after-tax		(8	)		-			(47	)		-
Net income (loss)	$	490		$	418		$	1,242		$	1,264

Revenue from Contracts with Customers

As discussed in Note 2, we adopted ASU 2014-09, Revenue from Contracts with Customers, as of January 1, 2018, that applies primarily to commissions and advisory fees earned by our broker dealer operation.  The following table illustrates the revenue recognized from contracts with customers reported within fee income and other revenues on our Consolidated Statements of Comprehensive Income (Loss) and timing of revenue recognition by segment (in millions):

	For the Three Months Ended September 30, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	137	$	42	$	6	$	-	$	-	$	185
Other revenues		120		5		2		41		-		168
Total revenue from contracts
with customers	$	257	$	47	$	8	$	41	$	-	$	353
Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	17	$	1	$	3	$	-	$	-	$	21
Transferred over time		240		46		5		41		-		332
Total revenue from contracts
with customers	$	257	$	47	$	8	$	41	$	-	$	353

	For the Nine Months Ended September 30, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	403	$	126	$	17	$	-	$	-	$	546
Other revenues		359		14		7		73		-		453
Total revenue from contracts
with customers	$	762	$	140	$	24	$	73	$	-	$	999
Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	53	$	3	$	6	$	-	$	-	$	62
Transferred over time		709		137		18		73		-		937
Total revenue from contracts
with customers	$	762	$	140	$	24	$	73	$	-	$	999

Revenue recognized from contracts with customers included in fee income consists primarily of wholesaling-related 12b-1 fees and net investment advisory fees.  The 12b-1 fees are received from separate account fund sponsors as compensation for servicing the underlying mutual funds.  The net investment advisory fees are related to asset management of certain separate account funds.  Such revenues are recorded based on a contractual percentage of the market value of mutual fund assets over the period shares are owned by customers, and on a contractual percentage of the customer’s managed assets over the period advisory services are provided, respectively. 

Revenue recognized from contracts with customers included in other revenues primarily relates to our retail sales network and consists of commission revenue for the sale of non-affiliated securities recorded on a trade-date basis and advisory fee income.  Advisory fee income is asset-based revenues recorded as earned based on a contractual percentage of customer account values. 

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Nature Of Operations And Basis Of Presentation

9 Months Ended

Sep. 30, 2018

Nature Of Operations And Basis Of Presentation

Nature Of Operations

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 15 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 and solutions.  These products primarily include fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, indexed universal life insurance (“IUL”), term life insurance, employer-sponsored retirement plans and services, and group life, disability and dental.

Basis Of Presentation

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.  As discussed in Note 3, on May 1, 2018, LNC and The Lincoln National Life Insurance Company (“LNL”) completed the acquisition of Liberty Life Assurance Company of Boston (“Liberty Life”).  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, 2017 (“2017 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 condition, results of operations and cash flows, are summarized in our 2017 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 nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018.  All material inter-company accounts and transactions have been eliminated in consolidation.

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Acquisition (Tables)

9 Months Ended

Sep. 30, 2018

Acquisition [Abstract]

Schedule Of Fair Value Of Net Assets Acquired

	Preliminary
	Fair Value
Assets
Investments	$	2,493
Mortgage loans on real estate		658
Cash and invested cash		107
Reinsurance recoverables		76
Premiums and fees receivable		83
Accrued investment income		24
Other intangible assets acquired		640
Other assets acquired		142
Separate account assets		99
Total assets acquired	$	4,322
Liabilities
Future contract benefits	$	2,930
Other contract holder funds		46
Other liabilities acquired		120
Separate account liabilities		99
Total liabilities assumed	$	3,195
Net identifiable assets acquired	$	1,127
Goodwill		390
Net assets acquired	$	1,517

Schedule Of Fair Value Of Identifiable Intangible Assets Acquired

			Weighted-
			Average
			Amortization
	Fair Value		Period
Value of customer relationships acquired	$	576	20
Value of distribution agreements		31	13
Value of business acquired		30	3
Insurance licenses		3	N/A
Total identifiable intangible assets	$	640

Schedule Of Pro Forma Information

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenue	$	4,263	$	3,989	$	12,632	$	12,030
Net income		497		396		1,287		1,201

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Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2018

Variable Interest Entities [Abstract]

Consolidated Variable Interest Entity Asset and Liability information

		As of September 30, 2018							As of December 31, 2017
		Number							Number
		of		Notional		Carrying			of		Notional		Carrying
	Instruments			Amounts		Value		Instruments			Amounts		Value
Assets
Total return swap			1		587		-			1		573		-
Total assets			1	$	587	$	-			1	$	573	$	-

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Investments (Tables)

9 Months Ended

Sep. 30, 2018

Investments [Abstract]

Reconciliation Of Available-For-Sale Securities From Cost Basis To Fair Value

	As of September 30, 2018
	Amortized		Gross Unrealized							Fair
	Cost		Gains		Losses		OTTI (1)			Value
Fixed maturity AFS securities:
Corporate bonds	$	78,496	$	3,299	$	1,724	$	(9	)	$	80,080
Asset-backed securities ("ABS")		934		41		7		(17	)		985
U.S. government bonds		392		23		6		-			409
Foreign government bonds		418		41		-		-			459
Residential mortgage-backed securities ("RMBS")		3,267		113		114		(21	)		3,287
Commercial mortgage-backed securities ("CMBS")		766		2		23		(3	)		748
Collateralized loan obligations ("CLOs")		1,371		-		14		(5	)		1,362
State and municipal bonds		4,588		656		26		-			5,218
Hybrid and redeemable preferred securities		576		62		25		-			613
Total AFS securities	$	90,808	$	4,237	$	1,939	$	(55	)	$	93,161

	As of December 31, 2017
	Amortized		Gross Unrealized							Fair
	Cost		Gains		Losses		OTTI (1)			Value
Fixed maturity AFS securities:
Corporate bonds	$	75,701	$	6,862	$	354	$	(7	)	$	82,216
ABS		903		51		7		(27	)		974
U.S. government bonds		527		41		1		-			567
Foreign government bonds		395		56		-		-			451
RMBS		3,327		155		39		(22	)		3,465
CMBS		590		10		2		(2	)		600
CLOs		803		2		2		(5	)		808
State and municipal bonds		4,172		953		6		-			5,119
Hybrid and redeemable preferred securities		575		87		22		-			640
Total fixed maturity securities		86,993		8,217		433		(63	)		94,840
Equity AFS securities		247		16		17		-			246
Total AFS securities	$	87,240	$	8,233	$	450	$	(63	)	$	95,086

⁽¹⁾ Includes unrealized (gains) and losses on impaired securities related to changes in the fair value of such securities subsequent to the impairment measurement date.

Available-For-Sale Securities By Contractual Maturities

	Amortized		Fair
	Cost		Value
Due in one year or less	$	3,631	$	3,669
Due after one year through five years		17,430		17,509
Due after five years through ten years		17,493		17,440
Due after ten years		45,916		48,161
Subtotal		84,470		86,779
Structured securities (ABS, MBS, CLOs)		6,338		6,382
Total fixed maturity AFS securities	$	90,808	$	93,161

Fair Value And Gross Unrealized Losses In A Continuous Unrealized Loss Position

	As of September 30, 2018
	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 AFS securities:
Corporate bonds	$	33,196		$	1,188	$	4,690		$	538	$	37,886		$	1,726
ABS		252			3		129			12		381			15
U.S. government bonds		169			4		18			2		187			6
RMBS		836			43		603			73		1,439			116
CMBS		624			18		57			5		681			23
CLOs		1,062			14		34			-		1,096			14
State and municipal bonds		724			15		75			11		799			26
Hybrid and redeemable
preferred securities		31			2		132			22		163			24
Total AFS securities	$	36,894		$	1,287	$	5,738		$	663	$	42,632		$	1,950
Total number of AFS securities in an unrealized loss position															3,480

	As of December 31, 2017
	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 AFS securities:
Corporate bonds	$	4,854		$	68	$	4,893		$	288	$	9,747		$	356
ABS		62			1		151			15		213			16
U.S. government bonds		156			-		19			1		175			1
RMBS		302			4		641			36		943			40
CMBS		113			-		60			3		173			3
CLOs		281			2		72			-		353			2
State and municipal bonds		34			-		93			6		127			6
Hybrid and redeemable
preferred securities		20			-		126			22		146			22
Total fixed maturity securities		5,822			75		6,055			371		11,877			446
Equity AFS securities		22			14		8			3		30			17
Total AFS securities	$	5,844		$	89	$	6,063		$	374	$	11,907		$	463
Total number of AFS securities in an unrealized loss position															1,128

Schedule Of Available-For-Sale Securities Whose Value Is Below Amortized Cost

	As of September 30, 2018
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	131	$	47	$	-			20
Six months or greater, but less than nine months		21		16		-			3
Nine months or greater, but less than twelve months		39		16		-			4
Twelve months or greater		123		50		8			29
Total	$	314	$	129	$	8			56

	As of December 31, 2017
								Number
	Fair		Gross Unrealized					of
	Value		Losses		OTTI		Securities (1)
Less than six months	$	156	$	57	$	1			26
Six months or greater, but less than nine months		2		1		-			4
Nine months or greater, but less than twelve months		15		8		-			7
Twelve months or greater		215		78		10			49
Total	$	388	$	144	$	11			86

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

Schedule Of Changes In Amount Of Credit Losses Of OTTI Recognized In Net Income (Loss)

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance as of beginning-of-period	$	375		$	390		$	378		$	430
Increases attributable to:
Credit losses on securities for which an
OTTI was not previously recognized		2			8			4			13
Credit losses on securities for which an
OTTI was previously recognized		-			1			1			4
Decreases attributable to:
Securities sold, paid down or matured		(5	)		(21	)		(11	)		(69	)
Balance as of end-of-period	$	372		$	378		$	372		$	378

Composition Of Current And Past Due Mortgage Loans On Real Estate

	As of				As of
	September 30,				December 31,
		2018				2017
Current		$	12,578			$	10,762
60 to 90 days past due			-				-
Greater than 90 days past due			1				3
Valuation allowance associated with impaired mortgage loans on real estate			(1	)			(3	)
Unamortized premium (discount)			(17	)			-
Total carrying value		$	12,561			$	10,762

Schedule Of Impaired Mortgage Loans

		As of				As of
	September 30,				December 31,
		2018				2017
Number of impaired mortgage loans on real estate		1				3
Principal balance of impaired mortgage loans on real estate		$	4			$	11
Valuation allowance associated with impaired mortgage loans on real estate			(1	)			(3	)
Carrying value of impaired mortgage loans on real estate		$	3			$	8

Changes In The Valuation Allowance Of Impaired Mortgage Loans On Real Estate

	For the Three					For the Nine
	Months Ended					Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
Balance as of beginning-of-period	$	2		$	2	$	3		$	2
Additions		-			-		-			-
Charge-offs, net of recoveries		(1	)		-		(2	)		-
Balance as of end-of-period	$	1		$	2	$	1		$	2

Schedule Of Average Carrying Value Of Impaired Mortgage Loans On Real Estate

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Average carrying value for impaired mortgage loans on real estate	$	5	$	5	$	6	$	5
Interest income recognized on impaired mortgage loans on real estate		-		-		-		-
Interest income collected on impaired mortgage loans on real estate		-		-		-		-

Credit Quality Indicators For Mortgage Loans

	As of September 30, 2018				As of December 31, 2017
				Debt-				Debt-
				Service				Service
	Carrying		% of	Coverage	Carrying		% of	Coverage
Loan-to-Value Ratio	Value		Total	Ratio	Value		Total	Ratio
Less than 65%	$	11,297	89.9%	2.30	$	9,642	89.6%	2.26
65% to 74%		1,187	9.5%	1.79		1,000	9.3%	1.94
75% to 100%		74	0.6%	0.95		112	1.0%	0.97
Greater than 100%		3	0.0%	0.21		8	0.1%	0.82
Total mortgage loans on real estate	$	12,561	100.0%		$	10,762	100.0%

Realized Gain (Loss) Related To Certain Investments

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Fixed maturity AFS securities: (1)
Gross gains	$	14		$	7		$	30		$	19
Gross losses		(21	)		(22	)		(65	)		(47	)
Equity AFS securities:
Gross gains		-			1			-			2
Gain (loss) on other investments (2)		1			-			6			(6	)
Associated amortization of DAC, VOBA, DSI and DFEL
and changes in other contract holder funds		(5	)		(5	)		(16	)		(17	)
Total realized gain (loss) related to certain investments, pre-tax	$	(11	)	$	(19	)	$	(45	)	$	(49	)

⁽¹⁾ These amounts are represented net of related fair value hedging activity.  See Note 6 for more information.

⁽²⁾ Includes market adjustments on equity securities still held of less than $1 million and $2 million for the three and nine months ended September 30, 2018, respectively.

OTTI Recognized In Net Income (Loss) And OCI

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
OTTI Recognized in Net Income (Loss)
Fixed maturity AFS securities:
Corporate bonds	$	(2	)	$	(8	)	$	(4	)	$	(13	)
ABS		-			(1	)		-			(2	)
RMBS		-			-			(1	)		(1	)
State and municipal bonds		-			-			-			(1	)
Gross OTTI recognized in net income (loss)		(2	)		(9	)		(5	)		(17	)
Associated amortization of DAC, VOBA, DSI and DFEL		-			1			-			1
Net OTTI recognized in net income (loss), pre-tax	$	(2	)	$	(8	)	$	(5	)	$	(16	)

Payables For Collateral On Investments

	As of September 30, 2018				As of December 31, 2017
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Collateral payable for derivative investments (1)	$	366	$	366	$	765	$	765
Securities pledged under securities lending agreements (2)		117		113		222		213
Securities pledged under repurchase agreements (3)		149		185		530		588
Investments pledged for Federal Home Loan Bank of
Indianapolis (“FHLBI”) (4)		3,580		5,413		2,900		4,235
Total payables for collateral on investments	$	4,212	$	6,077	$	4,417	$	5,801

⁽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 additional information.

⁽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 repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets.  We generally obtain collateral in an amount between 80% 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 repurchase program is typically invested in fixed maturity AFS securities.

⁽⁴⁾ 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.

Schedule Of Increase (Decrease) In Payables For Collateral On Investments

	For the Nine
	Months Ended
	September 30,
	2018			2017
Collateral payable for derivative investments	$	(399	)	$	41
Securities pledged under securities lending agreements		(105	)		(16	)
Securities pledged under repurchase agreements		(381	)		(2	)
Investments pledged for FHLBI		680			(50	)
Total increase (decrease) in payables for collateral on investments	$	(205	)	$	(27	)

Schedule Of Securities Pledged By Contractual Maturity

	As of September 30, 2018
	Overnight and Continuous		Up to 30 Days		30 -  90 Days		Greater Than 90 Days		Total
Repurchase Agreements
Corporate bonds	$	-	$	-	$	-	$	149	$	149
Total		-		-		-		149		149
Securities Lending
Corporate bonds		117		-		-		-		117
Total		117		-		-		-		117
Total gross secured borrowings	$	117	$	-	$	-	$	149	$	266

	As of December 31, 2017
	Overnight and Continuous		Up to 30 Days		30 -  90 Days		Greater Than 90 Days		Total
Repurchase Agreements
Corporate bonds	$	-	$	100	$	280	$	150	$	530
Total		-		100		280		150		530
Securities Lending
Corporate bonds		222		-		-		-		222
Total		222		-		-		-		222
Total gross secured borrowings	$	222	$	100	$	280	$	150	$	752

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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2018

Derivative Instruments [Abstract]

Outstanding Derivative Instruments With Off-Balance-Sheet Risks

	As of September 30, 2018						As of December 31, 2017
	Notional		Fair Value				Notional		Fair Value
	Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	2,827	$	121	$	42	$	3,007	$	46	$	84
Foreign currency contracts (1)		2,085		104		71		1,804		79		79
Total cash flow hedges		4,912		225		113		4,811		125		163
Fair value hedges:
Interest rate contracts (1)		1,268		30		112		1,438		254		174
Non-Qualifying Hedges
Interest rate contracts (1)		90,138		318		233		72,937		657		127
Foreign currency contracts (1)		87		-		-		22		-		-
Equity market contracts (1)		24,967		534		140		31,090		562		557
Credit contracts (1)		-		-		-		52		-		-
Embedded derivatives:
Guaranteed living benefit ("GLB")
direct (2)		-		1,648		-		-		903		-
GLB ceded (2) (3)		-		35		193		-		51		67
Reinsurance related (4)		-		-		20		-		-		57
Indexed annuity and IUL contracts (2) (5)		-		44		1,571		-		11		1,418
Total derivative instruments	$	121,372	$	2,834	$	2,382	$	110,350	$	2,563	$	2,563

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

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

⁽³⁾ Reported in other liabilities on our Consolidated Balance Sheets.

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

⁽⁵⁾ Reported in future contract benefits on our Consolidated Balance Sheets.

Maturity Of The Notional Amounts Of Derivative Financial Instruments

	Remaining Life as of September 30, 2018
	Less Than		1 - 5		6 - 10		11 - 30		Over 30
	1 Year		Years		Years		Years		Years		Total
Interest rate contracts (1)	$	10,907	$	14,802	$	47,193	$	20,118	$	1,213	$	94,233
Foreign currency contracts (2)		141		256		635		1,130		10		2,172
Equity market contracts		18,103		3,615		115		14		3,120		24,967
Total derivative instruments
with notional amounts	$	29,151	$	18,673	$	47,943	$	21,262	$	4,343	$	121,372

⁽¹⁾ As of September 30, 2018, 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 September 30, 2018, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was September 2049.

Change In Our Unrealized Gain On Derivative Instruments In Accumulated OCI

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(29	)	$	49
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period:
Cumulative effect from adoption of
new accounting standard		(6	)		-
Cash flow hedges:
Interest rate contracts		117			(15	)
Foreign currency contracts		(19	)		46
Change in foreign currency exchange rate adjustment		69			(119	)
Change in DAC, VOBA, DSI and DFEL		8			(3	)
Income tax benefit (expense)		(37	)		32
Less:
Reclassification adjustment for gains (losses)
included in net income (loss):
Cash flow hedges:
Interest rate contracts (1)		3			3
Interest rate contracts (2)		(6	)		(13	)
Foreign currency contracts (1)		18			12
Foreign currency contracts (3)		-			5
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)
Income tax benefit (expense)		(3	)		(2	)
Balance as of end-of-period	$	92		$	(14	)

⁽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).

⁽³⁾ The OCI offset is reported within realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

Gains (Losses) On Derivative Instruments Recorded Within Income (Loss) From Continuing Operations

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Qualifying Hedges
Cash flow hedges:
Interest rate contracts (1)	$	1		$	2		$	3		$	3
Interest rate contracts (2)		(4	)		(5	)		(6	)		(13	)
Foreign currency contracts (1)		7			4			18			12
Foreign currency contracts (3)		-			-			-			5
Total cash flow hedges		4			1			15			7
Fair value hedges:
Interest rate contracts (1)		(2	)		(5	)		(11	)		(18	)
Interest rate contracts (2)		5			6			11			21
Interest rate contracts (3)		17			2			64			2
Total fair value hedges		20			3			64			5
Non-Qualifying Hedges
Interest rate contracts (3)		(167	)		18			(577	)		161
Foreign currency contracts (3)		-			1			2			1
Equity market contracts (3)		(199	)		(347	)		(280	)		(1,163	)
Equity market contracts (4)		10			6			11			21
Embedded derivatives:					-						-
GLB (3)		333			233			603			784
Reinsurance related (3)		5			3			37			3
Indexed annuity and IUL contracts (3)		(164	)		(46	)		(175	)		(230	)
Total derivative instruments	$	(158	)	$	(128	)	$	(300	)	$	(411	)

⁽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) On Derivative Instruments Designated As Cash Flow Hedges

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Offset to net investment income	$	8		$	6		$	21		$	15
Offset to realized gain (loss)		-			-			-			5
Offset to interest and debt expense		(4	)		(5	)		(6	)		(13	)

Open Credit Default Swap Liabilities

As of December 31, 2017
					Credit
		Reason	Nature		Rating of	Number			Maximum
		for	of	Underlying		of	Fair		Potential
Credit Contract Type	Maturity	Entering	Recourse	Obligation (1)		Instruments	Value (2)		Payout
Basket credit default swaps	12/20/2022	(3)	(4)		BBB+	1	$	1	$	52
						1	$	1	$	52

⁽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 our credit default swaps.

⁽³⁾ Credit default swaps were entered into in order to hedge the liability exposure on certain variable annuity products.

⁽⁴⁾ Sellers do not have the right to demand indemnification or compensation from third parties in case of a loss (payment) on the contract.

Collateral Support Agreements

		As of			As of
	September 30,			December 31,
		2018			2017
Maximum potential payout		$	-		$	52
Less:  Counterparty thresholds			-			-
Maximum collateral potentially required to post		$	-		$	52

Schedule Of Collateral Amounts With Rights To Reclaim Or Obligation To Return Cash

	As of September 30, 2018					As of December 31, 2017
	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-	$	36	$	(22	)	$	116	$	(1	)
A+		177		(111	)		242		(453	)
A		40		(1	)		170		(120	)
A-		113		-			237		(3	)
BBB+		-		-			-		(4	)
	$	366	$	(134	)	$	765	$	(581	)

Schedule Of Offsetting Assets And Liabilities

		As of September 30, 2018
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	957			$	1,727	$	2,684
Gross amounts offset			(251	)			-		(251	)
Net amount of assets			706				1,727		2,433
Gross amounts not offset:
Cash collateral			(366	)			-		(366	)
Non-cash collateral			(80	)			-		(80	)
Net amount		$	260			$	1,727	$	1,987
Financial Liabilities
Gross amount of recognized liabilities		$	879			$	1,784	$	2,663
Gross amounts offset			(149	)			-		(149	)
Net amount of liabilities			730				1,784		2,514
Gross amounts not offset:
Cash collateral			(134	)			-		(134	)
Non-cash collateral			(420	)			-		(420	)
Net amount		$	176			$	1,784	$	1,960

		As of December 31, 2017
					Embedded
	Derivative				Derivative
	Instruments				Instruments			Total
Financial Assets
Gross amount of recognized assets		$	1,301			$	965	$	2,266
Gross amounts offset			(386	)			-		(386	)
Net amount of assets			915				965		1,880
Gross amounts not offset:
Cash collateral			(765	)			-		(765	)
Net amount		$	150			$	965	$	1,115
Financial Liabilities
Gross amount of recognized liabilities		$	955			$	1,542	$	2,497
Gross amounts offset			(296	)			-		(296	)
Net amount of liabilities			659				1,542		2,201
Gross amounts not offset:
Cash collateral			(581	)			-		(581	)
Net amount		$	78			$	1,542	$	1,620

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Guaranteed Benefit Features (Tables)

9 Months Ended

Sep. 30, 2018

Guaranteed Benefit Features [Abstract]

Information On Guaranteed Death Benefit Features

	As of			As of
	September 30,			December 31,
		2018 (1)			2017 (1)
Return of Net Deposits
Total account value		$	98,623		$	96,941
Net amount at risk (2)			93			81
Average attained age of contract holders			64 years			64 years
Minimum Return
Total account value		$	103		$	108
Net amount at risk (2)			16			18
Average attained age of contract holders			76 years			76 years
Guaranteed minimum return			5%			5%
Anniversary Contract Value
Total account value		$	26,308		$	26,596
Net amount at risk (2)			438			417
Average attained age of contract holders			71 years			70 years

⁽¹⁾ Our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

⁽²⁾ Represents the amount of death benefit in excess of the account balance that is subject to market fluctuations.

Summary Of Guaranteed Death Benefit Liabilities

	For the Nine
	Months Ended
	September 30,
	2018			2017
Balance as of beginning-of-year	$	100		$	110
Changes in reserves		18			4
Benefits paid		(11	)		(14	)
Balance as of end-of-period	$	107		$	100

Account Balances Of Variable Annuity Contracts With Guarantees Invested In Separate Accounts

	As of				As of
	September 30,			December 31,
		2018			2017
Asset Type
Domestic equity		$	61,732		$	59,647
International equity			20,598			20,837
Fixed income			40,529			40,626
Total		$	122,859		$	121,110
Percent of total variable annuity
separate account values			98%			99%

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Liability For Unpaid Claims (Tables)

9 Months Ended

Sep. 30, 2018

Liability For Unpaid Claims [Abstract]

Changes In Liability For Unpaid Claims

	For the Nine
	Months Ended
	September 30,
	2018			2017
Balance as of beginning-of-year	$	2,222		$	2,242
Reinsurance recoverable		57			69
Net balance as of beginning-of-year		2,165			2,173
Business acquired (1)		2,842			-
Incurred related to:
Current year		1,640			909
Prior years
Interest		85			53
All other incurred		(159	)		(85	)
Total incurred		1,566			877
Paid related to:
Current year		(663	)		(458	)
Prior years		(796	)		(440	)
Total paid		(1,459	)		(898	)
Net balance as of end-of-period		5,114			2,152
Reinsurance recoverable		141			57
Balance as of end-of-period	$	5,255		$	2,209

⁽¹⁾ Represents Liberty group life and disability reserves, net, as of May 1, 2018, subject to finalization of acquisition date fair values.  See Note 3 for additional information.

Schedule Of Reconciliation

	As of September 30,
	2018		2017
Future contract benefits	$	33,988	$	22,547
Less:
Life and annuity reserves and claims due		27,193		18,698
Accident and health active life reserves		1,540		1,640
Liability for unpaid claims	$	5,255	$	2,209

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Shares and Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Shares and Stockholders' Equity [Abstract]

Changes In Common stock (Number Of Shares)

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Common Stock
Balance as of beginning-of-period	217,294,051		222,237,262		218,090,114		226,335,105
Stock issued for exercise of warrants	97,076		2,464		119,942		337,394
Stock compensation/issued for benefit plans	38,642		139,179		675,608		1,600,465
Retirement/cancellation of shares	(2,652,963	)	(2,834,287	)	(4,108,858	)	(8,728,346	)
Balance as of end-of-period	214,776,806		219,544,618		214,776,806		219,544,618
Common Stock as of End-of-Period
Basic basis	214,776,806		219,544,618		214,776,806		219,544,618
Diluted basis	217,390,897		222,701,021		217,390,897		222,701,021

Reconciliation Of The Denominator Calculations Of Basic And Diluted EPS

	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Weighted-average shares, as used in basic calculation	215,901,268		220,813,693		217,413,480		223,311,993
Shares to cover exercise of outstanding warrants	579,882		668,103		620,580		795,312
Shares to cover non-vested stock	1,467,953		1,614,405		1,512,297		1,572,250
Average stock options outstanding during the period	1,700,026		2,275,826		1,807,340		2,432,171
Assumed acquisition of shares with assumed proceeds
from exercising outstanding warrants	(86,040	)	(94,338	)	(86,335	)	(116,577	)
Assumed acquisition of shares with assumed
proceeds and benefits from exercising stock
options (at average market price for the period)	(1,082,651	)	(1,361,094	)	(1,090,868	)	(1,481,524	)
Shares repurchasable from measured but
unrecognized stock option expense	(11,209	)	(44,579	)	(17,381	)	(60,539	)
Average deferred compensation shares	-		-		936,355		926,612
Weighted-average shares, as used in diluted calculation	218,469,229		223,872,016		221,095,468		227,379,698

Components And Changes In Accumulated OCI

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year	$	3,486		$	1,784
Cumulative effect from adoption of new accounting standards		674			-
Unrealized holding gains (losses) arising during the period		(5,520	)		2,385
Change in foreign currency exchange rate adjustment		(68	)		112
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds		1,538			(468	)
Income tax benefit (expense)		858			(717	)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		(35	)		(26	)
Associated amortization of DAC, VOBA, DSI and DFEL		(15	)		(16	)
Income tax benefit (expense)		11			15
Balance as of end-of-period	$	1,007		$	3,123
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year	$	44		$	25
(Increases) attributable to:
Cumulative effect from adoption of new accounting standards		9			-
Gross OTTI recognized in OCI during the period		-			(1	)
Change in DAC, VOBA, DSI and DFEL		-			-
Income tax benefit (expense)		-			-
Decreases attributable to:
Changes in fair value, sales, maturities or other settlements of AFS securities		(8	)		29
Change in DAC, VOBA, DSI and DFEL		(10	)		(5	)
Income tax benefit (expense)		4			(8	)
Balance as of end-of-period	$	39		$	40
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	(29	)	$	49
Cumulative effect from adoption of new accounting standard		(6	)		-
Unrealized holding gains (losses) arising during the period		98			31
Change in foreign currency exchange rate adjustment		69			(119	)
Change in DAC, VOBA, DSI and DFEL		8			(3	)
Income tax benefit (expense)		(37	)		32
Less:
Reclassification adjustment for gains (losses) included in net income (loss)		15			7
Associated amortization of DAC, VOBA, DSI and DFEL		(1	)		(1	)
Income tax benefit (expense)		(3	)		(2	)
Balance as of end-of-period	$	92		$	(14	)
Foreign Currency Translation Adjustment
Balance as of beginning-of-year	$	(14	)	$	(27	)
Foreign currency translation adjustment arising during the period		(6	)		11
Balance as of end-of-period	$	(20	)	$	(16	)
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year	$	(257	)	$	(265	)
Cumulative effect from adoption of new accounting standard		(35	)		-
Adjustment arising during the period		10			(9	)
Balance as of end-of-period	$	(282	)	$	(274	)

Schedule of Reclassifications Out Of AOCI

	For the Nine
	Months Ended
	September 30,
	2018			2017
Unrealized Gain (Loss) on AFS Securities
Gross reclassification	$	(35	)	$	(26	)	Total realized gain (loss)
Associated amortization of DAC,
VOBA, DSI and DFEL		(15	)		(16	)	Total realized gain (loss)
Reclassification before income							Income (loss) from continuing
tax benefit (expense)		(50	)		(42	)	operations before taxes
Income tax benefit (expense)		11			15		Federal income tax expense (benefit)
Reclassification, net of income tax	$	(39	)	$	(27	)	Net income (loss)
Unrealized OTTI on AFS Securities
Gross reclassification	$	(1	)	$	6		Total realized gain (loss)
Change in DAC, VOBA, DSI and DFEL		-			(1	)	Total realized gain (loss)
Reclassification before income							Income (loss) from continuing
tax benefit (expense)		(1	)		5		operations before taxes
Income tax benefit (expense)		-			(2	)	Federal income tax expense (benefit)
Reclassification, net of income tax	$	(1	)	$	3		Net income (loss)
Unrealized Gain (Loss) on Derivative Instruments
Gross reclassifications:
Interest rate contracts	$	3		$	3		Net investment income
Interest rate contracts		(6	)		(13	)	Interest and debt expense
Foreign currency contracts		18			12		Net investment income
Foreign currency contracts		-			5		Total realized gain (loss)
Total gross reclassifications		15			7
Associated amortization of DAC,
VOBA, DSI and DFEL		(1	)		(1	)	Commissions and other expenses
Reclassifications before income							Income (loss) from continuing
tax benefit (expense)		14			6		operations before taxes
Income tax benefit (expense)		(3	)		(2	)	Federal income tax expense (benefit)
Reclassifications, net of income tax	$	11		$	4		Net income (loss)

XML

Realized Gain (Loss) (Tables)

9 Months Ended

Sep. 30, 2018

Realized Gain (Loss) [Abstract]

Details underlying realized (gain) loss

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Total realized gain (loss) related to certain investments (1)	$	(11	)	$	(19	)	$	(45	)	$	(49	)
Realized gain (loss) on the mark-to-market on certain instruments (2)		(10	)		(2	)		14			3
Indexed annuity and IUL contracts net derivatives results: (3)
Gross gain (loss)		(7	)		-			(14	)		(17	)
Associated amortization of DAC, VOBA, DSI and DFEL		(2	)		(1	)		(2	)		(1	)
Variable annuity net derivatives results: (4)
Gross gain (loss)		(32	)		(41	)		(10	)		(45	)
Associated amortization of DAC, VOBA, DSI and DFEL		7			7			6			4
Total realized gain (loss)	$	(55	)	$	(56	)	$	(51	)	$	(105	)

⁽¹⁾ See “Realized Gain (Loss) Related to Certain Investments” section in Note 5.

⁽²⁾ Represents changes in the fair values of certain derivative investments (not including those associated with our variable and indexed annuity and IUL contracts net derivatives results), reinsurance related embedded derivatives and trading securities.

⁽³⁾ Represents the net difference between the change in the fair value of the S&P 500 Index ® call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity and IUL contracts 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 riders and the change in the fair value of the derivative instruments we own to hedge the change in embedded derivative reserves on our GLB riders and the benefit ratio unlocking on our GLB and GDB riders, including the cost of purchasing the hedging instruments.

XML

Stock-Based Incentive Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2018

Stock-Based Incentive Compensation Plans [Abstract]

Stock Based Awards Granted Table

		For the		For the
		Three		Nine
		Months		Months
		Ended		Ended
	September 30,		September 30,
		2018		2018
10-year LNC stock options		-		481,404
Performance shares		-		156,676
RSUs		1,202		695,471
Non-employee:
SARs		-		14,692
Agent stock options		-		32,400
Director DSUs		7,184		21,682

XML

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value of Financial Instruments [Abstract]

Carrying And Estimated Fair Values Of Financial Instruments

	As of September 30, 2018						As of December 31, 2017
	Carrying			Fair			Carrying			Fair
	Value			Value			Value			Value
Assets
AFS securities:
Fixed maturity securities	$	93,161		$	93,161		$	94,840		$	94,840
Equity securities		-			-			246			246
Trading securities		1,440			1,440			1,620			1,620
Equity securities		112			112			-			-
Mortgage loans on real estate		12,561			12,239			10,762			10,877
Derivative investments (1)		706			706			915			915
Other investments		2,204			2,204			2,296			2,296
Cash and invested cash		1,460			1,460			1,628			1,628
Other assets:
GLB direct embedded derivatives		1,648			1,648			903			903
GLB ceded embedded derivatives		35			35			51			51
Indexed annuity ceded embedded derivatives		44			44			11			11
Separate account assets		147,692			147,692			144,219			144,219
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(1,571	)		(1,571	)		(1,418	)		(1,418	)
Other contract holder funds:
Remaining guaranteed interest and similar contracts		(562	)		(562	)		(592	)		(592	)
Account values of certain investment contracts		(33,684	)		(34,577	)		(32,370	)		(36,200	)
Short-term debt		-			-			(450	)		(452	)
Long-term debt		(5,804	)		(5,795	)		(4,894	)		(5,042	)
Reinsurance related embedded derivatives		(20	)		(20	)		(57	)		(57	)
Other liabilities:
Derivative liabilities (1)		(197	)		(197	)		(338	)		(338	)
GLB ceded embedded derivatives		(193	)		(193	)		(67	)		(67	)

⁽¹⁾ We have master netting agreements with each of our derivative counterparties, which allow for the netting of our derivative asset and liability positions by counterparty.

Fair Value Of Assets And Liabilities On A Recurring Basis

		As of September 30, 2018
		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		$	-		$	76,871			$	3,209		$	80,080
ABS			-			954				31			985
U.S. government bonds			391			18				-			409
Foreign government bonds			-			351				108			459
RMBS			-			3,280				7			3,287
CMBS			-			725				23			748
CLOs			-			1,311				51			1,362
State and municipal bonds			-			5,218				-			5,218
Hybrid and redeemable preferred securities			74			462				77			613
Trading securities			43			1,379				18			1,440
Equity securities			28			58				26			112
Derivative investments (1)			-			572				535			1,107
Other investments			149			-				-			149
Cash and invested cash			-			1,460				-			1,460
Other assets:
GLB direct embedded derivatives			-			-				1,648			1,648
GLB ceded embedded derivatives			-			-				35			35
Indexed annuity ceded embedded derivatives			-			-				44			44
Separate account assets			764			146,894				-			147,658
Total assets		$	1,449		$	239,553			$	5,812		$	246,814
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,571	)	$	(1,571	)
Reinsurance related embedded derivatives			-			(20	)			-			(20	)
Other liabilities:
Derivative liabilities (1)			-			(417	)			(181	)		(598	)
GLB ceded embedded derivatives			-			-				(193	)		(193	)
Total liabilities		$	-		$	(437	)		$	(1,945	)	$	(2,382	)

		As of December 31, 2017
		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		$	-		$	79,125			$	3,091		$	82,216
ABS			-			947				27			974
U.S. government bonds			556			6				5			567
Foreign government bonds			-			341				110			451
RMBS			-			3,453				12			3,465
CMBS			-			594				6			600
CLOs			-			717				91			808
State and municipal bonds			-			5,119				-			5,119
Hybrid and redeemable preferred securities			71			493				76			640
Equity AFS securities			28			56				162			246
Trading securities			73			1,498				49			1,620
Derivative investments (1)			-			994				603			1,597
Other investments			150			-				-			150
Cash and invested cash			-			1,628				-			1,628
Other assets:
GLB direct embedded derivatives			-			-				903			903
GLB ceded embedded derivatives			-			-				51			51
Indexed annuity ceded embedded derivatives			-			-				11			11
Separate account assets			814			143,405				-			144,219
Total assets		$	1,692		$	238,376			$	5,197		$	245,265
Liabilities
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		$	-		$	-			$	(1,418	)	$	(1,418	)
Long-term debt			-			(1,127	)			-			(1,127	)
Reinsurance related embedded derivatives			-			(57	)			-			(57	)
Other liabilities:
Derivative liabilities (1)			-			(447	)			(573	)		(1,020	)
GLB ceded embedded derivatives			-			-				(67	)		(67	)
Total liabilities		$	-		$	(1,631	)		$	(2,058	)	$	(3,689	)

⁽¹⁾ Derivative investment assets and liabilities presented within the fair value hierarchy are presented on a gross basis by derivative type and not on a master netting basis by counterparty.

Fair Value Measured On A Recurring Basis Reconciliation

	For the Three Months Ended September 30, 2018
							Gains		Issuances,				Transfers
				Items			(Losses)			Sales,			Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	3,181		$	1		$	(30	)	$	88		$	(31	)	$	3,209
ABS		31			-			-			-			-			31
Foreign government bonds		108			-			-			-			-			108
RMBS		-			-			-			7			-			7
CMBS		5			-			-			18			-			23
CLOs		145			-			-			17			(111	)		51
Hybrid and redeemable
preferred securities		78			-			(1	)		-			-			77
Trading securities		22			-			-			2			(6	)		18
Equity securities		26			-			-			-			-			26
Derivative investments		93			(115	)		(55	)		431			-			354
Other assets: (6)
GLB direct embedded derivatives		1,248			400			-			-			-			1,648
GLB ceded embedded derivatives		41			(6	)		-			-			-			35
Indexed annuity ceded embedded derivatives		29			4			-			11			-			44
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,400	)		(164	)		-			(7	)		-			(1,571	)
Other liabilities – GLB ceded embedded
derivatives (6)		(131	)		(62	)		-			-			-			(193	)
Total, net	$	3,476		$	58		$	(86	)	$	567		$	(148	)	$	3,867

	For the Three Months Ended September 30, 2017
							Gains		Issuances,				Transfers
				Items			(Losses)			Sales			Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	2,517		$	4		$	35		$	(35	)	$	59		$	2,580
ABS		43			-			(1	)		-			(15	)		27
U.S. government bonds		5			-			-			-			-			5
Foreign government bonds		109			-			1			-			-			110
RMBS		7			-			-			6			-			13
CMBS		21			-			-			(1	)		(14	)		6
CLOs		28			-			-			15			(28	)		15
Hybrid and redeemable
preferred securities		82			-			3			-			(9	)		76
Equity AFS securities		183			-			(1	)		9			(1	)		190
Trading securities		59			-			-			(10	)		1			50
Derivative investments		155			(13	)		9			(85	)		-			66
Other assets: (6)
GLB direct embedded derivatives		298			272			-			-			-			570
GLB ceded embedded derivatives		85			(32	)		-			-			-			53
Indexed annuity ceded embedded derivatives		-			-			-			3			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,268	)		(47	)		-			(3	)		-			(1,318	)
Other liabilities – GLB ceded embedded
derivatives (6)		-			(7	)		-			-			-			(7	)
Total, net	$	2,324		$	177		$	46		$	(101	)	$	(7	)	$	2,439

	For the Nine Months Ended September 30, 2018
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net (2)			Net (3)(4)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	3,091		$	7		$	(137	)	$	319		$	(71	)	$	3,209
ABS		27			-			(1	)		5			-			31
U.S. government bonds		5			-			-			(5	)		-			-
Foreign government bonds		110			-			(2	)		-			-			108
RMBS		12			-			-			7			(12	)		7
CMBS		6			1			-			37			(21	)		23
CLOs		91			-			-			164			(204	)		51
Hybrid and redeemable
preferred securities		76			-			1			-			-			77
Equity AFS securities		162			-			-			-			(162	)		-
Trading securities		49			(5	)		-			(20	)		(6	)		18
Equity securities		-			-			-			-			26			26
Derivative investments		30			106			(113	)		331			-			354
Other assets: (6)
GLB direct embedded derivatives		903			745			-			-			-			1,648
GLB ceded embedded derivatives		51			(16	)		-			-			-			35
Indexed annuity ceded embedded derivatives		11			4			-			29			-			44
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,418	)		(175	)		-			22			-			(1,571	)
Other liabilities – GLB ceded embedded
derivatives (6)		(67	)		(126	)		-			-			-			(193	)
Total, net	$	3,139		$	541		$	(252	)	$	889		$	(450	)	$	3,867

	For the Nine Months Ended September 30, 2017
							Gains		Issuances,				Transfers
				Items			(Losses)		Sales,				Into or
				Included			in		Maturities,				Out
	Beginning			in			OCI		Settlements,				of			Ending
	Fair			Net			and			Calls,			Level 3,			Fair
	Value			Income			Other (1)			Net			Net (3)			Value
Investments: (5)
Fixed maturity AFS securities:
Corporate bonds	$	2,405		$	15		$	153		$	(182	)	$	189		$	2,580
ABS		33			-			-			-			(6	)		27
U.S. government bonds		-			-			-			-			5			5
Foreign government bonds		111			-			(1	)		-			-			110
RMBS		3			-			-			10			-			13
CMBS		7			-			1			54			(56	)		6
CLOs		68			-			-			33			(86	)		15
State and municipal bonds		-			(1	)		-			-			1			-
Hybrid and redeemable
preferred securities		76			-			14			-			(14	)		76
Equity AFS securities		177			1			(2	)		15			(1	)		190
Trading securities		65			2			8			(26	)		1			50
Derivative investments		(93	)		(25	)		97			87			-			66
Other assets: (6)
GLB direct embedded derivatives		-			570			-			-			-			570
GLB ceded embedded derivatives		203			(150	)		-			-			-			53
Indexed annuity ceded embedded derivatives		-			-			-			3			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives (6)		(1,139	)		(230	)		-			51			-			(1,318	)
Other liabilities: (6)
GLB direct embedded derivatives		(371	)		371			-			-			-			-
GLB ceded embedded derivatives		-			(7	)		-			-			-			(7	)
Total, net	$	1,545		$	546		$	270		$	45		$	33		$	2,439

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

⁽²⁾ Net issuances, sales, maturities, settlements, calls, net include financial instruments acquired from Liberty Life as follows: corporate bonds of $67 million and ABS of $17 million.

⁽³⁾ Transfers into or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-year.  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 the prior period.

⁽⁴⁾ Transfers into or out of Level 3 for FHLB stock between equity securities and other investments at cost on our Consolidated Balance Sheets.

⁽⁵⁾ 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).

⁽⁶⁾ Gains (losses) from sales, maturities, settlements and calls are included in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

Schedule Of Investment Holdings Movements

	For the Three Months Ended September 30, 2018
	Issuances			Sales		Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	162		$	-	$	(1	)	$	(65	)	$	(8	)	$	88
RMBS		7			-		-			-			-			7
CMBS		18			-		-			-			-			18
CLOs		17			-		-			-			-			17
Trading securities		2			-		-			-			-			2
Derivative investments		96			455		(120	)		-			-			431
Other assets – indexed annuity ceded
embedded derivatives		11			-		-			-			-			11
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(83	)		-		-			76			-			(7	)
Total, net	$	230		$	455	$	(121	)	$	11		$	(8	)	$	567

	For the Three Months Ended September 30, 2017
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	167		$	(114	)	$	(19	)	$	(43	)	$	(26	)	$	(35	)
RMBS		6			-			-			-			-			6
CMBS		-			-			-			(1	)		-			(1	)
CLOs		15			-			-			-			-			15
Equity AFS securities		10			(1	)		-			-			-			9
Trading securities		-			(10	)		-			-			-			(10	)
Derivative investments		50			(23	)		(112	)		-			-			(85	)
Other assets – indexed annuity ceded
embedded derivatives		3			-			-			-			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(14	)		-			-			11			-			(3	)
Total, net	$	237		$	(148	)	$	(131	)	$	(33	)	$	(26	)	$	(101	)

	For the Nine Months Ended September 30, 2018
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	785		$	(156	)	$	(3	)	$	(238	)	$	(69	)	$	319
ABS		22			(17	)		-			-			-			5
U.S. government bonds		-			(5	)		-			-			-			(5	)
RMBS		7			-			-			-			-			7
CMBS		39			-			-			(2	)		-			37
CLOs		164			-			-			-			-			164
Trading securities		4			(24	)		-			-			-			(20	)
Equity securities		1			(1	)		-			-			-			-
Derivative investments		225			460			(354	)		-			-			331
Other assets – indexed annuity ceded
embedded derivatives		29			-			-			-			-			29
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(158	)		-			-			180			-			22
Total, net	$	1,118		$	257		$	(357	)	$	(60	)	$	(69	)	$	889

	For the Nine Months Ended September 30, 2017
	Issuances			Sales			Maturities		Settlements				Calls			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	367		$	(179	)	$	(66	)	$	(170	)	$	(134	)	$	(182	)
RMBS		10			-			-			-			-			10
CMBS		55			-			-			(1	)		-			54
CLOs		33			-			-			-			-			33
Equity AFS securities		18			(3	)		-			-			-			15
Trading securities		2			(27	)		-			(1	)		-			(26	)
Derivative investments		145			243			(301	)		-			-			87
Other assets – indexed annuity ceded
embedded derivatives		3			-			-			-			-			3
Future contract benefits – indexed annuity
and IUL contracts embedded derivatives		(45	)		-			-			96			-			51
Total, net	$	588		$	34		$	(367	)	$	(76	)	$	(134	)	$	45

Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Derivative investments	$	(1	)	$	(83	)	$	105		$	(159	)
Embedded derivatives:
Indexed annuity and IUL contracts		(11	)		2			(18	)		(13	)
GLB		576			428			1,264			1,352
Total, net (1)	$	564		$	347		$	1,351		$	1,180

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

Components Of The Transfers In And Out Of Level 3

	For the Three								For the Three
	Months Ended								Months Ended
	September 30, 2018								September 30, 2017
	Transfers		Transfers						Transfers		Transfers
	Into		Out of						Into		Out of
	Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	11	$	(42	)	$	(31	)	$	116	$	(57	)	$	59
ABS		-		-			-			-		(15	)		(15	)
CMBS		-		-			-			-		(14	)		(14	)
CLOs		-		(111	)		(111	)		-		(28	)		(28	)
Hybrid and redeemable preferred
securities		-		-			-			-		(9	)		(9	)
Equity AFS securities		-		-			-			-		(1	)		(1	)
Trading securities		-		(6	)		(6	)		1		-			1
Total, net	$	11	$	(159	)	$	(148	)	$	117	$	(124	)	$	(7	)

	For the Nine								For the Nine
	Months Ended								Months Ended
	September 30, 2018								September 30, 2017
	Transfers		Transfers						Transfers		Transfers
	Into		Out of						Into		Out of
	Level 3		Level 3			Total			Level 3		Level 3			Total
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	54	$	(125	)	$	(71	)	$	277	$	(88	)	$	189
ABS		-		-			-			15		(21	)		(6	)
U.S. government bonds		-		-			-			5		-			5
RMBS		-		(12	)		(12	)		-		-			-
CMBS		-		(21	)		(21	)		3		(59	)		(56	)
CLOs		-		(204	)		(204	)		30		(116	)		(86	)
State and municipal bonds		-		-			-			2		(1	)		1
Hybrid and redeemable preferred
securities		-		-			-			-		(14	)		(14	)
Equity AFS securities		-		(162	)		(162	)		-		(1	)		(1	)
Trading securities		-		(6	)		(6	)		4		(3	)		1
Equity securities		26		-			26			-		-			-
Total, net	$	80	$	(530	)	$	(450	)	$	336	$	(303	)	$	33

Fair Value Inputs Quantitative Information

	Fair			Valuation	Significant	Assumption or
	Value			Technique	Unobservable Inputs	Input Ranges
Assets
Investments:
Fixed maturity AFS and trading
securities:
Corporate bonds	$	2,445		Discounted cash flow	Liquidity/duration adjustment (1)	0.5	%	-	24.8	%
ABS		23		Discounted cash flow	Liquidity/duration adjustment (1)	3.0	%	-	3.0	%
Foreign government bonds		78		Discounted cash flow	Liquidity/duration adjustment (1)	1.1	%	-	2.8	%
Hybrid and redeemable
preferred securities		4		Discounted cash flow	Liquidity/duration adjustment (1)	1.8	%	-	1.8	%
Equity securities		21		Discounted cash flow	Liquidity/duration adjustment (1)	4.5	%	-	5.1	%
Other assets:
GLB direct and ceded
embedded derivatives		1,683		Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	85	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	80	%	-	115	%
					NPR (5)	0.01	%	-	0.32	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	29	%
Indexed annuity ceded
embedded derivatives		44		Discounted cash flow	Lapse rate (2)	1	%	-	9	%
					Mortality rate (6)				(8)
Liabilities
Future contract benefits – indexed
annuity and IUL contracts
embedded derivatives	$	(1,571	)	Discounted cash flow	Lapse rate (2)	1	%	-	9	%
					Mortality rate (6)				(8)
Other liabilities – GLB ceded
embedded derivatives		(193	)	Discounted cash flow	Long-term lapse rate (2)	1	%	-	30	%
					Utilization of guaranteed withdrawals (3)	85	%	-	100	%
					Claims utilization factor (4)	60	%	-	100	%
					Premiums utilization factor (4)	80	%	-	115	%
					NPR (5)	0.01	%	-	0.32	%
					Mortality rate (6)				(8)
					Volatility (7)	1	%	-	29	%

⁽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 for indexed annuity and IUL contracts represents the lapse rates during the surrender charge period.

⁽³⁾ The utilization of guaranteed withdrawals input represents the estimated percentage of contract holders that utilize the guaranteed withdrawal feature.

⁽⁴⁾ The utilization factors are applied to the present value of claims or premiums, as appropriate, in the GLB reserve calculation to estimate the impact of inefficient withdrawal behavior, including taking less than or more than the maximum guaranteed withdrawal.

⁽⁵⁾ The NPR input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract.

⁽⁶⁾ 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 gender, will die.

⁽⁷⁾ 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.

⁽⁸⁾ The mortality rate is based on a combination of company and industry experience, adjusted for improvement factors.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Information [Abstract]

Reconciliation Of Revenue From Segments To Consolidated

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Revenues
Operating revenues:
Annuities	$	1,118		$	1,073		$	3,297		$	3,211
Retirement Plan Services		294			291			878			863
Life Insurance		1,766			1,614			5,106			4,874
Group Protection		1,128			564			2,618			1,646
Other Operations		56			65			182			220
Excluded realized gain (loss), pre-tax		(98	)		(97	)		(188	)		(229	)
Amortization of deferred gain arising from reserve changes
on business sold through reinsurance, pre-tax		-			-			-			1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax		-			1			-			2
Total revenues	$	4,264		$	3,511		$	11,893		$	10,588

Reconciliation Of Income (Loss) From Operations By Segment To Consolidated Net Income (Loss)

	For the Three						For the Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Net Income (Loss)
Income (loss) from operations:
Annuities	$	302		$	277		$	844		$	809
Retirement Plan Services		40			35			125			109
Life Insurance		176			121			470			384
Group Protection		63			41			137			83
Other Operations		(71	)		(20	)		(171	)		(71	)
Excluded realized gain (loss), after-tax		(77	)		(63	)		(149	)		(149	)
Gain (loss) on early extinguishment of debt, after-tax		-			(3	)		(18	)		(3	)
Income (loss) from reserve changes (net of related amortization)
on business sold through reinsurance, after-tax		-			-			-			1
Benefit ratio unlocking, after-tax		33			30			32			101
Net impact from the Tax Cuts and Jobs Act		32			-			19			-
Acquisition and integration costs related to mergers
and acquisitions, after-tax		(8	)		-			(47	)		-
Net income (loss)	$	490		$	418		$	1,242		$	1,264

Schedule Of Disaggregation of Revenue

	For the Three Months Ended September 30, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	137	$	42	$	6	$	-	$	-	$	185
Other revenues		120		5		2		41		-		168
Total revenue from contracts
with customers	$	257	$	47	$	8	$	41	$	-	$	353
Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	17	$	1	$	3	$	-	$	-	$	21
Transferred over time		240		46		5		41		-		332
Total revenue from contracts
with customers	$	257	$	47	$	8	$	41	$	-	$	353

	For the Nine Months Ended September 30, 2018
			Retirement
			Plan		Life		Group		Other
	Annuities		Services		Insurance		Protection		Operations		Total
Revenue from Contracts with Customers
Fee income	$	403	$	126	$	17	$	-	$	-	$	546
Other revenues		359		14		7		73		-		453
Total revenue from contracts
with customers	$	762	$	140	$	24	$	73	$	-	$	999
Timing of Revenue Recognition
Satisfaction of performance obligation:
Transferred at a point in time	$	53	$	3	$	6	$	-	$	-	$	62
Transferred over time		709		137		18		73		-		937
Total revenue from contracts
with customers	$	762	$	140	$	24	$	73	$	-	$	999

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Nature Of Operations And Basis Of Presentation (Details)	9 Months Ended
	Sep. 30, 2018 segment
Nature Of Operations And Basis Of Presentation
Number of segments	4

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New Accounting Standards (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
AFS Equity securities					$ 246
Equity Securities, FV-NI	$ 112		$ 112
Federal rate	21.00%	35.00%	21.00%	35.00%	35.00%
Accounting Standards Update 2016-01 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
AFS Equity securities					$ 246
Equity Securities, FV-NI					110
Cumulative effect of adoption					1
Accounting Standards Update 2016-01 [Member] | Scenario, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
AFS Equity securities					136
Accounting Standards Update 2018-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification from AOCI to retained earnings					$ 641

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Acquisition (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		5 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Business Acquisition [Line Items]
Cash received from sale				$ 423
Acquisition related costs	$ 10			60
Revenues	4,264	$ 3,511		11,893	$ 10,588
Net income (loss)	$ 490	$ 418		1,242	$ 1,264
Reinsurance ceded				$ 18,300		$ 4,900
Liberty Transaction [Member]
Business Acquisition [Line Items]
Acquisition agreement date				May 01, 2018
Capital stock acquired, percent	100.00%		100.00%	100.00%
Excess capital in LLAC (extraordinary dividend)				$ 1,800
Cash				$ 1,500
Revenues			$ 929
Net income (loss)			$ 26

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Acquisition (Schedule Of Fair Value Of Net Assets Acquired) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill	$ 1,757	$ 1,368
Liberty Transaction [Member]
Business Acquisition [Line Items]
Investments	2,493
Mortgage loans on real estate	658
Cash and invested cash	107
Reinsurance recoverables	76
Premiums and fees receivable	83
Accrued investment income	24
Other intangible assets acquired	640
Other assets acquired	142
Separate account assets	99
Total assets acquired	4,322
Future contract benefits	2,930
Other contract holder funds	46
Other liabilities acquired	120
Separate account liabilities	99
Total liabilities assumed	3,195
Net identifiable assets acquired	1,127
Goodwill	390
Net assets acquired	$ 1,517

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Acquisition (Schedule Of Fair Value Of Identifiable Intangible Assets Acquired) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Schedule Of Intangibles Acquired [Line Items]
Total identifiable intangible assets	$ 640
Insurance Licenses [Member]
Schedule Of Intangibles Acquired [Line Items]
Indefinite intangibles acquired	3
Customer Relationships [Member]
Schedule Of Intangibles Acquired [Line Items]
Finite intangibles acquired	$ 576
Weighted Average Amortization Period	20 years
Distribution Agreements [Member]
Schedule Of Intangibles Acquired [Line Items]
Finite intangibles acquired	$ 31
Weighted Average Amortization Period	13 years
Business Acquired [Member]
Schedule Of Intangibles Acquired [Line Items]
Finite intangibles acquired	$ 30
Weighted Average Amortization Period	3 years

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Acquisition (Schedule Of Pro Forma Information) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Acquisition [Abstract]
Revenue	$ 4,263	$ 3,989	$ 12,632	$ 12,030
Net Income	$ 497	$ 396	$ 1,287	$ 1,201

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Variable Interest Entities (Narrative) (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Variable Interest Entity [Line Items]
Gains (losses) for consolidated variable interest entities	$ 0		$ 0
Carrying Amounts of our Investments in LPs and LLCs, As Recognized In Other Investments on our Consolidated Balance Sheets	2,204,000,000		2,296,000,000
Income Tax Credits And Other Tax Benefits From Qualified Affordable Housing Projects	1,000,000	$ 2,000,000
Limited Partnerships and Limited Liability Companies [Member]
Variable Interest Entity [Line Items]
Carrying Amounts of our Investments in LPs and LLCs, As Recognized In Other Investments on our Consolidated Balance Sheets	1,700,000,000		1,500,000,000
Carrying Amount Of Investments In Qualified Affordable Housing Projects	$ 25,000,000		$ 31,000,000

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Variable Interest Entities (Consolidated Variable Interest Entity Asset and Liability Information) (Details) - Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] $ in Millions	Sep. 30, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Disclosure Of Variable Interest Entities Assets And Liabilities [Line Items]
Number of Instruments, Assets | security	1	1
Notional Amounts, Assets | $	$ 587	$ 573
Total Return Swap [Member]
Disclosure Of Variable Interest Entities Assets And Liabilities [Line Items]
Number of Instruments, Assets | security	1	1
Notional Amounts, Assets | $	$ 587	$ 573

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Investments (Narrative) (Details) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018 USD ($) item	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) item	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($) item
Investment [Line Items]
Increase (decrease) in gross AFS securities unrealized losses			$ 1,500.0
Portion of loss recognized in other comprehensive income		$ 1.0		$ 1.0
Number of partnerships in alternative investment portfolio | item	239		239		224
Alternative investments as a percentage of overall invested assets			1.00%		1.00%
Fair value of collateral received that we are permitted to sell or re-pledge	$ 528.0		$ 528.0
Securities that have been re-pledged	502.0		502.0
Investment commitments	1,500.0		1,500.0
Investment commitments for limited partnerships	815.0		815.0
Investment commitments for mortgage loans on real estate	379.0		379.0
Investment commitments for private placements	334.0		334.0
Maximum [Member]
Investment [Line Items]
Portion of loss recognized in other comprehensive income	1.0		1.0
Federal Home Loan Mortgage Corporation [Member] | Invested Assets [Member]
Investment [Line Items]
Fair value	1,400.0		$ 1,400.0		$ 1,300.0
Concentration risk, percentage			1.00%		1.00%
Federal National Mortgage Association [Member] | Invested Assets [Member]
Investment [Line Items]
Fair value	1,200.0		$ 1,200.0		$ 1,000.0
Concentration risk, percentage			1.00%		1.00%
Consumer Non-Cyclical Industry [Member] | Invested Assets [Member]
Investment [Line Items]
Fair value	14.5		$ 14.5		$ 15.0
Concentration risk, percentage			13.00%		13.00%
Financial Service [Member] | Invested Assets [Member]
Investment [Line Items]
Fair value	$ 13.7		$ 13.7
Concentration risk, percentage			12.00%
Utilities Industry [Member] | Invested Assets [Member]
Investment [Line Items]
Fair value					$ 14.3
Concentration risk, percentage					13.00%
Mortgage Loans On Real Estate [Member] | Geographic Concentration Risk [Member] | California [Member]
Investment [Line Items]
Concentration risk, percentage			22.00%		21.00%
Mortgage Loans On Real Estate [Member] | Geographic Concentration Risk [Member] | Texas [Member]
Investment [Line Items]
Concentration risk, percentage			12.00%		12.00%
Corporate Bonds [Member]
Investment [Line Items]
Percentage of fair value rated as investment grade	96.00%		96.00%		96.00%
Amortized cost of portfolio rated below investment grade	$ 3,200.0		$ 3,200.0		$ 3,500.0
Fair value of portfolio rated below investment grade	$ 3,100.0		$ 3,100.0		$ 3,500.0
ABS [Member]
Investment [Line Items]
Percentage of fair value rated as investment grade	98.00%		98.00%		98.00%
Amortized cost of portfolio rated below investment grade	$ 46.0		$ 46.0		$ 46.0
Fair value of portfolio rated below investment grade	$ 43.0		$ 43.0		$ 43.0
MBS [Member]
Investment [Line Items]
Projected default rate on existing delinquencies on MBS (low end of range)	10.00%		10.00%		10.00%
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%

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Investments (Reconciliation Of Available-For-Sale Securities From Cost Basis To Fair Value) (Details) - USD ($) $ in Millions		Sep. 30, 2018	Dec. 31, 2017
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		$ 90,808	$ 87,240
Gross unrealized gains		4,237	8,233
Gross unrealized losses		1,939	450
OTTI	[1]	(55)	(63)
Fair value		93,161	95,086
Fixed Maturity AFS Securities [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		90,808	86,993
Gross unrealized gains			8,217
Gross unrealized losses			433
OTTI	[1]		(63)
Fair value		93,161	94,840
Fixed Maturity AFS Securities [Member] | Corporate Bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		78,496	75,701
Gross unrealized gains		3,299	6,862
Gross unrealized losses		1,724	354
OTTI	[1]	(9)	(7)
Fair value		80,080	82,216
Fixed Maturity AFS Securities [Member] | ABS [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		934	903
Gross unrealized gains		41	51
Gross unrealized losses		7	7
OTTI	[1]	(17)	(27)
Fair value		985	974
Fixed Maturity AFS Securities [Member] | U.S. Government Bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		392	527
Gross unrealized gains		23	41
Gross unrealized losses		6	1
Fair value		409	567
Fixed Maturity AFS Securities [Member] | Foreign Government Bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		418	395
Gross unrealized gains		41	56
Fair value		459	451
Fixed Maturity AFS Securities [Member] | RMBS [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		3,267	3,327
Gross unrealized gains		113	155
Gross unrealized losses		114	39
OTTI	[1]	(21)	(22)
Fair value		3,287	3,465
Fixed Maturity AFS Securities [Member] | CMBS [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		766	590
Gross unrealized gains		2	10
Gross unrealized losses		23	2
OTTI	[1]	(3)	(2)
Fair value		748	600
Fixed Maturity AFS Securities [Member] | CLOs [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		1,371	803
Gross unrealized gains			2
Gross unrealized losses		14	2
OTTI	[1]	(5)	(5)
Fair value		1,362	808
Fixed Maturity AFS Securities [Member] | State And Municipal Bonds [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		4,588	4,172
Gross unrealized gains		656	953
Gross unrealized losses		26	6
Fair value		5,218	5,119
Fixed Maturity AFS Securities [Member] | Hybrid And Redeemable Preferred Securities [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost		576	575
Gross unrealized gains		62	87
Gross unrealized losses		25	22
Fair value		$ 613	640
Equity Securities [Member]
Amortized cost, gross unrealized gains, losses, OTTI and fair value of AFS securities
Amortized cost			247
Gross unrealized gains			16
Gross unrealized losses			17
Fair value			$ 246

[1] Includes unrealized (gains) and losses on impaired securities related to changes in the fair value of such securities subsequent to the impairment measurement date.

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Investments (Available-For-Sale Securities By Contractual Maturities) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Available-for-sale Securities, Debt Maturities, Amortized Cost
Amortized cost	$ 90,808	$ 87,240
Available-for-sale Securities, Debt Maturities, Fair Value
Fair Value	93,161	95,086
Fixed Maturity AFS Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost
Amortized cost	90,808	86,993
Available-for-sale Securities, Debt Maturities, Fair Value
Fair Value	93,161	$ 94,840
Fixed Maturity AFS Securities [Member] | Fixed maturity AFS securities other than structured securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost
Due in one year or less	3,631
Due after one year through five years	17,430
Due after five years through ten years	17,493
Due after ten years	45,916
Amortized cost	84,470
Available-for-sale Securities, Debt Maturities, Fair Value
Due in one year or less	3,669
Due after one year through five years	17,509
Due after five years through ten years	17,440
Due after ten years	48,161
Fair Value	86,779
Fixed Maturity AFS Securities [Member] | Structured securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost
Amortized cost	6,338
Available-for-sale Securities, Debt Maturities, Fair Value
Fair Value	$ 6,382

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Investments (Fair Value And Gross Unrealized Losses In A Continuous Unrealized Loss Position) (Details) $ in Millions	Sep. 30, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	$ 36,894	$ 5,844
Greater Than Twelve Months	5,738	6,063
Fair Value - Total	42,632	11,907
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	1,287	89
Greater Than Twelve Months	663	374
Losses - Total	$ 1,950	$ 463
Total number of AFS securities in an unrealized loss position | security	3,480	1,128
Fixed Maturity AFS Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months		$ 5,822
Greater Than Twelve Months		6,055
Fair Value - Total		11,877
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months		75
Greater Than Twelve Months		371
Losses - Total		446
Fixed Maturity AFS Securities [Member] | Corporate Bonds [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	$ 33,196	4,854
Greater Than Twelve Months	4,690	4,893
Fair Value - Total	37,886	9,747
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	1,188	68
Greater Than Twelve Months	538	288
Losses - Total	1,726	356
Fixed Maturity AFS Securities [Member] | ABS [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	252	62
Greater Than Twelve Months	129	151
Fair Value - Total	381	213
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	3	1
Greater Than Twelve Months	12	15
Losses - Total	15	16
Fixed Maturity AFS Securities [Member] | U.S. Government Bonds [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	169	156
Greater Than Twelve Months	18	19
Fair Value - Total	187	175
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	4
Greater Than Twelve Months	2	1
Losses - Total	6	1
Fixed Maturity AFS Securities [Member] | RMBS [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	836	302
Greater Than Twelve Months	603	641
Fair Value - Total	1,439	943
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	43	4
Greater Than Twelve Months	73	36
Losses - Total	116	40
Fixed Maturity AFS Securities [Member] | CMBS [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	624	113
Greater Than Twelve Months	57	60
Fair Value - Total	681	173
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	18
Greater Than Twelve Months	5	3
Losses - Total	23	3
Fixed Maturity AFS Securities [Member] | CLOs [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	1,062	281
Greater Than Twelve Months	34	72
Fair Value - Total	1,096	353
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	14	2
Losses - Total	14	2
Fixed Maturity AFS Securities [Member] | State And Municipal Bonds [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	724	34
Greater Than Twelve Months	75	93
Fair Value - Total	799	127
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	15
Greater Than Twelve Months	11	6
Losses - Total	26	6
Fixed Maturity AFS Securities [Member] | Hybrid And Redeemable Preferred Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months	31	20
Greater Than Twelve Months	132	126
Fair Value - Total	163	146
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months	2
Greater Than Twelve Months	22	22
Losses - Total	$ 24	22
Equity Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value
Less Than or Equal to Twelve Months		22
Greater Than Twelve Months		8
Fair Value - Total		30
Available-for-sale Securities, Continuous Unrealized Loss Position, Gross Unrealized Losses and OTTI
Less Than or Equal to Twelve Months		14
Greater Than Twelve Months		3
Losses - Total		$ 17

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Investments (Schedule Of Available-For-Sale Securities Whose Value Is Below Amortized Cost) (Details) $ in Millions		Sep. 30, 2018 USD ($) security	Dec. 31, 2017 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Fair Value - Nine months or greater, but less than twelve months		$ 36,894	$ 5,844
Fair Value - Twelve months or greater		5,738	6,063
Fair Value - Total		42,632	11,907
Losses - Nine months or greater, but less than twelve months		1,287	89
Losses - Twelve months or greater		663	374
Losses - Total		$ 1,950	$ 463
Number of Securities - Total | security		3,480	1,128
Fair Value Decline, Greater Than 20% [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value - Less than six months		$ 131	$ 156
Fair Value - Six months or greater, but less than nine months		21	2
Fair Value - Nine months or greater, but less than twelve months		39	15
Fair Value - Twelve months or greater		123	215
Fair Value - Total		314	388
Losses - Less than six months		47	57
Losses - Six months or greater, but less than nine months		16	1
Losses - Nine months or greater, but less than twelve months		16	8
Losses - Twelve months or greater		50	78
Losses - Total		129	144
OTTI - Less than six months			1
OTTI - Twelve months or greater		8	10
OTTI - Total		$ 8	$ 11
Number of Securities - Less than six months | security	[1]	20	26
Number of Securities - Six months or greater, but less than nine months | security	[1]	3	4
Number of Securities - Nine months or greater, but less than twelve months | security	[1]	4	7
Number of Securities - Twelve months or greater | security	[1]	29	49
Number of Securities - Total | security	[1]	56	86

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

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Investments (Schedule Of Changes in Amount Of Credit Losses Of OTTI Recognized In Net Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Investments [Abstract]
Balance as of beginning-of-period	$ 375	$ 390	$ 378	$ 430
Increases attributable to:
Credit losses on securities for which an OTTI was not previously recognized	2	8	4	13
Credit losses on securities for which an OTTI was previously recognized		1	1	4
Decreases attributable to:
Securities sold, paid down or matured	(5)	(21)	(11)	(69)
Balance as of end-of-period	$ 372	$ 378	$ 372	$ 378

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Investments (Composition Of Current And Past Due Mortgage Loans On Real Estate) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Mortgage Loans On Real Estate Aging [Abstract]
Current	$ 12,578		$ 10,762
60 to 90 days past due
Greater than 90 days past due	1		3
Valuation allowance associated with impaired mortgage loans on real estate	(1)	$ (2)	(3)	$ (2)	$ (2)	$ (2)
Unamortized premium (discount)	(17)
Total carrying value	$ 12,561		$ 10,762

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Investments (Schedule Of Impaired Mortgage Loans) (Details) $ in Millions	Sep. 30, 2018 USD ($) item	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($) item	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Information about impaired mortgage loans on real estate
Number of impaired mortgage loans on real estate | item	1		3
Principal balance of impaired mortgage loans on real estate	$ 4		$ 11
Valuation allowance associated with impaired mortgage loans on real estate	(1)	$ (2)	(3)	$ (2)	$ (2)	$ (2)
Carrying value of impaired mortgage loans on real estate	$ 3		$ 8

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Investments (Changes In The Valuation Allowance Of Impaired Mortgage Loans On Real Estate (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Allowance for Losses
Balance as of beginning-of-period	$ 2	$ 2	$ 3	$ 2
Additions
Charge-offs, net of recoveries	(1)		(2)
Balance as of end-of-period	$ 1	$ 2	$ 1	$ 2

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Investments (Schedule Of Average Carrying Value Of Impaired Mortgage Loans On Real Estate) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Information about impaired mortgage loans on real estate
Average carrying value for impaired mortgage loans on real estate	$ 5	$ 5	$ 6	$ 5
Interest income recognized on impaired mortgage loans on real estate
Interest income collected on impaired mortgage loans on real estate

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Investments (Credit Quality Indicators For Mortgage Loans) (Details) $ in Millions	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Mortgage Loans Credit Quality [Line Items]
Carrying value of mortgage loans on real estate	$ 12,561	$ 10,762
Percentage of total mortgage loans on real estate	100.00%	100.00%
Loan-to-value ratio, less than 65% [Member]
Mortgage Loans Credit Quality [Line Items]
Carrying value of mortgage loans on real estate	$ 11,297	$ 9,642
Percentage of total mortgage loans on real estate	89.90%	89.60%
Debt-service coverage ratio	2.30	2.26
Loan-to-value ratio, 65% to 74% [Member]
Mortgage Loans Credit Quality [Line Items]
Carrying value of mortgage loans on real estate	$ 1,187	$ 1,000
Percentage of total mortgage loans on real estate	9.50%	9.30%
Debt-service coverage ratio	1.79	1.94
Loan-to-value ratio, 75% to 100% [Member]
Mortgage Loans Credit Quality [Line Items]
Carrying value of mortgage loans on real estate	$ 74	$ 112
Percentage of total mortgage loans on real estate	0.60%	1.00%
Debt-service coverage ratio	0.95	0.97
Loan-To-Value Ratio, Greater Than 100% [Member]
Mortgage Loans Credit Quality [Line Items]
Carrying value of mortgage loans on real estate	$ 3	$ 8
Percentage of total mortgage loans on real estate	0.00%	0.10%
Debt-service coverage ratio	0.21	0.82

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Investments (Realized Gain (Loss) Related To Certain Investments) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Realized gain (loss) related to certain investments
Gain (loss) on other investments	[1]	$ 1		$ 6	$ (6)
Associated amortization of DAC, VOBA, DSI and DFEL and changes in other contract holder funds		(5)	$ (5)	(16)	(17)
Total realized gain (loss) related to certain investments, pre-tax	[2]	(11)	(19)	(45)	(49)
Fixed Maturity AFS Securities [Member]
Realized gain (loss) related to certain investments
AFS securities. Gross gains	[3]	14	7	30	19
AFS securities. Gross losses	[3]	(21)	(22)	(65)	(47)
Equity AFS Securities [Member]
Realized gain (loss) related to certain investments
AFS securities. Gross gains			$ 1		$ 2
Equity Securities [Member]
Realized gain (loss) related to certain investments
Gain (loss) on other investments		$ 1		$ 2

[1] Includes market adjustments on equity securities still held of less than $1 million and $2 million for the three and nine months ended September 30, 2018, respectively.

[2] See "Realized Gain (Loss) Related to Certain Investments" section in Note 5.

[3] These amounts are represented net of related fair value hedging activity. See Note 6 for more information.

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Investments (OTTI Recognized In Net Income (Loss) And OCI) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	$ (2)	$ (9)	$ (5)	$ (17)
Associated amortization of DAC, VOBA, DSI and DFEL		1		1
Net OTTI recognized in net income (loss), pre-tax	(2)	(8)	(5)	(16)
Fixed Maturity AFS Securities [Member] | Corporate Bonds [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)	$ (2)	(8)	(4)	(13)
Fixed Maturity AFS Securities [Member] | ABS [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)		$ (1)		(2)
Fixed Maturity AFS Securities [Member] | RMBS [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)			$ (1)	(1)
Fixed Maturity AFS Securities [Member] | State And Municipal Bonds [Member]
OTTI Recognized in Net Income (Loss)
Gross OTTI recognized in net income (loss)				$ (1)

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Investments (Payables For Collateral On Investments) (Details) - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2018	Dec. 31, 2017
Carrying Value Of Payables For Collateral On Investments [Abstract]
Collateral payable for derivative investments	[1]	$ 366	$ 765
Securities pledged under securities lending agreements	[2]	117	222
Securities pledged under repurchase agreements	[3]	149	530
Investments pledged for Federal Home Loan Bank of Indianapolis ('FHLBI')	[4]	3,580	2,900
Total payables for collateral on investments		4,212	4,417
Fair Value Of Related Investments Or Collateral [Abstract]
Collateral payable for derivative investments	[1]	366	765
Securities pledged under securities lending agreements	[2]	113	213
Securities pledged under repurchase agreements	[3]	185	588
Investments pledged for Federal Home Loan Bank of Indianapolis('FHLBI')	[4]	5,413	4,235
Total payables for collateral on investments		$ 6,077	$ 5,801
Percentage of the fair value of domestic securities obtained as collateral under securities lending agreements.		102.00%
Percentage of the fair value of foreign securities obtained as collateral under securities lending agreements.		105.00%
Maximum [Member]
Fair Value Of Related Investments Or Collateral [Abstract]
Percentage of the fair value of securities obtained as collateral under reverse repurchase agreements.		95.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for AFS Securities		115.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for mortgage loan		175.00%
Minimum [Member]
Fair Value Of Related Investments Or Collateral [Abstract]
Percentage of the fair value of securities obtained as collateral under reverse repurchase agreements.		80.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for AFS Securities		105.00%
Percentage of the fair value of FHLBI securities obtained as collateral under securities pledged for FHLBI for mortgage loan		155.00%

[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 additional information.

[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 repurchase agreements are included in fixed maturity AFS securities on our Consolidated Balance Sheets. We generally obtain collateral in an amount between 80% 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 repurchase program is typically invested in fixed maturity AFS securities.

[4] 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.

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Investments (Schedule Of Increase (Decrease) In Payables For Collateral On Investments) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Increase (decrease) in payables for collateral on investments
Collateral payable for derivative investments	$ (399)	$ 41
Securities pledged under securities lending agreements	(105)	(16)
Securities pledged under repurchase agreements	(381)	(2)
Investments pledged for FHLBI	680	(50)
Total increase (decrease) in payables for collateral on investments	$ (205)	$ (27)

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Investments (Schedule of Securities Pledged by Contractual Maturity) (Details) - USD ($) $ in Millions		9 Months Ended	12 Months Ended
		Sep. 30, 2018	Dec. 31, 2017
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements		$ 149	$ 530
Securities Lending	[1]	117	222
Total gross secured borrowings		266	752
Corporate Bonds [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements		149	530
Securities Lending		117	222
Overnight and Continuous [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Securities Lending		117	222
Total gross secured borrowings		117	222
Overnight and Continuous [Member] | Corporate Bonds [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Securities Lending		117	222
Up to 30 days [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements			100
Total gross secured borrowings			100
Up to 30 days [Member] | Corporate Bonds [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements			100
30 to 90 Days [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements			280
Total gross secured borrowings			280
30 to 90 Days [Member] | Corporate Bonds [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements			280
Greater than 90 days [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements		149	150
Total gross secured borrowings		149	150
Greater than 90 days [Member] | Corporate Bonds [Member]
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase Agreements		$ 149	$ 150

[1] 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.

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Derivative Instruments (Narrative) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Derivative Instruments [Abstract]
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months	$ 29,000,000
Cash flow hedge, reclassified to earnings, net	0	$ 0
Non-performance Risk Adjustment	0
Exposure Associated With Collateralization Events	$ 0		$ 0

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Derivative Instruments (Outstanding Derivative Instruments With Off-Balance-Sheet Risks) (Details) - USD ($) $ in Millions		Sep. 30, 2018	Dec. 31, 2017
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts		$ 121,372
Interest rate contracts [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[1]	94,233
Foreign currency contracts [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[2]	2,172
Equity market contracts [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts		24,967
Total Derivative Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts		121,372	$ 110,350
Asset Fair Value		2,834	2,563
Liability Fair Value		2,382	2,563
Derivative investments [Member] | Interest rate contracts [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]	90,138	72,937
Asset Fair Value	[3]	318	657
Liability Fair Value	[3]	233	127
Derivative investments [Member] | Foreign currency contracts [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]	87	22
Derivative investments [Member] | Equity market contracts [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]	24,967	31,090
Asset Fair Value	[3]	534	562
Liability Fair Value	[3]	140	557
Derivative investments [Member] | Credit contracts [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]		52
Derivative investments [Member] | Cash Flow Hedges [Member] | Designated as Hedging Instrument [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts		4,912	4,811
Asset Fair Value		225	125
Liability Fair Value		113	163
Derivative investments [Member] | Cash Flow Hedges [Member] | Interest rate contracts [Member] | Designated as Hedging Instrument [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]	2,827	3,007
Asset Fair Value	[3]	121	46
Liability Fair Value	[3]	42	84
Derivative investments [Member] | Cash Flow Hedges [Member] | Foreign currency contracts [Member] | Designated as Hedging Instrument [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]	2,085	1,804
Asset Fair Value	[3]	104	79
Liability Fair Value	[3]	71	79
Derivative investments [Member] | Fair Value Hedges [Member] | Interest rate contracts [Member] | Designated as Hedging Instrument [Member]
Outstanding derivative instruments with off-balance-sheet risks
Notional Amounts	[3]	1,268	1,438
Asset Fair Value	[3]	30	254
Liability Fair Value	[3]	112	174
Other Assets [Member] | GLB Direct Embedded Derivatives [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Asset Fair Value	[4]	1,648	903
Other Liabilities [Member] | GLB Ceded Embedded Derivatives [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Asset Fair Value	[4],[5]	35	51
Liability Fair Value	[4],[5]	193	67
Reinsurance Related Embedded Derivatives [Member] | Embedded derivatives - Reinsurance related [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Liability Fair Value	[6]	20	57
Future Contract Benefits [Member] | Indexed Annuity And Embedded Derivatives [Member] | Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member]
Outstanding derivative instruments with off-balance-sheet risks
Asset Fair Value	[4],[7]	44	11
Liability Fair Value	[4],[7]	$ 1,571	$ 1,418

[1] As of September 30, 2018, 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 September 30, 2018, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was September 2049.

[3] Reported in derivative investments and other liabilities on our Consolidated Balance Sheets.

[4] Reported in other assets on our Consolidated Balance Sheets.

[5] Reported in other liabilities on our Consolidated Balance Sheets.

[6] Reported in reinsurance related embedded derivatives on our Consolidated Balance Sheets.

[7] Reported in future contract benefits on our Consolidated Balance Sheets.

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Derivative Instruments (Maturity Of The Notional Amounts Of Derivative Financial Instruments) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Maturity of the notional amounts of derivative financial instruments
Remaining Life Less Than 1 Year	$ 29,151
Remaining Life - 1 - 5 Years	18,673
Remaining Life - 6 - 10 Years	47,943
Remaining Life - 11 - 30 Years	21,262
Remaining Life Over - 30 Years	4,343
Remaining Life - Total Years	121,372
Interest rate contracts [Member]
Maturity of the notional amounts of derivative financial instruments
Remaining Life Less Than 1 Year	10,907	[1]
Remaining Life - 1 - 5 Years	14,802	[1]
Remaining Life - 6 - 10 Years	47,193	[1]
Remaining Life - 11 - 30 Years	20,118	[1]
Remaining Life Over - 30 Years	1,213	[1]
Remaining Life - Total Years	$ 94,233	[1]
Derivative maturity date	Apr. 01, 2067
Foreign currency contracts [Member]
Maturity of the notional amounts of derivative financial instruments
Remaining Life Less Than 1 Year	$ 141	[2]
Remaining Life - 1 - 5 Years	256	[2]
Remaining Life - 6 - 10 Years	635	[2]
Remaining Life - 11 - 30 Years	1,130	[2]
Remaining Life Over - 30 Years	10	[2]
Remaining Life - Total Years	$ 2,172	[2]
Derivative maturity date	Sep. 01, 2049
Equity market contracts [Member]
Maturity of the notional amounts of derivative financial instruments
Remaining Life Less Than 1 Year	$ 18,103
Remaining Life - 1 - 5 Years	3,615
Remaining Life - 6 - 10 Years	115
Remaining Life - 11 - 30 Years	14
Remaining Life Over - 30 Years	3,120
Remaining Life - Total Years	$ 24,967

[1] As of September 30, 2018, 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 September 30, 2018, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was September 2049.

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Derivative Instruments (Change In Our Unrealized Gain On Derivative Instruments In Accumulated OCI) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Change in our unrealized gain on derivative instruments in accumulated OCI
Balance as of beginning-of-year				$ 3,230
Income tax expense (benefit)		$ 42	$ 92	176	$ 254
Balance as of end-of-period		836		836
Unrealized Gain (Loss) on Derivative Instruments [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Balance as of beginning-of-year				(29)	49
Cumulative effect from adoption of new accounting standards						$ (6)
Change in foreign currency exchange rate adjustment				69	(119)
Change in DAC, VOBA, DSI and DFEL				8	(3)
Income tax benefit (expense)				(37)	32
Reclassification adjustment for gains (losses) included in net income (loss)				15	7
Associated amortization of DAC, VOBA, DSI and DFEL				(1)	(1)
Income tax expense (benefit)				(3)	(2)
Balance as of end-of-period		$ 92	$ (14)	92	(14)
Unrealized Gain (Loss) on Derivative Instruments [Member] | Cash Flow Hedges [Member] | Interest rate contracts [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Unrealized holding gains (losses) arising during the period				117	(15)
Unrealized Gain (Loss) on Derivative Instruments [Member] | Cash Flow Hedges [Member] | Interest rate contracts [Member] | Net Investment Income [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Reclassification adjustment for gains (losses) included in net income (loss)	[1]			3	3
Unrealized Gain (Loss) on Derivative Instruments [Member] | Cash Flow Hedges [Member] | Interest rate contracts [Member] | Interest and Debt Expense [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Reclassification adjustment for gains (losses) included in net income (loss)	[2]			(6)	(13)
Unrealized Gain (Loss) on Derivative Instruments [Member] | Cash Flow Hedges [Member] | Foreign currency contracts [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Unrealized holding gains (losses) arising during the period				(19)	46
Unrealized Gain (Loss) on Derivative Instruments [Member] | Cash Flow Hedges [Member] | Foreign currency contracts [Member] | Net Investment Income [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Reclassification adjustment for gains (losses) included in net income (loss)	[1]			$ 18	12
Unrealized Gain (Loss) on Derivative Instruments [Member] | Cash Flow Hedges [Member] | Foreign currency contracts [Member] | Realized Gain (Loss) [Member]
Change in our unrealized gain on derivative instruments in accumulated OCI
Reclassification adjustment for gains (losses) included in net income (loss)	[3]				$ 5

[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).

[3] The OCI offset is reported within realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

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Derivative Instruments (Gains (Losses) On Derivative Instruments Recorded Within Income (Loss) From Continuing Operations) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Gains (losses)
Gains (losses)		$ (158)	$ (128)	$ (300)	$ (411)
Designated as Hedging Instrument [Member] | Cash Flow Hedges [Member]
Gains (losses)
Gains (losses)		4	1	15	7
Designated as Hedging Instrument [Member] | Fair Value Hedges [Member]
Gains (losses)
Gains (losses)		20	3	64	5
Designated as Hedging Instrument [Member] | Net Investment Income [Member] | Cash Flow Hedges [Member] | Interest rate contracts [Member]
Gains (losses)
Gains (losses)	[1]	1	2	3	3
Designated as Hedging Instrument [Member] | Net Investment Income [Member] | Cash Flow Hedges [Member] | Foreign currency contracts [Member]
Gains (losses)
Gains (losses)	[1]	7	4	18	12
Designated as Hedging Instrument [Member] | Net Investment Income [Member] | Fair Value Hedges [Member] | Interest rate contracts [Member]
Gains (losses)
Gains (losses)	[1]	(2)	(5)	(11)	(18)
Designated as Hedging Instrument [Member] | Interest and Debt Expense [Member] | Cash Flow Hedges [Member] | Interest rate contracts [Member]
Gains (losses)
Gains (losses)	[2]	(4)	(5)	(6)	(13)
Designated as Hedging Instrument [Member] | Interest and Debt Expense [Member] | Fair Value Hedges [Member] | Interest rate contracts [Member]
Gains (losses)
Gains (losses)	[2]	5	6	11	21
Designated as Hedging Instrument [Member] | Realized Gain (Loss) [Member] | Cash Flow Hedges [Member] | Foreign currency contracts [Member]
Gains (losses)
Gains (losses)	[3]				5
Designated as Hedging Instrument [Member] | Realized Gain (Loss) [Member] | Fair Value Hedges [Member] | Interest rate contracts [Member]
Gains (losses)
Gains (losses)	[3]	17	2	64	2
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Realized Gain (Loss) [Member] | Interest rate contracts [Member]
Gains (losses)
Gains (losses)	[3]	(167)	18	(577)	161
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Realized Gain (Loss) [Member] | Foreign currency contracts [Member]
Gains (losses)
Gains (losses)	[3]		1	2	1
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Realized Gain (Loss) [Member] | Equity market contracts [Member]
Gains (losses)
Gains (losses)	[3]	(199)	(347)	(280)	(1,163)
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Realized Gain (Loss) [Member] | GLB Embedded Derivatives [Member]
Gains (losses)
Gains (losses)	[3]	333	233	603	784
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Realized Gain (Loss) [Member] | Embedded derivatives - Reinsurance related [Member]
Gains (losses)
Gains (losses)	[3]	5	3	37	3
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Realized Gain (Loss) [Member] | Indexed Annuity And Embedded Derivatives [Member]
Gains (losses)
Gains (losses)	[3]	(164)	(46)	(175)	(230)
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments [Member] | Commissions and other expenses [Member] | Equity market contracts [Member]
Gains (losses)
Gains (losses)	[4]	$ 10	$ 6	$ 11	$ 21

[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).

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Derivative Instruments (Gains (Losses) On Derivative Instruments Designated As Cash Flow Hedges) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Gains (losses) on derivative instruments designated and qualifying as cash flow hedges
Offset to net investment income	$ 1,271	$ 1,239	$ 3,736	$ 3,738
Offset to realized gain (loss)	(55)	(56)	(51)	(105)
Offset to interest and debt expense	(69)	(63)	(228)	(190)
Designated as Hedging Instrument [Member] | Cash Flow Hedges [Member] | Other Comprehensive Income (Loss) [Member]
Gains (losses) on derivative instruments designated and qualifying as cash flow hedges
Offset to net investment income	8	6	21	15
Offset to realized gain (loss)				5
Offset to interest and debt expense	$ (4)	$ (5)	$ (6)	$ (13)

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Derivative Instruments (Open Credit Default Swap Liabilities) (Details) - Open Credit Default Swap Liabilities [Member] $ in Millions		9 Months Ended	12 Months Ended
		Sep. 30, 2018	Dec. 31, 2017 USD ($) item
Summary Of Credit Derivatives
Number of instruments | item			1
Fair value	[1]		$ 1
Maximum potential payout			$ 52
Maturity 12/20/2022 [Member]
Summary Of Credit Derivatives
Maturity		Dec. 20, 2022
Credit rating of underlying obligation	[2]		BBB+
Number of instruments | item			1
Fair value	[1]		$ 1
Maximum potential payout			$ 52

[1] Broker quotes are used to determine the market value of our credit default swaps.

[2] 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.

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Derivative Instruments (Collateral Support Agreements) (Details) - Open Credit Default Swap Liabilities [Member] - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Credit risk related contingent features collateral
Maximum potential payout		$ 52
Less: Counterparty thresholds
Maximum collateral potentially required to post		$ 52

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Derivative Instruments (Schedule Of Collateral Amounts With Rights To Reclaim Or Obligation To Return Cash) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Credit Derivatives [Line Items]
Collateral Posted by Counter-Party (Held by LNC)	$ 366	$ 765
Collateral Posted by LNC (Held by Counter-Party)	(134)	(581)
AA- [Member]
Credit Derivatives [Line Items]
Collateral Posted by Counter-Party (Held by LNC)	36	116
Collateral Posted by LNC (Held by Counter-Party)	(22)	(1)
A+ [Member]
Credit Derivatives [Line Items]
Collateral Posted by Counter-Party (Held by LNC)	177	242
Collateral Posted by LNC (Held by Counter-Party)	(111)	(453)
A [Member]
Credit Derivatives [Line Items]
Collateral Posted by Counter-Party (Held by LNC)	40	170
Collateral Posted by LNC (Held by Counter-Party)	(1)	(120)
A- [Member]
Credit Derivatives [Line Items]
Collateral Posted by Counter-Party (Held by LNC)	113	237
Collateral Posted by LNC (Held by Counter-Party)		(3)
BBB+ [Member]
Credit Derivatives [Line Items]
Collateral Posted by Counter-Party (Held by LNC)
Collateral Posted by LNC (Held by Counter-Party)		$ (4)

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Derivative Instruments (Schedule Of Offsetting Assets And Liabilities) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Financial Assets
Derivative Instruments, Gross amount of recognized assets	$ 957	$ 1,301
Derivative Instruments, Gross amounts offset	(251)	(386)
Derivative Instruments, Net amount of assets	706	915
Derivative Instruments, Cash collateral	(366)	(765)
Derivative Instruments, Non-cash collateral	(80)
Derivative Instruments, Net amount	260	150
Embedded Derivative Instruments, Gross amount of recognized assets	1,727	965
Embedded Derivative Instruments, Gross amounts offset
Embedded Derivative Instruments, Net amount of assets	1,727	965
Embedded Derivative Instruments, Cash collateral
Embedded Derivative Instruments, Non-cash collateral
Embedded Derivative Instruments, Net amount	1,727	965
Total, Gross amount of recognized assets	2,684	2,266
Total, Gross amounts offset	(251)	(386)
Total, Net amount of assets	2,433	1,880
Total, Cash collateral	(366)	(765)
Total, Non-cash collateral	(80)
Total, Net amount	1,987	1,115
Financial Liabilities
Derivative Instruments, Gross amount of recognized liabilities	879	955
Derivative Instruments, Gross amounts offset	(149)	(296)
Derivative Instruments, Net amount of liabilities	730	659
Derivative Instruments, Cash collateral	(134)	(581)
Derivative Instruments, Non-cash collateral	(420)
Derivative Instruments, Net amount	176	78
Embedded Derivative Instruments, Gross amount of recognized liabilities	1,784	1,542
Embedded Derivative Instruments, Gross amounts offset
Embedded Derivative Instruments, Net amount of liabilities	1,784	1,542
Embedded Derivative Instruments, Cash collateral
Embedded Derivative Instruments, Non-cash collateral
Embedded Derivative Instruments, Net amount	1,784	1,542
Total, Gross amount of recognized liabilities	2,663	2,497
Total, Gross amounts offset	(149)	(296)
Total, Net amount of liabilities	2,514	2,201
Total, Cash collateral	(134)	(581)
Total, Non-cash collateral	(420)
Total, Net amount	$ 1,960	$ 1,620

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Federal Income Taxes (Narrative) (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Federal Income Taxes [Abstract]
Effective tax rate	8.00%	18.00%	12.00%	17.00%
Federal rate	21.00%	35.00%	21.00%	35.00%	35.00%

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Guaranteed Benefit Features (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Guaranteed Benefit Features [Abstract]
Percent of permanent life insurance in force	35.00%		35.00%		35.00%
Percent of permanent life insurance sales	38.00%	26.00%	34.00%	27.00%

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Guaranteed Benefit Features (Information On Guaranteed Death Benefit Features) (Details) - USD ($) $ in Millions		9 Months Ended	12 Months Ended
		Sep. 30, 2018	Dec. 31, 2017
Return of Net Deposits [Member]
Net Amount at Risk by Product and Guarantee [Line Items]
Total Account Value	[1]	$ 98,623	$ 96,941
Net Amount At Risk	[1],[2]	$ 93	$ 81
Average attained age of contract holders	[1]	64 years	64 years
Minimum Return [Member]
Net Amount at Risk by Product and Guarantee [Line Items]
Total Account Value	[1]	$ 103	$ 108
Net Amount At Risk	[1],[2]	$ 16	$ 18
Average attained age of contract holders	[1]	76 years	76 years
Guaranteed minimum return	[1]	5.00%	5.00%
Anniversary Contract Value [Member]
Net Amount at Risk by Product and Guarantee [Line Items]
Total Account Value	[1]	$ 26,308	$ 26,596
Net Amount At Risk	[1],[2]	$ 438	$ 417
Average attained age of contract holders	[1]	71 years	70 years

[1] Our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.

[2] Represents the amount of death benefit in excess of the account balance that is subject to market fluctuations.

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Guaranteed Benefit Features (Summary Of Guaranteed Death Benefit Liabilities) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Guaranteed Benefit Features [Abstract]
Balance as of beginning-of-year	$ 100	$ 110
Changes in reserves	18	4
Benefits paid	(11)	(14)
Balance as of end-of-period	$ 107	$ 100

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Guaranteed Benefit Features (Account Balances Of Variable Annuity Contracts With Guarantees Invested In Separate Accounts) (Details) - Variable Annuity [Member] - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Account Balances Of Variable Annuity Contracts With Guarantees Invested In Separate Accounts [Line Items]
Total	$ 122,859	$ 121,110
Percent of total variable annuity separate account values	98.00%	99.00%
Domestic Equity [Member]
Account Balances Of Variable Annuity Contracts With Guarantees Invested In Separate Accounts [Line Items]
Total	$ 61,732	$ 59,647
International Equity [Member]
Account Balances Of Variable Annuity Contracts With Guarantees Invested In Separate Accounts [Line Items]
Total	20,598	20,837
Fixed Income [Member]
Account Balances Of Variable Annuity Contracts With Guarantees Invested In Separate Accounts [Line Items]
Total	$ 40,529	$ 40,626

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Liability For Unpaid Claims (Changes In Liability For Unpaid Claims) (Details) - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017
Liability For Unpaid Claims [Abstract]
Balance as of beginning-of-year		$ 2,222	$ 2,242
Reinsurance recoverable		57	69
Net balance as of beginning-of-year		2,165	2,173
Business acquired	[1]	2,842
Incurred related to:
Current year		1,640	909
Interest		85	53
All other incurred		(159)	(85)
Total incurred		1,566	877
Paid related to:
Current year		(663)	(458)
Prior years		(796)	(440)
Total paid		(1,459)	(898)
Net balance as of end-of-period		5,114	2,152
Reinsurance recoverable		141	57
Balance as of end-of-period		$ 5,255	$ 2,209

[1] Represents Liberty group life and disability reserves, net, as of May 1, 2018, subject to finalization of acquisition date fair values. See Note 3 for additional information.

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Liability For Unpaid Claims (Schedule Of Reconciliation) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Liability for Future Policy Benefit, by Product Segment [Line Items]
Future contract benefits	$ 33,988		$ 22,547
Liability for unpaid claims	5,255	$ 2,222	2,209	$ 2,242
Life And Annuity Reserves And Claims Due [Member]
Liability for Future Policy Benefit, by Product Segment [Line Items]
Less adjustments	27,193		18,698
Accident And Health Active Life Reserves [Member]
Liability for Future Policy Benefit, by Product Segment [Line Items]
Less adjustments	$ 1,540		$ 1,640

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Contingencies And Commitments (Narrative) (Details) $ in Millions	Sep. 30, 2018 USD ($)
Pending Litigation [Member]
Loss Contingencies [Line Items]
Loss contingency, estimate	$ 50

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Shares and Stockholders' Equity (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Shares and Stockholders' Equity [Abstract]
Deferred compensation plan mark to market adjustment	$ 6	$ (5)

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Shares and Stockholders' Equity (Changes In Common stock (Number Of Shares)) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Changes In Preferred And Common Stock Number Of Shares [Line Items]
Balance as of beginning-of-period			218,090,114
Balance as of end-of-period	214,776,806		214,776,806
Common stock as of End-of-period:
Basic basis	214,776,806	219,544,618	214,776,806	219,544,618
Diluted basis	217,390,897	222,701,021	217,390,897	222,701,021
Common Stock [Member]
Changes In Preferred And Common Stock Number Of Shares [Line Items]
Balance as of beginning-of-period	217,294,051	222,237,262	218,090,114	226,335,105
Stock issued for exercise of warrants	97,076	2,464	119,942	337,394
Stock compensation/issued for benefit plans	38,642	139,179	675,608	1,600,465
Retirement/cancellation of shares	(2,652,963)	(2,834,287)	(4,108,858)	(8,728,346)
Balance as of end-of-period	214,776,806	219,544,618	214,776,806	219,544,618

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Shares And Stockholders' Equity (Reconciliation Of The Denominator Calculations Of Basic And Diluted EPS) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Reconciliation of the denominator (number of shares) in the calculations of basic and diluted earnings (loss) per common share
Weighted-average shares, as used in basic calculation	215,901,268	220,813,693	217,413,480	223,311,993
Shares to cover exercise of outstanding warrants	579,882	668,103	620,580	795,312
Shares to cover non-vested stock	1,467,953	1,614,405	1,512,297	1,572,250
Average stock options outstanding during the period	1,700,026	2,275,826	1,807,340	2,432,171
Assumed acquisition of shares with assumed proceeds from exercising outstanding warrants	(86,040)	(94,338)	(86,335)	(116,577)
Assumed acquisition of shares with assumed proceeds and benefits from exercising stock options (at average market price for the period)	(1,082,651)	(1,361,094)	(1,090,868)	(1,481,524)
Shares repurchasable from measured but unrecognized stock option expense	(11,209)	(44,579)	(17,381)	(60,539)
Average deferred compensation shares			936,355	926,612
Weighted-average shares, as used in diluted calculation	218,469,229	223,872,016	221,095,468	227,379,698

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Shares and Stockholders' Equity (Components And Changes In Accumulated OCI) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of beginning-of-year	$ 3,230
Less:
Balance as of end-of-period	836
Unrealized Gain (Loss) on AFS Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of beginning-of-year	3,486	$ 1,784
Cumulative effect from adoption of new accounting standards			$ 674
Unrealized holding gains (losses) arising during the period	(5,520)	2,385
Change in foreign currency exchange rate adjustment	(68)	112
Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds	1,538	(468)
Income tax benefit (expense)	858	(717)
Less:
Reclassification adjustment for gains (losses) included in net income (loss)	(35)	(26)
Associated amortization of DAC, VOBA, DSI, and DFEL	(15)	(16)
Income tax benefit (expense)	11	15
Less:
Balance as of end-of-period	1,007	3,123
Unrealized OTTI on AFS Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of beginning-of-year	44	25
Cumulative effect from adoption of new accounting standards			9
(Increases) attributable to:
Gross OTTI recognized in OCI during the period		(1)
Decreases attributable to
Changes in fair value, sales, maturities or other settlements of AFS securities	(8)	29
Change in DAC, VOBA, DSI, and DFEL	(10)	(5)
Income tax benefit (expense)	4	(8)
Less:
Balance as of end-of-period	39	40
Unrealized Gain (Loss) on Derivative Instruments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of beginning-of-year	(29)	49
Cumulative effect from adoption of new accounting standards			(6)
Unrealized holding gains (losses) arising during the period	98	31
Change in foreign currency exchange rate adjustment	69	(119)
Decreases attributable to
Change in DAC, VOBA, DSI and DFEL	8	(3)
Income tax benefit (expense)	(37)	32
Less:
Reclassification adjustment for gains (losses) included in net income (loss)	15	7
Associated amortization of DAC, VOBA, DSI and DFEL	(1)	(1)
Income tax benefit (expense)	(3)	(2)
Balance as of end-of-period	92	(14)
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of beginning-of-year	(14)	(27)
Change in foreign currency exchange rate adjustment	(6)	11
Less:
Balance as of end-of-period	(20)	(16)
Funded Status of Employee Benefit Plans [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance as of beginning-of-year	(257)	(265)
Cumulative effect from adoption of new accounting standards			$ (35)
Less:
Adjustment arising during the period	10	(9)
Balance as of end-of-period	$ (282)	$ (274)

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Shares And Stockholders' Equity (Schedule of Reclassifications Out Of AOCI) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total realized gain (loss)	$ (55)	$ (56)	$ (51)	$ (105)
Net investment income	1,271	1,239	3,736	3,738
Interest and debt expense	(69)	(63)	(228)	(190)
Commissions and other expenses	$ (1,367)	$ (1,020)	(3,600)	(3,068)
Unrealized Gain (Loss) on AFS Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total realized gain (loss)			(35)	(26)
Reclassifications before income tax benefit (expense)			(50)	(42)
Income tax benefit (expense)			11	15
Reclassifications, net of income tax			(39)	(27)
Unrealized Gain (Loss) on AFS Securities [Member] | Associated amortization of DAC, VOBA, DSI and DFEL [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total realized gain (loss)			(15)	(16)
Unrealized OTTI on AFS Securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total realized gain (loss)			(1)	6
Reclassifications before income tax benefit (expense)			(1)	5
Income tax benefit (expense)				(2)
Reclassifications, net of income tax			(1)	3
Unrealized OTTI on AFS Securities [Member] | Change In DAC, VOBA, DSI, And DFEL [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total realized gain (loss)				(1)
Unrealized Gain (Loss) on Derivative Instruments [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Nonoperating income expense			15	7
Reclassifications before income tax benefit (expense)			14	6
Income tax benefit (expense)			(3)	(2)
Reclassifications, net of income tax			11	4
Unrealized Gain (Loss) on Derivative Instruments [Member] | Interest rate contracts [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net investment income			3	3
Interest and debt expense			(6)	(13)
Unrealized Gain (Loss) on Derivative Instruments [Member] | Foreign currency contracts [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total realized gain (loss)				5
Net investment income			18	12
Unrealized Gain (Loss) on Derivative Instruments [Member] | Associated amortization of DAC, VOBA, DSI and DFEL [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Commissions and other expenses			$ (1)	$ (1)

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Realized (Gain) Loss (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details underlying realized gain (loss)
Total realized gain (loss) related to certain investments	[1]	$ (11)	$ (19)	$ (45)	$ (49)
Realized gain (loss) on the mark-to-market on certain instruments	[2]	(10)	(2)	14	3
Indexed annuity and IUL contracts net derivatives results:
Gross gain (loss)	[3]	(7)		(14)	(17)
Associated amortization of DAC, VOBA, DSI, and DFEL	[3]	(2)	(1)	(2)	(1)
Variable annuity net derivatives results:
Gross gain (loss)	[4]	(32)	(41)	(10)	(45)
Associated amortization of DAC, VOBA, DSI, and DFEL	[4]	7	7	6	4
Total realized gain (loss)		$ (55)	$ (56)	$ (51)	$ (105)

[1] See "Realized Gain (Loss) Related to Certain Investments" section in Note 5.

[2] Represents changes in the fair values of certain derivative investments (not including those associated with our variable and indexed annuity and IUL contracts net derivatives results), reinsurance related embedded derivatives and trading securities.

[3] Represents the net difference between the change in the fair value of the S&P 500 Index ® call options that we hold and the change in the fair value of the embedded derivative liabilities of our indexed annuity and IUL contracts 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 riders and the change in the fair value of the derivative instruments we own to hedge the change in embedded derivative reserves on our GLB riders and the benefit ratio unlocking on our GLB and GDB riders, including the cost of purchasing the hedging instruments.

XML

Stock-Based Incentive Compensation Plans (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Stock Options [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted		481,404
Performance Shares [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted		156,676
Restricted Stock Units [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	1,202	695,471
Non-employee Stock Appreciation Rights [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted		14,692
Non-employee Agent Stock Options [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted		32,400
Non-employee Director Deferred Stock Units [Member]
Share-based compensation arrangement by share-based payment award [Line Items]
Shares granted	7,184	21,682

XML

Fair Value of Financial Instruments (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 246,814	$ 245,265
Liabilities measured at fair value	2,382	3,689
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Liabilities measured at fair value	0	$ 0
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	1		$ 1
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	1		1
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	1		1
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	$ 1		$ 1

XML

Fair Value of Financial Instruments (Carrying and Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Millions		Sep. 30, 2018	Dec. 31, 2017
AFS securities:
AFS Fixed Maturity Securities		$ 93,161	$ 94,840
Equity securities			246
Trading securities		1,440	1,620
Equity securities		112
Mortgage loans on real estate		12,561	10,762
Derivative investments		706	915
Other investments		2,204	2,296
Carrying Value [Member]
AFS securities:
Equity securities			246
Trading securities		1,440	1,620
Equity securities		112
Mortgage loans on real estate		12,561	10,762
Derivative investments	[1]	706	915
Other investments		2,204	2,296
Cash and invested cash		1,460	1,628
Separate account assets		147,692	144,219
Future contract benefits:
Indexed annuity and IUL contracts embedded derivatives		(1,571)	(1,418)
Other contract holder funds:
Remaining guaranteed interest and similar contracts		(562)	(592)
Account values of certain investment contracts		(33,684)	(32,370)
Short-term debt			(450)
Long-term debt		(5,804)	(4,894)
Reinsurance related embedded derivatives		(20)	(57)
Fair Value [Member]
AFS securities:
Equity securities			246
Trading securities		1,440	1,620
Equity securities		112
Mortgage loans on real estate		12,239	10,877
Derivative investments	[1]	706	915
Other investments		2,204	2,296
Cash and invested cash		1,460	1,628
Separate account assets		147,692	144,219
Future contract benefits:
Indexed annuity and IUL contracts embedded derivatives		(1,571)	(1,418)
Other contract holder funds:
Remaining guaranteed interest and similar contracts		(562)	(592)
Account values of certain investment contracts		(34,577)	(36,200)
Short-term debt			(452)
Long-term debt		(5,795)	(5,042)
Reinsurance related embedded derivatives		(20)	(57)
Fixed Maturity AFS Securities [Member] | Carrying Value [Member]
AFS securities:
AFS Fixed Maturity Securities		93,161	94,840
Fixed Maturity AFS Securities [Member] | Fair Value [Member]
AFS securities:
AFS Fixed Maturity Securities		93,161	94,840
Other Assets [Member] | Carrying Value [Member]
AFS securities:
Other assets - GLB direct embedded derivatives		1,648	903
Other assets - GLB ceded embedded derivatives		35	51
Indexed annuity ceded embedded derivatives		44	11
Other Assets [Member] | Fair Value [Member]
AFS securities:
Other assets - GLB direct embedded derivatives		1,648	903
Other assets - GLB ceded embedded derivatives		35	51
Indexed annuity ceded embedded derivatives		44	11
Other Liabilities [Member] | Carrying Value [Member]
Other contract holder funds:
Other liabilities - derivative liabilities	[1]	(197)	(338)
Other Liabilities [Member] | Fair Value [Member]
Other contract holder funds:
Other liabilities - derivative liabilities	[1]	(197)	(338)
Other Liabilities [Member] | GLB Ceded Embedded Derivatives [Member] | Carrying Value [Member]
Other contract holder funds:
Other liabilities - GLB embedded derivatives		(193)	(67)
Other Liabilities [Member] | GLB Ceded Embedded Derivatives [Member] | Fair Value [Member]
Other contract holder funds:
Other liabilities - GLB embedded derivatives		$ (193)	$ (67)

[1] We have master netting agreements with each of our derivative counterparties, which allow for the netting of our derivative asset and liability positions by counterparty.

XML

Fair Value of Financial Instruments (Fair Value of Assets and Liabilities on a Recurring Basis) (Details) - USD ($) $ in Millions		Sep. 30, 2018	Dec. 31, 2017
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		$ 246,814	$ 245,265
Liabilities measured at fair value		(2,382)	(3,689)
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,449	1,692
Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		239,553	238,376
Liabilities measured at fair value		(437)	(1,631)
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		5,812	5,197
Liabilities measured at fair value		(1,945)	(2,058)
Corporate Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		80,080	82,216
Corporate Bonds [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		76,871	79,125
Corporate Bonds [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		3,209	3,091
ABS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		985	974
ABS [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		954	947
ABS [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		31	27
U.S. Government Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		409	567
U.S. Government Bonds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		391	556
U.S. Government Bonds [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		18	6
U.S. Government Bonds [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value			5
Foreign Government Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		459	451
Foreign Government Bonds [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		351	341
Foreign Government Bonds [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		108	110
RMBS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		3,287	3,465
RMBS [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		3,280	3,453
RMBS [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		7	12
CMBS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		748	600
CMBS [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		725	594
CMBS [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		23	6
CLOs [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,362	808
CLOs [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,311	717
CLOs [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		51	91
State And Municipal Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		5,218	5,119
State And Municipal Bonds [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		5,218	5,119
Hybrid And Redeemable Preferred Securities [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		613	640
Hybrid And Redeemable Preferred Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		74	71
Hybrid And Redeemable Preferred Securities [Member] | Significant Observable Inputs (Level 2) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		462	493
Hybrid And Redeemable Preferred Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		77	76
Equity AFS Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value			246
Equity AFS Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value			28
Equity AFS Securities [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value			56
Equity AFS Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value			162
Trading Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,440	1,620
Trading Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		43	73
Trading Securities [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,379	1,498
Trading Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		18	49
Equity Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		112
Equity Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		28
Equity Securities [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		58
Equity Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		26
Derivative Investments [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value	[1]	1,107	1,597
Derivative Investments [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value	[1]	572	994
Derivative Investments [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value	[1]	535	603
Other investments [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		149	150
Other investments [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		149	150
Cash And Invested cash [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,460	1,628
Cash And Invested cash [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,460	1,628
GLB Direct Embedded Derivatives [Member] | Other Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,648	903
GLB Direct Embedded Derivatives [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		1,648	903
GLB Ceded Embedded Derivatives [Member] | Other Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		35	51
GLB Ceded Embedded Derivatives [Member] | Other Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value		(193)	(67)
GLB Ceded Embedded Derivatives [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		35	51
GLB Ceded Embedded Derivatives [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value		(193)	(67)
Separate Account Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		147,658	144,219
Separate Account Assets [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		764	814
Separate Account Assets [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		146,894	143,405
Indexed Annuity And Embedded Derivatives [Member] | Other Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		44	11
Indexed Annuity And Embedded Derivatives [Member] | Future Contract Benefits [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value		(1,571)	(1,418)
Indexed Annuity And Embedded Derivatives [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Assets measured at fair value		44	11
Indexed Annuity And Embedded Derivatives [Member] | Significant Unobservable Inputs (Level 3) [Member] | Future Contract Benefits [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value		(1,571)	(1,418)
Long-term Debt [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value			(1,127)
Long-term Debt [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value			(1,127)
Reinsurance Related Embedded Derivatives [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value		(20)	(57)
Reinsurance Related Embedded Derivatives [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value		(20)	(57)
Derivative Financial Instruments, Liabilities [Member] | Other Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value	[1]	(598)	(1,020)
Derivative Financial Instruments, Liabilities [Member] | Significant Observable Inputs (Level 2) [Member] | Other Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value	[1]	(417)	(447)
Derivative Financial Instruments, Liabilities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Liabilities measured at fair value	[1]	$ (181)	$ (573)

[1] Derivative investment assets and liabilities presented within the fair value hierarchy are presented on a gross basis by derivative type and not on a master netting basis by counterparty.

XML

Fair Value of Financial Instruments (Fair Value Measured On A Recurring Basis Reconciliation) (Details) - USD ($) $ in Millions		3 Months Ended			9 Months Ended
		Sep. 30, 2018		Sep. 30, 2017	Sep. 30, 2018		Sep. 30, 2017
Level 3 Unobservable Input Reconciliation
Beginning Fair Value		$ 3,476		$ 2,324	$ 3,139		$ 1,545
Items Included in Net Income		58		177	541		546
Gains (Losses) in OCI and Other	[1]	(86)		46	(252)		270
Issuances, Sales, Maturities, Settlements, Calls, Net		567	[2]	(101)	889	[2]	45
Transfers Into or Out of Level 3, Net	[3]	(148)		(7)	(450)	[4]	33
Ending Fair Value		3,867		2,439	3,867		2,439
Corporate Bonds [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	3,181		2,517	3,091		2,405
Items Included in Net Income	[5]	1		4	7		15
Gains (Losses) in OCI and Other	[1],[5]	(30)		35	(137)		153
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]	88	[2]	(35)	319	[2]	(182)
Transfers Into or Out of Level 3, Net	[3],[5]	(31)		59	(71)	[4]	189
Ending Fair Value	[5]	3,209		2,580	3,209		2,580
Corporate Bonds [Member] | Fixed Maturity AFS Securities [Member] | Liberty Transaction [Member]
Level 3 Unobservable Input Reconciliation
Issuances, Sales, Maturities, Settlements, Calls, Net		67			67
ABS [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	31		43	27		33
Items Included in Net Income	[5]
Gains (Losses) in OCI and Other	[1],[5]			(1)	(1)
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]		[2]		5	[2]
Transfers Into or Out of Level 3, Net	[3],[5]			(15)			(6)
Ending Fair Value	[5]	31		27	31		27
ABS [Member] | Fixed Maturity AFS Securities [Member] | Liberty Transaction [Member]
Level 3 Unobservable Input Reconciliation
Issuances, Sales, Maturities, Settlements, Calls, Net		17			17
U.S. Government Bonds [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]			5	5
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[5]				(5)
Transfers Into or Out of Level 3, Net	[3],[5]						5
Ending Fair Value	[5]			5			5
Foreign Government Bonds [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	108		109	110		111
Items Included in Net Income	[5]
Gains (Losses) in OCI and Other	[1],[5]			1	(2)		(1)
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[5]
Transfers Into or Out of Level 3, Net	[3],[5]
Ending Fair Value	[5]	108		110	108		110
RMBS [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]			7	12		3
Items Included in Net Income	[5]
Gains (Losses) in OCI and Other	[1],[5]
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]	7	[2]	6	7	[2]	10
Transfers Into or Out of Level 3, Net	[3],[5]				(12)	[4]
Ending Fair Value	[5]	7		13	7		13
CMBS [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	5		21	6		7
Items Included in Net Income	[5]				1
Gains (Losses) in OCI and Other	[1],[5]						1
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]	18	[2]	(1)	37	[2]	54
Transfers Into or Out of Level 3, Net	[3],[5]			(14)	(21)	[4]	(56)
Ending Fair Value	[5]	23		6	23		6
CLOs [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	145		28	91		68
Items Included in Net Income	[5]
Gains (Losses) in OCI and Other	[1],[5]
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]	17	[2]	15	164	[2]	33
Transfers Into or Out of Level 3, Net	[3],[5]	(111)		(28)	(204)	[4]	(86)
Ending Fair Value	[5]	51		15	51		15
State And Municipal Bonds [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Items Included in Net Income	[5]						(1)
Transfers Into or Out of Level 3, Net	[3],[5]						1
Hybrid And Redeemable Preferred Securities [Member] | Fixed Maturity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	78		82	76		76
Items Included in Net Income	[5]
Gains (Losses) in OCI and Other	[1],[5]	(1)		3	1		14
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[5]
Transfers Into or Out of Level 3, Net	[3],[5]			(9)			(14)
Ending Fair Value	[5]	77		76	77		76
Equity AFS Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]			183	162		177
Items Included in Net Income	[5]						1
Gains (Losses) in OCI and Other	[1],[5]			(1)			(2)
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]			9			15
Transfers Into or Out of Level 3, Net	[3],[5]			(1)	(162)	[4]	(1)
Ending Fair Value	[5]			190			190
Trading Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	22		59	49		65
Items Included in Net Income	[5]				(5)		2
Gains (Losses) in OCI and Other	[1],[5]						8
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]	2	[2]	(10)	(20)	[2]	(26)
Transfers Into or Out of Level 3, Net	[3],[5]	(6)		1	(6)	[4]	1
Ending Fair Value	[5]	18		50	18		50
Equity Securities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	26
Items Included in Net Income	[5]
Gains (Losses) in OCI and Other	[1],[5]
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[5]
Transfers Into or Out of Level 3, Net	[3],[5]				26	[4]
Ending Fair Value	[5]	26			26
Derivative Investments [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[5]	93		155	30		(93)
Items Included in Net Income	[5]	(115)		(13)	106		(25)
Gains (Losses) in OCI and Other	[1],[5]	(55)		9	(113)		97
Issuances, Sales, Maturities, Settlements, Calls, Net	[5]	431	[2]	(85)	331	[2]	87
Transfers Into or Out of Level 3, Net	[3],[5]
Ending Fair Value	[5]	354		66	354		66
GLB Direct Embedded Derivatives [Member] | Other Assets [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[6]	1,248		298	903
Items Included in Net Income	[6]	400		272	745		570
Gains (Losses) in OCI and Other	[1],[6]
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[6]
Transfers Into or Out of Level 3, Net	[3],[6]
Ending Fair Value	[6]	1,648		570	1,648		570
GLB Direct Embedded Derivatives [Member] | Other Liabilities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[6]						(371)
Items Included in Net Income	[6]						371
GLB Ceded Embedded Derivatives [Member] | Other Assets [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[6]	41		85	51		203
Items Included in Net Income	[6]	(6)		(32)	(16)		(150)
Gains (Losses) in OCI and Other	[1],[6]
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[6]
Transfers Into or Out of Level 3, Net	[3],[6]
Ending Fair Value	[6]	35		53	35		53
GLB Ceded Embedded Derivatives [Member] | Other Liabilities [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[6]	(131)			(67)
Items Included in Net Income	[6]	(62)		(7)	(126)		(7)
Gains (Losses) in OCI and Other	[1],[6]
Issuances, Sales, Maturities, Settlements, Calls, Net	[2],[6]
Transfers Into or Out of Level 3, Net	[3],[6]
Ending Fair Value	[6]	(193)		(7)	(193)		(7)
Indexed Annuity And Embedded Derivatives [Member] | Other Assets [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[6]	29			11
Items Included in Net Income	[6]	4			4
Gains (Losses) in OCI and Other	[1],[6]
Issuances, Sales, Maturities, Settlements, Calls, Net	[6]	11	[2]	3	29	[2]	3
Transfers Into or Out of Level 3, Net	[3],[6]
Ending Fair Value	[6]	44		3	44		3
Indexed Annuity And Embedded Derivatives [Member] | Future Contract Benefits [Member]
Level 3 Unobservable Input Reconciliation
Beginning Fair Value	[6]	(1,400)		(1,268)	(1,418)		(1,139)
Items Included in Net Income	[6]	(164)		(47)	(175)		(230)
Gains (Losses) in OCI and Other	[1],[6]
Issuances, Sales, Maturities, Settlements, Calls, Net	[6]	(7)	[2]	(3)	22	[2]	51
Transfers Into or Out of Level 3, Net	[3],[6]
Ending Fair Value	[6]	$ (1,571)		$ (1,318)	$ (1,571)		$ (1,318)

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

[2] Net issuances, sales, maturities, settlements, calls, net include financial instruments acquired from Liberty Life as follows: corporate bonds of $67 million and ABS of $17 million.

[3] Transfers into or out of Level 3 for AFS and trading securities are displayed at amortized cost as of the beginning-of-year. 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 the prior period.

[4] Transfers into or out of Level 3 for FHLB stock between equity securities and other investments at cost on our Consolidated Balance Sheets.

[5] 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).

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

XML

Fair Value of Financial Instruments (Schedule Of Investment Holdings Movements) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	$ 230	$ 237	$ 1,118	$ 588
Sales	455	(148)	257	34
Maturities	(121)	(131)	(357)	(367)
Settlements	11	(33)	(60)	(76)
Calls	(8)	(26)	(69)	(134)
Total	567	(101)	889	45
Corporate Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	162	167	785	367
Sales		(114)	(156)	(179)
Maturities	(1)	(19)	(3)	(66)
Settlements	(65)	(43)	(238)	(170)
Calls	(8)	(26)	(69)	(134)
Total	88	(35)	319	(182)
ABS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances			22
Sales			(17)
Total			5
U.S. Government Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Sales			(5)
Total			(5)
RMBS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	7	6	7	10
Total	7	6	7	10
CMBS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	18		39	55
Settlements		(1)	(2)	(1)
Total	18	(1)	37	54
CLOs [Member] | Fixed Maturity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	17	15	164	33
Total	17	15	164	33
Equity AFS Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances		10		18
Sales		(1)		(3)
Total		9		15
Trading Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	2		4	2
Sales		(10)	(24)	(27)
Settlements				(1)
Total	2	(10)	(20)	(26)
Equity Securities [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances			1
Sales			(1)
Derivative Investments [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	96	50	225	145
Sales	455	(23)	460	243
Maturities	(120)	(112)	(354)	(301)
Total	431	(85)	331	87
Indexed Annuity And Embedded Derivatives [Member] | Other Assets [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	11	3	29	3
Total	11	3	29	3
Indexed Annuity And Embedded Derivatives [Member] | Future Contract Benefits [Member]
Fair Value Investments Entities That Calculate Net Asset Value Per Share Unobservable Input Investment Holdings Movements [Abstract]
Issuances	(83)	(14)	(158)	(45)
Settlements	76	11	180	96
Total	$ (7)	$ (3)	$ 22	$ 51

XML

Fair Value of Financial Instruments (Changes In Unrealized Gains (Losses) Within Level 3 Financial Instruments Carried At Fair Value And Still Held) (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Change in unrealized gains (losses) included in net income	[1]	$ 564	$ 347	$ 1,351	$ 1,180
Derivative Investments [Member] | Realized Gain (Loss) [Member]
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Change in unrealized gains (losses) included in net income		(1)	(83)	105	(159)
Indexed Annuity And Embedded Derivatives [Member] | Realized Gain (Loss) [Member]
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Change in unrealized gains (losses) included in net income		(11)	2	(18)	(13)
GLB Embedded Derivatives [Member] | Realized Gain (Loss) [Member]
Changes in unrealized gains (losses) within Level 3 financial instruments carried at fair value and still held
Change in unrealized gains (losses) included in net income		$ 576	$ 428	$ 1,264	$ 1,352

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

XML

Fair Value of Financial Instruments (Components Of The Transfers In And Out Of Level 3) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3	$ 11	$ 117	$ 80	$ 336
Transfers Out of Level 3	(159)	(124)	(530)	(303)
Transfers Into or Out of Level 3, Net	(148)	(7)	(450)	33
Corporate Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3	11	116	54	277
Transfers Out of Level 3	(42)	(57)	(125)	(88)
Transfers Into or Out of Level 3, Net	(31)	59	(71)	189
ABS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3				15
Transfers Out of Level 3		(15)		(21)
Transfers Into or Out of Level 3, Net		(15)		(6)
U.S. Government Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3				5
Transfers Into or Out of Level 3, Net				5
RMBS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Out of Level 3			(12)
Transfers Into or Out of Level 3, Net			(12)
CMBS [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3				3
Transfers Out of Level 3		(14)	(21)	(59)
Transfers Into or Out of Level 3, Net		(14)	(21)	(56)
CLOs [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3				30
Transfers Out of Level 3	(111)	(28)	(204)	(116)
Transfers Into or Out of Level 3, Net	(111)	(28)	(204)	(86)
State And Municipal Bonds [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3				2
Transfers Out of Level 3				(1)
Transfers Into or Out of Level 3, Net				1
Hybrid And Redeemable Preferred Securities [Member] | Fixed Maturity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Out of Level 3		(9)		(14)
Transfers Into or Out of Level 3, Net		(9)		(14)
Equity AFS Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Out of Level 3		(1)	(162)	(1)
Transfers Into or Out of Level 3, Net		(1)	(162)	(1)
Trading Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3		1		4
Transfers Out of Level 3	(6)		(6)	(3)
Transfers Into or Out of Level 3, Net	$ (6)	$ 1	(6)	$ 1
Equity Securities [Member]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers, Net [Abstract]
Transfers Into Level 3			26
Transfers Into or Out of Level 3, Net			$ 26

XML

Fair Value of Financial Instruments (Fair Value Inputs Quantitative Information) (Details)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	$ 246,814,000,000	$ 245,265,000,000
Liabilities Fair Value Disclosure [Abstract]
Liabilities measured at fair value	(2,382,000,000)	(3,689,000,000)
Significant Unobservable Inputs (Level 3) [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	5,812,000,000	5,197,000,000
Liabilities Fair Value Disclosure [Abstract]
Liabilities measured at fair value	(1,945,000,000)	$ (2,058,000,000)
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Equity Securities [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	$ 21,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Minimum [Member] | Equity Securities [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Equity securities, measurement input	0.045
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Maximum [Member] | Equity Securities [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Equity securities, measurement input	0.051
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Corporate Bonds [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	$ 2,445,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | ABS [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	23,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Foreign Government Bonds [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	78,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Hybrid And Redeemable Preferred Securities [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	$ 4,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Minimum [Member] | Corporate Bonds [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.005
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Minimum [Member] | ABS [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.030
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Minimum [Member] | Foreign Government Bonds [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.011
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Minimum [Member] | Hybrid And Redeemable Preferred Securities [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.018
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Maximum [Member] | Corporate Bonds [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.248
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Maximum [Member] | ABS [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.030
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Maximum [Member] | Foreign Government Bonds [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.028
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Fixed Maturity AFS Securities [Member] | Maximum [Member] | Hybrid And Redeemable Preferred Securities [Member] | Liquidity/Duration Adjustment [Member]
Liabilities Fair Value Disclosure [Abstract]
Fixed maturity AFS and trading securities, measurement input	0.018
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Other Assets [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	$ 1,683,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Minimum [Member] | Other Assets [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.01
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Minimum [Member] | Other Assets [Member] | Utilization Of Guaranteed Withdrawls [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.85
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Minimum [Member] | Other Assets [Member] | Claims Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.60
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Minimum [Member] | Other Assets [Member] | Premiums Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.80
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Minimum [Member] | Other Assets [Member] | NPR [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.0001
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Minimum [Member] | Other Assets [Member] | Volatility [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.01
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Maximum [Member] | Other Assets [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.30
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Maximum [Member] | Other Assets [Member] | Utilization Of Guaranteed Withdrawls [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	1.00
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Maximum [Member] | Other Assets [Member] | Claims Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	1.00
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Maximum [Member] | Other Assets [Member] | Premiums Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	1.15
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Maximum [Member] | Other Assets [Member] | NPR [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.0032
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB direct and ceded embedded derivatives [Member] | Maximum [Member] | Other Assets [Member] | Volatility [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.29
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Indexed Annuity And Embedded Derivatives [Member] | Other Assets [Member]
Assets Fair Value Disclosure [Abstract]
Assets Fair Value Disclosure	$ 44,000,000
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Indexed Annuity And Embedded Derivatives [Member] | Minimum [Member] | Other Assets [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.01
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Indexed Annuity And Embedded Derivatives [Member] | Maximum [Member] | Other Assets [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative assets, measurement input	0.09
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Future contract benefits - indexed annuity and IUL contracts embedded derivatives [Member] | Future Contract Benefits [Member]
Liabilities Fair Value Disclosure [Abstract]
Liabilities measured at fair value	$ (1,571,000,000)
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Future contract benefits - indexed annuity and IUL contracts embedded derivatives [Member] | Minimum [Member] | Future Contract Benefits [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.01
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | Future contract benefits - indexed annuity and IUL contracts embedded derivatives [Member] | Maximum [Member] | Future Contract Benefits [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.09
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Other Liabilities [Member]
Liabilities Fair Value Disclosure [Abstract]
Liabilities measured at fair value	$ (193,000,000)
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Minimum [Member] | Other Liabilities [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.01
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Minimum [Member] | Other Liabilities [Member] | Utilization Of Guaranteed Withdrawls [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.85
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Minimum [Member] | Other Liabilities [Member] | Claims Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.60
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Minimum [Member] | Other Liabilities [Member] | Premiums Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.80
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Minimum [Member] | Other Liabilities [Member] | NPR [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.0001
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Minimum [Member] | Other Liabilities [Member] | Volatility [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.01
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Maximum [Member] | Other Liabilities [Member] | Long-Term Lapse Rate [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.30
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Maximum [Member] | Other Liabilities [Member] | Utilization Of Guaranteed Withdrawls [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	1.00
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Maximum [Member] | Other Liabilities [Member] | Claims Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	1.00
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Maximum [Member] | Other Liabilities [Member] | Premiums Utilization Factor [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	1.15
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Maximum [Member] | Other Liabilities [Member] | NPR [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.0032
Significant Unobservable Inputs (Level 3) [Member] | Discounted Cash Flow Valuation Technique [Member] | GLB Ceded Embedded Derivatives [Member] | Maximum [Member] | Other Liabilities [Member] | Volatility [Member]
Liabilities Fair Value Disclosure [Abstract]
Derivative liability, measurement input	0.29

XML

Segment Information (Narrative) (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Segment Information [Abstract]
Federal rate	21.00%	35.00%	21.00%	35.00%	35.00%

XML

Segment Information (Reconciliation Of Revenue From Segments To Consolidated) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Total revenues	$ 4,264	$ 3,511	$ 11,893	$ 10,588
Annuities Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	1,118	1,073	3,297	3,211
Retirement Plan Services Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	294	291	878	863
Life Insurance Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	1,766	1,614	5,106	4,874
Group Protection Segment [Member]
Segment Reporting Information [Line Items]
Total revenues	1,128	564	2,618	1,646
Other Operations [Member]
Segment Reporting Information [Line Items]
Total revenues	56	65	182	220
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Excluded realized gain (loss), pre-tax	$ (98)	(97)	$ (188)	(229)
Amortization of deferred gain arising from reserve changes on business sold through reinsurance, pre-tax				1
Amortization of DFEL associated with benefit ratio unlocking, pre-tax		$ 1		$ 2

XML

Segment Information (Reconciliation Of Income (Loss) From Operations By Segment To Consolidated Net Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Acquisition and integration costs related to mergers and acquisitions, after tax	$ (10)		$ (60)
Net income (loss)	490	$ 418	1,242	$ 1,264
Segment Reconciling Items [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Excluded realized gain (loss), after-tax	(77)	(63)	(149)	(149)
Gain (loss) on early extinguishment of debt, after-tax		(3)	(18)	(3)
Income (loss) from reserve changes (net of related amortization) on business sold through reinsurance, after tax				1
Benefit ratio unlocking, after-tax	33	30	32	101
Net impact from the Tax Cuts and Jobs Act	32		19
Acquisition and integration costs related to mergers and acquisitions, after tax	(8)		(47)
Annuities Segment [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Net income (loss)	302	277	844	809
Retirement Plan Services Segment [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Net income (loss)	40	35	125	109
Life Insurance Segment [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Net income (loss)	176	121	470	384
Group Protection Segment [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Net income (loss)	63	41	137	83
Other Operations [Member]
Reconciliation of Net Income (Loss) from Segments to Consolidated [Abstract]
Net income (loss)	$ (71)	$ (20)	$ (171)	$ (71)

XML

Segment Information (Schedule Of Disaggregation Of Revenue) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	$ 353	$ 999
Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	21	62
Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	332	937
Fee Income [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	185	546
Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	168	453
Annuities Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	257	762
Annuities Segment [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	17	53
Annuities Segment [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	240	709
Annuities Segment [Member] | Fee Income [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	137	403
Annuities Segment [Member] | Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	120	359
Retirement Plan Services Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	47	140
Retirement Plan Services Segment [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	1	3
Retirement Plan Services Segment [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	46	137
Retirement Plan Services Segment [Member] | Fee Income [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	42	126
Retirement Plan Services Segment [Member] | Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	5	14
Life Insurance Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	8	24
Life Insurance Segment [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	3	6
Life Insurance Segment [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	5	18
Life Insurance Segment [Member] | Fee Income [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	6	17
Life Insurance Segment [Member] | Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	2	7
Group Protection Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	41	73
Group Protection Segment [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	41	73
Group Protection Segment [Member] | Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Total revenue from contracts with customers	$ 41	$ 73