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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Measurements [Tables] [Abstract]

Financial assets and liabilities carried at fair value

December 31, 2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets at fair value:
Fixed maturities:
Federal government and agency	$	156	$	746	$	-	$	902
State and local government		-		2,437		-		2,437
Foreign government		-		1,298		24		1,322
Corporate		-		11,201		695		11,896
Federal agency mortgage-backed		-		122		-		122
Other mortgage-backed		-		88		1		89
Other asset-backed		-		340		597		937
Total fixed maturities⁽¹⁾		156		16,232		1,317		17,705
Equity securities		4		73		34		111
Subtotal		160		16,305		1,351		17,816
Short-term investments		-		154		-		154
GMIB assets⁽²⁾		-		-		622		622
Other derivative assets⁽³⁾		-		41		-		41
Total financial assets at fair value, excluding separate accounts	$	160	$	16,500	$	1,973	$	18,633
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	1,170	$	1,170
Other derivative liabilities⁽³⁾		-		31		-		31
Total financial liabilities at fair value	$	-	$	31	$	1,170	$	1,201

(1) Fixed maturities included $875 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $108 million of appreciation for securities classified in Level 3.

(2) The GMIB assets represent retrocessional contracts in place from two external reinsurers that cover 55% of the exposures on these contracts. Effective February 4, 2013, the Company reinsured the remaining 45% of the exposures on these contracts.

(3) Other derivative assets included $5 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $36 million of interest rate swaps not designated as accounting hedges. Other derivative liabilities reflected foreign currency and interest rate swaps qualifying as cash flow hedges. See Note 13 for additional information.

December 31, 2011
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets at fair value:
Fixed maturities:
Federal government and agency	$	217	$	738	$	3	$	958
State and local government		-		2,456		-		2,456
Foreign government		-		1,251		23		1,274
Corporate		-		10,132		381		10,513
Federal agency mortgage-backed		-		9		-		9
Other mortgage-backed		-		79		1		80
Other asset-backed		-		363		564		927
Total fixed maturities⁽¹⁾		217		15,028		972		16,217
Equity securities		3		67		30		100
Subtotal		220		15,095		1,002		16,317
Short-term investments		-		225		-		225
GMIB assets⁽²⁾		-		-		712		712
Other derivative assets⁽³⁾		-		45		-		45
Total financial assets at fair value, excluding separate accounts	$	220	$	15,365	$	1,714	$	17,299
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	1,333	$	1,333
Other derivative liabilities⁽³⁾		-		30		-		30
Total financial liabilities at fair value	$	-	$	30	$	1,333	$	1,363

(1) Fixed maturities included $826 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $115 million of appreciation for securities classified in Level 3.


(2) The GMIB assets represent retrocessional contracts in place from two external reinsurers which cover 55% of the exposures on these contracts.
(3) Other derivative assets included $10 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $35 million of interest rate swaps not designated as accounting hedges. Other derivative liabilities reflected foreign currency and interest rate swaps qualifying as cash flow hedges. See Note 13 for additional information.

Level 3 financial assets and financial liabilities

	December 31,		December 31,
(In millions)	2012		2011
Other asset and mortgage-backed securities - valued using pricing models	$	598	$	565
Corporate and government fixed maturities - valued using pricing models		596		335
Corporate fixed maturities - valued at transaction price		123		72
Equity securities - valued at transaction price		34		30
Total	$	1,351	$	1,002

Level 3 Fair Value And Significant Unobservable Inputs Developed Directly By Company


As of December 31, 2012			Unobservable Input	Unobservable Adjustment to Discount Rates Range (Weighted Average) in Basis Points
(In millions except basis points)		Fair Value	Unobservable Input
Other asset and mortgage-backed securities	$	584	Liquidity	60 - 410 (140)
			Weighting of credit spreads	50 - 4,540 (410)
Corporate and government fixed maturities	$	439	Liquidity	20 - 640 (190)

Changes in level 3 financial assets and liabilities carried at fair value

	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
(In millions)	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
Balance at January 1, 2012	$	1,002	$	712	$	(1,333)	$	(621)
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		(55)		96		41
Other		13		-		-		-
Total gains (losses) included in shareholders' net income		13		(55)		96		41
Gains included in other comprehensive income		8		-		-		-
Losses required to adjust future policy benefits for settlement annuities (1)		(10)		-		-		-
Purchases, issuances, settlements:
Purchases		188		-		-		-
Sales		(1)		-		-		-
Settlements		(88)		(35)		67		32
Total purchases, sales and settlements		99		(35)		67		32
Transfers into/(out of) Level 3:
Transfers into Level 3		283		-		-		-
Transfers out of Level 3		(44)		-		-		-
Total transfers into/(out of) Level 3		239		-		-		-
Balance at December 31, 2012	$	1,351	$	622	$	(1,170)	$	(548)
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	(1)	$	(55)	$	96	$	41

(1) Amounts do not accrue to shareholders.

	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
(In millions)	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
Balance at January 1, 2011	$	933	$	480	$	(903)	$	(423)
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		270		(504)		(234)
Other		10		-		-		-
Total gains (losses) included in shareholders' net income		10		270		(504)		(234)
Gains included in other comprehensive income		7		-		-		-
Gains required to adjust future policy benefits for settlement annuities (1)		41		-		-		-
Purchases, issuances, settlements:
Purchases		129		-		-		-
Sales		(20)		-		-		-
Settlements		(61)		(38)		74		36
Total purchases, sales, and settlements		48		(38)		74		36
Transfers into/(out of) Level 3:
Transfers into Level 3		81		-		-		-
Transfers out of Level 3		(118)		-		-		-
Total transfers into/(out of) Level 3		(37)		-		-		-
Balance at December 31, 2011	$	1,002	$	712	$	(1,333)	$	(621)
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	6	$	270	$	(504)	$	(234)

(1) Amounts do not accrue to shareholders.

Separate account assets schedule

2012
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Guaranteed separate accounts (See Note 24)	$	245	$	324	$	-	$	569
Non-guaranteed separate accounts (1)		1,925		4,258		1,005		7,188
Total separate account assets	$	2,170	$	4,582	$	1,005	$	7,757

(1) As of December 31, 2012, non-guaranteed separate accounts included $3.4 billion in assets supporting the Company's pension plans, including $956 million classified in Level 3.

2011
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Guaranteed separate accounts (See Note 24)	$	249	$	1,439	$	-	$	1,688
Non-guaranteed separate accounts (1)		1,804		3,851		750		6,405
Total separate account assets	$	2,053	$	5,290	$	750	$	8,093

(1) As of December 31, 2011, non-guaranteed separate accounts included $3.0 billion in assets supporting the Company's pension plans, including $702 million classified in Level 3.

Level 3 separate account assets

(In millions)
Balance at January 1, 2012	$	750
Policyholder gains (1)		55
Purchases, issuances, settlements:
Purchases		283
Sales		(6)
Settlements		(90)
Total purchases, sales and settlements		187
Transfers into/(out of) Level 3:
Transfers into Level 3		17
Transfers out of Level 3		(4)
Total transfers into/(out of) Level 3:		13
Balance at December 31, 2012	$	1,005

(1) Included in this amount are gains of $49 million attributable to instruments still held at the reporting date.

(In millions)
Balance at January 1, 2011	$	594
Policyholder gains (1)		114
Purchases, issuances, settlements:
Purchases		257
Sales		(51)
Settlements		(152)
Total purchases, sales and settlements		54
Transfers into/(out of) Level 3:
Transfers into Level 3		4
Transfers out of Level 3		(16)
Total transfers into/(out of) Level 3:		(12)
Balance at December 31, 2011	$	750

(1) Included in this amount are gains of $96 million attributable to instruments still held at the reporting date.

Financial instruments not carried at fair value

(In millions)			December 31, 2012				December 31, 2011
	Classification in Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	2,999	$	2,851	$	3,380	$	3,301
Contractholder deposit funds, excluding universal life products	Level 3	$	1,082	$	1,056	$	1,056	$	1,035
Long-term debt, including current maturities, excluding capital leases	Level 2	$	5,821	$	4,986	$	5,319	$	4,984

- Definition

Summarization of information required and determined to be disclosed concerning the fair value of financial instruments (as defined) classified in Level 3, including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities classified in Level 3 would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) the maximum amount of loss the Company is exposed to, based on the gross fair value of the related item; (3) quantitative information about market risks; (4) for items presented in the financial statement for which fair value measurement is elected, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (5) the difference between the aggregate fair value and unpaid principal balance of loans and long-term receivables and long-term debt instruments (as applicable); (6) the amount of gains and losses arising from changes in fair value; and (7) other required (as defined) and desired information.

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- Definition

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

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