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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Financial assets and liabilities carried at fair value

December 31, 2013
(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	$	297	$	583	$	-	$	880
State and local government		-		2,144		-		2,144
Foreign government		-		1,421		23		1,444
Corporate		-		10,476		505		10,981
Federal agency mortgage-backed		-		76		-		76
Other mortgage-backed		-		76		1		77
Other asset-backed		-		282		602		884
Total fixed maturities⁽¹⁾		297		15,058		1,131		16,486
Equity securities		8		74		59		141
Subtotal		305		15,132		1,190		16,627
Short-term investments		-		631		-		631
GMIB assets⁽²⁾		-		-		751		751
Other derivative assets⁽³⁾		-		3		-		3
Total financial assets at fair value, excluding separate accounts	$	305	$	15,766	$	1,941	$	18,012
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	741	$	741
Other derivative liabilities⁽³⁾		-		16		-		16
Total financial liabilities at fair value	$	-	$	16	$	741	$	757

(1) Fixed maturities included $458 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $60 million of appreciation for securities classified in Level 3.

(2) The GMIB assets represented retrocessional contracts in place from three external reinsurers that cover the exposures on these contracts. See Note 7 for additional information.

(3) Other derivative assets reflected interest rate and foreign currency swaps qualifying as cash flow hedges. Other derivative liabilities included $15 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $1 million of interest rate and foreign currency swaps not designated as accounting hedges. See Note 12 for additional information.

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 represented retrocessional contracts in place from two external reinsurers that cover 55% of the exposures on these contracts. See Note 7 for additional information.
(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 12 for additional information.

Level 3 fixed maturities and equity securities priced using significant unobservable inputs

	December 31,		December 31,
(In millions)	2013		2012
Other asset and mortgage-backed securities - valued using pricing models	$	603	$	598
Corporate and government fixed maturities - valued using pricing models		417		596
Corporate fixed maturities - valued at transaction price		111		123
Equity securities - valued at transaction price		59		34
Total	$	1,190	$	1,351

Level 3 fixed maturities and equity securities priced using significant unobservable inputs developed directly by the Company


As of December 31, 2013			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	$	593	Liquidity	60 - 620 (170)
			Weighting of credit spreads	120 - 2,090 (290)
Corporate and government fixed maturities	$	305	Liquidity	80 - 370 (200)


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, 2013	$	1,351	$	622	$	(1,170)	$	(548)
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		(380)		380		-
Other		16		17		(23)		(6)
Total gains (losses) included in shareholders' net income		16		(363)		357		(6)
Losses included in other comprehensive income		(19)		-		-		-
Losses required to adjust future policy benefits for settlement annuities (1)		(50)		-		-		-
Purchases, issuances, settlements:
Purchases		110		-		-		-
Sales		(64)		-		-		-
Settlements		(121)		492		72		564
Total purchases, sales and settlements		(75)		492		72		564
Transfers into/(out of) Level 3:
Transfers into Level 3		115		-		-		-
Transfers out of Level 3		(148)		-		-		-
Total transfers into/(out of) Level 3		(33)		-		-		-
Balance at December 31, 2013	$	1,190	$	751	$	(741)	$	10
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	7	$	(363)	$	357	$	(6)

(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, 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.

Separate account assets schedule

2013
(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 23)	$	264	$	284	$	-	$	548
Non-guaranteed separate accounts ⁽¹⁾		1,844		4,825		1,035		7,704
Total separate account assets	$	2,108	$	5,109	$	1,035	$	8,252

⁽¹⁾ As of December 31, 2013, non-guaranteed separate accounts included $3.8 billion in assets supporting the Company's pension plans, including $983 million classified in Level 3.

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 23)	$	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.

Changes in level 3 separate account assets

(In millions)		2013		2012
Balance at January 1	$	1,005	$	750
Policyholder gains ⁽¹⁾		82		55
Purchases, issuances, settlements:
Purchases		173		283
Sales		(14)		(6)
Settlements		(209)		(90)
Total purchases, sales and settlements		(50)		187
Transfers into/(out of) Level 3:
Transfers into Level 3		5		17
Transfers out of Level 3		(7)		(4)
Total transfers into/(out of) Level 3:		(2)		13
Balance at December 31	$	1,035	$	1,005

⁽¹⁾ Included in this amount were gains of $76 million attributable to instruments still held at December 31, 2013 and gains of $49 million attributable to instruments still held at December 31, 2012.

Financial instruments not carried at fair value

(In millions)			December 31, 2013				December 31, 2012
	Classification in Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	2,338	$	2,252	$	2,999	$	2,851
Contractholder deposit funds, excluding universal life products	Level 3	$	1,081	$	1,072	$	1,082	$	1,056
Long-term debt, including current maturities, excluding capital leases	Level 2	$	5,550	$	4,997	$	5,821	$	4,986

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

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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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-Name Statement of Financial Accounting Standard (FAS)

-Number 107

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