Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Financial assets and liabilities carried at fair value

December 31, 2014
(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	$	290	$	664	$	-	$	954
State and local government		-		1,856		-		1,856
Foreign government		-		1,936		4		1,940
Corporate		-		13,105		393		13,498
Mortgage-backed		-		84		1		85
Other asset-backed		-		234		416		650
Total fixed maturities⁽¹⁾		290		17,879		814		18,983
Equity securities		61		85		43		189
Subtotal		351		17,964		857		19,172
Short-term investments		-		163		-		163
GMIB assets⁽²⁾		-		-		953		953
Other derivative assets⁽³⁾		-		6		-		6
Total financial assets at fair value, excluding separate accounts	$	351	$	18,133	$	1,810	$	20,294
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	929	$	929
Other derivative liabilities⁽³⁾		-		1		-		1
Total financial liabilities at fair value	$	-	$	1	$	929	$	930

(1) Fixed maturities included $756 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $65 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.
(3) Other derivative assets included $5 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $1 million of interest rate swaps qualifying as fair value hedges. Other derivative liabilities reflected interest rate and foreign currency swaps qualifying as cash flow hedges. See Note 12 for additional information.

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
Mortgage-backed		-		152		1		153
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.
(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.

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


As of December 31, 2014			Unobservable Input	Unobservable Adjustment to Discount Rates Range (Weighted Average)
(Fair value in millions )		Fair Value	Unobservable Input
Fixed maturities:
Other asset and mortgage-backed securities	$	417	Liquidity	60 - 370 (140)
			Weighting of credit spreads	160 - 2,560 (290)
Corporate and government fixed maturities		344	Liquidity	80 - 930 (262)
Total fixed maturities		761
Equity securities		43	Price-to-earnings multiples	4.2 - 9.8 (8.1)
Subtotal		804
Pricing exemption securities⁽¹⁾		53
Total Level 3 securities	$	857
(1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.


As of December 31, 2013			Unobservable Input	Unobservable Adjustment to Discount Rates Range (Weighted Average)
(Fair value in millions)		Fair Value	Unobservable Input
Fixed maturities:
Other asset and mortgage-backed securities	$	593	Liquidity	60 - 620 (170)
			Weighting of credit spreads	120 - 2,090 (290)
Corporate and government fixed maturities		416	Liquidity	80 - 930 (310)
Total fixed maturities		1,009
Equity securities		59	Price-to-earnings multiples	4.2 - 9.8 (8.1)
Subtotal		1,068
Pricing exemption securities⁽¹⁾		122
Total Level 3 securities	$	1,190
(1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.

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, 2014	$	1,190	$	751	$	(741)	$	10
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		251		(251)		-
Other		15		(1)		15		14
Total gains (losses) included in shareholders' net income		15		250		(236)		14
Gains included in other comprehensive income		14		-		-		-
Gains required to adjust future policy benefits for settlement annuities⁽¹⁾		55		-		-		-
Purchases, sales, settlements:
Purchases		101		-		-		-
Sales		(202)		-		-		-
Settlements		(156)		(48)		48		-
Total purchases, sales and settlements		(257)		(48)		48		-
Transfers into/(out of) Level 3:
Transfers into Level 3		165		-		-		-
Transfers out of Level 3		(325)		-		-		-
Total transfers into/(out of) Level 3		(160)		-		-		-
Balance at December 31, 2014	$	857	$	953	$	(929)	$	24
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	2	$	250	$	(236)	$	14

(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, 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, sales, 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.

Separate account assets schedule

2014
(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)	$	242	$	288	$	-	$	530
Non-guaranteed separate accounts ⁽¹⁾		1,609		5,031		1,158		7,798
Total separate account assets	$	1,851	$	5,319	$	1,158	$	8,328

⁽¹⁾ As of December 31, 2014, non-guaranteed separate accounts included $3.8 billion in assets supporting the Company's pension plans, including $1.1 billion classified in Level 3.

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.

Changes in level 3 separate account assets

(In millions)		2014		2013
Balance at January 1	$	1,035	$	1,005
Policyholder gains ⁽¹⁾		85		82
Purchases, issuances, settlements:
Purchases		266		173
Sales		(2)		(14)
Settlements		(226)		(209)
Total purchases, sales and settlements		38		(50)
Transfers into/(out of) Level 3:
Transfers into Level 3		20		5
Transfers out of Level 3		(20)		(7)
Total transfers into/(out of) Level 3:		-		(2)
Balance at December 31	$	1,158	$	1,035

⁽¹⁾ Included in this amount were gains of $85 million attributable to instruments still held at December 31, 2014 and gains of $76 million attributable to instruments still held at December 31, 2013.

Financial instruments not carried at fair value

(In millions)			December 31, 2014				December 31, 2013
	Classification in Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	2,168	$	2,081	$	2,338	$	2,252
Contractholder deposit funds, excluding universal life products	Level 3	$	1,136	$	1,124	$	1,081	$	1,072
Long-term debt, including current maturities, excluding capital leases	Level 2	$	5,740	$	4,993	$	5,550	$	4,997

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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