The Company carries certain financial instruments at fair value in the financial statements including fixed maturities, equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value under certain conditions, such as when impaired.

Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor.

The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement. For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).

The Company estimates fair values using prices from third parties or internal pricing methods. Fair value estimates received from third-party pricing services are based on reported trade activity and quoted market prices when available, and other market information that a market participant may use to estimate fair value. The internal pricing methods are performed by the Company's investment professionals and generally involve using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality, as well as other qualitative factors. In instances where there is little or no market activity for the same or similar instruments, fair value is estimated using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price. These valuation techniques involve some level of estimation and judgment that becomes significant with increasingly complex instruments or pricing models.

The Company is responsible for determining fair value, as well as the appropriate level within the fair value hierarchy, based on the significance of unobservable inputs. The Company reviews methodologies, processes and controls of third-party pricing services and compares prices on a test basis to those obtained from other external pricing sources or internal estimates. The Company performs ongoing analyses of both prices received from third-party pricing services and those developed internally to determine that they represent appropriate estimates of fair value. The controls completed by the Company and third-party pricing services include reviewing to ensure that prices do not become stale and whether changes from prior valuations are reasonable or require additional review. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. Exceptions identified during these processes indicate that adjustments to prices are infrequent and do not significantly impact valuations.

The following tables provide information as of September 30, 2013 and December 31, 2012 about the Company's financial assets and liabilities carried at fair value. Separate account assets that are also recorded at fair value on the Company's Consolidated Balance Sheets are reported separately under the heading “Separate account assets” as gains and losses related to these assets generally accrue directly to policyholders.

September 30, 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	$	93	$	631	$	-	$	724
State and local government		-		2,196		-		2,196
Foreign government		-		1,154		23		1,177
Corporate		-		9,973		534		10,507
Federal agency mortgage-backed		-		83		-		83
Other mortgage-backed		-		66		1		67
Other asset-backed		-		284		607		891
Total fixed maturities⁽¹⁾		93		14,387		1,165		15,645
Equity securities		8		71		61		140
Subtotal		101		14,458		1,226		15,785
Short-term investments		-		763		-		763
GMIB assets⁽²⁾		-		-		853		853
Other derivative assets⁽³⁾		-		3		-		3
Total financial assets at fair value, excluding separate accounts	$	101	$	15,224	$	2,079	$	17,404
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	841	$	841
Other derivative liabilities⁽³⁾		-		21		-		21
Total financial liabilities at fair value	$	-	$	21	$	841	$	862

(1) Fixed maturities included $517 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 represent retrocessional contracts in place from three external reinsurers that cover the exposures on these contracts. See Note 6 for additional information.

(3) Other derivative assets and other derivative liabilities reflected foreign currency and interest rate swaps qualifying as cash flow hedges. See Note 10 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 represent retrocessional contracts in place from two external reinsurers that cover 55% 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 10 for additional information.

Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date. Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets.

Assets in Level 1 include actively-traded U.S. government bonds and exchange-listed equity securities. Given the narrow definition of Level 1 and the Company's investment asset strategy to maximize investment returns, a relatively small portion of the Company's investment assets are classified in this category.

Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are market observable or can be corroborated by market data for the term of the instrument. Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant.

Fixed maturities and equity securities. Approximately 92% of the Company's investments in fixed maturities and equity securities are classified in Level 2 including most public and private corporate debt and equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks. Because many fixed maturities do not trade daily, third-party pricing services and internal methods often use recent trades of securities with similar features and characteristics. When recent trades are not available, pricing models are used to determine these prices. These models calculate fair values by discounting future cash flows at estimated market interest rates. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities, based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data, and industry and economic events. For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating.

Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represent foreign bonds that are valued using a single unadjusted market-observable input derived by averaging multiple broker-dealer quotes, consistent with local market practice.

Short-term investments are carried at fair value which approximates cost. On a regular basis the Company compares market prices for these securities to recorded amounts to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2.

Other derivatives classified in Level 2 represent over-the-counter instruments such as interest rate and foreign currency swap contracts. Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices. Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives. However, the Company is largely protected by collateral arrangements with counterparties, and determined that no adjustment for credit risk was required as of September 30, 2013 or December 31, 2012. The nature and use of these other derivatives are described in Note 10.

Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.

The Company classifies certain newly issued, privately-placed, complex or illiquid securities, as well as assets and liabilities relating to GMIB, in Level 3.

Fixed maturities and equity securities. Approximately 8% of fixed maturities and equity securities are priced using significant unobservable inputs and classified in this category, including:

Fair values of other asset and mortgage-backed securities, corporate and government fixed maturities are primarily determined using pricing models that incorporate the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics. For other asset and mortgage-backed securities, inputs and assumptions for pricing may also include collateral attributes and prepayment speeds. Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research, as well as the issuer's financial statements, in its evaluation. Approximately 10% of fixed maturities classified in Level 3 represent single, unadjusted, non-binding broker quotes that are not considered market observable. Certain private equity investments and subordinated corporate fixed maturities, representing approximately 15% of securities included in Level 3, are valued at transaction price in the absence of market data indicating a change in the estimated fair values.

The following tables summarize the fair value and significant unobservable inputs used in pricing Level 3 securities that were developed directly by the Company as of September 30, 2013 and December 31, 2012. The range and weighted average basis point amounts reflect the Company's best estimates of the unobservable adjustments a market participant would make to the market observable spreads (adjustment to discount rates) used to calculate the fair values in a discounted cash flow analysis.

Other asset and mortgage-backed securities. The significant unobservable inputs used to value the following other asset and mortgage-backed securities are liquidity and weighting of credit spreads. When there is limited trading activity for the security, an adjustment for liquidity is made as of the measurement date that considers current market conditions, issuer circumstances and complexity of the security structure. An adjustment to weight credit spreads is needed to value a more complex bond structure with multiple underlying collateral and no standard market valuation technique. The weighting of credit spreads is primarily based on the underlying collateral's characteristics and their proportional cash flows supporting the bond obligations. The resulting wide range of unobservable adjustments in the table below is due to the varying liquidity and quality of the underlying collateral, ranging from high credit quality to below investment grade.

Corporate and government fixed maturities. The significant unobservable input used to value the following corporate and government fixed maturities is an adjustment for liquidity. When there is limited trading activity for the security, an adjustment is needed to reflect current market conditions and issuer circumstances.

Significant increases in any of these inputs would result in a lower fair value measurement while decreases in these inputs would result in a higher fair value measurement. Generally, the unobservable inputs are not interrelated and a change in the assumption used for one unobservable input is not accompanied by a change in the other unobservable input. The tables do not include Level 3 securities when fair value and significant unobservable inputs were not developed directly by the Company, including securities using single, unadjusted non-binding broker quotes and securities valued at transaction price. See the preceding discussion regarding the Company's valuation processes and controls.

Guaranteed minimum income benefit contracts. The Company reports GMIB liabilities and assets as derivatives at fair value because cash flows of these liabilities and assets are affected by equity markets and interest rates, but are without significant life insurance risk and are settled in lump sum payments. Under the terms of these written and purchased contracts, the Company periodically receives and pays fees based on either contractholders' account values or deposits increased at a contractual rate. The Company will also pay and receive cash depending on changes in account values and interest rates when contractholders first elect to receive minimum income payments. The Company estimates the fair value of the assets and liabilities for GMIB contracts by calculating the results for many scenarios run through a model utilizing various assumptions that include non-performance risk, among other things.

As discussed in Note 6, the Company effectively exited the GMIB business as a result of the February 4, 2013 agreement with Berkshire. Although these GMIB assets and liabilities must continue to be reported as derivatives at fair value, the only assumption that is expected to impact future net income is the risk of non-performance. This assumption reflects a market participant's view of (a) the risk of the Company not fulfilling its GMIB obligations (GMIB liability) and (b) the reinsurers' credit risk (GMIB asset).

The non-performance risk adjustment is incorporated by adding an additional spread to the discount rate in the calculation of both (a) the GMIB liability to reflect a market participant's view of the risk of the Company not fulfilling its GMIB obligations, and (b) the GMIB asset to reflect a market participant's view of the reinsurers' credit risk, after considering collateral. The estimated market-implied spread is (i) company-specific for each party involved to the extent that company-specific market data is available or (ii) is based on industry averages for similarly-rated companies when company-specific data is not available. The estimated spread is impacted by the credit default swap spreads of the specific parent companies, adjusted to reflect subsidiaries' credit ratings relative to their parent company and any available collateral. The additional spread over LIBOR incorporated into the discount rate ranged from 5 to 135 basis points for the GMIB liability with a weighted average of 50 basis points and ranged from 0 to 85 basis points for the GMIB reinsurance asset with a weighted average of 15 basis points for that portion of the interest rate curve most relevant to these policies.

Other assumptions that affect the GMIB asset and liability include capital market assumptions (including market returns, interest rates and market volatilities of the underlying equity and bond mutual fund investments) and future annuitant behavior (including mortality, lapse, and annuity election rates). As certain assumptions used to estimate fair values for these contracts are largely unobservable (primarily related to future annuitant behavior), the Company classifies GMIB assets and liabilities in Level 3.

The Company regularly evaluates each of the assumptions used in establishing these assets and liabilities. Significant decreases in assumed lapse rates or spreads used to calculate nonperformance risk, or increases in assumed annuity election rates would result in higher fair value measurements. A change in one of these assumptions is not necessarily accompanied by a change in another assumption.

GMIB liabilities are reported in the Company's Consolidated Balance Sheets in Accounts payable, accrued expenses and other liabilities. GMIB assets associated with these contracts represent net receivables in connection with reinsurance that the Company has purchased from three external reinsurers and are reported in the Company's Consolidated Balance Sheets in Other assets, including other intangibles.

Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value

The following tables summarize the changes in financial assets and financial liabilities classified in Level 3 for the three months and nine months ended September 30, 2013 and 2012. Separate account asset changes are reported separately under the heading “Separate account assets” as the changes in the fair values of these assets accrue directly to policyholders. Gains and losses reported in these tables may include net changes in fair value that are attributable to both observable and unobservable inputs.

For the Three Months Ended September 30, 2013
	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
(In millions)	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
Balance at July 1, 2013	$	1,209	$	945	$	(922)	$	23
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		(81)		81		-
Other		3		10		(16)		(6)
Total gains (losses) included in shareholders' net income		3		(71)		65		(6)
Losses included in other comprehensive income		(1)		-		-		-
Losses required to adjust future policy benefits for settlement annuities⁽¹⁾		(8)		-		-		-
Purchases, sales and settlements:
Purchases		64		-		-		-
Sales		(18)		-		-		-
Settlements		(35)		(21)		16		(5)
Total purchases, sales and settlements		11		(21)		16		(5)
Transfers into/(out of) Level 3:
Transfers into Level 3		32		-		-		-
Transfers out of Level 3		(20)		-		-		-
Total transfers into/(out of) Level 3		12		-		-		-
Balance at September 30, 2013	$	1,226	$	853	$	(841)	$	12
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	2	$	(71)	$	65	$	(6)

(1) Amounts do not accrue to shareholders.










For the Three Months Ended September 30, 2012
	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
(In millions)	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
Balance at July 1, 2012	$	1,128	$	707	$	(1,332)	$	(625)
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		(78)		131		53
Other		1		-		-		-
Total gains (losses) included in shareholders' net income		1		(78)		131		53
Gains included in other comprehensive income		11		-		-		-
Losses required to adjust future policy benefits for settlement annuities⁽¹⁾		(15)		-		-		-
Purchases and settlements:
Purchases		39		-		-		-
Settlements		(15)		(4)		17		13
Total purchases and settlements		24		(4)		17		13
Transfers into/(out of) Level 3:
Transfers into Level 3		36		-		-		-
Transfers out of Level 3		(4)		-		-		-
Total transfers into/(out of) Level 3		32		-		-		-
Balance at September 30, 2012	$	1,181	$	625	$	(1,184)	$	(559)
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	2	$	(78)	$	131	$	53

(1) Amounts do not accrue to shareholders.

For the Nine Months Ended September 30, 2013
	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)		-		(286)		286		-
Other		13		12		(16)		(4)
Total gains (losses) included in shareholders' net income		13		(274)		270		(4)
Losses included in other comprehensive income		(18)		-		-		-
Losses required to adjust future policy benefits for settlement annuities⁽¹⁾		(46)		-		-		-
Purchases, sales and settlements:
Purchases		104		-		-		-
Sales		(48)		-		-		-
Settlements		(96)		505		59		564
Total purchases, sales and settlements		(40)		505		59		564
Transfers into/(out of) Level 3:
Transfers into Level 3		101		-		-		-
Transfers out of Level 3		(135)		-		-		-
Total transfers into/(out of) Level 3		(34)		-		-		-
Balance at September 30, 2013	$	1,226	$	853	$	(841)	$	12
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	6	$	(274)	$	270	$	(4)

(1) Amounts do not accrue to shareholders.

For the Nine Months Ended September 30, 2012
	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)		-		(65)		98		33
Other		4		-		-		-
Total gains (losses) included in shareholders' net income		4		(65)		98		33
Gains included in other comprehensive income		16		-		-		-
Losses required to adjust future policy benefits for settlement annuities⁽¹⁾		(19)		-		-		-
Purchases and settlements:
Purchases		106		-		-		-
Settlements		(44)		(22)		51		29
Total purchases and settlements		62		(22)		51		29
Transfers into/(out of) Level 3:
Transfers into Level 3		155		-		-		-
Transfers out of Level 3		(39)		-		-		-
Total transfers into/(out of) Level 3		116		-		-		-
Balance at September 30, 2012	$	1,181	$	625	$	(1,184)	$	(559)
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	2	$	(65)	$	98	$	33

(1) Amounts do not accrue to shareholders.

As noted in the tables above, total gains and losses included in shareholders' net income are reflected in the following captions in the Consolidated Statements of Income:

In the tables above, gains and losses included in other comprehensive income are reflected in net unrealized appreciation (depreciation) on securities in the Consolidated Statements of Comprehensive Income.

Reclassifications impacting Level 3 financial instruments are reported as transfers into or out of the Level 3 category as of the beginning of the quarter in which the transfer occurs. Therefore gains and losses in income only reflect activity for the period the instrument was classified in Level 3.

Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. For the nine months ended September 30, 2013 and September 30, 2012, transfers between Level 2 and Level 3 primarily reflect the change in significance of the unobservable inputs used to value certain public and private corporate bonds, principally related to liquidity of the securities and credit risk of the issuers.

Because GMIB reinsurance arrangements remain in effect at the reporting date, the Company has reflected the total gain or loss for the period as the total gain or loss included in income attributable to instruments still held at the reporting date. However, the Company reduces the GMIB assets and liabilities resulting from these reinsurance arrangements when annuitants lapse, die, elect their benefit, or reach the age after which the right to elect their benefit expires.

Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and are excluded from the Company's revenues and expenses. As of September 30, 2013 and December 31, 2012 separate account assets were as follows:

(1) As of September 30, 2013, non-guaranteed separate accounts included $3.8 billion in assets supporting the Company's pension plans, including $965 million classified in Level 3.

(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.

Separate account assets in Level 1 primarily include exchange-listed equity securities. Level 2 assets primarily include:

Separate account assets classified in Level 3 include investments primarily in securities partnerships, real estate and hedge funds generally valued based on the separate account's ownership share of the equity of the investee including changes in the fair values of its underlying investments.

The following tables summarize the changes in separate account assets reported in Level 3 for the three months and nine months ended September 30, 2013 and 2012.

	Three Months Ended
	September 30,
(In millions)	2013		2012
Balance at July 1	$	1,049	$	952
Policyholder gains ⁽¹⁾		17		21
Purchases, sales and settlements:
Purchases		18		30
Sales		(2)		-
Settlements		(69)		(20)
Total purchases, sales and settlements		(53)		10
Transfers into/(out of) Level 3:
Transfers into Level 3		5		2
Transfers out of Level 3		(3)		-
Total transfers into/(out of) Level 3		2		2
Balance at September 30,	$	1,015	$	985

(1) Included in this amount are gains of $17 million attributable to instruments still held at September 30, 2013 and gains of $20 million attributable to instruments still held at September 30, 2012.

	Nine Months Ended
	September 30,
(In millions)	2013		2012
Balance at January 1	$	1,005	$	750
Policyholder gains⁽¹⁾		46		48
Purchases, sales and settlements:
Purchases		106		230
Sales		(2)		-
Settlements		(138)		(49)
Total purchases, sales and settlements		(34)		181
Transfers into/(out of) Level 3:
Transfers into Level 3		5		7
Transfers out of Level 3		(7)		(1)
Total transfers into/(out of) Level 3		(2)		6
Balance at September 30,	$	1,015	$	985

(1) Included in this amount are gains of $46 million attributable to instruments still held at September 30, 2013 and gains of $41 million attributable to instruments still held at September 30, 2012.

Some financial assets and liabilities are not carried at fair value each reporting period, but may be measured using fair value only under certain conditions, such as investments in real estate entities and commercial mortgage loans when they become impaired. During the nine months ended September 30, 2013, impaired mortgage loans and real estate entities representing less than 1% of total investments were written down to their fair values resulting in realized investment losses of $5 million, after-tax.

For the nine months ended September 30, 2012, impaired mortgage loans representing less than 1% of total investments were written down to their fair values, resulting in realized investment losses of $7 million, after-tax.

Most financial instruments that are subject to fair value disclosure requirements are carried in the Company's Consolidated Financial Statements at amounts that approximate fair value. The following table provides the fair values and carrying values of the Company's financial instruments not recorded at fair value that are subject to fair value disclosure requirements at September 30, 2013 and December 31, 2012.

(In millions)			September 30, 2013				December 31, 2012
	Classification in the Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	2,507	$	2,404	$	2,999	$	2,851
Contractholder deposit funds, excluding universal life products	Level 3	$	1,082	$	1,070	$	1,082	$	1,056
Long-term debt, including current maturities, excluding capital leases	Level 2	$	5,529	$	4,992	$	5,821	$	4,986

The fair values presented in the table above have been estimated using market information when available. The following valuation methodologies and inputs are used by the Company to determine fair value.

Commercial mortgage loans. The Company estimates the fair value of commercial mortgage loans generally by discounting the contractual cash flows at estimated market interest rates that reflect the Company's assessment of the credit quality of the loans. Market interest rates are derived by calculating the appropriate spread over comparable U.S. Treasury rates, based on the property type, quality rating and average life of the loan. The quality ratings reflect the relative risk of the loan, considering debt service coverage, the loan-to-value ratio and other factors. Fair values of impaired mortgage loans are based on the estimated fair value of the underlying collateral generally determined using an internal discounted cash flow model. The fair value measurements were classified in Level 3 because the cash flow models incorporate significant unobservable inputs.

Contractholder deposit funds, excluding universal life products. Generally, these funds do not have stated maturities. Approximately 60% of these balances can be withdrawn by the customer at any time without prior notice or penalty. The fair value for these contracts is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Most of the remaining contractholder deposit funds are reinsured by the buyers of the individual life and annuity and retirement benefits businesses. The fair value for these contracts is determined using the fair value of these buyers' assets supporting these reinsured contracts. The Company had a reinsurance recoverable equal to the carrying value of these reinsured contracts. These instruments were classified in Level 3 because certain inputs are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement.

Long-term debt, including current maturities, excluding capital leases. The fair value of long-term debt is based on quoted market prices for recent trades. When quoted market prices are not available, fair value is estimated using a discounted cash flow analysis and the Company's estimated current borrowing rate for debt of similar terms and remaining maturities. These measurements were classified in Level 2 because the fair values are based on quoted market prices or other inputs that are market observable or can be corroborated by market data.

Fair values of off-balance-sheet financial instruments were not material as of September 30, 2013 and December 31, 2012.