Variable Annuity and Insurance Guarantees

The majority of the variable annuity contracts offered by the Company contain GMDB provisions. The Company also offers variable annuities with GGU, GMWB and GMAB provisions. The Company previously offered contracts containing GMIB provisions. See Note 2 and Note 10 for additional information regarding the Company’s variable annuity guarantees.

The GMDB and GGU provisions provide a specified minimum return upon death of the contractholder. The death benefit payable is the greater of (i) the contract value less any purchase payment credits subject to recapture and less a pro-rata portion of any rider fees, or (ii) the GMDB provisions specified in the contract. The Company has the following primary GMDB provisions:


•	Return of premium — provides purchase payments minus adjusted partial surrenders.


•	Reset — provides that the value resets to the account value every sixth contract anniversary minus adjusted partial surrenders. This provision was often provided in combination with the return of premium provision and is no longer offered.


•	Ratchet — provides that the value ratchets up to the maximum account value at specified anniversary intervals, plus subsequent purchase payments less adjusted partial surrenders.

The variable annuity contracts with GMWB riders typically have account values that are based on an underlying portfolio of mutual funds, the values of which fluctuate based on fund performance. At issue, the guaranteed amount is equal to the amount deposited but the guarantee may be increased annually to the account value (a “step-up”) in the case of favorable market performance or by a benefit credit if the contract includes this provision.

The Company has GMWB riders in force, which contain one or more of the following provisions:


•	Withdrawals at a specified rate per year until the amount withdrawn is equal to the guaranteed amount.


•	Withdrawals at a specified rate per year for the life of the contractholder (“GMWB for life”).


•	Withdrawals at a specified rate per year for joint contractholders while either is alive.


•	Withdrawals based on performance of the contract.


•	Withdrawals based on the age withdrawals begin.


•	Once withdrawals begin, the contractholder’s funds are moved to one of the three least aggressive asset allocation models.


•	Credits are applied annually for a specified number of years to increase the guaranteed amount as long as withdrawals have not been taken.

Variable annuity contractholders age 79 or younger at contract issue can also obtain a principal-back guarantee by purchasing the optional GMAB rider for an additional charge. The GMAB rider guarantees that, regardless of market performance at the end of the 10-year waiting period, the contract value will be no less than the original investment or a specified percentage of the highest anniversary value, adjusted for withdrawals. If the contract value is less than the guarantee at the end of the 10-year period, a lump sum will be added to the contract value to make the contract value equal to the guarantee value.

Certain UL policies offered by the Company provide secondary guarantee benefits. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.

The following table provides information related to variable annuity guarantees for which the Company has established additional liabilities:



	December 31, 2015							December 31, 2014
Variable Annuity Guarantees by Benefit Type⁽¹⁾	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age	Total Contract Value		Contract Value in Separate Accounts		Net Amount at Risk		Weighted Average Attained Age
	(in millions, except age)
GMDB:
Return of premium	$	54,716	$	52,871	$	297	65	$	55,378	$	53,565	$	24	64
Five/six-year reset	9,307		6,731		78		65	10,360		7,821		28		64
One-year ratchet	6,747		6,379		266		67	7,392		7,006		39		66
Five-year ratchet	1,613		1,556		20		63	1,773		1,717		2		63
Other	887		869		82		71	959		941		38		70
Total — GMDB	$	73,270	$	68,406	$	743	65	$	75,862	$	71,050	$	131	64

GGU death benefit	$	1,056	$	1,004	$	113	67	$	1,072	$	1,019	$	123	67

GMIB	$	270	$	251	$	17	68	$	343	$	321	$	9	67

GMWB:
GMWB	$	3,118	$	3,109	$	2	69	$	3,671	$	3,659	$	1	68
GMWB for life	37,301		37,179		330		66	36,843		36,735		95		65
Total — GMWB	$	40,419	$	40,288	$	332	66	$	40,514	$	40,394	$	96	65

GMAB	$	4,018	$	4,006	$	31	58	$	4,247	$	4,234	$	2	58

⁽¹⁾ Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.

The net amount at risk for GMDB, GGU and GMAB guarantees is defined as the current guaranteed benefit amount in excess of the current contract value. The net amount at risk for GMIB and GMWB guarantees is defined as the greater of the present value of the minimum guaranteed withdrawal payments less the current contract value or zero. The present value is calculated using a discount rate that is consistent with assumptions embedded in the Company’s annuity pricing models.

The following table provides information related to insurance guarantees for which the Company has established additional liabilities:



	December 31, 2015			December 31, 2014
	Net Amount at Risk		Weighted Average Attained Age	Net Amount at Risk		Weighted Average Attained Age
	(in millions, except age)
UL secondary guarantees	$	6,601	63	$	6,076	62

The net amount at risk for UL secondary guarantees is defined as the current guaranteed death benefit amount in excess of the current policyholder value.

Changes in additional liabilities (contra liabilities) for variable annuity and insurance guarantees were as follows:



	GMDB & GGU			GMIB			GMWB⁽¹⁾			GMAB⁽¹⁾			UL
	(in millions)
Balance at January 1, 2013	$	4		$	9		$	799		$	103		$	155
Incurred claims	4			(2		)	(1,182		)	(165		)	67
Paid claims	(4		)	(1		)	—			—			(16		)
Balance at December 31, 2013	4			6			(383		)	(62		)	206
Incurred claims	9			1			1,076			21			75
Paid claims	(4		)	—			—			—			(18		)
Balance at December 31, 2014	9			7			693			(41		)	263
Incurred claims	10			1			364			41			92
Paid claims	(5		)	—			—			—			(23		)
Balance at December 31, 2015	$	14		$	8		$	1,057		$	—		$	332

⁽¹⁾ The incurred claims for GMWB and GMAB represent the total change in the liabilities (contra liabilities).

The liabilities for guaranteed benefits are supported by general account assets.

The following table summarizes the distribution of separate account balances by asset type for variable annuity contracts providing guaranteed benefits:



	December 31,
	2015		2014
	(in millions)
Mutual funds:
Equity	$	39,806	$	41,403
Bond	23,700		25,060
Other	5,241		4,490
Total mutual funds	$	68,747	$	70,953

No gains or losses were recognized on assets transferred to separate accounts for the years ended December 31, 2015, 2014 and 2013.