Fair Value Measurements

				Level 1		Level 2		Level 3		Total

				(In Millions)
December 31, 2011
Assets:
Investments:
	Fixed maturities, available-for-sale:
		Corporate		$	-	$	1,659	$	34	$	1,693
		U.S. Treasury, government and agency			-		105		-		105
		States and political subdivisions			-		22		-		22
		Foreign governments			-		4		-		4
		Commercial mortgage-backed			-		-		29		29
		Residential mortgage-backed⁽¹⁾			-		28		-		28
		Asset-backed⁽²⁾			-		5		5		10
		Redeemable preferred stock			19		57		-		76
			Subtotal		19		1,880		68		1,967
	Other equity investments				1		-		-		1
Cash equivalents					57		-		-		57
GMIB reinsurance contracts					-		-		9		9
Separate Accounts' assets					1,589		15		-		1,604
		Total Assets		$	1,666	$	1,895	$	77	$	3,638

December 31, 2010
Assets:
Investments:
	Fixed maturities, available-for-sale:
		Corporate		$	-	$	1,610	$	19	$	1,629
		U.S. Treasury, government and agency			-		88		-		88
		States and political subdivisions			-		20		-		20
		Foreign governments			-		4		-		4
		Commercial mortgage-backed			-		-		36		36
		Residential mortgage-backed⁽¹⁾			-		35		-		35
		Asset-backed⁽²⁾			-		6		5		11
		Redeemable preferred stock			19		58		-		77
			Subtotal		19		1,821		60		1,900
	Other equity investments				1		-		-		1
Cash equivalents					87		-		-		87
GMIB reinsurance contracts					-		-		2		2
Separate Accounts' assets					1,825		15		-		1,840
		Total Assets		$	1,932	$	1,836	$	62	$	3,830

(1) Includes publicly traded agency pass-through securities and collateralized obligations.

(2) Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.

In 2011, AFS fixed maturities with fair values of $5 million and $0 million were transferred out of Level 3 and into Level 2 and out of Level 2 and into Level 1, respectively, principally due to the availability of trading activity and/or market observable inputs to measure and validate their fair values. In addition, AFS fixed maturities with fair value of $22 million were transferred into the Level 3 classification. These transfers in the aggregate represent approximately 4.0% of total equity at December 31, 2011.

In 2010, AFS fixed maturities with fair values of $9 million and $1 million were transferred out of Level 3 and into Level 2 and out of Level 2 and into Level 1, respectively, principally due to the availability of trading activity and/or market observable inputs to measure and validate their fair values. In addition, AFS fixed maturities with fair value of $2 million were transferred into the Level 3 classification. These transfers in the aggregate represent approximately 2% of total equity at December 31, 2010.

The table below presents a reconciliation for all Level 3 assets at December 31, 2011 and 2010, respectively.

Level 3 Instruments
Fair Value Measurements


								Commercial				Redeemable		GMIB
								Mortgage-		Asset-		Preferred		Reinsurance
						Corporate		backed		backed		Stock		Contracts

						(In Millions)

Balance, January 1, 2011						$	19	$	36	$	5	$	-	$	2
	Total gains (losses), realized and unrealized, included in:
		Earnings (loss) as:
			Net investment income (loss)				-		-		-		-		-
			Investment gains (losses), net				-		(1)		-		-		-
			Increase (decrease) in the fair value of
				reinsurance contracts			-		-		-		-		7
					Subtotal		-		(1)		-		-		7
		Other comprehensive income (loss)					(2)		(3)		-		-		-
Purchases							-		-		-		-		-
Sales							(1)		(3)		-		-		-
Transfers into Level 3⁽²⁾							22		-		-		-		-
Transfers out of Level 3⁽²⁾							(4)		-		-		-		-
Balance, December 31, 2011⁽¹⁾						$	34	$	29	$	5	$	-	$	9

Balance, January 1, 2010						$	24	$	63	$	5	$	6	$	1
	Total gains (losses), realized and unrealized included in:
		Earnings (loss) as:
			Net investment income (loss)				-		-		-		-		-
			Investment gains (losses), net				-		(53)		-		2		-
			Increase (decrease) in the fair value of
				reinsurance contracts			-		-		-		-		-
					Subtotal	$	-	$	(53)	$	-	$	2	$	-
		Other comprehensive income (loss)					-		26		-		-		-
Purchases/issuances							4		-		-		-		1
Sales/settlements							(2)		-		-		(8)		-
Transfers into/out of Level 3⁽²⁾							(7)		-		-		-		-
Balance, December 31, 2010⁽¹⁾						$	19	$	36	$	5	$	-	$	2

The table below details changes in unrealized gains (losses) for 2011 and 2010 by category for Level 3 assets still held at December 31, 2011 and 2010, respectively.

					Earnings (Loss)
									Increase
					Net		Investment		(Decrease) in the
					Investment		Gains		Fair Value of
					Income		(Losses),		Reinsurance
					(Loss)		Net		Contracts		OCI

					(In Millions)
Level 3 Instruments
Full Year 2011
Still Held at December 31, 2011:⁽¹⁾
	Change in unrealized gains (losses):
		Fixed maturities, available-for-sale:
			Commercial mortgage-backed			-		-		-		(4)
			Other fixed maturities, available-for-sale			-		-		-		(2)
				Subtotal	$	-	$	-	$	-	$	(6)
		GMIB reinsurance contracts				-		-		7		-
				Total	$	-	$	-	$	7	$	(6)

Level 3 Instruments
Full Year 2010
Still Held at December 31, 2010:⁽¹⁾
	Change in unrealized gains (losses):
		Fixed maturities, available-for-sale:
			Commercial mortgage-backed			-		-		-		26
			Other fixed maturities, available-for-sale			-		-		-		-
				Subtotal	$	-	$	-	$	-	$	26
		GMIB reinsurance contracts				-		-		1		-
				Total	$	-	$	-	$	1	$	26

(1) There were no Equity securities classified as AFS, Other equity investments, Cash equivalents and Separate Accounts' assets at December 31, 2011 and 2010.

The carrying values and fair values for financial instruments not otherwise disclosed in Notes 3 and 5 are presented in the table below.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities 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) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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