GMDB, GMIB AND NO LAPSE GUARANTEE FEATURES

12 Months Ended

Dec. 31, 2012

Gmdb Gmib And No Lapse Guarantee Features [Abstract]

GMDB GMIB AND NO LAPSE GUARANTEE FEATURES

6)       GMDB, GMIB AND NO LAPSE GUARANTEE FEATURES

A) Variable Annuity Contracts - GMDB and GMIB

MLOA has certain variable annuity contracts with GMDB and GMIB features-in-force that guarantee one of the following:

• Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals);
• Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals);
• Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages; or
• Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit which may include a five year or an annual reset.

The following table summarizes the GMDB and GMIB liabilities, before reinsurance ceded, reflected in the General Account in future policy benefits and other policyholders' liabilities:

		GMDB		GMIB		Total
		(In Millions)
Balance at January 1, 2010		$	5	$	3	$	8
	Paid guarantee benefits		(2)		0		(2)
	Other changes in reserve		3		(1)		2
Balance at December 31, 2010			6		2		8
	Paid guarantee benefits		(2)		0		(2)
	Other changes in reserve		3		0		3
Balance at December 31, 2011			7		2		9
	Paid guarantee benefits		(2)		0		(2)
	Other changes in reserve		3		0		3
Balance at December 31, 2012		$	8	$	2	$	10

Related GMDB reinsurance ceded amounts were:

		GMDB
		(In Millions)
Balance at January 1, 2010		$	3
	Paid guarantee benefits		(1)
	Other changes in reserve		1
Balance at December 31, 2010			3
	Other changes in reserve		1
Balance at December 31, 2011			4
	Paid guarantee benefits		0
	Other changes in reserve		1
Balance at December 31, 2012		$	5

The GMIB reinsurance contracts are considered derivatives and are reported at fair value.

The December 31, 2012 values for variable annuity contracts in-force on such date with GMDB and GMIB features are presented in the following table. For contracts with the GMDB feature, the net amount at risk in the event of death is the amount by which the GMDB benefits exceed related account values. For contracts with the GMIB feature, the net amount at risk in the event of annuitization is the amount by which the present value of the GMIB benefits exceeds related account values, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. Since variable annuity contracts with GMDB guarantees may also offer GMIB guarantees in the same contract, the GMDB and GMIB amounts listed are not mutually exclusive:

			Return
			of
			Premium		Ratchet		Roll-Up		Combo		Total
			(Dollars In Millions)
GMDB:
	Account values invested in:
		General Account	$	121	$	186	$	N/A	$	30	$	337
		Separate Accounts	$	309	$	391	$	N/A	$	59	$	759
	Net amount at risk, gross		$	5	$	48	$	N/A	$	17	$	70
	Net amount at risk, net of
		amounts reinsured	$	5	$	43	$	N/A	$	0	$	48
	Average attained age
		of contractholders		66.1		66.4		N/A		66.1		66.3
	Percentage of contractholders
		over age 70		25.6%		25.7%		N/A		25.0%		25.6%
	Contractually specified
		interest rates		N/A		N/A		N/A		5.0%		5.0%
GMIB:
	Account values invested in:
		General Account		N/A		N/A	$	30	$	N/A	$	30
		Separate Accounts		N/A		N/A	$	59	$	N/A	$	59
	Net amount at risk, gross			N/A		N/A	$	3	$	N/A	$	3
	Net amount at risk, net of
		amounts reinsured		N/A		N/A	$	0	$	N/A	$	0
	Weighted average years
		remaining until annuitization		N/A		N/A		1.7		N/A		1.7
	Contractually specified
		interest rates		N/A		N/A		5.0%		N/A		5.0%

• Separate Account Investments by Investment Category Underlying GMDB and GMIB Features

The total account values of variable annuity contracts with GMDB and GMIB features include amounts allocated to the guaranteed interest option, which is part of the General Account and variable investment options that invest through Separate Accounts in variable insurance trusts. The following table presents the aggregate fair value of assets, by major investment category, held by Separate Accounts that support variable annuity contracts with GMDB and GMIB benefits and guarantees. The investment performance of the assets impacts the related account values and, consequently, the net amount of risk associated with the GMDB and GMIB benefits and guarantees. Since variable annuity contracts with GMDB benefits and guarantees may also offer GMIB benefits and guarantees in each contract, the GMDB and GMIB amounts listed are not mutually exclusive:

Investment in Variable Insurance Trust Mutual Funds
	December 31,
	2012			2011
	(In Millions)
GMDB:
Equity	$	643	$	685
Fixed income		73		89
Balanced		15		16
Other		28		34
Total	$	759	$	824
GMIB:
Equity	$	47	$	54
Fixed income		9		12
Other		3		4
Total	$	59	$	70

C) Variable and Interest-Sensitive Life Insurance Policies - No Lapse Guarantee

The no lapse guarantee feature contained in variable and interest-sensitive life insurance policies keeps them in force in situations where the policy value is not sufficient to cover monthly charges then due. The no lapse guarantee remains in effect so long as the policy meets a contractually specified premium funding test and certain other requirements. At December 31, 2012 and 2011, MLOA had liabilities of $1 million and $1 million, respectively, for no lapse guarantees reflected in the General Account in future policy benefits and other policyholders' liabilities.