Fair Value Measurements Level 1 (Notes)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

The following section applies the fair value hierarchy and disclosure requirements for the Company’s financial instruments that are carried at fair value. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2 or 3).

Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include highly liquid U.S. Treasuries, money market funds and exchange traded equity securities, open-ended mutual funds reported in separate account assets and exchange-traded derivative instruments.

Level 2 Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most fixed maturities and preferred stocks, including those reported in separate account assets, are model priced by vendors using observable inputs and are classified within Level 2. Also included are hedge funds where investment company accounting guidance has been applied to a wholly-owned fund of funds measured at fair value where an investment can be redeemed, or substantially redeemed, at the NAV at the measurement date or in the near-term, not to exceed 90 days. Derivative instruments classified within Level 2 are priced using observable market inputs such as swap yield curves and credit default swap curves.

Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Level 3 securities include less liquid securities, guaranteed product embedded and reinsurance derivatives and other complex derivative instruments, as well as hedge fund investments carried at fair value, consistent with investment company accounting guidance, that cannot be redeemed in the near-term at the NAV. Because Level 3 fair values, by their nature, contain one or more significant unobservable inputs, as there is little or no observable market for these assets and liabilities, considerable judgment is used to determine the Level 3 fair values. Level 3 fair values represent the Company’s best estimate of an amount that could be realized in a current market exchange absent actual market exchanges.

In many situations, inputs used to measure the fair value of an asset or liability position may fall into different levels of the fair value hierarchy. In these situations, the Company will determine the level in which the fair value falls based upon the lowest level input that is significant to the determination of the fair value. Transfers of securities among the levels occur at the beginning of the reporting period. The amount of transfers from Level 1 to Level 2 was $2.5 billion, and $1.3 billion, for the years ended December 31, 2014 and 2013, respectively, which represented previously on-the-run U.S. Treasury securities that are now off-the-run. For the years ended December 31, 2014 and 2013, there were no transfers from Level 2 to Level 1. In most cases, both observable (e.g., changes in interest rates) and unobservable (e.g., changes in risk assumptions) inputs are used in the determination of fair values that the Company has classified within Level 3. Consequently, these values and the related gains and losses are based upon both observable and unobservable inputs. The Company’s fixed maturities included in Level 3 are classified as such because these securities are primarily priced by independent brokers and/or are within illiquid markets.

The following tables present assets and (liabilities) carried at fair value by hierarchy level. These disclosures provide information as to the extent to which the Company uses fair value to measure financial instruments and information about the inputs used to value those financial instruments to allow users to assess the relative reliability of the measurements. The following table presents assets and (liabilities) carried at fair value by hierarchy level.

	December 31, 2014
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
Asset backed securities ("ABS")	$	2,472		$	—	$	2,350		$	122
Collateralized debt obligations ("CDOs")	2,841			—		2,218			623
Commercial mortgage-backed securities ("CMBS")	4,415			—		4,131			284
Corporate	27,359			—		26,319			1,040
Foreign government/government agencies	1,636			—		1,577			59
States, municipalities and political subdivisions (“Municipal”)	12,871			—		12,805			66
Residential mortgage-backed securities ("RMBS")	3,918			—		2,637			1,281
U.S. Treasuries	3,872			106		3,766			—
Total fixed maturities	59,384			106		55,803			3,475
Fixed maturities, FVO	488			—		396			92
Equity securities, trading	11			11		—			—
Equity securities, AFS	1,047			786		163			98
Derivative assets
Credit derivatives	8			—		10			(2		)
Equity derivatives	3			—		—			3
Interest rate derivatives	129			—		113			16
GMWB hedging instruments	119			—		5			114
Macro hedge program	93			—		—			93
Other derivative contracts	12			—		—			12
Total derivative assets [1]	364			—		128			236
Short-term investments	4,883			349		4,534			—
Limited partnerships and other alternative investments [2]	770			—		581			189
Reinsurance recoverable for GMWB	56			—		—			56
Modified coinsurance reinsurance contracts	34			—		34			—
Separate account assets [3]	132,211			91,537		40,096			578
Total assets accounted for at fair value on a recurring basis	$	199,248		$	92,789	$	101,735		$	4,724
Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
GMWB	$	(139	)	$	—	$	—		$	(139	)
Equity linked notes	(26		)	—		—			(26		)
Total other policyholder funds and benefits payable	(165		)	—		—			(165		)
Derivative liabilities
Credit derivatives	(16		)	—		(9		)	(7		)
Equity derivatives	28			—		25			3
Foreign exchange derivatives	(445		)	—		(445		)	—
Interest rate derivatives	(597		)	—		(574		)	(23		)
GMWB hedging instruments	55			—		(1		)	56
Macro hedge program	48			—		—			48
Total derivative liabilities [4]	(927		)	—		(1,004		)	77
Consumer notes [5]	(3		)	—		—			(3		)
Total liabilities accounted for at fair value on a recurring basis	$	(1,095	)	$	—	$	(1,004	)	$	(91	)

	December 31, 2013
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
ABS	$	2,365		$	—	$	2,218		$	147
CDOs	2,387			—		1,723			664
CMBS	4,446			—		3,783			663
Corporate	28,490			—		27,216			1,274
Foreign government/government agencies	4,104			—		4,039			65
Municipal	12,173			—		12,104			69
RMBS	4,647			—		3,375			1,272
U.S. Treasuries	3,745			1,311		2,434			—
Total fixed maturities	62,357			1,311		56,892			4,154
Fixed maturities, FVO	844			—		651			193
Equity securities, trading	19,745			12		19,733			—
Equity securities, AFS	868			454		337			77
Derivative assets
Credit derivatives	25			—		20			5
Foreign exchange derivatives	14			—		14			—
Interest rate derivatives	(21		)	—		(63		)	42
GMWB hedging instruments	26			—		(42		)	68
Macro hedge program	109			—		—			109
International program hedging instruments	272			—		241			31
Other derivative contracts	17			—		—			17
Total derivative assets [1]	442			—		170			272
Short-term investments	4,008			427		3,581			—
Limited partnerships and other alternative investments [2]	921			—		813			108
Reinsurance recoverable for GMWB	29			—		—			29
Modified coinsurance reinsurance contracts	67			—		67			—
Separate account assets [3]	138,495			99,930		37,828			737
Total assets accounted for at fair value on a recurring basis	$	227,776		$	102,134	$	120,072		$	5,570
Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
U.S. GMWB	$	(36	)	$	—	$	—		$	(36	)
International GMWB	3			—		—			3
International other guaranteed living benefits	3			—		—			3
Equity linked notes	(18		)	—		—			(18		)
Total other policyholder funds and benefits payable	(48		)	—		—			(48		)
Derivative liabilities
Credit derivatives	(12		)	—		(9		)	(3		)
Equity derivatives	19			—		16			3
Foreign exchange derivatives	(388		)	—		(388		)	—
Interest rate derivatives	(582		)	—		(558		)	(24		)
GMWB hedging instruments	15			—		(63		)	78
Macro hedge program	30			—		—			30
International program hedging instruments	(305		)	—		(245		)	(60		)
Total derivative liabilities [4]	(1,223		)	—		(1,247		)	24
Consumer notes [5]	(2		)	—		—			(2		)
Total liabilities accounted for at fair value on a recurring basis	$	(1,273	)	$	—	$	(1,247	)	$	(26	)

[1] Includes OTC and OTC-cleared derivative instruments in a net asset value position after consideration of the impact of collateral posting requirements which may be imposed by agreements, clearinghouse rules, and applicable law. As of December 31, 2014 and 2013, $413 and $128, respectively, of cash collateral liability was netted against the derivative asset value in the Consolidated Balance Sheets and is excluded from the table above. See footnote 4 below for derivative liabilities.

[2] Represents hedge funds where investment company accounting has been applied to a wholly-owned fund of funds measured at fair value.

[3] Approximately $2.5 billion and $2.4 billion of investment sales receivable, as of December 31, 2014 and 2013, respectively, are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value.

[4] Includes OTC and OTC-cleared derivative instruments in a net negative market value position (derivative liability) after consideration of the impact of collateral posting requirements which may be imposed by agreements, clearing house rules and applicable law. In the Level 3 roll-forward table included below in this Note 5, the derivative assets and liabilities are referred to as “freestanding derivatives” and are presented on a net basis.

[5] Represents embedded derivatives associated with non-funding agreement-backed consumer equity linked notes.

Determination of Fair Values

The valuation methodologies used to determine the fair values of assets and liabilities under the “exit price” notion, reflect market participant objectives and are based on the application of the fair value hierarchy that prioritizes relevant observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and liabilities based on quoted market prices where available, and where prices represent a reasonable estimate of fair value. The Company also determines fair value based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s default spreads, liquidity, and where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments listed in the above tables.

The fair value process is monitored by the Valuation Committee, which is a cross-functional group of senior management within the Company that meets at least quarterly. The Valuation Committee is co-chaired by the Heads of Investment Operations and Accounting, and has representation from various investment sector professionals, accounting, operations, legal, compliance and risk management. The purpose of the committee is to oversee the pricing policy and procedures by ensuring objective and reliable valuation practices and pricing of financial instruments, as well as addressing valuation issues and approving changes to valuation methodologies and pricing sources. There are also two working groups under the Valuation Committee, a Securities Fair Value Working Group (“Securities Working Group”) and a Derivatives Fair Value Working Group ("Derivatives Working Group"), which include various investment, operations, accounting and risk management professionals that meet monthly to review market data trends, pricing and trading statistics and results, and any proposed pricing methodology changes described in more detail in the following paragraphs.

The Company also has an enterprise-wide Operational Risk Management function, led by the Chief Operational Risk Officer, which is responsible for establishing, maintaining and communicating the framework, principles and guidelines of the Company's operational risk management program. This includes model risk management which provides an independent review of the suitability, characteristics and reliability of model inputs, as well as an analysis of significant changes to current models.

Fixed Maturities, AFS; Equity Securities, AFS; Equity Securities, FVO; Fixed Maturities, FVO, Equity Securities, Trading; and Short-term Investments

The fair value of AFS and FVO securities, equity securities, trading, and short-term investments in an active and orderly market (e.g. not distressed or forced liquidation) are determined by management after considering the following primary sources of information: quoted prices for identical assets or liabilities, third-party pricing services, independent broker quotations, or pricing matrices. Security pricing is applied using a “waterfall” approach whereby publicly available prices are first sought from third-party pricing services, and the remaining unpriced securities are submitted to independent brokers for prices, or priced using a pricing matrix. Typical inputs used by these pricing methods include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, and/or estimated cash flows, prepayment speeds, and default rates. Based on the typical trading volumes and the lack of quoted market prices for fixed maturities, third-party pricing services will normally derive the security prices from recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information as outlined above. If there are no recently reported trades, the third-party pricing services and independent brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Included in the pricing of ABS and RMBS are estimates of the rate of future prepayments of principal over the remaining life of the securities. Such estimates are derived based on the characteristics of the underlying structure and prepayment speeds previously experienced at the interest rate levels projected for the underlying collateral. Actual prepayment experience may vary from these estimates.

Prices from third-party pricing services are often unavailable for securities that are rarely traded or are traded only in privately negotiated transactions. As a result, certain securities are priced via independent broker quotations which utilize inputs that may be difficult to corroborate with observable market based data. Additionally, the majority of these independent broker quotations are non-binding.

A pricing matrix is used to price private placement securities for which the Company is unable to obtain a price from a third-party pricing service by discounting the expected future cash flows from the security by a developed market discount rate utilizing current credit spreads. Credit spreads are developed each month using market based data for public securities adjusted for credit spread differentials between public and private securities which are obtained from a survey of multiple private placement brokers. The appropriate credit spreads determined through this survey approach are based upon the issuer’s financial strength and term to maturity, utilizing an independent public security index and trade information and adjusting for the non-public nature of the securities.

The Securities Working Group performs ongoing analysis of the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. As a part of this analysis, the Company considers trading volume, new issuance activity and other factors to determine whether the market activity is significantly different than normal activity in an active market, and if so, whether transactions may not be orderly considering the weight of available evidence. If the available evidence indicates that pricing is based upon transactions that are stale or not orderly, the Company places little, if any, weight on the transaction price and will estimate fair value utilizing an internal pricing model. In addition, the Company ensures that prices received from independent brokers represent a reasonable estimate of fair value through the use of internal and external cash flow models developed based on spreads, and when available, market indices. As a result of this analysis, if the Company determines that there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly and approved by the Valuation Committee. The Company’s internal pricing model utilizes the Company’s best estimate of expected future cash flows discounted at a rate of return that a market participant would require. The significant inputs to the model include, but are not limited to, current market inputs, such as credit loss assumptions, estimated prepayment speeds and market risk premiums.

The Company conducts other specific monitoring controls around pricing. Daily analyses identify price changes over 3% for fixed maturities and 5% for equity securities and trade prices that differ over 3% to the current day's price. Weekly analyses identify prices that differ more than 5% from published bond prices of a corporate bond index. Monthly analyses identify price changes over 3%, prices that have not changed, and missing prices. Also on a monthly basis, a second source validation is performed on most sectors. Analyses are conducted by a dedicated pricing unit that follows up with trading and investment sector professionals and challenges prices with vendors when the estimated assumptions used differ from what the Company feels a market participant would use. Any changes from the identified pricing source are verified by further confirmation of assumptions used. Examples of other procedures performed include, but are not limited to, initial and on-going review of third-party pricing services’ methodologies, review of pricing statistics and trends, and back testing recent trades.

The Company has analyzed the third-party pricing services’ valuation methodologies and related inputs, and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Most prices provided by third-party pricing services are classified into Level 2 because the inputs used in pricing the securities are market observable. Due to a general lack of transparency in the process that brokers use to develop prices, most valuations that are based on brokers’ prices are classified as Level 3. Some valuations may be classified as Level 2 if the price can be corroborated with observable market data.

Derivative Instruments, including embedded derivatives within investments

Derivative instruments are fair valued using pricing valuation models for OTC derivatives that utilize independent market data inputs, quoted market prices for exchange-traded and OTC-cleared derivatives, or independent broker quotations. Excluding embedded and reinsurance related derivatives, as of December 31, 2014 and 2013, 96% and 97%, respectively, of derivatives, based upon notional values, were priced by valuation models or quoted market prices. The remaining derivatives were priced by broker quotations.

The Derivatives Working Group performs ongoing analysis of the valuations, assumptions and methodologies used to ensure that the prices represent a reasonable estimate of the fair value. The Company performs various controls on derivative valuations which include both quantitative and qualitative analysis. Analyses are conducted by a dedicated derivative pricing team that works directly with investment sector professionals to analyze impacts of changes in the market environment and investigate variances. There is a monthly analysis to identify market value changes greater than pre-defined thresholds, stale prices, missing prices and zero prices. Also on a monthly basis, a second source validation, typically to broker quotations, is performed for certain of the more complex derivatives, as well as for any existing deals with a market value greater than $10 and all new deals during the month. In addition, on a daily basis, market valuations are compared to counterparty valuations for OTC derivatives. A model validation review is performed on any new models, which typically includes detailed documentation and validation to a second source. The model validation documentation and results of validation are presented to the Valuation Committee for approval. There is a monthly control to review changes in pricing sources to ensure that new models are not moved to production until formally approved.

The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instrument may not be classified with the same fair value hierarchy level as the associated assets and liabilities. Therefore the realized and unrealized gains and losses on derivatives reported in the Level 3 rollforward may not reflect the offsetting impact of the realized and unrealized gains and losses of the associated assets and liabilities.

Limited partnerships and other alternative investments

A portion of limited partnerships and other alternative investments include hedge funds where investment company accounting has been applied to a wholly-owned fund of funds measured at fair value. These funds are fair valued using the net asset value per share or equivalent (“NAV”), as a practical expedient, calculated on a monthly basis and is the amount at which a unit or shareholder may redeem their investment, if redemption is allowed. Certain impediments to redemption include, but are not limited to the following: 1) redemption notice periods vary and may be as long as 90 days, 2) redemption may be restricted (e.g. only be allowed on a quarter-end), 3) a holding period referred to as a lock-up may be imposed whereby an investor must hold their investment for a specified period of time before they can make a notice for redemption, 4) gating provisions may limit all redemptions in a given period to a percentage of the entities' equity interests, or may only allow an investor to redeem a portion of their investment at one time and 5) early redemption penalties may be imposed that are expressed as a percentage of the amount redeemed. The Company regularly assesses impediments to redemption and current market conditions that will restrict the redemption at the end of the notice period. Any funds that are subject to significant liquidity restrictions are reported in Level 3; all others have been classified as Level 2.

Valuation Techniques and Inputs for Investments

Generally, the Company determines the estimated fair value of its AFS and FVO securities, equity securities, trading, and short-term investments using the market approach. The income approach is used for securities priced using a pricing matrix, as well as for derivative instruments. Certain limited partnerships and other alternative investments are measured at fair value using a NAV as a practical expedient. For Level 1 investments, which are comprised of on-the-run U.S. Treasuries, exchange-traded equity securities, short-term investments, and exchange traded futures and option contracts, valuations are based on observable inputs that reflect quoted prices for identical assets in active markets that the Company has the ability to access at the measurement date.

For most of the Company’s debt securities, the following inputs are typically used in the Company’s pricing methods: reported trades, benchmark yields, bids and/or estimated cash flows. For securities except U.S. Treasuries, inputs also include issuer spreads, which may consider credit default swaps. Derivative instruments are valued using mid-market inputs that are predominantly observable in the market.

A description of additional inputs used in the Company’s Level 2 and Level 3 measurements is listed below:

Level 2 The fair values of most of the Company’s Level 2 investments are determined by management after considering prices received from third party pricing services. These investments include most fixed maturities and preferred stocks, including those reported in separate account assets; as well as, hedge funds where investment company accounting has been applied to a wholly-owned fund of funds measured at fair value, and derivative instruments.

• ABS, CDOs, CMBS and RMBS — Primary inputs also include monthly payment information, collateral performance, which varies by vintage year and includes delinquency rates, collateral valuation loss severity rates, collateral refinancing assumptions, credit default swap indices and, for ABS and RMBS, estimated prepayment rates.

• Corporates, including investment grade private placements — Primary inputs also include observations of credit default swap curves related to the issuer.

• Foreign government/government agencies - Primary inputs also include observations of credit default swap curves related to the issuer and political events in emerging market economies.

• Municipals — Primary inputs also include Municipal Securities Rulemaking Board reported trades and material event notices, and issuer financial statements.

• Short-term investments — Primary inputs also include material event notices and new issue money market rates.

• Equity securities, trading — Consist of investments in mutual funds. Primary inputs include net asset values obtained from third party pricing services.

• Credit derivatives — Primary inputs include the swap yield curve and credit default swap curves.

• Foreign exchange derivatives — Primary inputs include the swap yield curve, currency spot and forward rates, and cross currency basis curves.

• Interest rate derivatives — Primary input is the swap yield curve.

• Limited partnerships and other alternative investments — Primary inputs include a NAV for investment companies with no redemption restrictions as reported on their U.S. GAAP financial statements, which are recorded on a one-month lag.

Level 3 Most of the Company's securities classified as Level 3 include less liquid securities such as lower quality ABS, CMBS, commercial real estate ("CRE") CDOs and RMBS primarily backed by sub-prime loans. Securities included in level 3 are primarily valued based on broker prices or broker spreads, without adjustments. Primary inputs for non-broker priced investments, including structured securities, are consistent with the typical inputs used in Level 2 measurements noted above, but are Level 3 due to their less liquid markets. Additionally, certain long-dated securities are priced based on third party pricing services, including municipal securities, foreign government/government agencies, bank loans and below investment grade private placement securities. Primary inputs for these long-dated securities are consistent with the typical inputs used in Level 1 and Level 2 measurements noted above, but include benchmark interest rate or credit spread assumptions that are not observable in the marketplace. Level 3 investments also include hedge funds where investment company accounting has been applied to a wholly-owned fund of funds measured at fair value where the Company does not have the ability to redeem the investment in the near-term at the NAV. Also included in Level 3 are certain derivative instruments that either have significant unobservable inputs or are valued based on broker quotations. Significant inputs for these derivative contracts primarily include the typical inputs used in the Level 1 and Level 2 measurements noted above, but also include equity and interest rate volatility and swap yield curves beyond observable limits.

Significant Unobservable Inputs for Level 3 Assets Measured at Fair Values

The following tables present information about significant unobservable inputs used in Level 3 assets measured at fair value. The tables exclude securities such as ABS and CRE CDOs for which fair values are predominately based on broker quotations.

	As of December 31, 2014
Securities					Unobservable Inputs
Assets accounted for at fair value on a recurring basis	Fair Value		Predominant Valuation Method	Significant Unobservable Input	Minimum	Maximum	Weighted Average [1]	Impact of Increase in Input on Fair Value [2]
CMBS	$	284	Discounted cash flows	Spread (encompasses prepayment, default risk and loss severity)	46 bps	2,475 bps	284 bps	Decrease
Corporate [3]	568		Discounted cash flows	Spread	123 bps	765 bps	279 bps	Decrease
Municipal [3]	32		Discounted cash flows	Spread	212 bps	212 bps	212 bps	Decrease
RMBS	1,281		Discounted cash flows	Spread	23 bps	1,904 bps	142 bps	Decrease
				Constant prepayment rate	—%	7.0%	2.0%	Decrease [4]
				Constant default rate	1.0%	14.0%	7.0%	Decrease
				Loss severity	—%	100.0%	78.0%	Decrease

	As of December 31, 2013
Securities					Unobservable Inputs
Assets accounted for at fair value on a recurring basis	Fair Value		Predominant Valuation Method	Significant Unobservable Input	Minimum	Maximum	Weighted Average [1]	Impact of Increase in Input on Fair Value [2]
CMBS	$	663	Discounted cash flows	Spread (encompasses prepayment, default risk and loss severity)	99 bps	3,000 bps	527 bps	Decrease
Corporate [3]	665		Discounted cash flows	Spread	119 bps	5,594 bps	344 bps	Decrease
Municipal [3]	29		Discounted cash flows	Spread	184 bps	184 bps	184 bps	Decrease
RMBS	1,272		Discounted cash flows	Spread	62 bps	1,748 bps	232 bps	Decrease
				Constant prepayment rate	—%	10.0%	3.0%	Decrease [4]
				Constant default rate	1.0%	22.0%	8.0%	Decrease
				Loss severity	—%	100.0%	80.0%	Decrease

[1] The weighted average is determined based on the fair value of the securities.

[2] Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table above.

[3] Level 3 corporate and municipal securities excludes those for which the Company bases fair value on broker quotations as discussed below.

[4] Decrease for above market rate coupons and increase for below market rate coupons.

	As of December 31, 2014
Freestanding Derivatives					Unobservable Inputs
	Fair Value		Predominant Valuation Method	Significant Unobservable Input	Minimum		Maximum		Impact of Increase in Input on Fair Value [1]
Interest rate derivative
Interest rate swaps	(29	)	Discounted cash flows	Swap curve beyond 30 years	3	%	3	%	Decrease
Interest rate swaptions	22		Option model	Interest rate volatility	1	%	1	%	Increase
GMWB hedging instruments
Equity options	46		Option model	Equity volatility	22	%	34	%	Increase
Customized swaps	124		Discounted cash flows	Equity volatility	10	%	40	%	Increase
Macro hedge program
Equity options	141		Option model	Equity volatility	27	%	28	%	Increase

	As of December 31, 2013
Freestanding Derivatives					Unobservable Inputs
	Fair Value		Predominant Valuation Method	Significant Unobservable Input	Minimum		Maximum		Impact of Increase in Input on Fair Value [1]
Interest rate derivative
Interest rate swaps	(24	)	Discounted cash flows	Swap curve beyond 30 years	4	%	4	%	Increase
Long interest rate swaptions	42		Option model	Interest rate volatility	1	%	1	%	Increase
GMWB hedging instruments
Equity options	72		Option model	Equity volatility	21	%	29	%	Increase
Customized swaps	74		Discounted cash flows	Equity volatility	10	%	50	%	Increase
Macro hedge program
Equity options	139		Option model	Equity volatility	24	%	31	%	Increase
International program hedging [2]
Equity options	(35	)	Option model	Equity volatility	24	%	37	%	Increase
Short interest rate swaptions	(13	)	Option model	Interest rate volatility	—	%	1	%	Decrease
Long interest rate swaptions	50		Option model	Interest rate volatility	1	%	1	%	Increase

[1] Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions.

[2] Excludes derivatives for which the Company based fair value on broker quotations.

Securities and derivatives for which the Company bases fair value on broker quotations predominately include ABS, CDOs, corporate, fixed maturities, FVO and certain credit derivatives. Due to the lack of transparency in the process brokers use to develop prices for these investments, the Company does not have access to the significant unobservable inputs brokers use to price these securities and derivatives. The Company believes however, the types of inputs brokers may use would likely be similar to those used to price securities and derivatives for which inputs are available to the Company, and therefore may include, but not be limited to, loss severity rates, constant prepayment rates, constant default rates and credit spreads. Therefore, similar to non broker priced securities and derivatives, generally, increases in these inputs would cause fair values to decrease. For the year ended December 31, 2014, no significant adjustments were made by the Company to broker prices received.

As of December 31, 2014 and 2013, excluded from the tables above are hedge funds where investment company accounting has been applied to a wholly-owned fund of funds measured at fair value which total $189 and $108, respectively, of Level 3 assets. The predominant valuation method uses a NAV calculated on a monthly basis and represents funds where the Company does not have the ability to redeem the investment in the near-term at that NAV, including an assessment of the investee's liquidity.

Product Derivatives

The Company formerly offered certain variable annuity products with GMWB riders. The GMWB provides the policyholder with a GRB which is generally equal to premiums less withdrawals.  If the policyholder’s account value is reduced to the specified level through a combination of market declines and withdrawals but the GRB still has value, the Company is obligated to continue to make annuity payments to the policyholder until the GRB is exhausted. Certain contract provisions can increase the GRB at contractholder election or after the passage of time. The GMWB represents an embedded derivative in the variable annuity contract. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host for measurement purposes. The embedded derivative is carried at fair value, with changes in fair value reported in net realized capital gains and losses. The Company’s GMWB liability is reported in other policyholder funds and benefits payable in the Consolidated Balance Sheets. The notional value of the embedded derivative is the GRB.

In valuing the embedded derivative, the Company attributes to the derivative a portion of the expected fees to be collected over the expected life of the contract from the contract holder equal to the present value of future GMWB claims. The excess of fees collected from the contract holder in the current period over the current period’s attributed fees are associated with the host variable annuity contract and reported in fee income.

GMWB Reinsurance Derivative

The Company has reinsurance arrangements in place to transfer a portion of its risk of loss due to GMWB. These arrangements are recognized as derivatives and carried at fair value in reinsurance recoverables. Changes in the fair value of the reinsurance agreements are reported in net realized capital gains and losses.

The fair value of the GMWB reinsurance derivative is calculated as an aggregation of the components described in the Living Benefits Required to be Fair Valued discussion below and is modeled using significant unobservable policyholder behavior inputs, identical to those used in calculating the underlying liability, such as lapses, fund selection, resets and withdrawal utilization and risk margins.

Living Benefits Required to be Fair Valued (in Other Policyholder Funds and Benefits Payable)

Fair values for GMWBs classified as embedded derivatives are calculated using the income approach based upon internally developed models because active, observable markets do not exist for those items. The fair value of these GMWBs and the related reinsurance and customized freestanding derivatives are calculated as an aggregation of the following components: Best Estimate Claim Payments; Credit Standing Adjustment; and Margins. The resulting aggregation is reconciled or calibrated, if necessary, to market information that is, or may be, available to the Company, but may not be observable by other market participants, including reinsurance discussions and transactions. The Company believes the aggregation of these components, as necessary and as reconciled or calibrated to the market information available to the Company, results in an amount that the Company would be required to transfer or receive, for an asset, to or from market participants in an active liquid market, if one existed, for those market participants to assume the risks associated with the guaranteed minimum benefits and the related reinsurance and customized derivatives. The fair value is likely to materially diverge from the ultimate settlement of the liability as the Company believes settlement will be based on our best estimate assumptions rather than those best estimate assumptions plus risk margins. In the absence of any transfer of the guaranteed benefit liability to a third party, the release of risk margins is likely to be reflected as realized gains in future periods’ net income. Each component described below is unobservable in the marketplace and require subjectivity by the Company in determining their value. Oversight of the Company's valuation policies and processes for product and GMWB reinsurance derivatives is performed by a multidisciplinary group comprised of finance, actuarial and risk management professionals. This multidisciplinary group reviews and approves changes and enhancements to the Company's valuation model as well as associated controls.

Best Estimate

Claim Payments

The Best Estimate Claim Payments is calculated based on actuarial and capital market assumptions related to projected cash flows, including the present value of benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior such as lapses, fund selection, resets and withdrawal utilization. For the customized derivatives, policyholder behavior is prescribed in the derivative contract. Because of the dynamic and complex nature of these cash flows, best estimate assumptions and a Monte Carlo stochastic process is used in valuation. The Monte Carlo stochastic process involves the generation of thousands of scenarios that assume risk neutral returns consistent with swap rates and a blend of observable implied index volatility levels. Estimating these cash flows involves numerous estimates and subjective judgments regarding a number of variables. These variables include expected market rates of return, market volatility, correlations of market index returns to funds, fund performance, discount rates, and assumptions about policyholder behavior which emerge over time.

At each valuation date, the Company assumes expected returns based on:

• risk-free rates as represented by the Eurodollar futures, LIBOR deposits and swap rates to derive forward curve rates;

• market implied volatility assumptions for each underlying index based primarily on a blend of observed market “implied volatility” data;

• correlations of historical returns across underlying well known market indices based on actual observed returns over the ten years preceding the valuation date; and

• three years of history for fund indexes compared to separate account fund regression.

On a daily basis, the Company updates capital market assumptions used in the GMWB liability model such as interest rates, equity indices and the blend of implied equity index volatilities. The Company monitors various aspects of policyholder behavior and may modify certain of its assumptions, including living benefit lapses and withdrawal rates, if credible emerging data indicates that changes are warranted. In addition, the Company will continue to evaluate policyholder behavior assumptions as we begin to implement initiatives to reduce the size of the variable annuity business. At a minimum, all policyholder behavior assumptions are reviewed and updated, as appropriate, in conjunction with the completion of the Company’s comprehensive study to refine its estimate of future gross profits during the third quarter of each year.

Credit Standing Adjustment

This assumption makes an adjustment that market participants would make, in determining fair value, to reflect the risk that guaranteed benefit obligations, or the GMWB reinsurance recoverables will not be fulfilled. The Company incorporates a blend of observable Company and reinsurer credit default spreads from capital markets, adjusted for market recoverability. The credit standing adjustment assumption, net of reinsurance, resulted in pre-tax realized gains (losses) of $3, $(13) and $(69), for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, the credit standing adjustment was $1 and $(1), respectively.

Margins

The behavior risk margin adds a margin that market participants would require, in determining fair value, for the risk that the Company’s assumptions about policyholder behavior could differ from actual experience. The behavior risk margin is calculated by taking the difference between adverse policyholder behavior assumptions and best estimate assumptions.

Assumption updates, including policyholder behavior assumptions, affected best estimates and margins for total pre-tax realized gains of $31, $75 and $274 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, the behavior risk margin was $74 and $108, respectively.

In addition to the non-market-based updates described above, the Company recognized non-market-based updates driven by the relative outperformance (underperformance) of the underlying actively managed funds as compared to their respective indices resulting in pre-tax realized gains (losses) of approximately $5, $33 and $106 for the years ended December 31, 2014, 2013 and 2012, respectively.

Significant unobservable inputs used in the fair value measurement of the GMWB embedded derivative and the GMWB reinsurance derivative are withdrawal utilization and withdrawal rates, lapse rates, reset elections and equity volatility. The following table provides quantitative information about the significant unobservable inputs and is applicable to all of the GMWB embedded derivative and the GMWB reinsurance derivative. Significant increases in any of the significant unobservable inputs, in isolation, will generally have an increase or decrease correlation with the fair value measurement, as shown in the table.

Significant Unobservable Input	Unobservable Inputs (Minimum)	Unobservable Inputs (Maximum)	Impact of Increase in Input on Fair Value Measurement [1]
Withdrawal Utilization [2]	20%	100%	Increase
Withdrawal Rates [3]	—%	8%	Increase
Lapse Rates [4]	—%	75%	Decrease
Reset Elections [5]	20%	75%	Increase
Equity Volatility [6]	10%	40%	Increase

[1] Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table.

[2] Range represents assumed cumulative percentages of policyholders taking withdrawals.

[3] Range represents assumed cumulative annual amount withdrawn by policyholders.

[4] Range represents assumed annual percentages of full surrender of the underlying variable annuity contracts across all policy durations for in force business.

[5] Range represents assumed cumulative percentages of policyholders that would elect to reset their guaranteed benefit base.

[6] Range represents implied market volatilities for equity indices based on multiple pricing sources.

Generally a change in withdrawal utilization assumptions would be accompanied by a directionally opposite change in lapse rate assumptions, as the behavior of policyholders that utilize GMWB riders is typically different from policyholders that do not utilize these riders.

Separate Account Assets

Separate account assets are primarily invested in mutual funds. Other separate account assets include fixed maturities, limited partnerships, equity securities, short-term investments and derivatives that are valued in the same manner, and using the same pricing sources and inputs, as those investments held by the Company. Separate account assets classified as Level 3 primarily include limited partnerships in which fair value represents the separate account's share of the fair value of the equity in the investment ("net asset value") and are classified in Level 3, based on the Company's ability to redeem its investments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The tables below provide fair value roll-forwards for the years ended December 31, 2014 and 2013, for the financial instruments classified as Level 3.

For the year ended December 31, 2014

	Fixed Maturities, AFS
Assets	ABS			CDOs			CMBS			Corporate			Foreign govt./govt. agencies			Municipal			RMBS			Total Fixed Maturities, AFS			Fixed Maturities, FVO
Fair value as of January 1, 2014	$	147		$	664		$	663		$	1,274		$	65		$	69		$	1,272		$	4,154		$	193
Total realized/unrealized gains (losses)
Included in net income [1], [2], [6]	—			12			28			(24		)	(2		)	—			11			25			19
Included in OCI [3]	3			(4		)	(27		)	10			9			7			12			10			—
Purchases	72			48			126			145			15			16			494			916			16
Settlements	(3		)	(60		)	(253		)	(46		)	(4		)	—			(193		)	(559		)	(136		)
Sales	(18		)	(12		)	(123		)	(205		)	(24		)	(1		)	(260		)	(643		)	(4		)
Transfers into Level 3 [4]	75			72			17			255			—			—			—			419			6
Transfers out of Level 3 [4]	(154		)	(97		)	(147		)	(369		)	—			(25		)	(55		)	(847		)	(2		)
Fair value as of December 31, 2014	$	122		$	623		$	284		$	1,040		$	59		$	66		$	1,281		$	3,475		$	92
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2014 [2] [7]	$	—		$	—		$	(3	)	$	(15	)	$	(2	)	$	—		$	(1	)	$	(21	)	$	16

				Freestanding Derivatives [5]
Assets (Liabilities)	Equity Securities, AFS			Credit			Foreign exchange contracts			Equity		Interest Rate			GMWB Hedging			Macro Hedge Program			Intl. Program Hedging			Other Contracts			Total Free- Standing Derivatives [5]
Fair value as of January 1, 2014	$	77		$	2		$	—		$	3	$	18		$	146		$	139		$	(29	)	$	17		$	296
Total realized/unrealized gains (losses)
Included in net income [1], [2], [6]	3			(4		)	2			3		(42		)	13			(12		)	28			(5		)	(17		)
Included in OCI [3]	2			—			—			—		—			—			—			—			—			—
Purchases	30			(7		)	—			—		19			4			14			9			—			39
Settlements	—			—			—			—		—			7			—			(41		)	—			(34		)
Sales	(14		)	—			—			—		—			—			—			—			—			—
Transfers into Level 3 [4]	—			—			(2		)	—		—			—			—			—			—			(2		)
Transfers out of Level 3 [4]	—			—			—			—		(2		)	—			—			33			—			31
Fair value as of December 31, 2014	$	98		$	(9	)	$	—		$	6	$	(7	)	$	170		$	141		$	—		$	12		$	313
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2014 [2] [7]	$	(2	)	$	(4	)	$	—		$	1	$	(43	)	$	(1	)	$	(11	)	$	(18	)	$	(3	)	$	(79	)

Assets	Limited Partnerships and Other Alternative Investments			Reinsurance  Recoverable for GMWB		Separate Accounts
Fair value as of January 1, 2014	$	108		$	29	$	737
Total realized/unrealized gains (losses)
Included in net income [1] [2] [6]	1			4		13
Included in OCI [3]	—			—		—
Purchases	130			—		339
Settlements	—			23		(3		)
Sales	(24		)	—		(201		)
Transfers into Level 3 [4]	53			—		37
Transfers out of Level 3 [4]	(79		)	—		(344		)
Fair value as of December 31, 2014	$	189		$	56	$	578
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2014 [2] [7]	$	1		$	4	$	8

	Other Policyholder Funds and Benefits Payable
Liabilities	Guaranteed Withdrawal Benefits			International Guaranteed Living Benefits			International Other Living Benefits			Equity Linked Notes			Total Other Policyholder Funds and Benefits Payable			Consumer Notes
Fair value as of January 1, 2014	$	(36	)	$	3		$	3		$	(18	)	$	(48	)	$	(2	)
Total realized/unrealized gains (losses)
Included in net income [1] [2] [6]	(2		)	—			—			(8		)	(10		)	(1		)
Settlements	(101		)	(3		)	(3		)	—			(107		)	—
Fair value as of December 31, 2014	$	(139	)	$	—		$	—		$	(26	)	$	(165	)	$	(3	)
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2014 [2] [7]	$	(2	)	$	—		$	—		$	(8	)	$	(10	)	$	(1	)

For the year ended December 31, 2013

	Fixed Maturities, AFS
Assets	ABS			CDOs			CMBS			Corporate			Foreign govt./govt. agencies			Municipal			RMBS			Total Fixed Maturities, AFS			Fixed Maturities, FVO
Fair value as of January 1, 2013	$	278		$	944		$	859		$	2,001		$	56		$	227		$	1,373		$	5,738		$	214
Total realized/unrealized gains (losses)
Included in net income [1], [2], [6]	(9		)	22			(27		)	5			(2		)	2			38			29			59
Included in OCI [3]	31			138			115			(12		)	(9		)	(11		)	52			304			—
Purchases	96			92			50			180			45			21			371			855			19
Settlements	(8		)	(126		)	(142		)	(132		)	(4		)	—			(186		)	(598		)	(3		)
Sales	(139		)	(365		)	(208		)	(403		)	(15		)	(126		)	(375		)	(1,631		)	(94		)
Transfers into Level 3 [4]	3			32			65			149			—			—			—			249			2
Transfers out of Level 3 [4]	(105		)	(73		)	(49		)	(514		)	(6		)	(44		)	(1		)	(792		)	(4		)
Fair value as of December 31, 2013	$	147		$	664		$	663		$	1,274		$	65		$	69		$	1,272		$	4,154		$	193
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]	$	(7	)	$	—		$	(10	)	$	(9	)	$	—		$	—		$	(1	)	$	(27	)	$	43

				Freestanding Derivatives [5]
Assets (Liabilities)	Equity Securities, AFS			Credit			Equity			Interest Rate			GMWB Hedging			Macro Hedge Program			Intl. Program Hedging			Other Contracts			Total Free- Standing Derivatives [5]
Fair value as of January 1, 2013	$	84		$	4		$	57		$	(32	)	$	519		$	286		$	68		$	23		$	925
Total realized/unrealized gains (losses)
Included in net income [1], [2], [6]	(15		)	—			(37		)	24			(372		)	(191		)	(112		)	(6		)	(694		)
Included in OCI [3]	6			—			—			—			—			—			—			—			—
Purchases	14			—			—			(3		)	—			44			(38		)	—			3
Settlements	—			(2		)	(7		)	3			(4		)	—			(1		)	—			(11		)
Sales	(3		)	—			—			—			—			—			—			—			—
Transfers into Level 3 [4]	—			—			—			—			—			—			(8		)	—			(8		)
Transfers out of Level 3 [4]	(9		)	—			(10		)	26			3			—			62			—			81
Fair value as of December 31, 2013	$	77		$	2		$	3		$	18		$	146		$	139		$	(29	)	$	17		$	296
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]	$	(15	)	$	(1	)	$	(22	)	$	9		$	(390	)	$	(187	)	$	(382	)	$	(6	)	$	(979	)

Assets	Limited Partnerships and Other Alternative Investments			Reinsurance Recoverable for GMWB			Separate Accounts
Fair value as of January 1, 2013	$	314		$	191		$	583
Total realized/unrealized gains (losses)
Included in net income [1] [2] [6]	(18		)	(192		)	23
Purchases	135			—			250
Settlements	—			30			(2		)
Sales	(22		)	—			(88		)
Transfers into Level 3 [4]	—			—			45
Transfers out of Level 3 [4]	(301		)	—			(74		)
Fair value as of December 31, 2013	$	108		$	29		$	737
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]	$	(18	)	$	(192	)	$	21

	Other Policyholder Funds and Benefits Payable
Liabilities	Guaranteed Withdrawal Benefits			International Guaranteed Living Benefits			International Other Living Benefits			Equity Linked Notes			Total Other Policyholder Funds and Benefits Payable			Consumer Notes
Fair value as of January 1, 2013	$	(1,249	)	$	(50	)	$	2		$	(7	)	$	(1,304	)	$	(2	)
Total realized/unrealized gains (losses)
Included in net income [1] [2] [6]	1,306			13			3			(10		)	1,312			—
Settlements	(93		)	40			(2		)	(1		)	(56		)	—
Fair value as of December 31, 2013	$	(36	)	$	3		$	3		$	(18	)	$	(48	)	$	(2	)
Changes in unrealized gains (losses) included in net income related to financial instruments still held at December 31, 2013 [2] [7]	$	1,306		$	13		$	3		$	(10	)	$	1,312		$	—

[1] The Company classifies gains and losses on GMWB reinsurance derivatives and GMWB embedded derivatives as unrealized gains (losses) for purposes of disclosure in this table because it is impracticable to track on a contract-by-contract basis the realized gains (losses) for these derivatives and embedded derivatives.

[2] All amounts in these rows are reported in net realized capital gains/losses. The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on net income for the Company. All amounts are before income taxes and amortization DAC.

[3] All amounts are before income taxes and amortization of DAC.

[4] Transfers in and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

[5] Derivative instruments are reported in this table on a net basis for asset/(liability) positions and reported in the Consolidated Balance Sheets in other investments and other liabilities.

[6] Includes both market and non-market impacts in deriving realized and unrealized gains (losses).

[7] Amounts presented are for Level 3 only and therefore may not agree to other disclosures included herein.

Fair Value Option

The Company classifies the underlying fixed maturities held in certain consolidated investment funds within the Fixed Maturities, FVO line on the Consolidated Balance Sheets. The Company reports consolidated investment companies at fair value with changes in the fair value of these securities recognized in net realized capital gains and losses, which is consistent with accounting requirements for investment companies. The investment funds hold fixed income securities in multiple sectors and the Company has management and control of the funds as well as a significant ownership interest.

FVO investments also include certain securities that contain embedded credit derivatives with underlying credit risk primarily related to residential and commercial real estate.

The Company also elected the fair value option for certain equity securities in order to align the accounting with total return swap contracts that hedge the risk associated with the investments. The swaps do not qualify for hedge accounting and the change in value of both the equity securities and the total return swap are recorded in net realized capital gains and losses. These equity securities are classified within equity securities, AFS on the Consolidated Balance Sheets. Income earned from FVO securities is recorded in net investment income and changes in fair value are recorded in net realized capital gains and losses.

The Company previously held fair value option investments in foreign government securities that aligned with the accounting for yen-based fixed annuity liabilities, which are adjusted for changes in foreign-exchange spot rates. These investments were previously held in a U.S. subsidiary and were disposed of as a consequence of the recapture of certain risks by HLIKK. For further discussion on the sale, see the Sale of Hartford Life Insurance KK section in Note 2 - Business Dispositions of Notes to Consolidated Financial Statements. The change in fair value on these investments was previously recorded as a component of net realized capital gains and losses, but has been reclassified to discontinued operations.

The following table presents the changes in fair value of those assets and liabilities accounted for using the fair value option reported in net realized capital gains and losses in the Company’s Consolidated Statements of Operations.

	For the years ended December 31,
	2014			2013
Assets
Fixed maturities, FVO
Corporate	$	(3	)	$	(13	)
CRE CDOs	18			11
Foreign government	—			(4		)
RMBS	(1		)	—
Total fixed maturities, FVO	$	14		$	(6	)
Equity, FVO	(3		)	—
Total realized capital gains (losses)	$	11		$	(6	)

The following table presents the fair value of assets and liabilities accounted for using the fair value option included in the Company’s Consolidated Balance Sheets.

	As of December 31,
	2014		2013
Assets
Fixed maturities, FVO
ABS	$	15	$	3
CRE CDOs	69		183
CMBS	22		8
Corporate	133		92
Foreign government	30		518
U.S. government	2		24
Municipals	2		1
RMBS	215		15
Total fixed maturities, FVO	$	488	$	844
Equity, FVO [1]	$	348	$	—

[1] Included in equity securities, AFS on the Consolidated Balance Sheets.

Financial Instruments Not Carried at Fair Value

The following table presents carrying amounts and fair values of The Hartford’s financial instruments not carried at fair value and not included in the above fair value discussion as of December 31, 2014 and 2013.

		December 31, 2014				December 31, 2013
	Fair Value Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets
Policy loans	Level 3	$	1,431	$	1,431	$	1,420	$	1,480
Mortgage loans	Level 3	5,556		5,840		5,598		5,641
Liabilities
Other policyholder funds and benefits payable [1]	Level 3	$	7,304	$	7,522	$	9,152	$	9,352
Senior notes [2]	Level 2	5,009		5,837		5,206		5,845
Junior subordinated debentures [2]	Level 2	1,100		1,291		1,100		1,271
Revolving credit facility	Level 2	—		—		238		238
Consumer notes [3] [4]	Level 3	68		68		82		82
Assumed investment contracts [4]	Level 3	763		851		—		—

[1] Excludes guarantees on variable annuities, group accident and health and universal life insurance contracts, including corporate owned life insurance.

[2] Included in long-term debt in the Consolidated Balance Sheets, except for current maturities, which are included in short-term debt.

[3] Excludes amounts carried at fair value and included in preceding disclosures.

[4] Included in other liabilities in the Consolidated Balance Sheets.

Fair values for policy loans were determined using current loan coupon rates, which reflect the current rates available under the contracts. As a result, the carrying value approximates the fair value of the policy loans. During the second quarter of 2014, the Company changed the valuation technique used to estimate the fair value of policy loans, which previously was estimated by utilizing discounted cash flow calculations, using U.S. Treasury interest rates, based on the loan durations.

Fair values for mortgage loans were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans.

Fair values for other policyholder funds and benefits payable, and assumed investment contracts, not carried at fair value, are estimated based on the cash surrender values of the underlying policies or by estimating future cash flows discounted at current interest rates adjusted for credit risk.

Fair values for senior notes and junior subordinated debentures are determined using the market approach based on reported trades, benchmark interest rates and issuer spread for the Company which may consider credit default swaps.

Fair values for consumer notes were estimated using discounted cash flow calculations using current interest rates adjusted for estimated loan durations.