Investments and Derivative Instruments Level 1 (Notes)

12 Months Ended

Dec. 31, 2014

Investments and Derivative Instruments [Abstract]

Investments and Derivative Instruments [Text Block]

Net Investment Income (Loss)

	For the years ended December 31,
(Before-tax)	2014			2013			2012
Fixed maturities [1]	$	2,420		$	2,552		$	3,299
Equity securities, AFS	38			30			36
Mortgage loans	265			260			334
Policy loans	80			83			119
Limited partnerships and other alternative investments	294			287			196
Other investments [2]	179			167			248
Investment expenses	(122		)	(115		)	(105		)
Total net investment income	$	3,154		$	3,264		$	4,127

[1] Includes net investment income on short-term investments.

[2] Includes income from derivatives that hedge fixed maturities and qualify for hedge accounting.

Net Realized Capital Gains (Losses)

	For the years ended December 31,
(Before-tax)	2014			2013			2012
Gross gains on sales [1]	$	527		$	2,313		$	801
Gross losses on sales	(250		)	(659		)	(420		)
Net OTTI losses recognized in earnings [2]	(59		)	(73		)	(349		)
Valuation allowances on mortgage loans	(4		)	(1		)	14
Periodic net coupon settlements on credit derivatives	1			(8		)	(18		)
Results of variable annuity hedge program
GMWB derivatives, net	5			262			519
Macro hedge program	(11		)	(234		)	(340		)
Total results of variable annuity hedge program	(6		)	28			179
Other, net [3]	(193		)	198			290
Net realized capital gains	$	16		$	1,798		$	497

[1] Includes $1.5 billion of gains relating to the sales of the Retirement Plans and Individual Life businesses in the year ended December 31, 2013.

[2] Includes $177 of intent-to-sell impairments relating to the Retirement Plans and Individual Life businesses sold for the year ended December 31, 2012.

[3] Primarily consists of changes in the value of non-qualifying derivatives, including interest rate derivatives used to manage the risk of a rise in interest rates and manage duration, transactional foreign currency revaluation gains (losses) on the Japan fixed payout annuity liabilities assumed from HLIKK and gains (losses) on non-qualifying derivatives used to hedge the foreign currency exposure of the liabilities. For the years ended December 31, 2014, 2013, and 2012, gains (losses) from transactional foreign currency revaluation of the Japan fixed payout annuity liabilities were $116, $250, and $189, respectively. For the years ended December 31, 2014, 2013, and 2012, gains (losses) on instruments used to hedge the foreign currency exposure on the fixed payout annuities were $(148), $(268), and $(300), respectively. Also includes $71 and $110 of gains relating to the sales of the Retirement Plans and Individual Life businesses for the years ended December 31, 2013 and 2012, respectively.

Net realized capital gains and losses from investment sales are reported as a component of revenues and are determined on a specific identification basis. Before tax, net gains and losses on sales and impairments previously reported as unrealized gains in AOCI were $217, $1.5 billion, and $32 for the years ended December 31, 2014, 2013, and 2012, respectively.

Sales of Available-for-Sale Securities

	For the years ended December 31,
	2014			2013			2012
Fixed maturities, AFS
Sale proceeds	$	22,923		$	39,225		$	41,442
Gross gains [1]	456			2,143			825
Gross losses	(182		)	(645		)	(399		)
Equity securities, AFS
Sale proceeds	$	354		$	274		$	295
Gross gains	22			96			34
Gross losses	(20		)	(6		)	(20		)

[1] Includes $1.5 billion of gross gains related to the sale of the Individual Life and Retirement Plans businesses for the year ended December 31, 2013.

Sales of AFS securities in 2014 were primarily a result of duration and liquidity management, as well as tactical changes to the portfolio as a result of changing market conditions.

Other-Than-Temporary Impairment Losses

The following table presents a roll-forward of the Company’s cumulative credit impairments on debt securities held as of December 31, 2014, 2013 and 2012.

	For the years ended December 31,
(Before-tax)	2014			2013			2012
Balance as of beginning of period	$	(552	)	$	(1,013	)	$	(1,676	)
Additions for credit impairments recognized on [1]:
Securities not previously impaired	(15		)	(19		)	(28		)
Securities previously impaired	(22		)	(13		)	(20		)
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period	138			469			700
Securities the Company made the decision to sell or more likely than not will be required to sell	—			2			—
Securities due to an increase in expected cash flows	27			22			11
Balance as of end of period	$	(424	)	$	(552	)	$	(1,013	)

[1] These additions are included in the net OTTI losses recognized in earnings in the Consolidated Statements of Operations.

Available-for-Sale Securities

The following table presents the Company’s AFS securities by type.

	December 31, 2014												December 31, 2013
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non- Credit OTTI [1]			Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non- Credit OTTI [1]
ABS	$	2,470	$	39	$	(37	)	$	2,472	$	(1	)	$	2,404	$	25	$	(64	)	$	2,365	$	(2	)
CDOs [2]	2,776		98		(36		)	2,841		—			2,340		108		(59		)	2,387		—
CMBS	4,235		196		(16		)	4,415		(6		)	4,288		216		(58		)	4,446		(6		)
Corporate	25,188		2,382		(211		)	27,359		(3		)	27,013		1,823		(346		)	28,490		(7		)
Foreign govt./govt. agencies	1,592		73		(29		)	1,636		—			4,228		52		(176		)	4,104		—
Municipal	11,735		1,141		(5		)	12,871		—			11,932		425		(184		)	12,173		—
RMBS	3,815		122		(19		)	3,918		(1		)	4,639		90		(82		)	4,647		(4		)
U.S. Treasuries	3,551		326		(5		)	3,872		—			3,797		7		(59		)	3,745		—
Total fixed maturities, AFS	55,362		4,377		(358		)	59,384		(11		)	60,641		2,746		(1,028		)	62,357		(19		)
Equity securities, AFS [3]	676		50		(27		)	699		—			850		67		(49		)	868		—
Total AFS securities	$	56,038	$	4,427	$	(385	)	$	60,083	$	(11	)	$	61,491	$	2,813	$	(1,077	)	$	63,225	$	(19	)

[1] Represents the amount of cumulative non-credit OTTI losses recognized in OCI on securities that also had credit impairments. These losses are included in gross unrealized losses as of December 31, 2014 and 2013.

[2] Gross unrealized gains (losses) exclude the fair value of bifurcated embedded derivative features of certain securities. Subsequent changes in value will be recorded in net realized capital gains (losses).

[3] As of December 31, 2014, excludes equity securities, FVO, with a cost of $351 and fair value of $348, which are included in equity securities, AFS on the Consolidated Balance Sheets.

The following table presents the Company’s fixed maturities, AFS, by contractual maturity year.

	December 31, 2014				December 31, 2013
Contractual Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	2,141	$	2,168	$	2,195	$	2,228
Over one year through five years	11,264		11,827		11,930		12,470
Over five years through ten years	8,802		9,226		10,814		11,183
Over ten years	19,859		22,517		22,031		22,631
Subtotal	42,066		45,738		46,970		48,512
Mortgage-backed and asset-backed securities	13,296		13,646		13,671		13,845
Total fixed maturities, AFS	$	55,362	$	59,384	$	60,641	$	62,357

Estimated maturities may differ from contractual maturities due to security call or prepayment provisions. Due to the potential for variability in payment spreads (i.e. prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity.

Concentration of Credit Risk

The Company aims to maintain a diversified investment portfolio including issuer, sector and geographic stratification, where applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk.

The Company did not have exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity, other than the U.S. government and certain U.S. government securities as of December 31, 2014. As of December 31, 2013, the Company's only exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity, other than the U.S. government and certain U.S. government securities, was the Government of Japan, which represents $2.6 billion, or 14% of stockholders' equity, and 3% of total invested assets. As of December 31, 2014, other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were the State of Illinois, JP Morgan Chase &Co., and Goldman Sachs Group Inc. which each comprised less than 1% of total invested assets. As of December 31, 2013, other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were the Government of Japan, Goldman Sachs Group Inc., and State of Illinois which each comprised less than 4% of total invested assets. The Company’s three largest exposures by sector as of December 31, 2014 were municipal securities, financial services, and utilities which comprised approximately 17%, 7% and 6%, respectively, of total invested assets. The Company’s three largest exposures by sector as of December 31, 2013 were municipal investments, utilities, and financial services which comprised approximately 15%, 8% and 7%, respectively, of total invested assets.

Security Unrealized Loss Aging

The following tables present the Company’s unrealized loss aging for AFS securities by type and length of time the security was in a continuous unrealized loss position.

	December 31, 2014
	Less Than 12 Months							12 Months or More							Total
	Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses
ABS	$	897	$	893	$	(4	)	$	473	$	440	$	(33	)	$	1,370	$	1,333	$	(37	)
CDOs [1]	748		743		(5		)	1,489		1,461		(31		)	2,237		2,204		(36		)
CMBS	230		227		(3		)	319		306		(13		)	549		533		(16		)
Corporate	3,082		2,980		(102		)	1,177		1,068		(109		)	4,259		4,048		(211		)
Foreign govt./govt. agencies	363		349		(14		)	227		212		(15		)	590		561		(29		)
Municipal	74		73		(1		)	86		82		(4		)	160		155		(5		)
RMBS	320		318		(2		)	433		416		(17		)	753		734		(19		)
U.S. Treasuries	432		431		(1		)	361		357		(4		)	793		788		(5		)
Total fixed maturities, AFS	6,146		6,014		(132		)	4,565		4,342		(226		)	10,711		10,356		(358		)
Equity securities, AFS [2]	172		160		(12		)	102		87		(15		)	274		247		(27		)
Total securities in an unrealized loss position	$	6,318	$	6,174	$	(144	)	$	4,667	$	4,429	$	(241	)	$	10,985	$	10,603	$	(385	)

	December 31, 2013
	Less Than 12 Months							12 Months or More							Total
	Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses
ABS	$	893	$	888	$	(5	)	$	477	$	418	$	(59	)	$	1,370	$	1,306	$	(64	)
CDOs [1]	137		135		(2		)	1,933		1,874		(57		)	2,070		2,009		(59		)
CMBS	812		788		(24		)	610		576		(34		)	1,422		1,364		(58		)
Corporate	4,922		4,737		(185		)	1,225		1,064		(161		)	6,147		5,801		(346		)
Foreign govt./govt. agencies	2,961		2,868		(93		)	343		260		(83		)	3,304		3,128		(176		)
Municipal	3,150		2,994		(156		)	190		162		(28		)	3,340		3,156		(184		)
RMBS	2,046		2,008		(38		)	591		547		(44		)	2,637		2,555		(82		)
U.S. Treasuries	2,914		2,862		(52		)	33		26		(7		)	2,947		2,888		(59		)
Total fixed maturities, AFS	17,835		17,280		(555		)	5,402		4,927		(473		)	23,237		22,207		(1,028		)
Equity securities, AFS [2]	196		188		(8		)	223		182		(41		)	419		370		(49		)
Total securities in an unrealized loss position	$	18,031	$	17,468	$	(563	)	$	5,625	$	5,109	$	(514	)	$	23,656	$	22,577	$	(1,077	)

[1] Unrealized losses exclude the change in fair value of bifurcated embedded derivative features of certain securities. Subsequent changes in fair value are recorded in net realized capital gains (losses).

[2] As of December 31, 2014, excludes equity securities, FVO which are included in equity securities, AFS on the Consolidated Balance Sheets.

As of December 31, 2014, AFS securities in an unrealized loss position, consisted of 3,065 securities, primarily in the corporate sector, which are depressed primarily due to an increase in interest rates and/or wider credit spreads since the securities were purchased. As of December 31, 2014, 92% of these securities were depressed less than 20% of cost or amortized cost. The decrease in unrealized losses during 2014 was primarily attributable to a decrease in interest rates.

Most of the securities depressed for twelve months or more relate to certain floating rate corporate securities with greater than 10 years to maturity concentrated in the financial services sector and structured securities with exposure to commercial and residential real estate. Corporate securities are primarily depressed because the securities have floating-rate coupons and have long-dated maturities or are perpetual and current credit spreads are wider than when these securities were purchased. For certain commercial and residential real estate securities, current market spreads continue to be wider than spreads at the securities' respective purchase dates, even though credit spreads have continued to tighten over the past five years. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined above.

Mortgage Loans

	December 31, 2014							December 31, 2013
	Amortized Cost [1]		Valuation Allowance			Carrying Value		Amortized Cost [1]		Valuation Allowance			Carrying Value
Total commercial mortgage loans	$	5,574	$	(18	)	$	5,556	$	5,665	$	(67	)	$	5,598

[1] Amortized cost represents carrying value prior to valuation allowances, if any.

As of December 31, 2014 and 2013, the carrying value of mortgage loans associated with the valuation allowance was $140 and $191, respectively. Included in the table above are mortgage loans held-for-sale with a carrying value and valuation allowance of $61 and $3, respectively, as of December 31, 2013. The carrying value of these loans is included in mortgage loans in the Company’s Consolidated Balance Sheets. There were no mortgage loans held-for-sale as of December 31, 2014. As of December 31, 2014, loans within the Company’s mortgage loan portfolio that have had extensions or restructurings other than what is allowable under the original terms of the contract are immaterial.

The following table presents the activity within the Company’s valuation allowance for mortgage loans. These loans have been evaluated both individually and collectively for impairment. Loans evaluated collectively for impairment are immaterial.

	For the years ended December 31,
	2014			2013			2012
Balance as of January 1	$	(67	)	$	(68	)	$	(102	)
(Additions)/Reversals	(4		)	(2		)	14
Deductions	53			3			20
Balance as of December 31	$	(18	)	$	(67	)	$	(68	)

The decline in the valuation allowance as compared to December 31, 2013 resulted from the sale of the underlying collateral supporting one commercial mortgage loan. The loan was fully reserved for and the Company did not recover any proceeds as a result of the sale.

The weighted-average LTV ratio of the Company’s commercial mortgage loan portfolio was 57% as of December 31, 2014, while the weighted-average LTV ratio at origination of these loans was 62%. LTV ratios compare the loan amount to the value of the underlying property collateralizing the loan. The loan values are updated no less than annually through property level reviews of the portfolio. Factors considered in the property valuation include, but are not limited to, actual and expected property cash flows, geographic market data and capitalization rates. DSCRs compare a property’s net operating income to the borrower’s principal and interest payments. The weighted average DSCR of the Company’s commercial mortgage loan portfolio was 2.51x as of December 31, 2014. As of December 31, 2014, the Company held only one delinquent commercial mortgage loan past due by 90 days or more. The carrying value and valuation allowance of this loan totaled $7 and $0, respectively, and was not accruing income. As of December 31, 2013, the Company held one delinquent commercial mortgage loan past due by 90 days or more. This loan had a total carrying value and valuation allowance totaled $0 and $50, respectively, and was not accruing income.

The following table presents the carrying value of the Company’s commercial mortgage loans by LTV and DSCR.

Commercial Mortgage Loans Credit Quality
	December 31, 2014			December 31, 2013
Loan-to-value	Carrying Value		Avg. Debt-Service Coverage Ratio	Carrying Value		Avg. Debt-Service Coverage Ratio
Greater than 80%	$	53	1.07x	$	101	0.99x
65% - 80%	789		1.75x	1,195		1.82x
Less than 65%	4,714		2.66x	4,302		2.53x
Total commercial mortgage loans	$	5,556	2.51x	$	5,598	2.34x

The following tables present the carrying value of the Company’s mortgage loans by region and property type.

Mortgage Loans by Region
	December 31, 2014				December 31, 2013
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	211	3.8	%	$	187	3.3	%
Middle Atlantic	468		8.4	%	409		7.3	%
Mountain	88		1.6	%	104		1.9	%
New England	381		6.9	%	353		6.3	%
Pacific	1,607		29.0	%	1,587		28.3	%
South Atlantic	1,019		18.3	%	899		16.1	%
West North Central	44		0.8	%	47		0.8	%
West South Central	302		5.4	%	338		6.0	%
Other [1]	1,436		25.8	%	1,674		30.0	%
Total mortgage loans	$	5,556	100.0	%	$	5,598	100.0	%

[1] Primarily represents loans collateralized by multiple properties in various regions.

Mortgage Loans by Property Type
	December 31, 2014				December 31, 2013
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Agricultural	$	46	0.8	%	$	125	2.2	%
Industrial	1,476		26.6	%	1,718		30.7	%
Lodging	26		0.5	%	27		0.5	%
Multifamily	1,190		21.4	%	1,155		20.6	%
Office	1,517		27.3	%	1,278		22.8	%
Retail	1,147		20.6	%	1,140		20.4	%
Other	154		2.8	%	155		2.8	%
Total mortgage loans	$	5,556	100.0	%	$	5,598	100.0	%

Variable Interest Entities

The Company is involved with various special purpose entities and other entities that are deemed to be VIEs primarily as a collateral or investment manager and as an investor through normal investment activities, as well as a means of accessing capital through a contingent capital facility. For further information on the facility, see Note 12 - Debt of Notes to Consolidated Financial Statements.

A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest or lacks sufficient funds to finance its own activities without financial support provided by other entities.

The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the Company’s Consolidated Financial Statements.

Consolidated VIEs

The following table presents the carrying value of assets and liabilities, and the maximum exposure to loss relating to the VIEs for which the Company is the primary beneficiary. Creditors have no recourse against the Company in the event of default by these VIEs nor does the Company have any implied or unfunded commitments to these VIEs. The Company’s financial or other support provided to these VIEs is limited to its collateral or investment management services and original investment.

	December 31, 2014						December 31, 2013
	Total Assets		Total Liabilities [1]		Maximum Exposure to Loss [2]		Total Assets		Total Liabilities [1]		Maximum Exposure to Loss [2]
CDOs [3]	$	5	$	5	$	—	$	31	$	33	$	—
Investment funds [4]	238		—		243		164		—		173
Limited partnerships and other alternative investments	3		1		2		4		—		4
Total	$	246	$	6	$	245	$	199	$	33	$	177

[1] Included in other liabilities in the Company’s Consolidated Balance Sheets.

[2] The maximum exposure to loss represents the maximum loss amount that the Company could recognize as a reduction in net investment income or as a realized capital loss and is the cost basis of the Company’s investment.

[3] Total assets included in fixed maturities, AFS and short-term investments, or cash in the Company’s Consolidated Balance Sheets.

[4] Total assets included in fixed maturities, FVO, short-term investments, and equity, AFS in the Company's Consolidated Balance Sheets.

CDOs represent structured investment vehicles for which the Company has a controlling financial interest as it provides collateral management services, earns a fee for those services and also holds investments in the securities issued by these vehicles. Investment funds represent wholly-owned fixed income funds for which the Company has management and control of the investments which is the activity that most significantly impacts its economic performance. Limited partnerships represent one hedge fund for which the Company holds a majority interest in the fund as an investment.

Non-Consolidated VIEs

The Company holds a significant variable interest for one VIE for which it is not the primary beneficiary and, therefore, was not consolidated on the Company’s Consolidated Balance Sheets. This VIE represents a contingent capital facility (“facility”) that has been held by the Company since February 2007 for which the Company has no implied or unfunded commitments. Assets and liabilities recorded for the facility were $12 and $14 as of December 31, 2014, respectively, and $17 and $19, respectively, as of December 31, 2013. Additionally, the Company has a maximum exposure to loss of $3 and $3, respectively, as of December 31, 2014 and 2013, which represents the issuance costs that were incurred to establish the facility. The Company does not have a controlling financial interest as it does not manage the assets of the facility nor does it have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the facility, as the asset manager has significant variable interest in the vehicle. The Company’s financial or other support provided to the facility is limited to providing ongoing support to cover the facility’s operating expenses. For further information on the facility, see Note 12 - Debt of Notes to Consolidated Financial Statements.

In addition, the Company, through normal investment activities, makes passive investments in structured securities issued by VIEs for which the Company is not the manager which are included in ABS, CDOs, CMBS and RMBS in the Available-for-Sale Securities table and fixed maturities, FVO, in the Company’s Consolidated Balance Sheets. The Company has not provided financial or other support with respect to these investments other than its original investment. For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum exposure to loss on these investments is limited to the amount of the Company’s investment.

Repurchase Agreements, Dollar Roll Transactions and Other Collateral Transactions

From time to time, the Company enters into repurchase agreements and dollar roll transactions to manage liquidity or to earn incremental spread income. A repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities at a specified price at a later date. A dollar roll is a type of repurchase agreement where a mortgage backed security is sold with an agreement to repurchase substantially the same security at a specified time in the future. These transactions generally have a contractual maturity of ninety days or less and the carrying amounts of these instruments approximates fair value.

As part of repurchase agreements and dollar roll transactions, the Company transfers collateral of U.S. government and government agency securities and receives cash. For the repurchase agreements, the Company obtains cash in an amount equal to at least 95% of the fair value of the securities transferred. The agreements contain contractual provisions that require additional collateral to be transferred when necessary and provide the counterparty the right to sell or re-pledge the securities transferred. The cash received from the repurchase program is typically invested in short-term investments or fixed maturities. Repurchase agreements include master netting provisions that provide the counterparties the right to offset claims and apply securities held by them with respect to their obligations in the event of a default. Although the Company has the contractual right to offset claims, fixed maturities do not meet the specific conditions for net presentation under U.S. GAAP. The Company accounts for the repurchase agreements and dollar roll transactions as collateralized borrowings. The securities transferred under repurchase agreements and dollar roll transactions are included in fixed maturities, AFS with the obligation to repurchase those securities recorded in other liabilities on the Company's Consolidated Balance Sheets.

The Company had no outstanding repurchase agreements or dollar roll transactions as of December 31, 2014 or December 31, 2013.

The Company is required by law to deposit securities with government agencies in certain states in which it conducts business. As of December 31, 2014 and 2013, the fair value of securities on deposit was approximately $2.5 billion and $1.9 billion, respectively.

As of December 31, 2013, the Company pledged as collateral $272 in Japan government bonds reported in fixed maturities, AFS, associated with short-term debt of $238. The collateral and short-term debt were related to the Japan variable and fixed annuity business and were transferred to the Buyer as of June 30, 2014.

As of December 31, 2014 and 2013, the Company has pledged as collateral $34 and $34, respectively, of U.S. government securities and government agency securities for letters of credit.

Refer to Derivative Collateral Arrangements section of this note for disclosure of collateral in support of derivative transactions.

Equity Method Investments

The majority of the Company's investments in limited partnerships and other alternative investments, including hedge funds, mortgage and real estate funds, mezzanine debt funds, and private equity and other funds (collectively, “limited partnerships”), are accounted for under the equity method of accounting. The Company’s maximum exposure to loss as of December 31, 2014 is limited to the total carrying value of $2.9 billion. In addition, the Company has outstanding commitments totaling $604 to fund limited partnership and other alternative investments as of December 31, 2014. The Company’s investments in limited partnerships are generally of a passive nature in that the Company does not take an active role in the management of the limited partnerships. In 2014, aggregate investment income from limited partnerships and other alternative investments exceeded 10% of the Company’s pre-tax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for the Company’s limited partnership investments. This aggregated summarized financial data does not represent the Company’s proportionate share of limited partnership assets or earnings. Aggregate total assets of the limited partnerships in which the Company invested totaled $85.8 billion and $85.6 billion as of December 31, 2014 and 2013, respectively. Aggregate total liabilities of the limited partnerships in which the Company invested totaled $10.6 billion and $11.4 billion as of December 31, 2014 and 2013, respectively. Aggregate net investment income of the limited partnerships in which the Company invested totaled $3.6 billion, $1.8 billion and $1.0 billion for the periods ended December 31, 2014, 2013 and 2012, respectively. Aggregate net income of the limited partnerships in which the Company invested totaled $9.6 billion, $8.4 billion and $7.2 billion for the periods ended December 31, 2014, 2013 and 2012, respectively. As of, and for the period ended, December 31, 2014, the aggregated summarized financial data reflects the latest available financial i

Derivative Instruments

The Company utilizes a variety of OTC, OTC-cleared and exchange traded derivative instruments as a part of its overall risk management strategy as well as to enter into replication transactions. Derivative instruments are used to manage risk associated with interest rate, equity market, credit spread, issuer default, price, and currency exchange rate risk or volatility. Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that would be permissible investments under the Company’s investment policies. The Company also may enter into and has previously issued financial instruments and products that either are accounted for as free-standing derivatives, such as certain reinsurance contracts, or may contain features that are deemed to be embedded derivative instruments, such as the GMWB rider included with certain variable annuity products.

Strategies that qualify for hedge accounting

Certain derivatives the Company enters into satisfy the hedge accounting requirements as outlined in Note 1 of these financial statements. Typically, these hedge relationships include interest rate and foreign currency swaps where the terms or expected cash flows of the securities being hedged closely match the terms of the swap. The swaps are typically used to manage interest rate duration of certain fixed maturity securities or liability contracts. The hedge strategies by hedge accounting designation include:

Cash flow hedges

Interest rate swaps are predominantly used to manage portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities. These derivatives primarily convert interest receipts on floating-rate fixed maturity securities to fixed rates. The Company also enters into forward starting swap agreements to hedge the interest rate exposure related to the purchase of fixed-rate securities, primarily to hedge interest rate risk inherent in the assumptions used to price certain liabilities.

Foreign currency swaps are used to convert foreign currency-denominated cash flows related to certain investment receipts and liability payments to U.S. dollars in order to reduce cash flow fluctuations due to changes in currency rates.

Fair value hedges

Interest rate swaps are used to hedge the changes in fair value of fixed maturity securities due to fluctuations in interest rates.

Non-qualifying strategies

Derivative relationships that do not qualify for hedge accounting (“non-qualifying strategies”) primarily include the hedge program for the Company's variable annuity products as well as the hedging and replication strategies that utilize credit default swaps. In addition, hedges of interest rate and foreign currency risk of certain fixed maturities and liabilities do not qualify for hedge accounting.

The non-qualifying strategies include:

Interest rate swaps, swaptions, and futures

The Company may use interest rate swaps, swaptions, and futures to manage duration between assets and liabilities in certain investment portfolios. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap. As of December 31, 2014 and 2013, the notional amount of interest rate swaps in offsetting relationships was $13.1 billion and $6.9 billion, respectively.

Foreign currency swaps and forwards

The Company enters into foreign currency swaps and forwards to convert the foreign currency exposures of certain foreign currency-denominated fixed maturity investments to U.S. dollars.

Japan fixed payout annuity hedge

The Company formerly offered certain variable annuity products with a GMIB rider through HLIKK, a former indirect wholly-owned subsidiary that was sold on June 30, 2014. For further discussion on the sale, see the Sale of Hartford Life Insurance KK section in Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements. The Company will continue to reinsure from HLIKK the Japan fixed payout annuities. The Company invests in U.S. dollar denominated assets to support the reinsurance liability. The Company entered into pay U.S. dollar, receive yen swap contracts to hedge the currency and yen interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.

Credit contracts

Credit default swaps are used to purchase credit protection on an individual entity or referenced index to economically hedge against default risk and credit-related changes in value on fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity or referenced index as a part of replication transactions. These contracts require the Company to pay or receive a periodic fee in exchange for compensation from the counterparty should the referenced security issuers experience a credit event, as defined in the contract. The Company is also exposed to credit risk related to credit derivatives embedded within certain fixed maturity securities which are comprised of structured securities that contain credit derivatives that reference a standard index of corporate securities. In addition, the Company enters into credit default swaps to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward.

Equity index swaps and options

Beginning in 2014, the Company entered into total return swaps to hedge equity risk of equity common stock investments which are accounted for using fair value option in order to align the accounting treatment with net realized capital gains (losses). The Company also enters into equity index options with the purpose of hedging the impact of an adverse equity market environment on the investment portfolio. In addition, the Company formerly offered certain equity indexed products, a portion of which contain embedded derivatives that require bifurcation. The Company uses equity index swaps to economically hedge the equity volatility risk associated with the equity indexed products.

GMWB derivatives, net

The Company formerly offered certain variable annuity products with GMWB riders. The GMWB product is a bifurcated embedded derivative (“GMWB product derivatives”) that has a notional value equal to the GRB. The Company uses reinsurance contracts to transfer a portion of its risk of loss due to GMWB. The reinsurance contracts covering GMWB (“GMWB reinsurance contracts”) are accounted for as free-standing derivatives with a notional amount equal to the GRB amount.

The Company utilizes derivatives (“GMWB hedging instruments”) as part of an actively managed program designed to hedge a portion of the capital market risk exposures of the non-reinsured GMWB riders due to changes in interest rates, equity market levels, and equity volatility. These derivatives include customized swaps, interest rate swaps and futures, and equity swaps, options and futures, on certain indices including the S&P 500 index, EAFE index and NASDAQ index. The following table presents notional and fair value for GMWB hedging instruments.

	Notional Amount				Fair Value
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
Customized swaps	$	7,041	$	7,839	$	124	$	74
Equity swaps, options, and futures	3,761		4,237		39		44
Interest rate swaps and futures	3,640		6,615		11		(77		)
Total	$	14,442	$	18,691	$	174	$	41

Macro hedge program

The Company utilizes equity options, swaps and foreign currency options to partially hedge against a decline in the equity markets and the resulting statutory surplus and capital impact primarily arising from the guaranteed minimum death benefit ("GMDB") and GMWB obligations. The following table presents notional and fair value for the macro hedge program.

	Notional Amount				Fair Value
	December 31, 2014		December 31, 2013		December 31, 2014		December 31, 2013
Equity options and swaps	$	5,983	$	9,934	$	141	$	139
Foreign currency options	400		—		—		—
Total	$	6,383	$	9,934	$	141	$	139

Contingent capital facility put option

The Company entered into a put option agreement that provides the Company the right to require a third-party trust to purchase, at any time, The Hartford’s junior subordinated notes in a maximum aggregate principal amount of $500. Under the put option agreement, The Hartford will pay premiums on a periodic basis and will reimburse the trust for certain fees and ordinary expenses.

Modified coinsurance reinsurance contracts

As of December 31, 2014 and 2013, the Company had approximately $1.0 billion and $1.3 billion, respectively, of invested assets supporting other policyholder funds and benefits payable reinsured under a modified coinsurance arrangement in connection with the sale of the Individual Life business structured as a reinsurance transaction. The assets are primarily held in a trust established by the Company. The Company pays or receives cash quarterly to settle the results of the reinsured business, including the investment results. As a result of this modified coinsurance arrangement, the Company has an embedded derivative that transfers to the reinsurer certain unrealized changes in fair value due to interest rate and credit risks of these assets. The notional amounts of the embedded derivative reinsurance contracts are the invested assets that are carried at fair value supporting the reinsured reserves.

Derivative Balance Sheet Classification

The following table summarizes the balance sheet classification of the Company’s derivative related fair value amounts as well as the gross asset and liability fair value amounts. For reporting purposes, the Company has elected to offset the fair value amounts, income accruals, and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset. The Company has also elected to offset the fair value amounts, income accruals and related cash collateral receivables and payables of OTC-cleared derivative instruments based on clearing house agreements. The fair value amounts presented below do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation. Derivative fair value reported as liabilities after taking into account the master netting agreements, is $1.1 billion and $1.3 billion as of December 31, 2014 and 2013, respectively. Derivatives in the Company’s separate accounts where the associated gains and losses accrue directly to policyholders are not included. The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity. Notional amounts are not necessarily reflective of credit risk. The tables below exclude investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements of Notes to the Consolidated Financial Statements.

	Net Derivatives										Asset Derivatives				Liability Derivatives
	Notional Amount				Fair Value						Fair Value				Fair Value
Hedge Designation/ Derivative Type	Dec 31, 2014		Dec 31, 2013		Dec 31, 2014			Dec 31, 2013			Dec 31, 2014		Dec 31, 2013		Dec 31, 2014			Dec 31, 2013
Cash flow hedges
Interest rate swaps	$	3,999	$	5,026	$	44		$	(92	)	$	52	$	50	$	(8	)	$	(142	)
Foreign currency swaps	143		143		(19		)	(5		)	3		2		(22		)	(7		)
Total cash flow hedges	4,142		5,169		25			(97		)	55		52		(30		)	(149		)
Fair value hedges
Interest rate swaps	32		1,799		—			(24		)	—		3		—			(27		)
Total fair value hedges	32		1,799		—			(24		)	—		3		—			(27		)
Non-qualifying strategies
Interest rate contracts
Interest rate swaps, caps, floors, and futures	15,254		8,453		(512		)	(487		)	536		171		(1,048		)	(658		)
Foreign exchange contracts
Foreign currency swaps and forwards	177		258		1			(9		)	3		6		(2		)	(15		)
Japan fixed payout annuity hedge	1,319		1,571		(427		)	(354		)	—		—		(427		)	(354		)
Japanese fixed annuity hedging instruments [1]	—		1,436		—			(6		)	—		88		—			(94		)
Credit contracts
Credit derivatives that purchase credit protection	595		938		(6		)	(15		)	4		1		(10		)	(16		)
Credit derivatives that assume credit risk [2]	1,487		1,886		3			33			14		36		(11		)	(3		)
Credit derivatives in offsetting positions	5,343		7,764		(3		)	(7		)	53		76		(56		)	(83		)
Equity contracts
Equity index swaps and options	635		358		2			(1		)	31		19		(29		)	(20		)
Variable annuity hedge program
GMWB product derivative [3]	17,908		21,512		(139		)	(36		)	—		—		(139		)	(36		)
GMWB reinsurance contracts	3,659		4,508		56			29			56		29		—			—
GMWB hedging instruments	14,442		18,691		174			41			289		333		(115		)	(292		)
Macro hedge program	6,383		9,934		141			139			180		178		(39		)	(39		)
International program product derivatives [1]	—		366		—			6			—		6		—			—
International program hedging instruments [1]	—		73,048		—			(33		)	—		866		—			(899		)
Other
Contingent capital facility put option	500		500		12			17			12		17		—			—
Modified coinsurance reinsurance contracts	974		1,250		34			67			34		67		—			—
Total non-qualifying strategies	68,676		152,473		(664		)	(616		)	1,212		1,893		(1,876		)	(2,509		)
Total cash flow hedges, fair value hedges, and non-qualifying strategies	$	72,850	$	159,441	$	(639	)	$	(737	)	$	1,267	$	1,948	$	(1,906	)	$	(2,685	)
Balance Sheet Location
Fixed maturities, available-for-sale	$	454	$	473	$	2		$	(2	)	$	2	$	1	$	—		$	(3	)
Other investments	23,014		53,219		364			442			624		909		(260		)	(467		)
Other liabilities	26,791		78,064		(930		)	(1,225		)	551		936		(1,481		)	(2,161		)
Reinsurance recoverables	4,633		5,758		90			96			90		96		—			—
Other policyholder funds and benefits payable	17,958		21,927		(165		)	(48		)	—		6		(165		)	(54		)
Total derivatives	$	72,850	$	159,441	$	(639	)	$	(737	)	$	1,267	$	1,948	$	(1,906	)	$	(2,685	)

[1] Represents hedge programs formerly associated with the Japan variable and fixed annuity products which were terminated due to the sale of HLIKK during 2014. For further information on the sale, see Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements.

[2] The derivative instruments related to this strategy are held for other investment purposes.

[3] These derivatives are embedded within liabilities and are not held for risk management purposes.

Change in Notional Amount

The net decrease in notional amount of derivatives since December 31, 2013 was primarily due to the following:

• The decrease in notional amount related to the international program hedging instruments resulted from the termination of the hedging program associated with the Japan variable annuity product due to the sale of HLIKK. For further discussion on the sale, see the Sale of Hartford Life Insurance KK section in Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements.

• The decrease in notional amount related to the GMWB hedging instruments primarily resulted from portfolio re-balancing, including the termination of offsetting positions.

• The decrease in notional amount associated with the macro hedge program was primarily driven by the expiration of certain out-of-the-money options.

• These declines in notional amount were partially offset by an increase in notional amount related to non-qualifying interest rate swaps and futures related to duration shortening positions, which were subsequently closed by offset.

Change in Fair Value

The net improvement in the total fair value of derivative instruments since December 31, 2013 was primarily related to the following:

• The increase in fair value of qualifying interest rate derivatives was primarily due to a decline in interest rates.

• The net increase in fair value related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily driven by liability model assumption updates and increased volatility, partially offset by a decline in fair value resulting from policyholder behavior primarily related to increased surrenders.

• The increase in the fair value associated with the international program hedging instruments resulted from the termination of the hedging program associated with the Japan variable annuity product due to the sale of HLIKK. For further discussion on the sale, see the Sale of Hartford Life Insurance KK section in Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements.

• These improvements in fair value were partially offset by a decrease in fair value associated with the fixed payout annuity hedges primarily driven by a decline in U.S. interest rates and by a depreciation of the Japanese yen in relation to the U.S. dollar.

• Additional declines in fair value related to modified coinsurance reinsurance contracts, which are accounted for as embedded derivatives and transfer to the reinsurer the investment experience related to the assets supporting the reinsured policies, were driven by a decline in interest rates, slightly offset by credit spread widening.

Offsetting of Derivative Assets/Liabilities

The following tables present the gross fair value amounts, the amounts offset, and net position of derivative instruments eligible for offset in the Company's Consolidated Balance Sheets.  Amounts offset include fair value amounts, income accruals and related cash collateral receivables and payables associated with derivative instruments that are traded under a common master netting agreement, as described above.  Also included in the tables are financial collateral receivables and payables, which is contractually permitted to be offset upon an event of default, although is disallowed for offsetting under U.S. GAAP.

As of December 31, 2014

	(i)		(ii)		(iii) = (i) - (ii)					(iv)			(v) = (iii) - (iv)
					Net Amounts Presented in the Statement of Financial Position						Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Derivative Assets [1]		Accrued Interest and Cash Collateral Received [2]				Financial Collateral Received [4]		Net Amount
Description
Other investments	$	1,175	$	969	$	364	$	(158	)		$	109	$	97

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position			Derivative Liabilities [3]			Accrued Interest and Cash Collateral Pledged [3]			Financial Collateral Pledged [4]			Net Amount
Description
Other liabilities	$	(1,741	)	$	(799	)	$	(927	)	$	(15	)	$	(1,079	)	$	137

As of December 31, 2013

	(i)		(ii)		(iii) = (i) - (ii)					(iv)			(v) = (iii) - (iv)
					Net Amounts Presented in the Statement of Financial Position						Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Derivative Assets [1]		Accrued Interest and Cash Collateral Received [2]				Financial Collateral Received [4]		Net Amount
Description
Other investments	$	1,845	$	1,463	$	442	$	(60	)		$	242	$	140

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position			Derivative Liabilities [3]			Accrued Interest and Cash Collateral Pledged [3]		Financial Collateral Pledged [4]			Net Amount
Description
Other liabilities	$	(2,626	)	$	(1,496	)	$	(1,223	)	$	93	$	(1,204	)	$	74

[1] Included in other investments in the Company's Consolidated Balance Sheets.

[2] Included in other assets in the Company's Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.

[3] Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty. Not included in this amount are embedded derivatives associated with consumer notes of $(3) and $(2) as of December 31, 2014 and December 31, 2013, respectively, which were not eligible for offset in the Company's Consolidated Balance Sheets.

[4] Excludes collateral associated with exchange-traded derivatives instruments.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current period earnings. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

The following table presents the components of the gain or loss on derivatives that qualify as cash flow hedges:

Derivatives in Cash Flow Hedging Relationships
	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)									Net Realized Capital Gains(Losses) Recognized in Income on Derivative (Ineffective Portion)
	2014			2013			2012			2014		2013			2012
Interest rate swaps	$	150		$	(315	)	$	120		$	2	$	(3	)	$	—
Foreign currency swaps	(10		)	12			(31		)	—		—			—
Total	$	140		$	(303	)	$	89		$	2	$	(3	)	$	—

Derivatives in Cash Flow Hedging Relationships
		Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
	Location	2014			2013		2012
Interest rate swaps	Net realized capital gain/(loss)	$	(1	)	$	91	$	90
Interest rate swaps	Net investment income	87			97		140
Foreign currency swaps	Net realized capital gain/(loss)	(13		)	4		(6		)
Total		$	73		$	192	$	224

As of December 31, 2014, the before-tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $63. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to net investment income over the term of the investment cash flows. The maximum term over which the Company is hedging its exposure to the variability of future cash flows for forecasted transactions, excluding interest payments on existing variable-rate financial instruments, is approximately two years.

During the years ended December 31, 2014 and 2013, the Company had no net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring. For the year ended December 31, 2012 the before-tax deferred net gains on derivative instruments reclassified from AOCI to earnings totaled $99 which primarily resulted from the discontinuance of cash flow hedges due to forecasted transactions no longer probable of occurring associated with variable rate bonds sold as part of the Individual Life and Retirement Plans business dispositions. For further information on the business dispositions, see Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements.

Fair Value Hedges

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged items attributable to the hedged risk are recognized in current earnings. The Company includes the gain or loss on the derivative in the same line item as the offsetting loss or gain on the hedged item. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

The Company recognized in income gains (losses) representing the ineffective portion of fair value hedges as follows:

Derivatives in Fair Value Hedging Relationships
	Gain (Loss) Recognized in Income [1]
	2014					2013						2012
	Derivative			Hedged Item		Derivative			Hedged Item			Derivative			Hedged Item
Interest rate swaps
Net realized capital gains (losses)	$	(3	)	$	1	$	7		$	(12	)	$	(4	)	$	2
Foreign currency swaps
Net realized capital gains (losses)	—			—		1			(1		)	(7		)	7
Benefits, losses and loss adjustment expenses	—			—		(2		)	2			(6		)	6
Total	$	(3	)	$	1	$	6		$	(11	)	$	(17	)	$	15

[1] The amounts presented do not include the periodic net coupon settlements of the derivative or the coupon income (expense) related to the hedged item. The net of the amounts presented represents the ineffective portion of the hedge.

Non-qualifying Strategies

For non-qualifying strategies, including embedded derivatives that are required to be bifurcated from their host contracts and accounted for as derivatives, the gain or loss on the derivative is recognized currently in earnings within net realized capital gains (losses). The following table presents the gain or loss recognized in income on non-qualifying strategies:

Non-qualifying Strategies
Gain (Loss) Recognized within Net Realized Capital Gains (Losses)
	December 31,
	2014			2013			2012
Interest rate contracts
Interest rate swaps, caps, floors, and forwards	$	(172	)	$	50		$	22
Foreign exchange contracts
Foreign currency swaps and forwards	6			5			19
Japan fixed payout annuity hedge [1]	(148		)	(268		)	(300		)
Credit contracts
Credit derivatives that purchase credit protection	(10		)	(38		)	(61		)
Credit derivatives that assume credit risk	16			71			291
Equity contracts
Equity index swaps and options	3			(33		)	(39		)
Variable annuity hedge program
GMWB product derivative	(2		)	1,306			1,430
GMWB reinsurance contracts	4			(192		)	(280		)
GMWB hedging instruments	3			(852		)	(631		)
Macro hedge program	(11		)	(234		)	(340		)
Other
Contingent capital facility put option	(6		)	(7		)	(6		)
Modified coinsurance reinsurance contracts	(34		)	67			—
Derivative instruments formerly associated with Japan [3]	(2		)	—			—
Total [2]	$	(353	)	$	(125	)	$	105

[1] The associated liability is adjusted for changes in spot rates through realized capital gains and was $116, $250 and $189 for the years ended December 31, 2014, 2013 and 2012, respectively, which is not presented in this table

[2] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements.

[3] These amounts relate to the termination of the hedging program associated with the Japan variable annuity product due to the sale of HLIKK.

For the year ended December 31, 2014 the net realized capital gain (loss) related to derivatives used in non-qualifying strategies was primarily comprised of the following:

• The net loss related to interest rate derivatives used to manage the risk of a rise in interest rates and manage duration, was driven by a decline in U.S. interest rates.

• The net loss related to the Japan fixed payout annuity hedge was primarily driven by a decline in U.S. interest rates and a depreciation of the Japanese yen in relation to the U.S. dollar.

• The loss associated with modified coinsurance reinsurance contracts, which are accounted for as embedded derivatives and transfer to the reinsurer the investment experience related to the assets supporting the reinsured policies, was primarily driven by a decline in long-term interest rates, partially offset by credit spread widening. The assets remain on the Company's books and the Company recorded an offsetting gain in AOCI as a result of the increase in market value of the bonds.

In addition, for the year ended December 31, 2014 the Company recognized gains of $13, due to cash recovered on derivative receivables that were previously written-off related to the bankruptcy of Lehman Brothers Inc. The derivative receivables were the result of the contractual collateral threshold amounts and open collateral calls prior to the bankruptcy filing as well as interest rate and credit spread movements from the date of the last collateral call to the date of the bankruptcy filing. For the years ended December 31, 2013 and 2012 there were no recognized gains and gains of $9, respectively, due to derivative receivables that were previously written-off related to the bankruptcy of Lehman Brothers Inc.

For the year ended December 31, 2013 the net realized capital gain (loss) related to derivatives used in non-qualifying strategies was primarily comprised of the following:

• The net loss related to the Japan fixed annuity payout hedge was primarily driven by a depreciation of the Japanese yen in relation to the U.S. dollar.

• The net loss on the macro hedge program was primarily due to an improvement in domestic equity markets, an increase in interest rates, and a decline in equity volatility.

• The net gain related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily driven by revaluing the liability for living benefits resulting from favorable policyholder behavior largely related to increased full surrenders and liability assumption updates for partial lapses and withdrawal rates.

For the year ended December 31, 2012 the net realized capital gain (loss) related to derivatives used in non-qualifying strategies was primarily due to the following:

• The net gain related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily driven by liability model assumption updates largely related to a reduction in the reset assumptions to better align with actual experience, outperformance of underlying actively managed funds compared to their respective indices, and lower equity volatility.

• The gain on credit derivatives that assume credit risk as part of replication transactions resulted from credit spread tightening.

• The net loss on the macro hedge program was primarily due to the passage of time, an improvement in domestic equity markets, and a decrease in equity volatility.

• The net loss related to the Japan fixed annuity payout hedge was primarily driven by a depreciation of the Japanese yen in relation to the U.S. dollar, the strengthening of the currency basis swap spread between the U.S. dollar and the Japanese yen, and a decline in U.S. interest rates.

Refer to Note 14 - Commitments and Contingencies for additional disclosures regarding contingent credit related features in derivative agreements.

Credit Risk Assumed through Credit Derivatives

The Company enters into credit default swaps that assume credit risk of a single entity or referenced index in order to synthetically replicate investment transactions. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced security issuer’s debt obligation after the occurrence of the credit event. A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk primarily reference investment grade single corporate issuers and baskets, which include standard and customized diversified portfolios of corporate issuers. The diversified portfolios of corporate issuers are established within sector concentration limits and may be divided into tranches that possess different credit ratings.

The following tables present the notional amount, fair value, weighted average years to maturity, underlying referenced credit obligation type and average credit ratings, and offsetting notional amounts and fair value for credit derivatives in which the Company is assuming credit risk as of December 31, 2014 and 2013.

As of December 31, 2014
							Underlying Referenced Credit Obligation(s) [1]
Credit Derivative type by derivative risk exposure	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
Single name credit default swaps
Investment grade risk exposure	$	320	$	5		2 years	Corporate Credit/ Foreign Gov.	BBB+	$	247	$	(5	)
Below investment grade risk exposure	29		—			2 years	Corporate Credit	BB	29		(1		)
Basket credit default swaps [4]
Investment grade risk exposure	2,546		33			3 years	Corporate Credit	BBB	1,973		(25		)
Below investment grade risk exposure	38		(1		)	12 years	Corporate Credit	D	—		—
Investment grade risk exposure	722		(12		)	6 years	CMBS Credit	AA+	269		3
Below investment grade risk exposure	154		(22		)	2 years	CMBS Credit	CCC+	154		23
Embedded credit derivatives
Investment grade risk exposure	350		342			2 years	Corporate Credit	A	—		—
Total [5]	$	4,159	$	345					$	2,672	$	(5	)

As of December 31, 2013
							Unifying Referenced Credit Obligation(s) [1]
Credit Derivative type by derivative risk exposure	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
Single name credit default swaps
Investment grade risk exposure	$	1,259	$	8		1 year	Corporate Credit/ Foreign Gov.	A	$	1,066	$	(9	)
Below investment grade risk exposure	24		—			1 year	Corporate Credit	CCC	24		(1		)
Basket credit default swaps [4]
Investment grade risk exposure	3,447		50			3 years	Corporate Credit	BBB	2,270		(35		)
Below investment grade risk exposure	166		15			5 years	Corporate Credit	BB-	—		—
Investment grade risk exposure	327		(7		)	3 years	CMBS Credit	A	327		7
Below investment grade risk exposure	195		(31		)	3 years	CMBS Credit	B-	195		31
Embedded credit derivatives
Investment grade risk exposure	350		339			3 years	Corporate Credit	BBB+	—		—
Total [5]	$	5,768	$	374					$	3,882	$	(7	)

[1] The average credit ratings are based on availability and the midpoint of the applicable ratings among Moody’s, S&P, Fitch and Morningstar. If no rating is available from a rating agency, then an internally developed rating is used.

[2] Notional amount is equal to the maximum potential future loss amount. These derivatives are governed by agreements, clearing house rules and applicable law which include collateral posting requirements. There is no additional specific collateral related to these contracts or recourse provisions included in the contracts to offset losses.

[3] The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of, or losses paid related to, the original swap.

[4] Includes $3.5 billion and $4.1 billion as of December 31, 2014 and 2013, respectively, of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.

[5] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements.

Derivative Collateral Arrangements

The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, 2014 and 2013, the Company pledged cash collateral associated with derivative instruments with a fair value of $120 and $347, respectively, for which the collateral receivable has been primarily included within other assets on the Company's Consolidated Balance Sheets. As of December 31, 2014 and 2013, the Company also pledged securities collateral associated with derivative instruments with a fair value of $1.1 billion and $1.3 billion, respectively, which have been included in fixed maturities on the Consolidated Balance Sheets. The counterparties have the right to sell or re-pledge these securities.

As of December 31, 2014 and 2013, the Company accepted cash collateral associated with derivative instruments of $327 and $180, respectively, which was invested and recorded in the Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other liabilities. The Company also accepted securities collateral as of December 31, 2014 and 2013 with a fair value of $109 and $243, respectively, of which the Company has the ability to sell or repledge $97 and $191, respectively. As of December 31, 2014 and 2013, the fair value of repledged securities totaled $0 and $39, respectively, and the Company did not sell any securities. In addition, as of December 31, 2014 and 2013, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.