4. Fair Value Measurements — Financial Instruments Excluding Guaranteed Living Benefits

The following financial instruments are carried at fair value in the Company’s Condensed Consolidated Financial Statements: fixed maturity and equity securities, available-for-sale (“AFS”); fixed maturities at fair value using fair value option (“FVO”); equity securities, trading; short-term investments; freestanding and embedded derivatives; separate account assets; and certain other liabilities.

The following section and Note 4a apply 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 derivative securities, including futures and certain option contracts.

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 in the Level 2 category are exchange traded equity securities, investment grade private placement securities and derivative instruments that are priced using models with significant observable market inputs, including interest rate, foreign currency and certain credit default swap contracts and have no significant unobservable market inputs.

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 such as lower quality asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), commercial real estate (“CRE”) collateralized debt obligations (“CDOs”), residential mortgage-backed securities (“RMBS”) primarily backed by below-prime loans and below investment grade private placement securities. Also included in Level 3 are guaranteed product embedded and reinsurance derivatives and other complex derivative securities, including customized guaranteed minimum withdrawal benefit (“GMWB”) hedging derivatives (see Note 4a for further information on GMWB product related financial instruments), equity derivatives, long dated derivatives, swaps with optionality, certain complex credit derivatives and certain other liabilities. 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. Transfers between Level 1 and Level 2 were not material for the three and six months ended June 30, 2011 and 2010. 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 as they are primarily priced by independent brokers and/or within illiquid markets.

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 tables present assets and (liabilities) carried at fair value by hierarchy level, excluding those related to the Company’s living benefits and associated hedging programs, which are reported in Note 4a.


	June 30, 2011
				Quoted Prices
				in Active			Significant			Significant
				Markets for			Observable			Unobservable
				Identical Assets			Inputs			Inputs
	Total			(Level 1)			(Level 2)			(Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
ABS	$	3,297		$	—		$	2,845		$	452
CDOs		2,575			—			—			2,575
CMBS		7,277			—			6,623			654
Corporate		41,629			—			39,519			2,110
Foreign government/government agencies		1,864			—			1,813			51
States, municipalities and political subdivisions (“Municipal”)		12,781			—			12,501			280
RMBS		5,214			—			4,100			1,114
U.S. Treasuries		3,495			411			3,084			—

Total fixed maturities, AFS		78,132			411			70,485			7,236
Fixed maturities, FVO		1,227			—			671			556
Equity securities, trading		32,278			2,227			30,051			—
Equity securities, AFS		1,081			377			604			100
Derivative assets
Credit derivatives		(3	)		—			(17	)		14
Equity derivatives		3			—			—			3
Foreign exchange derivatives		428			—			428			—
Interest rate derivatives		23			—			(25	)		48
Other derivative contracts		30			—			—			30

Total derivative assets [1]		481			—			386			95
Short-term investments		8,861			327			8,534			—
Separate account assets [2]		153,140			116,044			36,028			1,068

Total assets accounted for at fair value on a recurring basis	$	275,200		$	119,386		$	146,759		$	9,055

Percentage of level to total		100	%		43	%		54	%		3	%


Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
Equity linked notes	$	(10	)	$	—		$	—		$	(10	)
Derivative liabilities
Credit derivatives		(478	)		—			(62	)		(416	)
Equity derivatives		3			—			—			3
Foreign exchange derivatives		214			—			214			—
Interest rate derivatives		(254	)		—			(213	)		(41	)

Total derivative liabilities [3]		(515	)		—			(61	)		(454	)
Other liabilities		(44	)		—			—			(44	)
Consumer notes [4]		(4	)		—			—			(4	)

Total liabilities accounted for at fair value on a recurring basis	$	(573	)	$	—		$	(61	)	$	(512	)


[1]		Includes over-the-counter derivative instruments in a net asset value position which may require the counterparty to pledge collateral to the Company. As of June 30, 2011, $410 of a cash collateral liability was netted against the derivative asset value in the Condensed Consolidated Balance Sheet and is excluded from the table above. See footnote 3 below for derivative liabilities.

[2]		As of June 30, 2011, excludes approximately $4 billion of investment sales receivable that are not subject to fair value accounting.

[3]		Includes over-the-counter derivative instruments in a net negative market value position (derivative liability). In the Level 3 roll-forward table included below in this Note 4, the derivative asset and liability are referred to as “freestanding derivatives” and are presented on a net basis.

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


	December 31, 2010
				Quoted Prices in
				Active Markets			Significant			Significant
				for Identical			Observable			Unobservable
				Assets			Inputs			Inputs
	Total			(Level 1)			(Level 2)			(Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
ABS	$	2,889		$	—		$	2,412		$	477
CDOs		2,611			—			30			2,581
CMBS		7,917			—			7,228			689
Corporate		39,884			—			37,755			2,129
Foreign government/government agencies		1,683			—			1,627			56
Municipal		12,124			—			11,852			272
RMBS		5,683			—			4,398			1,285
U.S. Treasuries		5,029			434			4,595			—

Total fixed maturities, AFS		77,820			434			69,897			7,489
Fixed maturities, FVO		649			—			127			522
Equity securities, trading		32,820			2,279			30,541			—
Equity securities, AFS		973			298			521			154
Derivative assets
Credit derivatives		3			—			(18	)		21
Equity derivatives		2			—			—			2
Foreign exchange derivatives		868			—			868			—
Interest rate derivatives		(106	)		—			(70	)		(36	)
Other derivative contracts		32			—			—			32

Total derivative assets [1]		799			—			780			19
Short-term investments		8,528			541			7,987			—
Separate account assets [2]		153,727			116,717			35,763			1,247

Total assets accounted for at fair value on a recurring basis	$	275,316		$	120,269		$	145,616		$	9,431

Percentage of level to total		100	%		44	%		53	%		3	%


Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
Equity linked notes	$	(9	)	$	—		$	—		$	(9	)
Derivative liabilities
Credit derivatives		(482	)		—			(71	)		(411	)
Equity derivatives		2			—			—			2
Foreign exchange derivatives		(34	)		—			(34	)		—
Interest rate derivatives		(266	)		—			(249	)		(17	)

Total derivative liabilities [3]		(780	)		—			(354	)		(426	)
Other liabilities		(37	)		—			—			(37	)
Consumer notes [4]		(5	)		—			—			(5	)

Total liabilities accounted for at fair value on a recurring basis	$	(831	)	$	—		$	(354	)	$	(477	)


[1]		Includes over-the-counter derivative instruments in a net asset value position which may require the counterparty to pledge collateral to the Company. As of December 31, 2010, $968 of cash collateral liability was netted against the derivative asset value in the Condensed Consolidated Balance Sheet and is excluded from the table above. See footnote 3 below for derivative liabilities.

[2]		As of December 31, 2010, excludes approximately $6 billion of investment sales receivable that are not subject to fair value accounting.

[3]		Includes over-the-counter derivative instruments in a net negative market value position (derivative liability). In the Level 3 roll-forward table included below in this Note 4, the derivative asset and liability are referred to as “freestanding derivatives” and are presented on a net basis.

[4]		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 financial 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.

Available-for-Sale Securities, Fixed Maturities, FVO, Equity Securities, Trading, and Short-term Investments

The fair value of AFS securities, fixed maturities, FVO, 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 one of three primary sources of information: 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, the remaining unpriced securities are submitted to independent brokers for prices, or lastly, securities are priced using a pricing matrix. 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 Company performs a monthly analysis of the prices and credit spreads received from third parties to ensure that the prices represent a reasonable estimate of the fair value. As a part of this analysis, the Company considers trading volume and other factors to determine whether the decline in market activity is significant when compared to 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. This process involves quantitative and qualitative analysis and is overseen by investment and accounting professionals. Examples of 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, back testing recent trades, and monitoring of trading volumes, new issuance activity and other market activities. 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. 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 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 that utilize independent market data inputs, quoted market prices for exchange-traded derivatives, or independent broker quotations. Excluding embedded and reinsurance related derivatives, as of June 30, 2011 and December 31, 2010, 98% 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 Company performs a monthly analysis on derivative valuations which includes both quantitative and qualitative analysis. Examples of procedures performed include, but are not limited to, review of pricing statistics and trends, back testing recent trades, analyzing the impacts of changes in the market environment, and review of changes in market value for each derivative including those derivatives priced by brokers.

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 Level 3 may not reflect the offsetting impact of the realized and unrealized gains and losses of the associated assets and liabilities.

Valuation Techniques and Inputs for Investments

Generally, the Company determines the estimated fair value of its AFS securities, fixed maturities, FVO, 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. 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 swap curves. 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.

•

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 — 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 markets.

•

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 — Significant inputs primarily include the swap yield curve and credit curves.

•

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

•

Interest rate derivatives — Significant input is primarily the swap yield curve.

Level 3

Most of the Company’s securities classified as Level 3 are valued based on brokers’ prices. Certain long-dated securities are priced based on third party pricing services, including municipal securities and foreign government/government agencies, as well as 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. 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 may include the following:

•

Credit derivatives — Significant unobservable inputs may include credit correlation and swap yield curve and credit curve extrapolation beyond observable limits.

•

Equity derivatives — Significant unobservable inputs may include equity volatility.

•

Interest rate contracts — Significant unobservable inputs may include swap yield curve extrapolation beyond observable limits and interest rate volatility.

Separate Account Assets

Separate account assets are primarily invested in mutual funds but also have investments in fixed maturity and equity securities. The separate account investments are valued in the same manner, and using the same pricing sources and inputs, as the fixed maturity, equity security, and short-term investments of the Company.

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 three and six months ending June 30, 2011 and 2010, for the financial instruments classified as Level 3, excluding those related to the Company’s living benefits and associated hedging programs, which are reported in Note 4a.

For the three months ended June 30, 2011


	Fixed Maturities, AFS
													Foreign									Total Fixed
													govt./govt.									Maturities,
Assets	ABS			CDOs			CMBS			Corporate			agencies			Municipal			RMBS			AFS
Fair value as of March 31, 2011	$	446		$	2,674		$	741		$	2,096		$	63		$	276		$	1,124		$	7,420
Total realized/unrealized gains (losses)
Included in net income [1]		(1	)		—			13			(6	)		—			—			—			6
Included in OCI [2]		17			10			34			27			1			9			(16	)		82
Purchases		—			—			—			35			—			—			25			60
Settlements		(7	)		(43	)		(20	)		(42	)		(1	)		—			(33	)		(146	)
Sales		(2	)		(66	)		(193	)		(61	)		(3	)		(2	)		—			(327	)
Transfers into Level 3 [3]		19			—			79			78			—			—			14			190
Transfers out of Level 3 [3]		(20	)		—			—			(17	)		(9	)		(3	)		—			(49	)

Fair value as of June 30, 2011	$	452		$	2,575		$	654		$	2,110		$	51		$	280		$	1,114		$	7,236

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1]	$	(1	)	$	—		$	13		$	(6	)	$	—		$	—		$	—		$	6


							Freestanding Derivatives [4]
	Fixed			Equity								Interest			Other			Total Free-
	Maturities			Securities,			Credit			Equity		Rate			Derivative			Standing			Separate
Assets	FVO			AFS			Derivatives			Derivatives		Derivatives			Contracts			Derivatives			Accounts
Fair value as of March 31, 2011	$	579		$	80		$	(382	)	$	5	$	9		$	31		$	(337	)	$	1,207
Total realized/unrealized gains (losses)
Included in net income [1]		(22	)		—			(17	)		1		(2	)		(1	)		(19	)		5
Included in OCI [2]		—			2			—			—		—			—			—			—
Purchases		—			24			—			—		—			—			—			(94	)
Settlements		(1	)		—			(3	)		—		—			—			(3	)		—
Sales		—			(1	)		—			—		—			—			—			(22	)
Transfers into Level 3 [3]		—			—			—			—		—			—			—			3
Transfers out of Level 3 [3]		—			(5	)		—			—		—			—			—			(31	)

Fair value as of June 30, 2011	$	556		$	100		$	(402	)	$	6	$	7		$	30		$	(359	)	$	1,068

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1]	$	(22	)	$	—		$	(19	)	$	1	$	(2	)	$	(1	)	$	(21	)	$	4


Liabilities	Equity Linked Notes			Other Liabilities			Consumer Notes
Fair value as of March 31, 2011	$	(10	)	$	(51	)	$	(5	)
Total realized/unrealized gains (losses)
Included in net income [1]		—			7			1

Fair value as of June 30, 2011	$	(10	)	$	(44	)	$	(4	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1]	$	—		$	7		$	1

For the six months ended June 30, 2011


	Fixed Maturities, AFS
													Foreign									Total Fixed
													govt./govt.									Maturities,
Assets	ABS			CDOs			CMBS			Corporate			agencies			Municipal			RMBS			AFS
Fair value as of January 1, 2011	$	477		$	2,581		$	689		$	2,129		$	56		$	272		$	1,285		$	7,489
Total realized/unrealized gains (losses)
Included in net income [1]		(6	)		(15	)		11			(28	)		—			—			(9	)		(47	)
Included in OCI [2]		37			123			147			19			1			9			25			361
Purchases		—			—			—			52			2			—			25			79
Settlements		(18	)		(78	)		(30	)		(73	)		(2	)		—			(67	)		(268	)
Sales		(2	)		(66	)		(315	)		(134	)		(5	)		(2	)		(16	)		(540	)
Transfers into Level 3 [3]		68			30			152			273			11			4			14			552
Transfers out of Level 3 [3]		(104	)		—			—			(128	)		(12	)		(3	)		(143	)		(390	)

Fair value as of June 30, 2011	$	452		$	2,575		$	654		$	2,110		$	51		$	280		$	1,114		$	7,236

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1]	$	(6	)	$	(15	)	$	11		$	(28	)	$	—		$	—		$	(9	)	$	(47	)


							Freestanding Derivatives [4]
	Fixed			Equity								Interest			Other			Total Free-
	Maturities			Securities,			Credit			Equity		Rate			Derivative			Standing			Separate
Assets	FVO			AFS			Derivatives			Derivatives		Derivatives			Contracts			Derivatives			Accounts
Fair value as of January 1, 2011	$	522		$	154		$	(390	)	$	4	$	(53	)	$	32		$	(407	)	$	1,247
Total realized/unrealized gains (losses)
Included in net income [1]		36			(10	)		(6	)		2		(5	)		(2	)		(11	)		24
Included in OCI [2]		—			1			—			—		—			—			—			—
Purchases		—			37			1			—		64			—			65			34
Settlements		(2	)		—			(7	)		—		1			—			(6	)		—
Sales		—			(1	)		—			—		—			—			—			(169	)
Transfers into Level 3 [3]		—			—			—			—		—			—			—			12
Transfers out of Level 3 [3]		—			(81	)		—			—		—			—			—			(80	)

Fair value as of June 30, 2011	$	556		$	100		$	(402	)	$	6	$	7		$	30		$	(359	)	$	1,068

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1]	$	36		$	(10	)	$	(8	)	$	2	$	(3	)	$	(2	)	$	(11	)	$	1


Liabilities	Equity Linked Notes			Other Liabilities			Consumer Notes
Fair value as of January 1, 2011	$	(9	)	$	(37	)	$	(5	)
Total realized/unrealized gains (losses)
Included in net income [1]		—			(7	)		1
Settlements		(1	)		—			—

Fair value as of June 30, 2011	$	(10	)	$	(44	)	$	(4	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1]	$	—		$	(7	)	$	1

For the three months ended June 30, 2010


	Fixed Maturities, AFS
													Foreign									Total Fixed
													govt./ govt.									Maturities,
Assets	ABS			CDOs			CMBS			Corporate			agencies			Municipal			RMBS			AFS
Fair value as of March 31, 2010	$	533		$	2,749		$	442		$	8,612		$	59		$	322		$	1,174		$	13,891
Total realized/unrealized gains (losses)
Included in net income [1]		(3	)		(22	)		(42	)		6			—			—			(21	)		(82	)
Included in OCI [2]		15			105			189			103			—			16			75			503
Purchases, issuances, and settlements		(13	)		(48	)		(17	)		61			(2	)		(21	)		238			198
Transfers into Level 3 [3]		28			11			139			174			—			—			—			352
Transfers out of Level 3 [3]		(12	)		(17	)		(59	)		(140	)		(6	)		—			—			(234	)

Fair value as of June 30, 2010	$	548		$	2,778		$	652		$	8,816		$	51		$	317		$	1,466		$	14,628

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1]	$	(4	)	$	(28	)	$	(39	)	$	2		$	—		$	—		$	(16	)	$	(85	)


				Freestanding Derivatives [4]
	Equity									Interest			Other		Total Free-
	Securities,			Credit			Equity			Rate			Derivative		Standing			Separate
Assets	AFS			Derivatives			Derivatives			Derivatives			Contracts		Derivatives			Accounts
Fair value as of March 31, 2010	$	65		$	(491	)	$	(1	)	$	(6	)	$	35	$	(463	)	$	955
Total realized/unrealized gains (losses)
Included in net income [1]		(1	)		(47	)		1			1			—		(45	)		(2	)
Included in OCI [2]		2			—			—			—			—		—			—
Purchases, issuances, and settlements		8			5			—			(44	)		—		(39	)		5
Transfers into Level 3 [3]		6			—			—			—			—		—			(2	)
Transfers out of Level 3 [3]		—			—			—			—			—		—			(19	)

Fair value as of June 30, 2010	$	80		$	(533	)	$	—		$	(49	)	$	35	$	(547	)	$	937

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1]	$	(4	)	$	(47	)	$	1		$	(20	)	$	—	$	(66	)	$	9


	Other Policyholder Funds and Benefits Payable
							Total Other
	Institutional			Equity Linked			Policyholder Funds
Liabilities	Notes			Notes			and Benefits Payable			Other Liabilities			Consumer Notes
Fair value as of March 31, 2010	$	(7	)	$	(9	)	$	(16	)	$	(22	)	$	(5	)
Total realized/unrealized gains (losses)
Included in net income [1]		9			2			11			6			1

Fair Value as of June 30, 2010	$	2		$	(7	)	$	(5	)	$	(16	)	$	(4	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1]	$	9		$	2		$	11		$	—		$	1

For the six months ended June 30, 2010


	Fixed Maturities, AFS
													Foreign									Total Fixed
													govt./ govt.									Maturities,
Assets	ABS			CDOs			CMBS			Corporate			agencies			Municipal			RMBS			AFS
Fair value as of January 1, 2010	$	580		$	2,835		$	307		$	8,027		$	93		$	262		$	1,153		$	13,257
Total realized/unrealized gains (losses)
Included in net income [1]		(3	)		(85	)		(114	)		8			—			—			(34	)		(228	)
Included in OCI [2]		43			320			275			232			2			34			164			1,070
Purchases, issuances, and settlements		(23	)		(67	)		(23	)		277			(8	)		25			206			387
Transfers into Level 3 [3]		28			27			266			510			6			—			—			837
Transfers out of Level 3 [3]		(77	)		(252	)		(59	)		(238	)		(42	)		(4	)		(23	)		(695	)

Fair value as of June 30, 2010	$	548		$	2,778		$	652		$	8,816		$	51		$	317		$	1,466		$	14,628

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1]	$	(4	)	$	(91	)	$	(110	)	$	2		$	—		$	—		$	(29	)	$	(232	)


				Freestanding Derivatives [4]
	Equity									Interest			Other			Total Free-
	Securities,			Credit			Equity			Rate			Derivative			Standing			Separate
Assets	AFS			Derivatives			Derivatives			Derivatives			Contracts			Derivatives			Accounts
Fair value as of January 1, 2010	$	58		$	(228	)	$	(2	)	$	5		$	36		$	(189	)	$	962
Total realized/unrealized gains (losses)
Included in net income [1]		(2	)		(20	)		2			1			(1	)		(18	)		16
Included in OCI [2]		9			—			—			—			—			—			—
Purchases, issuances, and settlements		9			5			—			(44	)		—			(39	)		82
Transfers into Level 3 [3]		6			(290	)		—			—			—			(290	)		4
Transfers out of Level 3 [3]		—			—			—			(11	)		—			(11	)		(127	)

Fair value as of June 30, 2010	$	80		$	(533	)	$	—		$	(49	)	$	35		$	(547	)	$	937

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1]	$	(5	)	$	(20	)	$	2		$	(20	)	$	(1	)	$	(39	)	$	13


	Other Policyholder Funds and Benefits Payable
							Total Other
	Institutional			Equity Linked			Policyholder Funds
Liabilities	Notes			Notes			and Benefits Payable			Other Liabilities			Consumer Notes
Fair value as of January 1, 2010	$	(2	)	$	(10	)	$	(12	)	$	—		$	(5	)
Total realized/unrealized gains (losses)
Included in net income [1]		4			3			7			(5	)		1
Transfers into Level 3 [3]		—			—			—			(11	)		—

Fair Value as of June 30, 2010	$	2		$	(7	)	$	(5	)	$	(16	)	$	(4	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1]	$	4		$	3		$	7		$	—		$	1


[1]		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 of deferred policy acquisition costs and present value of future profits (“DAC”).

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

[3]		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.

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

Fair Value Option

The Company elected the fair value option for its investments containing an embedded credit derivative which were not bifurcated as a result of new accounting guidance effective July 1, 2010. The underlying credit risk of these securities is primarily corporate bonds and commercial real estate. The Company elected the fair value option given the complexity of bifurcating the economic components associated with the embedded credit derivative. Additionally, the Company elected the fair value option for purchases of foreign government securities to align with the accounting for yen-based fixed annuity liabilities, which are adjusted for changes in spot rates through realized gains and losses. Similar to other fixed maturities, income earned from these securities is recorded in net investment income. Changes in the fair value of these securities are recorded in net realized capital gains and losses.

The Company previously elected the fair value option for one of its consolidated VIEs in order to apply a consistent accounting model for the VIE’s assets and liabilities. The VIE is an investment vehicle that holds high quality investments, derivative instruments that reference third-party corporate credit and issues notes to investors that reflect the credit characteristics of the high quality investments and derivative instruments. The risks and rewards associated with the assets of the VIE inure to the investors. The investors have no recourse against the Company. As a result, there has been no adjustment to the market value of the notes for the Company’s own credit risk.

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 Condensed Consolidated Statements of Operations.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
*(Before-tax)*	2011			2010			2011			2010
Assets
Fixed maturities, FVO
Corporate	$	2		$	1		$	14		$	2
CRE CDOs		(25	)		(4	)		21			(4	)
Foreign government		17			—			11			—
Other liabilities
Credit-linked notes		7			6			(7	)		(5	)

Total realized capital gains (losses)	$	1		$	3		$	39		$	(7	)

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


Assets	June 30, 2011		December 31, 2010
Fixed maturities, FVO
ABS	$	65	$	65
CRE CDOs		290		270
Corporate		267		250
Foreign government		605		64

Total fixed maturities, FVO	$	1,227	$	649

Other liabilities
Credit-linked notes [1]	$	44	$	37


[1]		As of June 30, 2011 and December 31, 2010, the outstanding principal balance of the notes was $243.

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 June 30, 2011 and December 31, 2010.


	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets
Mortgage loans	$	5,304	$	5,393	$	4,489	$	4,524
Policy loans		2,188		2,318		2,181		2,294
Liabilities
Other policyholder funds and benefits payable [1]	$	10,837	$	11,141	$	11,155	$	11,383
Senior notes [2]		4,880		5,167		4,880		5,072
Junior subordinated debentures [2]		1,734		2,634		1,727		2,596
Consumer notes [3]		364		377		377		392


[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 Condensed Consolidated Balance Sheets, except for current maturities, which are included in short-term debt.

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

As of June 30, 2011 and December 31, 2010, included in other liabilities in the Condensed Consolidated Balance Sheets are carrying amounts of $223 and $233 for deposits, respectively, and $25, for Federal Home Loan Bank advances, related to Federal Trust Corporation. These liabilities are held for sale and the carrying amounts approximate fair value.

The Company has not made any changes in its valuation methodologies for the following assets and liabilities since December 31, 2010.

•

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 value for policy loans and consumer notes were estimated using discounted cash flow calculations using current interest rates.

•

Fair values for other policyholder funds and benefits payable, not carried at fair value, are determined by estimating future cash flows, discounted at the current market rate.

•

Fair values for senior notes and junior subordinated debentures are based primarily on market quotations from independent third-party pricing services.

4a. Fair Value Measurements — Guaranteed Living Benefits

These disclosures provide information as to the extent to which the Company uses fair value to measure financial instruments related to variable annuity product guaranteed living benefits and the related variable annuity hedging program and information about the inputs used to value those financial instruments to allow users to assess the relative reliability of the measurements. The following tables present assets and (liabilities) related to the guaranteed living benefits program carried at fair value by hierarchy level.


	June 30, 2011
				Quoted Prices
				in Active		Significant			Significant
				Markets for		Observable			Unobservable
				Identical Assets		Inputs			Inputs
	Total			(Level 1)		(Level 2)			(Level 3)
Assets accounted for at fair value on a recurring basis
Variable annuity hedging derivatives	$	144		$	—	$	(33	)	$	177
Macro hedge program		265			—		88			177
Reinsurance recoverable for U.S. GMWB		237			—		—			237

Total assets accounted for at fair value on a recurring basis	$	646		$	—	$	55		$	591

Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
U.S. guaranteed withdrawal benefits	$	(1,420	)	$	—	$	—		$	(1,420	)
International guaranteed withdrawal benefits		(30	)		—		—			(30	)
Variable annuity hedging derivatives		285			—		(86	)		371
Macro hedge program		206			—		126			80

Total liabilities accounted for at fair value on a recurring basis	$	(959	)	$	—	$	40		$	(999	)


	December 31, 2010
				Quoted Prices
				in Active			Significant			Significant
				Markets for			Observable			Unobservable
				Identical Assets			Inputs			Inputs
	Total			(Level 1)			(Level 2)			(Level 3)
Assets accounted for at fair value on a recurring basis
Variable annuity hedging derivatives	$	339		$	—		$	(122	)	$	461
Macro hedge program		386			2			176			208
Reinsurance recoverable for U.S. GMWB		280			—			—			280

Total assets accounted for at fair value on a recurring basis	$	1,005		$	2		$	54		$	949


Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
U.S. guaranteed withdrawal benefits	$	(1,611	)	$	—		$	—		$	(1,611	)
International guaranteed withdrawal benefits		(36	)		—			—			(36	)
International other guaranteed living benefits		3			—			—			3
Variable annuity hedging derivatives		128			—			(11	)		139
Macro hedge program		(2	)		(2	)		—			—

Total liabilities accounted for at fair value on a recurring basis	$	(1,518	)	$	(2	)	$	(11	)	$	(1,505	)

Product Derivatives

The Company currently offers certain variable annuity products with GMWB riders in the U.S., and formerly offered such products in the U.K. and Japan. 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.

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 “Attributed Fees”). 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.

U.S. 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 U.S. 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 GMWB and guaranteed minimum accumulation benefit (“GMAB”) contracts 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 the Company’s guaranteed benefit liabilities, classified as embedded derivatives, and the related reinsurance and customized freestanding derivatives is 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.

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 —including 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.

As many guaranteed benefit obligations are relatively new in the marketplace, actual policyholder behavior experience is limited. As a result, estimates of future policyholder behavior are subjective and based on analogous internal and external data. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions for this component of the fair value model.

On a daily basis, the Company updates capital market assumptions used in the GMWB liability model such as interest rates and equity indices. On a weekly basis, the blend of implied equity index volatilities is updated. The Company continually 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. 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 (“nonperformance risk”). The Company’s estimate of the Credit Standing Adjustment 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, and exclusive of the impact of the credit standing adjustment on other market inputs, resulted in pre-tax realized gains/(losses) of $1 and $54 for the three months ended June 30, 2011 and 2010, respectively. As of June 30, 2011 and December 31, 2010 the credit standing adjustment was $26, 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.

The Company did not update any policyholder behavior assumptions, in the three and six months ended June 30, 2011 or the three and six months ended June 30, 2010. As of June 30, 2011 and December 31, 2010 the behavior risk margin was $525 and $565, respectively.

In addition to the non-market-based updates described above, the Company recognized non-market-based updates driven by the relative outperformance of the underlying actively managed funds as compared to their respective indices resulting in pre-tax realized gains of approximately $4 and $15, for the three months ended June 30, 2011 and 2010, respectively, and $29 and $42 for the six months ended June 30, 2011 and 2010, respectively.

The tables below provide fair value roll forwards for the three and six months ended June 30, 2011 and 2010, for the financial instruments related to the Guaranteed Living Benefits Program classified as Levels 1, 2 and 3.

For the three months ended June 30, 2011


	Variable Annuity Hedging Derivatives [5]
						Total Variable Annuity
Asset/(liability)	Levels 1 and 2			Level 3		Hedging Derivatives
Fair value as of March 31, 2011	$	(142	)	$	488	$	346
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		(17	)		60		43
Settlements[3]		40			—		40

Fair value as of June 30, 2011	$	(119	)	$	548	$	429

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1], [2], [4]				$	52


									Total Guaranteed
						International			Withdrawal Benefits
	Reinsurance		U.S. Guaranteed			Guaranteed			Net of Reinsurance
	Recoverable		Withdrawal			Withdrawal			and Hedging
Asset/(liability)	for GMWB		Benefits – Level 3			Benefits – Level 3			Derivatives
Fair value as of March 31, 2011	$	224	$	(1,301	)	$	(23	)	$	(754	)
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		4		(80	)		(4	)		(37	)
Settlements[3]		9		(39	)		(3	)		7

Fair value as of June 30, 2011	$	237	$	(1,420	)	$	(30	)	$	(784	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1], [2], [4]	$	4	$	(80	)	$	(4	)


	Macro Hedge Program [5]								International Other
							Total Macro		Guaranteed Living
Asset/(liability)	Levels 1 and 2			Level 3			Hedge Program		Benefits – Level 3
Fair value as of March 31, 2011	$	(92	)	$	125		$	33	$	3
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		53			(18	)		35		(2	)
Purchases [3]		99			185			284		—
Settlements[3]		154			(35	)		119		(1	)

Fair value as of June 30, 2011	$	214		$	257		$	471	$	—

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1], [2], [4]				$	(3	)			$	(2	)

For the six months ended June 30, 2011


	Variable Annuity Hedging Derivatives [5]
							Total Variable Annuity
Asset/(liability)	Levels 1 and 2			Level 3			Hedging Derivatives
Fair value as of January 1, 2011	$	(133	)	$	600		$	467
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		(125	)		(59	)		(184	)
Purchases [3]		—			23			23
Settlements[3]		139			(16	)		123

Fair value as of June 30, 2011	$	(119	)	$	548		$	429

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1], [2], [4]				$	(61	)


										Total Guaranteed
							International			Withdrawal Benefits
	Reinsurance			U.S. Guaranteed			Guaranteed			Net of Reinsurance
	Recoverable			Withdrawal			Withdrawal			and Hedging
Asset/(liability)	for GMWB			Benefits – Level 3			Benefits – Level 3			Derivatives
Fair value as of January 1, 2011	$	280		$	(1,611	)	$	(36	)	$	(900	)
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		(61	)		268			11			34
Purchases [3]		—			—			—			23
Settlements[3]		18			(77	)		(5	)		59

Fair value as of June 30, 2011	$	237		$	(1,420	)	$	(30	)	$	(784	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1], [2], [4]	$	(61	)	$	268		$	11


	Macro Hedge Program [5]
										International Other
							Total Macro			Guaranteed Living
Asset/(liability)	Levels 1 and 2			Level 3			Hedge Program			Benefits – Level 3
Fair value as of January 1, 2011	$	176		$	208		$	384		$	3
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		(221	)		(101	)		(322	)		(1	)
Purchases [3]		99			185			284			—
Settlements[3]		160			(35	)		125		(2	)

Fair value as of June 30, 2011	$	214		$	257		$	471		$	—

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2011 [1], [2], [4]				$	(85	)				$	(1	)

For the three months ended June 30, 2010


	Variable Annuity Hedging Derivatives [5]
						Total Variable Annuity
Asset/(liability)	Levels 1 and 2			Level 3		Hedging Derivatives
Fair value as of March 31, 2010	$	(166	)	$	311	$	145
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		208			617		825
Purchases, issuances, and settlements [3]		(133	)		—		(133	)

Fair value as of June 30, 2010	$	(91	)	$	928	$	837

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1], [2],[4]				$	617


									Total Guaranteed
						International			Withdrawal Benefits
	Reinsurance		U.S. Guaranteed			Guaranteed			Net of Reinsurance
	Recoverable		Withdrawal			Withdrawal			and Hedging
Asset/(liability)	for GMWB		Benefits – Level 3			Benefits – Level 3			Derivatives
Fair value as of March 31, 2010	$	295	$	(1,655	)	$	(31	)	$	(1,246	)
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		246		(1,458	)		(39	)		(426	)
Included in OCI [2]		—		—			(1	)		(1	)
Purchases, issuances, and settlements [3]		9		(35	)		(1	)		(160	)

Fair value as of June 30, 2010	$	550	$	(3,148	)	$	(72	)	$	(1,833	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1], [2], [4]	$	246	$	(1,458	)	$	(39	)


	Macro Hedge Program [5]						International Other
					Total Macro		Guaranteed Living
Asset/(liability)	Levels 1 and 2		Level 3		Hedge Program		Benefits – Level 3
Fair Value as of March 31, 2010	$	54	$	151	$	205	$	4
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		117		280		397		(5	)
Purchases, issuances, and settlements [3]		19		232		251		—

Fair value as of June 30, 2010	$	190	$	663	$	853	$	(1	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1], [2],[4]			$	300			$	(5	)

For the six months ended June 30, 2010


	Variable Annuity Hedging Derivatives [5]
						Total Variable Annuity
Asset/(liability)	Levels 1 and 2			Level 3		Hedging Derivatives
Fair value as of January 1, 2010	$	(184	)	$	236	$	52
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		123			539		662
Purchases, issuances, and settlements [3]		(30	)		153		123

Fair value as of June 30, 2010	$	(91	)	$	928	$	837

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1], [2],[4]				$	502


									Total Guaranteed
						International			Withdrawal Benefits
	Reinsurance		U.S. Guaranteed			Guaranteed			Net of Reinsurance
	Recoverable		Withdrawal			Withdrawal			and Hedging
Asset/(liability)	for GMWB		Benefits – Level 3			Benefits – Level 3			Derivatives
Fair value as of January 1, 2010	$	347	$	(1,957	)	$	(45	)	$	(1,603	)
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		185		(1,120	)		(24	)		(297	)
Purchases, issuances, and settlements [3]		18		(71	)		(3	)		67

Fair value as of June 30, 2010	$	550	$	(3,148	)	$	(72	)	$	(1,833	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1], [2], [4]	$	185	$	(1,120	)	$	(24	)


	Macro Hedge Program [5]						International Other
					Total Macro		Guaranteed Living
Asset/(liability)	Levels 1 and 2		Level 3		Hedge Program		Benefits – Level 3
Fair Value as of January 1, 2010	$	28	$	290	$	318	$	2
Total realized/unrealized gains (losses)
Included in net income [1],[2],[6]		92		141		233		(2	)
Purchases, issuances, and settlements [3]		70		232		302		(1	)

Fair value as of June 30, 2010	$	190	$	663	$	853	$	(1	)

Changes in unrealized gains (losses) included in net income related to financial instruments still held at June 30, 2010 [1], [2],[4]			$	161			$	(2	)


[1]		The Company classifies gains and losses on GMWB reinsurance derivatives and Guaranteed Living Benefit 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 are before income taxes and amortization of DAC.

[3]		The ‘Purchases, issuances, and settlements’ primarily relates to the payment and receipt of cash on futures and option contracts classified as Level 1 and interest rate, currency and credit default swaps classified as Level 2. As of January 1, 2011, for GMWB reinsurance and guaranteed withdrawal benefits, purchases, issuances and settlements represent the reinsurance premium paid and the attributed fees collected, respectively.

[4]		Disclosure of changes in unrealized gains (losses) is not required for Levels 1 and 2. Information presented is for Level 3 only.

[5]		The variable annuity hedging derivatives and the macro hedge program derivatives are reported in this table on a net basis for asset/(liability) positions and reported in the Condensed Consolidated Balance Sheet in other investments and other liabilities.

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