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Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

18. Employee Benefit Plans

Pension and Other Postretirement Benefit Plans

The Subsidiaries sponsor and/or administer various U.S. qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering employees and sales representatives who meet specified eligibility requirements. U.S. pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits that are primarily based upon years of credited service and either final average or career average earnings. The cash balance formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually based upon the average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. At December 31, 2012, the majority of active participants were accruing benefits under the cash balance formula; however, 90% of the Subsidiaries’ obligations result from benefits calculated with the traditional formula. The U.S. non-qualified pension plans provide supplemental benefits in excess of limits applicable to a qualified plan. The non-U.S. pension plans generally provide benefits based upon either years of credited service and earnings preceding-retirement or points earned on job grades and other factors in years of service.

The Subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. Employees of the Subsidiaries who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for one of the Subsidiaries may become eligible for these other postretirement benefits, at various levels, in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total costs of postretirement medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits.

Obligations and Funded Status


	Pension Benefits												Other Postretirement Benefits
	U.S. Plans (1)						Non-U.S. Plans						U.S. Plans						Non-U.S. Plans
	December 31,
	2012			2011			2012			2011			2012			2011			2012			2011
	(In millions)
Change in benefit obligations:
Benefit obligations at January 1,	$	8,327		$	7,043		$	773		$	676		$	2,093		$	1,808		$	39		$	37
Service costs		224			187			75			64			21			16			1			1
Interest costs		406			404			17			16			103			106			2			2
Plan participants’ contributions		—			—			—			—			29			28			—			—
Net actuarial (gains) losses		999			1,072			32			24			261			267			4			2
Acquisition, divestitures and curtailments		—			—			(12	)		(5	)		—			—			(3	)		1
Change in benefits		—			17			(1	)		—			—			—			—			—
Benefits paid		(476	)		(396	)		(41	)		(30	)		(132	)		(132	)		(2	)		(4	)
Transfers		—			—			—			(13	)		—			—			—			—
Effect of foreign currency translation and other		—			—			(20	)		41			—			—			2			—

Benefit obligations at December 31,		9,480			8,327			823			773			2,375			2,093			43			39

Change in plan assets:
Fair value of plan assets at January 1,		7,108			6,310			185			178			1,240			1,185			13			15
Actual return on plan assets		740			944			20			(4	)		105			80			2			(1	)
Acquisition and divestitures		—			—			(11	)		(4	)		—			—			(3	)		—
Plan participants’ contributions		—			—			—			—			29			28			—			—
Employer contributions		507			250			74			55			78			79			4			1
Benefits paid		(476	)		(396	)		(41	)		(30	)		(132	)		(132	)		(2	)		(2	)
Transfers		—			—			—			(13	)		—			—			—			—
Effect of foreign currency translation		—			—			(3	)		3			—			—			1			—

Fair value of plan assets at December 31,		7,879			7,108			224			185			1,320			1,240			15			13

Over (under) funded status at December 31,	$	(1,601	)	$	(1,219	)	$	(599	)	$	(588	)	$	(1,055	)	$	(853	)	$	(28	)	$	(26	)

Amounts recognized in the consolidated balance sheets consist of:
Other assets	$	—		$	—		$	6		$	3		$	—		$	—		$	—		$	—
Other liabilities		(1,601	)		(1,219	)		(605	)		(591	)		(1,055	)		(853	)		(28	)		(26	)

Net amount recognized	$	(1,601	)	$	(1,219	)	$	(599	)	$	(588	)	$	(1,055	)	$	(853	)	$	(28	)	$	(26	)

Accumulated other comprehensive (income) loss:
Net actuarial (gains) losses	$	3,047		$	2,498		$	27		$	10		$	799		$	623		$	3		$	2
Prior service costs (credit)		24			30			2			2			(74	)		(179	)		1			1

Accumulated other comprehensive (income) loss, before income tax	$	3,071		$	2,528		$	29		$	12		$	725		$	444		$	4		$	3


Accumulated Benefit Obligation	$	8,866		$	7,849		$	724		$	658			N/A			N/A			N/A			N/A

(1)	Includes non-qualified unfunded plans, for which the aggregate projected benefit obligation was $1.1 billion and $997 million at December 31, 2012 and 2011, respectively.

The aggregate pension accumulated benefit obligation and aggregate fair value of plan assets for pension benefit plans with accumulated benefit obligations in excess of plan assets was as follows:


	Pension Benefits
	U.S. Plans				Non-U.S. Plans
	December 31,
	2012		2011		2012		2011
	(In millions)
Projected benefit obligations	$	1,323	$	1,164	$	690	$	708
Accumulated benefit obligations	$	1,166	$	1,045	$	651	$	644
Fair value of plan assets	$	157	$	131	$	144	$	121

Information for pension and other postretirement benefit plans with a projected benefit obligation in excess of plan assets were as follows:


	Pension Benefits								Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
	December 31,
	2012		2011		2012		2011		2012		2011		2012		2011
	(In millions)
Projected benefit obligations	$	9,480	$	8,327	$	763	$	732	$	2,375	$	2,093	$	43	$	39
Fair value of plan assets	$	7,879	$	7,108	$	188	$	140	$	1,320	$	1,240	$	15	$	13

Net Periodic Benefit Costs

Net periodic benefit cost is determined using management estimates and actuarial assumptions to derive service cost, interest cost, and expected return on plan assets for a particular year. Net periodic benefit cost also includes the applicable amortization of net actuarial gains (losses) and amortization of any prior service cost (credit).

The obligations and expenses associated with these plans require an extensive use of assumptions such as the discount rate, expected rate of return on plan assets, rate of future compensation increases, healthcare cost trend rates, as well as assumptions regarding participant demographics such as rate and age of retirements, withdrawal rates and mortality. Management, in consultation with its external consulting actuarial firms, determines these assumptions based upon a variety of factors such as historical performance of the plan and its assets, currently available market and industry data and expected benefit payout streams. The assumptions used may differ materially from actual results due to, among other factors, changing market and economic conditions and changes in participant demographics. These differences may have a significant effect on the Company’s consolidated financial statements and liquidity.

Net periodic pension costs and net periodic other postretirement benefit plan costs are comprised of the following:

•

Service Costs — Service costs are the increase in the projected (expected) PBO resulting from benefits payable to employees of the Subsidiaries on service rendered during the current year.

•

Interest Costs — Interest costs are the time value adjustment on the projected (expected) PBO at the end of each year.

•

Settlement and Curtailment Costs — The aggregate amount of net gains (losses) recognized in net periodic benefit costs due to settlements and curtailments. Settlements result from actions that relieve/eliminate the plan’s responsibility for benefit obligations or risks associated with the obligations or assets used for the settlement. Curtailments result from an event that significantly reduces/eliminates plan participants’ expected years of future services or benefit accruals.

•

Expected Return on Plan Assets — Expected return on plan assets is the assumed return earned by the accumulated pension and other postretirement fund assets in a particular year.

•

Amortization of Net Actuarial Gains (Losses) — Actuarial gains and losses result from differences between the actual experience and the expected experience on pension and other postretirement plan assets or projected (expected) PBO during a particular period. These gains and losses are accumulated and, to the extent they exceed 10% of the greater of the PBO or the fair value of plan assets, the excess is amortized into pension and other postretirement benefit costs over the expected service years of the employees.

•

Amortization of Prior Service Costs (Credit) — These costs relate to the recognition of increases or decreases in pension and other postretirement benefit obligation due to amendments in plans or initiation of new plans. These increases or decreases in obligation are recognized in accumulated other comprehensive income (loss) at the time of the amendment. These costs are then amortized to pension and other postretirement benefit costs over the expected service years of the employees affected by the change.

The components of net periodic benefit costs and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:


	Pension Benefits																		Other Postretirement Benefits
	U.S. Plans									Non-U.S. Plans									U.S. Plans									Non-U.S. Plans
	Years Ended December 31,
	2012			2011			2010			2012			2011			2010			2012			2011			2010			2012			2011			2010
	(In millions)
Net Periodic Benefit Costs:
Service costs	$	224		$	187		$	172		$	75		$	64		$	8		$	21		$	16		$	16		$	1		$	1		$	1
Interest costs		406			404			393			17			16			6			103			106			111			2			2			2
Settlement and curtailment costs		—			—			—			—			—			8			—			—			—			1			1			1
Expected return on plan assets		(484	)		(448	)		(444	)		(6	)		(6	)		(6	)		(77	)		(76	)		(79	)		(1	)		(1	)		—
Amortization of net actuarial (gains) losses		195			194			196			—			—			—			57			43			38			—			—			—
Amortization of prior service costs (credit)		6			4			7			—			—			—			(104	)		(108	)		(83	)		—			—			—

Total net periodic benefit costs (credit)		347			341			324			86			74			16			—			(19	)		3			3			3			4

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss):
Net actuarial (gains) losses		744			575			37			18			34			(15	)		234			262			49			2			5			1
Prior service costs (credit)		—			17			—			(1	)		—			1			—			—			(81	)		(1	)		—			1
Amortization of net actuarial gains (losses)		(195	)		(194	)		(196	)		—			—			—			(57	)		(43	)		(38	)		—			—			—
Amortization of prior service (costs) credit		(6	)		(4	)		(7	)		—			—			—			104			108			83			—			—			—

Total recognized in other comprehensive income (loss)		543			394			(166	)		17			34			(14	)		281			327			13			1			5			2

Total recognized in net periodic benefit costs and other comprehensive income (loss)	$	890		$	735		$	158		$	103		$	108		$	2		$	281		$	308		$	16		$	4		$	8		$	6

For the year ended December 31, 2012, included within other comprehensive income (loss) were other changes in plan assets and benefit obligations associated with pension benefits of $543 million for the U.S. plans and $17 million for the non-U.S. plans and other postretirement benefits of $281 million for the U.S. plans and $1 million for the non-U.S. plans for an aggregate reduction in other comprehensive income (loss) of $842 million before income tax and $546 million, net of income tax.

The estimated net actuarial (gains) losses and prior service costs (credit) for the U.S. pension plans and the U.S. defined benefit other postretirement benefit plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs over the next year are $225 million and $6 million, and $73 million and ($75) million, respectively.

The Medicare Modernization Act of 2003 created various subsidies for all U.S. sponsors of retiree drug programs. Two common ways of providing subsidies were the Retiree Drug Subsidy (“RDS”) and Medicare Part D Prescription Drug Plans (“PDP”). From 2006 through 2010, the Company applied for and received the RDS each year. The RDS program provides the subsidy through cash payments made by Medicare to the Company, resulting in smaller net claims paid by the Company. A summary of the reduction to the APBO and the related reduction to the components of net periodic other postretirement benefits plan costs resulting from receipt of the RDS is presented below. As of January 1, 2011, as a result of changes made under the Patient Protection and Affordable Care Act of 2010, the Company no longer applies for the RDS. Instead it has joined PDP and will indirectly receive Medicare subsidies in the form of smaller gross benefit payments for prescription drug coverage.


	December 31, 2010
	(In millions)
Cumulative reduction in other postretirement benefits obligations:
Balance at January 1,	$	247
Service costs		3
Interest costs		16
Net actuarial (gains) losses		(255	)
Expected prescription drug subsidy		(11	)

Balance at December 31,	$	—


	Year Ended December 31, 2010
	Year Ended December 31, 2010
	(In millions)
Reduction in net periodic other postretirement benefit costs:
Service costs	$	3
Interest costs		16
Amortization of net actuarial (gains) losses		10

Total reduction in net periodic benefit costs	$	29

The Company did not receive subsidies for the year ended December 31, 2012. The Company received subsidies of $3 million and $8 million for the years ended December 31, 2011 and 2010, respectively.

Assumptions

Assumptions used in determining benefit obligations were as follows:


	Pension Benefits		Other Postretirement Benefits
	U.S. Plans	Non-U.S. Plans (1)	U.S. Plans	Non-U.S. Plans (1)
December 31, 2012:
Weighted average discount rate	4.20%	1.98%	4.20%	4.94%
Rate of compensation increase	3.50% - 7.50%	2.01% - 5.50%	N/A	N/A

December 31, 2011:
Weighted average discount rate	4.95%	2.33%	4.95%	5.60%
Rate of compensation increase	3.50% - 7.50%	2.40% - 5.50%	N/A	N/A

(1)	Reflects those assumptions that were most appropriate for the local economic environments of each of the Subsidiaries providing such benefits.

Assumptions used in determining net periodic benefit costs were as follows:


	Pension Benefits		Other Postretirement Benefits
	U.S. Plans	Non-U.S. Plans (1)	U.S. Plans	Non-U.S. Plans (1)
Year Ended December 31, 2012:
Weighted average discount rate	4.95%	2.35%	4.95%	5.78%
Weighted average expected rate of return on plan assets	7.00%	3.35%	6.26%	6.54%
Rate of compensation increase	3.50% - 7.50%	2.00% - 4.00%	N/A	N/A

Year Ended December 31, 2011:
Weighted average discount rate	5.80%	2.40%	5.80%	6.34%
Weighted average expected rate of return on plan assets	7.25%	3.19%	7.25%	7.01%
Rate of compensation increase	3.50% - 7.50%	3.00% -5.50%	N/A	N/A

Year Ended December 31, 2010:
Weighted average discount rate	6.25%	1.76%	6.25%	N/A
Weighted average expected rate of return on plan assets	8.00%	1.32%	7.20%	N/A
Rate of compensation increase	3.50% - 7.50%	2.00% -4.00%	N/A	N/A

(1)	Reflects those assumptions that were most appropriate for the local economic environments of each of the Subsidiaries providing such benefits.

The weighted average discount rate for the U.S. plans is determined annually based on the yield, measured on a yield to worst basis, of a hypothetical portfolio constructed of high quality debt instruments available on the valuation date, which would provide the necessary future cash flows to pay the aggregate projected benefit obligation when due.

The weighted average discount rate for non-U.S. pension plans is based on the duration of liabilities on a country by country basis. The rate was selected by reference to high quality corporate bonds in developed markets or local government bonds where markets were less robust or nonexistent.

The weighted average expected rate of return on plan assets for the U.S. plans is based on anticipated performance of the various asset sectors in which the plans invest, weighted by target allocation percentages. Anticipated future performance is based on long-term historical returns of the plan assets by sector, adjusted for the Subsidiaries’ long-term expectations on the performance of the markets. While the precise expected rate of return derived using this approach will fluctuate from year to year, the policy of most of the Subsidiaries’ is to hold this long-term assumption constant as long as it remains within reasonable tolerance from the derived rate.

The weighted average expected long-term rate of return for the non-U.S. pension plans is an aggregation of each country’s expected rate of return within each asset class. For each country, the rate of return with respect to each asset class was developed based on a building block approach that considers historical returns, current market conditions, asset volatility and the expectations for future market returns. While the assessment of the expected rate of return is long-term and not expected to change annually, significant changes in investment strategy or economic conditions may warrant such a change. The expected rate of return within each asset class, together with any contributions made, are expected to maintain the plans’ ability to meet all required benefit obligations.

The weighted average expected rate of return on plan assets for use in that plan’s valuation in 2013 is currently anticipated to be 6.25% for U.S. pension benefits and 5.75% for U.S. other postretirement benefits. The weighted average expected rate of return on plan assets for use in that plan’s valuation in 2013 is currently anticipated to be 2.94% for non-U.S. pension benefits and 5.75% for non-U.S. other postretirement benefits.

The assumed healthcare costs trend rates used in measuring the APBO and net periodic benefit costs were as follows:


	December 31,
	2012	2011
Pre-and Post-Medicare eligible claims	7.8% in 2013, gradually decreasing each year until 2094 reaching the ultimate rate of 4.4% for Pre-Medicare and 4.6% for Post-Medicare.	7.3% in 2012, gradually decreasing each year until 2083 reaching the ultimate rate of 4.3%.

Assumed healthcare costs trend rates may have a significant effect on the amounts reported for healthcare plans. A 1% change in assumed healthcare costs trend rates would have the following effects as of December 31, 2012:


	U.S. Plans				Non-U.S. Plans
	One Percent Increase		One Percent Decrease		One Percent Increase		One Percent Decrease
	(In millions)
Effect on total of service and interest costs components	$	17	$	(14)	$	—	$	—
Effect of accumulated postretirement benefit obligations	$	308	$	(251)	$	1	$	(1)

Plan Assets

The pension and other postretirement benefit plan assets are categorized into a three-level fair value hierarchy, as defined in Note 10, based upon the significant input with the lowest level in its valuation. The following summarizes the types of assets included within the three-level fair value hierarchy presented below.


Level 1		This category includes investments in fixed maturity securities, equity securities, derivative assets, and short-term investments which have unadjusted quoted market prices in active markets for identical assets and liabilities.

Level 2		This category includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair value of such separate account is based upon reported NAV provided by fund managers and this value represents the amount at which transfers into and out of the respective separate account are effected. These separate accounts provide reasonable levels of price transparency and can be corroborated through observable market data.

		Certain separate accounts are invested in investment partnerships designated as hedge funds. The values for these separate accounts is determined monthly based on the NAV of the underlying hedge fund investment. Additionally, such hedge funds generally contain lock out or other waiting period provisions for redemption requests to be filled. While the reporting and redemption restrictions may limit the frequency of trading activity in separate accounts invested in hedge funds, the reported NAV, and thus the referenced value of the separate account, provides a reasonable level of price transparency that can be corroborated through observable market data.

		Directly held investments are primarily invested in U.S. and foreign government and corporate securities.

Level 3		This category includes separate accounts that are invested in fixed maturity securities, equity securities, derivative assets, and other investments that provide little or no price transparency due to the infrequency with which the underlying assets trade and generally require additional time to liquidate in an orderly manner. Accordingly, the values for separate accounts invested in these alternative asset classes are based on inputs that cannot be readily derived from or corroborated by observable market data.

U.S. Plans

The U.S. Subsidiaries provide employees with benefits under various Employee Retirement Income Security Act of 1974 (“ERISA”) benefit plans. These include qualified pension plans, postretirement medical plans and certain retiree life insurance coverage. The assets of the U.S. Subsidiaries’ qualified pension plans are held in insurance group annuity contracts, and the vast majority of the assets of the postretirement medical plan and backing the retiree life coverage are held in insurance contracts. All of these contracts are issued by Company insurance affiliates, and the assets under the contracts are held in insurance separate accounts that have been established by the Company. The underlying assets of the separate accounts are principally comprised of cash and cash equivalents, short-term investments, fixed maturity and equity securities, derivatives, real estate, private equity investments and hedge fund investments.

The insurance contract provider engages investment management firms (“Managers”) to serve as sub-advisors for the separate accounts based on the specific investment needs and requests identified by the plan fiduciary. These Managers have portfolio management discretion over the purchasing and selling of securities and other investment assets pursuant to the respective investment management agreements and guidelines established for each insurance separate account. The assets of the qualified pension plans and postretirement medical plans (the “Invested Plans”) are well diversified across multiple asset categories and across a number of different Managers, with the intent of minimizing risk concentrations within any given asset category or with any given Manager.

The Invested Plans, other than those held in participant directed investment accounts, are managed in accordance with investment policies consistent with the longer-term nature of related benefit obligations and within prudent risk parameters. Specifically, investment policies are oriented toward (i) maximizing the Invested Plan’s funded status; (ii) minimizing the volatility of the Invested Plan’s funded status; (iii) generating asset returns that exceed liability increases; and (iv) targeting rates of return in excess of a custom benchmark and industry standards over appropriate reference time periods. These goals are expected to be met through identifying appropriate and diversified asset classes and allocations, ensuring adequate liquidity to pay benefits and expenses when due and controlling the costs of administering and managing the Invested Plan’s investments. Independent investment consultants are periodically used to evaluate the investment risk of Invested Plan’s assets relative to liabilities, analyze the economic and portfolio impact of various asset allocations and management strategies and to recommend asset allocations.

Derivative contracts may be used to reduce investment risk, to manage duration and to replicate the risk/return profile of an asset or asset class. Derivatives may not be used to leverage a portfolio in any manner, such as to magnify exposure to an asset, asset class, interest rates or any other financial variable. Derivatives are also prohibited for use in creating exposures to securities, currencies, indices or any other financial variable that are otherwise restricted.

The table below summarizes the actual weighted average allocation of the fair value of total plan assets by asset class at December 31 for the years indicated and the approved target allocation by major asset class at December 31, 2012 for the Invested Plans:


	Pension								Postretirement Medical								Postretirement Life
	Target		Actual Allocation						Target		Actual Allocation						Target		Actual Allocation
	Target		2012			2011			Target		2012			2011			Target		2012			2011
Asset Class:
Fixed maturity securities (1)		75%		69	%		59	%		70%		63	%		62	%		0%		—	%		—	%
Equity securities (2)		12%		21	%		24	%		30%		37	%		37	%		0%		—	%		—	%
Alternative securities (3)		13%		10	%		17	%		0%		—	%		1	%		100%		100	%		100	%

Total assets				100	%		100	%				100	%		100	%				100	%		100	%

(1)

Fixed maturity securities include ABS, collateralized mortgage obligations, corporate, federal agency, foreign bonds, mortgage-backed securities, municipals, preferred stocks and U.S. government bonds. Certain prior year amounts have been reclassified from alternative securities into fixed maturity securities to conform to the current year presentation.

(2)	Equity securities primarily include common stock of U.S. companies.

(3)	Alternative securities primarily include derivative assets, money market securities, short-term investments, and other investments. Postretirement life’s target and actual allocation of plan assets are all in short-term investments.

The pension and postretirement plan assets measured at estimated fair value on a recurring basis were determined as described in “— Plan Assets.” These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:


	December 31, 2012
	Pension Benefits								Other Postretirement Benefits
	Fair Value Hierarchy								Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
Corporate	$	—	$	2,260	$	19	$	2,279	$	—	$	165	$	4	$	169
U.S. government bonds		1,153		160		—		1,313		175		3		—		178
Foreign bonds		—		761		8		769		—		51		—		51
Federal agencies		1		335		—		336		—		26		—		26
Municipals		—		258		—		258		—		70		1		71
Other (1)		—		490		7		497		—		55		3		58

Total fixed maturity securities		1,154		4,264		34		5,452		175		370		8		553

Equity securities:
Common stock - domestic		1,092		38		137		1,267		249		1		—		250
Common stock - foreign		362		—		—		362		83		—		—		83

Total equity securities		1,454		38		137		1,629		332		1		—		333

Other investments		—		117		447		564		—		—		—		—
Short-term investments		—		214		—		214		—		432		—		432
Money market securities		2		10		—		12		1		—		—		1
Derivative assets		—		7		1		8		—		1		—		1

Total assets	$	2,610	$	4,650	$	619	$	7,879	$	508	$	804	$	8	$	1,320


	December 31, 2011
	Pension Benefits								Other Postretirement Benefits
	Fair Value Hierarchy								Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
Corporate	$	—	$	1,932	$	32	$	1,964	$	—	$	139	$	4	$	143
U.S. government bonds		1,007		187		—		1,194		160		1		—		161
Foreign bonds		—		213		5		218		—		13		—		13
Federal agencies		1		286		—		287		—		29		—		29
Municipals		—		184		—		184		—		59		1		60
Other (1)		—		473		2		475		—		84		5		89

Total fixed maturity securities		1,008		3,275		39		4,322		160		325		10		495

Equity securities:
Common stock - domestic		1,149		38		206		1,393		240		2		—		242
Common stock - foreign		287		—		—		287		55		—		—		55

Total equity securities		1,436		38		206		1,680		295		2		—		297

Other investments		—		69		531		600		—		—		—		—
Short-term investments		4		401		—		405		6		435		—		441
Money market securities		2		—		—		2		—		1		—		1
Derivative assets		30		10		4		44		—		—		1		1
Other receivables		—		47		—		47		—		4		—		4
Securities receivable		—		8		—		8		—		1		—		1

Total assets	$	2,480	$	3,848	$	780	$	7,108	$	461	$	768	$	11	$	1,240

(1)	Other primarily includes mortgage-backed securities, collateralized mortgage obligations, and ABS. The prior year amounts have been reclassified into fixed maturity securities to conform to the current year presentation.

A rollforward of all pension and other postretirement benefit plan assets measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs was as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Pension Benefits
	Fixed Maturity Securities:						Equity Securities:
	Corporate		Foreign Bonds		Other (1)		Common Stock- Domestic		Other Investments		Derivative Assets
	(In millions)
Year Ended December 31, 2012:
Balance, January 1,	$	32	$	5	$	2	$	206	$	531	$	4
Realized gains (losses)		—		—		—		(27)		55		6
Unrealized gains (losses)		(1)		8		—		10		(36)		(7)
Purchases, sales, issuances and settlements, net		(12)		(5)		5		(52)		(103)		(2)
Transfers into and/or out of Level 3		—		—		—		—		—		—

Balance, December 31,	$	19	$	8	$	7	$	137	$	447	$	1


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Other Postretirement Benefits
	Fixed Maturity Securities:
	Corporate		Municipals		Other (1)			Derivative Assets
	(In millions)
Year Ended December 31, 2012:
Balance, January 1,	$	4	$	1	$	5		$	1
Realized gains (losses)		—		—		(2	)		2
Unrealized gains (losses)		—		—		2			(2	)
Purchases, sales, issuances and settlements, net		—		—		(2	)		(1	)
Transfers into and/or out of Level 3		—		—		—			—

Balance, December 31,	$	4	$	1	$	3		$	—


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Pension Benefits
	Fixed Maturity Securities:									Equity Securities:
	Corporate			Foreign Bonds			Other (1)			Common Stock - Domestic			Other Investments			Derivative Assets
	(In millions)
Year Ended December 31, 2011:
Balance, January 1,	$	49		$	4		$	2		$	240		$	471		$	—
Realized gains (losses)		—			—			(1	)		(59	)		85			2
Unrealized gains (losses)		(4	)		(1	)		1			118			45			4
Purchases, sales, issuances and settlements, net		(13	)		2			(1	)		(93	)		(70	)		(2	)
Transfers into and/or out of Level 3		—			—			1			—			—			—

Balance, December 31,	$	32		$	5		$	2		$	206		$	531		$	4


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Other Postretirement Benefits
	Fixed Maturity Securities:
	Corporate		Municipals		Other (1)			Derivative Assets
	(In millions)
Year Ended December 31, 2011:
Balance, January 1,	$	4	$	1	$	6		$	—
Realized gains (losses)		—		—		(1	)		—
Unrealized gains (losses)		—		—		1			1
Purchases, sales, issuances and settlements, net		—		—		(1	)		—
Transfers into and/or out of Level 3		—		—		—			—

Balance, December 31,	$	4	$	1	$	5		$	1


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Pension Benefits															Other Postretirement Benefits
	Fixed Maturity Securities:									Equity Securities:						Fixed Maturity Securities:
	Corporate			Foreign Bonds			Other (1)			Common Stock - Domestic			Other Investments			Corporate		Municipals		Other (1)
	(In millions)
Year Ended December 31, 2010:
Balance, January 1,	$	68		$	5		$	69		$	241		$	373		$	—	$	—	$	9
Realized gains (losses)		—			—			(11	)		—			78			—		—		(4	)
Unrealized gains (losses)		7			1			14			(2	)		(4	)		1		—		1
Purchases, sales, issuances and settlements, net		(17	)		(2	)		(71	)		1			24			—		—		(1	)
Transfers into and/or out of Level 3		(9	)		—			1			—			—			3		1		1

Balance, December 31,	$	49		$	4		$	2		$	240		$	471		$	4	$	1	$	6

(1)	Other includes ABS and collateralized mortgage obligations.

Non-U.S. Plans

Pension benefits are provided utilizing either a traditional formula or cash balance formula, similar to the U.S. plans. The investment objectives are also similar, subject to local regulations. Generally, these international pension plans invest directly in high quality equity and fixed maturity securities. The assets of the non-U.S. pension plans are comprised of short-term investments, equity and fixed maturity securities, real estate and hedge fund investments.

The assets of the non-U.S. pension plans, other than those held in participant directed investment accounts, are managed in accordance with investment policies consistent with the longer-term nature of related benefit obligations and within prudent risk parameters and consistent with the policies, goals and derivative instrument risk management guidelines described above for the U.S. plans.


	Pension								Other Postretirement
			Actual Allocation								Actual Allocation
	Target		2012			2011			Target		2012			2011
Asset Class:
Fixed maturity securities (1)		64%		54	%		52	%		100 %		100	%		100	%
Equity securities (2)		17%		24	%		23	%		— %		—	%		—	%
Alternative securities (3)		19%		22	%		25	%		— %		—	%		—	%

Total assets				100	%		100	%				100	%		100	%

(1)	Fixed maturity securities include foreign bonds.

(2)	Equity securities primarily include common stock of non-U.S. companies.

(3)	Alternative securities include derivative assets, real estate, short-term investments, and other investments.


	December 31, 2012
	Pension Benefits								Other Postretirement Benefits
	Fair Value Hierarchy								Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
Foreign bonds	$	—	$	120	$	—	$	120	$	—	$	15	$	—	$	15
Equity securities:
Common stock - foreign		—		54		—		54		—		—		—		—
Other investments		24		—		—		24		—		—		—		—
Derivative assets		—		—		13		13		—		—		—		—
Real estate		—		—		7		7		—		—		—		—
Short-term investments		—		6		—		6		—		—		—		—

Total assets	$	24	$	180	$	20	$	224	$	—	$	15	$	—	$	15


	December 31, 2011
	Pension Benefits								Other Postretirement Benefits
	Fair Value Hierarchy								Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
Foreign bonds	$	—	$	96	$	—	$	96	$	—	$	13	$	—	$	13
Equity securities:
Common stock - foreign		—		43		—		43		—		—		—		—
Other investments		19		—		—		19		—		—		—		—
Derivative assets		—		—		13		13		—		—		—		—
Real estate		—		—		8		8		—		—		—		—
Short-term investments		—		6		—		6		—		—		—		—

Total assets	$	19	$	145	$	21	$	185	$	—	$	13	$	—	$	13

A rollforward of all pension benefit plan assets measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs was as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Pension Benefits
	Years Ended December 31,
	2012						2011				2010
	Derivative Assets			Real Estate			Derivative Assets		Real Estate		Derivative Assets (1)			Real Estate (1)
	(In millions)
Balance, January 1,	$	13		$	8		$	11	$	8	$	—		$	—
Realized gains (losses)		(1	)		(1	)		—		—		3			—
Unrealized gains (losses)		1			—			2		—		(3	)		—
Purchases, sales, issuances, and settlements, net		—			—			—		—		(1	)		—
Transfers into and/or out of Level 3		—			—			—		—		12			8

Balance, December 31,	$	13		$	7		$	13	$	8	$	11		$	8

(1)	Derivative assets and real estate transfers into Level 3 are due to the ALICO Acquisition and are not related to the changes in Level 3 classification at the security level.

Expected Future Contributions and Benefit Payments

It is the Subsidiaries’ practice to make contributions to the U.S. qualified pension plan to comply with minimum funding requirements of ERISA. In accordance with such practice, no contributions are required for 2013. The Subsidiaries expect to make discretionary contributions to the qualified pension plan of $233 million in 2013. For information on employer contributions, see “— Obligations and Funded Status.”

Benefit payments due under the U.S. non-qualified pension plans are primarily funded from the Subsidiaries’ general assets as they become due under the provision of the plans, therefore benefit payments equal employer contributions. The U.S. Subsidiaries expect to make contributions of $61 million to fund the benefit payments in 2013.

U.S. and non-U.S. postretirement benefits are either: (i) not vested under law; (ii) a non-funded obligation of the Subsidiaries; or (iii) both. Current regulations do not require funding for these benefits. The Subsidiaries use their general assets, net of participant’s contributions, to pay postretirement medical claims as they come due in lieu of utilizing any plan assets. The U.S. Subsidiaries expect to make contributions of $78 million towards benefit obligations in 2013 to pay postretirement medical claims.

As noted previously, the Subsidiaries no longer expect to receive the RDS under the Medicare Modernization Act of 2003 to partially offset payment of such benefits. Instead, the gross benefit payments that will be made under the PDP will already reflect subsidies.

Gross benefit payments for the next 10 years, which reflect expected future service where appropriate, are expected to be as follows:


	Pension Benefits				Other Postretirement Benefits
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
	(In millions)
2013	$	436	$	42	$	112	$	4
2014	$	473	$	44	$	115	$	3
2015	$	470	$	48	$	117	$	3
2016	$	489	$	54	$	119	$	3
2017	$	517	$	57	$	119	$	3
2018-2022	$	2,866	$	311	$	613	$	15

Additional Information

As previously discussed, most of the assets of the U.S. pension and other postretirement benefit plans are held in group annuity and life insurance contracts issued by the Subsidiaries. Total revenues from these contracts recognized in the consolidated statements of operations were $54 million, $47 million and $46 million for the years ended December 31, 2012, 2011 and 2010, respectively, and included policy charges and net investment income from investments backing the contracts and administrative fees. Total investment income (loss), including realized and unrealized gains (losses), credited to the account balances was $867 million, $885 million and $767 million for the years ended December 31, 2012, 2011 and 2010, respectively. The terms of these contracts are consistent in all material respects with those the Subsidiaries offer to unaffiliated parties that are similarly situated.

Defined Contribution Plans

The Subsidiaries sponsor defined contribution plans for substantially all U.S. employees under which a portion of employee contributions are matched. The Subsidiaries contributed $96 million, $95 million and $86 million for the years ended December 31, 2012, 2011 and 2010, respectively.