Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Financial assets and liabilities carried at fair value

As of December 31,
(In millions)	Quoted Prices in Active Markets for Identical Assets(Level 1)				Significant Other Observable Inputs(Level 2)				Significant Unobservable Inputs(Level 3)				Total
	2018		2017		2018		2017		2018		2017		2018		2017
Financial assets at fair value
Fixed maturities
Federal government and agency	$	209	$	253	$	501	$	526	$	-	$	-	$	710	$	779
State and local government		-		-		985		1,287		-		-		985		1,287
Foreign government		-		-		2,356		2,442		6		45		2,362		2,487
Corporate		-		-		18,127		17,658		234		430		18,361		18,088
Mortgage and other asset-backed		-		-		372		343		138		154		510		497
Total fixed maturities		209		253		22,341		22,256		378		629		22,928		23,138
Equity securities⁽¹⁾		384		412		43		73		32		103		459		588
Short-term investments		-		-		316		199		-		-		316		199
Derivative assets		-		-		53		2		-		-		53		2
Real estate funds priced at NAV as a practical expedient⁽²⁾														239		N/A
Financial liabilities at fair value
Derivative liabilities	$	-	$	-	$	10	$	25	$	-	$	-	$	10	$	25
(1) Certain private equity securities are no longer carried at fair value under the policy election of ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities) beginning in 2018. Such private equity securities of $70 million were included in the Level 3 amount as of December 31, 2017. See Note 9 for additional information on this accounting policy change.
(2) Certain real estate funds are carried at fair value (previously carried at cost) based on the Company's ownership share of the equity of the investee (Net Asset Value (“NAV“)) as a practical expedient including changes in the fair value of its underlying investments upon adopting ASU 2016-01 beginning in 2018. The funds have a quarterly redemption frequency, 45-90 day redemption notice period and $57 million in unfunded commitments as of December 31, 2018. See Note 9 for additional information on this accounting change. Prior years are designated as not applicable (“N/A“) in this table.

Level 3 fixed maturities and equity securities priced using significant unobservable inputs

As of December 31,
	Fair Value				Unobservable Input	Unobservable Adjustment Range (Weighted Average)
(Fair value in millions )	2018		2017		Unobservable Input	2018	2017
Fixed maturities
Mortgage and other asset-backed securities	$	138	$	154	Liquidity	60- 340 (70) bps	60 - 370 (90) bps
					Weighting of credit spreads	190 - 340 (260) bps	180 - 290 (230) bps
Corporate and government fixed maturities		229		446	Liquidity	50 - 930 (230) bps	70 - 1,650 (300) bps
Securities not priced by the Company ⁽¹⁾		11		29
Total Level 3 fixed maturities	$	378	$	629

(1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.

Changes in level 3 financial assets and liabilities carried at fair value

(In millions)	Fixed Maturities & Equity Securities
	2018		2017
Balance at January 1,	$	732	$	776
Total gains (losses) included in shareholders‘ net income		(22)		25
Losses included in other comprehensive income		(8)		(11)
Gains (losses) required to adjust future policy benefits for settlement annuities⁽¹⁾		(8)		7
Purchases, sales, settlements
Purchases		22		133
Sales		(11)		(95)
Settlements		(70)		(74)
Total purchases, sales and settlements		(59)		(36)
Transfers into/(out of) Level 3
Transfers into Level 3		44		275
Transfers out of Level 3 ⁽²⁾		(269)		(304)
Total transfers into/(out of) Level 3		(225)		(29)
Balance at December 31,	$	410	$	732
Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date	$	(9)	$	(9)

(1) Amounts do not accrue to shareholders.
(2) Beginning in 2018, certain private equity securities are no longer carried at fair value under the policy election of ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities). Private equity securities of $70 million as of December 31, 2017 are included in the 2018 Transfers out of Level 3 amount.

Separate account assets schedule

(In millions)	Quoted Prices in Active Markets for Identical Assets(Level 1)				Significant Other Observable Inputs(Level 2)				Significant Unobservable Inputs(Level 3)				Total
	2018		2017		2018		2017		2018		2017		2018		2017
Guaranteed separate accounts (See Note 19)	$	187	$	215	$	267	$	308	$	-	$	-	$	454	$	523
Non-guaranteed separate accounts ⁽¹⁾		1,204		1,536		5,216		5,298		233		292		6,653		7,126
Subtotal	$	1,391	$	1,751	$	5,483	$	5,606	$	233	$	292		7,107		7,649
Non-guaranteed separate accounts priced at NAV as a practical expedient⁽¹⁾														732		774
Total separate account assets													$	7,839	$	8,423

(1) Non-guaranteed separate accounts included $3.8 billion as of December 31, 2018 and $3.9 billion as of December 31, 2017 in assets supporting the Company‘s pension plans, including $0.2 billion classified in Level 3 as of December 31, 2018 and $0.3 billion classified in Level 3 as of December 31, 2017.

Separate account assets priced at net asset value

						Unfunded
						Commitments	Redemption Frequency
	Fair Value as of					as of	(if currently	Redemption Notice
(In millions)	December 31, 2018		December 31, 2017		December 31, 2018		eligible)	Period
Securities partnerships	$	477	$	458	$	308	Not applicable	Not applicable
Real estate funds		237		239		-	Quarterly	30-90 days
Hedge funds		18		77		-	Up to annually, varying by fund	30-90 days
Total	$	732	$	774	$	308

Financial instruments not carried at fair value

(In millions)			December 31, 2018				December 31, 2017
	Classification in Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	1,832	$	1,858	$	1,766	$	1,761
Long-term debt, including current maturities, excluding capital leases	Level 2	$	40,819	$	40,829	$	5,730	$	5,321

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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