Derivative Financial Instruments and Off-balance sheet Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Derivative Financial Instruments and Off-balance sheet Financial Instruments

Summary of volume and fair value positions of derivative instruments and reporting location in the Condensed Consolidated Statement of Financial Position

The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2013.

($ in millions, except number of contracts)			Volume (1)
	Balance sheet location		Notional amount	Number of contracts		Fair value, net		Gross asset		Gross liability
Asset derivatives
Derivatives designated as accounting hedging instruments
Foreign currency swap agreements	Other investments	$	16	n/a	$	1	$	1	$	--
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Interest rate swaption agreements	Other investments		1,420	n/a		--		--		--
Interest rate cap agreements	Other investments		61	n/a		2		2		--
Equity and index contracts
Options and warrants (2)	Other investments		3	10,035		261		261		--
Financial futures contracts	Other assets		--	627		--		--		--
Foreign currency contracts
Foreign currency forwards	Other investments		47	n/a		--		--		--
Embedded derivative financial instruments
Credit default swaps	Fixed income securities		12	n/a		(12)		--		(12)
Credit default contracts
Credit default swaps – buying protection	Other investments		1	n/a		--		--		--
Credit default swaps – selling protection	Other investments		85	n/a		2		2		--
Other contracts
Other contracts	Other assets		4	n/a		--		--		--
Subtotal			1,633	10,662		253		265		(12)
Total asset derivatives		$	1,649	10,662	$	254	$	266	$	(12)

Liability derivatives
Derivatives designated as accounting hedging instruments
Foreign currency swap agreements		Other liabilities & accrued expenses	$	132	n/a	$	(15)	$	--	$	(15)
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Interest rate swap agreements		Other liabilities & accrued expenses		85	n/a		4		4		--
Interest rate swaption agreements		Other liabilities & accrued expenses		4,570	n/a		1		1		--
Interest rate cap agreements		Other liabilities & accrued expenses		262	n/a		4		4		--
Equity and index contracts
Options		Other liabilities & accrued expenses		55	10,035		(165)		2		(167)
Embedded derivative financial instruments
Guaranteed accumulation benefits		Contractholder funds		738	n/a		(43)		--		(43)
Guaranteed withdrawal benefits		Contractholder funds		506	n/a		(13)		--		(13)
Equity-indexed and forward starting options in life and annuity product contracts		Contractholder funds		1,693	n/a		(247)		--		(247)
		Liabilities held for sale		2,363	n/a		(246)		--		(246)
Other embedded derivative financial instruments		Contractholder funds		85	n/a		(4)		--		(4)
Credit default contracts
Credit default swaps – buying protection		Other liabilities & accrued expenses		171	n/a		(2)		--		(2)
Credit default swaps – selling protection		Other liabilities & accrued expenses		100	n/a		(15)		--		(15)
Subtotal				10,628	10,035		(726)		11		(737)
Total liability derivatives				10,760	10,035		(741)	$	11	$	(752)
Total derivatives			$	12,409	20,697	$	(487)
	(1)   Volume for OTC derivative contracts is represented by their notional amounts.  Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded.  (n/a = not applicable)
	(2)   In addition to the number of contracts presented in the table, the Company held 837,100 stock warrants.  Stock warrants can be converted to cash upon sale of those instruments or exercised for shares of common stock.

The following table provides a summary of the volume and fair value positions of derivative instruments as well as their reporting location in the Consolidated Statement of Financial Position as of December 31, 2012.

($ in millions, except number of contracts)			Volume (1)
Asset derivatives	Balance sheet location		Notional amount	Number of contracts		Fair value, net		Gross asset		Gross liability
Derivatives designated as accounting hedging instruments
Foreign currency swap agreements	Other investments	$	16	n/a	$	2	$	2	$	--
Derivatives not designated as accounting hedging instruments
Interest rate contracts
Interest rate swap agreements	Other investments		5,541	n/a		19		28		(9)
Interest rate cap agreements	Other investments		372	n/a		1		1		--
Financial futures contracts	Other assets		n/a	2		--		--		--
Equity and index contracts
Options and warrants (2)	Other investments		146	12,400		125		125		--
Financial futures contracts	Other assets		n/a	249		2		2		--
Foreign currency contracts
Foreign currency forwards	Other investments		44	n/a		--		--		--
Embedded derivative financial instruments
Conversion options	Fixed income securities		5	n/a		--		--		--
Equity-indexed call options	Fixed income securities		90	n/a		9		9		--
Credit default swaps	Fixed income securities		12	n/a		(12)		--		(12)
Credit default contracts
Credit default swaps – buying protection	Other investments		32	n/a		(1)		--		(1)
Credit default swaps – selling protection	Other investments		100	n/a		1		1		--
Other contracts
Other contracts	Other assets		4	n/a		1		1		--
Subtotal			6,346	12,651		145		167		(22)
Total asset derivatives		$	6,362	12,651	$	147	$	169	$	(22)

Liability derivatives
Derivatives designated as accounting hedging instruments
Foreign currency swap agreements	Other liabilities & accrued expenses	$	135	n/a	$	(19)	$	--	$	(19)
Derivatives not designated as accounting  hedging instruments
Interest rate contracts
Interest rate swap agreements	Other liabilities & accrued expenses		1,185	n/a		16		18		(2)
Interest rate swaption agreements	Other liabilities & accrued expenses		250	n/a		--		--		--
Interest rate cap agreements	Other liabilities & accrued expenses		429	n/a		1		1		--
Financial futures contracts	Other liabilities & accrued expenses		--	357		--		--		--
Equity and index contracts
Options and futures	Other liabilities & accrued expenses		--	12,262		(58)		--		(58)
Embedded derivative financial instruments
Guaranteed accumulation benefits	Contractholder funds		820	n/a		(86)		--		(86)
Guaranteed withdrawal benefits	Contractholder funds		554	n/a		(39)		--		(39)
Equity-indexed and forward starting options in life and annuity product contracts	Contractholder funds		3,916	n/a		(419)		--		(419)
Other embedded derivative financial instruments	Contractholder funds		85	n/a		(9)		--		(9)
Credit default contracts
Credit default swaps – buying protection	Other liabilities & accrued expenses		193	n/a		(2)		--		(2)
Credit default swaps – selling protection	Other liabilities & accrued expenses		130	n/a		(30)		--		(30)
Subtotal			7,562	12,619		(626)		19		(645)
Total liability derivatives			7,697	12,619		(645)	$	19	$	(664)
Total derivatives		$	14,059	25,270	$	(498)

(1)   Volume for OTC derivative contracts is represented by their notional amounts.  Volume for exchange traded derivatives is represented by the number of contracts, which is the basis on which they are traded.  (n/a = not applicable)

(2)In addition to the number of contracts presented in the table, the Company held 837,100 stock warrants.  Stock warrants can be converted to cash upon sale of those instruments or exercised for shares of common stock.

Schedule of gross and net amounts about the Company's OTC derivatives subject to enforceable master netting arrangements

($ in millions)				Offsets
		Gross amount		Counter- party netting		Cash collateral (received) pledged		Net amount on balance sheet		Securities collateral (received) pledged		Net amount
December 31, 2013
Asset derivatives	$	14	$	(11)	$	--	$	3	$	(3)	$	--
Liability derivatives		(33)		11		(4)		(26)		22		(4)
December 31, 2012
Asset derivatives	$	52	$	(29)	$	(18)	$	5	$	(5)	$	--
Liability derivatives		(63)		29		--		(34)		25		(9)

Summary of impacts on operations and AOCI from foreign currency contracts, cash flow hedges

($ in millions)		2013		2012		2011
Gain (loss) recognized in OCI on derivatives during the period	$	3	$	(6)	$	4
Loss recognized in OCI on derivatives during the term of the hedging relationship		(13)		(17)		(12)
Loss reclassified from AOCI into income (net investment income)		(1)		--		--
Loss reclassified from AOCI into income (realized capital gains and losses)		--		(1)		(1)

Schedule of gains and losses from valuation, settlements, and hedge ineffectiveness, fair value hedges and derivatives not designated as hedges

($ in millions)		2013
		Realized capital gains and losses		Contract benefits		Interest credited to contractholder funds		Loss on disposition of operations		Total gain (loss) recognized in net income on derivatives
Interest rate contracts	$	3	$	--	$	--	$	(6)	$	(3)
Equity and index contracts		--		--		94		--		94
Embedded derivative financial instruments		(1)		74		(75)		--		(2)
Foreign currency contracts		(2)		--		--		--		(2)
Credit default contracts		14		--		--		--		14
Other contracts		--		--		(3)		--		(3)
Total	$	14	$	74	$	16	$	(6)	$	98

		2012
		Net investment income		Realized capital gains and losses		Contract benefits		Interest credited to contractholder funds		Total gain (loss) recognized in net income on derivatives
Derivatives in fair value accounting hedging relationships
Interest rate contracts	$	(1)	$	--	$	--	$	--	$	(1	)
Derivatives not designated as accounting hedging instruments
Interest rate contracts		--		2		--		--		2
Equity and index contracts		--		--		--		56		56
Embedded derivative financial instruments		--		20		36		134		190
Foreign currency contracts		--		(2)		--		--		(2	)
Credit default contracts		--		15		--		--		15
Other contracts		--		--		--		3		3
Subtotal		--		35		36		193		264
Total	$	(1)	$	35	$	36	$	193	$	263

		2011
		Net investment income		Realized capital gains and losses		Contract benefits		Interest credited to contractholder funds		Total gain (loss) recognized in net income on derivatives
Derivatives in fair value accounting hedging relationships
Interest rate contracts	$	(2)	$	(8)	$	--	$	(5)	$	(15	)
Foreign currency and interest rate contracts		--		--		--		(32)		(32	)
Subtotal		(2)		(8)		--		(37)		(47	)
Derivatives not designated as accounting hedging instruments
Interest rate contracts		--		(151)		--		--		(151	)
Equity and index contracts		--		--		--		(2)		(2	)
Embedded derivative financial instruments		--		(45)		(32)		(38)		(115	)
Credit default contracts		--		2		--		--		2
Other contracts		--		--		--		7		7
Subtotal		--		(194)		(32)		(33)		(259	)
Total	$	(2)	$	(202)	$	(32)	$	(70)	$	(306	)

Summary of the changes in fair value of fair value hedging relationships

($ in millions)		Gain (loss) on derivatives				Gain (loss) on hedged risk
Location of gain or (loss) recognized in net income on derivatives		Interest rate contracts		Foreign currency & interest rate contracts		Contractholder funds		Investments
2012
Net investment income	$	3	$	--	$	--	$	(3	)
Total	$	3	$	--	$	--	$	(3	)
2011
Interest credited to contractholder funds	$	(7)	$	(34)	$	41	$	--
Net investment income		26		--		--		(26	)
Realized capital gains and losses		(8)		--		--		--
Total	$	11	$	(34)	$	41	$	(26	)

Summary of counterparty credit exposure by counterparty credit rating

($ in millions)	2013							2012
Rating (1)	Number of counter- parties		Notional amount (2)		Credit exposure (2)		Exposure, net of collateral (2)	Number of counter- parties		Notional amount (2)		Credit exposure (2)		Exposure, net of collateral (2)
A+	1	$	22	$	1	$	1	1	$	19	$	--	$	--
A	4		1,523		2		--	3		2,252		12		--
A-	1		24		1		--	2		311		1		1
BBB+	1		3		--		--	1		3,617		11		--
BBB	1		76		1		--	--		--		--		--
Total	8	$	1,648	$	5	$	1	7	$	6,199	$	24	$	1

(1)	Rating is the lower of S&P or Moody’s ratings.
(2)	Only OTC derivatives with a net positive fair value are included for each counterparty.

Summary of derivative instruments with credit features in a liability position, including fair value of assets and collateral netted against the liability

($ in millions)		2013		2012
Gross liability fair value of contracts containing credit-risk-contingent features	$	25	$	62
Gross asset fair value of contracts containing credit-risk-contingent features and subject to MNAs		(9)		(28)
Collateral posted under MNAs for contracts containing credit-risk-contingent features		(14)		(25)
Maximum amount of additional exposure for contracts with credit-risk-contingent features if all features were triggered concurrently	$	2	$	9

Schedule of CDS notional amounts by credit rating and fair value of protection sold

($ in millions)			Notional amount
			AA		A		BBB		BB and lower		Total		Fair value
December 31, 2013
Single name
Investment grade corporate debt (1)		$	--	$	5	$	--	$	--	$	5	$	--
Baskets
First-to-default
Municipal			--		100		--		--		100		(15)
Index
Investment grade corporate debt (1)			1		20		55		4		80		2
Total		$	1	$	125	$	55	$	4	$	185	$	(13)
December 31, 2012
Single name
Investment grade corporate debt (1)		$	--	$	5	$	--	$	--	$	5	$	--
Municipal			25		--		--		--		25		(3)
Subtotal			25		5		--		--		30		(3)
Baskets
First-to-default
Municipal			--		100		--		--		100		(26)
Index
Investment grade corporate debt (1)			1		26		68		5		100		--
Total		$	26	$	131	$	68	$	5	$	230	$	(29)
	(1) Investment grade corporate debt categorization is based on the rating of the underlying name(s) at initial purchase.

Contractual amounts of off-balance-sheet financial instruments

($ in millions)		2013		2012
Commitments to invest in limited partnership interests	$	1,366	$	947
Commitments to extend mortgage loans		1		67
Private placement commitments		5		6
Other loan commitments		26		7