Investments and Derivative Instruments

12 Months Ended

Dec. 31, 2013

Investments and Derivative Instruments [Abstract]

Investments and Derivative Instruments

Investments and Derivative Instruments

Net Investment Income

	For the years ended December 31,
(Before-tax)	2013			2012			2011
Fixed maturities [1]	$	1,253		$	1,953		$	1,927
Equity securities, AFS	8			11			10
Mortgage loans	172			248			206
Policy loans	82			116			128
Limited partnerships and other alternative investments	119			85			143
Other investments [2]	123			199			231
Investment expenses	(76		)	(77		)	(73		)
Total securities AFS and other	1,681			2,535			2,572
Equity securities, trading	2			1			—
Total net investment income	$	1,683		$	2,536		$	2,572

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

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

The net unrealized gain on equity securities, trading, included in net investment income during the years ended December 31, 2013, 2012 and 2011, was $1, $0 and $1, respectively. These amounts were not included in net unrealized gains (losses) in the accompanying Consolidated Balance Sheets.

Net Realized Capital Gains (Losses)

	For the years ended December 31,
(Before-tax)	2013			2012			2011
Gross gains on sales [1]	$	2,196		$	478		$	400
Gross losses on sales	(700		)	(278		)	(200		)
Net OTTI losses recognized in earnings [2]	(45		)	(255		)	(125		)
Valuation allowances on mortgage loans	(1		)	4			25
Japanese fixed annuity contract hedges, net [3]	6			(36		)	3
Periodic net coupon settlements on credit derivatives/Japan	(3		)	(8		)	—
Results of variable annuity hedge program
U.S. GMWB derivatives, net	262			519			(397		)
U.S. macro hedge program	(234		)	(340		)	(216		)
Total U.S. program	28			179			(613		)
International Program [4]	(963		)	(1,145		)	639
Total results of variable annuity hedge program	(935		)	(966		)	26
GMIB/GMAB/GMWB reinsurance	1,107			1,233			(326		)
Coinsurance and modified coinsurance reinsurance contracts	(1,405		)	(1,901		)	375
Other, net [5]	106			248			(255		)
Net realized capital gains (losses), before-tax	$	326		$	(1,481	)	$	(77	)

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

[2] Includes $173 of intent-to-sell impairments relating to the Retirement Plans and Individual Life businesses sold for the year ended December 31, 2012.

[3] Includes for the years ended December 31, 2013, 2012 and 2011, transactional foreign currency re-valuation related to the Japan fixed annuity product of $324, $245, and $(129) , respectively, as well as the change in value related to the derivative hedging instruments and the Japan government FVO securities of $(318), $(281), and $132, respectively.

[4] Includes $(55), $(66), and $0 of transactional foreign currency re-valuation for the years ended December 31, 2013, 2012 and 2011, respectively.

[5] For the years ended December 31, 2013, 2012 and 2011, other, net gains and losses includes $295, $205 and $(119), respectively, of transactional foreign currency re-valuation primarily associated with the internal reinsurance of the Japan variable annuity business, of which a portion is offset within realized gains and losses by the change in value of the associated hedging derivatives. Also includes $71 and $110 of gains relating to Retirement Plans and Individual Life businesses sold for the years ended December 31, 2013 and 2012, respectively, as well as changes in value of non-qualifying derivatives.

Net realized capital gains and losses from investment sales are reported as a component of revenues and are determined on a specific identification basis. Gross gains and losses on sales and impairments previously reported as unrealized gains in AOCI were $1.4 billion, $(55) and $75 for the years ended December 31, 2013, 2012 and 2011, respectively.

Sales of Available-for-Sale Securities

	For the years ended December 31,
	2013			2012			2011
Fixed maturities, AFS
Sale proceeds	$	19,190		$	23,555		$	19,861
Gross gains [1]	1,867			521			354
Gross losses	(421		)	(270		)	(205		)
Equity securities, AFS
Sale proceeds	$	81		$	133		$	147
Gross gains	254			15			50
Gross losses	(263		)	(5		)	—

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

Sales of AFS securities in 2013 were primarily as a result of management of duration and liquidity as well as progress towards sector allocation objectives.

Other-Than-Temporary Impairment Losses

The following table presents a roll-forward of the Company’s cumulative credit impairments on debt securities held as of December 31, 2013, 2012 and 2011.

	For the years ended December 31,
(Before-tax)	2013			2012			2011
Balance, beginning of period	$	(813	)	$	(1,319	)	$	(1,598	)
Additions for credit impairments recognized on [1]:
Securities not previously impaired	(14		)	(27		)	(41		)
Securities previously impaired	(4		)	(15		)	(47		)
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period	403			543			358
Securities due to an increase in expected cash flows	17			5			9
Securities the Company made the decision to sell or more likely than not will be required to sell	1			—			$	—
Balance, end of period	$	(410	)	$	(813	)	$	(1,319	)

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

Available-for-Sale Securities

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

	December 31, 2013												December 31, 2012
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [1]			Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [1]
ABS	$	1,172	$	13	$	(56	)	$	1,129	$	(2	)	$	1,807	$	38	$	(172	)	$	1,673	$	(4	)
CDOs [2]	1,392		98		(41		)	1,448		—			2,236		61		(117		)	2,160		(4		)
CMBS	2,275		106		(34		)	2,347		(3		)	3,757		262		(107		)	3,912		(7		)
Corporate	15,913		1,196		(192		)	16,917		(6		)	27,774		3,426		(221		)	30,979		(19		)
Foreign govt./govt. agencies	1,267		27		(117		)	1,177		—			1,369		120		(29		)	1,460		—
Municipal	988		26		(49		)	965		—			1,808		204		(14		)	1,998		—
RMBS	2,419		60		(48		)	2,431		(3		)	4,590		196		(115		)	4,671		(28		)
U.S. Treasuries	1,762		1		(14		)	1,749		—			2,412		151		(12		)	2,551		—
Total fixed maturities, AFS	27,188		1,527		(551		)	28,163		(14		)	45,753		4,458		(787		)	49,404		(62		)
Equity securities, AFS	362		35		(25		)	372		—			408		28		(36		)	400		—
Total AFS securities [3]	$	27,550	$	1,562	$	(576	)	$	28,535	$	(14	)	$	46,161	$	4,486	$	(823	)	$	49,804	$	(62	)

[1] Represents the amount of cumulative non-credit OTTI losses recognized in OCI on securities that also had credit impairments. These losses are included in gross unrealized losses as of December 31, 2013 and 2012.

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

[3] As of December 31, 2012 Includes fixed maturities, AFS and equity securities, AFS relating to the sales of the Retirement Plans and Individual Life businesses; see Note 2 - Business Dispositions of Notes to Consolidated Financial Statements for further discussion of these transactions.

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

	December 31, 2013
Contractual Maturity	Amortized Cost		Fair Value
One year or less	$	1,615	$	1,639
Over one year through five years	5,328		5,535
Over five years through ten years	4,319		4,481
Over ten years	8,668		9,153
Subtotal	19,930		20,808
Mortgage-backed and asset-backed securities	7,258		7,355
Total fixed maturities, AFS	$	27,188	$	28,163

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

Concentration of Credit Risk

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

The Company's only exposure to any credit concentration risk of a single issuer greater than 10% of the Company’s stockholders’ equity other than U.S. government and certain U.S. government agencies, was the Government of Japan which represents $853 or 10% of stockholders' equity, and 2% of total invested assets as of December 31, 2013. As of December 31, 2012, the Company was not exposed to any concentration of credit risk of a single issuer greater than 10% of the Company’s stockholders’ equity other than U.S. government and certain U.S. government agencies. As of December 31, 2013, other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were the Government of Japan, JPMorgan Chase & Co. and Goldman Sachs Group Inc. which each comprised less than 3% of total invested assets. As of December 31, 2012, other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were the Government of Japan, National Grid PLC and Berkshire Hathaway Inc. which each comprised less than 2% of total invested assets.

The Company’s three largest exposures by sector as of December 31, 2013 were utilities, financial services, and commercial real estate which comprised approximately 9%, 8% and 7%, respectively, of total invested assets. The Company’s three largest exposures by sector as of December 31, 2012 were utilities, financial services, and consumer non-cyclical which comprised approximately 10%, 8% and 8%, respectively, of total invested assets.

Security Unrealized Loss Aging

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

	December 31, 2013
	Less Than 12 Months							12 Months or More							Total
	Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses
ABS	$	288	$	286	$	(2	)	$	418	$	364	$	(54	)	$	706	$	650	$	(56	)
CDOs [1]	64		63		(1		)	1,185		1,144		(40		)	1,249		1,207		(41		)
CMBS	437		423		(14		)	392		372		(20		)	829		795		(34		)
Corporate	2,449		2,360		(89		)	799		696		(103		)	3,248		3,056		(192		)
Foreign govt./govt. agencies	542		501		(41		)	303		227		(76		)	845		728		(117		)
Municipal	508		475		(33		)	99		83		(16		)	607		558		(49		)
RMBS	922		909		(13		)	475		440		(35		)	1,397		1,349		(48		)
U.S. Treasuries	1,456		1,442		(14		)	—		—		—			1,456		1,442		(14		)
Total fixed maturities, AFS	6,666		6,459		(207		)	3,671		3,326		(344		)	10,337		9,785		(551		)
Equity securities, AFS	77		73		(4		)	135		114		(21		)	212		187		(25		)
Total securities in an unrealized loss position	$	6,743	$	6,532	$	(211	)	$	3,806	$	3,440	$	(365	)	$	10,549	$	9,972	$	(576	)

	December 31, 2012
	Less Than 12 Months							12 Months or More							Total
	Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses
ABS	$	77	$	76	$	(1	)	$	787	$	616	$	(171	)	$	864	$	692	$	(172	)
CDOs [1]	5		5		—			1,640		1,515		(117		)	1,645		1,520		(117		)
CMBS	192		179		(13		)	795		701		(94		)	987		880		(107		)
Corporate [1]	614		578		(36		)	1,339		1,154		(185		)	1,953		1,732		(221		)
Foreign govt./govt. agencies	318		290		(28		)	7		6		(1		)	325		296		(29		)
Municipal	65		62		(3		)	98		87		(11		)	163		149		(14		)
RMBS	322		321		(1		)	750		636		(114		)	1,072		957		(115		)
U.S. Treasuries	384		372		(12		)	—		—		—			384		372		(12		)
Total fixed maturities, AFS	1,977		1,883		(94		)	5,416		4,715		(693		)	7,393		6,598		(787		)
Equity securities, AFS	9		9		—			172		136		(36		)	181		145		(36		)
Total securities in an unrealized loss position	$	1,986	$	1,892	$	(94	)	$	5,588	$	4,851	$	(729	)	$	7,574	$	6,743	$	(823	)

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

As of December 31, 2013, AFS securities in an unrealized loss position, comprised of 1,007 securities, primarily related to corporate securities and foreign government and government agencies, which are depressed due to an increase in interest rates since the securities were purchased and/or declines in the value of the currency in which the assets are denominated. As of December 31, 2013, 89% of these securities were depressed less than 20% of cost or amortized cost. The decrease in unrealized losses during 2013 was primarily attributable to realized capital losses as a result of portfolio management activity, partially offset by an increase in interest rates.

Most of the securities depressed for twelve months or more relate to certain floating rate corporate securities with greater than 10 years to maturity concentrated in the financial services sector, foreign government and government agencies, as well as structured securities with exposure to commercial and residential real estate. Although credit spreads have tightened during 2013, current market spreads continue to be wider than spreads at the securities' respective purchase dates for structured securities with exposure to commercial and residential real estate largely due to the economic and market uncertainties regarding future performance of certain commercial and residential real estate backed securities. In addition, the majority of securities have a floating-rate coupon referenced to a market index where rates have declined substantially. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined above.

Mortgage Loans

	December 31, 2013							December 31, 2012
	Amortized Cost [1]		Valuation Allowance			Carrying Value		Amortized Cost [1]		Valuation Allowance			Carrying Value
Total commercial mortgage loans [2]	$	3,482	$	(12	)	$	3,470	$	4,949	$	(14	)	$	4,935

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

[2] As of December 31, 2012 includes commercial mortgage loans relating to the sales of the Retirement Plans and Individual Life businesses; see Note 2 - Business Dispositions of Notes to Consolidated Financial Statements for further discussion of these transactions.

As of December 31, 2013 and 2012, the carrying value of mortgage loans associated with the valuation allowance was $86 and $189, respectively. Included in the table above are mortgage loans held-for-sale with a carrying value and valuation allowance of $53 and $3, respectively, as of December 31, 2013 and $47 and $3, respectively, as of December 31, 2012. The carrying value of these loans is included in mortgage loans in the Company’s Consolidated Balance Sheets. As of December 31, 2013, loans within the Company’s mortgage loan portfolio that have had extensions or restructurings other than what is allowable under the original terms of the contract are immaterial.

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

	For the years ended December 31,
	2013			2012			2011
Balance as of January 1	$	(14	)	$	(23	)	$	(62	)
(Additions)/Reversals	(2		)	4			25
Deductions	4			5			14
Balance as of December 31	$	(12	)	$	(14	)	$	(23	)

The weighted-average LTV ratio of the Company’s commercial mortgage loan portfolio was 57% as of December 31, 2013, while the weighted-average LTV ratio at origination of these loans was 63%. LTV ratios compare the loan amount to the value of the underlying property collateralizing the loan. The loan values are updated no less than annually through property level reviews of the portfolio. Factors considered in the property valuation include, but are not limited to, actual and expected property cash flows, geographic market data and capitalization rates. DSCRs compare a property’s net operating income to the borrower’s principal and interest payments. The weighted average DSCR of the Company’s commercial mortgage loan portfolio was 2.23x as of December 31, 2013. As of December 31, 2013, the Company held no delinquent commercial mortgage loans past due by 90 days or more. The Company held only one delinquent commercial mortgage loan past due by 90 days or more as of December 31, 2012. The carrying value and valuation allowance of this loan totaled $32 and $0, respectively, and was not accruing income.

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

Commercial Mortgage Loans Credit Quality
	December 31, 2013			December 31, 2012
Loan-to-value	Carrying Value		Avg. Debt-Service Coverage Ratio	Carrying Value		Avg. Debt-Service Coverage Ratio
Greater than 80%	$	35	1.15x	$	137	0.89x
65% - 80%	777		1.94x	1,717		2.27x
Less than 65%	2,658		2.34x	3,081		2.44x
Total commercial mortgage loans	$	3,470	2.23x	$	4,935	2.34x

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

Mortgage Loans by Region
	December 31, 2013			December 31, 2012
	Carrying Value		Percent of Total	Carrying Value		Percent of Total
East North Central	$	79	2.3%	$	97	2.0%
Middle Atlantic	255		7.3%	370		7.5%
Mountain	40		1.2%	62		1.3%
New England	163		4.7%	231		4.7%
Pacific	1,019		29.4%	1,504		30.5%
South Atlantic	548		15.8%	1,012		20.5%
West North Central	17		0.5%	16		0.3%
West South Central	144		4.1%	234		4.7%
Other [1]	1,205		34.7%	1,409		28.5%
Total mortgage loans	$	3,470	100%	$	4,935	100%

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

Mortgage Loans by Property Type
	December 31, 2013				December 31, 2012
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Agricultural	$	93	2.7	%	$	109	2.2	%
Industrial	1,182		34.1	%	1,519		30.8	%
Lodging	27		0.8	%	81		1.6	%
Multifamily	576		16.6	%	869		17.6	%
Office	723		20.8	%	1,120		22.7	%
Retail	745		21.5	%	1,047		21.2	%
Other	124		3.5	%	190		3.9	%
Total mortgage loans	$	3,470	100	%	$	4,935	100	%

Variable Interest Entities

The Company is involved with various special purpose entities and other entities that are deemed to be VIEs primarily as a collateral or investment manager and as an investor through normal investment activities, as well as a means of accessing capital through a contingent capital facility. For further information on the facility, see Note 10 - Debt of Notes to Consolidated Financial Statements.

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

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

Consolidated VIEs

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

	December 31, 2013						December 31, 2012
	Total Assets		Total Liabilities  [1]		Maximum Exposure to Loss [2]		Total Assets		Total Liabilities  [1]		Maximum Exposure to Loss [2]
CDOs [3]	$	12	$	13	$	—	$	89	$	88	$	7
Investment funds [4]	134		20		119		132		20		110
Limited partnerships	4		2		2		6		3		3
Total	$	150	$	35	$	121	$	227	$	111	$	120

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

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

[3] Total assets included in fixed maturities, AFS in the Company’s Consolidated Balance Sheets.

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

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

Non-Consolidated VIEs

The Company does not hold any investments issued by VIEs for which the Company is not the primary beneficiary as of December 31, 2013 and 2012. In addition, the Company, through normal investment activities, makes passive investments in structured securities issued by VIEs for which the Company is not the manager which are included in ABS, CDOs, CMBS and RMBS in the Available-for-Sale Securities table and fixed maturities, FVO, in the Company’s Consolidated Balance Sheets. The Company has not provided financial or other support with respect to these investments other than its original investment. For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum exposure to loss on these investments is limited to the amount of the Company’s investment.

Repurchase and Dollar Roll Agreements and Other Collateral Transactions

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

As part of repurchase agreements and dollar roll transactions, the Company transfers collateral of U.S. government and government agency securities and receives cash. For the repurchase agreements, the Company obtains cash in an amount equal to at least 95% of the fair value of the securities transferred. The agreements contain contractual provisions that require additional collateral to be transferred when necessary and provide the counterparty the right to sell or re-pledge the securities transferred. The cash received from the repurchase program is typically invested in short-term investments or fixed maturities. Repurchase agreements include master netting provisions that provide the counterparties the right to set off claims and apply securities held by them in respect of their obligations in the event of a default. The Company accounts for the repurchase agreements and dollar roll transactions as collateralized borrowings. The securities transferred under repurchase agreements and dollar roll transactions are included in fixed maturities, AFS with the obligation to repurchase those securities recorded in other liabilities on the Company's Consolidated Balance Sheets.

As of December 31, 2013, the Company has no outstanding repurchase agreements or dollar roll transactions. As of December 31, 2012, the Company reported financial collateral pledged relating to repurchase agreements of $923 in fixed maturities, AFS on the Consolidated Balance sheets. The Company reported a corresponding obligation to repurchase these securities of $923 in other liabilities on the Consolidated Balance sheets. With respect to dollar roll transactions, the Company reported financial collateral pledged with a fair value of $692 in fixed maturities, AFS with a corresponding obligation to repurchase $692 reported in other liabilities, as of December 31, 2012.

The Company is required by law to deposit securities with government agencies in states where it conducts business. As of December 31, 2013 and 2012 the fair value of securities on deposit was approximately $13 and $14, respectively.

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

Equity Method Investments

The majority of the Company's investments in limited partnerships and other alternative investments, including hedge funds, mortgage and real estate funds, mezzanine debt funds, and private equity and other funds (collectively, “limited partnerships”), are accounted for under the equity method of accounting. The Company’s maximum exposure to loss as of December 31, 2013 is limited to the total carrying value of $0.9 billion. In addition, the Company has outstanding commitments totaling approximately $223, to fund limited partnership and other alternative investments as of December 31, 2013. The Company’s investments in limited partnerships are generally of a passive nature in that the Company does not take an active role in the management of the limited partnerships. In 2013, aggregate investment income (losses) from limited partnerships and other alternative investments exceeded 10% of the Company’s pre-tax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for the Company’s limited partnership investments. This aggregated summarized financial data does not represent the Company’s proportionate share of limited partnership assets or earnings. Aggregate total assets of the limited partnerships in which the Company invested totaled $77.2 billion and $75.3 billion as of December 31, 2013 and 2012, respectively. Aggregate total liabilities of the limited partnerships in which the Company invested totaled $10.7 billion and $9.6 billion as of December 31, 2013 and 2012, respectively. Aggregate net investment income (loss) of the limited partnerships in which the Company invested totaled $1.8 billion, $0.9 billion and $1.2 billion for the periods ended December 31, 2013, 2012 and 2011, respectively. Aggregate net income (loss) of the limited partnerships in which the Company invested totaled $7.1 billion, $6.5 billion, and $8.1 billion for the periods ended December 31, 2013, 2012 and 2011, respectively. As of, and for the period ended, December 31, 2013, the aggregated summarized financial data reflects the latest available financial information.

Derivative Instruments

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

Strategies that qualify for hedge accounting

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

Cash flow hedges

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

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

Fair value hedges

Interest rate swaps are used to hedge the changes in fair value of certain fixed rate liabilities and fixed maturity securities due to fluctuations in interest rates. Foreign currency swaps are used to hedge the changes in fair value of certain foreign currency-denominated fixed rate liabilities due to changes in foreign currency rates by swapping the fixed foreign payments to floating rate U.S. dollar denominated payments.

Non-qualifying strategies

Derivative relationships that do not qualify for hedge accounting or “non-qualifying strategies” primarily include the hedge programs for our U.S. and international variable annuity products as well as the hedging and replication strategies through the use of credit default swaps. In addition, hedges of interest rate and foreign currency risk of certain fixed maturities and liabilities do not qualify for hedge accounting. These non-qualifying strategies include:

Interest rate swaps, swaptions, caps, floors, and futures

The Company may use interest rate swaps, swaptions, caps, floors and futures to manage duration between assets and liabilities in certain investment portfolios. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap. As of December 31, 2013 and 2012 the notional amount of interest rate swaps in offsetting relationships was $4.5 billion and $5.1 billion, respectively.

Foreign currency swaps and forwards

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

Japan 3Win foreign currency swaps

The Company formerly offered certain variable annuity products with a guaranteed minimum income benefit ("GMIB") rider through a wholly-owned Japanese subsidiary. The GMIB rider is reinsured to a wholly-owned U.S. subsidiary which invests in U.S. dollar denominated assets to support the liability. The U.S. subsidiary entered into pay U.S. dollar, receive yen swap contracts to hedge the currency and yen interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.

Japanese fixed annuity hedging instruments

The Company formerly offered a yen denominated fixed annuity product through a wholly-owned Japanese subsidiary and reinsured to a wholly-owned U.S. subsidiary. The U.S. subsidiary invests in U.S. dollar denominated securities to support the yen denominated fixed liability payments and entered into currency rate swaps to hedge the foreign currency exchange rate and yen interest rate exposures that exist as a result of U.S. dollar assets backing the yen denominated liability.

Credit contracts

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

Equity index swaps and options

The Company formerly offered certain equity indexed products, which may contain an embedded derivative that requires bifurcation. The Company has entered into equity index swaps and options to economically hedge the equity volatility risk associated with these embedded derivatives. The Company also enters into equity index options and futures with the purpose of hedging the impact of an adverse equity market environment on the investment portfolio.

U.S GMWB derivatives, net

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

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

	Notional Amount				Fair Value
	December 31, 2013		December 31, 2012		December 31, 2013			December 31, 2012
Customized swaps	$	7,839	$	7,787	$	74		$	238
Equity swaps, options, and futures	4,237		5,130		44			267
Interest rate swaps and futures	6,615		5,705		(77		)	67
Total	$	18,691	$	18,622	$	41		$	572

U.S. macro hedge program

The Company utilizes equity options to partially hedge against a decline in the equity markets and the resulting statutory surplus and capital impact primarily arising from GMDB and GMWB obligations. The following table represents notional and fair value for the U.S. macro hedge program.

	Notional Amount				Fair Value
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Equity options and swaps	9,934		7,442		139		286
Total	$	9,934	$	7,442	$	139	$	286

International program

The Hartford formerly offered certain variable annuity products in Japan with GMWB or GMAB riders, which are bifurcated embedded derivatives (“International program product derivatives”). The GMWB provides the policyholder with a guaranteed remaining balance (“GRB”) which is generally equal to premiums less withdrawals.  If the policyholder’s account value is reduced to a specified level through a combination of market declines and withdrawals but the GRB still has value, the Company is obligated to continue to make annuity payments to the policyholder until the GRB is exhausted. Certain contract provisions can increase the GRB at contractholder election or after the passage of time. The GMAB provides the policyholder with their initial deposit in a lump sum after a specified waiting period. The notional amount of the International program product derivatives are the foreign currency denominated GRBs converted to U.S. dollars at the current foreign spot exchange rate as of the reporting period date.

The Company has reinsured certain of these GMWB and GMAB riders from an affiliate. See Note 13 - Transactions with Affiliates for further discussion.

The Company enters into derivative contracts (“International program hedging instruments”) to hedge a portion of the capital market risk exposures associated with the guaranteed benefits associated with the international variable annuity contracts. During 2013, the Company expanded its hedging program to substantially reduce equity and foreign currency exchange risk. The program is primarily focused on the risks that have been reinsured to the Company’s U.S. legal entities although certain hedges, predominantly options, are also held directly in HLIKK .  The hedging derivatives collectively held in these entities are comprised of equity futures, options, swaps and currency forwards and options to hedge against a decline in the debt and equity markets or changes in foreign currency exchange rates and the resulting statutory surplus and capital impact primarily arising from GMDB, GMIB and GMWB obligations issued in Japan.

The Company also enters into foreign currency denominated interest rate swaps and swaptions to hedge the interest rate exposure related to the potential annuitization of certain benefit obligations.

The following table represents notional and fair value for the international program hedging instruments.

	Notional Amount				Fair Value
	December 31, 2013		December 31, 2012		December 31, 2013			December 31, 2012
Credit derivatives	350		350		5			28
Currency forwards [1]	8,778		9,327		24			(87		)
Currency options	8,408		9,710		(58		)	(49		)
Equity futures	999		1,206		—			—
Equity options	1,022		2,621		(63		)	(105		)
Equity swaps	3,830		2,683		(95		)	(12		)
Customized swaps	—		899		—			(11		)
Interest rate futures	566		634		—			—
Interest rate swaps and swaptions	33,072		21,018		160			131
Total	$	57,025	$	48,448	$	(27	)	$	(105	)

[1] As of December 31, 2013 and 2012 net notional amounts are $(1.6) billion and $0.1 billion, respectively, which include $3.6 billion and $4.7 billion, respectively, related to long positions and $5.2 billion and $4.6 billion, respectively, related to short positions.

GMAB, GMWB and GMIB reinsurance contracts

As a reinsurer, the Company assumes the GMAB, GMWB, and GMIB embedded derivatives for host variable annuity contracts written by HLIKK. The reinsurance contracts are accounted for as free-standing derivative contracts. The notional amount of the reinsurance contracts is the yen denominated GRB balance value converted at the period-end yen to U.S. dollar foreign spot exchange rate. For further information on this transaction, refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements.

Coinsurance and modified coinsurance reinsurance contracts

During 2010, a subsidiary entered into a coinsurance with funds withheld and modified coinsurance reinsurance agreement with an affiliated captive reinsurer, which creates an embedded derivative. In addition, provisions of this agreement include reinsurance to cede a portion of direct written U.S. GMWB riders, which is accounted for as an embedded derivative. Additional provisions of this agreement cede variable annuity contract GMAB, GMWB and GMIB riders reinsured by the Company that have been assumed from HLIKK and is accounted for as a free-standing derivative. For further information on this transaction, refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements.

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

Derivative Balance Sheet Classification

The following table summarizes the balance sheet classification of the Company’s derivative related fair value amounts as well as the gross asset and liability fair value amounts. For reporting purposes, the Company has elected to offset the fair value amounts, income accruals, and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty or under a master netting agreement, which provides the Company with the legal right of offset. The Company has also elected to offset the fair value amounts, income accruals and related cash collateral receivables and payables of OTC-cleared derivative instruments based on clearing house agreements. The fair value amounts presented below do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation. Derivatives in the Company’s separate accounts are not included because the associated gains and losses accrue directly to policyholders. The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity. Notional amounts are not necessarily reflective of credit risk. In addition, the tables below exclude investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 3 - Fair Value Measurements.

	Net Derivatives										Asset Derivatives				Liability Derivatives
	Notional Amount				Fair Value						Fair Value				Fair Value
Hedge Designation/ Derivative Type	Dec 31, 2013		Dec 31, 2012		Dec 31, 2013			Dec 31, 2012			Dec 31, 2013		Dec 31, 2012		Dec 31, 2013			Dec 31, 2012
Cash flow hedges
Interest rate swaps	$	3,215	$	3,863	$	16		$	167		$	49	$	167	$	(33	)	$	—
Foreign currency swaps	143		163		(5		)	(17		)	2		3		(7		)	(20		)
Total cash flow hedges	3,358		4,026		11			150			51		170		(40		)	(20		)
Fair value hedges
Interest rate swaps	1,261		753		(24		)	(55		)	2		—		(26		)	(55		)
Foreign currency swaps	—		40		—			16			—		16		—			—
Total fair value hedges	1,261		793		(24		)	(39		)	2		16		(26		)	(55		)
Non-qualifying strategies
Interest rate contracts
Interest rate swaps, swaptions, caps, floors, and futures	4,633		13,432		(368		)	(363		)	123		436		(491		)	(799		)
Foreign exchange contracts
Foreign currency swaps and forwards	118		182		(4		)	(9		)	6		5		(10		)	(14		)
Japan 3Win foreign currency swaps	1,571		1,816		(354		)	(127		)	—		—		(354		)	(127		)
Japanese fixed annuity hedging instruments	1,436		1,652		(6		)	224			88		228		(94		)	(4		)
Credit contracts
Credit derivatives that purchase credit protection	243		1,539		(4		)	(5		)	—		3		(4		)	(8		)
Credit derivatives that assume credit risk [1]	1,507		1,981		27			(8		)	28		17		(1		)	(25		)
Credit derivatives in offsetting positions	3,501		5,341		(3		)	(22		)	35		56		(38		)	(78		)
Equity contracts
Equity index swaps and options	131		791		(2		)	35			18		45		(20		)	(10		)
Variable annuity hedge program
U.S. GMWB product derivative [2]	21,512		28,868		(36		)	(1,249		)	—		—		(36		)	(1,249		)
U.S. GMWB reinsurance contracts	4,508		5,773		29			191			29		191		—			—
U.S. GMWB hedging instruments	18,691		18,622		41			572			333		743		(292		)	(171		)
U.S. macro hedge program	9,934		7,442		139			286			178		356		(39		)	(70		)
International program product derivatives [2]	—		1,876		—			(42		)	—		—		—			(42		)
International program hedging instruments	57,025		48,448		(27		)	(105		)	649		657		(676		)	(762		)
Other
GMAB, GMWB, and GMIB reinsurance contracts	11,999		18,287		(540		)	(1,827		)	—		—		(540		)	(1,827		)
Coinsurance and modified coinsurance reinsurance contracts	29,423		44,985		(427		)	890			383		1,566		(810		)	(676		)
Total non-qualifying strategies	166,232		201,035		(1,535		)	(1,559		)	1,870		4,303		(3,405		)	(5,862		)
Total cash flow hedges, fair value hedges, and non-qualifying strategies	$	170,851	$	205,854	$	(1,548	)	$	(1,448	)	$	1,923	$	4,489	$	(3,471	)	$	(5,937	)
Balance Sheet Location
Fixed maturities, available-for-sale	$	196	$	416	$	(1	)	$	(20	)	$	—	$	—	$	(1	)	$	(20	)
Other investments	40,564		37,809		272			581			721		1,049		(449		)	(468		)
Other liabilities	62,590		67,765		(825		)	38			789		1,683		(1,614		)	(1,645		)
Consumer notes	9		26		(2		)	(2		)	—		—		(2		)	(2		)
Reinsurance recoverable	33,931		47,430		(398		)	1,081			413		1,757		(811		)	(676		)
Other policyholder funds and benefits payable	33,561		52,408		(594		)	(3,126		)	—		—		(594		)	(3,126		)
Total derivatives	$	170,851	$	205,854	$	(1,548	)	$	(1,448	)	$	1,923	$	4,489	$	(3,471	)	$	(5,937	)

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

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

Change in Notional Amount

The net decrease in notional amount of derivatives since December 31, 2012 was primarily due to the following:

• The decrease in notional amount of non-qualifying interest rate contracts primarily resulted from the termination of interest rate swaptions purchased during the third quarter of 2012 designed to hedge the interest rate risk of the securities being transferred related to the sale of the Retirement Plan business segment.

• The decrease in notional amount related to the U.S. GMWB product derivatives was primarily driven by product lapses and partial withdrawals.

• The decrease in notional amount related to the international program product derivatives was due to the GWMB embedded derivative disposed of as part of the sale of HLIL. For additional information on the sale agreement, refer to Note 2 - Business Dispositions of Notes to Consolidated Financial Statements.

• The decrease in notional amount of coinsurance and modified coinsurance reinsurance contracts primarily resulted from policyholder surrender activity and the termination of embedded derivatives as part of Individual Life and Retirement Plans business dispositions. For additional information on the sale agreement, refer to Note 2 - Business Dispositions of Notes to Consolidated Financial Statements.

• The decrease in notional amount of GMAB, GMWB, and GMIB reinsurance contracts was primarily driven by policyholder surrender activity.

• The increase in notional amount related to the international program hedging instruments resulted from the Company expanding its hedging program related to international product program guarantees from the business reinsured from HLIKK in the first quarter of 2013.

Change in Fair Value

The net decrease in the total fair value of derivative instruments since December 31, 2012 was primarily related to the following:

• The fair value related to the Japanese fixed annuity hedging instruments and Japan 3Win foreign currency swaps decreased primarily due to a depreciation of the Japanese yen in relation to the U.S. dollar.

• The fair value related to the cash flow hedging interest rate swaps decreased primarily due to an increase in U.S. interest rates.

• GMAB, GMWB and GMIB reinsurance contracts represent the guarantees that are internally reinsured from HLIKK.  The fair value of these liabilities has improved as a result of a sustained recovery in the equity markets, exchange rates, interest rates, and volatility.  For a discussion related to the reinsurance agreement refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements for more information on this transaction.

• The Coinsurance and modified coinsurance reinsurance contracts represents U.S. and International guarantees that are ceded to an affiliate.  The primary driver of the decline in the fair value of these derivatives is a result of changes in the unrealized gains/losses of the underlying portfolios associated with these contracts as well as policyholder surrender activity.  For a discussion related to the reinsurance agreement refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements for more information on this transaction.

• The fair value associated with the international program hedging instruments decreased primarily due to an improvement in global equity markets and depreciation of the Japanese yen in relation to the euro and the U.S. dollar.

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

Offsetting of Derivative Assets/Liabilities

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

As of December 31, 2013

	(i)		(ii)		(iii) = (i) - (ii)					(iv)			(v) = (iii) - (iv)
					Net Amounts Presented in the Statement of Financial Position						Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Derivative Assets [1]		Accrued Interest and Cash Collateral Received [2]				Financial Collateral Received [4]		Net Amount
Description
Other investments	$	1,510	$	1,290	$	272	$	(52	)		$	121	$	99

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position			Derivative Liabilities [3]			Accrued Interest and Cash Collateral Pledged [3]		Financial Collateral Pledged [4]			Net Amount
Description
Other liabilities	$	(2,063	)	$	(1,308	)	$	(825	)	$	70	$	(826	)	$	71

As of December 31, 2012

	(i)		(ii)		(iii) = (i) - (ii)					(iv)			(v) = (iii) - (iv)
					Net Amounts Presented in the Statement of Financial Position						Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Derivative Assets [1]		Accrued Interest and Cash Collateral Received [2]				Financial Collateral Received [4]		Net Amount
Description
Other investments	$	2,732	$	2,238	$	581	$	(87	)		$	490	$	4

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position			Derivative Liabilities [3]		Accrued Interest and Cash Collateral Pledged [3]			Financial Collateral Pledged [4]			Net Amount
Description
Other liabilities	$	(2,113	)	$	(1,759	)	$	38	$	(392	)	$	(300	)	$	(54	)

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

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

[3] Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.

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

Cash Flow Hedges

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

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

Derivatives in Cash Flow Hedging Relationships
	Gain (Loss) Recognized in OCI on Derivative (Effective  Portion)									Net Realized Capital Gains (Losses) Recognized in Income on Derivative (Ineffective Portion)
	2013			2012			2011			2013			2012		2011
Interest rate swaps	$	(158	)	$	26		$	245		$	(2	)	$	—	$	(2	)
Foreign currency swaps	12			(18		)	(5		)	—			—		—
Total	$	(146	)	$	8		$	240		$	(2	)	$	—	$	(2	)

Derivatives in Cash Flow Hedging Relationships
		Gain (Loss) Reclassified from AOCI into Income (Effective  Portion)
		2013		2012			2011
Interest rate swaps	Net realized capital gains (losses)	$	70	$	85		$	6
Interest rate swaps	Net investment income (loss)	57		97			77
Foreign currency swaps	Net realized capital gains (losses)	4		(4		)	(1		)
Total		$	131	$	178		$	82

As of December 31, 2013, the before-tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $46. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to interest income over the term of the investment cash flows.

During the year ended December 31, 2013, the Company had no net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring. For the year ended December 31, 2012, the before-tax deferred net gains on derivative instruments reclassified from AOCI to earnings totaled $91 which primarily resulted from the discontinuance of cash flow hedges due to forecasted transactions no longer probable of occurring associated with variable rate bonds sold as part of the Individual Life and Retirement Plans business dispositions. For further information on the business dispositions, see Note 2. For the year ended December 31, 2011, the Company had no net reclassifications, respectively, from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.

Fair Value Hedges

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

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

Derivatives in Fair Value Hedging Relationships
	Gain (Loss) Recognized in Income [1]
	2013						2012						2011
	Derivative			Hedged Item			Derivative			Hedged Item			Derivative			Hedged Item
Interest rate swaps
Net realized capital gains (losses)	$	27		$	(24	)	$	(3	)	$	(3	)	$	(58	)	$	54
Foreign currency swaps
Net realized capital gains (losses)	1			(1		)	(7		)	7			(1		)	1
Benefits, losses and loss adjustment expenses	(2		)	2			(6		)	6			(22		)	22
Total	$	26		$	(23	)	$	(16	)	$	10		$	(81	)	$	77

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

Non-qualifying Strategies

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

Non-qualifying Strategies Gain (Loss) Recognized within Net Realized Capital Gains (Losses)
	December 31,
	2013			2012			2011
Interest rate contracts
Interest rate swaps, caps, floors, and forwards	$	(5	)	$	26		$	20
Foreign exchange contracts
Foreign currency swaps and forwards	4			10			1
Japan 3Win foreign currency swaps [1]	(268		)	(300		)	31
Japanese fixed annuity hedging instruments [2]	(207		)	(178		)	109
Credit contracts
Credit derivatives that purchase credit protection	(20		)	(19		)	(8		)
Credit derivatives that assume credit risk	46			204			(141		)
Equity contracts
Equity index swaps and options	(22		)	(31		)	(67		)
Variable annuity hedge program
U.S. GMWB product derivatives	1,306			1,430			(780		)
U.S. GMWB reinsurance contracts	(192		)	(280		)	131
U.S. GMWB hedging instruments	(852		)	(631		)	252
U.S. macro hedge program	(234		)	(340		)	(216		)
International program hedging instruments	(963		)	(1,145		)	639
Other
GMAB, GMWB, and GMIB reinsurance contracts	1,107			1,233			(326		)
Coinsurance and modified coinsurance reinsurance contracts	(1,405		)	(1,901		)	375
Total [3]	$	(1,705	)	$	(1,922	)	$	20

[1] The associated liability is adjusted for changes in spot rates through realized capital gains and was $250, $189 and $(100) for the years ended December 31, 2013, 2012 and 2011, respectively.

[2] The associated liability is adjusted for changes in spot rates through realized capital gains and losses and was $324, $245 and $(129) for the years ended December 31, 2013, 2012, and 2011, respectively.

[3] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 3 - Fair Value Measurements.

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

• The net loss associated with the international program hedging instruments was primarily driven by an improvement in global equity markets and depreciation of the Japanese yen in relation to the euro and the U.S. dollar.

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

• The net gain associated with GMAB, GMWB, and GMIB reinsurance contracts, which are reinsured to an affiliated captive reinsurer, was primarily due to the depreciation of the Japanese yen and an improvement in equity markets.

• The net loss on the coinsurance and modified coinsurance reinsurance agreement, which is accounted for as a derivative instrument primarily offsets the net loss on GMAB, GMWB, and GMIB reinsurance contracts. For a discussion related to the reinsurance agreement refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements for more information on this transaction.

• The net loss related to the Japanese fixed annuity hedging instruments and the Japan 3Win foreign currency swaps was primarily due to a depreciation of the Japanese yen in relation to the U.S. dollar.

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

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

• The net loss associated with the international program hedging instruments was primarily driven by an improvement in global equity markets and depreciation of the Japanese yen in relation to the euro and the U.S. dollar.

• The net gain related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily driven by liability model assumption updates, outperformance of underlying actively managed funds compared to their respective indices, and lower equity volatility.

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

• The net gain associated with GMAB, GMWB, and GMIB reinsurance contracts, which are reinsured to an affiliated captive reinsurer, was primarily due to the depreciation of the Japanese yen and an improvement in equity markets.

• The net loss on the coinsurance and modified coinsurance reinsurance agreement, which is accounted for as a derivative instrument primarily offsets the net loss on GMAB, GMWB, and GMIB reinsurance contracts. For a discussion related to the reinsurance agreement refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements for more information on this transaction.

• The net loss related to the Japan 3Win foreign currency swaps and Japanese fixed annuity hedging instruments was primarily due to the depreciation of the Japanese yen in relation to the U.S. dollar, the strengthening of the currency basis swap spread between the U.S. dollar and the Japanese yen, and a decline in U.S. interest rates.

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

For the year ended December 31, 2011 the net realized capital gain (loss) related to derivatives used in non-qualifying strategies was primarily due to the following:

• The net gain associated with the international program hedging instruments was primarily driven by strengthening of the Japanese yen, a decline in global equity markets, and a decrease in interest rates.

• The loss related to the combined GMWB hedging program, which includes the GMWB product, reinsurance, and hedging derivatives, was primarily a result of a decrease in long-term interest rates and higher interest rate volatility.

• The net loss associated with GMAB, GMWB, and GMIB reinsurance contracts, which are reinsured to an affiliated captive reinsurer, was primarily due to the strengthening of the Japanese yen and a decrease in equity markets.

• The net gain on the coinsurance and modified coinsurance reinsurance agreement, which is accounted for as a derivative instrument primarily offsets the net loss on GMAB, GMWB, and GMIB reinsurance contracts. For a discussion related to the reinsurance agreement refer to Note 13 - Transactions with Affiliates of Notes to Consolidated Financial Statements for more information on this transaction.

• The net loss on the U.S. macro hedge program was primarily driven by time decay and a decrease in equity market volatility since the purchase date of certain options during the fourth quarter.

Refer to Note 12 - Commitments and Contingencies of Notes to Consolidated Financial Statements for additional disclosures regarding contingent credit related features in derivative agreements.

Credit Risk Assumed through Credit Derivatives

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

The following tables present the notional amount, fair value, weighted average years to maturity, underlying referenced credit obligation type and average credit ratings, and offsetting notional amounts and fair value for credit derivatives in which the Company is assuming credit risk as of December 31, 2013 and 2012.

As of December 31, 2013

							Underlying Referenced Credit Obligation(s) [1]
Credit Derivative type by derivative risk exposure	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
Single name credit default swaps
Investment grade risk exposure	$	735	$	6		2 years	Corporate Credit/ Foreign Gov.	A	$	592	$	(4	)
Below investment grade risk exposure	24		—			1 year	Corporate Credit	CCC	25		—
Basket credit default swaps [4]
Investment grade risk exposure	1,912		25			3 years	Corporate Credit	BBB+	784		(10		)
Below investment grade risk exposure	87		8			5 years	Corporate Credit	BB-	—		—
Investment grade risk exposure	235		(5		)	3 years	CMBS Credit	A	235		5
Below investment grade risk exposure	115		(18		)	3 years	CMBS Credit	B-	115		18
Embedded credit derivatives
Investment grade risk exposure	150		145			3 years	Corporate Credit	BBB+	—		—
Total [5]	$	3,258	$	161					$	1,751	$	9

As of December 31, 2012

							Underlying Referenced Credit Obligation(s) [1]
Credit Derivative type by derivative risk exposure	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
Single name credit default swaps
Investment grade risk exposure	$	1,787	$	8		3 years	Corporate Credit/ Foreign Gov.	A	$	878	$	(19	)
Below investment grade risk exposure	114		(1		)	1 year	Corporate Credit	B+	114		(3		)
Basket credit default swaps [4]
Investment grade risk exposure	2,074		11			2 years	Corporate Credit	BBB+	1,326		(6		)
Investment grade risk exposure	237		(12		)	4 years	CMBS Credit	A	238		12
Below investment grade risk exposure	115		(27		)	4 years	CMBS Credit	B+	115		27
Embedded credit derivatives
Investment grade risk exposure	325		296			4 years	Corporate Credit	BBB-	—		—
Total [5]	$	4,652	$	275					$	2,671	$	11

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

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

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

[4] Includes $2.3 billion and $2.4 billion as of December 31, 2013 and 2012, respectively, of standard market indices of diversified portfolios of corporate issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.

[5] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 3 - Fair Value Measurements.

Derivative Collateral Arrangements

The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, 2013 and 2012, the Company pledged securities collateral associated with derivative instruments with a fair value of $865 and $370, respectively, which have been included in fixed maturities on the Consolidated Balance Sheets. The counterparties have the right to sell or re-pledge these securities. The Company also pledged cash collateral associated with derivative instruments with a fair value of $290 and $179, respectively, as of December 31, 2013 and 2012 which have been included in short-term investments on the Consolidated Balance Sheets.

As of December 31, 2013 and 2012, the Company accepted cash collateral associated with derivative instruments with a fair value of $171 and $607, respectively, which was invested and recorded in the Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other liabilities. The Company also accepted securities collateral as of December 31, 2013 and 2012 of $121 and $490, respectively, of which the Company has the ability to sell or repledge $117 and $348, respectively. As of December 31, 2013 and 2012, the fair value of repledged securities totaled $39 and $0, respectively, and the Company did not sell any securities. In addition, as of December 31, 2013 and 2012, noncash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.