LENDING ACTIVITIES

9 Months Ended

Sep. 30, 2014

7. LENDING ACTIVITIES

The following table presents the composition of Mortgage and other loans receivable:

	September 30,			December 31,
(in millions)		2014		2013
Commercial mortgages^*	$	17,841	$	16,195
Life insurance policy loans		2,756		2,830
Commercial loans, other loans and notes receivable		3,084		2,052
Total mortgage and other loans receivable		23,681		21,077
Allowance for losses		(284)		(312)
Mortgage and other loans receivable, net	$	23,397	$	20,765

* Commercial mortgages primarily represent loans for office, retail and industrial properties, with exposures in California and New York representing the largest geographic concentrations (aggregating approximately 14 percent and 16 percent, respectively, at September 30, 2014, and approximately 18 percent and 17 percent, respectively, at December 31, 2013).

The following table presents the credit quality indicators for commercial mortgages:

	Number															Percent
	of	Class														of
(dollars in millions)	Loans	Apartments			Offices		Retail	Industrial			Hotel		Others		Total^(c)	Total $
September 30, 2014
Credit Quality Indicator:
In good standing	973	$	3,231	$	5,390	$	3,868	$	1,718	$	1,469	$	1,784	$	17,460	98	%
Restructured^(a)	8		4		285		16		-		-		22		327	2
90 days or less delinquent	1		-		14		-		-		-		-		14	-
>90 days delinquent or in
process of foreclosure	3		40		-		-		-		-		-		40	-
Total^(b)	985	$	3,275	$	5,689	$	3,884	$	1,718	$	1,469	$	1,806	$	17,841	100	%
Valuation allowance		$	9	$	96	$	14	$	20	$	6	$	30	$	175	1	%

December 31, 2013
Credit Quality Indicator:
In good standing	978	$	2,786	$	4,636	$	3,364	$	1,607	$	1,431	$	1,970	$	15,794	98	%
Restructured^(a)	9		53		210		6		-		-		85		354	2
90 days or less delinquent	2		-		-		5		-		-		-		5	-
>90 days delinquent or in
process of foreclosure	6		-		42		-		-		-		-		42	-
Total^(b)	995	$	2,839	$	4,888	$	3,375	$	1,607	$	1,431	$	2,055	$	16,195	100	%
Allowance for losses		$	10	$	109	$	9	$	19	$	3	$	51	$	201	1	%

(a) Loans that have been modified in troubled debt restructurings and are performing according to their restructured terms. For additional discussion of troubled debt restructurings see Note 7 to the Consolidated Financial Statements in the 2013 Annual Report.

(b) Does not reflect valuation allowances.

(c) Over 99 percent of the commercial mortgages held at such respective dates were current as to payments of principal and interest.

Allowance for Loan Losses

See Note 7 to the Consolidated Financial Statements in the 2013 Annual Report for a discussion of our accounting policy for evaluating mortgage and other loans receivable for impairment.

The following table presents a rollforward of the changes in the allowance for losses on Mortgage and other loans receivable:

	2014						2013
Nine Months Ended September 30,		Commercial		Other				Commercial		Other
(in millions)		Mortgages		Loans		Total		Mortgages		Loans		Total
Allowance, beginning of year	$	201	$	111	$	312	$	159	$	246	$	405
Loans charged off		(10)		(13)		(23)		(5)		(37)		(42)
Recoveries of loans previously charged off		-		16		16		3		6		9
Net charge-offs		(10)		3		(7)		(2)		(31)		(33)
Provision for loan losses		(16)		(6)		(22)		47		(16)		31
Other		-		1		1		(1)		(4)		(5)
Allowance, end of period	$	175^*	$	109	$	284	$	203^*	$	195	$	398

* Of the total allowance at the end of the period, $86 million and $102 million relates to individually assessed credit losses on $246 million and $267 million of commercial mortgage loans at September 30, 2014 and 2013, respectively.

No significant loans were modified in a troubled debt restructuring during the nine-month periods ended September 30, 2014 and 2013.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

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