FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2014

FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis

December 31, 2013							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)	Collateral			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	133	$	3,062	$	-	$	-	$	-	$	3,195
Obligations of states, municipalities and political subdivisions		-		28,300		1,080		-		-		29,380
Non-U.S. governments		508		21,985		16		-		-		22,509
Corporate debt		-		143,297		1,255		-		-		144,552
RMBS		-		21,207		14,941		-		-		36,148
CMBS		-		5,747		5,735		-		-		11,482
CDO/ABS		-		4,034		6,974		-		-		11,008
Total bonds available for sale		641		227,632		30,001		-		-		258,274
Other bond securities:
U.S. government and government sponsored entities		78		5,645		-		-		-		5,723
Obligations of states, municipalities and political subdivisions		-		121		-		-		-		121
Non-U.S. governments		-		2		-		-		-		2
Corporate debt		-		1,169		-		-		-		1,169
RMBS		-		1,326		937		-		-		2,263
CMBS		-		509		844		-		-		1,353
CDO/ABS		-		3,158		8,834		-		-		11,992
Total other bond securities		78		11,930		10,615		-		-		22,623
Equity securities available for sale:
Common stock		3,218		-		1		-		-		3,219
Preferred stock		-		27		-		-		-		27
Mutual funds		408		2		-		-		-		410
Total equity securities available for sale		3,626		29		1		-		-		3,656
Other equity securities		750		84		-		-		-		834
Mortgage and other loans receivable		-		-		-		-		-		-
Other invested assets		1		2,667		5,930		-		-		8,598
Derivative assets:
Interest rate contracts		14		3,716		41		-		-		3,771
Foreign exchange contracts		-		52		-		-		-		52
Equity contracts		151		106		49		-		-		306
Commodity contracts		-		-		1		-		-		1
Credit contracts		-		-		55		-		-		55
Other contracts		-		1		33		-		-		34
Counterparty netting and cash collateral		-		-		-		(1,734)		(820)		(2,554)
Total derivative assets		165		3,875		179		(1,734)		(820)		1,665
Short-term investments		332		5,981		-		-		-		6,313
Separate account assets		67,708		3,351		-		-		-		71,059
Other assets		-		418		-		-		-		418
Total	$	73,301	$	255,967	$	46,726	$	(1,734)	$	(820)	$	373,440
Liabilities:
Policyholder contract deposits	$	-	$	72	$	312	$	-	$	-	$	384
Other policyholder funds		-		-		-		-		-		-
Derivative liabilities:
Interest rate contracts		-		3,661		141		-		-		3,802
Foreign exchange contracts		-		319		-		-		-		319
Equity contracts		-		101		-		-		-		101
Commodity contracts		-		5		-		-		-		5
Credit contracts		-		-		1,335		-		-		1,335
Other contracts		-		25		142		-		-		167
Counterparty netting and cash collateral		-		-		-		(1,734)		(1,484)		(3,218)
Total derivative liabilities		-		4,111		1,618		(1,734)		(1,484)		2,511
Long-term debt		-		6,377		370		-		-		6,747
Other liabilities		42		891		-		-		-		933
Total	$	42	$	11,451	$	2,300	$	(1,734)	$	(1,484)	$	10,575

(a)Represents netting of derivative exposures covered by a qualifying master netting agreement.

(b) Effective April 1, 2014, we reclassified cross-currency swaps from Interest rate contracts to Foreign exchange contracts. This change was applied prospectively.

September 30, 2014							Counterparty		Cash
(in millions)		Level 1		Level 2		Level 3		Netting(a)	Collateral			Total
Assets:
Bonds available for sale:
U.S. government and government sponsored entities	$	15	$	2,783	$	-	$	-	$	-	$	2,798
Obligations of states, municipalities and political subdivisions		-		26,158		2,014		-		-		28,172
Non-U.S. governments		772		21,867		23		-		-		22,662
Corporate debt		-		146,319		2,009		-		-		148,328
RMBS		-		21,786		16,918		-		-		38,704
CMBS		-		6,626		5,916		-		-		12,542
CDO/ABS		-		4,423		8,157		-		-		12,580
Total bonds available for sale		787		229,962		35,037		-		-		265,786
Other bond securities:
U.S. government and government sponsored entities		128		5,130		-		-		-		5,258
Obligations of states, municipalities and political subdivisions		-		122		-		-		-		122
Non-U.S. governments		-		2		-		-		-		2
Corporate debt		-		948		-		-		-		948
RMBS		-		1,143		1,023		-		-		2,166
CMBS		-		507		713		-		-		1,220
CDO/ABS		-		2,596		8,069		-		-		10,665
Total other bond securities		128		10,448		9,805		-		-		20,381
Equity securities available for sale:
Common stock		3,570		2		-		-		-		3,572
Preferred stock		-		29		-		-		-		29
Mutual funds		740		2		1		-		-		743
Total equity securities available for sale		4,310		33		1		-		-		4,344
Other equity securities		701		65		-		-		-		766
Mortgage and other loans receivable		-		-		6		-		-		6
Other invested assets		25		3,211		5,809		-		-		9,045
Derivative assets:
Interest rate contracts(b)		7		2,805		11		-		-		2,823
Foreign exchange contracts(b)		-		1,061		3		-		-		1,064
Equity contracts		107		65		49		-		-		221
Commodity contracts		-		-		-		-		-		-
Credit contracts		-		-		20		-		-		20
Other contracts		-		-		34		-		-		34
Counterparty netting and cash collateral		-		-		-		(1,769)		(805)		(2,574)
Total derivative assets		114		3,931		117		(1,769)		(805)		1,588
Short-term investments		560		3,631		-		-		-		4,191
Separate account assets		72,592		5,218		-		-		-		77,810
Other assets		-		-		-		-		-		-
Total	$	79,217	$	256,499	$	50,775	$	(1,769)	$	(805)	$	383,917
Liabilities:
Policyholder contract deposits	$	-	$	53	$	991	$	-	$	-	$	1,044
Other policyholder funds		-		8		-		-		-		8
Derivative liabilities:
Interest rate contracts(b)		-		2,649		82		-		-		2,731
Foreign exchange contracts(b)		-		1,493		10		-		-		1,503
Equity contracts		-		88		3		-		-		91
Commodity contracts		-		5		-		-		-		5
Credit contracts		-		-		1,038		-		-		1,038
Other contracts		-		-		89		-		-		89
Counterparty netting and cash collateral		-		-		-		(1,769)		(1,186)		(2,955)
Total derivative liabilities		-		4,235		1,222		(1,769)		(1,186)		2,502
Long-term debt		-		5,370		297		-		-		5,667
Other liabilities		70		332		-		-		-		402
Total	$	70	$	9,998	$	2,510	$	(1,769)	$	(1,186)	$	9,623

Changes in Level 3 recurring fair value measurements

				Net												Changes in
				Realized and												Unrealized Gains
				Unrealized				Purchases,								(Losses) Included
		Fair Value		Gains (Losses)		Other		Sales,		Gross		Gross		Fair Value		in Income on
		Beginning		Included		Comprehensive		Issues and		Transfers		Transfers		End		Instruments Held
(in millions)		of Period(a)		in Income		Income (Loss)		Settlements, Net		in		out		of Period		at End of Period
Three Months Ended September 30, 2014
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	1,991	$	(1)	$	(11)	$	43	$	-	$	(8)	$	2,014	$	-
Non-U.S. governments		25		-		-		1		-		(3)		23		-
Corporate debt		2,196		2		(22)		(73)		3		(97)		2,009		-
RMBS		16,328		264		(49)		375		-		-		16,918		-
CMBS		5,917		27		(39)		14		-		(3)		5,916		-
CDO/ABS		7,431		18		(2)		692		53		(35)		8,157		-
Total bonds available for sale		33,888		310		(123)		1,052		56		(146)		35,037		-
Other bond securities:
RMBS		1,062		-		-		(39)		-		-		1,023		(9)
CMBS		757		(24)		-		(20)		-		-		713		(21)
CDO/ABS		8,397		257		-		(451)		-		(134)		8,069		76
Total other bond securities		10,216		233		-		(510)		-		(134)		9,805		46
Equity securities available for sale:
Common stock		-		-		1		-		-		(1)		-		-
Preferred stock		-		-		-		-		-		-		-		-
Mutual funds		-		-		-		-		1		-		1		-
Total equity securities available for sale		-		-		1		-		1		(1)		1		-
Mortgage and other loans receivable		6		-		-		-		-		-		6		-
Other invested assets		5,824		(7)		90		65		83		(246)		5,809		-
Total	$	49,934	$	536	$	(32)	$	607	$	140	$	(527)	$	50,658	$	46
Liabilities:
Policyholder contract deposits	$	(842)	$	(155)	$	8	$	(2)	$	-	$	-	$	(991)	$	(21)
Derivative liabilities, net:
Interest rate contracts		(67)		(3)		-		1		-		(2)		(71)		(3)
Foreign exchange contracts		(9)		-		-		2		-		-		(7)		-
Equity contracts		91		6		-		2		-		(53)		46		-
Commodity contracts		1		(1)		-		-		-		-		-		-
Credit contracts		(1,085)		75		-		(8)		-		-		(1,018)		65
Other contracts		(53)		14		4		(20)		-		-		(55)		17
Total derivative liabilities, net		(1,122)		91		4		(23)		-		(55)		(1,105)		79
Long-term debt(c)		(394)		21		-		1		-		75		(297)		16
Total	$	(2,358)	$	(43)	$	12	$	(24)	$	-	$	20	$	(2,393)	$	74
				Net												Changes in
				Realized and												Unrealized Gains
				Unrealized				Purchases,								(Losses) Included
		Fair Value		Gains (Losses)		Other		Sales,		Gross		Gross		Fair Value		in Income on
		Beginning		Included		Comprehensive		Issues and		Transfers		Transfers		End		Instruments Held
(in millions)		of Period(a)		in Income		Income (Loss)		Settlements, Net		in		out		of Period		at End of Period
Nine Months Ended September 30, 2014
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions(b)	$	1,080	$	(1)	$	180	$	896	$	-	$	(141)	$	2,014	$	-
Non-U.S. governments		16		-		(1)		7		4		(3)		23		-
Corporate debt		1,255		8		31		(140)		1,358		(503)		2,009		-
RMBS		14,941		759		211		999		119		(111)		16,918		-
CMBS		5,735		50		201		(43)		69		(96)		5,916		-
CDO/ABS		6,974		70		1		1,426		222		(536)		8,157		-
Total bonds available for sale		30,001		886		623		3,145		1,772		(1,390)		35,037		-
Other bond securities:
RMBS		937		51		-		33		2		-		1,023		9
CMBS		844		14		-		(151)		6		-		713		11
CDO/ABS		8,834		926		-		(1,338)		1		(354)		8,069		341
Total other bond securities		10,615		991		-		(1,456)		9		(354)		9,805		361
Equity securities available for sale:
Common stock		1		-		1		-		-		(2)		-		-
Preferred stock		-		-		-		-		-		-		-		-
Mutual funds		-		-		-		-		1		-		1		-
Total equity securities available for sale		1		-		1		-		1		(2)		1		-
Mortgage and other loans receivable		-		-		-		6		-		-		6		-
Other invested assets		5,930		80		139		99		168		(607)		5,809		-
Total	$	46,547	$	1,957	$	763	$	1,794	$	1,950	$	(2,353)	$	50,658	$	361
Liabilities:
Policyholder contract deposits	$	(312)	$	(687)	$	(16)	$	24	$	-	$	-	$	(991)	$	(140)
Derivative liabilities, net:
Interest rate contracts		(100)		(2)		-		33		-		(2)		(71)		-
Foreign exchange contracts		-		3		-		(10)		-		-		(7)		4
Equity contracts		49		14		-		(12)		48		(53)		46		6
Commodity contracts		1		-		-		-		-		(1)		-		-
Credit contracts		(1,280)		229		-		33		-		-		(1,018)		229
Other contracts		(109)		49		51		(46)		-		-		(55)		37
Total derivative liabilities, net		(1,439)		293		51		(2)		48		(56)		(1,105)		276
Long-term debt(c)		(370)		13		-		34		(70)		96		(297)		15
Total	$	(2,121)	$	(381)	$	35	$	56	$	(22)	$	40	$	(2,393)	$	151

				Net												Changes in
				Realized and												Unrealized Gains
				Unrealized				Purchases,								(Losses) Included
		Fair value		Gains (Losses)		Other		Sales,		Gross		Gross		Fair value		in Income on
		Beginning		Included		Comprehensive		Issues and		Transfers		Transfers		End		Instruments Held
(in millions)		of Period(a)		in Income		Income (Loss)		Settlements, Net		In		Out		of Period		at End of Period
Three Months Ended September 30, 2013
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	945	$	4	$	(28)	$	160	$	-	$	(27)	$	1,054	$	-
Non-U.S. governments		20		-		-		1		-		-		21		-
Corporate debt		1,634		(3)		5		-		39		(233)		1,442		-
RMBS		13,694		216		(60)		127		167		(58)		14,086		-
CMBS		5,455		4		55		102		-		-		5,616		-
CDO/ABS		6,142		37		(47)		363		289		(133)		6,651		-
Total bonds available for sale		27,890		258		(75)		753		495		(451)		28,870		-
Other bond securities:
RMBS		782		14		-		(8)		27		-		815		13
CMBS		820		33		-		(53)		31		-		831		29
CDO/ABS		8,972		243		-		(557)		223		-		8,881		217
Total other bond securities		10,574		290		-		(618)		281		-		10,527		259
Equity securities available for sale:
Common stock		76		-		(1)		(48)		-		-		27		-
Preferred stock		48		-		-		-		-		-		48		-
Total equity securities available for sale		124		-		(1)		(48)		-		-		75		-
Other invested assets		5,639		(25)		78		55		1		-		5,748		-
Total	$	44,227	$	523	$	2	$	142	$	777	$	(451)	$	45,220	$	259
Liabilities:
Policyholder contract deposits	$	(586)	$	250	$	-	$	(51)	$	-	$	-	$	(387)	$	218
Derivative liabilities, net:
Interest rate contracts		779		6		-		(912)		-		-		(127)		3
Equity contracts		70		12		-		(1)		1		-		82		10
Commodity contracts		1		-		-		-		-		-		1		-
Credit contracts		(1,594)		52		-		36		-		-		(1,506)		91
Other contracts		(105)		16		(25)		(16)		(1)		-		(131)		8
Total derivatives liabilities, net		(849)		86		(25)		(893)		-		-		(1,681)		112
Long-term debt(c)		(419)		(25)		-		1		-		-		(443)		(19)
Total	$	(1,854)	$	311	$	(25)	$	(943)	$	-	$	-	$	(2,511)	$	311
				Net												Changes in
				Realized and												Unrealized Gains
				Unrealized				Purchases,								(Losses) Included
		Fair value		Gains (Losses)		Other		Sales,		Gross		Gross		Fair value		in Income on
		Beginning		Included		Comprehensive		Issues and		Transfers		Transfers		End		Instruments Held
(in millions)		of Period(a)		in Income		Income (Loss)		Settlements, Net		In		Out		of Period		at End of Period
Nine Months Ended September 30, 2013
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions	$	1,024	$	29	$	(178)	$	365	$	-	$	(186)	$	1,054	$	-
Non-U.S. governments		14		-		-		7		1		(1)		21		-
Corporate debt		1,487		(7)		(9)		30		371		(430)		1,442		-
RMBS		11,662		624		279		1,393		186		(58)		14,086		-
CMBS		5,124		15		75		290		161		(49)		5,616		-
CDO/ABS		4,841		134		(47)		1,383		668		(328)		6,651		-
Total bonds available for sale		24,152		795		120		3,468		1,387		(1,052)		28,870		-
Other bond securities:
RMBS		396		24		-		130		265		-		815		(27)
CMBS		812		44		-		(193)		282		(114)		831		(13)
CDO/ABS		8,536		1,096		-		(1,566)		843		(28)		8,881		434
Total other bond securities		9,744		1,164		-		(1,629)		1,390		(142)		10,527		394
Equity securities available for sale:
Common stock		24		-		4		(1)		-		-		27		-
Preferred stock		44		-		4		-		-		-		48		-
Total equity securities available for sale		68		-		8		(1)		-		-		75		-
Other invested assets		5,389		144		88		95		345		(313)		5,748		-
Total	$	39,353	$	2,103	$	216	$	1,933	$	3,122	$	(1,507)	$	45,220	$	394
Liabilities:
Policyholder contract deposits	$	(1,257)	$	865	$	-	$	5	$	-	$	-	$	(387)	$	825
Derivative liabilities, net:
Interest rate contracts		732		20		-		(879)		-		-		(127)		33
Equity contracts		47		49		-		(14)		-		-		82		40
Commodity contracts		1		-		-		(1)		-		1		1		(1)
Credit contracts		(1,991)		365		-		120		-		-		(1,506)		486
Other contracts		(162)		35		(16)		13		(1)		-		(131)		8
Total derivatives liabilities, net		(1,373)		469		(16)		(761)		(1)		1		(1,681)		566
Long-term debt(c)		(344)		(120)		-		23		(2)		-		(443)		(41)
Total	$	(2,974)	$	1,214	$	(16)	$	(733)	$	(3)	$	1	$	(2,511)	$	1,350

(a) Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

(b)Purchases, Sales, Issues and Settlements, Net primarily reflect the effect of consolidating previously unconsolidated securitization vehicles.

(c) Includes guaranteed investment agreements (GIAs), notes, bonds, loans and mortgages payable.

Schedule of net realized and unrealized gains and losses related to Level 3 items

		Net		Net Realized
		Investment		Capital		Other
(in millions)		Income	Gains (Losses)			Income		Total
Three Months Ended September 30, 2014
Bonds available for sale	$	320	$	(22)	$	12	$	310
Other bond securities		(3)		-		236		233
Equity securities available for sale		-		-		-		-
Other invested assets		18		(20)		(5)		(7)
Policyholder contract deposits		-		(155)		-		(155)
Derivative liabilities, net		18		(1)		74		91
Long-term debt		-		-		21		21
Three Months Ended September 30, 2013
Bonds available for sale	$	264	$	(21)	$	15	$	258
Other bond securities		86		7		197		290
Equity securities available for sale		-		-		-		-
Other invested assets		(12)		(5)		(8)		(25)
Policyholder contract deposits		-		250		-		250
Derivative liabilities, net		11		8		67		86
Long-term debt		-		-		(25)		(25)
Nine Months Ended September 30, 2014
Bonds available for sale	$	922	$	(73)	$	37	$	886
Other bond securities		97		2		892		991
Equity securities available for sale		-		-		-		-
Other invested assets		107		(33)		6		80
Policyholder contract deposits		-		(687)		-		(687)
Derivative liabilities, net		49		4		240		293
Long-term debt		-		-		13		13
Nine Months Ended September 30, 2013
Bonds available for sale	$	713	$	(8)	$	90	$	795
Other bond securities		114		8		1,042		1,164
Equity securities available for sale		-		-		-		-
Other invested assets		142		(34)		36		144
Policyholder contract deposits		-		865		-		865
Derivative liabilities, net		26		25		418		469
Long-term debt		-		-		(120)		(120)

Gross components of purchases, sales, issuances and settlements, net

								Purchases,
								Sales, Issues and
(in millions)		Purchases		Sales		Settlements		Settlements, Net(a)
Three Months Ended September 30, 2014
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	66	$	(3)	$	(20)	$	43
Non-U.S. governments		1		-		-		1
Corporate debt		22		-		(95)		(73)
RMBS		1,062		(62)		(625)		375
CMBS		276		(167)		(95)		14
CDO/ABS		1,085		(68)		(325)		692
Total bonds available for sale		2,512		(300)		(1,160)		1,052
Other bond securities:
RMBS		-		(3)		(36)		(39)
CMBS		-		(9)		(11)		(20)
CDO/ABS		6		(4)		(453)		(451)
Total other bond securities		6		(16)		(500)		(510)
Equity securities available for sale		-		-		-		-
Other invested assets		276		-		(211)		65
Total assets	$	2,794	$	(316)	$	(1,871)	$	607
Liabilities:
Policyholder contract deposits	$	-	$	(36)	$	34	$	(2)
Derivative liabilities, net		-		(2)		(21)		(23)
Long-term debt(c)		-		-		1		1
Total liabilities	$	-	$	(38)	$	14	$	(24)
Three Months Ended September 30, 2013
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	194	$	(34)	$	-	$	160
Non-U.S. governments		1		-		-		1
Corporate debt		146		-		(146)		-
RMBS		750		-		(623)		127
CMBS		179		(3)		(74)		102
CDO/ABS		628		-		(265)		363
Total bonds available for sale		1,898		(37)		(1,108)		753
Other bond securities:
RMBS		31		(12)		(27)		(8)
CMBS		-		(9)		(44)		(53)
CDO/ABS		-		(66)		(491)		(557)
Total other bond securities		31		(87)		(562)		(618)
Equity securities available for sale		-		-		(48)		(48)
Other invested assets		249		(3)		(191)		55
Total assets	$	2,178	$	(127)	$	(1,909)	$	142
Liabilities:
Policyholder contract deposits	$	-	$	(4)	$	(47)	$	(51)
Derivative liabilities, net		4		-		(897)		(893)
Long-term debt(c)		-		-		1		1
Total liabilities	$	4	$	(4)	$	(943)	$	(943)
								Purchases,
								Sales, Issues and
(in millions)		Purchases		Sales		Settlements		Settlements, Net(a)
Nine Months Ended September 30, 2014
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions(b)	$	1,002	$	(35)	$	(71)	$	896
Non-U.S. governments		8		-		(1)		7
Corporate debt		141		(8)		(273)		(140)
RMBS		2,814		(88)		(1,727)		999
CMBS		368		(224)		(187)		(43)
CDO/ABS		2,307		(70)		(811)		1,426
Total bonds available for sale		6,640		(425)		(3,070)		3,145
Other bond securities:
RMBS		162		(22)		(107)		33
CMBS		-		(15)		(136)		(151)
CDO/ABS		50		(19)		(1,369)		(1,338)
Total other bond securities		212		(56)		(1,612)		(1,456)
Equity securities available for sale		-		-		-		-
Mortgage and other loans receivable		6		-		-		6
Other invested assets		709		(1)		(609)		99
Total assets	$	7,567	$	(482)	$	(5,291)	$	1,794
Liabilities:
Policyholder contract deposits	$	-	$	(94)	$	118	$	24
Derivative liabilities, net		1		(2)		(1)		(2)
Long-term debt(c)		-		-		34		34
Total liabilities	$	1	$	(96)	$	151	$	56
Nine Months Ended September 30, 2013
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions	$	502	$	(137)	$	-	$	365
Non-U.S. governments		9		-		(2)		7
Corporate debt		454		(114)		(310)		30
RMBS		3,462		(231)		(1,838)		1,393
CMBS		872		(167)		(415)		290
CDO/ABS		2,099		(159)		(557)		1,383
Total bonds available for sale		7,398		(808)		(3,122)		3,468
Other bond securities:
RMBS		244		(12)		(102)		130
CMBS		19		(67)		(145)		(193)
CDO/ABS		318		(66)		(1,818)		(1,566)
Total other bond securities		581		(145)		(2,065)		(1,629)
Equity securities available for sale		58		(11)		(48)		(1)
Other invested assets		697		(49)		(553)		95
Total assets	$	8,734	$	(1,013)	$	(5,788)	$	1,933
Liabilities:
Policyholder contract deposits	$	-	$	(16)	$	21	$	5
Derivative liabilities, net		9		(1)		(769)		(761)
Long-term debt(c)		-		-		23		23
Total liabilities	$	9	$	(17)	$	(725)	$	(733)

(a)There were no issuances during thethree- and nine-month periods ended September 30,2014 and 2013.

(b) Purchases primarily reflect the effect of consolidating previously unconsolidated securitization vehicles.

(c)Includes GIAs, notes, bonds, loans and mortgages payable.

Significant unobservable inputs used for recurring fair value measurements

	Fair Value  at
	September 30,		Valuation		Range
(in millions)	2014		Technique	Unobservable Input	(Weighted Average )
Assets:
Obligations of states,	$	1,141	Discounted cash flow	Yield(b)	4.15% - 4.93% (4.54%)
municipalities and
political subdivisions
Corporate debt		1,217	Discounted cash flow	Yield(b)	0.00% - 8.57% (6.19%)
RMBS		17,384	Discounted cash flow	Constant prepayment rate(a)(c)	0.36% - 9.74% (5.05%)
				Loss severity(a)(c)	45.61% - 79.52% (62.57%)
				Constant default rate(a)(c)	3.84% - 10.46% (7.15%)
				Yield(c)	2.51% - 6.61% (4.56%)
Certain CDO/ABS		5,321	Discounted cash flow	Constant prepayment rate(a)(c)	6.40% - 13.40% (9.90%)
				Loss severity(a)(c)	43.80% - 59.90% (52.00%)
				Constant default rate(a)(c)	2.60% - 14.90% (8.00%)
				Yield(c)	4.70% - 10.30% (7.70%)
CMBS		6,048	Discounted cash flow	Yield(b)	0.00% - 13.01% (4.50%)
CDO/ABS - Direct			Binomial Expansion	Recovery rate(b)	7.00% - 58.00% (26.00%)
Investment book		425	Technique (BET)	Diversity score(b)	6 - 23 (14)
				Weighted average life(b)	0.25 - 10.32 years (4.09 years)
Liabilities:
Policyholder contract
deposits		991	Discounted cash flow	Equity implied volatility(b)	6.00% - 39.00%
				Base lapse rate(b)	1.00% - 40.00%
				Dynamic lapse rate(b)	0.20% - 60.00%
				Mortality rate(b)	0.10% - 35.00%
				Utilization rate(b)	0.50% - 30.00%
Total derivative
liabilities, net		813	BET	Recovery rate(b)	5.00% - 32.00% (17.00%)
				Diversity score(b)	9 - 27 (14)
				Weighted average life(b)	2.69 - 10.32 years (4.67 years)

		Fair Value  at
		December 31,	Valuation		Range
(in millions)		2013	Technique	Unobservable Input	(Weighted Average )
Assets:
Obligations of states,	$	920	Discounted cash flow	Yield(b)	4.94% - 5.86% (5.40%)
municipalities and
political subdivisions
Corporate debt		788	Discounted cash flow	Yield(b)	0.00% - 14.29% (6.64%)
RMBS		14,419	Discounted cash flow	Constant prepayment rate(a)(c)	0.00% - 10.35% (4.97%)
				Loss severity(a)(c)	42.60% - 79.07% (60.84%)
				Constant default rate(a)(c)	3.98% - 12.22% (8.10%)
				Yield(c)	2.54% - 7.40% (4.97%)
Certain CDO/ABS		5,414	Discounted cash flow	Constant prepayment rate(a)(c)	5.20% - 10.80% (8.20%)
				Loss severity(a)(c)	48.60% - 63.40% (56.40%)
				Constant default rate(a)(c)	3.20% - 16.20% (9.00%)
				Yield(c)	5.20% - 11.50% (9.40%)
CMBS		5,847	Discounted cash flow	Yield(b)	0.00% - 14.69% (5.58%)
CDO/ABS - Direct			Binomial Expansion	Recovery rate(b)	6.00% - 63.00% (25.00%)
Investment book		557	Technique (BET)	Diversity score(b)	5 - 35 (12)
				Weighted average life(b)	1.07 - 9.47 years (4.86 years)
Liabilities:
Policyholder contract
deposits		312	Discounted cash flow	Equity implied volatility(b)	6.00% - 39.00%
				Base lapse rate(b)	1.00% - 40.00%
				Dynamic lapse rate(b)	0.20% - 60.00%
				Mortality rate(b)	0.50% - 40.00%
				Utilization rate(b)	0.50% - 25.00%
Total derivative
liabilities, net		996	BET	Recovery rate(b)	5.00% - 34.00% (17.00%)
				Diversity score(b)	9 - 32 (13)
				Weighted average life(b)	4.50 - 9.47 years (5.63 years)

(a)The unobservable inputs and ranges for the constant prepayment rate, loss severity and constant default rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CDO securitization vehicles and not necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the tranches purchased by us because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price, position in the waterfall, senior versus subordinated position and attachment points.

(b) Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.

(c) Information received from independent third-party valuation service providers.

Investments in Certain Entities Carried at Fair Value Using Net Asset Value per Share

		September 30, 2014				December 31, 2013
			Fair Value Using Net Asset Value Per Share (or its equivalent)				Fair Value Using Net Asset Value Per Share (or its equivalent)
					Unfunded				Unfunded
(in millions)	Investment Category Includes				Commitments				Commitments
Investment Category
Private equity funds:
Leveraged buyout	Debt and/or equity investments made as part of a transaction in which assets of mature companies are acquired from the current shareholders, typically with the use of financial leverage	$	2,496	$	474	$	2,544	$	578
Real Estate / Infrastructure	Investments in real estate properties and infrastructure positions, including power plants and other energy generating facilities		427		209		346		86
Venture capital	Early-stage, high-potential, growth companies expected to generate a return through an eventual realization event, such as an initial public offering or sale of the company		136		10		140		13
Distressed	Securities of companies that are in default, under bankruptcy protection, or troubled		174		44		183		34
Other	Includes multi-strategy and mezzanine strategies		194		213		134		238
Total private equity funds			3,427		950		3,347		949
Hedge funds:
Event-driven	Securities of companies undergoing material structural changes, including mergers, acquisitions and other reorganizations		1,188		2		976		2
Long-short	Securities that the manager believes are undervalued, with corresponding short positions to hedge market risk		2,096		4		1,759		11
Macro	Investments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions		486		-		612		-
Distressed	Securities of companies that are in default, under bankruptcy protection or troubled		659		5		594		15
Emerging markets	Investments in the financial markets of developing countries		302		-		287		-
Other	Includes multi-strategy and relative value strategies		238		-		157		-
Total hedge funds			4,969		11		4,385		28
Total		$	8,396	$	961	$	7,732	$	977

Gains or losses related to the eligible instruments for which AIG elected the fair value option

	Gain (Loss) Three Months Ended September 30,				Gain (Loss) Nine Months Ended September 30,
(in millions)		2014		2013		2014		2013
Assets:
Mortgage and other loans receivable	$	-	$	1	$	-	$	3
Bond and equity securities		252		331		1,529		963
Alternative Investments(a)		73		23		245		229
Other, including Short-term investments		2		3		7		8
Liabilities:
Long-term debt(b)		23		(51)		(186)		271
Other liabilities		(4)		(4)		(10)		(10)
Total gain	$	346	$	303	$	1,585	$	1,464

(a)Includes hedge funds, private equity funds and other investment partnerships.

(b)Includes GIAs, notes, bonds, loans and mortgages payable.

Difference between fair values and aggregate contractual principal amounts, fair value option

	September 30, 2014						December 31, 2013
			Outstanding						Outstanding
(in millions)	Fair Value		Principal Amount		Difference		Fair Value		Principal Amount		Difference
Assets:
Mortgage and other loans receivable	$	6	$	4	$	2	$	-	$	-	$	-
Liabilities:
Long-term debt*	$	5,667	$	4,344	$	1,323	$	6,747	$	5,231	$	1,516

* Includes GIAs, notes, bonds, loans and mortgages payable.

Fair value assets measured on nonrecurring basis and impairment charges

	Assets at Fair Value								Impairment Charges
	Non-Recurring Basis								Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	Level 1		Level 2		Level 3			Total		2014		2013		2014		2013
September 30, 2014
Other investments	$	-	$	-	$	766	$	766	$	62	$	9	$	117	$	82
Investments in life settlements		-		-		473		473		52		61		139		139
Other assets		-		-		1		1		1		2		2		26
Total	$	-	$	-	$	1,240	$	1,240	$	115	$	72	$	258	$	247
December 31, 2013
Other investments	$	-	$	-	$	1,615	$	1,615
Investments in life settlements		-		-		896		896
Other assets		-		11		48		59
Total	$	-	$	11	$	2,559	$	2,570

Carrying value and estimated fair value of AIG's financial instruments

	Estimated Fair Value									Carrying
(in millions)		Level 1		Level 2		Level 3		Total		Value
September 30, 2014
Assets:
Mortgage and other loans receivable	$	-	$	217	$	24,468	$	24,685	$	23,391
Other invested assets		-		626		2,839		3,465		4,357
Short-term investments		-		13,661		-		13,661		13,661
Cash		1,933		-		-		1,933		1,933
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		226		117,983		118,209		105,258
Other liabilities		-		3,993		-		3,993		3,993
Long-term debt		-		30,880		3,689		34,569		30,556
December 31, 2013
Assets:
Mortgage and other loans receivable	$	-	$	219	$	21,418	$	21,637	$	20,765
Other invested assets		-		529		2,705		3,234		4,194
Short-term investments		-		15,304		-		15,304		15,304
Cash		2,241		-		-		2,241		2,241
Liabilities:
Policyholder contract deposits associated
with investment-type contracts		-		199		114,361		114,560		105,093
Other liabilities		-		4,869		1		4,870		4,869
Long-term debt		-		36,239		2,394		38,633		34,946