Segment Information

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements [Abstract]

Segment Information

14. Segment Information

We provide products and services and report results through our Annuities, Retirement Plan Services, Life Insurance and Group Protection segments. We also have Other Operations, which includes the financial data for operations that are not directly related to the business segments. Our reporting segments reflect the manner by which our chief operating decision makers view and manage the business. See Note 22 of our 2011 Form 10-K for a brief description of these segments and Other Operations.

Segment operating revenues and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments. Income (loss) from operations is GAAP net income excluding the after-tax effects of the following items, as applicable:

• Realized gains and losses associated with the following (“excluded realized gain (loss)”):

• Sales or disposals of securities;
• Impairments of securities;
• Changes in the fair value of derivatives, embedded derivatives within certain reinsurance arrangements and trading securities;
• Changes in the fair value of the derivatives we own to hedge our GDB riders within our variable annuities;
• Changes in the fair value of the embedded derivatives of our GLB riders accounted for at fair value, net of the change in the fair value of the derivatives we own to hedge them; and
• Changes in the fair value of the embedded derivative liabilities related to index call options we may purchase in the future to hedge contract holder index allocations applicable to future reset periods for our indexed annuity products accounted for at fair value;

• Changes in reserves resulting from benefit ratio unlocking on our GDB and GLB riders;
• Income (loss) from reserve changes, net of related amortization, on business sold through reinsurance;
• Gains (losses) on early extinguishment of debt;
• Losses from the impairment of intangible assets;
• Income (loss) from discontinued operations; and
• Income (loss) from the initial adoption of new accounting standards.

Operating revenues represent GAAP revenues excluding the pre-tax effects of the following items, as applicable:

• Excluded realized gain (loss);
• Revenue adjustments from the initial adoption of new accounting standards;
• Amortization of DFEL arising from changes in GDB and GLB benefit ratio unlocking; and
• Amortization of deferred gains arising from the reserve changes on business sold through reinsurance.

We use our prevailing corporate federal income tax rate of 35% while taking into account any permanent differences for events recognized differently in our financial statements and federal income tax returns when reconciling our non-GAAP measures to the most comparable GAAP measure. Operating revenues and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

Segment information (in millions) was as follows:

			For the Three				For the Nine
			Months Ended				Months Ended
			September 30,				September 30,
			2012		2011		2012		2011
Revenues
Operating revenues:
	Annuities		$	745	$	711	$	2,210	$	2,179
	Retirement Plan Services			255		247		765		771
	Life Insurance			1,296		1,176		3,765		3,552
	Group Protection			517		479		1,560		1,458
	Other Operations			101		122		321		352
Excluded realized gain (loss), pre-tax				39		(186)		(55)		(239)
Amortization of deferred gain arising from reserve changes on business
	sold through reinsurance, pre-tax			1		1		2		2
Amortization of DFEL associated with benefit ratio unlocking, pre-tax				-		(3)		-		(2)
		Total revenues	$	2,954	$	2,547	$	8,568	$	8,073

				For the Three				For the Nine
				Months Ended				Months Ended
				September 30,				September 30,
				2012		2011		2012		2011
Net Income (Loss)
Income (loss) from operations:
	Annuities			$	139	$	153	$	433	$	442
	Retirement Plan Services				29		39		101		129
	Life Insurance				154		154		434		433
	Group Protection				16		27		59		77
	Other Operations				(3)		(44)		(75)		(104)
Excluded realized gain (loss), after-tax					25		(121)		(35)		(156)
Gain (loss) on early extinguishment of debt, after-tax					-		(5)		-		(5)
Income (expense) from reserve changes (net of related
	amortization) on business sold through reinsurance, after-tax				1		-		1		1
Impairment of intangibles, after-tax					2		-		2		-
Benefit ratio unlocking, after-tax					10		(42)		24		(39)
		Income (loss) from continuing operations, after-tax			373		161		944		778
		Income (loss) from discontinued operations, after-tax			29		(8)		27		(8)
			Net income (loss)	$	402	$	153	$	971	$	770