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Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2013



	As of March 31, 2013						As of December 31, 2012
	Notional		Fair Value				Notional		Fair Value
	Amounts		Asset		Liability		Amounts		Asset		Liability
Qualifying Hedges
Cash flow hedges:
Interest rate contracts⁽¹⁾	$	3,094	$	487	$	197	$	3,214	$	462	$	224
Foreign currency contracts⁽¹⁾		532		46		22		420		39		26
Total cash flow hedges		3,626		533		219		3,634		501		250
Fair value hedges:
Interest rate contracts⁽¹⁾		875		227		-		875		269		-
Non-Qualifying Hedges
Interest rate contracts⁽¹⁾		43,609		845		466		36,539		1,042		475
Foreign currency contracts⁽¹⁾		230		-		-		48		-		-
Equity market contracts⁽¹⁾		19,993		1,417		69		19,857		1,734		170
Equity collar⁽¹⁾		9		-		-		9		1		-
Credit contracts⁽²⁾		148		-		10		148		-		11
Embedded derivatives:
Indexed annuity contracts⁽³⁾		-		-		853		-		-		732
Guaranteed living benefit ("GLB") Reserves⁽³⁾		-		-		199		-		-		909
Reinsurance related ⁽⁴⁾		-		-		199		-		-		215
Total derivative instruments	$	68,490	$	3,022	$	2,015	$	61,110	$	3,547	$	2,762

⁽¹⁾	Reported in derivative investments on our Consolidated Balance Sheets.

⁽²⁾	Reported in other liabilities on our Consolidated Balance Sheets.

⁽³⁾	Reported in future contract benefits on our Consolidated Balance Sheets.

⁽⁴⁾	Reported in reinsurance related embedded derivatives on our Consolidated Balance Sheets.



	Remaining Life as of March 31, 2013
	Less Than 1 Year		1 – 5 Years		6 – 10 Years		11 – 30 Years		Over 30 Years		Total
Interest rate contracts⁽¹⁾	$	3,174	$	20,682	$	12,917	$	9,592	$	1,213	$	47,578
Foreign currency contracts⁽²⁾		255		180		200		127		-		762
Equity market contracts		10,707		4,049		5,224		21		1		20,002
Credit contracts		-		148		-		-		-		148
Total derivative instruments with notional amounts	$	14,136	$	25,059	$	18,341	$	9,740	$	1,214	$	68,490

⁽¹⁾	As of March 31, 2013, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was June 2042.

⁽²⁾	As of March 31, 2013, the latest maturity date for which we were hedging our exposure to the variability in future cash flows for these instruments was April 2028.



	For the Three Months Ended March 31,
	2013		2012
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year	$	163	$	119
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the year:
Cash flow hedges:
Interest rate contracts		34		(40)
Foreign currency contracts		13		(3)
Fair value hedges:
Interest rate contracts		1		1
Change in foreign currency exchange rate adjustment		11		(9)
Change in DAC, VOBA, DSI and DFEL		2		4
Income tax benefit (expense)		(22)		15
Less:
Reclassification adjustment for gains (losses) included in net income (loss):
Cash flow hedges:
Interest rate contracts⁽¹⁾		(5)		(6)
Foreign currency contracts⁽¹⁾		2		2
Fair value hedges:
Interest rate contracts⁽²⁾		1		1
Associated amortization of DAC, VOBA, DSI and DFEL		1		-
Income tax benefit (expense)		-		1
Balance as of end-of-period	$	203	$	89

⁽¹⁾	The OCI offset is reported within net investment income on our Consolidated Statements of Comprehensive Income (Loss).

⁽²⁾	The OCI offset is reported within interest and debt expense on our Consolidated Statements of Comprehensive Income (Loss).



	For the Three Months Ended March 31,
	2013		2012
Qualifying Hedges
Cash flow hedges:
Interest rate contracts⁽¹⁾	$	(6)	$	(7)
Foreign currency contracts⁽¹⁾		2		2
Total cash flow hedges		(4)		(5)
Fair value hedges:
Interest rate contracts⁽²⁾		9		12
Non-Qualifying Hedges
Interest rate contracts⁽³⁾		(178)		(416)
Foreign currency contracts⁽³⁾		(10)		(4)
Equity market contracts⁽³⁾		(534)		(815)
Equity market contracts⁽⁴⁾		12		14
Credit contracts⁽³⁾		(1)		(3)
Embedded derivatives:
Indexed annuity contracts⁽³⁾		(130)		104
GLB reserves⁽³⁾		710		1,153
Reinsurance related⁽³⁾		16		10
Total derivative instruments	$	(110)	$	50

⁽¹⁾	Reported in net investment income on our Consolidated Statements of Comprehensive Income (Loss).

⁽²⁾	Reported in interest and debt expense on our Consolidated Statements of Comprehensive Income (Loss).

⁽³⁾	Reported in realized gain (loss) on our Consolidated Statements of Comprehensive Income (Loss).

⁽⁴⁾	Reported in commissions and other expenses on our Consolidated Statements of Comprehensive Income (Loss).



As of March 31, 2013
Maturity	Reason for Entering	Nature of Recourse	Credit Rating of Underlying Obligation⁽¹⁾	Number of Instruments	Fair Value⁽²⁾		Maximum Potential Payout
12/20/2016⁽³⁾	⁽⁴⁾	⁽⁵⁾	BBB-	3		(4)		68
3/20/2017⁽³⁾	⁽⁴⁾	⁽⁵⁾	BBB-	4		(7)		81
				7	$	(11)	$	149



As of December 31, 2012
Maturity	Reason for Entering	Nature of Recourse	Credit Rating of Underlying Obligation⁽¹⁾	Number of Instruments	Fair Value⁽²⁾		Maximum Potential Payout
12/20/2016⁽³⁾	⁽⁴⁾	⁽⁵⁾	BBB-	3		(4)		68
3/20/2017⁽³⁾	⁽⁴⁾	⁽⁵⁾	BBB-	4		(7)		81
				7	$	(11)	$	149

⁽¹⁾	Represents average credit ratings based on the midpoint of the applicable ratings among Moody’s, S&P and Fitch Ratings, as scaled to the corresponding S&P ratings.

⁽²⁾	Broker quotes are used to determine the market value of credit default swaps.

⁽³⁾	These credit default swaps were sold to a counter-party of the consolidated VIEs discussed in Note 4 in our 2012 Form 10-K.

⁽⁴⁾	Credit default swaps were entered into in order to generate income by providing default protection in return for a quarterly payment.

⁽⁵⁾	Sellers do not have the right to demand indemnification or compensation from third parties in case of a loss (payment) on the contract.



	As of March 31, 2013		As of December 31, 2012
Maximum potential payout	$	149	$	149
Less: Counterparty thresholds		-		-
Maximum collateral potentially required to post	$	149	$	149



	As of March 31, 2013				As of December 31, 2012
S&P Credit Rating of Counterparty	Collateral Posted by Counter-Party (Held by LNC)		Collateral Posted by LNC (Held by Counter-Party)		Collateral Posted by Counter-Party (Held by LNC)		Collateral Posted by LNC (Held by Counter-Party)

AA	$	36	$	-	$	41	$	-
AA-		44		-		58		-
A+		508		-		605		-
A		621		(55)		770		(68)
A-		1,021		-		1,214		-
BBB		16		-		4		-
	$	2,246	$	(55)	$	2,692	$	(68)



	As of March 31, 2013
	Derivative Instruments		Embedded Derivative Instruments		Securities Lending and Reverse Repurchase Agreements		Total
Financial Assets
Gross amount of recognized assets	$	3,022	$	-	$	-	$	3,022
Gross amounts offset		(754)		-		-		(754)
Net amount of assets		2,268		-		-		2,268
Gross amounts not offset:
Cash collateral received		(2,191)		-		-		(2,191)
Net amount	$	77	$	-	$	-	$	77

Financial Liabilities
Gross amount of recognized liabilities	$	764	$	1,251	$	2,115	$	4,130
Gross amounts offset		(754)		-		-		(754)
Net amount of liabilities		10		1,251		2,115		3,376
Gross amounts not offset:
Financial instruments		-		-		(2,115)		(2,115)
Net amount	$	10	$	1,251	$	-	$	1,261



	As of December 31, 2012
	Derivative Instruments		Embedded Derivative Instruments		Securities Lending and Reverse Repurchase Agreements		Total
Financial Assets
Gross amount of recognized assets	$	3,547	$	-	$	-	$	3,547
Gross amounts offset		(895)		-		-		(895)
Net amount of assets		2,652		-		-		2,652
Gross amounts not offset:
Cash collateral received		(2,624)		-		-		(2,624)
Net amount	$	28	$	-	$	-	$	28

Financial Liabilities
Gross amount of recognized liabilities	$	906	$	1,856	$	1,614	$	4,376
Gross amounts offset		(895)		-		-		(895)
Net amount of liabilities		11		1,856		1,614		3,481
Gross amounts not offset:
Financial instruments		-		-		(1,614)		(1,614)
Net amount	$	11	$	1,856	$	-	$	1,867

For the Three Months Ended March 31,

Gain (loss) recognized as a component of OCI with the offset to net investment income