Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Financial assets and liabilities carried at fair value

March 31, 2015
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets at fair value:
Fixed maturities:
Federal government and agency	$	258	$	665	$	-	$	923
State and local government		-		1,832		-		1,832
Foreign government		-		1,953		3		1,956
Corporate		-		13,371		350		13,721
Mortgage-backed		-		63		1		64
Other asset-backed		-		226		419		645
Total fixed maturities⁽¹⁾		258		18,110		773		19,141
Equity securities		34		103		45		182
Subtotal		292		18,213		818		19,323
Short-term investments		-		172		-		172
GMIB assets⁽²⁾		-		-		970		970
Other derivative assets⁽³⁾		-		16		-		16
Total financial assets at fair value, excluding separate accounts	$	292	$	18,401	$	1,788	$	20,481
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	948	$	948
Total financial liabilities at fair value	$	-	$	-	$	948	$	948

(1) Fixed maturities included $817 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $71 million of appreciation for securities classified in Level 3. See Note 8 for additional information.

(2) The GMIB assets represent retrocessional contracts in place from three external reinsurers that cover the exposures on these contracts.

(3) Other derivative assets included $15 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $1 million of interest rate swaps qualifying as fair value hedges. See Note 9 for additional information.

December 31, 2014
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets at fair value:
Fixed maturities:
Federal government and agency	$	290	$	664	$	-	$	954
State and local government		-		1,856		-		1,856
Foreign government		-		1,936		4		1,940
Corporate		-		13,105		393		13,498
Mortgage-backed		-		84		1		85
Other asset-backed		-		234		416		650
Total fixed maturities⁽¹⁾		290		17,879		814		18,983
Equity securities		61		85		43		189
Subtotal		351		17,964		857		19,172
Short-term investments		-		163		-		163
GMIB assets⁽²⁾		-		-		953		953
Other derivative assets⁽³⁾		-		6		-		6
Total financial assets at fair value, excluding separate accounts	$	351	$	18,133	$	1,810	$	20,294
Financial liabilities at fair value:
GMIB liabilities	$	-	$	-	$	929	$	929
Other derivative liabilities⁽³⁾		-		1		-		1
Total financial liabilities at fair value	$	-	$	1	$	929	$	930

(1) Fixed maturities included $756 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $65 million of appreciation for securities classified in Level 3. See Note 8 for additional information.

(2) The GMIB assets represented retrocessional contracts in place from three external reinsurers that cover the exposures on these contracts.

(3) Other derivative assets included $5 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $1 million of interest rate swaps qualifying as fair value hedges. Other derivative liabilities reflected interest rate and foreign currency swaps qualifying as cash flow hedges. See Note 9 for additional information.

Level 3 fixed maturities and equity securities priced using significant unobservable inputs


As of March 31, 2015			Unobservable Input	Unobservable Adjustment Range (Weighted Average)
(Fair value in millions )		Fair Value	Unobservable Input	Unobservable Adjustment Range (Weighted Average)
Fixed maturities:
Other asset and mortgage-backed securities	$	419	Liquidity	60 - 390 (150) bps
			Weighting of credit spreads	170 - 2,630 (290) bps
Corporate and government fixed maturities		301	Liquidity	80 -930 (280) bps
Total fixed maturities		720
Equity securities		45	Price-to-earnings multiples	4.2 - 9.8 (8.0)
Subtotal		765
Pricing exemption securities⁽¹⁾		53
Total Level 3 securities	$	818
(1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.


As of December 31, 2014			Unobservable Input	Unobservable Adjustment Range (Weighted Average)
(Fair value in millions )		Fair Value	Unobservable Input	Unobservable Adjustment Range (Weighted Average)
Fixed maturities:
Other asset and mortgage-backed securities	$	417	Liquidity	60 - 370 (140) bps
			Weighting of credit spreads	160 - 2,560 (290) bps
Corporate and government fixed maturities		344	Liquidity	80 - 930 (262) bps
Total fixed maturities		761
Equity securities		43	Price-to-earnings multiples	4.2 - 9.8 (8.1)
Subtotal		804
Pricing exemption securities⁽¹⁾		53
Total Level 3 securities	$	857
(1) The fair values for these securities use single, unadjusted non-binding broker quotes not developed directly by the Company.

Changes in level 3 financial assets and liabilities carried at fair value

For the Three Months Ended March 31, 2015
	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
(In millions)	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
Balance at January 1, 2015	$	857	$	953	$	(929)	$	24
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		27		(27)		-
Other		13		(1)		(1)		(2)
Total gains (losses) included in shareholders' net income		13		26		(28)		(2)
Gains included in other comprehensive income		2		-		-		-
Gains required to adjust future policy benefits for settlement annuities⁽¹⁾		6		-		-		-
Purchases, sales and settlements:
Purchases		11		-		-		-
Sales		(18)		-		-		-
Settlements		(3)		(9)		9		-
Total purchases, sales and settlements		(10)		(9)		9		-
Transfers into/(out of) Level 3:
Transfers into Level 3		1		-		-		-
Transfers out of Level 3		(51)		-		-		-
Total transfers into/(out of) Level 3		(50)		-		-		-
Balance at March 31, 2015	$	818	$	970	$	(948)	$	22
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	-	$	26	$	(28)	$	(2)

(1) Amounts do not accrue to shareholders.










For the Three Months Ended March 31, 2014
	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
(In millions)	Fixed Maturities & Equity Securities		GMIB Assets		GMIB Liabilities		GMIB Net
Balance at January 1, 2014	$	1,190	$	751	$	(741)	$	10
Gains (losses) included in shareholders' net income:
GMIB fair value gain/(loss)		-		77		(77)		-
Other		12		(1)		12		11
Total gains (losses) included in shareholders' net income		12		76		(65)		11
Gains included in other comprehensive income		8		-		-		-
Gains required to adjust future policy benefits for settlement annuities⁽¹⁾		22		-		-		-
Purchases, sales and settlements:
Purchases		24		-		-		-
Sales		(24)		-		-		-
Settlements		(61)		(12)		12		-
Total purchases, sales and settlements		(61)		(12)		12		-
Transfers into/(out of) Level 3:
Transfers into Level 3		124		-		-		-
Transfers out of Level 3		(97)		-		-		-
Total transfers into/(out of) Level 3		27		-		-		-
Balance at March 31, 2014	$	1,198	$	815	$	(794)	$	21
Total gains (losses) included in shareholders' net income attributable
to instruments held at the reporting date	$	1	$	76	$	(65)	$	11

(1) Amounts do not accrue to shareholders.

Separate account assets schedule

March 31, 2015
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Guaranteed separate accounts (See Note 16)	$	238	$	302	$	-	$	540
Non-guaranteed separate accounts⁽¹⁾		1,659		5,098		1,095		7,852
Total separate account assets	$	1,897	$	5,400	$	1,095	$	8,392

(1) As of March 31, 2015, non-guaranteed separate accounts included $ 3.7 billion in assets supporting the Company's pension plans, including $ 1.1 billion classified in Level 3.

December 31, 2014
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Guaranteed separate accounts (See Note 16)	$	242	$	288	$	-	$	530
Non-guaranteed separate accounts⁽¹⁾		1,609		5,031		1,158		7,798
Total separate account assets	$	1,851	$	5,319	$	1,158	$	8,328

(1) As of December 31, 2014, non-guaranteed separate accounts included $3.8 billion in assets supporting the Company's pension plans, including $1.1 billion classified in Level 3.

Changes in level 3 separate account assets

	Three Months Ended
	March 31,
(In millions)	2015		2014
Balance at January 1,	$	1,158	$	1,035
Policyholder gains ⁽¹⁾		33		32
Purchases, sales and settlements:
Purchases		37		44
Sales		-		-
Settlements		(129)		(47)
Total purchases, sales and settlements		(92)		(3)
Transfers into/(out of) Level 3:
Transfers into Level 3		-		7
Transfers out of Level 3		(4)		(2)
Total transfers into/(out of) Level 3		(4)		5
Balance at March 31,	$	1,095	$	1,069

(1) Included in this amount are gains of $32 million attributable to instruments still held at March 31, 2015 and 2014.

Financial instruments not carried at fair value

(In millions)			March 31, 2015				December 31, 2014
	Classification in the Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	2,106	$	2,010	$	2,168	$	2,081
Contractholder deposit funds, excluding universal life products	Level 3	$	1,157	$	1,144	$	1,136	$	1,124
Long-term debt, including current maturities, excluding capital leases	Level 2	$	6,823	$	5,904	$	5,740	$	4,993

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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