Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Financial assets and liabilities carried at fair value

(In millions)	Quoted Prices in Active Markets for Identical Assets(Level 1)				Significant Other Observable Inputs(Level 2)				Significant Unobservable Inputs(Level 3)				Total
	As of March 31, 2018		As of December 31, 2017		As of March 31, 2018		As of December 31, 2017		As of March 31, 2018		As of December 31, 2017		As of March 31, 2018		As of December 31, 2017
Financial assets at fair value
Fixed maturities
Federal government and agency	$	356	$	253	$	512	$	526	$	-	$	-	$	868	$	779
State and local government		-		-		1,129		1,287		-		-		1,129		1,287
Foreign government		-		-		2,454		2,442		45		45		2,499		2,487
Corporate		-		-		18,802		17,658		371		430		19,173		18,088
Mortgage and other asset-backed		-		-		362		343		147		154		509		497
Total fixed maturities		356		253		23,259		22,256		563		629		24,178		23,138
Equity securities ⁽¹⁾		399		412		69		73		33		103		501		588
Subtotal		755		665		23,328		22,329		596		732		24,679		23,726
Short-term investments		-		-		245		199		-		-		245		199
GMIB assets		-		-		-		-		717		777		717		777
Other derivative assets		-		-		2		2		-		-		2		2
Total financial assets at fair value, excluding separate accounts and real estate funds	$	755	$	665	$	23,575	$	22,530	$	1,313	$	1,509	$	25,643	$	24,704
Real estate funds priced at NAV as a practical expedient ⁽²⁾														273		N/A
Financial liabilities at fair value
GMIB liabilities	$	-	$	-	$	-	$	-	$	682	$	762	$	682	$	762
Other derivative liabilities		-		-		44		25		-		-		44		25
Total financial liabilities at fair value, excluding separate accounts	$	-	$	-	$	44	$	25	$	682	$	762	$	726	$	787

(1) Beginning in 2018, certain private equity securities are no longer carried at fair value under the policy election of ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities). As of December 31, 2017, private equity securities of $70 million were included in the Level 3 amount. See Note 10 for additional information on this accounting policy change.
(2) Beginning in 2018 upon adopting ASU 2016-01, certain real estate funds are carried at fair value (previously carried at cost) based on the Company's ownership share of the equity of the investee (Net Asset Value ("NAV") as a practical expedient) including changes in the fair value of its underlying investments. The funds have a quarterly redemption frequency, 45-90 day redemption notice period and $67 million in unfunded commitments. See Note 10 for additional information on this accounting policy change. Prior periods are designated as not applicable ("N/A") in this table.

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

	Fair Value as of				Unobservable Input	Unobservable AdjustmentRange (Weighted Average) as of
(Fair value in millions )	March 31, 2018		December 31, 2017		Unobservable Input	March 31, 2018	December 31, 2017
Fixed maturities
Mortgage and other asset-backed	$	147	$	154	Liquidity	60 - 350 (80) bps	60 - 370 (90) bps
securities					Weighting of credit spreads	180 - 290 (230) bps	180 - 290 (230) bps
Corporate and government fixed maturities		389		446	Liquidity	70 - 930 (240) bps	70 - 1,650 (300) bps
Total fixed maturities		536		600
Equity securities
Private equity securities ⁽¹⁾		N/A		70	Price-to-EBITDA multiples	N/A	5.0 - 12.0 (8.9)
Hybrid equity securities		33		33	Liquidity	205 - 205 (205) bps	270 - 270 (270) bps
Total equity securities		33		103
Subtotal		569		703
Securities not priced by the Company⁽²⁾		27		29
Total Level 3 securities	$	596	$	732

(1) Beginning in 2018, private equity securities are no longer carried at fair value under the policy election of ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities). Current periods are designated as N/A in this table.
(2) 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

(In millions)	Fixed Maturities & Equity Securities				GMIB Assets				GMIB Liabilities
	2018		2017		2018		2017		2018		2017
Balance at January 1,	$	732	$	776	$	777	$	799	$	(762)	$	(780)
Gains (losses) included in shareholders' net income
GMIB fair value gain (loss)		-		-		(40)		(11)		42		11
Other		(20)		23		(3)		1		16		(4)
Total gains (losses) included in shareholders' net income		(20)		23		(43)		(10)		58		7
Losses included in other comprehensive income		(5)		(8)		-		-		-		-
Losses required to adjust future policy benefits for settlement annuities⁽¹⁾		(4)		-		-		-		-		-
Purchases, sales, settlements
Purchases		10		25		-		-		-		-
Sales		(11)		(47)		-		-		-		-
Settlements		(2)		(27)		(17)		(12)		22		12
Total purchases, sales and settlements		(3)		(49)		(17)		(12)		22		12
Transfers into (out of) Level 3
Transfers into Level 3		20		40		-		-		-		-
Transfers out of Level 3 ⁽²⁾		(124)		(55)		-		-		-		-
Total transfers into/(out of) Level 3		(104)		(15)		-		-		-		-
Balance at March 31,	$	596	$	727	$	717	$	777	$	(682)	$	(761)
Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date	$	(7)	$	(6)	$	(43)	$	(10)	$	(58)	$	7

(1) Amounts do not accrue to shareholders.
(2) Beginning in 2018, certain private equity securities are no longer carried at fair value under the policy election of ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities). $70 million in private equity securities as of December 31, 2017 are included in the March 31, 2018 Transfers out of Level 3 amount.

Separate account assets schedule

(In millions)	Quoted Prices in Active Markets for Identical Assets(Level 1)				Significant Other Observable Inputs(Level 2)				Significant Unobservable Inputs(Level 3)				Total
	March		December		March		December		March		December		March		December
	31,		31,		31,		31,		31,		31,		31,		31,
	2018		2017		2018		2017		2018		2017		2018		2017
Guaranteed separate accounts (see Note 16)	$	206	$	215	$	300	$	308	$	-	$	-	$	506	$	523
Non-guaranteed separate accounts ⁽¹⁾		1,506		1,536		5,197		5,298		262		292		6,965		7,126
Subtotal	$	1,712	$	1,751	$	5,497	$	5,606	$	262	$	292		7,471		7,649
Non-guaranteed separate accounts priced at NAV as a practical expedient⁽¹⁾														782		774
Total separate account assets													$	8,253	$	8,423

(1) Non-guaranteed separate accounts included $3.8 billion as of March 31, 2018 and $3.9 billion as of December 31, 2017 in assets supporting the Company's pension plans, including $0.2 billion classified in Level 3 as of March 31, 2018 and $0.3 billion classified in Level 3 as of December 31, 2017.

Changes in level 3 separate account assets

	Three Months Ended
	March 31,
(In millions)	2018		2017
Balance, beginning of period	$	292	$	331
Policyholder gains		45		27
Purchases, sales and settlements
Purchases		8		10
Sales		(72)		(35)
Settlements		(4)		(1)
Total purchases, sales and settlements		(68)		(26)
Transfers into (out of) Level 3
Transfers into Level 3		-		-
Transfers out of Level 3		(7)		(2)
Total transfers into (out of) Level 3		(7)		(2)
Balance, end of period	$	262	$	330

Separate account assets priced at net asset value

	Fair Value as of				Unfunded Commitments as of March 31, 2018		Data as of March 31, 2018 and December 31, 2017
(In millions)	March 31, 2018		December 31, 2017		Unfunded Commitments as of March 31, 2018		Redemption Frequency (if currently eligible)	Redemption Notice Period
Securities Partnerships	$	487	$	458	$	315	Not applicable	Not applicable
Real Estate Funds		244		239		-	Quarterly	45-90 days
Hedge Funds		51		77		-	Up to Annually, varying by fund	30-90 days
Total	$	782	$	774	$	315

Financial instruments not carried at fair value

			March 31, 2018				December 31, 2017
(In millions)	Classification in the Fair Value Hierarchy		Fair Value		Carrying Value		Fair Value		Carrying Value
Commercial mortgage loans	Level 3	$	1,781	$	1,801	$	1,766	$	1,761
Long-term debt, including current maturities, excluding capital leases	Level 2	$	5,289	$	5,182	$	5,730	$	5,321

- 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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