Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2018		As of December 31, 2017		As of September 30, 2018		As of December 31, 2017		As of September 30, 2018		As of December 31, 2017		As of September 30, 2018		As of December 31, 2017
Financial assets at fair value
Fixed maturities
Federal government and agency	$	246	$	253	$	501	$	526	$	-	$	-	$	747	$	779
State and local government		-		-		990		1,287		-		-		990		1,287
Foreign government		-		-		2,485		2,442		6		45		2,491		2,487
Corporate		-		-		18,214		17,658		288		430		18,502		18,088
Mortgage and other asset-backed		-		-		397		343		141		154		538		497
Total fixed maturities		246		253		22,587		22,256		435		629		23,268		23,138
Equity securities ⁽¹⁾		392		412		66		73		33		103		491		588
Subtotal		638		665		22,653		22,329		468		732		23,759		23,726
Short-term investments		-		-		102		199		-		-		102		199
GMIB assets		-		-		-		-		636		777		636		777
Other derivative assets		-		-		24		2		-		-		24		2
Total financial assets at fair value, excluding separate accounts and real estate funds	$	638	$	665	$	22,779	$	22,530	$	1,104	$	1,509	$	24,521	$	24,704
Real estate funds priced at NAV as a practical expedient ⁽²⁾														244		N/A
Financial liabilities at fair value
GMIB liabilities	$	-	$	-	$	-	$	-	$	613	$	762	$	613	$	762
Other derivative liabilities		-		-		21		25		-		-		21		25
Total financial liabilities at fair value, excluding separate accounts	$	-	$	-	$	21	$	25	$	613	$	762	$	634	$	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, a 45-90 day redemption notice period and $68 million in unfunded commitments as of September 30, 2018. 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 )	September 30, 2018		December 31, 2017		Unobservable Input	September 30, 2018	December 31, 2017
Fixed maturities
Mortgage and other asset-backed	$	141	$	154	Liquidity	60 - 370 (80) bps	60 - 370 (90) bps
securities					Weighting of credit spreads	180 - 310 (240) bps	180 - 290 (230) bps
Corporate and government fixed maturities		275		446	Liquidity	70 - 930 (250) bps	70 - 1,650 (300) bps
Total fixed maturities		416		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	240 bps⁽³⁾	270 bps⁽³⁾
Total equity securities		33		103
Subtotal		449		703
Securities not priced by the Company⁽²⁾		19		29
Total Level 3 securities	$	468	$	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.
(3) The range and weighted average is equivalent for this security type.

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

For the Three Months Ended September 30,
(In millions)	Fixed Maturities & Equity Securities				GMIB Assets				GMIB Liabilities
	2018		2017		2018		2017		2018		2017
Balance at July 1,	$	528	$	751	$	684	$	777	$	(653)	$	(764)
Gains (losses) included in shareholders' net income
GMIB fair value gain/(loss)		-		-		(39)		40		39		(40)
Other		-		(2)		2		(1)		(10)		6
Total gains (losses) included in shareholders' net income		-		(2)		(37)		39		29		(34)
Gains (losses) included in other comprehensive income		2		(9)		-		-		-		-
Losses required to adjust future policy benefits for settlement annuities⁽¹⁾		(2)		(2)		-		-		-		-
Purchases, sales, settlements
Purchases		3		37		-		-		-		-
Sales		-		(3)		-		-		-		-
Settlements		(14)		(30)		(11)		(18)		11		18
Total purchases, sales and settlements		(11)		4		(11)		(18)		11		18
Transfers into/(out of) Level 3
Transfers into Level 3		24		178		-		-		-		-
Transfers out of Level 3		(73)		(116)		-		-		-		-
Total transfers into/(out of) Level 3		(49)		62		-		-		-		-
Balance at September 30,	$	468	$	804	$	636	$	798	$	(613)	$	(780)
Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date	$	(1)	$	1	$	(37)	$	39	$	29	$	(34)

For the Nine Months Ended September 30,
(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)		-		-		(106)		44		108		(44)
Other		(21)		22		-		-		1		(1)
Total gains (losses) included in shareholders' net income		(21)		22		(106)		44		109		(45)
Losses included in other comprehensive income		(8)		(12)		-		-		-		-
Gains (losses) required to adjust future policy benefits for settlement annuities⁽¹⁾		(8)		7		-		-		-		-
Purchases, sales, settlements
Purchases		19		127		-		-		-		-
Sales		(11)		(73)		-		-		-		-
Settlements		(29)		(69)		(35)		(45)		40		45
Total purchases, sales and settlements		(21)		(15)		(35)		(45)		40		45
Transfers into/(out of) Level 3
Transfers into Level 3		44		254		-		-		-		-
Transfers out of Level 3 ⁽²⁾		(250)		(228)		-		-		-		-
Total transfers into/(out of) Level 3		(206)		26		-		-		-		-
Balance at September 30,	$	468	$	804	$	636	$	798	$	(613)	$	(780)
Total gains (losses) included in shareholders' net income attributable to instruments held at the reporting date	$	(9)	$	-	$	(106)	$	44	$	109	$	(45)

(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). Private equity securities of $70 million as of December 31, 2017 are included in the September 30, 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
	September		December		September		December		September		December		September		December
	30,		31,		30,		31,		30,		31,		30,		31,
	2018		2017		2018		2017		2018		2017		2018		2017
Guaranteed separate accounts (see Note 16)	$	206	$	215	$	276	$	308	$	-	$	-	$	482	$	523
Non-guaranteed separate accounts ⁽¹⁾		1,335		1,536		5,353		5,298		257		292		6,945		7,126
Subtotal	$	1,541	$	1,751	$	5,629	$	5,606	$	257	$	292		7,427		7,649
Non-guaranteed separate accounts priced at NAV as a practical expedient⁽¹⁾														735		774
Total separate account assets													$	8,162	$	8,423

(1) Non-guaranteed separate accounts included $3.9 billion in assets supporting the Company's pension plans as of September 30, 2018 and December 31, 2017, including $0.2 billion classified in Level 3 as of September 30, 2018 and $0.3 billion classified in Level 3 as of December 31, 2017.

Changes in level 3 separate account assets

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2018		2017		2018		2017
Balance, beginning of period	$	256	$	316	$	292	$	331
Policyholder (losses) gains		(1)		(1)		42		36
Purchases, sales and settlements
Purchases		8		9		20		26
Sales		(1)		-		(73)		(52)
Settlements		(9)		(12)		(21)		(13)
Total purchases, sales and settlements		(2)		(3)		(74)		(39)
Transfers into (out of) Level 3
Transfers into Level 3		12		4		12		5
Transfers out of Level 3		(8)		(16)		(15)		(33)
Total transfers into (out of) Level 3		4		(12)		(3)		(28)
Balance, end of period	$	257	$	300	$	257	$	300

Separate account assets priced at net asset value

	Fair Value as of				Unfunded Commitments as of September 30, 2018
(In millions)	September 30, 2018		December 31, 2017		Unfunded Commitments as of September 30, 2018		Redemption Frequency (if currently eligible)	Redemption Notice Period
Securities Partnerships	$	472	$	458	$	302	Not applicable	Not applicable
Real Estate Funds		244		239		-	Quarterly	30-90 days
Hedge Funds		19		77		-	Up to Annually, varying by fund	30-90 days
Total	$	735	$	774	$	302

Financial instruments not carried at fair value

			September 30, 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	$	1,819	$	1,867	$	1,766	$	1,761
Long-term debt, including current maturities, excluding capital leases	Level 2	$	25,153	$	25,034	$	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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