Fair Value (Tables)

9 Months Ended

Sep. 30, 2013

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below.



	September 30, 2013
	Fair Value Hierarchy							Total Estimated Fair Value
	Level 1		Level 2		Level 3			Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
U.S. corporate	$	—	$	16,367	$	1,081		$	17,448
U.S. Treasury and agency	3,836		3,920		—			7,756
Foreign corporate	—		8,033		762			8,795
RMBS	108		4,603		393			5,104
ABS	—		1,538		410			1,948
State and political subdivision	—		2,117		5			2,122
CMBS	—		1,597		66			1,663
Foreign government	—		1,094		—			1,094
Total fixed maturity securities	3,944		39,269		2,717			45,930
Equity securities:
Non-redeemable preferred stock	—		131		77			208
Common stock	77		84		28			189
Total equity securities	77		215		105			397
FVO securities	—		9		—			9
Short-term investments (1)	289		1,811		2			2,102
Mortgage loans held by CSEs	—		2,096		—			2,096
Derivative assets: (2)
Interest rate	1		1,077		55			1,133
Foreign currency exchange rate	—		72		—			72
Credit	—		22		7			29
Equity market	5		356		5			366
Total derivative assets	6		1,527		67			1,600
Net embedded derivatives within asset host contracts (3)	—		—		1,797			1,797
Separate account assets (4)	218		93,662		140			94,020
Total assets	$	4,534	$	138,589	$	4,828		$	147,951
Liabilities:
Derivative liabilities: (2)
Interest rate	$	—	$	570	$	20		$	590
Foreign currency exchange rate	—		88		—			88
Credit	—		2		—			2
Equity market	—		34		97			131
Total derivative liabilities	—		694		117			811
Net embedded derivatives within liability host contracts (3)	—		—		(606		)	(606		)
Long-term debt of CSEs	—		1,969		—			1,969
Total liabilities	$	—	$	2,663	$	(489	)	$	2,174



	December 31, 2012
	Fair Value Hierarchy						Total Estimated Fair Value
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Fixed maturity securities:
U.S. corporate	$	—	$	17,461	$	1,434	$	18,895
U.S. Treasury and agency	5,082		3,782		—		8,864
Foreign corporate	—		8,577		868		9,445
RMBS	—		5,460		278		5,738
ABS	—		1,910		343		2,253
State and political subdivision	—		2,304		25		2,329
CMBS	—		2,231		125		2,356
Foreign government	—		1,085		3		1,088
Total fixed maturity securities	5,082		42,810		3,076		50,968
Equity securities:
Non-redeemable preferred stock	—		47		93		140
Common stock	70		81		26		177
Total equity securities	70		128		119		317
FVO securities	—		9		—		9
Short-term investments (1)	1,233		1,285		13		2,531
Mortgage loans held by CSEs	—		2,666		—		2,666
Derivative assets: (2)
Interest rate	—		1,643		148		1,791
Foreign currency exchange rate	—		76		—		76
Credit	—		13		10		23
Equity market	—		469		11		480
Total derivative assets	—		2,201		169		2,370
Net embedded derivatives within asset host contracts (3)	—		—		3,551		3,551
Separate account assets (4)	201		85,772		141		86,114
Total assets	$	6,586	$	134,871	$	7,069	$	148,526
Liabilities:
Derivative liabilities: (2)
Interest rate	$	7	$	767	$	29	$	803
Foreign currency exchange rate	—		67		—		67
Credit	—		3		—		3
Equity market	27		8		62		97
Total derivative liabilities	34		845		91		970
Net embedded derivatives within liability host contracts (3)	—		—		1,261		1,261
Long-term debt of CSEs	—		2,559		—		2,559
Total liabilities	$	34	$	3,404	$	1,352	$	4,790

____________


(1)	Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.

(2)

Derivative assets are presented within other invested assets in the consolidated balance sheets and derivative liabilities are presented within other liabilities in the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.

(3)

Net embedded derivatives within asset host contracts are presented primarily within premiums, reinsurance and other receivables in the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented primarily within PABs and other liabilities in the consolidated balance sheets. At September 30, 2013 and December 31, 2012, equity securities also included embedded derivatives of ($31) million and ($14) million, respectively.


(4)	Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets.

Fair Value Inputs, Quantitative Information

The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:



					September 30, 2013				December 31, 2012				Impact of Increase in Input on Estimated Fair Value (2)
	Valuation Techniques		Significant Unobservable Inputs		Range			Weighted Average (1)	Range			Weighted Average (1)	Impact of Increase in Input on Estimated Fair Value (2)
Fixed maturity securities: (3)
U.S. corporate and foreign corporate	Ÿ	Matrix pricing	Ÿ	Delta spread adjustments (4)	—	-	240	72	9	-	500	105	Decrease
			Ÿ	Illiquidity premium (4)	30	-	30	30	30	-	30	30	Decrease
			Ÿ	Credit spreads (4)	(491)	-	505	241	(157)	-	876	282	Decrease
			Ÿ	Offered quotes (5)	14	-	100	99	100	-	100	100	Increase
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	64	-	103	87	35	-	555	96	Increase
RMBS		Matrix pricing and discounted cash flow	Ÿ	Credit spreads (4)	(205)	-	1,243	290	40	-	2,367	436	Decrease (6)
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	75	-	100	98	100	-	100	100	Increase (6)
CMBS	Ÿ	Matrix pricing and discounted cash flow	Ÿ	Credit spreads (4)	130	-	2,515	945	10	-	9,164	413	Decrease (6)
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	98	-	104	101	100	-	104	102	Increase (6)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	96	-	96	96					Increase (6)
ABS	Ÿ	Matrix pricing and discounted cash flow	Ÿ	Credit spreads (4)	30	-	875	258	—	-	900	152	Decrease (6)
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	—	-	104	101	97	-	102	100	Increase (6)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	54	-	106	95	50	-	111	100	Increase (6)
Derivatives:
Interest rate	Ÿ	Present value techniques	Ÿ	Swap yield (7)	247	-	427		221	-	353		Increase (11)
Credit	Ÿ	Present value techniques	Ÿ	Credit spreads (8)	99	-	99		100	-	100		Decrease (8)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (9)
Equity market	Ÿ	Present value techniques	Ÿ	Volatility (10)	16%	-	25%		18%	-	26%		Increase (11)
Embedded derivatives:
Direct and ceded guaranteed minimum benefits	Ÿ	Option pricing techniques	Ÿ	Mortality rates:
				Ages 0 - 40	0%	-	0.10%		0%	-	0.10%		Decrease (12)
				Ages 41 - 60	0.04%	-	0.65%		0.05%	-	0.64%		Decrease (12)
				Ages 61 - 115	0.26%	-	100%		0.32%	-	100%		Decrease (12)
			Ÿ	Lapse rates:
				Durations 1 - 10	0.50%	-	100%		0.50%	-	100%		Decrease (13)
				Durations 11 - 20	3%	-	100%		3%	-	100%		Decrease (13)
				Durations 21 - 116	3%	-	100%		3%	-	100%		Decrease (13)
			Ÿ	Utilization rates	20%	-	50%		20%	-	50%		Increase (14)
			Ÿ	Withdrawal rates	0.07%	-	10%		0.07%	-	10%		(15)
			Ÿ	Long-term equity volatilities	17.40%	-	25%		17.40%	-	25%		Increase (16)
			Ÿ	Nonperformance risk spread	0.05%	-	0.55%		0.10%	-	0.67%		Decrease (17)

____________


(1)	The weighted average for fixed maturity securities is determined based on the estimated fair value of the securities.


(2)	The impact of a decrease in input would have the opposite impact on the estimated fair value. For embedded derivatives, changes to direct guaranteed minimum benefits are based on liability positions and changes to ceded guaranteed minimum benefits are based on asset positions.


(3)	Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations.


(4)	Range and weighted average are presented in basis points.


(5)	Range and weighted average are presented in accordance with the market convention for fixed maturity securities of dollars per hundred dollars of par.


(6)	Changes in the assumptions used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.

(7)

Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curve is utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.


(8)	Represents the risk quoted in basis points of a credit default event on the underlying instrument. The range being provided is a single quoted spread in the valuation model. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps.


(9)	At both September 30, 2013 and December 31, 2012, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value.


(10)	Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.


(11)	Changes are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.


(12)	Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(13)

Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(14)

The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(15)

The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.


(16)	Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.


(17)	Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate			Foreign Corporate			RMBS			ABS			State and Political Subdivision			CMBS			Foreign Government
	(In millions)
Three Months Ended September 30, 2013:
Balance, beginning of period	$	1,169		$	813		$	352		$	423		$	6		$	66		$	2
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	2			—			1			—			—			—			—
Net investment gains (losses)	—			(3		)	(1		)	2			—			—			—
Net derivative gains (losses)	—			—			—			—			—			—			—
OCI	(7		)	12			(2		)	(2		)	—			—			—
Purchases (3)	20			—			81			37			—			18			—
Sales (3)	(56		)	(29		)	(15		)	(34		)	(1		)	(7		)	(2		)
Issuances (3)	—			—			—			—			—			—			—
Settlements (3)	—			—			—			—			—			—			—
Transfers into Level 3 (4)	—			11			—			—			—			—			—
Transfers out of Level 3 (4)	(47		)	(42		)	(23		)	(16		)	—			(11		)	—
Balance, end of period	$	1,081		$	762		$	393		$	410		$	5		$	66		$	—
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	2		$	—		$	1		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	(3	)	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:								Net Derivatives: (6)
	Non - redeemable Preferred Stock			Common Stock			Short-term Investments		Interest Rate			Credit		Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)
	(In millions)
Three Months Ended September 30, 2013:
Balance, beginning of period	$	81		$	30		$	2	$	47		$	6	$	(84	)	$	2,453		$	140
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	—			—			—		—			—		—			—			—
Net investment gains (losses)	—			2			—		—			—		—			—			(1		)
Net derivative gains (losses)	—			—			—		3			1		(8		)	(20		)	—
OCI	2			—			—		(13		)	—		—			—			—
Purchases (3)	2			—			—		—			—		—			—			1
Sales (3)	(8		)	(4		)	—		—			—		—			—			—
Issuances (3)	—			—			—		—			—		—			—			—
Settlements (3)	—			—			—		(2		)	—		—			(30		)	—
Transfers into Level 3 (4)	—			—			—		—			—		—			—			—
Transfers out of Level 3 (4)	—			—			—		—			—		—			—			—
Balance, end of period	$	77		$	28		$	2	$	35		$	7	$	(92	)	$	2,403		$	140
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	—		$	—		$	—	$	—		$	—	$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—	$	—		$	—	$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—	$	5		$	1	$	(10	)	$	(14	)	$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate			Foreign Corporate			RMBS			ABS			State and Political Subdivision		CMBS			Foreign Government
	(In millions)
Three Months Ended September 30, 2012:
Balance, beginning of period	$	1,522		$	698		$	233		$	289		$	25	$	158		$	2
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	2			—			—			—			—		—			—
Net investment gains (losses)	—			(14		)	(1		)	—			—		—			—
Net derivative gains (losses)	—			—			—			—			—		—			—
OCI	73			19			16			4			—		(1		)	—
Purchases (3)	56			26			27			7			—		32			—
Sales (3)	(45		)	(26		)	(24		)	(3		)	—		(37		)	—
Issuances (3)	—			—			—			—			—		—			—
Settlements (3)	—			—			—			—			—		—			—
Transfers into Level 3 (4)	2			40			1			—			—		22			—
Transfers out of Level 3 (4)	(38		)	(8		)	—			(4		)	—		(15		)	—
Balance, end of period	$	1,572		$	735		$	252		$	293		$	25	$	159		$	2
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	2		$	—		$	—		$	—		$	—	$	—		$	—
Net investment gains (losses)	$	—		$	(10	)	$	—		$	—		$	—	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—	$	—		$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:								Net Derivatives: (6)
	Non- redeemable Preferred Stock		Common Stock			Short-term Investments			Interest Rate			Credit		Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)
	(In millions)
Three Months Ended September 30, 2012:
Balance, beginning of period	$	91	$	22		$	22		$	169		$	6	$	(6	)	$	1,214		$	149
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	—		—			—			—			—		—			—			—
Net investment gains (losses)	—		1			—			—			—		—			—			—
Net derivative gains (losses)	—		—			—			(6		)	4		(25		)	95			—
OCI	1		1			—			(6		)	—		—			—			—
Purchases (3)	—		—			45			—			—		—			—			4
Sales (3)	—		(1		)	(1		)	—			—		—			—			(3		)
Issuances (3)	—		—			—			(10		)	—		—			—			—
Settlements (3)	—		—			—			(5		)	—		—			(10		)	—
Transfers into Level 3 (4)	—		—			—			—			—		—			—			—
Transfers out of Level 3 (4)	—		—			—			—			—		—			—			(2		)
Balance, end of period	$	92	$	23		$	66		$	142		$	10	$	(31	)	$	1,299		$	148
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—
Net investment gains (losses)	$	—	$	—		$	—		$	—		$	—	$	—		$	—		$	—
Net derivative gains (losses)	$	—	$	—		$	—		$	(4	)	$	4	$	(25	)	$	97		$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate			Foreign Corporate			RMBS			ABS			State and Political Subdivision			CMBS			Foreign Government
	(In millions)
Nine Months Ended September 30, 2013:
Balance, beginning of period	$	1,434		$	868		$	278		$	343		$	25		$	125		$	3
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	7			—			—			1			—			1			—
Net investment gains (losses)	(3		)	(7		)	—			2			—			—			—
Net derivative gains (losses)	—			—			—			—			—			—			—
OCI	(21		)	(10		)	7			(3		)	—			2			(1		)
Purchases (3)	109			56			141			136			—			24			—
Sales (3)	(192		)	(83		)	(37		)	(41		)	(1		)	(60		)	(2		)
Issuances (3)	—			—			—			—			—			—			—
Settlements (3)	—			—			—			—			—			—			—
Transfers into Level 3 (4)	49			15			8			—			—			—			—
Transfers out of Level 3 (4)	(302		)	(77		)	(4		)	(28		)	(19		)	(26		)	—
Balance, end of period	$	1,081		$	762		$	393		$	410		$	5		$	66		$	—
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	7		$	—		$	—		$	1		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	(3	)	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:									Net Derivatives: (6)
	Non- redeemable Preferred Stock			Common Stock			Short-term Investments			Interest Rate			Credit			Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)
	(In millions)
Nine Months Ended September 30, 2013:
Balance, beginning of period	$	93		$	26		$	13		$	119		$	10		$	(51	)	$	2,290		$	141
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			—			—			—			—			—
Net investment gains (losses)	4			2			—			—			—			—			—			(1		)
Net derivative gains (losses)	—			—			—			(21		)	(3		)	(34		)	153			—
OCI	9			1			—			(47		)	—			—			—			—
Purchases (3)	2			3			2			—			—			—			—			3
Sales (3)	(31		)	(4		)	(13		)	—			—			—			—			(3		)
Issuances (3)	—			—			—			—			—			—			—			—
Settlements (3)	—			—			—			(17		)	—			(7		)	(40		)	—
Transfers into Level 3 (4)	—			—			—			—			—			—			—			—
Transfers out of Level 3 (4)	—			—			—			1			—			—			—			—
Balance, end of period	$	77		$	28		$	2		$	35		$	7		$	(92	)	$	2,403		$	140
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	(14	)	$	(3	)	$	(34	)	$	172		$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities:
	U.S. Corporate			Foreign Corporate			RMBS			ABS			State and Political Subdivision		CMBS			Foreign Government
	(In millions)
Nine Months Ended September 30, 2012:
Balance, beginning of period	$	1,432		$	580		$	239		$	220		$	23	$	147		$	2
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	5			—			—			—			—		—			—
Net investment gains (losses)	—			(22		)	(4		)	—			—		(2		)	—
Net derivative gains (losses)	—			—			—			—			—		—			—
OCI	70			39			32			5			2		5			—
Purchases (3)	143			100			27			98			—		33			—
Sales (3)	(98		)	(41		)	(46		)	(12		)	—		(52		)	—
Issuances (3)	—			—			—			—			—		—			—
Settlements (3)	—			—			—			—			—		—			—
Transfers into Level 3 (4)	26			93			4			—			—		28			—
Transfers out of Level 3 (4)	(6		)	(14		)	—			(18		)	—		—			—
Balance, end of period	$	1,572		$	735		$	252		$	293		$	25	$	159		$	2
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	5		$	—		$	—		$	—		$	—	$	—		$	—
Net investment gains (losses)	$	—		$	(16	)	$	(2	)	$	—		$	—	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—	$	—		$	—



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities:								Net Derivatives: (6)
	Non- redeemable Preferred Stock		Common Stock			Short-term Investments			Interest Rate			Credit			Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)
	(In millions)
Nine Months Ended September 30, 2012:
Balance, beginning of period	$	76	$	21		$	10		$	174		$	(1	)	$	43		$	1,032		$	130
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	—		—			—			—			—			—			—			—
Net investment gains (losses)	—		(2		)	—			—			—			—			—			19
Net derivative gains (losses)	—		—			—			3			10			(74		)	276			—
OCI	16		5			—			9			—			—			—			—
Purchases (3)	—		—			66			—			—			—			—			4
Sales (3)	—		(1		)	(10		)	—			—			—			—			(4		)
Issuances (3)	—		—			—			(10		)	—			—			—			—
Settlements (3)	—		—			—			(34		)	—			—			(9		)	—
Transfers into Level 3 (4)	—		—			—			—			—			—			—			—
Transfers out of Level 3 (4)	—		—			—			—			1			—			—			(1		)
Balance, end of period	$	92	$	23		$	66		$	142		$	10		$	(31	)	$	1,299		$	148
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—	$	(3	)	$	—		$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—	$	—		$	—		$	4		$	10		$	(74	)	$	283		$	—

____________


(1)	Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses).


(2)	Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.


(3)	Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.


(4)	Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.


(5)	Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods.


(6)	Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.


(7)	Embedded derivative assets and liabilities are presented net for purposes of the rollforward.


(8)	Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income. For the purpose of this disclosure, these changes are presented within net investment gains (losses).

Fair Value, Option, Quantitative Disclosures

The following table presents information for certain assets and liabilities of CSEs, which are accounted for under the FVO. These assets and liabilities were initially measured at fair value.



	September 30, 2013		December 31, 2012
	(In millions)
Assets: (1)
Unpaid principal balance	$	2,020	$	2,539
Difference between estimated fair value and unpaid principal balance	76		127
Carrying value at estimated fair value	$	2,096	$	2,666
Liabilities: (1)
Contractual principal balance	$	1,925	$	2,444
Difference between estimated fair value and contractual principal balance	44		115
Carrying value at estimated fair value	$	1,969	$	2,559

____________

(1)

These assets and liabilities are comprised of commercial mortgage loans and long-term debt. Changes in estimated fair value on these assets and liabilities and gains or losses on sales of these assets are recognized in net investment gains (losses). Interest income on commercial mortgage loans held by CSEs is recognized in net investment income. Interest expense from long-term debt of CSEs is recognized in other expenses.

Estimated fair value of certain investments

The following table presents information for assets measured at estimated fair value on a nonrecurring basis during the periods and still held at the reporting dates; that is, they are not measured at fair value on a recurring basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The estimated fair values for these assets were determined using significant unobservable inputs (Level 3).



	At September 30,				Three Months Ended September 30,						Nine Months Ended September 30,
	2013		2012		2013			2012			2013			2012
	Carrying Value After Measurement				Gains (Losses)
	(In millions)
Mortgage loans, net (1)	$	18	$	12	$	—		$	—		$	(3	)	$	4
Other limited partnership interests (2)	$	4	$	4	$	—		$	(1	)	$	(5	)	$	(3	)
Real estate joint ventures (3)	$	1	$	2	$	—		$	—		$	(1	)	$	(3	)
Goodwill (4)	$	—	$	—	$	(66	)	$	(394	)	$	(66	)	$	(394	)

____________


(1)	Estimated fair values for impaired mortgage loans are based on independent broker quotations or valuation models using unobservable inputs or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, are based on the estimated fair value of the underlying collateral or the present value of the expected future cash flows.

(2)

For these cost method investments, estimated fair value is determined from information provided in the financial statements of the underlying entities including NAV data. These investments include private equity and debt funds that typically invest primarily in various strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; and below investment grade debt and mezzanine debt funds. Distributions will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next two to 10 years. Unfunded commitments for these investments at both September 30, 2013 and 2012 were not significant.

(3)

For these cost method investments, estimated fair value is determined from information provided in the financial statements of the underlying entities including NAV data. These investments include several real estate funds that typically invest primarily in commercial real estate. Distributions will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next one to 10 years. Unfunded commitments for these investments at both September 30, 2013 and 2012 were not significant.

(4)

As discussed in Note 7, in September 2013, the Company recorded an impairment of goodwill associated with the Retail Life & Other reporting unit. Also, as discussed in Note 10 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report, the Company recorded an impairment of goodwill associated with the Retail Annuities reporting unit. These impairments have been categorized as Level 3 due to the significant unobservable inputs used in the determination of the estimated fair value.

Fair value of financial instruments

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:



	September 30, 2013
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3			Total Estimated Fair Value
	(In millions)
Assets:
Mortgage loans:
Held-for-investment	$	6,390	$	—	$	—	$	6,752		$	6,752
Held-for-sale	63		—		—		63			63
Mortgage loans, net	$	6,453	$	—	$	—	$	6,815		$	6,815
Policy loans	$	1,216	$	—	$	869	$	418		$	1,287
Real estate joint ventures	$	56	$	—	$	—	$	103		$	103
Other limited partnership interests	$	85	$	—	$	—	$	96		$	96
Other invested assets	$	455	$	—	$	512	$	—		$	512
Premiums, reinsurance and other receivables	$	6,541	$	—	$	506	$	6,753		$	7,259
Liabilities:
PABs	$	21,255	$	—	$	—	$	22,933		$	22,933
Long-term debt	$	790	$	—	$	999	$	—		$	999
Other liabilities	$	435	$	—	$	278	$	157		$	435
Separate account liabilities	$	1,373	$	—	$	1,373	$	—		$	1,373
Commitments: (1)
Mortgage loan commitments	$	—	$	—	$	—	$	(1	)	$	(1	)
Commitments to fund bank credit facilities and private corporate bond investments	$	—	$	—	$	3	$	—		$	3



	December 31, 2012
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets:
Mortgage loans:
Held-for-investment	$	6,491	$	—	$	—	$	7,009	$	7,009
Held-for-sale	—		—		—		—		—
Mortgage loans, net	$	6,491	$	—	$	—	$	7,009	$	7,009
Policy loans	$	1,216	$	—	$	861	$	450	$	1,311
Real estate joint ventures	$	59	$	—	$	—	$	101	$	101
Other limited partnership interests	$	94	$	—	$	—	$	103	$	103
Other invested assets	$	432	$	—	$	548	$	—	$	548
Premiums, reinsurance and other receivables	$	6,015	$	—	$	86	$	6,914	$	7,000
Liabilities:
PABs	$	22,613	$	—	$	—	$	24,520	$	24,520
Long-term debt	$	791	$	—	$	1,076	$	—	$	1,076
Other liabilities	$	237	$	—	$	81	$	156	$	237
Separate account liabilities	$	1,296	$	—	$	1,296	$	—	$	1,296
Commitments: (1)
Mortgage loan commitments	$	—	$	—	$	—	$	1	$	1
Commitments to fund bank credit facilities and private corporate bond investments	$	—	$	—	$	6	$	—	$	6

____________


(1)	Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. See Note 10 for additional information on these off-balance sheet obligations.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- 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.

+ References+ Details

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

+ References+ Details