Premium Deficiency Reserve (Tables)

12 Months Ended

Dec. 31, 2012

Premium Deficiency Reserve [Abstract]

Components of premium deficiency reserve

The components of the premium deficiency reserve at December 31, 2012, 2011 and 2010 appear in the table below.

				December 31,
	2012			2011			2010
	(In millions)
Present value of expected future premium	$	445		$	494		$	506
Present value of expected future paid losses and expenses		(1,285	)		(1,455	)		(1,760	)
Net present value of future cash flows		(840	)		(961	)		(1,254	)
Established loss reserves		766			826			1,075
Net deficiency	$	(74	)	$	(135	)	$	(179	)
Discount rate utilized at December 31,		1.3	%		2.3	%		2.5	%

Reconciliation of beginning and ending balances in the premium deficiency reserve

The decrease in the premium deficiency reserve for the years ended December 31, 2012, 2011 and 2010 appears in the table below.

	Year ended December 31,
	2012						2011						2010
	(In millions)
Premium Deficiency Reserve at beginning of period				$	(135	)				$	(179	)				$	(193	)
Adjustment to premium deficiency reserve (1)					-						-						(37	)
Adjusted premium deficiency reserve at beginning of period					(135	)					(179	)					(230	)
Paid claims and loss adjustment expenses	$	279					$	334					$	426
Decrease in loss reserves		(60	)					(249	)					(425	)
Premium earned		(102	)					(120	)					(128	)
Effects of present valuing on future premiums, losses and expenses		(1	)					(8	)					(25	)
Change in premium deficiency reserve to reflect actual premium, losses and expenses recognized					116						(43	)					(152	)
Change in premium deficiency reserve to reflect change in assumptions relating to future premiums, losses, expenses and discount rate (2)					(55	)					87						203
Premium Deficiency Reserve at end of period				$	(74	)				$	(135	)				$	(179	)

(1) In periods prior to 2010 an estimate of premium to be refunded in conjunction with claim payments was included in Loss Reserves. In 2010, we separately stated this liability in Premium deficiency reserve on the consolidated balance sheet. (See Note 3 - "Summary of Significant Accounting Policies – Revenue Recognition")

(2) A (negative) positive number for changes in assumptions relating to premiums, losses, expenses and discount rate indicates a (deficiency) redundancy of prior premium deficiency reserves.