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<div style="font-size:12pt"><p>Note 1 — Basis of Presentation<br /><br />The Consolidated Financial Statements include the accounts of CIGNA Corporation and its significant subsidiaries (referred to collectively as “the Company”). Intercompany transactions and accounts have been eliminated in consolidation. These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).  <br /><br />The interim consolidated financial statements are unaudited but include all adjustments (including normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the periods reported. The interim consolidated financial statements and notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s Form 10-K for the year ended December 31, 2009.<br /><br />The preparation of interim consolidated financial statements necessarily relies heavily on estimates. This and certain other factors, such as the seasonal nature of portions of the health care and related benefits business as well as competitive and other market conditions, call for caution in estimating full year results based on interim results of operations.<br /><br />Certain reclassifications have been made to prior period amounts to conform to the current presentation. <br /><br />Discontinued operations for the three months ended March 31, 2009 represented a $1 million after-tax benefit from the settlement of certain issues related to a past divestiture.<br /><br />Unless otherwise indicated, amounts in these Notes exclude the effects of discontinued operations.        </p></div>
<div style="font-size:12pt"><p>Note 2 — Recent Accounting Pronouncements <br /><br />Variable interest entities. Effective January 1, 2010, the Company adopted the Financial Accounting Standards Board’s (“FASB”) amended guidance that requires ongoing qualitative analysis to determine whether a variable interest entity must be consolidated based on the entity’s purpose and design, the Company’s ability to direct the entity’s activities that most significantly impact its economic performance, and the Company’s right or obligation to participate in that performance (ASC 810). A variable interest entity is insufficiently capitalized or is not controlled by its equity owners through voting or similar rights. These amendments must be applied to qualifying special-purpose entities and troubled debt restructures formerly excluded from such analysis. On adoption, the Company was not required to consolidate any variable interest entities and there were no effects to its results of operations or financial condition. Although consolidation was not required, disclosures about the Company’s involvement with variable interest entities have been provided in Note 10.<br /><br />Transfers of financial assets. Effective January 1, 2010, the Company adopted the FASB’s guidance for accounting for transfers of financial assets (ASC 860) that changes the requirements for recognizing the transfer of financial assets and requires additional disclosures about a transferor’s continuing involvement in transferred financial assets. The guidance also eliminates the concept of a “qualifying special purpose entity” when assessing transfers of financial instruments. On adoption, there were no effects to the Company’s results of operations or financial condition.<br /><br />Fair value measurements. The Company adopted the FASB’s updated guidance on fair value measurements (ASU 2010-06) in the first quarter of 2010, which requires separate disclosures of significant transfers between levels in the fair value hierarchy. See Note 7 for additional information. <br /><br />Other-than-temporary impairments. On April 1, 2009, the Company adopted the FASB’s updated guidance for evaluating whether an impairment is other than temporary for fixed maturities with declines in fair value below amortized cost (ASC 320). A reclassification adjustment from retained earnings to accumulated other comprehensive income was required for previously impaired fixed maturities that had a non-credit loss as of the date of adoption, net of related tax effects. <br /><br />The cumulative effect of adoption increased the Company’s retained earnings in the second quarter of 2009 with an offsetting decrease to accumulated other comprehensive income of $18 million, with no overall change to shareholders’ equity. See Note 8 for information on the Company’s other-than-temporary impairments including additional required disclosures.</p></div>
<div style="font-size:12pt"><p>Note 3 — Earnings Per Share (“EPS”)<br /><br />Basic and diluted earnings per share were computed as follows:<br />        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425"><i> </i></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="43"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b> </b></td><td width="95" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Effect of </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b> </b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425"><i>(Dollars in millions, except per share amounts)</i></td><td width="118" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Basic</b></td><td width="95" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Dilution</b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Diluted</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425">Three Months Ended March 31,</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="43"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid 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style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="20"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425">Shareholders' income from continuing operations</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid 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style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="20"> </td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="425">Weighted average</td><td height="17" style="background-color: #FFFFFF;" align="right" width="43"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 272,591 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="20"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 272,591 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425">Common stock equivalents</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="43"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="20"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 277 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 277 </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425">Total shares</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="43"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 272,591 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="20"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 277 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 272,868 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="425">EPS</td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="43">$</td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 0.76 </td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="20">$</td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 0.76 </td></tr></table><p>The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect would have increased diluted earnings per share (antidilutive) as their exercise price was greater than the average share price of the Company's common stock for the period.<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="567"><i> </i></td><td width="148" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">Three Months Ended </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="567"> </td><td width="148" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="567"><i>(In millions)</i></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="74"><b>2010 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="74">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="567">Antidilutive options</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="74"><b>5.2 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="74">11.3 </td></tr></table><p>The Company held 74,283,513 shares of common stock in Treasury as of March 31, 2010, and 78,169,190 shares as of March 31, 2009.        </p></div>
<div style="font-size:12pt"><p>Note 4 — Health Care Medical Claims Payable<br /><br />Medical claims payable for the Health Care segment reflects estimates of the ultimate cost of claims that have been incurred but not yet reported, those which have been reported but not yet paid (reported claims in process) and other medical expense payable, which primarily comprises accruals for provider incentives and other amounts payable to providers. Incurred but not yet reported comprises the majority of the reserve balance as follows:<br />        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="523"> </td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;" height="17"><b>March 31,</b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;" height="17">December 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="523"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="523">Incurred but not yet reported</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 1,185 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 790 </td></tr><tr><td height="17" width="523" align="left">Reported claims in process</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 137 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 114 </td></tr><tr><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="523">Other medical expense payable</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 19 </b></td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="75"> 17 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="523">Medical claims payable</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"><b> 1,341 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 921 </td></tr></table><p>Activity in medical claims payable was as follows:<br />        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="18" style="border-top: 1px solid #000000;" align="left" width="523"> </td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="18">For the period ended</td></tr><tr><td height="18" width="523" align="left"> </td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;" height="18"><b>March 31,</b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;" height="18">December 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="523"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="523">Balance at January 1,</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 921 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 924 </td></tr><tr><td height="17" width="523" align="left">Less: Reinsurance and other amounts recoverable</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 206 </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 211 </td></tr><tr><td height="17" width="523" align="left">Balance at January 1, net</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 715 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 713 </td></tr><tr><td height="3" width="523" align="left"> </td><td height="3" width="19" align="right"><b> </b></td><td height="3" width="75" align="right"><b> </b></td><td height="3" width="19" align="right"> </td><td height="3" width="75" align="right"> </td></tr><tr><td height="5" width="523" align="left"> </td><td height="5" width="19" align="right"><b> </b></td><td height="5" width="75" align="right"><b> </b></td><td height="5" width="19" align="right"> </td><td height="5" width="75" align="right"> </td></tr><tr><td height="16" width="523" align="left">Incurred claims related to:</td><td height="16" width="19" align="right"><b> </b></td><td height="16" width="75" align="right"><b> </b></td><td height="16" width="19" align="right"> </td><td height="16" width="75" align="right"> </td></tr><tr><td height="17" width="523" align="left">   Current year</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 2,259 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 6,970 </td></tr><tr><td height="17" width="523" align="left">   Prior years</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> (50)</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> (43)</td></tr><tr><td height="17" width="523" align="left">   Total incurred</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 2,209 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 6,927 </td></tr><tr><td height="17" width="523" align="left">Paid claims related to:</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> </td></tr><tr><td height="17" width="523" align="left">   Current year</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 1,321 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 6,278 </td></tr><tr><td height="17" width="523" align="left">   Prior years</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 507 </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 647 </td></tr><tr><td height="17" width="523" align="left">   Total paid</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 1,828 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 6,925 </td></tr><tr><td height="17" width="523" align="left">Ending Balance, net</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 1,096 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 715 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="523">Add: Reinsurance and other amounts recoverable</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 245 </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 206 </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="523">Ending Balance</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"><b> 1,341 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 921 </td></tr></table><p>Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims for minimum premium products and certain administrative services only business where the right of offset does not exist. See Note 11 for additional information on reinsurance. For the three months ended March 31, 2010, actual experience differed from the Company’s key assumptions resulting in favorable incurred claims related to prior years’ medical claims payable of $50 million, or 0.7% of the current year incurred claims as reported for the year ended December 31, 2009. Actual completion factors resulted in a reduction in medical claims payable of $24 million, or 0.3% of the current year incurred claims as reported for the year ended December 31, 2009 for the insured book of business. Actual medical cost trend resulted in a reduction in medical claims payable of $26 million, or 0.4% of the current year incurred claims as reported for the year ended December 31, 2009 for the insured book of business.<br /><br />For the year ended December 31, 2009, actual experience differed from the Company's key assumptions, resulting in favorable incurred claims related to prior years’ medical claims payable of $43 million, or 0.6% of the current year incurred claims as reported for the year ended December 31, 2008. Actual completion factors resulted in a reduction of the medical claims payable of $21 million, or 0.3% of the current year incurred claims as reported for the year ended December 31, 2008 for the insured book of business. Actual medical cost trend resulted in a reduction of the medical claims payable of $22 million, or 0.3% of the current year incurred claims as reported for the year ended December 31, 2008 for the insured book of business.<br /><br />The favorable impacts in 2010 and 2009 relating to completion factors and medical cost trend variances are primarily due to the release of the provision for moderately adverse conditions, which is a component of the assumptions for both completion factors and medical cost trend, established for claims incurred related to prior years. This release was substantially offset by the provision for moderately adverse conditions established for claims incurred related to the current year.<br /><br />The corresponding impact of prior year development on shareholders’ net income was not material for the three months ended March 31, 2010 and 2009. The change in the amount of the incurred claims related to prior years in the medical claims payable liability does not directly correspond to an increase or decrease in the Company's shareholders’ net income recognized for the following reasons:<br /><br />First, due to the nature of the Company's retrospectively experience-rated business, only adjustments to medical claims payable on accounts in deficit affect shareholders’ net income. An increase or decrease to medical claims payable on accounts in deficit, in effect, accrues to the Company and directly impacts shareholders’ net income. An account is in deficit when the accumulated medical costs and administrative charges, including profit charges, exceed the accumulated premium received. Adjustments to medical claims payable on accounts in surplus accrue directly to the policyholder with no impact on the Company’s shareholders’ net income. An account is in surplus when the accumulated premium received exceeds the accumulated medical costs and administrative charges, including profit charges.<br /><br />Second, the Company consistently recognizes the actuarial best estimate of the ultimate liability within a level of confidence, as required by actuarial standards of practice, which require that the liabilities be adequate under moderately adverse conditions. As the Company establishes the liability for each incurral year, the Company ensures that its assumptions appropriately consider moderately adverse conditions. When a portion of the development related to the prior year incurred claims is offset by an increase determined appropriate to address moderately adverse conditions for the current year incurred claims, the Company does not consider that offset amount as having any impact on shareholders’ net income.<br /><br />The determination of liabilities for Health Care medical claims payable required the Company to make critical accounting estimates. See Note 2(N) to the Consolidated Financial Statements in the Company’s 2009 Form 10-K.</p></div>
<div style="font-size:12pt"><p>Note 5 — Cost Reduction<br /><br />As part of its strategy, the Company has undertaken several initiatives to realign its organization and consolidate support functions in an effort to increase efficiency and responsiveness to customers and to reduce costs. <br /><br />During 2008 and 2009, the Company conducted a comprehensive review to reduce the operating expenses of its ongoing businesses (“cost reduction program”). As a result, the Company recognized severance-related and real estate charges in other operating expenses.<br /><br />Substantially all of these charges were recorded in the Health Care segment, and are expected to be paid in cash by the end of 2010.<br /><br />Cost reduction activity for 2010 was as follows:<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="453"><i>(In millions)</i></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75"><b>Severance</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75"><b>Real estate</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75"><b>Total</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="453">Balance, January 1, 2010</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 33 </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 8 </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 41 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="453">Less: Payments </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 10 </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 1 </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 11 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="453">Balance, March 31, 2010</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 23 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 7 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 30 </td></tr></table></div>
<div style="font-size:12pt"><p>Note 6 ― Guaranteed Minimum Death Benefit Contracts<br /><br />The Company’s reinsurance operations, which were discontinued in 2000 and are now an inactive business in run-off mode, reinsured a guaranteed minimum death benefit (“GMDB”), also known as variable annuity death benefits (“VADBe”), under certain variable annuities issued by other insurance companies.  These variable annuities are essentially investments in mutual funds combined with a death benefit.  The Company has equity and other market exposures as a result of this product. In periods of declining equity markets and in periods of flat equity markets following a decline, the Company’s liabilities for these guaranteed minimum death benefits increase. Conversely, in periods of rising equity markets, the Company’s liabilities for these guaranteed minimum death benefits decrease. <br /><br />In order to substantially reduce the equity market exposures relating to guaranteed minimum death benefit contracts, the Company operates a dynamic hedge program (“GMDB equity hedge program”), using exchange-traded futures contracts.   The hedge program is designed to offset both positive and negative impacts of changes in equity markets on the GMDB liability. The hedge program involves detailed, daily monitoring of equity market movements and rebalancing the futures contracts within established parameters. While the hedge program is actively managed, it may not exactly offset changes in the GMDB liability due to, among other things, divergence between the performance of the underlying mutual funds and the hedge instruments, high levels of volatility in the equity markets, and differences between actual contractholder behavior and what is assumed. The performance of the underlying mutual funds compared to the hedge instruments is further impacted by a time lag, since the data is not reported and incorporated into the required hedge position on a real time basis. Although this hedge program does not qualify for GAAP hedge accounting, it is an economic hedge because it is designed to reduce and is effective in reducing equity market exposures resulting from this product. The results of the futures contracts are included in other revenue and amounts reflecting corresponding changes in liabilities for these GMDB contracts are included in benefits and expenses. <br /><br />In 2000, the Company determined that the GMDB reinsurance business was premium deficient because the recorded future policy benefit reserve was less than the expected present value of future claims and expenses less the expected present value of future premiums and investment income using revised assumptions based on actual and expected experience. As a result, the Company increased its reserves. Since that time, the Company has tested for premium deficiency by performing a reserve review on a quarterly basis using current market conditions and assumptions. Under premium deficiency accounting, if the recorded reserve is determined insufficient, an increase to the reserve is reflected as a charge to current period income. Consistent with GAAP, the Company does not recognize gains on premium deficient long duration products. <br /><br />The Company had future policy benefit reserves for GMDB contracts of $1.2 billion as of March 31, 2010, and $1.3 billion as of December 31, 2009.   The determination of liabilities for GMDB requires the Company to make critical accounting estimates.  The Company estimates its liabilities for GMDB exposures using a complex internal model run using many scenarios and based on assumptions regarding lapse, future partial surrenders, claim mortality (deaths that result in claims), interest rates (mean investment performance and discount rate) and volatility. Lapse refers to the full surrender of an annuity prior to a contractholder’s death. Future partial surrender refers to the fact that most contractholders have the ability to withdraw substantially all of their mutual fund investments while retaining the death benefit coverage in effect at the time of the withdrawal. Mean investment performance for underlying equity mutual funds refers to market rates expected to be earned on the hedging instruments over the life of the GMDB equity hedge program, and for underlying fixed income mutual funds refers to the expected market return over the life of the contracts. Market volatility refers to market fluctuation. These assumptions are based on the Company’s experience and future expectations over the long-term period, consistent with the long-term nature of this product. The Company regularly evaluates these assumptions and changes its estimates if actual experience or other evidence suggests that assumptions should be revised.  If actual experience differs from the assumptions (including lapse, future partial surrenders, claim mortality, interest rates and volatility) used in estimating these liabilities, the result could have a material adverse effect on the Company’s consolidated results of operations, and in certain situations, could have a material adverse effect on the Company’s financial condition.<br /><br />The following provides information about the Company’s reserving methodology and assumptions for GMDB as of March 31, 2010:<br /><br /></p><ul><li>The reserves represent estimates of the present value of net amounts expected to be paid, less the present value of net future premiums.  Included in net amounts expected to be paid is the excess of the guaranteed death benefits over the values of the contractholders’ accounts (based on underlying equity and bond mutual fund investments).<br /></li><li>The reserves include an estimate for partial surrenders that essentially lock in the death benefit for a particular policy based on annual election rates that vary from 0-21% depending on the net amount at risk for each policy and whether surrender charges apply.<br /></li><li>The assumed mean investment performance for the underlying equity mutual funds considers the Company’s GMDB equity hedge program using futures contracts, and is based on the Company’s view that short-term interest rates will average 5% over future periods, but considers that current short-term rates are less than 5%.  The mean investment performance assumption for the underlying fixed income mutual funds (bonds and money market) is 5% based on a review of historical returns. The investment performance for underlying equity and fixed income mutual funds is reduced by fund fees ranging from 1-3% across all funds.  The results of futures contracts are reflected in the liability calculation as a component of investment returns.<br /></li><li>The volatility assumption is based on a review of historical monthly returns for each key index (e.g. S&P 500) over a period of at least ten years. Volatility represents the dispersion of historical returns compared to the average historical return (standard deviation) for each index. The assumption is 16-27%, varying by equity fund type; 4-10%, varying by bond fund type; and 2% for money market funds. These volatility assumptions are used along with the mean investment performance assumption to project future return scenarios.<br /></li><li>The discount rate is 5.75%.<br /></li><li>The claim mortality assumption is 65-89% of the 1994 Group Annuity Mortality table, with 1% annual improvement beginning January 1, 2000. For certain contracts, a spousal beneficiary is allowed to elect to continue a contract by becoming its new owner, thereby postponing the death claim rather than receiving the death benefit currently. For certain issuers of these contracts, the claim mortality assumption depends on age, gender, and net amount at risk for the policy.<br /></li><li>The lapse rate assumption is 0-21%, depending on contract type, policy duration and the ratio of the net amount at risk to account value.<br /></li></ul><p><br />No reserve strengthening was required for GMDB in the first quarter of 2010, primarily due to the stabilization and recovery of equity markets. <br /><br />In the first quarter of 2009, the Company reported a loss related to GMDB of $75 million pre-tax ($49 million after-tax), which included a charge of $73 million pre-tax ($47 million after-tax) to strengthen GMDB reserves. The reserve strengthening primarily reflected an increase in the provision for future partial surrenders due to market declines, adverse volatility-related impacts due to turbulent equity market conditions, and interest rate impacts.<br /><br />Activity in future policy benefit reserves for the GMDB business was as follows:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523"> </td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="18">For the period ended</td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="523"> </td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="18"><b>March 31,</b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="18">December 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523">Balance at January 1</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,285 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 1,609 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Add: Unpaid Claims</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 36 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 34 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Less: Reinsurance and other amounts recoverable</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 53 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 83 </td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="523">Balance at January 1, net</td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,268 </b></td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 1,560 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Add: Incurred benefits</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (23)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (122)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Less: Paid benefits</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 27 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 170 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Ending balance, net</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,218 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 1,268 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Less: Unpaid Claims</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 36 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 36 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523">Add: Reinsurance and other amounts recoverable</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 49 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 53 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523">Ending balance</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,231 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 1,285 </td></tr></table><p>Benefits paid and incurred are net of ceded amounts.  Incurred benefits reflect the favorable or unfavorable impact of a rising or falling equity market on the liability, and include the charges discussed above.  As discussed below, losses or gains have been recorded in other revenues as a result of the GMDB equity hedge program to reduce equity market exposures.</p><p>The aggregate value of the underlying mutual fund investments was $17.2 billion as of March 31, 2010 and December 31, 2009. The death benefit coverage in force was $6.3 billion as of March 31, 2010 and $7.0 billion as of December 31, 2009.  The death benefit coverage in force represents the excess of the guaranteed benefit amount over the value of the underlying mutual fund investments for all contractholders (approximately 570,000 as of March 31, 2010 and 590,000 as of December 31, 2009).<br /><br />As discussed above, the Company operates a GMDB equity hedge program to substantially reduce the equity market exposures of this business by selling exchange-traded futures contracts, which are expected to rise in value as the equity market declines and decline in value as the equity market rises. In addition, the Company uses foreign currency futures contracts to reduce the international equity market and foreign currency risks associated with this business. The notional amount of futures contract positions held by the Company at March 31, 2010 was $1.0 billion.  The Company recorded in other revenues pre-tax losses of $45 million for the three months ended March 31, 2010, and pre-tax gains of $117 million for the three months ended March 31, 2009.<br /><br />The Company has also written reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees related to minimum income benefits (“GMIB”). All reinsured GMIB policies also have a GMDB benefit reinsured by the Company. See Note 7 for further information.</p></div>
<div style="font-size:12pt"><p>Note 7 ― Fair Value Measurements<br /><br />The Company carries certain financial instruments at fair value in the financial statements including fixed maturities, equity securities, short-term investments and derivatives.  Other financial instruments are measured at fair value under certain conditions, such as when impaired.<br /><br />Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date.  A liability’s fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor.<br /><br />Fair values are based on quoted market prices when available.  When market prices are not available, fair value is generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality.  In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair value using methods, models and assumptions that the Company believes a hypothetical market participant would use to determine a current transaction price.  These valuation techniques involve some level of estimation and judgment by the Company which becomes significant with increasingly complex instruments or pricing models.  <br /><br />The Company’s financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP.  The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level of input that is significant to its measurement.  For example, a financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument’s fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).<br /><br />The Company performs ongoing analyses of prices used to value the Company’s invested assets to determine that they represent appropriate estimates of fair value. This process involves quantitative and qualitative analysis including reviews of pricing methodologies, judgments of valuation inputs, the significance of any unobservable inputs, pricing statistics and trends. The Company also performs sample testing of sales values to confirm the accuracy of prior fair value estimates. These procedures are overseen by the Company’s investment professionals.<br />Financial Assets and Financial Liabilities Carried at Fair Value <br /><br />The following tables provide information as of March 31, 2010 and December 31, 2009 about the Company’s financial assets and liabilities carried at fair value.  Similar disclosures for separate account assets, which are also recorded at fair value on the Company’s Consolidated Balance Sheets, are provided separately as gains and losses related to these assets generally accrue directly to policyholders.<br />        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="334"><b>March 31, 2010</b><sup><b></b></sup></td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="15" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="334"><i>(In millions)</i><sup><i></i></sup></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="15"><b>Quoted Prices in Active Markets for Identical Assets
(Level 1)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="15"><b>Significant Other Observable Inputs
(Level 2)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="15"><b>Significant Unobservable Inputs
(Level 3)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="15"><b>Total</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="334">Financial assets at fair value:<sup></sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">Fixed maturities:<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Federal government and agency <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 36 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 528 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 1 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 565 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  State and local government<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 2,523 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 2,523 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Foreign government<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 1,154 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 15 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 1,169 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Corporate <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 8,658 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 351 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 9,009 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Federal agency mortgage-backed <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 30 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 30 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Other mortgage-backed <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 114 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 8 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 122 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Other asset-backed <sup></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 84 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 475 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 559 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">Total fixed maturities<sup> (1)</sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 36 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 13,091 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 850 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 13,977 </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Equity securities <sup></sup></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 2 </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 86 </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 34 </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 122 </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">    Subtotal<sup></sup></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 38 </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 13,177 </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 884 </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 14,099 </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Short-term investments<sup></sup></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 188 </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 188 </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">GMIB assets<sup> (2)</sup></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 479 </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 479 </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Other derivative assets<sup> (3)</sup></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 18 </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 18 </b></td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="334">Total financial assets at fair value, excluding separate accounts<sup></sup></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 38 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 13,383 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,363 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 14,784 </b></td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="334">Financial liabilities at fair value:<sup></sup></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">GMIB liabilities <sup></sup></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 886 </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 886 </b></td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Other derivative liabilities<sup></sup></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 27 </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 27 </b></td></tr><tr><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="334">Total financial liabilities at fair value<sup></sup></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 27 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 886 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 913 </b></td></tr><tr><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="334"> <sup></sup></td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td rowspan="2" height="30" style="background-color: #FFFFFF;" width="738" colspan="10" align="left"><i>(1) Fixed maturities includes $320 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $56 million of appreciation for securities classified in Level 3.</i></td></tr><tr><td rowspan="2" height="30" style="background-color: #FFFFFF;" width="738" colspan="10" align="left"><i>(2) The guaranteed minimum income benefit (&quot;GMIB&quot;) assets represent retrocessional contracts in place from two external reinsurers which cover 55% of the exposures on these contracts. The assets are net of a liability of $16 million for the future cost of reinsurance.</i></td></tr><tr><td rowspan="2" height="30" style="background-color: #FFFFFF;" width="738" colspan="10" align="left"><i>(3) Other derivative assets includes $14 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $4 million of interest rate swaps not designated as accounting hedges.</i></td></tr></table><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="334">December 31, 2009<sup></sup></td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="334"><i>(In millions)</i><sup><i></i></sup></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Quoted Prices in Active Markets for Identical Assets
(Level 1)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Significant Other Observable Inputs
(Level 2)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Significant Unobservable Inputs
(Level 3)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Total</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="334">Financial assets at fair value:<sup></sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">Fixed maturities:<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Federal government and agency <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 43 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 527 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 1 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 571 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  State and local government<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 2,521 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 2,521 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Foreign government<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 1,056 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 14 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 1,070 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Corporate <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 8,241 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 344 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 8,585 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Federal agency mortgage-backed <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 34 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 34 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Other mortgage-backed <sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 114 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 7 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 121 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">  Other asset-backed <sup></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 92 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 449 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 541 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="334">Total fixed maturities<sup> (1)</sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 43 </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 12,585 </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 815 </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 13,443 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Equity securities <sup></sup></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 2 </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 81 </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 30 </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 113 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">    Subtotal<sup></sup></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 45 </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 12,666 </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 845 </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 13,556 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Short-term investments<sup></sup></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 493 </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 493 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">GMIB assets<sup> (2)</sup></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 482 </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 482 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Other derivative assets<sup> (3)</sup></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 16 </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 16 </td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="334">Total financial assets at fair value, excluding separate accounts<sup></sup></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 45 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 13,175 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 1,327 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 14,547 </td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="334">Financial liabilities at fair value:<sup></sup></td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">GMIB liabilities <sup></sup></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 903 </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 903 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="334">Other derivative liabilities<sup></sup></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 30 </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 30 </td></tr><tr><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="334">Total financial liabilities at fair value<sup></sup></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 30 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 903 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 933 </td></tr><tr><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="334"> <sup></sup></td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td rowspan="2" height="30" style="background-color: #FFFFFF;" width="739" colspan="10" align="left"><i>(1) Fixed maturities includes $274 million of net appreciation required to adjust future policy benefits for the run-off settlement annuity business including $38 million of appreciation for securities classified in Level 3.</i></td></tr><tr><td height="8" style="background-color: #FFFFFF;" align="left" width="334"><i> </i><sup><i></i></sup></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td></tr><tr><td rowspan="2" height="30" style="background-color: #FFFFFF;" width="739" colspan="10" align="left"><i>(2) The GMIB assets represent retrocessional contracts in place from two external reinsurers which cover 55% of the exposures on these contracts. The assets are net of a liability of $15 million for the future cost of reinsurance.</i></td></tr><tr><td height="8" style="background-color: #FFFFFF;" align="left" width="334"><i> </i><sup><i></i></sup></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="8" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td></tr><tr><td rowspan="2" height="30" style="background-color: #FFFFFF;" width="739" colspan="10" align="left"><i>(3) Other derivative assets include $12 million of interest rate and foreign currency swaps qualifying as cash flow hedges and $4 million of interest rate swaps not designated as accounting hedges.</i></td></tr></table><p>Level 1 Financial Assets<br /><br />Inputs for instruments classified in Level 1 include unadjusted quoted prices for identical assets in active markets accessible at the measurement date.  Active markets provide pricing data for trades occurring at least weekly and include exchanges and dealer markets.<br /><br />Assets in Level 1 include actively-traded U.S. government bonds and exchange-listed equity securities. Given the narrow definition of Level 1 and the Company's investment asset strategy to maximize investment returns, a relatively small portion of the Company’s investment assets are classified in this category. <br /><br />Level 2 Financial Assets and Financial Liabilities<br /><br />Inputs for instruments classified in Level 2 include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are market observable or can be corroborated by market data for the term of the instrument.  Such other inputs include market interest rates and volatilities, spreads and yield curves. An instrument is classified in Level 2 if the Company determines that unobservable inputs are insignificant.<br /><br />Fixed maturities and equity securities.  Approximately 93% of the Company’s investments in fixed maturities and equity securities are classified in Level 2 including most public and private corporate debt and equity securities, federal agency and municipal bonds, non-government mortgage-backed securities and preferred stocks.  Because many fixed maturities and preferred stocks do not trade daily, fair values are often derived using recent trades of securities with similar features and characteristics.  When recent trades are not available, pricing models are used to determine these prices.  These models calculate fair values by discounting future cash flows at estimated market interest rates.  Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities, based on the credit quality, industry and structure of the asset. Typical inputs and assumptions to pricing models include, but are not limited to, a combination of benchmark yields, reported trades, issuer spreads, liquidity, benchmark securities, bids, offers, reference data, and industry and economic events.  For mortgage-backed securities, inputs and assumptions may also include characteristics of the issuer, collateral attributes, prepayment speeds and credit rating. <br /><br />Nearly all of these instruments are valued using recent trades or pricing models. Less than 1% of the fair value of investments classified in Level 2 represents foreign bonds that are valued, consistent with local market practice, using a single unadjusted market-observable input derived by averaging multiple broker-dealer quotes.<br /><br />Short-term investments are carried at fair value, which approximates cost. On a regular basis the Company compares market prices for these securities to recorded amounts to validate that current carrying amounts approximate exit prices. The short-term nature of the investments and corroboration of the reported amounts over the holding period support their classification in Level 2. <br /><br />Other derivatives classified in Level 2 represent over-the-counter instruments such as interest rate and foreign currency swap contracts.  Fair values for these instruments are determined using market observable inputs including forward currency and interest rate curves and widely published market observable indices.  Credit risk related to the counterparty and the Company is considered when estimating the fair values of these derivatives.  However, the Company is largely protected by collateral arrangements with counterparties, and determined that no adjustment for credit risk was required as of March 31, 2010 or December 31, 2009.  The nature and use of these other derivatives are described in Note 9.<br /><br />Level 3 Financial Assets and Financial Liabilities<br /><br />Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement.  Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.<br /><br />The Company classifies certain newly issued, privately placed, complex or illiquid securities, as well as assets and liabilities relating to GMIB in Level 3.<br /><br />Fixed maturities and equity securities.  Approximately 6% of fixed maturities and equity securities are priced using significant unobservable inputs and classified in this category, including:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="523"> </td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;" height="17"><b>March 31,</b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;" height="17">December 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="523"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="523">Mortgage and asset-backed securities</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 483 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 456 </td></tr><tr><td height="17" width="523" align="left">Corporate bonds</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 286 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 288 </td></tr><tr><td height="16" style="border-bottom: 1px solid #000000;" align="left" width="523">Subordinated loans and private equity investments</td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 115 </b></td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;" align="right" width="75"> 101 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="523">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"><b> 884 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 845 </td></tr></table><p>Fair values of mortgage and asset-backed securities and corporate bonds are determined using pricing models that incorporate the specific characteristics of each asset and related assumptions including the investment type and structure, credit quality, industry and maturity date in comparison to current market indices, spreads and liquidity of assets with similar characteristics.  For mortgage and asset-backed securities, inputs and assumptions to pricing may also include collateral attributes and prepayment speeds.  Recent trades in the subject security or similar securities are assessed when available, and the Company may also review published research as well as the issuer’s financial statements in its evaluation. Subordinated loans and private equity investments are valued at transaction price in the absence of market data indicating a change in the estimated fair values.</p><p>Guaranteed minimum income benefit contracts.  Because cash flows of the GMIB liabilities and assets are affected by equity markets and interest rates but are without significant life insurance risk and are settled in lump sum payments, the Company reports these liabilities and assets as derivatives at fair value. The Company estimates the fair value of the assets and liabilities for GMIB contracts using assumptions regarding capital markets (including market returns, interest rates and market volatilities of the underlying equity and bond mutual fund investments), future annuitant behavior (including mortality, lapse, and annuity election rates), and non-performance risk, as well as risk and profit charges. As certain assumptions (primarily related to future annuitant behavior) used to estimate fair values for these contracts are largely unobservable, the Company classifies GMIB assets and liabilities in Level 3. The Company considered the following in determining the view of a hypothetical market participant:<br /><br /></p><ul><li>that the most likely transfer of these assets and liabilities would be through a reinsurance transaction with an independent insurer having a market capitalization and credit rating similar to that of the Company; and<br /></li><li>that because this block of contracts is in run-off mode, an insurer looking to acquire these contracts would have similar existing contracts with related administrative and risk management capabilities.<br /></li></ul><p><br />These GMIB assets and liabilities are estimated with a complex internal model using many scenarios to determine the present value of net amounts expected to be paid, less the present value of net future premiums expected to be received adjusted for risk and profit charges that the Company estimates a hypothetical market participant would require to assume this business. Net amounts expected to be paid include the excess of the expected value of the income benefits over the values of the annuitants’ accounts at the time of annuitization. Generally, market return, interest rate and volatility assumptions are based on market observable information.  Assumptions related to annuitant behavior reflect the Company’s belief that a hypothetical market participant would consider the actual and expected experience of the Company as well as other relevant and available industry resources in setting policyholder behavior assumptions.   The significant assumptions used to value the GMIB assets and liabilities as of March 31, 2010 were as follows:<br /><br />        The market return and discount rate assumptions are based on the market-observable LIBOR swap curve.<br />        The projected interest rate used to calculate the reinsured income benefits is indexed to the 7-year Treasury Rate at the time of annuitization (claim interest rate) based on contractual terms.  That rate was 3.28% at March 31, 2010 and must be projected for future time periods. These projected rates vary by economic scenario and are determined by an interest rate model using current interest rate curves and the prices of instruments available in the market including various interest rate caps and zero-coupon bonds. For a subset of the business, there is a contractually guaranteed floor of 3% for the claim interest rate.<br />        The market volatility assumptions for annuitants’ underlying mutual fund investments that are modeled based on the S&P 500, Russell 2000 and NASDAQ Composite are based on the market-implied volatility for these indices for three to seven years grading to historical volatility levels thereafter. For the remaining 55% of underlying mutual fund investments modeled based on other indices (with insufficient market-observable data), volatility is based on the average historical level for each index over the past 10 years.  Using this approach, volatility ranges from 17% to 31% for equity funds, 4% to 12% for bond funds and 1% to 2% for money market funds.<br />        The mortality assumption is 70% of the 1994 Group Annuity Mortality table, with 1% annual improvement beginning January 1, 2000.<br />        The annual lapse rate assumption reflects experience that differs by the company issuing the underlying variable annuity contracts, ranges from 2% to 17% and depends on the time since contract issue and the relative value of the guarantee.<br />        The annual annuity election rate assumption reflects experience that differs by the company issuing the underlying variable annuity contracts and depends on the annuitant’s age, the relative value of the guarantee and whether a contractholder has had a previous opportunity to elect the benefit.  Immediately after the expiration of the waiting period, the assumed probability that an individual will annuitize their variable annuity contract is up to 80%.  For the second and subsequent annual opportunities to elect the benefit, the assumed probability of election is up to 30%. Actual data is still emerging for the Company as well as the industry and the estimates are based on this limited data.<br /></p><ul><li>The nonperformance risk adjustment is incorporated by adding an additional spread to the discount rate in the calculation of both (1) the GMIB liability to reflect a hypothetical market participant’s view of the risk of the Company not fulfilling its GMIB obligations, and (2) the GMIB asset to reflect a hypothetical market participant’s view of the reinsurers’ credit risk, after considering collateral. The estimated market-implied spread is company-specific for each party involved to the extent that company-specific market data is available and is based on industry averages for similarly rated companies when company-specific data is not available. The spread is impacted by the credit default swap spreads of the specific parent companies, adjusted to reflect subsidiaries’ credit ratings relative to their parent company. The additional spread over LIBOR incorporated into the discount rate ranged from 20 to 115 basis points for the GMIB liability and from 0 to 60 basis points for the GMIB reinsurance asset for that portion of the interest rate curve most relevant to these policies.<br /></li></ul><p>        The risk and profit charge assumption is based on the Company’s estimate of the capital and return on capital that would be required by a hypothetical market participant.<br /><br />The Company regularly evaluates each of the assumptions used in establishing these assets and liabilities by considering how a hypothetical market participant would set assumptions at each valuation date.  Capital markets assumptions are expected to change at each valuation date reflecting current observable market conditions. Other assumptions may also change based on a hypothetical market participant’s view of actual experience as it emerges over time or other factors that impact the net liability.  If the emergence of future experience or future assumptions differs from the assumptions used in estimating these assets and liabilities, the resulting impact could be material to the Company’s consolidated results of operations, and in certain situations, could be material to the Company’s financial condition. <br /><br />GMIB liabilities are reported in the Company’s Consolidated Balance Sheets in Accounts payable, accrued expenses and other liabilities.  GMIB assets associated with these contracts represent net receivables in connection with reinsurance that the Company has purchased from two external reinsurers and are reported in the Company’s Consolidated Balance Sheets in Other assets, including other intangibles. The current S&P financial strength rating of one reinsurer is AA-. The receivable from the second reinsurer is fully collateralized by assets held in a trust.</p><p>Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value <br /><br />The following tables summarize the changes in financial assets and financial liabilities classified in Level 3 for the three months ended March 31, 2010 and 2009.  These tables exclude separate account assets as changes in fair values of these assets accrue directly to policyholders. Gains and losses reported in these tables may include changes in fair value that are attributable to both observable and unobservable inputs.</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><b>For the Three Months Ended March 31, 2010</b><sup><b></b></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="27" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"> <sup></sup></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>Fixed Maturities & Equity Securities</b></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>GMIB Assets</b></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>GMIB Liabilities</b></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>GMIB Net</b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><i>(In millions)</i><sup><i></i></sup></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362">Balance at January 1, 2010<sup></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 845 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 482 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (903)</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (421)</b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Gains (losses) included in shareholders' net income:</b><sup><b></b></sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  GMIB fair value gain/(loss)<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  Other<sup></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Total gains (losses) included in shareholders' net income</b><sup><b></b></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">Gains included in other comprehensive income<sup></sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 12 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">Gains required to adjust future policy benefits for settlement annuities<sup> (1)</sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 18 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">Purchases, issuances, settlements<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (11)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (3)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 13 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 10 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Transfers into/(out of) Level 3:</b><sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  Transfers into Level 3<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 54 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  Transfers out of Level 3<sup></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (38)</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Total transfers into/(out of) Level 3</b><sup></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 16 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="362"><b>Balance at March 31, 2010</b><sup><b></b></sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 884 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 479 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> (886)</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> (407)</b></td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="362"><b>Total gains (losses) included in income attributable to </b><sup><b></b></sup></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td></tr><tr><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><b>  instruments held at the reporting date</b><sup><b></b></sup></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td></tr><tr><td height="9" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><b> </b><sup><b></b></sup></td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td width="775" align="left" colspan="10" style="background-color: #FFFFFF;" height="17"><i>(1) Amounts do not accrue to shareholders.</i></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><i> </i><sup><i></i></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"><i> </i></td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362">For the Three Months Ended March 31, 2009<sup><b></b></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"> <sup></sup></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>Fixed Maturities & Equity Securities</b></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>GMIB Assets</b></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>GMIB Liabilities</b></td><td rowspan="2" height="44" style="border-top: 1px solid #000000;background-color: #FFFFFF;" width="94" colspan="2" align="center"><b>GMIB Net</b></td></tr><tr><td height="27" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><i>(In millions)</i><sup><i></i></sup></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362">Balance at January 1, 2009<sup></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 889 </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 953 </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (1,757)</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (804)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Gains (losses) included in shareholders' net income:</b><sup><b></b></sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  GMIB fair value gain/(loss)<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (38)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 70 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 32 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  Other<sup></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (4)</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Total gains (losses) included in shareholders' net income</b><sup><b></b></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (4)</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (38)</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 70 </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 32 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">Losses included in other comprehensive income<sup></sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (19)</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">Losses required to adjust future policy benefits for settlement annuities<sup> (1)</sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (76)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">Purchases, sales, settlements<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (3)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (7)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 46 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 39 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Transfers into/(out of) Level 3:</b><sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  Transfers into Level 3<sup></sup></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 155 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362">  Transfers out of Level 3<sup></sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (32)</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="362"><b>Total transfers into/(out of) Level 3</b><sup></sup></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 123 </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> - </td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="362"><b>Balance at March 31, 2009</b><sup><b></b></sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 910 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 908 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> (1,641)</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> (733)</td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="362"><b>Total gains (losses) included in income attributable to </b><sup><b></b></sup></td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="18" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"><b>  instruments held at the reporting date</b><sup><b></b></sup></td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> (4)</td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> (38)</td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 70 </td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-bottom: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> 32 </td></tr><tr><td height="9" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="362"> <sup></sup></td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 3px double #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td width="775" align="left" colspan="10" style="background-color: #FFFFFF;" height="17"><i>(1) Amounts do not accrue to shareholders.</i></td></tr></table><p>As noted in the tables above, total gains and losses included in net income are reflected in the following captions in the Consolidated Statements of Income:<br /> <br /></p><ul><li>Realized investment gains (losses) and net investment income for amounts related to fixed maturities and equity securities; and<br /></li><li>GMIB fair value (gain) loss for amounts related to GMIB assets and liabilities.<br /></li></ul><p><br />Reclassifications impacting Level 3 financial instruments are reported as transfers into or out of the Level 3 category as of the beginning of the quarter in which the transfer occurs. Therefore gains and losses in income only reflect activity for the period the instrument was classified in Level 3. <br /><br />Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company’s best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. For the three months ended March 31, 2009, transfers into Level 3 from Level 2 primarily reflect an increase in the unobservable inputs used to value certain private corporate bonds, principally related to credit risk of the issuers.<br /><br />The Company provided reinsurance for other insurance companies that offer a guaranteed minimum income benefit, and then retroceded a portion of the risk to other insurance companies.  These arrangements with third-party insurers are the instruments still held at the reporting date for GMIB assets and liabilities in the table above.  Because these reinsurance arrangements remain in effect at the reporting date, the Company has reflected the total gain or loss for the period as the total gain or loss included in income attributable to instruments still held at the reporting date.  However, the Company reduces the GMIB assets and liabilities resulting from these reinsurance arrangements when annuitants lapse, die, elect their benefit, or reach the age after which the right to elect their benefit expires.<br /><br />Under FASB’s guidance for fair value measurements, the Company’s GMIB assets and liabilities are expected to be volatile in future periods because the underlying capital markets assumptions will be based largely on market-observable inputs at the close of each reporting period including interest rates and market-implied volatilities.<br /> <br />The net GMIB fair value gain was $4 million for the three months ended March 31, 2010, and due primarily to favorable equity market returns, offset by declining interest rates. <br /><br />The net GMIB fair value gain was $32 million for the three months ended March 31, 2009. The gain was due primarily to increases in interest rates since December 31, 2008 partially offset by declines in equity markets and bond fund returns and updates to the lapse assumption.<br /></p><p>Separate account assets<br /><br />Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and are excluded from the Company’s revenues and expenses.  As of March 31, 2010 and December 31, 2009 separate account assets were as follows:<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="257"><b>March 31, 2010</b><sup><b></b></sup></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"><b> </b></td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="257"><i>(In millions)</i><sup><i></i></sup></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Quoted Prices in Active Markets for Identical Assets
(Level 1)</b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Significant Other Observable Inputs
(Level 2)</b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Significant Unobservable Inputs
(Level 3)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Total</b></td></tr><tr><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="257">Guaranteed separate accounts (See Note 17)<sup></sup></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 276 </b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 1,462 </b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> - </b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,738 </b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="257">Non-guaranteed separate accounts <sup> (1)</sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 1,957 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 3,252 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 544 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 5,753 </b></td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="257"><b>Total separate account assets</b><sup><b></b></sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 2,233 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 4,714 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 544 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 7,491 </b></td></tr><tr><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="257"> <sup></sup></td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td width="753" align="left" colspan="10" style="background-color: #FFFFFF;" height="17"><i>(1) Non-guaranteed separate accounts include $2.6 billion in assets supporting the Company's pension plans, including $524 million classified in Level 3.</i></td></tr><tr><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="257"><i> </i><sup><i></i></sup></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="17" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"><i> </i></td></tr><tr><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="257">December 31, 2009<sup></sup></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" height="18"><b> </b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="18"><b> </b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="18"><b> </b></td><td height="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"><b> </b></td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="257"><i>(In millions)</i><sup><i></i></sup></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Quoted Prices in Active Markets for Identical Assets
(Level 1)</b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Significant Other Observable Inputs
(Level 2)</b></td><td width="129" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Significant Unobservable Inputs
(Level 3)</b></td><td width="94" align="center" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Total</b></td></tr><tr><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="257">Guaranteed separate accounts (See Note 17)<sup></sup></td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 275 </td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 1,480 </td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> - </td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 1,755 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="257">Non-guaranteed separate accounts<sup> (1)</sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 1,883 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 3,100 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 550 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 5,533 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="left" width="257"><b>Total separate account assets</b><sup><b></b></sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 2,158 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 4,580 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 550 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 7,288 </td></tr><tr><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="257"> <sup></sup></td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td width="753" align="left" colspan="10" style="background-color: #FFFFFF;" height="17"><i>(1) Non-guaranteed separate accounts include $2.6 billion in assets supporting the Company's pension plans, including $517 million classified in Level 3.</i></td></tr></table><p>Separate account assets in Level 1 include exchange-listed equity securities.  Level 2 assets primarily include:<br /><br /></p><ul><li>equity securities and corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and<br /></li><li>actively-traded institutional and retail mutual fund investments and separate accounts priced using the daily net asset value which is their exit price.<br /></li></ul><p><br />Separate account assets classified in Level 3 include investments primarily in securities partnerships and real estate generally valued based on the separate account’s ownership share of the equity of the investee including changes in the fair values of its underlying investments. In addition, certain fixed income funds priced using the net asset values are classified in Level 3 due to restrictions on their withdrawal.<br /><br />The following table summarizes the changes in separate account assets reported in Level 3 for the three months ended March 31, 2010 and 2009.        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="505"><b> </b><sup><b></b></sup></td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;" height="17">Three Months Ended </td></tr><tr><td height="17" width="505" align="left"><b> </b><sup><b></b></sup></td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="17">March 31,</td></tr><tr><td height="18" style="border-bottom: 1px solid #000000;" align="left" width="505"><i>(In millions)</i><sup><i></i></sup></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="18"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="18">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="505">Balance at January 1<sup></sup></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 550 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 475 </td></tr><tr><td height="18" width="505" align="left">Policyholder gains (losses) <sup> (1)</sup></td><td height="18" width="19" align="right"><b> </b></td><td height="18" width="75" align="right"><b> 16 </b></td><td height="18" width="19" align="right"> </td><td height="18" width="75" align="right"> (46)</td></tr><tr><td height="17" width="505" align="left">Purchases, issuances, settlements<sup></sup></td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> (3)</b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 8 </td></tr><tr><td height="17" width="505" align="left"><b>Transfers into/(out of) Level 3:</b><sup><b></b></sup></td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> </td></tr><tr><td height="17" width="505" align="left">  Transfers into Level 3<sup></sup></td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> - </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 174 </td></tr><tr><td height="18" width="505" align="left">  Transfers out of Level 3<sup></sup></td><td height="18" width="19" align="right"><b> </b></td><td height="18" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> (19)</b></td><td height="18" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="18" style="border-bottom: 1px solid #000000;" align="right" width="75"> (14)</td></tr><tr><td height="18" style="border-bottom: 1px solid #000000;" align="left" width="505"><b>Net transfers into/(out of) Level 3</b><sup><b></b></sup></td><td height="18" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="75"><b> (19)</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="75"> 160 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="505">Balance at March 31<sup></sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"><b> 544 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 597 </td></tr><tr><td height="6" style="border-top: 1px solid #000000;" align="left" width="505"> <sup></sup></td><td height="6" style="border-top: 2px solid #000000;" align="left" width="19"> </td><td height="6" style="border-top: 2px solid #000000;" align="left" width="75"> </td><td height="6" style="border-top: 2px solid #000000;" align="left" width="19"> </td><td height="6" style="border-top: 2px solid #000000;" align="left" width="75"> </td></tr><tr><td width="714" align="left" height="17" colspan="6"><i>(1) Includes losses of $15 million and losses of $46 million attributable to instruments still held at March 31, 2010 and March 31, 2009 respectively.</i></td></tr></table><p>For the three months ended March 31, 2009, transfers into Level 3 primarily represented fixed income funds that are priced using the net asset value where restrictions were placed on withdrawal.<br /><br />Assets and Liabilities Measured at Fair Value under Certain Conditions<br /><br />Some financial assets and liabilities are not carried at fair value each reporting period, but may be measured using fair value only under certain conditions, such as investments in real estate entities and commercial mortgage loans when they become impaired. During the three months ended March 31, 2010, impaired real estate entities carried at cost of $35 million were written down to their fair values of $21 million, resulting in pre-tax realized investment losses of $14 million. Also during the three months ended March 31, 2010, impaired commercial mortgage loans with carrying values of $64 million were written down to their fair values of $53 million, resulting in pre-tax realized investment losses of $11 million. During 2009, impaired commercial mortgage loans with carrying values of $143 million were written down to their fair values of $126 million, resulting in pre-tax realized investment losses of $17 million. Also, during 2009, impaired real estate entities with carrying values of $48 million were written down to their fair values of $12 million, resulting in realized investment losses of $36 million. These fair values were calculated by discounting the expected future cash flows at estimated market interest rates. Such market rates were derived by calculating the appropriate spread over comparable U.S. Treasury rates, based on the characteristics of the underlying collateral including; the type, quality and location of the assets. The fair value measurements were classified in Level 3 because these cash flow models incorporate significant unobservable inputs.        </p><p>Fair Value Disclosures for Financial Instruments Not Carried at Fair Value <br /><br />Most financial instruments that are subject to fair value disclosure requirements are carried in the Company’s consolidated financial statements at amounts that approximate fair value. The following table provides the fair values and carrying values of the Company’s financial instruments not recorded at fair value that are subject to fair value disclosure requirements at March 31, 2010 and December 31, 2009:<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="355"><i>(In millions)</i></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"> </td><td width="169" align="center" colspan="3" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="19"><b> </b></td><td width="169" align="center" colspan="3" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17">December 31, 2009</td></tr><tr><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="355"> </td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75"><b>Fair Value</b></td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75"><b>Carrying Value</b></td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75">Fair Value</td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="29" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="75">Carrying Value</td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="355">Commercial mortgage loans </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 3,407 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> 3,493 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 3,323 </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 3,522 </td></tr><tr><td height="17" width="355" align="left">Contractholder deposit funds, excluding universal life products</td><td height="17" width="19" align="right"><b>$</b></td><td height="17" width="75" align="right"><b> 997 </b></td><td height="17" width="19" align="right"><b>$</b></td><td height="17" width="75" align="right"><b> 992 </b></td><td height="17" width="19" align="right">$</td><td height="17" width="75" align="right"> 940 </td><td height="17" width="19" align="right">$</td><td height="17" width="75" align="right"> 941 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="355">Long-term debt, including current maturities, excluding capital leases</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 2,578 </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> 2,427 </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 2,418 </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 2,427 </td></tr></table><p>The fair values presented in the table above have been estimated using market information when available. The following is a description of the valuation methodologies and inputs used by the Company to determine fair value.<br /><br />Commercial mortgage loans. The Company estimates the fair value of commercial mortgage loans generally by discounting the contractual cash flows at estimated market interest rates that reflect the Company’s assessment of the credit quality of the loans. Market interest rates are derived by calculating the appropriate spread over comparable U.S. Treasury rates, based on the property type, quality rating and average life of the loan. The quality ratings reflect the relative risk of the loan, considering debt service coverage, the loan-to-value ratio and other factors. Fair values of impaired mortgage loans are based on the estimated fair value of the underlying collateral generally determined using an internal discounted cash flow model.<br /><br />Contractholder deposit funds, excluding universal life products. Generally, these funds do not have stated maturities. Approximately 45% of these balances can be withdrawn by the customer at any time without prior notice or penalty. The fair value for these contracts is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Most of the remaining contractholder deposit funds are reinsured by the buyers of the individual life and annuity and retirement benefits businesses. The fair value for these contracts is determined using the fair value of these buyers’ assets supporting these reinsured contracts. The Company had a reinsurance recoverable equal to the carrying value of these reinsured contracts.<br /> <br />Long-term debt, including current maturities, excluding capital leases. The fair value of long-term debt is based on quoted market prices for recent trades. When quoted market prices are not available, fair value is estimated using a discounted cash flow analysis and the Company’s estimated current borrowing rate for debt of similar terms and remaining maturities. <br /><br />Fair values of off-balance-sheet financial instruments were not material. <br /></p></div>
<div style="font-size:12pt"><p>Note 8 — Investments<br /><br />Total Realized Investment Gains and Losses<br /><br />The following total realized gains and losses on investments include other-than-temporary impairments on debt securities but exclude amounts required to adjust future policy benefits for the run-off settlement annuity business:<br />        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="496"> </td><td width="207" align="center" colspan="4" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">Three Months Ended</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="496"> </td><td width="207" align="center" colspan="4" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="496"><i>(In millions)</i></td><td width="113" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="496">Fixed maturities</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="38"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 15 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (16)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="496">Equity securities</td><td height="17" style="background-color: #FFFFFF;" align="right" width="38"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (17)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="496">Commercial mortgage loans</td><td height="17" style="background-color: #FFFFFF;" align="right" width="38"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (11)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (1)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="496">Other investments, including derivatives</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="38"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (14)</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (2)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="496">Realized investment losses, before income taxes</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="38"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (6)</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (36)</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="496">Less income tax benefits</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="38"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (3)</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (12)</td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="496">Net realized investment losses</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="38"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (3)</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (24)</td></tr></table><p>Included in pre-tax realized investment gains (losses) above were other-than-temporary impairments on debt securities, asset write-downs and changes in valuation reserves as follows: <br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="500"> <sup></sup></td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">Three Months Ended</td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="500"> <sup></sup></td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="500"><i>(In millions)</i><sup><i></i></sup></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="500">Credit-related <sup> (1)</sup></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 25 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 11 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="500">Other <sup> (2)</sup></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 10 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="500">Total <sup> (3)</sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 26 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 21 </td></tr><tr><td height="9" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="500"> <sup></sup></td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="9" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td width="709" align="left" colspan="10" style="background-color: #FFFFFF;" height="48"><i>(1) Credit-related losses include other-than-temporary declines in value of fixed maturities and equity securities, and impairments of commercial mortgage loans and real estate entities. The amount related to credit losses on fixed maturities for which a portion of the impairment was recognized in other comprehensive income was not significant.</i></td></tr><tr><td height="5" style="background-color: #FFFFFF;" align="left" width="500"> <sup></sup></td><td height="5" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="5" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="5" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="5" style="background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td width="709" align="left" colspan="10" style="background-color: #FFFFFF;" height="29"><i>(2) Prior to adoption of GAAP guidance for other-than-temporary impairments on April 1, 2009, other primarily represented the impact of rising market yields on investments where the Company could not demonstrate the intent and ability to hold until recovery.</i></td></tr><tr><td height="10" style="background-color: #FFFFFF;" align="left" width="500"><i> </i><sup><i></i></sup></td><td height="10" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="10" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td><td height="10" style="background-color: #FFFFFF;" align="left" width="19"><i> </i></td><td height="10" style="background-color: #FFFFFF;" align="left" width="75"><i> </i></td></tr><tr><td width="709" align="left" colspan="6" style="background-color: #FFFFFF;" height="29"><i>(3) Includes other-than-temporary impairments on debt securities of $1 million in the first quarter of 2010 and $17 million in the first quarter of 2009. These impairments are included in the other category in 2010 and in both the credit-related and other categories for 2009.</i></td></tr></table><p>Fixed Maturities and Equity Securities <br /><br />Securities in the following table are included in fixed maturities and equity securities on the Company’s Consolidated Balance Sheets. These securities are carried at fair value with changes in fair value reported in other realized investment gains and interest and dividends reported in net investment income. The Company’s hybrid investments include preferred stock or debt securities with call or conversion features. </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="449"> </td><td width="129" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>As of March 31,</b></td><td width="129" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">As of December 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="449"><i>(In millions)</i></td><td width="129" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="129" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="449">Included in fixed maturities:</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="110"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="449">  Trading securities (amortized cost: $8; $8)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="110"><b> 8 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="110"> 8 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="449">  Hybrid securities (amortized cost: $36; $37)</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 42 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 43 </td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="449">      Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 50 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 51 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="449">Included in equity securities:</td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> </b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"> </td></tr><tr><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="449">  Hybrid securities (amortized cost: $109; $109)</td><td height="18" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"><b> 86 </b></td><td height="18" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="110"> 81 </td></tr></table><p>Fixed maturities and equity securities included $163 million at March 31, 2010, which were pledged as collateral to brokers as required under certain futures contracts. These fixed maturities and equity securities were primarily corporate securities.<br /><br />The following information about fixed maturities excludes trading and hybrid securities. The amortized cost and fair value by contractual maturity periods for fixed maturities were as follows at March 31, 2010: <br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Amortized</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Fair </b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523"><i>(In millions)</i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Cost</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Value</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523">Due in one year or less</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 742 </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 761 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Due after one year through five years</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 4,004 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 4,266 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Due after five years through ten years</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 4,928 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 5,268 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="523">Due after ten years</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 2,601 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 2,922 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523">Mortgage and other asset-backed securities</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 639 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 710 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="523">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 12,914 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 13,927 </td></tr></table><p>Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without penalties. Also, in some cases the Company may extend maturity dates.<br /><br />Mortgage-backed assets consist principally of commercial mortgage-backed securities and collateralized mortgage obligations of which $33 million were residential mortgages and home equity lines of credit, all of which were originated using standard underwriting practices and are not considered sub-prime loans.<br />Gross unrealized appreciation (depreciation) on fixed maturities (excluding trading securities and hybrid securities) by type of issuer is shown below. <br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="341"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="75"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="75"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="75"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="75"> </td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="341"> </td><td width="376" align="center" colspan="8" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Unrealized</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Unrealized</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b> </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341"> </td><td height="17" style="background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="75"><b>Amortized</b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="75"><b>Appre-</b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="75"><b>Depre-</b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="center" width="75"><b>Fair</b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341"><i>(In millions)</i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Cost</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>ciation</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>ciation</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Value</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Federal government and agency</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 392 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 174 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (1)</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 565 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">State and local government</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 2,350 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 182 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (9)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 2,523 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Foreign government</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 1,122 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 52 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (5)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 1,169 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Corporate</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 8,411 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 606 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (57)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 8,960 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Federal agency mortgage-backed</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 29 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 1 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 30 </b></td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Other mortgage-backed</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 120 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 8 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> (7)</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 121 </b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Other asset-backed</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 490 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 74 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (5)</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 559 </b></td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 12,914 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 1,097 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (84)</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 13,927 </b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="341"><i>(In millions)</i></td><td width="376" align="center" colspan="8" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17">December 31, 2009</td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Federal government and agency</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 398 </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 174 </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (1)</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 571 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">State and local government</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 2,341 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 188 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (8)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 2,521 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Foreign government</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 1,040 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 38 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (8)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 1,070 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Corporate</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 8,104 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 529 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (98)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 8,535 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Federal agency mortgage-backed</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 33 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 1 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> - </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 34 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">Other mortgage-backed</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 125 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 5 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (10)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 120 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Other asset-backed</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 494 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 55 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (8)</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 541 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 12,535 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 990 </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (133)</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 13,392 </td></tr></table><p>The above table includes investments with a fair value of $2.3 billion supporting the Company’s run-off settlement annuity business, with gross unrealized appreciation of $354 million and gross unrealized depreciation of $34 million at March 31, 2010. Such unrealized amounts are required to support future policy benefit liabilities of this business and, as such, are not included in accumulated other comprehensive income. At December 31, 2009, investments supporting this business had a fair value of $2.3 billion, gross unrealized appreciation of $326 million and gross unrealized depreciation of $52 million.<br /><br />Sales information for available-for-sale fixed maturities and equity securities were as follows:<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="509"> </td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">Three Months Ended </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="509"> </td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="509"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="509">Proceeds from sales</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 240 </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 119 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="509">Gross gains on sales</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 15 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 3 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="509">Gross losses on sales</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (1)</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (3)</td></tr></table><p>Review of declines in fair value. Management reviews fixed maturities with a decline in fair value from cost for impairment based on criteria that include:<br /><br /></p><ul><li>length of time and severity of decline;<br /></li><li>financial health and specific near term prospects of the issuer; <br /></li><li>changes in the regulatory, economic or general market environment of the issuer’s industry or geographic region; and<br /></li><li>the Company’s intent to sell or the likelihood of a required sale prior to recovery. <br /></li></ul><p><br />Excluding trading and hybrid securities, as of March 31, 2010, fixed maturities with a decline in fair value from amortized cost (which were primarily investment grade corporate bonds) were as follows, including the length of time of such decline: </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341"> </td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Fair </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Amortized </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Unrealized</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>Number</b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Value</b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Cost</b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Depreciation</b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"><b>of Issues</b></td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">Fixed maturities:</td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">One year or less:</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">   Investment grade</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 838 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 856 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (18)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75">222 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">   Below investment grade</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 89 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 92 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (3)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75">49 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">More than one year:</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="341">   Investment grade</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 605 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 661 </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (56)</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75">109 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="341">   Below investment grade</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 43 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 50 </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (7)</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75">16 </td></tr></table><p>The unrealized depreciation of investment grade fixed maturities is primarily due to increases in market yields since purchase. Approximately $22 million of the unrealized depreciation is due to securities with a decline in value of greater than 20%. The remaining $62 million of the unrealized depreciation is due to securities with declines in value of less than 20%. There were no equity securities with a fair value significantly lower than cost as of March 31, 2010.<br /></p><p>Short-term investments and cash equivalents. Short-term investments and cash equivalents includes corporate securities of $921 million, federal government securities of $171 million and money market funds of $75 million at March 31, 2010. The Company’s short-term investments and cash equivalents at December 31, 2009 included corporate securities of $624 million, federal government securities of $402 million and money market funds of $104 million.</p></div>
<div style="font-size:12pt"><p>Note 9 — Derivative Financial Instruments<br /><br />The Company’s investment strategy is to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and contractholder liabilities (such as paying claims, investment returns and withdrawals). As part of this investment strategy, the Company typically uses derivatives to minimize interest rate, foreign currency and equity price risks. The Company routinely monitors exposure to credit risk associated with derivatives and diversifies the portfolio among approved dealers of high credit quality to minimize credit risk. From time to time, the Company has used derivatives to enhance investment returns. In addition, the Company has written or sold contracts to guarantee minimum income benefits.<br /><br />The Company uses hedge accounting when derivatives are designated, qualified and highly effective as hedges. Effectiveness is formally assessed and documented at inception and each period throughout the life of a hedge using various quantitative methods appropriate for each hedge, including regression analysis and dollar offset. Under hedge accounting, the changes in fair value of the derivative and the hedged risk are generally recognized together and offset each other when reported in shareholders’ net income. <br /><br />The Company accounts for derivative instruments as follows:<br /><br /></p><ul><li>Derivatives are reported on the balance sheet at fair value with changes in fair values reported in net income or accumulated other comprehensive income.<br /></li><li>Changes in the fair value of derivatives that hedge market risk related to future cash flows – and that qualify for hedge accounting – are reported in a separate caption in accumulated other comprehensive income. These hedges are referred to as cash flow hedges. <br /></li><li>A change in the fair value of a derivative instrument may not always equal the change in the fair value of the hedged item; this difference is referred to as hedge ineffectiveness. Where hedge accounting is used, the Company reflects hedge ineffectiveness in net income (generally as part of realized investment gains and losses). <br /></li></ul><p><br />Certain subsidiaries of the Company are parties to over-the-counter derivative instruments that contain provisions requiring both parties to such instruments to post collateral depending on net liability thresholds and the party’s financial strength or credit rating. The collateral posting requirements vary by counterparty. The aggregate fair value of derivative instruments with such credit-risk-related contingent features where a subsidiary of the Company was in a net liability position as of March 31, 2010 was $25 million for which the Company was not required to post collateral with its counterparties. If the various contingent features underlying the agreements were triggered as of March 31, 2010, the Company would be required to post collateral equal to the total net liability. Such subsidiaries are parties to certain other derivative instruments that contain termination provisions for which the counterparties could demand immediate payment of the total net liability position if the financial strength rating of the subsidiary were to decline below specified levels. As of March 31, 2010, there was no net liability position under such derivative instruments. <br /> <br />The tables below present information about the nature and accounting treatment of the Company’s primary derivative financial instruments including the Company’s purpose for entering into specific derivative transactions, and their locations in and effect on the financial statements as of and for the three months ended March 31, 2010. Derivatives in the Company’s separate accounts are excluded from the tables because associated gains and losses generally accrue directly to policyholders.        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="12" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="left" width="104"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td width="89" align="center" colspan="2" style="border-top: 2px solid #000000;" height="12"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="19"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="83"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="12"><b> </b></td><td width="81" align="center" colspan="2" style="border-top: 2px solid #000000;" height="12"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="19"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="80"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="12"><b> </b></td><td width="111" align="center" colspan="4" style="border-top: 2px solid #000000;" height="12"><b> </b></td></tr><tr><td height="29" style="border-left: 2px solid #000000;" align="left" width="102"><b>Instrument / Volume of Activity</b></td><td height="29" width="12" align="left"><b> </b></td><td height="29" width="104" align="left"><b>Primary Risk</b></td><td height="29" width="12" align="left"><b> </b></td><td width="191" align="left" height="29" colspan="4"><b>Purpose</b></td><td height="29" width="12" align="left"><b> </b></td><td width="180" align="left" height="29" colspan="4"><b>Cash Flows</b></td><td height="29" width="12" align="left"><b> </b></td><td width="111" align="left" height="29" colspan="4"><b>Accounting Policy</b></td></tr><tr><td height="12" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"><b> </b></td><td height="12" style="border-bottom: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="12" style="border-bottom: 2px solid #000000;" align="left" width="104"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td width="89" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="12"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="19"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="83"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="12"> </td><td width="81" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="12"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="19"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="80"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="12"> </td><td width="111" align="center" colspan="4" style="border-bottom: 2px solid #000000;" height="12"> </td></tr><tr><td width="736" align="left" colspan="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;border-left: 2px solid #000000;" height="18"><b>Derivatives Designated as Accounting Hedges - Cash Flow Hedges</b></td></tr><tr><td height="169" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"><b>Interest rate swaps — $159 million of par value of related investments
Foreign currency swaps — $179 million of U.S. dollar equivalent par value of related investments
Combination swaps (interest rate and foreign currency) — $54 million of U.S. dollar equivalent par value of related investments</b></td><td height="169" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="169" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="104">Interest rate and foreign currency</td><td height="169" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="191" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="169">To hedge the interest and/or foreign currency cash flows of fixed maturities and commercial mortgage loans to match associated liabilities. Currency swaps are primarily euros, Australian dollars, Canadian dollars and British pounds for periods of up to 11 years.</td><td height="169" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="180" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="169">The Company periodically exchanges cash flows between variable and fixed interest rates and/or between two currencies for both principal and interest. Net interest cash flows are reported in net investment income and included in operating activities.</td><td height="169" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="111" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="169">Using cash flow hedge accounting, fair values are reported in other long-term investments or other liabilities and accumulated other comprehensive income and amortized into net investment income or reported in other realized investment gains and losses as interest or principal payments are received.</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="17" width="12" align="left"> </td><td width="622" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Fair Value Effect on the Financial Statements (in millions)</b></td></tr><tr><td height="39" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="39" width="12" align="left"> </td><td height="39" style="border-top: 1px solid #000000;" align="left" width="104"><b> </b></td><td height="39" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="191" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="39"><b>Other Long-Term Investments</b></td><td height="39" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="180" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="39"><b>Accounts Payable, Accrued Expenses and Other Liabilities</b></td><td height="39" style="border-top: 1px solid #000000;" align="center" width="12"><b> </b></td><td width="111" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="39"><b>Gain (Loss) Recognized in Other Comprehensive Income</b></td></tr><tr><td height="29" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="29" width="12" align="left"> </td><td height="29" width="104" align="left"><b> </b></td><td height="29" width="12" align="left"><b> </b></td><td width="89" align="center" colspan="2" style="border-top: 1px solid #000000;" height="29"><b>As of</b></td><td width="102" align="center" colspan="2" style="border-top: 1px solid #000000;" height="29">As of</td><td height="29" width="12" align="left"><b> </b></td><td width="81" align="center" colspan="2" style="border-top: 1px solid #000000;" height="29"><b>As of</b></td><td width="99" align="center" colspan="2" style="border-top: 1px solid #000000;" height="29">As of</td><td height="29" width="12" align="center"><b> </b></td><td width="111" align="center" colspan="4" style="border-top: 1px solid #000000;" height="29">Three Months Ended March 31,</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="17" width="12" align="left"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="104"><b>Instrument</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="89" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td><td width="102" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">December 31, 2009</td><td height="17" width="12" align="center"><b> </b></td><td width="81" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td><td width="99" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">December 31, 2009</td><td height="17" width="12" align="center"><b> </b></td><td width="55" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="56" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="104">Interest rate swaps</td><td height="17" style="border-top: 1px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="70"><b> 9 </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="83"> 8 </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="62"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="80"> - </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="36"><b> 1 </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="37"> (1)</td></tr><tr><td height="25" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="25" width="12" align="left"> </td><td height="25" width="104" align="left">Foreign currency swaps</td><td height="25" width="12" align="left"> </td><td height="25" width="19" align="right"><b> </b></td><td height="25" width="70" align="right"><b> 5 </b></td><td height="25" width="19" align="left"> </td><td height="25" width="83" align="right"> 4 </td><td height="25" width="12" align="left"> </td><td height="25" width="19" align="right"><b> </b></td><td height="25" width="62" align="right"><b> 21 </b></td><td height="25" width="19" align="right"> </td><td height="25" width="80" align="right"> 24 </td><td height="25" width="12" align="left"> </td><td height="25" width="19" align="right"><b> </b></td><td height="25" width="36" align="right"><b> 4 </b></td><td height="25" width="19" align="right"> </td><td height="25" style="border-right: 2px solid #000000;" align="right" width="37"> 2 </td></tr><tr><td height="26" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="26" width="12" align="left"> </td><td height="26" width="104" align="left">Interest rate and foreign currency swaps</td><td height="26" width="12" align="left"> </td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="70"><b> - </b></td><td height="26" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="83"> - </td><td height="26" width="12" align="left"> </td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="62"><b> 6 </b></td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="80"> 6 </td><td height="26" width="12" align="left"> </td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="36"><b> - </b></td><td height="26" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="26" style="border-bottom: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="37"> 2 </td></tr><tr><td height="17" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"> </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="104">Total</td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="70"><b> 14 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="83"> 12 </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="62"><b> 27 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="80"> 30 </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="36"><b> 5 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;border-right: 2px solid #000000;" align="right" width="37"> 3 </td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="102"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="104"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="70"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="83"> </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="62"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="80"> </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="36"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="37"> </td></tr><tr><td height="109" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"><b>Purchased options — $315 million of cash surrender value of related life insurance policies</b></td><td height="109" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="109" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="104">Interest rate</td><td height="109" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="191" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="109">To hedge the possibility of early policyholder cash surrender when the amortized cost of underlying invested assets is greater than their fair values.</td><td height="109" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="180" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="109">The Company pays a fee and may receive or pay cash, based on the difference between the amortized cost and fair values of underlying invested assets at the time of policyholder surrender. These cash flows will be reported in financing activities. </td><td height="109" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="111" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="109">Using cash flow hedge accounting, fair values are reported in other assets or other liabilities, with changes in fair value reported in accumulated other comprehensive income and amortized to other benefit expenses over the life of the underlying invested assets. </td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="17" width="12" align="left"> </td><td width="622" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Fair Value Effect on the Financial Statements</b></td></tr><tr><td height="18" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td width="622" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" height="18">For the periods ended March 31, 2010 and March 31, 2009, fair values reported in other assets and other comprehensive income were not significant.</td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="102"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="104"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="70"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="83"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="62"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="80"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="36"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="37"> </td></tr><tr><td height="99" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"><b>Treasury lock</b></td><td height="99" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="99" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="104">Interest rate</td><td height="99" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="191" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="99">To hedge the variability of and fix at inception date, the benchmark Treasury rate component of future interest payments on debt to be issued.</td><td height="99" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="180" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="99">The Company paid the fair value of the contract at the expiration. Cash flows were reported in operating activities.</td><td height="99" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="111" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="99">Using cash flow hedge accounting, fair values are reported in short-term investments or other liabilities, with changes in fair value reported in accumulated other comprehensive income and amortized to interest expense over the life of the debt issued.</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="102"> </td><td height="17" width="12" align="left"> </td><td width="622" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Fair Value Effect on the Financial Statements</b></td></tr><tr><td height="39" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="102"> </td><td height="39" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td width="622" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" height="39">In the first quarter of 2009, all treasury locks matured and the Company recognized a gain of $14 million in other comprehensive income, resulting in net cumulative losses of $26 million, to be amortized to interest expense over the life of the debt. In the second quarter of 2009, the Company issued debt and began amortizing this loss to interest expense. </td></tr></table><p></p><p>For the periods ended March 31, 2010 and March 31, 2009, the amount of gains (losses) reclassified from accumulated other comprehensive income into income was not significant. No gains (losses) were recognized due to ineffectiveness and no amounts were excluded from the assessment of hedge ineffectiveness.        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="12" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="left" width="99"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td width="91" align="center" colspan="2" style="border-top: 2px solid #000000;" height="12"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="19"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="83"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="12"><b> </b></td><td width="79" align="center" colspan="2" style="border-top: 2px solid #000000;" height="12"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="19"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="89"><b> </b></td><td height="12" style="border-top: 2px solid #000000;" align="center" width="12"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 2px solid #000000;" height="12"><b> </b></td></tr><tr><td height="29" style="border-left: 2px solid #000000;" align="left" width="110"><b>Instrument / Volume of Activity</b></td><td height="29" width="12" align="left"><b> </b></td><td height="29" width="99" align="left"><b>Primary Risk</b></td><td height="29" width="12" align="left"><b> </b></td><td width="193" align="left" height="29" colspan="4"><b>Purpose</b></td><td height="29" width="12" align="left"><b> </b></td><td width="187" align="left" height="29" colspan="4"><b>Cash Flows</b></td><td height="29" width="12" align="left"><b> </b></td><td width="96" align="left" height="29" colspan="4"><b>Accounting Policy</b></td></tr><tr><td height="12" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"><b> </b></td><td height="12" style="border-bottom: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="12" style="border-bottom: 2px solid #000000;" align="left" width="99"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td width="91" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="12"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="19"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="83"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="12"> </td><td width="79" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="12"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="19"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="89"> </td><td height="12" style="border-bottom: 2px solid #000000;" align="center" width="12"> </td><td width="96" align="center" colspan="4" style="border-bottom: 2px solid #000000;" height="12"> </td></tr><tr><td width="733" align="left" colspan="18" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;border-left: 2px solid #000000;" height="18"><b>Derivatives Not Designated As Accounting Hedges</b></td></tr><tr><td height="100" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"><b>Futures — $985 million of U.S. dollar equivalent market price of outstanding contracts</b></td><td height="100" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="100" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="99">Equity and foreign currency</td><td height="100" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="193" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="100">To reduce domestic and international equity market exposures for certain reinsurance contracts that guarantee minimum death benefits (GMDB) resulting from changes in variable annuity account values based on underlying mutual funds. Currency futures are primarily euros, Japanese yen and British pounds. </td><td height="100" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="187" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="100">The Company receives (pays) cash daily in the amount of the change in fair value of the futures contracts. Cash flows are included in operating activities.</td><td height="100" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="96" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="100">Fair value changes are reported in other revenues. Amounts not yet settled from the previous day's fair value change (daily variation margin) are reported in premiums, accounts and notes receivable, net or accounts payable, accrued expenses and other liabilities.</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td width="611" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Fair Value Effect on the Financial Statements (In millions)</b></td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="99"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="72"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="83"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="center" width="12"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="60"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="89"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="center" width="12"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Other Revenues</b></td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td height="17" width="99" align="left"><b> </b></td><td height="17" width="12" align="left"><b> </b></td><td width="91" align="center" height="17" colspan="2"><b> </b></td><td height="17" width="19" align="center"><b> </b></td><td height="17" width="83" align="center"><b> </b></td><td height="17" width="12" align="center"><b> </b></td><td width="79" align="center" height="17" colspan="2"><b> </b></td><td height="17" width="19" align="center"><b> </b></td><td height="17" width="89" align="center"><b> </b></td><td height="17" width="12" align="center"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 1px solid #000000;" height="17">Three Months Ended March 31,</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td height="17" width="99" align="left"><b> </b></td><td height="17" width="12" align="left"><b> </b></td><td height="17" width="19" align="center"><b> </b></td><td height="17" width="72" align="center"><b> </b></td><td height="17" width="19" align="center"><b> </b></td><td height="17" width="83" align="center"><b> </b></td><td height="17" width="12" align="center"><b> </b></td><td height="17" width="19" align="center"><b> </b></td><td height="17" width="60" align="center"><b> </b></td><td height="17" width="19" align="center"><b> </b></td><td height="17" width="89" align="center"><b> </b></td><td height="17" width="12" align="center"><b> </b></td><td width="51" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="45" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="18" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="99">Futures</td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="72"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="83"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="60"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="89"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="11"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="40"><b> (45)</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="13">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;border-right: 2px solid #000000;" align="right" width="32"> 117 </td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="110"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="99"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="72"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="83"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="60"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="89"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="11"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="40"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="13"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="32"> </td></tr><tr><td height="81" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"><b>Interest rate swaps — $76 million of par value of related investments</b></td><td height="81" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="81" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="99">Interest rate</td><td height="81" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="193" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="81">To hedge the interest cash flows of fixed maturities to match associated liabilities. </td><td height="81" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="187" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="81">The Company periodically exchanges cash flows between variable and fixed interest rates for both principal and interest. Net interest cash flows are reported in other realized investment gains (losses) and included in operating activities.</td><td height="81" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="96" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="81">Fair values are reported in other long-term investments or other liabilities, with changes in fair value reported in other realized investment gains and losses.</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td width="611" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Fair Value Effect on the Financial Statements (In millions)</b></td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="99"><b> </b></td><td width="205" align="center" colspan="5" style="border-top: 1px solid #000000;" height="17"><b>Other Long-Term Investments</b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="60"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="89"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Realized Investment (Losses)</b></td></tr><tr><td height="27" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="27" width="12" align="left"> </td><td height="27" width="99" align="left"><b> </b></td><td height="27" width="12" align="left"><b> </b></td><td width="91" align="center" colspan="2" style="border-top: 1px solid #000000;" height="27"><b>As of</b></td><td width="102" align="center" colspan="2" style="border-top: 1px solid #000000;" height="27">As of</td><td height="27" width="12" align="center"><b> </b></td><td height="27" width="19" align="left"> </td><td height="27" width="60" align="left"><b> </b></td><td height="27" width="19" align="left"><b> </b></td><td height="27" width="89" align="left"><b> </b></td><td height="27" width="12" align="center"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 1px solid #000000;" height="27">Three Months Ended March 31,</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td height="17" width="99" align="left"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="91" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td><td width="102" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">December 31, 2009</td><td height="17" width="12" align="center"><b> </b></td><td height="17" width="19" align="left"><b> </b></td><td height="17" width="60" align="left"><b> </b></td><td height="17" width="19" align="left"><b> </b></td><td height="17" width="89" align="left"><b> </b></td><td height="17" width="12" align="center"><b> </b></td><td width="51" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="45" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="18" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="99">Interest rate swaps</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="72"><b> 4 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="83"> 4 </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="60"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="89"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="11"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="40"><b> - </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="13"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;border-right: 2px solid #000000;" align="right" width="32"> - </td></tr><tr><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="110"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="99"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="72"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="83"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="60"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="89"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="11"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="40"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="13"> </td><td height="17" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="32"> </td></tr><tr><td height="186" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"><b>Written options (GMIB liability) — $1,165 million of maximum potential undiscounted future payments as defined in Note 17
Purchased options (GMIB asset) — $641 million of maximum potential undiscounted future receipts as defined in Note 17</b></td><td height="186" style="border-top: 2px solid #000000;" align="left" width="12"><b> </b></td><td height="186" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="99">Equity and interest rate</td><td height="186" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="193" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="186">The Company has written reinsurance contracts with issuers of variable annuity contracts that provide annuitants with certain guarantees of minimum income benefits, resulting from the level of variable annuity account values compared with a contractually guaranteed amount. Payment by the Company depends on the actual account value in the underlying mutual funds and the level of interest rates when the contractholders elect to receive minimum income payments. The Company purchased reinsurance contracts to reduce a portion of the market risks assumed. These contracts are accounted for as written and purchased options.</td><td height="186" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="187" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="186">The Company periodically receives (pays) fees based on either contractholders' account values or deposits increased at a contractual rate. The Company will also pay (receive) cash depending on changes in account values and interest rates when contractholders first elect to receive minimum income payments. These cash flows are reported in operating activities.</td><td height="186" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="12"> </td><td width="96" align="left" colspan="4" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="186">Fair values are reported in other liabilities (GMIB liability) and other assets (GMIB asset). Changes in fair value are reported in GMIB fair value (gain)/loss.</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td width="611" align="left" colspan="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Fair Value Effect on the Financial Statements (In millions)</b></td></tr><tr><td height="34" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="34" width="12" align="left"> </td><td height="34" style="border-top: 1px solid #000000;" align="left" width="99"><b> </b></td><td height="34" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="193" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="34"><b>Other Assets</b></td><td height="34" style="border-top: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="187" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="34"><b>Accounts Payable, Accrued Expenses and Other Liabilities</b></td><td height="34" style="border-top: 1px solid #000000;" align="center" width="12"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="34"><b>GMIB Fair Value (Gain)/Loss</b></td></tr><tr><td height="34" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="34" width="12" align="left"> </td><td height="34" width="99" align="left"><b> </b></td><td height="34" width="12" align="left"><b> </b></td><td width="91" align="center" colspan="2" style="border-top: 1px solid #000000;" height="34"><b>As of</b></td><td width="102" align="center" colspan="2" style="border-top: 1px solid #000000;" height="34">As of</td><td height="34" width="12" align="left"><b> </b></td><td width="79" align="center" colspan="2" style="border-top: 1px solid #000000;" height="34"><b>As of</b></td><td width="108" align="center" colspan="2" style="border-top: 1px solid #000000;" height="34">As of</td><td height="34" width="12" align="center"><b> </b></td><td width="96" align="center" colspan="4" style="border-top: 1px solid #000000;" height="34">Three Months Ended March 31,</td></tr><tr><td height="17" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" width="12" align="left"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="99"><b>Instrument</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="12"><b> </b></td><td width="91" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td><td width="102" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">December 31, 2009</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="12"><b> </b></td><td width="79" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>March 31, 2010</b></td><td width="108" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">December 31, 2009</td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="12"><b> </b></td><td width="51" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="45" align="center" colspan="2" style="border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="25" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="25" width="12" align="left"> </td><td height="25" style="border-top: 1px solid #000000;" align="left" width="99">Written options (GMIB liability)</td><td height="25" style="border-top: 1px solid #000000;" align="left" width="12"> </td><td height="25" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="25" style="border-top: 1px solid #000000;" align="right" width="72"><b> - </b></td><td height="25" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="25" style="border-top: 1px solid #000000;" align="right" width="83"> - </td><td height="25" style="border-top: 1px solid #000000;" align="left" width="12"> </td><td height="25" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="25" style="border-top: 1px solid #000000;" align="right" width="60"><b> 886 </b></td><td height="25" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="25" style="border-top: 1px solid #000000;" align="right" width="89"> 903 </td><td height="25" style="border-top: 1px solid #000000;" align="left" width="12"> </td><td height="25" style="border-top: 1px solid #000000;" align="right" width="11"><b>$</b></td><td height="25" style="border-top: 1px solid #000000;" align="right" width="40"><b> (4)</b></td><td height="25" style="border-top: 1px solid #000000;" align="right" width="13">$</td><td height="25" style="border-top: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="32"> (70)</td></tr><tr><td height="25" style="border-left: 2px solid #000000;" align="left" width="110"> </td><td height="25" width="12" align="left"> </td><td height="25" width="99" align="left">Purchased options (GMIB asset)</td><td height="25" width="12" align="left"> </td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="72"><b> 479 </b></td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="83"> 482 </td><td height="25" width="12" align="left"> </td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="60"><b> - </b></td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="89"> - </td><td height="25" width="12" align="left"> </td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="11"><b> </b></td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="40"><b> - </b></td><td height="25" style="border-bottom: 1px solid #000000;" align="right" width="13"> </td><td height="25" style="border-bottom: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="32"> 38 </td></tr><tr><td height="17" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="110"> </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="99">Total</td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="72"><b> 479 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="83"> 482 </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="60"><b> 886 </b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="89"> 903 </td><td height="17" style="border-bottom: 2px solid #000000;" align="left" width="12"> </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="11"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="40"><b> (4)</b></td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="13">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;border-right: 2px solid #000000;" align="right" width="32"> (32)</td></tr></table><p></p></div>
<div style="font-size:12pt"><p>Note 10 – Variable Interest Entities <br /><br />In the normal course of its activities, the Company is involved with special-purpose or other entities that are considered variable interest entities. When the Company becomes involved with a variable interest entity and when the nature of the Company’s involvement with the entity changes, in order to determine if the Company is the primary beneficiary and must consolidate the entity, it evaluates:<br /></p><ul><li>the structure and purpose of the entity;<br /></li><li>the risks and rewards created by and shared through the entity; and<br /></li><li>the entity’s participants’ ability to direct the activities, receive its benefits and absorb its losses. Participants include the entity’s sponsors, equity holders, guarantors, creditors and servicers.<br /></li></ul><p><br />Although the Company is involved with certain variable interest entities, it determined that consolidation was not required because either:<br /></p><ul><li>it has no power or shares equally in the power to direct the activities that most significantly impact the entities’ economic performance; or<br /></li><li>the Company has no right to receive benefits nor obligation to absorb losses that could be significant to these variable interest entities.<br /></li></ul><p>The Company performs ongoing qualitative analyses of its involvement with these variable interest entities to determine if consolidation is required. <br /><br />The following table presents information about the nature and activities of the more significant variable interest entities including carrying amounts and their locations in and effect on the Company’s financial statements as of and for the three months ended March 31, 2010.<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="29" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="29" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><b>Variable Interests</b></td><td height="29" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;" height="29"><b>Nature, Purpose and Activities</b></td><td height="29" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;" height="29"><b>Factors Considered in Determining Consolidation Not Required</b><sup><b></b></sup></td><td height="29" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;" height="29"><b>Risk Exposure and Effect on the Financial Statements</b></td></tr><tr><td height="18" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="18" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><b> </b></td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="7"><b> </b></td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="100"><b> </b></td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="100"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="7"> </td><td width="200" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="18"> <sup></sup></td><td height="18" style="border-bottom: 2px solid #000000;" align="center" width="7"> </td><td width="200" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="18"> </td></tr><tr><td height="18" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td width="718" align="left" colspan="11" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;border-left: 2px solid #000000;" height="18"><b> </b></td></tr><tr><td height="110" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="110" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><b>Fixed maturities - Foreign bank obligations — $410 million par value interest of total $1,131 million par value</b></td><td height="110" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="110">To create a more active market for perpetual floating-rate subordinated notes issued by foreign banks, special-purpose trusts are formed to purchase these notes and sell participation interests to investors in the form of fixed-rate debt securities and equity interests. The trusts also purchase derivative contracts to exchange the floating-rate cash flows for fixed-rate and obtain guarantees from third parties to support these fixed-rate payments to its debt holders. In certain trusts, the foreign bank perpetual notes were replaced with U.S. government-sponsored bonds. The Company owns a share of the debt securities issued by the trust and receives fixed-rate cash flows for a stated period. </td><td height="110" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="7"> </td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="110">The third-party guarantors of the debt securities issued by the trust generally control the activities that most significantly impact the trusts' economic performance, are obligated to absorb any losses, and are the primary beneficiaries. <sup></sup></td><td height="110" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="7"> </td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="110">The Company's maximum exposure to loss is equal to the fair value of its variable interests reported on the balance sheet in fixed maturities. Unrealized changes in fair value are reported in accumulated other comprehensive income. Realized changes in fair value (impairment or sale) are reported in realized investment gains (losses), and interest earned is reported in net investment income.</td></tr><tr><td height="17" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="17" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="17" width="7" align="left"> </td><td width="633" align="left" colspan="9" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Effect on the Financial Statements (In millions)</b></td></tr><tr><td height="19" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="19" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="19" width="7" align="left"> </td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="19"><b>As of March 31, 2010</b></td><td height="19" style="border-top: 1px solid #000000;" align="left" width="7"><b> </b></td><td width="426" align="center" colspan="6" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="19"><b>Three Months Ended March 31, 2010</b></td></tr><tr><td height="37" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="37" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="37" width="7" align="left"> </td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Fixed Maturities</b></td><td height="37" width="7" align="left"><b> </b></td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Gain (Loss) Recognized in Other Comprehensive Income</b><sup><b> (1)</b></sup></td><td height="37" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="7"><b> </b></td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Income from Continuing Operations before Income Taxes</b></td></tr><tr><td height="18" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="18" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="18" width="7" align="left"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="100">450 </td><td height="18" width="7" align="left"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="right" width="100"> 2 <sup></sup></td><td height="18" style="border-top: 1px solid #000000;" align="left" width="7"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="100"> 1 </td></tr><tr><td height="7" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="7" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="7" width="7" align="left"> </td><td height="7" style="border-top: 1px solid #000000;" align="left" width="100"> </td><td height="7" style="border-top: 1px solid #000000;" align="right" width="100"> </td><td height="7" width="7" align="left"> </td><td height="7" style="border-top: 1px solid #000000;" align="left" width="100"> </td><td height="7" style="border-top: 1px solid #000000;" align="right" width="100"> <sup></sup></td><td height="7" width="7" align="left"> </td><td height="7" style="border-top: 1px solid #000000;" align="left" width="100"> </td><td height="7" style="border-top: 1px solid #000000;border-right: 2px solid #000000;" align="left" width="100"> </td></tr><tr><td height="24" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="24" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><i> </i></td><td height="24" style="border-bottom: 2px solid #000000;" align="left" width="7"><i> </i></td><td width="633" align="left" colspan="9" style="border-bottom: 2px solid #000000;" height="24"><i>(1) Other comprehensive income excludes $17 million and income from continuing operations before income taxes excludes $7 million of amounts required to adjust future policy benefits for the run-off settlement annuity business.</i></td></tr></table><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="29" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="29" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><b>Variable Interests</b></td><td height="29" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;" height="29"><b>Nature, Purpose and Activities</b></td><td height="29" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;" height="29"><b>Factors Considered in Determining Consolidation Not Required</b><sup><b></b></sup></td><td height="29" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;" height="29"><b>Risk Exposure and Effect on the Financial Statements</b></td></tr><tr><td height="18" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="18" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><b> </b></td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="7"><b> </b></td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="100"><b> </b></td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="100"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="7"> </td><td width="200" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="18"> <sup></sup></td><td height="18" style="border-bottom: 2px solid #000000;" align="center" width="7"> </td><td width="200" align="center" colspan="2" style="border-bottom: 2px solid #000000;" height="18"> </td></tr><tr><td height="17" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td width="718" align="left" colspan="11" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" height="17"><b> </b></td></tr><tr><td height="120" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="120" style="border-left: 2px solid #000000;" align="left" width="78"><b>Fixed maturities - Mortgage and other asset backed securities — $294 million par value interest of total $47,841 million par value</b></td><td height="120" width="7" align="left"><b> </b></td><td width="200" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="120">Special-purpose entities are created by third-party sponsors to increase the availability of financing for commercial or residential mortgages or other assets and provide investors with diversified exposure to these assets. The entities purchase mortgage loans or other assets, assemble pools of these assets and sell senior or subordinated securities to investors based on their risk tolerance. The securities represent a right to a share of the cash flows from the underlying assets in the pool. Typically, the most subordinate holder bears the first risk of loss and potential for higher returns. The Company owns a minority share of senior securities and receives fixed-rate cash flows. </td><td height="120" style="border-bottom: 1px solid #000000;" align="left" width="7"> </td><td width="200" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="120">Third-party sponsors generally control the activities that most significantly impact the entities' economic performance, bear the first risk of loss and receive any residual returns, and are primary beneficiaries. In certain circumstances (such as when unexpected losses occur), the sponsor may lose the power to direct the entity's activities and control would rest with the next most subordinate investor. <sup></sup></td><td height="120" style="border-bottom: 1px solid #000000;" align="left" width="7"> </td><td width="200" align="left" colspan="2" style="border-bottom: 1px solid #000000;" height="120">The Company's maximum exposure to loss is equal to the fair value of its variable interests reported on the balance sheet in fixed maturities. Unrealized changes in fair value are reported in accumulated other comprehensive income. Realized changes in fair value (impairment or sale) are reported in realized investment gains (losses), and interest earned is reported in net investment income.</td></tr><tr><td height="17" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="17" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="17" width="7" align="left"> </td><td width="633" align="left" colspan="9" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Effect on the Financial Statements (In millions)</b></td></tr><tr><td height="17" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="17" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="17" width="7" align="left"> </td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>As of March 31, 2010</b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="7"><b> </b></td><td width="426" align="center" colspan="6" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Three Months Ended March 31, 2010</b></td></tr><tr><td height="37" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="37" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="37" width="7" align="left"> </td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Fixed Maturities</b></td><td height="37" width="7" align="left"><b> </b></td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Gain (Loss) Recognized in Other Comprehensive Income</b><sup><b></b></sup></td><td height="37" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="7"><b> </b></td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Income from Continuing Operations before Income Taxes</b></td></tr><tr><td height="18" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="18" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"> </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="7"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="100"> 261 </td><td height="18" style="border-bottom: 2px solid #000000;" align="left" width="7"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="100"> 9 <sup></sup></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="7"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;border-right: 2px solid #000000;" align="right" width="100"> 4 </td></tr><tr><td height="4" width="5" align="left"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="78"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="7"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="100"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="100"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="7"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="100"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="100"> <sup></sup></td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="left" width="7"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="100"> </td><td height="4" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;" align="right" width="100"> </td></tr><tr><td height="127" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="127" style="border-top: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"><b>Equity securities and fixed maturities - Other — $59 million par value interest of total $6,795 million par value</b></td><td height="127" style="border-top: 2px solid #000000;" align="left" width="7"><b> </b></td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="127">Special-purpose trust entities are created by banks to gain access to capital markets, maintain required regulatory capital and receive tax deductions for interest paid on debt obligations. These entities purchase subordinated notes issued and guaranteed by the sponsoring banks and sell debt or equity securities. Equity interests in these entities are held by their sponsoring banks. The Company owns a minority share of these debt and equity securities and receives fixed cash flows.</td><td height="127" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="7"> </td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="127">The banks that create these trusts control the activities that most significantly impact their economic performance, are obligated to absorb any losses and are the primary beneficiaries. <sup></sup></td><td height="127" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" align="left" width="7"> </td><td width="200" align="left" colspan="2" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;" height="127">The Company's maximum exposure to loss is equal to the fair value of its variable interests reported on the balance sheet in equity securities and fixed maturities. Realized changes in fair value (impairment or sale) are reported in realized investment gains (losses), and interest earned is reported in net investment income. </td></tr><tr><td height="17" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="17" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="17" width="7" align="left"> </td><td width="633" align="left" colspan="9" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Effect on the Financial Statements (In millions)</b></td></tr><tr><td height="17" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="17" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="17" width="7" align="left"> </td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>As of March 31, 2010</b></td><td height="17" style="border-top: 1px solid #000000;" align="left" width="7"><b> </b></td><td width="426" align="center" colspan="6" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>Three months ended March 31, 2010</b></td></tr><tr><td height="37" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="37" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="37" width="7" align="left"> </td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Equity Securities and
Fixed Maturities</b></td><td height="37" width="7" align="left"><b> </b></td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Gain (Loss) Recognized in Other Comprehensive Income</b><sup><b> (1)</b></sup></td><td height="37" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="7"><b> </b></td><td width="200" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="37"><b>Income from Continuing Operations before Income Taxes</b></td></tr><tr><td height="18" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="18" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="18" width="7" align="left"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="100">52 </td><td height="18" width="7" align="left"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="100"> - <sup></sup></td><td height="18" style="border-top: 1px solid #000000;" align="center" width="7"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="100">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="100">3 </td></tr><tr><td height="7" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="7" style="border-left: 2px solid #000000;" align="left" width="78"> </td><td height="7" width="7" align="left"> </td><td height="7" style="border-top: 1px solid #000000;" align="left" width="100"> </td><td height="7" style="border-top: 1px solid #000000;" align="center" width="100"> </td><td height="7" width="7" align="left"> </td><td height="7" style="border-top: 1px solid #000000;" align="left" width="100"> </td><td height="7" style="border-top: 1px solid #000000;" align="center" width="100"> <sup></sup></td><td height="7" width="7" align="center"> </td><td height="7" style="border-top: 1px solid #000000;" align="left" width="100"> </td><td height="7" style="border-top: 1px solid #000000;border-right: 2px solid #000000;" align="right" width="100"> </td></tr><tr><td height="24" style="border-right: 2px solid #000000;" align="left" width="5"> </td><td height="24" style="border-bottom: 2px solid #000000;border-left: 2px solid #000000;" align="left" width="78"> </td><td height="24" style="border-bottom: 2px solid #000000;" align="left" width="7"> </td><td width="633" align="left" colspan="9" style="border-bottom: 2px solid #000000;" height="24"><i>(1) Other comprehensive income excludes $5 million and income from continuing operations before income taxes excludes $1 million of amounts required to adjust future policy benefits for the run-off settlement annuity business.</i></td></tr></table><p>In addition to the variable interest entities described in this table, as of March 31, 2010 the Company was also involved in:<br /></p><ul><li>trusts that are variable interest entities controlled by contractual provisions and holding investments that secure certain reinsurance recoverables resulting from the sales of the retirement benefits and individual life insurance and annuity businesses (see Note 11 for further information);<br /></li><li>real estate joint ventures with carrying values of $17 million where all decisions significantly affecting the entities' economic performance are subject to unanimous approval by the equity holders. As a result, the Company determined that the power over these entities is shared equally, and there is no primary beneficiary. The Company’s maximum exposure to loss was equal to its carrying value; and<br /></li><li>certain fixed maturities with an aggregate fair value of $13 million issued by entities subject to troubled debt restructurings or bankruptcy proceedings. As a result, the equity owners no longer have the power to direct the significant activities of the entities. The Company’s maximum exposure to loss was equal to its fair value.<br /></li></ul><p><br />The Company does not have the power to direct these entities’ activities; therefore, it was not the primary beneficiary and did not consolidated these entities. <br /></p></div>
<div style="font-size:12pt"><p>Note 11 ― Reinsurance<br /><br />The Company’s insurance subsidiaries enter into agreements with other insurance companies to assume and cede reinsurance.  Reinsurance is ceded primarily to limit losses from large exposures and to permit recovery of a portion of direct losses.  Reinsurance is also used in acquisition and disposition transactions where the underwriting company is not being acquired. Reinsurance does not relieve the originating insurer of liability.  The Company regularly evaluates the financial condition of its reinsurers and monitors its concentrations of credit risk.<br /><br />Retirement benefits business.  The Company had a reinsurance recoverable of $1.7 billion as of March 31, 2010 and December 31, 2009 from Prudential Retirement Insurance and Annuity Company resulting from the sale of the retirement benefits business, which was primarily in the form of a reinsurance arrangement.  The reinsurance recoverable, which is reduced as the Company’s reinsured liabilities are paid or directly assumed by the reinsurer, is secured primarily by fixed maturities whose book value is equal to or greater than 100% of the reinsured liabilities. These fixed maturities are held in a trust established for the benefit of the Company. As of March 31, 2010, the book value of the trust assets exceeded the recoverable and S&P had assigned this reinsurer a rating of AA-. <br /><br />Individual life and annuity reinsurance. The Company had reinsurance recoverables of $4.4 billion as of March 31, 2010 and December 31, 2009 from The Lincoln National Life Insurance Company and Lincoln Life & Annuity of New York resulting from the 1998 sale of the Company’s individual life insurance and annuity business through indemnity reinsurance arrangements. At March 31, 2010, the $4 billion reinsurance recoverable from The Lincoln National Life Insurance Company was secured by assets held in a trust established for the benefit of the Company, and was less than the market value of the trust assets. The remaining recoverable from Lincoln Life & Annuity of New York of $414 million is currently unsecured, however, if this reinsurer does not maintain a specified minimum credit or claims paying rating, it is required to fully secure the outstanding balance. As of March 31, 2010 S&P has assigned both The Lincoln National Life Insurance Company and Lincoln Life & Annuity of New York a rating of AA-.<br /></p><p>Other Ceded and Assumed Reinsurance<br /><br />Ceded Reinsurance: Ongoing operations. The Company’s insurance subsidiaries have reinsurance recoverables from various reinsurance arrangements in the ordinary course of business for its Health Care, Disability and Life, and International segments as well as the non-leveraged and leveraged corporate-owned life insurance business. Reinsurance recoverables of $282 million as of March 31, 2010 are expected to be collected from more than 90 reinsurers which have been assigned the following financial strength ratings from S&P:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="404"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;" align="center" width="145"><b>Percent of Reinsurance</b></td></tr><tr><td height="17" width="404" align="left"><b> </b></td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="center"><b>Reinsurance</b></td><td height="17" width="75" align="center"><b>Percent</b></td><td height="17" width="145" align="center"><b>Recoverable Protected</b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="404"><i>(In millions)</i></td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="75"><b>Recoverable</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="75"><b>of Total</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="145"><b>by Collateral</b></td></tr><tr><td height="8" style="border-top: 1px solid #000000;" align="left" width="404"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="19"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="145"> </td></tr><tr><td height="17" width="404" align="left">AA- (Single reinsurer)</td><td height="17" width="19" align="left">$</td><td height="17" width="75" align="right"> 48 </td><td height="17" width="75" align="center">17% </td><td height="17" width="145" align="center">0% </td></tr><tr><td height="17" width="404" align="left">AA- or higher (Other reinsurers)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 31 </td><td height="17" width="75" align="center">11% </td><td height="17" width="145" align="center">0% </td></tr><tr><td height="17" width="404" align="left">A (Single reinsurer)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 26 </td><td height="17" width="75" align="center">9% </td><td height="17" width="145" align="center">0% </td></tr><tr><td height="17" width="404" align="left">A+ to A- (Other reinsurers)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 106 </td><td height="17" width="75" align="center">38% </td><td height="17" width="145" align="center">3% </td></tr><tr><td height="17" width="404" align="left">Unrated (Single reinsurer)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 34 </td><td height="17" width="75" align="center">12% </td><td height="17" width="145" align="center">100% </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="404">Below A- or unrated (Other reinsurers)</td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 37 </td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="75">13% </td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="145">64% </td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="404">Total ongoing operations</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 282 </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="center" width="75">100% </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="145">22% </td></tr></table><p>The collateral protecting the recoverables includes assets held in trust and letters of credit. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables in the event that recovery is not considered probable. As of March 31, 2010, the Company’s recoverables related to these segments were net of a reserve of $9 million.<br /><br />Assumed and Ceded reinsurance: Run-off Reinsurance segment. The Company's Run-off Reinsurance operations assumed risks related to GMDB contracts, GMIB contracts, workers’ compensation, and personal accident business. The Company’s Run-off Reinsurance operations also purchased retrocessional coverage to reduce the risk of loss on these contracts.<br /><br />Liabilities related to GMDB, workers’ compensation and personal accident are included in future policy benefits and unpaid claims. Because the GMIB contracts are treated as derivatives under GAAP, the asset related to GMIB is recorded in the caption Other assets, including other intangibles and the liability related to GMIB is recorded in the caption Accounts payable, accrued expenses, and other liabilities on the Company’s Consolidated Balance Sheets (see Notes 7 and 17 for additional discussion of the GMIB assets and liabilities).<br /><br />The reinsurance recoverables for GMDB, workers’ compensation, and personal accident of $109 million as of March 31, 2010 are expected to be collected from approximately 80 retrocessionaires which have been assigned the following financial strength ratings from S&P:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="404"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;" align="center" width="75"><b> </b></td><td height="17" style="border-top: 1px solid #000000;" align="center" width="145"><b>Percent of Reinsurance</b></td></tr><tr><td height="17" width="404" align="left"> </td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="center"><b>Reinsurance</b></td><td height="17" width="75" align="center"><b>Percent</b></td><td height="17" width="145" align="center"><b>Recoverable Protected</b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="404"><i>(In millions)</i></td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="75"><b>Recoverable</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="75"><b>of Total</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="145"><b>by Collateral</b></td></tr><tr><td height="8" style="border-top: 1px solid #000000;" align="left" width="404"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="19"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="75"> </td><td height="8" style="border-top: 1px solid #000000;" align="left" width="145"> </td></tr><tr><td height="17" width="404" align="left">AA- or higher </td><td height="17" width="19" align="left">$</td><td height="17" width="75" align="right"> 32 </td><td height="17" width="75" align="center">29% </td><td height="17" width="145" align="center">10% </td></tr><tr><td height="17" width="404" align="left">A (Single reinsurer)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 32 </td><td height="17" width="75" align="center">29% </td><td height="17" width="145" align="center">100% </td></tr><tr><td height="17" width="404" align="left">A- (Single reinsurer)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 17 </td><td height="17" width="75" align="center">16% </td><td height="17" width="145" align="center">80% </td></tr><tr><td height="17" width="404" align="left">A+ to A- (Other reinsurers)</td><td height="17" width="19" align="left"> </td><td height="17" width="75" align="right"> 16 </td><td height="17" width="75" align="center">15% </td><td height="17" width="145" align="center">5% </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="404">Below A- or unrated </td><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> 12 </td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="75">11% </td><td height="17" style="border-bottom: 1px solid #000000;" align="center" width="145">50% </td></tr><tr><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="404">Total Run-off Reinsurance segment</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="left" width="19">$</td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 109 </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="center" width="75">100% </td><td height="17" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="center" width="145">51% </td></tr></table><p>The collateral protecting the recoverables includes letters of credit and assets held in trust. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables in the event that recovery is not considered probable. As of March 31, 2010, the Company’s recoverables related to this segment were net of a reserve of $6 million.<br /><br />The Company's payment obligations for underlying reinsurance exposures assumed by the Company under these contracts are based on the ceding companies’ claim payments. For GMDB, claim payments vary because of changes in equity markets and interest rates, as well as claim mortality and contractholder behavior. For workers’ compensation and personal accident, the payments relate to accidents and injuries. Any of these claim payments can extend many years into the future, and the amount of the ceding companies’ ultimate claims, and therefore the amount of the Company's ultimate payment obligations and corresponding ultimate collection from retrocessionaires, may not be known with certainty for some time.<br /><br />Summary. The Company’s reserves for underlying reinsurance exposures assumed by the Company, as well as for amounts recoverable from reinsurers/retrocessionaires for both ongoing operations and the run-off reinsurance operation, are considered appropriate as of March 31, 2010, based on current information.  However, it is possible that future developments could have a material adverse effect on the Company’s consolidated results of operations and, in certain situations, such as if actual experience differs from the assumptions used in estimating reserves for GMDB, could have a material adverse effect on the Company’s financial condition. The Company bears the risk of loss if its retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company.<br /><br />Effects of reinsurance. In the Company’s Consolidated Statements of Income, Premiums and fees were net of ceded premiums, and Total benefits and expenses were net of reinsurance recoveries, in the following amounts:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518"> </td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">Three Months Ended </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="518"> </td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518"><b>Ceded premiums and fees</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="518">Individual life insurance and annuity business sold</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 46 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 51 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518">Other</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 64 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 60 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 110 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 111 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518"><b>Reinsurance recoveries</b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="518">Individual life insurance and annuity business sold</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 67 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 68 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518">Other</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 44 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 58 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="518">Total</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 111 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 126 </td></tr></table></div>
<div style="font-size:12pt"><p>Note 12 — Pension and Other Postretirement Benefit Plans<br /><br />The Company and certain of its subsidiaries provide pension, health care and life insurance defined benefits to eligible retired employees, spouses and other eligible dependents through various domestic and foreign plans. The effect of its foreign pension and other postretirement benefit plans is immaterial to the Company’s results of operations, liquidity and financial position. Effective July 1, 2009, the Company froze its primary domestic defined benefit pension plans. <br /><br /></p><p>Pension benefits. Components of net pension cost were as follows:<br />        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="521"><b> </b></td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;" height="17">Three Months Ended</td></tr><tr><td height="17" width="521" align="left"> </td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="521"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="521">Service cost</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> 21 </td></tr><tr><td height="17" width="521" align="left">Interest cost</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 59 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 61 </td></tr><tr><td height="17" width="521" align="left">Expected long-term return on plan assets</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> (63)</b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> (60)</td></tr><tr><td height="17" width="521" align="left">Amortization of:</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> </td></tr><tr><td height="17" width="521" align="left">   Net loss from past experience</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 7 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 17 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="521">   Prior service cost</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> - </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> (3)</td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="521">Net pension cost</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"><b> 3 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> 36 </td></tr></table><p>The Company funds its qualified pension plans at least at the minimum amount required by the Pension Protection Act of 2006, which requires companies to fully fund defined benefit pension plans over a seven-year period beginning in 2008. For the three months ended March 31, 2010, the Company contributed $55 million, of which $12 million was required and $43 million was voluntary. For the remainder of 2010, the Company expects to make additional required contributions of $57 million and voluntary contributions of $100 million.<br /></p><p>Other postretirement benefits. Components of net other postretirement benefit cost were as follows:        </p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;" align="center" width="499"><b> </b></td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;" height="17">Three Months Ended </td></tr><tr><td height="17" width="499" align="left"> </td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="499"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;" align="left" width="499">Service cost</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19"><b>$</b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"><b> - </b></td><td height="17" style="border-top: 1px solid #000000;" align="right" width="19">$</td><td height="17" style="border-top: 1px solid #000000;" align="right" width="75"> - </td></tr><tr><td height="17" width="499" align="left">Interest cost</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> 5 </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> 6 </td></tr><tr><td height="17" width="499" align="left">Expected long-term return on plan assets</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> - </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> - </td></tr><tr><td height="17" width="499" align="left">Amortization of:</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> </td></tr><tr><td height="17" width="499" align="left">   Net gain from past experience</td><td height="17" width="19" align="right"><b> </b></td><td height="17" width="75" align="right"><b> - </b></td><td height="17" width="19" align="right"> </td><td height="17" width="75" align="right"> (2)</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;" align="left" width="499">   Prior service cost</td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"><b> (4)</b></td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;" align="right" width="75"> (5)</td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;" align="left" width="499">Net other postretirement benefit cost</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"><b> 1 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;" align="right" width="75"> (1)</td></tr></table></div>
<div style="font-size:12pt"><p>Note 13 ― Debt<br /><br />Short-term and long-term debt were as follows:<br /></p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530"><i> </i></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>March 31,</b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">December 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530"><b>Short-term:</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">Commercial paper</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 100 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 100 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530">Current maturities of long-term debt</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 226 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 4 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530">Total short-term debt</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 326 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 104 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530"><b>Long-term:</b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">Uncollateralized debt:</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">7% Notes due 2011</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> - </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 222 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">6.375% Notes due 2011</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 226 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 226 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">5.375% Notes due 2017</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 250 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 250 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">6.35% Notes due 2018</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 300 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 300 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">8.5% Notes due 2019</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 349 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 349 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">6.37% Notes due 2021</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 78 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 78 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">7.65% Notes due 2023</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 100 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 100 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">8.3% Notes due 2023</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 17 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 17 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">7.875% Debentures due 2027</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 300 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 300 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">8.3% Step Down Notes due 2033</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 83 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 83 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="530">6.15% Notes due 2036</td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 500 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 500 </td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530">Other</td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 9 </b></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 11 </td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="530">Total long-term debt</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 2,212 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 2,436 </td></tr></table><p>In the first quarter of 2010, the 7% Notes due 2011 were reclassified into current maturities of long-term debt since they will mature in less than one year.</p></div>
<div style="font-size:12pt"><p>Note 14 — Accumulated Other Comprehensive Loss<br /><br />Accumulated other comprehensive loss excludes amounts required to adjust future policy benefits for the run-off settlement annuity business. Changes in accumulated other comprehensive loss were as follows:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Tax</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="446"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="left" width="75"> </td><td width="94" align="center" colspan="2" style="background-color: #FFFFFF;" height="17"><b>(Expense)</b></td><td width="94" align="center" colspan="2" style="background-color: #FFFFFF;" height="17"><b>After-</b></td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><i>(In millions)</i></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Pre-Tax</b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Benefit</b></td><td width="94" align="center" colspan="2" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>Tax</b></td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Three Months Ended March 31,</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="19"><b> </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="center" width="75"> </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="446"><b>2010 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Net unrealized appreciation, securities:</b></td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="446">Net unrealized appreciation on securities arising during the period</td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"><b> 127 </b></td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"><b> (42)</b></td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"><b> 85 </b></td></tr><tr><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446">Reclassification adjustment for (gains) included in shareholders' net income</td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (19)</b></td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 6 </b></td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (13)</b></td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446">Net unrealized appreciation, securities </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 108 </b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (36)</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 72 </b></td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Net unrealized appreciation, derivatives</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 6 </b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (2)</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Net translation of foreign currencies</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 6 </b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (2)</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td></tr><tr><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Postretirement benefits liability adjustment: </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="446">Reclassification adjustment for amortization of net losses from past</td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="16" style="background-color: #FFFFFF;" align="left" width="75"><b> </b></td><td height="16" style="background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="16" style="background-color: #FFFFFF;" align="left" width="75"><b> </b></td><td height="16" style="background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="16" style="background-color: #FFFFFF;" align="left" width="75"><b> </b></td></tr><tr><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446">   experience and prior service costs</td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 3 </b></td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 5 </b></td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 8 </b></td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"> </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="446">2009 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Net unrealized appreciation, securities:</b></td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="446">Net unrealized appreciation on securities arising during the period</td><td height="16" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"> 43 </td><td height="16" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"> (13)</td><td height="16" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"> 30 </td></tr><tr><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446">Reclassification adjustment for losses included in shareholders' net income</td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 33 </td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (12)</td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="19"> </td><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 21 </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446">Net unrealized appreciation, securities </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 76 </td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (25)</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 51 </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Net unrealized appreciation, derivatives</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 17 </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (6)</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 11 </td></tr><tr><td height="16" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Net translation of foreign currencies</b></td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (44)</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 16 </td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-top: 2px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (28)</td></tr><tr><td height="16" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446"><b>Postretirement benefits liability adjustment: </b></td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="background-color: #FFFFFF;" align="left" width="446">Reclassification adjustment for amortization of net losses from past</td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"> </td><td height="16" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="16" style="background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="16" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="446">   experience and prior service costs</td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 7 </td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (3)</td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="16" style="border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 4 </td></tr></table></div>
<div style="font-size:12pt"><p>Note 15 — Income Taxes</p><p>A. Income Tax Expense<br /><br />The Company has historically accrued U.S. income taxes on the undistributed earnings of foreign subsidiaries. During the first quarter of 2010, the Company determined that the prospective earnings of its Hong Kong operations are to be permanently invested overseas. The Company made a similar determination as related to the prospective earnings of its South Korea operations in 2009. This permanent investment of earnings increased shareholders’ net income for the three months ended March 31, 2010 by $14 million, which included $6 million (including $1 million related to realized investment gains) related to the Hong Kong implementation and $8 million attributable to recording taxes for the first quarter of 2010 at the foreign jurisdiction’s tax rate. As of March 31, 2010, deferred tax liabilities not recognized as a result of the permanent investment of South Korea and Hong Kong operation earnings was $37 million. <br /><br />B. Unrecognized Tax Benefits<br /><br />Gross unrecognized tax benefits declined for the three months ended March 31, 2010 by $22 million which was primarily due to the reversal of previously established liabilities that were reevaluated in light of new factors and technical developments. The effect on shareholders’ net income was not material.<br /><br />During the first quarter of 2009, the IRS completed its examination of the Company's 2005 and 2006 consolidated federal income tax returns, resulting in an increase to shareholders’ net income of $21 million ($20 million in continuing operations and $1 million in discontinued operations). This increase reflected a reduction in net unrecognized tax benefits of $8 million ($17 million reported in income tax expense, partially offset by a $9 million pre-tax charge) and a reduction of interest and penalties of $13 million (reported in income tax expense). <br /><br />Over the next twelve months, the Company has determined it reasonably possible that the level of unrecognized tax benefits could increase or decrease significantly, subject to developments in certain matters in dispute with the IRS. It is also reasonably possible there could be a significant decline in the level of valuation allowances recorded against deferred tax benefits of the reinsurance operations within the next twelve months. The Company, however, is currently unable to reasonably estimate the potential impact of such changes. <br /><br />C. Other Tax Matters<br /><br />During the first quarter of 2009, final resolution was reached in one of the two disputed issues associated with the IRS examination of the Company’s 2003 and 2004 consolidated federal income tax returns. The second of these disputed matters remains unresolved and on June 4, 2009 the Company initiated litigation of this matter by filing a petition in the United States Tax Court. Due to the nature of the litigation process, the timing of the resolution of this matter is uncertain. Though the Company expects to prevail, an unfavorable resolution of this litigation would result in a charge to shareholder’s net income of up to $17 million, representing net interest expense on the cumulative incremental tax for all affected years. In addition, two issues remain unresolved from the IRS examination of the Company’s 2005 and 2006 consolidated federal income tax returns. One of these unresolved issues is the same matter which remains in dispute from the prior IRS examination. The Company is attempting to resolve the other matter through the administrative appeals process, and filed a formal protest of the proposed adjustments on March 31, 2009.<br /><br />The recently enacted Patient Protection & Affordable Care Act, including the Reconciliation Act of 2010, included provisions limiting the tax deductibility of certain future retiree benefit and compensation related payments. The effect of these provisions reduced shareholders’ net income for the first quarter of 2010 by $5 million. The Company will continue to evaluate the tax effect of these provisions. <br /></p></div>
<div style="font-size:12pt"><p>Note 16 ― Segment Information<br /><br />The Company's operating segments generally reflect groups of related products, except for the International segment which is generally based on geography. In accordance with GAAP, operating segments that do not require separate disclosure have been combined into Other Operations. The Company measures the financial results of its segments using “segment earnings (loss),” which is defined as shareholders’ income (loss) from continuing operations excluding after-tax realized investment gains and losses. <br /><br />Beginning in 2010, the Company began reporting the expense associated with its frozen pension plans in Corporate. Prior periods were not restated. The effect on prior periods is not material.<br /><br />Summarized segment financial information was as follows:</p><table style="border-collapse: collapse; margin-top: 20px;"><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"> </td><td width="188" align="center" colspan="4" style="border-top: 1px solid #000000;background-color: #FFFFFF;" height="17">Three Months Ended </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="355"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="142"> </td><td width="188" align="center" colspan="4" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">March 31,</td></tr><tr><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355"><i>(In millions)</i></td><td height="17" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"><i> </i></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17"><b>2010 </b></td><td width="94" align="center" colspan="2" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" height="17">2009 </td></tr><tr><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355"><b>Premiums and fees, Mail order pharmacy revenues and Other revenues</b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"><b> </b></td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="75"> </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="355">Health Care</td><td height="17" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 3,731 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 3,289 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="355">Disability and Life</td><td height="17" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 690 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 701 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="355">International</td><td height="17" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="17" style="background-color: #FFFFFF;" align="left" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 534 </b></td><td height="17" style="background-color: #FFFFFF;" align="left" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> 439 </td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="355">Run-off Reinsurance</td><td height="18" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="18" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="18" style="background-color: #FFFFFF;" align="right" width="75"><b> (38)</b></td><td height="18" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="18" style="background-color: #FFFFFF;" align="right" width="75"> 121 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="355">Other Operations</td><td height="15" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 43 </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 44 </td></tr><tr><td height="18" style="background-color: #FFFFFF;" align="left" width="355">Corporate</td><td height="18" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (15)</b></td><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="18" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (14)</td></tr><tr><td height="20" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355">Total</td><td height="20" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"> </td><td height="20" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="20" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 4,945 </b></td><td height="20" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="20" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 4,580 </td></tr><tr><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355"><b>Shareholders' income from continuing operations</b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"><b> </b></td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> </b></td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="355">Health Care</td><td height="15" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 167 </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19">$</td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 155 </td></tr><tr><td height="19" style="background-color: #FFFFFF;" align="left" width="355">Disability and Life</td><td height="19" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="19" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="19" style="background-color: #FFFFFF;" align="right" width="75"><b> 70 </b></td><td height="19" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="19" style="background-color: #FFFFFF;" align="right" width="75"> 63 </td></tr><tr><td height="19" style="background-color: #FFFFFF;" align="left" width="355">International</td><td height="19" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="19" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="19" style="background-color: #FFFFFF;" align="right" width="75"><b> 72 </b></td><td height="19" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="19" style="background-color: #FFFFFF;" align="right" width="75"> 42 </td></tr><tr><td height="17" style="background-color: #FFFFFF;" align="left" width="355">Run-off Reinsurance</td><td height="17" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"><b> 4 </b></td><td height="17" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="17" style="background-color: #FFFFFF;" align="right" width="75"> (26)</td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="355">Other Operations</td><td height="15" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"><b> 19 </b></td><td height="15" style="background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="background-color: #FFFFFF;" align="right" width="75"> 19 </td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="355">Corporate</td><td height="15" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (46)</b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (22)</td></tr><tr><td height="15" style="background-color: #FFFFFF;" align="left" width="355">Segment Earnings</td><td height="15" style="background-color: #FFFFFF;" align="left" width="142"> </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 286 </b></td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-top: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 231 </td></tr><tr><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355">Realized investment losses, net of taxes</td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b> </b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> (3)</b></td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="19"> </td><td height="15" style="border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="right" width="75"> (24)</td></tr><tr><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="355">Shareholders' income from continuing operations</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 1px solid #000000;background-color: #FFFFFF;" align="left" width="142"> </td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19"><b>$</b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"><b> 283 </b></td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="19">$</td><td height="18" style="border-top: 1px solid #000000;border-bottom: 2px solid #000000;background-color: #FFFFFF;" align="right" width="75"> 207 </td></tr></table></div>
<div style="font-size:12pt"><p>Note 17 ― Contingencies and Other Matters<br /><br />The Company, through its subsidiaries, is contingently liable for various financial guarantees provided in the ordinary course of business.<br /><br />Financial Guarantees Primarily Associated with the Sold Retirement Benefits Business<br /><br />Separate account assets are contractholder funds maintained in accounts with specific investment objectives. The Company records separate account liabilities equal to separate account assets.  In certain cases, primarily associated with the sold retirement benefits business (which was sold in April 2004), the Company guarantees a minimum level of benefits for retirement and insurance contracts written in separate accounts.  The Company establishes an additional liability if management believes that the Company will be required to make a payment under these guarantees.<br /> <br />The Company guarantees that separate account assets will be sufficient to pay certain retiree or life benefits.  The sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations.  This percentage varies depending on the asset class within a sponsoring employer’s portfolio (for example, a bond fund would require a lower percentage than a riskier equity fund) and thus will vary as the composition of the portfolio changes.  If employers do not maintain the required levels of separate account assets, the Company or an affiliate of the buyer has the right to redirect the management of the related assets to provide for benefit payments.  As of March 31, 2010, employers maintained assets that exceeded the benefit obligations. Benefit obligations under these arrangements were $1.7 billion as of March 31, 2010.  Approximately 75% of these guarantees are reinsured by an affiliate of the buyer of the retirement benefits business. The remaining guarantees are provided by the Company with minimal reinsurance from third parties. There were no additional liabilities required for these guarantees as of March 31, 2010.  Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value hierarchy.  See Note 7 for further information on the fair value hierarchy.<br /><br />The Company does not expect that these financial guarantees will have a material effect on the Company’s consolidated results of operations, liquidity or financial condition.</p><p>Other Financial Guarantees<br /><br />Guaranteed minimum income benefit contracts. The Company's reinsurance operations, which were discontinued in 2000 and are now an inactive business in run-off mode, reinsured minimum income benefits under certain variable annuity contracts issued by other insurance companies.  A contractholder can elect the guaranteed minimum income benefit (“GMIB”) within 30 days of any eligible policy anniversary after a specified contractual waiting period. The Company’s exposure arises when the guaranteed annuitization benefit exceeds the annuitization benefit based on the policy’s current account value.  At the time of annuitization, the Company pays the excess (if any) of the guaranteed benefit over the benefit based on the current account value in a lump sum to the direct writing insurance company.<br /><br />In periods of declining equity markets or declining interest rates, the Company’s GMIB liabilities increase.  Conversely, in periods of rising equity markets and rising interest rates, the Company’s liabilities for these benefits decrease.<br /><br />The Company estimates the fair value of the GMIB assets and liabilities using assumptions for market returns and interest rates, volatility of the underlying equity and bond mutual fund investments, mortality, lapse, annuity election rates, nonperformance risk, and risk and profit charges.  See Note 7 for additional information on how fair values for these liabilities and related receivables for retrocessional coverage are determined.<br /><br />The Company is required to disclose the maximum potential undiscounted future payments for GMIB contracts.  Under these guarantees, the future payment amounts are dependent on equity and bond fund market and interest rate levels prior to and at the date of annuitization election, which must occur within 30 days of a policy anniversary, after the appropriate waiting period.  Therefore, the future payments are not fixed and determinable under the terms of the contract.  Accordingly, the Company has estimated the maximum potential undiscounted future payments using hypothetical adverse assumptions, defined as follows:<br /><br /></p><ul><li>no annuitants surrendered their accounts;<br /></li><li>all annuitants lived to elect their benefit;<br /></li><li>all annuitants elected to receive their benefit on the next available date (2010 through 2014); and<br /></li><li>all underlying mutual fund investment values remained at the March 31, 2010 value of $1.3 billion with no future returns.<br /></li></ul><p><br />The maximum potential undiscounted payments that the Company would make under those assumptions would aggregate $1.2 billion before reinsurance recoveries.  The Company expects the amount of actual payments to be significantly less than this hypothetical undiscounted aggregate amount.  The Company has retrocessional coverage in place from two external reinsurers which covers 55% of the exposures on these contracts.  The Company bears the risk of loss if its retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company.</p><p>Certain other guarantees. The Company had indemnification obligations to lenders of up to $236 million as of March 31, 2010, related to borrowings by certain real estate joint ventures which the Company either records as an investment or consolidates. These borrowings, which are nonrecourse to the Company, are secured by the joint ventures’ real estate properties with fair values in excess of the loan amounts and mature at various dates beginning in 2010 through 2017.  The Company’s indemnification obligations would require payment to lenders for any actual damages resulting from certain acts such as unauthorized ownership transfers, misappropriation of rental payments by others or environmental damages.  Based on initial and ongoing reviews of property management and operations, the Company does not expect that payments will be required under these indemnification obligations. Any payments that might be required could be recovered through a refinancing or sale of the assets.  In some cases, the Company also has recourse to partners for their proportionate share of amounts paid.  There were no liabilities required for these indemnification obligations as of March 31, 2010.<br /><br />As of March 31, 2010, the Company guaranteed that it would compensate the lessors for a shortfall of up to $44 million in the market value of certain leased equipment at the end of the lease.  Guarantees of $28 million expire in 2012 and $16 million expire in 2016.  The Company had liabilities for these guarantees of $8 million as of March 31, 2010.<br /><br />As part of the reinsurance and administrative service arrangements acquired from Great-West Life and Annuity, Inc., the Company is responsible to pay claims for the group medical and long-term disability business of Great-West Healthcare and collect related amounts due from their third party reinsurers. Any such amounts not collected will represent additional assumed liabilities of the Company and decrease shareholders’ net income if and when these amounts are determined uncollectible. At March 31, 2010, there were no receivables recorded for paid claims due from third party reinsurers for this business and unpaid claims related to this business were estimated at $22 million.<br /><br />The Company had indemnification obligations as of March 31, 2010 in connection with acquisition and disposition transactions. These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, the filing of tax returns, compliance with law or the identification of outstanding litigation.  These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation.  In some cases, the maximum potential amount due is subject to contractual limitations based on a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable.  The Company does not believe that it is possible to determine the maximum potential amount due under these obligations, since not all amounts due under these indemnification obligations are subject to limitation.  There were no liabilities required for these indemnification obligations as of March 31, 2010.<br /><br />The Company contracts on an administrative services only (“ASO”) basis with customers who fund their own claims. The Company charges these customers administrative fees based on the expected cost of administering their self-funded programs. In some cases, the Company provides performance guarantees associated with meeting certain service related and other performance standards. If these standards are not met, the Company may be financially at risk up to a stated percentage of the contracted fee or a stated dollar amount. The Company establishes liabilities for estimated payouts associated with these performance guarantees. Approximately 12% of reported ASO fees are at risk, with actual reimbursements of less than 1% of reported ASO fees. <br /><br />The Company has agreements with certain banks that provide banking services to settle claim checks processed by the Company for ASO and certain minimum premium customers. The customers are responsible for adequately funding their accounts as claim checks are presented for payment. Under these agreements, the Company guarantees that the banks will not incur a loss if a customer fails to properly fund its account. The guarantee will fluctuate daily. As of March 31, 2010, the aggregate maximum exposure under these guarantees was approximately $700 million. Through April 29, 2010, the exposure that existed at March 31, 2010 has been reduced by approximately 85% from customers’ funding of claim checks when presented for payment. In addition, the Company can limit its exposure under these guarantees by suspending claim payments for any customer who has not adequately funded their bank account. <br /><br />The Company does not expect that these guarantees will have a material adverse effect on the Company’s consolidated results of operations, liquidity or financial condition.<br /></p><p>Regulatory and Industry Developments<br /><br />Employee benefits regulation.  The business of administering and insuring employee benefit programs, particularly health care programs, is heavily regulated by federal and state laws and administrative agencies, such as state departments of insurance and the Federal Departments of Labor and Justice, as well as the courts.  Regulation, legislation and judicial decisions have resulted in changes to industry and the Company’s business practices and will continue to do so in the future.  In addition, the Company’s subsidiaries are routinely involved with various claims, lawsuits and regulatory and IRS audits and investigations that could result in financial liability, changes in business practices, or both.  Health care regulation and legislation in its various forms, including the implementation of the Patient Protection and Affordable Care Act (including the Reconciliation Act) that was signed into law during the first quarter of 2010, could have an adverse effect on the Company’s health care operations if it inhibits the Company’s ability to respond to market demands, adversely affects the way the Company does business, or results in increased medical or administrative costs without improving the quality of care or services.<br /><br />Other possible regulatory and legislative changes or judicial decisions that could have an adverse effect on the Company’s employee benefits businesses include:<br /><br /></p><ul><li>additional mandated benefits or services that increase costs;<br /></li><li>legislation that would grant plan participants broader rights to sue their health plans;<br /></li><li>changes in public policy and in the political environment, which could affect state and federal law, including legislative and regulatory proposals related to health care issues, which could increase cost and affect the market for the Company’s health care products and services; <br /></li><li>changes in Employee Retirement Income Security Act of 1974 (“ERISA”) regulations resulting in increased administrative burdens and costs;<br /></li><li>additional restrictions on the use of prescription drug formularies and rulings from pending purported class action litigation, which could result in adjustments to or the elimination of the average wholesale price or “AWP” of pharmaceutical products as a benchmark in establishing certain rates, charges, discounts, guarantees and fees for various prescription drugs;<br /></li><li>additional privacy legislation and regulations that interfere with the proper use of medical information for research, coordination of medical care and disease and disability management;<br /></li><li>additional variations among state laws mandating the time periods and administrative processes for payment of health care provider claims;<br /></li><li>legislation that would exempt independent physicians from antitrust laws; and<br /></li><li>changes in federal tax laws, such as amendments that could affect the taxation of employer provided benefits.<br /></li></ul><p><br />The employee benefits industry remains under scrutiny by various state and federal government agencies and could be subject to government efforts to bring criminal actions in circumstances that could previously have given rise only to civil or administrative proceedings.<br /> <br />Concentration of risk.  For the Company’s International segment, South Korea is the single largest geographic market. South Korea generated 32% of the segment’s revenues and 39% of the segment’s earnings for the three months ended March 31, 2010.  Due to the concentration of business in South Korea, the International segment is exposed to potential losses resulting from economic and geopolitical developments in that country, as well as foreign currency movements affecting the South Korean currency, which could have a significant impact on the segment’s results and the Company’s consolidated financial results.<br /><br /><br />Litigation and Other Legal Matters<br /><br />The Company is routinely involved in numerous claims, lawsuits, regulatory and IRS audits, investigations and other legal matters arising, for the most part, in the ordinary course of the business of administering and insuring employee benefit programs including payments to providers and benefit level disputes. Litigation of income tax matters is accounted for under FASB’s accounting guidance for uncertainty in income taxes. Further information can be found in Note 15.  An increasing number of claims are being made for substantial non-economic, extra-contractual or punitive damages.  The outcome of litigation and other legal matters is always uncertain, and outcomes that are not justified by the evidence can occur.  The Company believes that it has valid defenses to the legal matters pending against it and is defending itself vigorously and has recorded accruals in accordance with GAAP.  Nevertheless, it is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company’s consolidated results of operations, liquidity or financial condition.<br /><br />Managed care litigation. On April 7, 2000, several pending actions were consolidated in the United States District Court for the Southern District of Florida in a multi-district litigation proceeding captioned In re Managed Care Litigation challenging, in general terms, the mechanisms used by managed care companies in connection with the delivery of or payment for health care services. The consolidated cases include Shane v. Humana, Inc., et al., Mangieri v. CIGNA Corporation, Kaiser and Corrigan v. CIGNA Corporation, et al. and Amer. Dental Ass’n v. CIGNA Corp. et al. <br /><br />In 2004, the court approved a settlement agreement between the physician class and CIGNA. However, a dispute over disallowed claims under the settlement submitted by a representative of certain class member physicians is in arbitration. Separately, in 2005, the court approved a settlement between CIGNA and a class of non-physician health care providers. Only the American Dental Association case remains unresolved. On March 2, 2009, the Court dismissed with prejudice five of the six counts of the complaint. On March 20, 2009, the Court declined to exercise supplemental jurisdiction over the remaining state law claim and dismissed the case. Plaintiffs appealed on February 26, 2010 before the United States Court of Appeals for the Eleventh Circuit. CIGNA denies the allegations and will continue to vigorously defend itself. <br /><br />CIGNA has received insurance recoveries related to the In re Managed Care Litigation. In 2008, the Court of Common Pleas of Philadelphia County ruled that the Company is not entitled to insurance recoveries from one of the two insurers from which the Company is pursuing further recoveries. CIGNA appealed that decision and on June 3, 2009, the Superior Court of Pennsylvania reversed the trial court’s decision, remanding the case to the trial court for further proceedings.<br /><br />Broker compensation. Beginning in 2004, the Company, other insurance companies and certain insurance brokers received subpoenas and inquiries from various regulators, including the New York and Connecticut Attorneys General, the Florida Office of Insurance Regulation, the U.S. Attorney’s Office for the Southern District of California and the U.S. Department of Labor relating to their investigations of insurance broker compensation. CIGNA cooperated with the inquiries and investigations. <br /><br />On August 1, 2005, two CIGNA subsidiaries, Connecticut General Life Insurance Company and Life Insurance Company of North America, were named as defendants in a multi-district litigation proceeding, In re Insurance Brokerage Antitrust Litigation, consolidated in the United States District Court for the District of New Jersey. The complaint alleges that brokers and insurers conspired to hide commissions, thus increasing the cost of employee benefit plans, and seeks treble damages and injunctive relief. Numerous insurance brokers and other insurance companies are named as defendants. In 2008, the court ordered the clerk to enter judgment against plaintiffs and in favor of the defendants. Plaintiffs appealed. CIGNA denies the allegations and will continue to vigorously defend itself. <br /><br />Amara cash balance pension plan litigation. On December 18, 2001, Janice Amara filed a class action lawsuit, captioned Janice C. Amara, Gisela R. Broderick, Annette S. Glanz, individually and on behalf of all others similarly situated v. CIGNA Corporation and CIGNA Pension Plan, in the United States District Court for the District of Connecticut against CIGNA Corporation and the CIGNA Pension Plan on behalf of herself and other similarly situated participants in the CIGNA Pension Plan affected by the 1998 conversion to a cash balance formula. The plaintiffs allege various ERISA violations including, among other things, that the Plan’s cash balance formula discriminates against older employees; the conversion resulted in a wear away period (during which the pre-conversion accrued benefit exceeded the post-conversion benefit); and these conditions are not adequately disclosed in the Plan. <br /><br />In 2008, the court issued a decision finding in favor of CIGNA Corporation and the CIGNA Pension Plan on the age discrimination and wear away claims. However, the court found in favor of the plaintiffs on many aspects of the disclosure claims and ordered an enhanced level of benefits from the existing cash balance formula for the majority of the class, requiring class members to receive their frozen benefits under the pre-conversion CIGNA Pension Plan and their accrued benefits under the post-conversion CIGNA Pension Plan. The court also ordered, among other things, pre-judgment and post-judgment interest. Both parties appealed the court’s decisions to the United States Court of Appeals for the Second Circuit which issued a decision on October 6, 2009 affirming the District Court’s judgment and order on all issues. On January 4, 2010, the Company and the plaintiffs filed separate petitions for a writ of certiorari to the United States Supreme Court, both of which are fully briefed and pending. The implementation of the judgment is currently stayed. The Company will continue to vigorously defend itself in this case. In the second quarter of 2008, the Company recorded a charge of $80 million pre-tax ($52 million after-tax), which principally reflects the Company’s best estimate of the liabilities related to the court order. <br /><br />Ingenix. On February 13, 2008, State of New York Attorney General Andrew M. Cuomo announced an industry-wide investigation into the use of data provided by Ingenix, Inc., a subsidiary of UnitedHealthcare, used to calculate payments for services provided by out-of-network providers. The Company received four subpoenas from the New York Attorney General’s office in connection with this investigation and responded appropriately. On February 17, 2009, the Company entered into an Assurance of Discontinuance resolving the investigation. In connection with the industry-wide resolution, the Company contributed $10 million to the establishment of a new non-profit company that will compile and provide the data currently provided by Ingenix. In addition, on March 28, 2008, the Company received a voluntary request for production of documents from the Connecticut Attorney General’s office seeking certain out-of-network claim payment information. The Company has responded appropriately. Since January 2009, the Company has received and responded to inquiries regarding the use of Ingenix data from the Illinois and Texas Attorneys General and the Departments of Insurance in Illinois, Florida, Vermont, Georgia, Pennsylvania, Connecticut, and Alaska. <br /><br />The Company was named as a defendant in seven putative nationwide class actions asserting that due to the use of data from Ingenix, Inc., the Company improperly underpaid claims, an industry-wide issue. Two actions were brought on behalf of members, (Franco v. CIGNA Corp. et al., and Chazen v. CIGNA Corp. et al.), and five actions were brought on behalf of providers, (American Medical Association et al. v. CIGNA Corp. et al., Shiring et al. v. CIGNA Corp. et al.; Higashi et al. v. CGLIC et al.; Pain Management and Surgery Center of Southeast Indiana v. CGLIC et al.; and North Peninsula Surgical Center v. Connecticut General Life Insurance Co. et al.), all of which have been consolidated into the Franco case pending in the United States District Court for the District of New Jersey. The consolidated amended complaint, filed on August 7, 2009, asserts claims under ERISA, the RICO statute, the Sherman Antitrust Act and New Jersey state law. CIGNA filed a motion to dismiss the consolidated amended complaint on September 9, 2009, which is now fully briefed and pending. Discovery is ongoing and class certification is scheduled to be briefed in the second quarter of 2010. <br /><br />On June 9, 2009, CIGNA filed motions in the United States District Court for the Southern District of Florida to enforce the In re Managed Care Litigation settlement described above by enjoining the RICO and antitrust causes of action asserted by the provider and medical association plaintiffs in the Ingenix litigation on the ground that they arose prior to and were released in the April 2004 settlement. On November 30, 2009, the Court granted the motions and ordered the provider and association plaintiffs to withdraw their RICO and antitrust claims from the Ingenix litigation by December 21, 2009. The plaintiffs filed notices of appeal with the United States Court of Appeals for the Eleventh Circuit on December 10 and 11, 2009, along with motions to stay the order pending appeal. On January 12, 2010, the United States Court of Appeals for the Eleventh Circuit stayed the order pending resolution of the appeal. The appeal is fully briefed and pending. <br /><br />One of the provider plaintiffs, Pain Management and Surgery Center of Southern Indiana, filed a voluntary dismissal of its claims on November 11, 2009.<br /><br />It is reasonably possible that others could initiate additional litigation or additional regulatory action against the Company with respect to use of data provided by Ingenix, Inc. The Company denies the allegations asserted in the investigations and litigation and will vigorously defend itself in these matters.<br /></p></div>