FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Measurement––Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1—Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. The Company’s Level 1 assets and liabilities primarily include certain cash equivalents and short-term investments, equity securities and derivative contracts that trade on an active exchange market.

Level 2—Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company’s Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not trade in active markets because they are not publicly available), certain commercial mortgage loans, short-term investments and certain cash equivalents (primarily commercial paper), and certain OTC derivatives.

Level 3—Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value. The Company’s Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured OTC derivative contracts, certain commercial mortgage loans, certain consolidated real estate funds for which the Company is the general partner and embedded derivatives resulting from certain products with guaranteed benefits.

Assets and Liabilities by Hierarchy Level––The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.



	As of December 31, 2017
	Level 1		Level 2		Level 3		Netting(1)			Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	26,086	$	52	$			$	26,138
Obligations of U.S. states and their political subdivisions	0		10,466		5					10,471
Foreign government bonds	0		103,271		148					103,419
U.S. corporate public securities	0		90,115		109					90,224
U.S. corporate private securities(2)	0		31,845		1,889					33,734
Foreign corporate public securities	0		29,329		79					29,408
Foreign corporate private securities	0		23,528		699					24,227
Asset-backed securities(3)	0		5,629		6,604					12,233
Commercial mortgage-backed securities	0		13,268		13					13,281
Residential mortgage-backed securities	0		3,547		98					3,645
Subtotal	0		337,084		9,696					346,780
Trading account assets:(4)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		328		0					328
Obligations of U.S. states and their political subdivisions	0		208		0					208
Foreign government bonds	0		857		223					1,080
Corporate securities	0		16,712		552					17,264
Asset-backed securities(3)	0		697		788					1,485
Commercial mortgage-backed securities	0		2,321		0					2,321
Residential mortgage-backed securities	0		1,029		1					1,030
Equity securities	2,015		274		509					2,798
All other(5)	56		10,763		8		(9,601		)	1,226
Subtotal	2,071		33,189		2,081		(9,601		)	27,740
Equity securities, available-for-sale	5,344		540		290					6,174
Commercial mortgage and other loans	0		593		0					593
Other long-term investments(6)	24		111		136		1			272
Short-term investments	3,906		1,850		8					5,764
Cash equivalents	1,900		6,398		0					8,298
Other assets	0		1		13					14
Separate account assets(7)(8)	45,397		232,874		2,122					280,393
Total assets	$	58,642	$	612,640	$	14,346	$	(9,600	)	$	676,028
Future policy benefits(9)	$	0	$	0	$	8,720	$			$	8,720
Other liabilities	4		5,946		50		(5,312		)	688
Notes issued by consolidated VIEs	0		0		1,196					1,196
Total liabilities	$	4	$	5,946	$	9,966	$	(5,312	)	$	10,604



	As of December 31, 2016
	Level 1		Level 2		Level 3		Netting(1)			Total
	(in millions)
Fixed maturities, available-for-sale:
U.S. Treasury securities and obligations of U.S. government authorities and agencies	$	0	$	23,784	$	0	$			$	23,784
Obligations of U.S. states and their political subdivisions	0		9,687		5					9,692
Foreign government bonds	0		96,132		124					96,256
U.S. corporate public securities	0		81,350		261					81,611
U.S. corporate private securities(2)	0		30,434		1,354					31,788
Foreign corporate public securities	0		28,166		71					28,237
Foreign corporate private securities	0		20,393		487					20,880
Asset-backed securities(3)	0		7,591		4,344					11,935
Commercial mortgage-backed securities	0		12,690		14					12,704
Residential mortgage-backed securities	0		4,335		197					4,532
Subtotal	0		314,562		6,857					321,419
Trading account assets:(4)
U.S. Treasury securities and obligations of U.S. government authorities and agencies	0		301		0					301
Obligations of U.S. states and their political subdivisions	0		194		0					194
Foreign government bonds	0		714		227					941
Corporate securities	0		16,992		188					17,180
Asset-backed securities(3)	0		1,086		329					1,415
Commercial mortgage-backed securities	0		2,061		1					2,062
Residential mortgage-backed securities	0		1,208		2					1,210
Equity securities	1,690		214		487					2,391
All other(5)	208		13,259		1		(11,708		)	1,760
Subtotal	1,898		36,029		1,235		(11,708		)	27,454
Equity securities, available-for-sale	6,033		3,450		265					9,748
Commercial mortgage and other loans	0		519		0					519
Other long-term investments(6)	44		106		7		(8		)	149
Short-term investments	5,623		1,558		1					7,182
Cash equivalents	3,885		4,421		0					8,306
Other assets	0		0		0					0
Separate account assets(7)(8)	38,915		221,253		1,849					262,017
Total assets	$	56,398	$	581,898	$	10,214	$	(11,716	)	$	636,794
Future policy benefits(9)	$	0	$	0	$	8,238	$			$	8,238
Other liabilities	8		6,284		22		(5,945		)	369
Notes issued by consolidated VIEs	0		0		1,839					1,839
Total liabilities	$	8	$	6,284	$	10,099	$	(5,945	)	$	10,446

__________


(1)	“Netting” amounts represent cash collateral of $4,288 million and $5,771 million as of December 31, 2017 and 2016, respectively, and the impact of offsetting asset and liability positions held with the same counterparty, subject to master netting arrangements.


(2)	Excludes notes with both fair value and carrying amount of $2,660 million and $1,456 million, as of December 31, 2017 and 2016, respectively, which have been offset with the associated payables under a netting agreement.


(3)	Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.


(4)	Includes “Trading account assets supporting insurance liabilities” and “Other trading account assets.”


(5)	Level 1 represents cash equivalents and short term investments. All other amounts primarily represent derivative assets.


(6)	Other long-term investments excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at NAV per share (or its equivalent) as a practical expedient. At December 31, 2017 and 2016, the fair values of such investments were $1,969 million and $1,579 million respectively.

(7)

Separate account assets included in the fair value hierarchy exclude investments in entities that calculate net asset value per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate, hedge funds and other invested assets, for which fair value is measured at NAV per share (or its equivalent). At December 31, 2017 and 2016, the fair value of such investments was $26,224 million and $25,619 million, respectively.

(8)

Separate account assets represent segregated funds that are invested for certain customers. Investment risks associated with market value changes are borne by the customers, except to the extent of minimum guarantees made by the Company with respect to certain accounts. Separate account liabilities are not included in the above table as they are reported at contract value and not fair value in the Company’s Consolidated Statements of Financial Position.

(9)

As of December 31, 2017, the net embedded derivative liability position of $8.7 billion includes $0.9 billion of embedded derivatives in an asset position and $9.6 billion of embedded derivatives in a liability position. As of December 31, 2016, the net embedded derivative liability position of $8.2 billion includes $1.2 billion of embedded derivatives in an asset position and $9.4 billion of embedded derivatives in a liability position.

The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below.

Fixed Maturity Securities—The fair values of the Company’s public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices for each security are generally sourced from multiple pricing vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. The pricing hierarchy is updated for new financial products and recent pricing experience with various vendors. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. Typical inputs used by these pricing services include but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, and/or estimated cash flow, prepayment speeds and default rates. If the pricing information received from third-party pricing services is deemed not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service or classify the securities as Level 3. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2.

Internally-developed valuations or indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from the independent pricing services is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may override the information with an internally-developed valuation. As of December 31, 2017 and 2016, overrides on a net basis were not material. Pricing service overrides, internally-developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy.

The Company conducts several specific price monitoring activities. Daily analyses identify price changes over predetermined thresholds defined at the financial instrument level. Various pricing integrity reports are reviewed on a daily and monthly basis to determine if pricing is reflective of market activity or if it would warrant any adjustments. Other procedures performed include, but are not limited to, reviews of third-party pricing services methodologies, reviews of pricing trends and back testing.

The fair values of private fixed maturities, which are originated by internal private asset managers, are primarily determined using discounted cash flow models. These models primarily use observable inputs that include Treasury or similar base rates plus estimated credit spreads to value each security. The credit spreads are obtained through a survey of private market intermediaries who are active in both primary and secondary transactions, and consider, among other factors, the credit quality and the reduced liquidity associated with private placements. Internal adjustments are made to reflect variation in observed sector spreads. Since most private placements are valued using standard market observable inputs and inputs derived from, or corroborated by, market observable data including, but not limited to observed prices and spreads for similar publicly-traded issues, they have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model may incorporate significant unobservable inputs, which reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the price of a security, a Level 3 classification is made.

Trading Account Assets—Trading account assets consist primarily of fixed maturity securities, equity securities and derivatives whose fair values are determined consistent with similar instruments described above under “Fixed Maturity Securities” and below under “Equity Securities” and “Derivative Instruments.”

Equity Securities—Equity securities consist principally of investments in common and preferred stock of publicly-traded companies, perpetual preferred stock, privately-traded securities, as well as mutual fund shares. The fair values of most publicly-traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using discounted cash flow, earnings multiple and other valuation models that require a substantial level of judgment around inputs and therefore are classified within Level 3. The fair values of mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy. The fair values of perpetual preferred stock are based on inputs obtained from independent pricing services that are primarily based on indicative broker quotes. As a result, the fair values of perpetual preferred stock are classified as Level 3.

Commercial Mortgage and Other Loans—The fair value of loans held and accounted for using the fair value option is determined utilizing pricing indicators from the whole loan market, where investors are committed to purchase these loans at a predetermined price, which is considered the principal exit market for these loans. The Company evaluates the valuation inputs used for these assets, including the existence of predetermined exit prices, the terms of the loans, prevailing interest rates and credit risk, and deems the primary pricing inputs are Level 2 inputs in the fair value hierarchy.

Other Long-Term Investments—Other long-term investments include limited partnerships which are consolidated because the Company is either deemed to exercise control or considered the primary beneficiary of a variable interest entity. These entities are primarily investment companies and follow specialized industry accounting whereby their assets are carried at fair value. The investments held by these entities include various feeder fund investments in underlying master funds (whose underlying holdings generally include public fixed maturities, equity securities and mutual funds), as well as wholly-owned real estate held within other investment funds. For the unconsolidated fund investments, where the Company has elected the fair value option, the fair value is primarily determined by the fund managers and is measured at NAV as a practical expedient.

Other Assets—Other assets reflected in Level 3 include reinsurance recoverables which are carried at fair value and relate to the reinsurance of the Company’s living benefit guarantees on certain variable annuity contracts. The methods and assumptions used to estimate the fair value are consistent with those described in “Future Policy Benefits.”

Derivative Instruments—Derivatives are recorded at fair value either as assets, within “Other trading account assets,” or “Other long-term investments,” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, commodity prices, credit spreads, market volatility, expected returns, NPR, liquidity and other factors. For derivative positions included within Level 3 of the fair value hierarchy, liquidity valuation adjustments are made to reflect the cost of exiting significant risk positions, and consider the bid-ask spread, maturity, complexity and other specific attributes of the underlying derivative position.

The Company’s exchange-traded futures and options include Treasury futures, Eurodollar futures, commodity futures, Eurodollar options and commodity options. Exchange-traded futures and options are valued using quoted prices in active markets and are classified within Level 1 in the fair value hierarchy.

The majority of the Company’s derivative positions are traded in the OTC derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models that utilize actively quoted or observable market input values from external market data providers, third-party pricing vendors and/or recent trading activity. The Company’s policy is to use mid-market pricing in determining its best estimate of fair value. The fair values of most OTC derivatives, including interest rate and cross-currency swaps, currency forward contracts, commodity swaps, commodity forward contracts, single name credit default swaps, loan commitments held for sale and “to be announced” (“TBA”) forward contracts on highly rated mortgage-backed securities issued by U.S. government sponsored entities are determined using discounted cash flow models. The fair values of European style option contracts are determined using Black-Scholes option pricing models. These models’ key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, NPR, volatility and other factors.

The Company’s cleared interest rate swaps and credit derivatives linked to an index are valued using models that utilize actively quoted or observable market inputs, including Overnight Indexed Swap discount rates, obtained from external market data providers, third-party pricing vendors and/or recent trading activity. These derivatives are classified as Level 2 in the fair value hierarchy.

The vast majority of the Company’s derivative agreements are with highly rated major international financial institutions. To reflect the market’s perception of its own and the counterparty’s NPR, the Company incorporates additional spreads over London Inter-Bank Offered Rate (“LIBOR”) into the discount rate used in determining the fair value of OTC derivative assets and liabilities that are not otherwise collateralized.

Derivatives classified as Level 3 include look-back equity options and other structured products. These derivatives are valued based upon models, such as Monte Carlo simulation models and other techniques that utilize significant unobservable inputs. Level 3 methodologies are validated through periodic comparison of the Company’s fair values to external broker-dealer values.

Cash Equivalents and Short-Term Investments—Cash equivalents and short-term investments include money market instruments, commercial paper and other highly liquid debt instruments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The remaining instruments in this category are generally fair valued based on market observable inputs and these investments have primarily been classified within Level 2.

Separate Account Assets—Separate account assets include mutual funds, fixed maturity securities, treasuries, equity securities, real estate and commercial mortgage loans for which values are determined consistent with similar instruments described above under “Fixed Maturity Securities,” “Equity Securities” and “Commercial Mortgage and Other Loans.”

Notes issued by Consolidated VIEs—These notes are based on the fair values of corresponding bank loan collateral. Since the notes are valued based on reference collateral, they are classified as Level 3. See Note 5 and “Fair Value Option” below for additional information.

Other Liabilities—Other liabilities include certain derivative instruments, including embedded derivatives associated with certain “Policyholders’ account balances.” The fair values are primarily determined consistent with similar derivative instruments described above under “Derivative Instruments.”

Future Policy Benefits—The liability for future policy benefits is related to guarantees primarily associated with the living benefit features of certain variable annuity contracts offered by the Company’s Individual Annuities segment, including GMAB, GMWB and GMIWB, accounted for as embedded derivatives. The fair values of these liabilities are calculated as the present value of future expected benefit payments to customers less the present value of future expected rider fees attributable to the embedded derivative feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally-developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management’s judgment.

The significant inputs to the valuation models for these embedded derivatives include capital market assumptions, such as interest rate levels and volatility assumptions, the Company’s market-perceived NPR, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy.

Capital market inputs and actual policyholders’ account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets and volatility. In the risk neutral valuation, the initial swap curve drives the total return used to grow the policyholders’ account values. The Company’s discount rate assumption is based on the LIBOR swap curve adjusted for an additional spread relative to LIBOR to reflect NPR.

Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data. These assumptions are generally updated annually unless a material change that the Company feels is indicative of a long term trend is observed in an interim period.

Transfers between Levels 1 and 2—Transfers between levels are made to reflect changes in observability of inputs and market activity. Transfers into or out of any level are generally reported at the value as of the beginning of the quarter in which the transfers occur for any such assets still held at the end of the quarter. Periodically there are transfers between Level 1 and Level 2 for assets held in the Company’s Separate Account. The fair value of foreign common stock held in the Company’s Separate Account may reflect differences in market levels between the close of foreign trading markets and the close of U.S. trading markets for the respective day. Dependent on the existence of such a timing difference, the assets may move between Level 1 and Level 2. The following table presents the transfers between Level 1 and Level 2 for dates indicated below:



	Year Ended December 31,
	2017		2016
	(in millions)
Transferred from Level 1 to Level 2	$	111	$	86
Transferred from Level 2 to Level 1	$	207	$	40

Quantitative Information Regarding Internally-Priced Level 3 Assets and Liabilities—The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities.



	As of December 31, 2017
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum		Maximum	Weighted Average		Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)	$	1,352	Discounted cash flow	Discount rate	0.65%	—	22%	7.20	%	Decrease
			Market comparables	EBITDA multiples(3)	7.4X	—	7.4X	7.4X		Increase
			Liquidation	Liquidation value	13.10%	—	25.00%	14.68	%	Increase
Separate account assets-commercial mortgage loans(4)	$	821	Discounted cash flow	Spread	1.08%	—	2.78%	1.20	%	Decrease
Liabilities:
Future policy benefits(5)	$	8,720	Discounted cash flow	Lapse rate(6)	1%	—	12%			Decrease
				Spread over LIBOR(7)	0.12%	—	1.10%			Decrease
				Utilization rate(8)	52%	—	97%			Increase
				Withdrawal rate	See table footnote (9) below.
				Mortality rate(10)	0%	—	14%			Decrease
				Equity volatility curve	13%	—	24%			Increase



	As of December 31, 2016
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum		Maximum	Weighted Average	Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Corporate securities(2)	$	1,848	Discounted cash flow	Discount rate	0.70%	—	20%	7.12%	Decrease
			Market comparables	EBITDA multiples(3)	4.0X	—	4.0X	4.0X	Increase
			Liquidation	Liquidation value	15.19%	—	98.68%	91.72%	Increase
Separate account assets-commercial mortgage loans(4)	$	971	Discounted cash flow	Spread	1.19%	—	2.90%	1.37%	Decrease
Liabilities:
Future policy benefits(5)	$	8,238	Discounted cash flow	Lapse rate(6)	0%	—	13%		Decrease
				Spread over LIBOR(7)	0.25%	—	1.50%		Decrease
				Utilization rate(8)	52%	—	96%		Increase
				Withdrawal rate	See table footnote (9) below.
				Mortality rate(10)	0%	—	14%		Decrease
				Equity volatility curve	16%	—	25%		Increase

__________


(1)	Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.


(2)	Includes assets classified as fixed maturities available-for-sale, trading account assets supporting insurance liabilities and other trading account assets.


(3)	Represents multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), and are amounts used when the Company has determined that market participants would use such multiples when valuing the investments.


(4)	Changes in the fair value of separate account assets are borne by customers and thus are offset by changes in separate account liabilities on the Company’s Consolidated Statements of Financial Position. As a result, changes in value associated with these investments are not reflected in the Company’s Consolidated Statements of Operations.

(5)

Future policy benefits primarily represent general account liabilities for the living benefit features of the Company’s variable annuity contracts which are accounted for as embedded derivatives. Since the valuation methodology for these liabilities uses a range of inputs that vary at the contract level over the cash flow projection period, presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.


(6)	Lapse rates are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates are also generally assumed to be lower for the period where surrender charges apply.

(7)

The spread over LIBOR swap curve represents the premium added to the risk-free discount rate (i.e., LIBOR) to reflect our estimates of rates that a market participant would use to value the living benefit contracts in both the accumulation and payout phases. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because both funding agreements and living benefit contracts are insurance liabilities and are therefore senior to debt.

(8)

The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration, and begin lifetime withdrawals at various time intervals from contract inception. The remaining contractholders are assumed to either begin lifetime withdrawals immediately or never utilize the benefit. Utilization assumptions may vary by product type, tax status, and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal. Range reflects the utilization rate for the vast majority of business with living benefits.

(9)

The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of December 31, 2017 and 2016, the minimum withdrawal rate assumption is 78% and the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(10)

Range reflects the mortality rate for the vast majority of business with living benefits, with policyholders ranging from 35 to 90 years old. While the majority of living benefits have a minimum age requirement, certain benefits do not have an age restriction. This results in contractholders for certain benefits with mortality rates approaching 0%. Based on historical experience, the Company applies a set of age and duration specific mortality rate adjustments compared to standard industry tables. A mortality improvement assumption is also incorporated into the overall mortality table.

Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another or multiple inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities—The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term, and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors.

Future Policy Benefits—The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Valuation Process for Fair Value Measurements Categorized within Level 3—The Company has established an internal control infrastructure over the valuation of financial instruments that requires ongoing oversight by its various business groups. These management control functions are segregated from the trading and investing functions. For invested assets, the Company has established oversight teams, often in the form of pricing committees within each asset management group. The teams, which typically include representation from investment, accounting, operations, legal and other disciplines are responsible for overseeing and monitoring the pricing of the Company’s investments and performing periodic due diligence reviews of independent pricing services. An actuarial valuation team oversees the valuation of living benefit features of the Company’s variable annuity contracts.

The Company has also established policies and guidelines that require the establishment of valuation methodologies and consistent application of such methodologies. These policies and guidelines govern the use of inputs and price source hierarchies and provide controls around the valuation processes. These controls include appropriate review and analysis of investment prices against market activity or indicators of reasonableness, analysis of portfolio returns to corresponding benchmark returns, back-testing, review of bid-ask spreads to assess activity, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels. For living benefit features of the Company’s variable annuity products, the actuarial valuation unit periodically tests contract input data and actuarial assumptions are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data. The valuation policies and guidelines are reviewed and updated as appropriate.

Within the trading and investing functions, the Company has established policies and procedures that relate to the approval of all new transaction types, transaction pricing sources and fair value hierarchy coding within the financial reporting system. For variable annuity product changes or new launches of living benefit features, the actuarial valuation unit validates input logic and new product features and agrees new input data directly to source documents.

Changes in Level 3 Assets and Liabilities––The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.



	Year Ended December 31, 2017
	Fixed Maturities Available-For-Sale
	U.S. Government		U.S. States			Foreign Government			Corporate Securities(1)			Structured Securities(2)
	(in millions)
Fair Value, beginning of period	$	0	$	5		$	124		$	2,173		$	4,555
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	0		0			0			(93		)	70
Included in other comprehensive income (loss)	0		0			(1		)	(22		)	11
Net investment income	0		0			0			19			7
Purchases	42		7			0			525			4,967
Sales	0		0			0			(173		)	(645		)
Issuances	0		0			0			0			0
Settlements	0		0			0			(781		)	(2,756		)
Foreign currency translation	0		0			3			7			38
Other(4)	10		0			0			(55		)	(2		)
Transfers into Level 3(5)	0		0			39			1,498			3,933
Transfers out of Level 3(5)	0		(7		)	(17		)	(322		)	(3,463		)
Fair Value, end of period	$	52	$	5		$	148		$	2,776		$	6,715
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0	$	0		$	0		$	(154	)	$	0



	Year Ended December 31, 2017
	Trading Account Assets
	Foreign Government			Corporate Securities			Structured Securities(2)			Equity			All Other Activity
	(in millions)
Fair Value, beginning of period	$	227		$	188		$	332		$	487		$	1
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	0			0			0			0			0
Other income	(5		)	(32		)	0			25			0
Net investment income	5			3			1			0			0
Purchases	0			154			656			28			46
Sales	0			(7		)	(25		)	(17		)	0
Issuances	0			0			0			0			0
Settlements	(4		)	(119		)	(355		)	(47		)	(39		)
Foreign currency translation	0			0			5			6			0
Other(4)	0			0			1			29			0
Transfers into Level 3(5)	0			383			602			31			0
Transfers out of Level 3(5)	0			(18		)	(428		)	(33		)	0
Fair Value, end of period	$	223		$	552		$	789		$	509		$	8
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	0		$	0		$	0		$	0
Other income	$	(5	)	$	(33	)	$	3		$	38		$	0



	Year Ended December 31, 2017
	Equity Securities Available- For-Sale			Other Long-term Investments			Short-term Investments			Cash Equivalents			Other Assets
	(in millions)
Fair Value, beginning of period	$	265		$	7		$	1		$	0		$	0
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	2			1			0			0			(20		)
Included in other comprehensive income (loss)	17			0			0			0			0
Net investment income	0			0			0			2			0
Purchases	33			0			30			93			33
Sales	(35		)	0			0			0			0
Issuances	0			39			0			0			0
Settlements	0			(1		)	(23		)	(99		)	0
Foreign currency translation	3			(1		)	0			0			0
Other(4)	(1		)	77			(1		)	0			0
Transfers into Level 3(5)	7			14			1			4			0
Transfers out of Level 3(5)	(1		)	0			0			0			0
Fair Value, end of period	$	290		$	136		$	8		$	0		$	13
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	(4	)	$	0		$	0		$	0		$	(21	)



	Year Ended December 31, 2017
	Separate Account Assets(3)			Future Policy Benefits			Other Liabilities			Notes Issued by Consolidated VIEs
	(in millions)
Fair Value, beginning of period	$	1,849		$	(8,238	)	$	(22	)	$	(1,839	)
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	0			637			(37		)	(4		)
Interest credited to policyholders’ account balances	81			0			0			0
Net investment income	2			0			0			0
Purchases	1,122			0			0			0
Sales	(98		)	0			0			0
Issuances	0			(1,117		)	0			0
Settlements	(725		)	0			4			0
Foreign currency translation	0			(2		)	0			0
Other(4)	0			0			5			647
Transfers into Level 3(5)	353			0			0			0
Transfers out of Level 3(5)	(462		)	0			0			0
Fair Value, end of period	$	2,122		$	(8,720	)	$	(50	)	$	(1,196	)
Unrealized gains (losses) for assets/liabilities still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	372		$	(37	)	$	(4	)
Interest credited to policyholders’ account balances	$	78		$	0		$	0		$	0



	Year Ended December 31, 2016
	Fixed Maturities Available-For-Sale
	U.S. States			Foreign Government			Corporate Securities(1)			Structured Securities(2)
	(in millions)
Fair Value, beginning of period	$	6		$	123		$	1,222		$	4,269
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	0			0			(131		)	10
Included in other comprehensive income (loss)	0			(3		)	76			(23		)
Net investment income	0			0			11			13
Purchases	0			0			318			3,582
Sales	0			0			(18		)	(444		)
Issuances	0			0			0			0
Settlements	(1		)	0			(323		)	(700		)
Foreign currency translation	0			3			5			35
Other(4)	0			0			0			159
Transfers into Level 3(5)	0			1			1,486			1,787
Transfers out of Level 3(5)	0			0			(473		)	(4,133		)
Fair Value, end of period	$	5		$	124		$	2,173		$	4,555
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	0		$	(110	)	$	0



	Year Ended December 31, 2016
	Trading Account Assets
	Foreign Government			Corporate Securities			Structured Securities(2)			Equity			All Other Activity
	(in millions)
Fair Value, beginning of period	$	34		$	203		$	603		$	589		$	5
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	0			0			0			0			0
Other income	(5		)	(9		)	(12		)	8			1
Net investment income	1			2			2			0			0
Purchases	201			11			185			20			0
Sales	0			(3		)	(49		)	(65		)	0
Issuances	0			0			0			0			0
Settlements	(4		)	(41		)	(122		)	(108		)	0
Foreign currency translation	0			0			(2		)	31			0
Other(4)	0			(15		)	141			14			(5		)
Transfers into Level 3(5)	0			151			252			28			0
Transfers out of Level 3(5)	0			(111		)	(666		)	(30		)	0
Fair Value, end of period	$	227		$	188		$	332		$	487		$	1
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	0		$	0		$	0		$	0
Other income	$	(5	)	$	(10	)	$	(4	)	$	3		$	1



	Year Ended December 31, 2016
	Equity Securities Available- For-Sale			Other Long-term Investments			Short-term Investments		Other Assets
	(in millions)
Fair Value, beginning of period	$	266		$	49		$	0	$	7
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	52			(1		)	0		(30		)
Other income	0			0			0		0
Included in other comprehensive income (loss)	(75		)	0			0		0
Net investment income	0			(1		)	0		0
Purchases	99			1			1		23
Sales	(79		)	0			0		0
Issuances	0			0			0		0
Settlements	(13		)	0			0		0
Foreign currency translation	13			0			0		0
Other(4)	0			(33		)	0		0
Transfers into Level 3(5)	9			0			0		0
Transfers out of Level 3(5)	(7		)	(8		)	0		0
Fair Value, end of period	$	265		$	7		$	1	$	0
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	(1	)	$	0	$	(30	)
Other income	$	0		$	0		$	0	$	0



	Year Ended December 31, 2016
	Separate Account Assets(3)			Future Policy Benefits			Other Liabilities			Notes Issued by Consolidated VIEs
	(in millions)
Fair Value, beginning of period	$	1,995		$	(8,434	)	$	(2	)	$	(8,597	)
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	1			1,252			(8		)	(23		)
Other income	0			0			0			(14		)
Interest credited to policyholders’ account balances	22			0			0			0
Net investment income	17			0			0			0
Purchases	555			0			0			0
Sales	(141		)	0			0			0
Issuances	0			(1,056		)	0			(2,187		)
Settlements	(485		)	0			(6		)	697
Foreign currency translation	0			0			0			0
Other(4)	0			0			(6		)	8,285
Transfers into Level 3(5)	344			0			0			0
Transfers out of Level 3(5)	(459		)	0			0			0
Fair Value, end of period	$	1,849		$	(8,238	)	$	(22	)	$	(1,839	)
Unrealized gains (losses) for assets/liabilities still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	1,046		$	(9	)	$	(23	)
Other income	$	0		$	0		$	0		$	(14	)
Interest credited to policyholders’ account balances	$	3		$	0		$	0		$	0

The following tables summarize the portion of changes in fair values of Level 3 assets and liabilities included in earnings and other comprehensive income for the year ended December 31, 2015, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held as of December 31, 2015.



	Year Ended December 31, 2015
	Fixed Maturities Available-For-Sale
	Foreign Government			Corporate Securities(1)			Structured Securities(2)
	(in millions)
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	$	0		$	(95	)	$	41
Included in other comprehensive income (loss)	$	(3	)	$	7		$	(40	)
Net investment income	$	0		$	17		$	20
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	(87	)	$	4



	Year Ended December 31, 2015
	Trading Account Assets
	Corporate Securities			Structured Securities(2)			Equity			All Other Activity
	(in millions)
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	$	0		$	0		$	0		$	0
Other income	$	(28	)	$	(7	)	$	(15	)	$	(1	)
Net investment income	$	1		$	1		$	0		$	0
Unrealized gains (losses) for assets still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	0		$	0		$	0
Other income	$	9		$	(7	)	$	6		$	(1	)



	Year Ended December 31, 2015
	Equity Securities Available- For-Sale			Other Long-term Investments			Other Assets
	(in millions)
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	$	15		$	21		$	0
Included in other comprehensive income (loss)	$	1		$	0		$	0
Net investment income	$	0		$	(1	)	$	0
Unrealized gains (losses) for assets/liabilities still held(6):
Included in earnings:
Realized investment gains (losses), net	$	(3	)	$	19		$	2



	Year Ended December 31, 2015
	Separate Account Assets(3)			Future Policy Benefits		Other Liabilities		Notes Issued by Consolidated VIEs
	(in millions)
Total gains (losses) (realized/unrealized):
Included in earnings:
Realized investment gains (losses), net	$	0		$	717	$	1	$	287
Other income	$	0		$	0	$	0	$	146
Interest credited to policyholders’ account balances	$	(38	)	$	0	$	0	$	0
Net investment income	$	24		$	0	$	0	$	0
Unrealized gains (losses) for assets/liabilities still held(6):
Included in earnings:
Realized investment gains (losses), net	$	0		$	485	$	1	$	287
Other income	$	0		$	0	$	0	$	146
Interest credited to policyholders’ account balances	$	318		$	0	$	0	$	0

__________


(1)	Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities. Prior period amounts were aggregated to conform to current period presentation.


(2)	Includes asset-backed, commercial mortgage-backed and residential mortgage-backed securities. Prior period information has been revised to conform to current period presentation.

(3)


(4)	Other, for the period ended December 31, 2017 primarily represents deconsolidations of certain previously consolidated collateralized loan obligations and reclassifications of certain assets between reporting categories. Other, for the period ended December 31, 2016 primarily represents deconsolidations of certain previously consolidated collateralized loan obligations.


(5)	Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfers occur for any such assets still held at the end of the quarter.


(6)	Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

Transfers—Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company is able to validate.

Fair Value of Financial Instruments

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Consolidated Statements of Financial Position. In some cases, as described below, the carrying amount equals or approximates fair value.



	December 31, 2017(1)
	Fair Value								Carrying Amount(2)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(3)	$	0	$	1,484	$	946	$	2,430	$	2,049
Trading account assets	58		51		0		109		109
Commercial mortgage and other loans	0		129		56,619		56,748		55,452
Policy loans	1		0		11,890		11,891		11,891
Short-term investments	989		22		0		1,011		1,011
Cash and cash equivalents	5,997		195		0		6,192		6,192
Accrued investment income	0		3,325		0		3,325		3,325
Other assets	45		2,385		685		3,115		3,115
Total assets	$	7,090	$	7,591	$	70,140	$	84,821	$	83,144
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	33,045	$	67,141	$	100,186	$	99,948
Securities sold under agreements to repurchase	0		8,400		0		8,400		8,400
Cash collateral for loaned securities	0		4,354		0		4,354		4,354
Short-term debt	0		1,384		0		1,384		1,380
Long-term debt(4)	1,296		16,369		2,095		19,760		17,172
Notes issued by consolidated VIEs	0		0		322		322		322
Other liabilities	0		6,002		715		6,717		6,717
Separate account liabilities—investment contracts	0		71,336		30,490		101,826		101,826
Total liabilities	$	1,296	$	140,890	$	100,763	$	242,949	$	240,119



	December 31, 2016(1)
	Fair Value								Carrying Amount(2)
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Fixed maturities, held-to-maturity(3)	$	0	$	1,526	$	998	$	2,524	$	2,144
Trading account assets	0		150		0		150		150
Commercial mortgage and other loans	0		139		53,625		53,764		52,260
Policy loans	1		0		11,754		11,755		11,755
Short-term investments	0		326		0		326		326
Cash and cash equivalents	4,945		876		0		5,821		5,821
Accrued investment income	0		3,204		0		3,204		3,204
Other assets	54		1,976		658		2,688		2,688
Total assets	$	5,000	$	8,197	$	67,035	$	80,232	$	78,348
Liabilities:
Policyholders’ account balances—investment contracts	$	0	$	41,653	$	58,392	$	100,045	$	99,719
Securities sold under agreements to repurchase	0		7,606		0		7,606		7,606
Cash collateral for loaned securities	0		4,333		0		4,333		4,333
Short-term debt	0		1,077		73		1,150		1,133
Long-term debt(4)	1,267		15,705		2,957		19,929		18,041
Notes issued by consolidated VIEs(5)	0		0		311		311		311
Other liabilities	0		6,540		696		7,236		7,236
Separate account liabilities—investment contracts	0		71,010		27,578		98,588		98,588
Total liabilities	$	1,267	$	147,924	$	90,007	$	239,198	$	236,967

__________

(1)

Other long-term investments excluded from the fair value hierarchy include certain hedge funds, private equity funds and other funds for which fair value is measured at NAV per share (or its equivalent) as a practical expedient. At December 31, 2017 and 2016, the fair values of these cost method investments were $1,795 million and $1,514 million, respectively. The carrying value of these investments were $1,571 million and $1,478 million as of December 31, 2017 and 2016, respectively.

(2)

Carrying values presented herein differ from those in the Company’s Consolidated Statements of Financial Position because certain items within the respective financial statement captions are not considered financial instruments or out of scope under authoritative guidance relating to disclosures of the fair value of financial instruments. Financial statement captions excluded from the above table are not considered financial instruments.


(3)	As of December 31, 2017, excludes notes with fair value and carrying amount of $4,913 million and $4,627 million, respectively. As of December 31, 2016, excludes notes with both fair value and carrying amount of $4,403 million. These amounts have been offset with the associated payables under a netting agreement.


(4)	As of December 31, 2017, includes notes with fair value and carrying amount of $7,577 million and $7,287 million, respectively. As of December 31, 2016, includes notes with both fair value and carrying amount of $5,859 million. These amounts have been offset with the associated receivables under a netting agreement.


(5)	The amount as of December 31, 2016 was added to the table to correct the previously reported amounts.

The fair values presented above have been determined by using available market information and by applying market valuation methodologies, as described in more detail below.

Fixed Maturities, Held-to-Maturity

The fair values of public fixed maturity securities are generally based on prices from third-party pricing services, which are reviewed for reasonableness; however, for certain public fixed maturity securities and investments in private placement fixed maturity securities, this information is either not available or not reliable. For these public fixed maturity securities, the fair value is based on indicative broker quotes, if available, or determined using a discounted cash flow model or other internally-developed models. For private fixed maturities, fair value is determined using a discounted cash flow model. In determining the fair value of certain fixed maturity securities, the discounted cash flow model may also use unobservable inputs, which reflect the Company’s own assumptions about the inputs market participants would use in pricing the security.

Commercial Mortgage and Other Loans

The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate or foreign government bond rate (for non-U.S. dollar-denominated loans) plus an appropriate credit spread for loans of similar quality, average life and currency. The quality ratings for these loans, a primary determinant of the credit spreads and a significant component of the pricing process, are based on an internally-developed methodology. Certain commercial mortgage loans are valued incorporating other factors, including the terms of the loans, the principal exit strategies for the loans, prevailing interest rates and credit risk.

Policy Loans

The Company’s valuation technique for policy loans is to discount cash flows at the current policy loan coupon rate. Policy loans are fully collateralized by the cash surrender value of underlying insurance policies. As a result, the carrying value of the policy loans approximates the fair value.

Short-Term Investments, Cash and Cash Equivalents, Accrued Investment Income and Other Assets

The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. These assets include: certain short-term investments which are not securities, are recorded at amortized cost and include quality loans; cash and cash equivalent instruments; accrued investment income; and other assets that meet the definition of financial instruments, including receivables, such as reinsurance recoverables, unsettled trades, accounts receivable and restricted cash.

Policyholders’ Account Balances—Investment Contracts

Only the portion of policyholders’ account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities, single premium endowments, payout annuities and other similar contracts without life contingencies, fair values are generally derived using discounted projected cash flows based on interest rates that are representative of the Company’s financial strength ratings, and hence reflect the Company’s NPR. For guaranteed investment contracts, funding agreements, structured settlements without life contingencies and other similar products, fair values are generally derived using discounted projected cash flows based on interest rates being offered for similar contracts with maturities consistent with those of the contracts being valued. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. For defined contribution and defined benefit contracts and certain other products, the fair value is the market value of the assets supporting the liabilities.

Securities Sold Under Agreements to Repurchase

The Company receives collateral for selling securities under agreements to repurchase, or pledges collateral under agreements to resell. Repurchase and resale agreements are also generally short-term in nature and, therefore, the carrying amounts of these instruments approximate fair value.

Cash Collateral for Loaned Securities

Cash collateral for loaned securities represents the collateral received or paid in connection with loaning or borrowing securities, similar to the securities sold under agreement to repurchase above. Due to the short-term nature of these transactions, the carrying value approximates fair value.

Debt

The fair value of short-term and long-term debt, as well as notes issued by consolidated VIEs, is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. With the exception of the notes issued by consolidated VIEs for which recourse is limited to the assets of the respective VIE and does not extend to the general credit of the Company, the fair values of these instruments consider the Company’s NPR. Discounted cash flow models predominately use market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities. For commercial paper issuances and other debt with a maturity of less than 90 days, the carrying value approximates fair value.

Other Liabilities

Other liabilities are primarily payables, such as reinsurance payables, unsettled trades, drafts and accrued expense payables. Due to the short-term until settlement of most of these liabilities, the Company believes that carrying value approximates fair value.

Separate Account Liabilities—Investment Contracts

Only the portion of separate account liabilities related to products that are investment contracts are reflected in the table above. Separate account liabilities are recorded at the amount credited to the contractholder, which reflects the change in fair value of the corresponding separate account assets including contractholder deposits less withdrawals and fees; therefore, carrying value approximates fair value.