d10-q.htm


 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
____________________
 
FORM 10-Q
____________________
 
 
(Mark One)
x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended September 30, 2011
 OR

¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from              to             
 
Commission File Number 1-6028
 
____________________
 
LINCOLN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
 
____________________
 
   
               Indiana               
35-1140070
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
   
150 N. Radnor Chester Road, Suite A305, Radnor, Pennsylvania
19087
(Address of principal executive offices)
(Zip Code)
 
(484) 583-1400
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)
 
____________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x  Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No  x
 
As of October 31, 2011, there were 301,664,558 shares of the registrant’s common stock outstanding.
 

 
 

 

Lincoln National Corporation
 
Table of Contents

Item
 
Page
 
PART I
 
 
1.
Financial Statements
1
 
       
2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
57
 
   
Forward-Looking Statements – Cautionary Language
58
 
   
Introduction
59
 
     
Executive Summary
59
 
     
Critical Accounting Policies and Estimates
61
 
     
Acquisitions and Dispositions
66
 
   
Results of Consolidated Operations
67
 
   
Results of Retirement Solutions
72
 
     
Annuities
73
 
     
Defined Contribution
80
 
   
Results of Insurance Solutions
87
 
     
Life Insurance
88
 
     
Group Protection
96
 
   
Results of Other Operations
99
 
   
Realized Gain (Loss) and Benefit Ratio Unlocking
103
 
   
Consolidated Investments
106
 
   
Review of Consolidated Financial Condition
127
 
     
Liquidity and Capital Resources
127
 
   
Other Matters
133
 
     
Other Factors Affecting Our Business
133
 
     
Recent Accounting Pronouncements
133
 
     
3.
Quantitative and Qualitative Disclosures About Market Risk
133
 
       
4. Controls and Procedures
137
 
       
PART II
 
       
1.
Legal Proceedings
138
 
       
1A. Risk Factors
138
 
       
2.
Unregistered Sales of Equity Securities and Use of Proceeds
141
 
       
6.
Exhibits
141
 
       
 
Signatures
142
 
       
 
Exhibit Index for the Report on Form 10-Q
E-1
 

 
 

 
 
PART I – FINANCIAL INFORMATION
Item 1.  Financial Statements
LINCOLN NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
 
 
 
 
 
 
 
 
 
As of
 
 
As of
 
 
 
 
 
 
 
 
September 30,
December 31,
 
 
 
 
 
 
 
 
2011 
 
 
2010 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
Available-for-sale securities, at fair value:
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities (amortized cost: 2011 - $68,382; 2010 - $65,175)
 
$
 74,591 
 
 
$
 68,030 
 
 
 
Variable interest entities' fixed maturity securities (amortized cost: 2011 - $672; 2010 - $570)
 
 
 700 
 
 
 
 584 
 
 
 
Equity securities (cost: 2011 - $131; 2010 - $179)
 
 
 137 
 
 
 
 197 
 
 
Trading securities
 
 
 2,726 
 
 
 
 2,596 
 
 
Mortgage loans on real estate
 
 
 6,893 
 
 
 
 6,752 
 
 
Real estate
 
 
 136 
 
 
 
 202 
 
 
Policy loans
 
 
 2,874 
 
 
 
 2,865 
 
 
Derivative investments
 
 
 3,029 
 
 
 
 1,076 
 
 
Other investments
 
 
 1,105 
 
 
 
 1,038 
 
 
 
 
Total investments
 
 
 92,191 
 
 
 
 83,340 
 
Cash and invested cash
 
 
 4,833 
 
 
 
 2,741 
 
Deferred acquisition costs and value of business acquired
 
 
 8,130 
 
 
 
 8,930 
 
Premiums and fees receivable
 
 
 383 
 
 
 
 335 
 
Accrued investment income
 
 
 1,023 
 
 
 
 933 
 
Reinsurance recoverables
 
 
 6,659 
 
 
 
 6,527 
 
Goodwill
 
 
 3,019 
 
 
 
 3,019 
 
Other assets
 
 
 3,314 
 
 
 
 3,369 
 
Separate account assets
 
 
 78,195 
 
 
 
 84,630 
 
 
 
 
 
 
Total assets
 
$
 197,747 
 
 
$
 193,824 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
Future contract benefits
 
$
 19,969 
 
 
$
 17,460 
 
Other contract holder funds
 
 
 68,581 
 
 
 
 66,478 
 
Short-term debt
 
 
 550 
 
 
 
 351 
 
Long-term debt
 
 
 5,348 
 
 
 
 5,399 
 
Reinsurance related embedded derivatives
 
 
 177 
 
 
 
 102 
 
Funds withheld reinsurance liabilities
 
 
 1,072 
 
 
 
 1,149 
 
Deferred gain on business sold through reinsurance
 
 
 412 
 
 
 
 468 
 
Payables for collateral on investments
 
 
 3,855 
 
 
 
 1,659 
 
Variable interest entities' liabilities
 
 
 203 
 
 
 
 132 
 
Other liabilities
 
 
 4,466 
 
 
 
 3,190 
 
Separate account liabilities
 
 
 78,195 
 
 
 
 84,630 
 
 
 
 
 
Total liabilities
 
 
 182,828 
 
 
 
 181,018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingencies and Commitments (See Note 10)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
 
Preferred stock - 10,000,000 shares authorized; Series A - 10,854 and 10,914 shares
 
 
 
 
 
 
 
 
 
issued and outstanding as of September 30, 2011, and December 31, 2010, respectively
 
 
 - 
 
 
 
 - 
 
Common stock - 800,000,000 shares authorized; 301,659,175 and 315,718,554 shares
 
 
 
 
 
 
 
 
 
issued and outstanding as of September 30, 2011, and December 31, 2010, respectively
 
 
 7,792 
 
 
 
 8,124 
 
Retained earnings
 
 
 4,664 
 
 
 
 3,934 
 
Accumulated other comprehensive income (loss)
 
 
 2,463 
 
 
 
 748 
 
 
 
 
 
Total stockholders' equity
 
 
 14,919 
 
 
 
 12,806 
 
 
 
 
 
 
Total liabilities and stockholders' equity
 
$
 197,747 
 
 
$
 193,824 
 

See accompanying Notes to Consolidated Financial Statements
 
1

 
 
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited, in millions, except per share data)
 
 
 
 
 
 
 
 
 
 
For the Three
 
For the Nine
 
 
 
 
 
 
 
Months Ended
 
Months Ended
 
 
 
 
 
 
 
September 30,
 
September 30,
 
 
 
 
 
 
 
2011 
 
2010 
 
2011 
 
2010 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Insurance premiums
$
 559 
 
$
 538 
 
$
 1,721 
 
$
 1,621 
Insurance fees
 
 864 
 
 
 769 
 
 
 2,582 
 
 
 2,351 
Net investment income
 
 1,151 
 
 
 1,132 
 
 
 3,522 
 
 
 3,358 
Realized gain (loss):
 
 
 
 
 
 
 
 
 
 
 
 
Total other-than-temporary impairment losses on securities
 
 (42)
 
 
 (99)
 
 
 (133)
 
 
 (187)
 
Portion of loss recognized in other comprehensive income
 
 17 
 
 
 53 
 
 
 39 
 
 
 77 
 
 
Net other-than-temporary impairment losses on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
recognized in earnings
 
 (25)
 
 
 (46)
 
 
 (94)
 
 
 (110)
 
 
Realized gain (loss), excluding other-than-temporary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
impairment losses on securities
 
 (138)
 
 
 89 
 
 
 (83)
 
 
 132 
 
 
 
 
Total realized gain (loss)
 
 (163)
 
 
 43 
 
 
 (177)
 
 
 22 
Amortization of deferred gain on business sold through reinsurance
 
 19 
 
 
 19 
 
 
 56 
 
 
 56 
Other revenues and fees
 
 118 
 
 
 112 
 
 
 361 
 
 
 337 
 
 
Total revenues
 
 2,548 
 
 
 2,613 
 
 
 8,065 
 
 
 7,745 
Benefits and Expenses
 
 
 
 
 
 
 
 
 
 
 
Interest credited
 
 625 
 
 
 623 
 
 
 1,864 
 
 
 1,855 
Benefits
 
 665 
 
 
 924 
 
 
 2,527 
 
 
 2,541 
Underwriting, acquisition, insurance and other expenses
 
 1,040 
 
 
 689 
 
 
 2,401 
 
 
 2,155 
Interest and debt expense
 
 79 
 
 
 74 
 
 
 223 
 
 
 212 
 
Total benefits and expenses
 
 2,409 
 
 
 2,310 
 
 
 7,015 
 
 
 6,763 
 
 
Income (loss) from continuing operations before taxes
 
 139 
 
 
 303 
 
 
 1,050 
 
 
 982 
 
 
Federal income tax expense (benefit)
 
 (12)
 
 
 55 
 
 
 234 
 
 
 226 
 
 
 
Income (loss) from continuing operations
 
 151 
 
 
 248 
 
 
 816 
 
 
 756 
 
 
 
Income (loss) from discontinued operations, net of federal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
income taxes
 
 (8)
 
 
 (2)
 
 
 (8)
 
 
 29 
 
 
 
 
 
Net income (loss)
 
 143 
 
 
 246 
 
 
 808 
 
 
 785 
 
 
 
 
 
Preferred stock dividends and accretion of discount
 
 - 
 
 
 - 
 
 
 - 
 
 
 (168)
 
 
 
 
 
 
Net income (loss) available to common stockholders
$
 143 
 
$
 246 
 
$
 808 
 
$
 617 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) Per Common Share - Basic
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
 0.50 
 
$
 0.79 
 
$
 2.63 
 
$
 1.92 
Income (loss) from discontinued operations
 
 (0.03)
 
 
 (0.01)
 
 
 (0.03)
 
 
 0.09 
 
Net income (loss)
$
 0.47 
 
$
 0.78 
 
$
 2.60 
 
$
 2.01 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) Per Common Share - Diluted
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
 0.47 
 
$
 0.76 
 
$
 2.55 
 
$
 1.85 
Income (loss) from discontinued operations
 
 (0.03)
 
 
 (0.01)
 
 
 (0.03)
 
 
 0.09 
 
Net income (loss)
$
 0.44 
 
$
 0.75 
 
$
 2.52 
 
$
 1.94 

See accompanying Notes to Consolidated Financial Statements
 
2

 
 
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in millions, except per share data)
 
 
 
 
 
 
For the Nine
 
 
 
Months Ended
 
 
 
September 30,
 
 
 
2011 
 
2010 
Preferred Stock
 
 
 
 
 
Balance as of beginning-of-year
$
 - 
 
$
 806 
Issuance (redemption) of Series B preferred stock
 
 - 
 
 
 (950)
Accretion of discount on Series B preferred stock
 
 - 
 
 
 144 
 
Balance as of end-of-period
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
Balance as of beginning-of-year
 
 8,124 
 
 
 7,840 
Issuance of common stock
 
 - 
 
 
 368 
Issuance (repurchase and cancellation) of common stock warrants
 
 - 
 
 
 (48)
Stock compensation/issued for benefit plans
 
 13 
 
 
 11 
Effect of amendment to deferred compensation plans
 
 - 
 
 
 (29)
Retirement of common stock/cancellation of shares
 
 (345)
 
 
 - 
 
Balance as of end-of-period
 
 7,792 
 
 
 8,142 
 
 
 
 
 
 
 
 
Retained Earnings
 
 
 
 
 
Balance as of beginning-of-year
 
 3,934 
 
 
 3,316 
Cumulative effect from adoption of new accounting standards
 
 - 
 
 
 (169)
Comprehensive income (loss)
 
 2,523 
 
 
 2,528 
Less other comprehensive income (loss), net of tax
 
 1,715 
 
 
 1,743 
 
Net income (loss)
 
 808 
 
 
 785 
Retirement of common stock
 
 (30)
 
 
 - 
Dividends declared:  Common (2011 - $0.150; 2010 - $0.030)
 
 (48)
 
 
 (9)
Dividends on preferred stock
 
 - 
 
 
 (24)
Accretion of discount on Series B preferred stock
 
 - 
 
 
 (144)
 
Balance as of end-of-period
 
 4,664 
 
 
 3,755 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
Balance as of beginning-of-year
 
 748 
 
 
 (262)
Cumulative effect from adoption of new accounting standards
 
 - 
 
 
 181 
Other comprehensive income (loss), net of tax
 
 1,715 
 
 
 1,743 
 
Balance as of end-of-period
 
 2,463 
 
 
 1,662 
 
 
Total stockholders' equity as of end-of-period
$
 14,919 
 
$
 13,559 

See accompanying Notes to Consolidated Financial Statements
 
3

 
 
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
 
 
 
 
 
 
For the Nine
 
 
 
Months Ended
 
 
 
September 30,
 
 
 
2011 
 
2010 
Cash Flows from Operating Activities
 
 
 
 
 
Net income (loss)
$
 808 
 
$
 785 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
Deferred acquisition costs, value of business acquired, deferred sales inducements
 
 
 
 
 
 
 
and deferred front-end loads deferrals and interest, net of amortization
 
 (110)
 
 
 (186)
 
Trading securities purchases, sales and maturities, net
 
 33 
 
 
 15 
 
Change in premiums and fees receivable
 
 (48)
 
 
 13 
 
Change in accrued investment income
 
 (90)
 
 
 (100)
 
Change in future contract benefits and other contract holder funds
 
 141 
 
 
 671 
 
Change in reinsurance related assets and liabilities
 
 (210)
 
 
 (119)
 
Change in federal income tax accruals
 
 275 
 
 
 261 
 
Realized (gain) loss
 
 177 
 
 
 (22)
 
(Gain) loss on early extinguishment of debt
 
 8 
 
 
 - 
 
Amortization of deferred gain on business sold through reinsurance
 
 (56)
 
 
 (56)
 
(Gain) loss on disposal of discontinued operations
 
 3 
 
 
 (65)
 
Other
 
 3 
 
 
 (53)
 
 
Net cash provided by (used in) operating activities
 
 934 
 
 
 1,144 
 
 
 
 
 
 
 
 
Cash Flows from Investing Activities
 
 
 
 
 
Purchases of available-for-sale securities
 
 (8,540)
 
 
 (10,449)
Sales of available-for-sale securities
 
 1,274 
 
 
 2,595 
Maturities of available-for-sale securities
 
 3,988 
 
 
 3,093 
Purchases of other investments
 
 (2,202)
 
 
 (2,390)
Sales or maturities of other investments
 
 2,336 
 
 
 2,307 
Increase (decrease) in payables for collateral on investments
 
 2,196 
 
 
 660 
Proceeds from sale of subsidiaries/businesses, net of cash disposed
 
 - 
 
 
 321 
Other
 
 (63)
 
 
 (49)
 
 
Net cash provided by (used in) investing activities
 
 (1,011)
 
 
 (3,912)
 
 
 
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
 
Payment of long-term debt, including current maturities
 
 (275)
 
 
 (250)
Issuance of long-term debt, net of issuance costs
 
 298 
 
 
 749 
Increase (decrease) in commercial paper, net
 
 (100)
 
 
 1 
Deposits of fixed account values, including the fixed portion of variable
 
 8,187 
 
 
 8,247 
Withdrawals of fixed account values, including the fixed portion of variable
 
 (3,750)
 
 
 (3,858)
Transfers to and from separate accounts, net
 
 (1,763)
 
 
 (2,087)
Common stock issued for benefit plans and excess tax benefits
 
 (6)
 
 
 (2)
Issuance (redemption) of Series B preferred stock
 
 - 
 
 
 (998)
Issuance of common stock
 
 - 
 
 
 368 
Repurchase of common stock
 
 (375)
 
 
 - 
Dividends paid to common and preferred stockholders
 
 (47)
 
 
 (39)
 
 
Net cash provided by (used in) financing activities
 
 2,169 
 
 
 2,131 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and invested cash, including discontinued operations
 
 2,092 
 
 
 (637)
Cash and invested cash, including discontinued operations, as of beginning-of-year
 
 2,741 
 
 
 4,184 
 
Cash and invested cash, including discontinued operations, as of end-of-period
$
 4,833 
 
$
 3,547 

See accompanying Notes to Consolidated Financial Statements
 
4

 

LINCOLN NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
 
 
1.  Nature of Operations and Basis of Presentation

Nature of Operations

Lincoln National Corporation and its majority-owned subsidiaries (“LNC” or the “Company,” which also may be referred to as “we,” “our” or “us”) operate multiple insurance businesses through four business segments.  See Note 15 for additional details.  The collective group of businesses uses “Lincoln Financial Group” as its marketing identity.  Through our business segments, we sell a wide range of wealth protection, accumulation and retirement income products.  These products include institutional and/or retail fixed and indexed annuities, variable annuities, universal life insurance (“UL”), variable universal life insurance (“VUL”), linked-benefit UL, term life insurance, mutual funds and group life, disability and dental.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements.

Certain GAAP policies, which significantly affect the determination of financial position, results of operations and cash flows, are summarized in our 2010 Form 10-K.

In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results.  Operating results for the nine month period ended September 30, 2011, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2011.  All material intercompany accounts and transactions have been eliminated in consolidation.

Certain amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the presentation adopted in the current year.  These reclassifications had no effect on net income or stockholders’ equity of the prior years.

2.  New Accounting Standards

Adoption of New Accounting Standards

Fair Value Measurements and Disclosures Topic

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), which requires additional disclosure related to the three-level fair value hierarchy.  For a more detailed description of ASU 2010-06, see “Adoption of New Accounting Standards – Fair Value Measurements and Disclosures Topic” in Note 2 of our 2010 Form 10-K.  We adopted the remaining disclosure requirements in ASU 2010-06 effective January 1, 2011, and have prospectively included the disclosures related to purchases, sales, issuances and settlements for Level 3 fair value measurements in Note 14 for the period ended September 30, 2011.

Financial Services – Insurance Industry Topic

In April 2010, the FASB issued ASU No. 2010-15, “How Investments Held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments” (“ASU 2010-15”), to clarify a consolidation issue for insurance entities that hold a controlling interest in an investment fund either partially or completely through separate accounts.  For a more detailed description of ASU 2010-15, see “Future Adoption of New Accounting Standards – Financial Services – Insurance Industry Topic” in Note 2 of our 2010 Form 10-K.  We adopted the accounting guidance in ASU 2010-15 effective January 1, 2011.  The adoption did not have a material effect on our consolidated financial condition and results of operations.

Intangibles – Goodwill and Other Topic

In December 2010, the FASB issued ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts” (“ASU 2010-28”).  For a more detailed description of ASU 2010-28, see “Future Adoption of New Accounting Standards – Intangibles – Goodwill and Other Topic” in Note 2 of our 2010 Form 10-K.  We adopted ASU 2010-28 effective January 1, 2011, and evaluated the reporting units within scope under this new accounting guidance.  The adoption did not have a material effect on our consolidated financial condition and results of operations.

 
5

 
 
Receivables Topic

In July 2010, the FASB issued ASU No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (“ASU 2010-20”), in order to enhance and expand the financial statement disclosures.  For a more detailed description of ASU 2010-20, see “Adoption of New Accounting Standards – Receivables Topic” in Note 2 of our 2010 Form 10-K.  We adopted the remaining disclosure requirements in ASU 2010-20 effective January 1, 2011, and have prospectively included the required financial statement disclosures related to the activity in our allowance for mortgage loan on real estate losses in Note 5 for the period ended September 30, 2011.

Future Adoption of New Accounting Standards

Comprehensive Income Topic

In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), with an objective of increasing the prominence of items reported in other comprehensive income (“OCI”).  The amendments in ASU 2011-05 provide entities with the option to present the total of comprehensive income, the components of net income and the components of OCI in either a single continuous statement of comprehensive income or in two separate but consecutive statements.  In addition, entities must present on the face of the financial statement, items reclassified from OCI to net income in the section of the financial statement where the components of net income and OCI are presented, regardless of the option selected to present comprehensive income.  ASU 2011-05 is applicable retrospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011.  Early adoption is permitted.  We will adopt the provisions of ASU 2011-05 effective January 1, 2012, and are currently evaluating our options for the presentation of comprehensive income upon adoption.

Fair Value Measurements and Disclosures Topic

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards” (“ASU 2011-04”), which was issued to create a consistent framework for the application of fair value measurement across jurisdictions.  The amendments include wording changes to GAAP in order to clarify the FASB’s intent about the application of existing fair value measurements and disclosure requirements, as well as to change a particular principle or existing requirement for measuring fair value or disclosing information about fair value measurements.  There are no additional fair value measurements required upon the adoption of ASU 2011-04.  The amendments are effective, prospectively, for interim and annual reporting periods beginning after December 15, 2011.  Early adoption is prohibited.  We will adopt the provisions of ASU 2011-04 effective January 1, 2012, and are currently evaluating the effect of adoption on our consolidated financial condition and results of operations.

Financial Services – Insurance Industry Topic

In October 2010, the FASB issued ASU No. 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts” (“ASU 2010-26”), which clarifies the types of costs incurred by an insurance entity that can be capitalized in the acquisition of insurance contracts.  For a more detailed description of ASU 2010-26, see “Future Adoption of New Accounting Standards – Financial Services – Insurance Industry Topic” in Note 2 of our 2010 Form 10-K.  We will adopt the provisions of ASU 2010-26 effective January 1, 2012, and currently estimate that retrospective adoption will result in the restatement of all years presented with a cumulative effect adjustment to the opening balance of retained earnings for the earliest period presented of approximately $950 million to $1.15 billion.  In addition, the adoption of this accounting guidance will result in a lower deferred acquisition costs (“DAC”) adjustment associated with unrealized gains and losses on available-for-sale (“AFS”) securities and certain derivatives; therefore, we will also adjust these DAC balances as of January 1, 2012, through a cumulative effect adjustment to the opening balance of accumulated other comprehensive income (loss) (“AOCI”).  This adjustment is dependent on our unrealized position as of the date of adoption.  
 
Intangibles – Goodwill and Other Topic

In September 2011, the FASB issued ASU No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”), which provides an option to first assess qualitative factors to determine if it is necessary to complete the two-step goodwill impairment test.  If an assessment of the relevant events and circumstances leads to a conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then performing the two-step impairment test is unnecessary.  However, if a conclusion is reached otherwise, the two-step impairment test, that is currently required under the FASB ASC, must be completed.  An entity has an unconditional option to bypass the qualitative assessment for any reporting unit and proceed directly to the two-

 
6

 
 
step goodwill impairment test, and resume qualitative assessment for the same reporting unit in the subsequent reporting period.  The amendments in ASU 2011-08 will be effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.  We will adopt the provisions of ASU 2011-08 effective January 1, 2012, and do not expect the adoption will have a material effect on our consolidated financial condition and results of operations.

Transfers and Servicing Topic

In April 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements” (“ASU 2011-03”), which revises the criteria for assessing effective control for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.  The determination of whether the transfer of a financial asset subject to a repurchase agreement is a sale is based, in part, on whether the entity maintains effective control over the financial asset.  ASU 2011-03 removes from the assessment of effective control: the criterion requiring the transferor to have the ability to repurchase or redeem the financial asset on substantially the agreed terms, even in the event of default by the transferee, and the related requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.  The amendments in ASU 2011-03 will be effective for interim and annual reporting periods beginning on or after December 15, 2011, early adoption is prohibited, and the amendments will be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date.  We will adopt the provisions of ASU 2011-03 effective January 1, 2012, and do not expect the adoption will have a material effect on our consolidated financial condition and results of operations.

3.  Dispositions

Discontinued Investment Management Operations

On January 4, 2010, we closed on the stock sale of our subsidiary Delaware Management Holdings, Inc. (“Delaware”), which provided investment products and services to individuals and institutions, to Macquarie Bank Limited.  Net of tax proceeds were approximately $405 million.

We have reclassified the results of operations of Delaware into income (loss) from discontinued operations, net of federal income taxes, for all periods presented on our Consolidated Statements of Income (Loss), and selected amounts (in millions) were as follows:

 
 
 
 
For the Three
 
For the Nine
 
 
 
 
 
Months Ended
 
Months Ended
 
 
 
 
 
September 30,
 
September 30,
 
 
 
 
 
2011 
 
2010 
 
2011 
 
2010 
 
Discontinued Operations Before Disposal
 
 
 
 
 
 
 
 
 
 
 
 
Revenues - gain (loss) on sale of business
$
 - 
 
$
 - 
 
$
 - 
 
$
 4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations before disposal,
 
 
 
 
 
 
 
 
 
 
 
 
 
before federal income taxes
$
 - 
 
$
 - 
 
$
 - 
 
$
 (13)
 
Federal income tax expense (benefit)
 
 - 
 
 
 - 
 
 
 - 
 
 
 (2)
 
 
 
Income (loss) from discontinued operations before disposal
 
 - 
 
 
 - 
 
 
 - 
 
 
 (11)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Disposal
 
 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on disposal, before federal income taxes
 
 (3)
 
 
 - 
 
 
 (3)
 
 
 37 
 
Federal income tax expense (benefit)
 
 5 
 
 
 - 
 
 
 5 
 
 
 13 
 
 
 
Gain (loss) on disposal
 
 (8)
 
 
 - 
 
 
 (8)
 
 
 24 
 
 
 
 
Income (loss) from discontinued operations
$
 (8)
 
$
 - 
 
$
 (8)
 
$
 13 
 

The loss from discontinued operations for the three and nine months ended September 30, 2011, related to an unfavorable tax return true-up from the prior year.

The income from discontinued operations for the nine months ended September 30, 2010, included final cash received toward the purchase price for certain institutional taxable fixed income business sold during the fourth quarter 2007, and also reflected stock compensation expense attributable to the acceleration of vesting of equity awards for certain Delaware employees upon the sale of Delaware.


 
7

 
 
Discontinued Lincoln UK Operations

On October 1, 2009, we closed on the stock sale of Lincoln National (UK) plc (“Lincoln UK”), our subsidiary, which focused primarily on providing life and retirement income products in the United Kingdom to SLF of Canada UK Limited, and we retained Lincoln UK’s pension plan assets and liabilities.

We have reclassified the results of operations of Lincoln UK into income (loss) from discontinued operations, net of federal income taxes, for all periods presented on our Consolidated Statements of Income (Loss), and selected amounts (in millions) were as follows:

 
 
 
 
 
For the
 
 
For the
 
 
 
 
 
 
 
Three
 
 
Nine
 
 
 
 
 
 
 
Months
 
 
Months
 
 
 
 
 
 
 
Ended
 
 
Ended
 
 
 
 
 
 
  September 30,
September 30,
 
 
 
 
 
 
2010 
 
 
2010 
 
 
Disposal
 
 
 
 
 
 
 
 
 
Gain (loss) on disposal, before federal income taxes
 
$
 1 
 
 
$
 28 
 
 
Federal income tax expense (benefit)
 
 
 3 
 
 
 
 12 
 
 
 
 
Gain (loss) on disposal
 
 
 (2)
 
 
 
 16 
 
 
 
 
 
Income (loss) from discontinued operations
 
$
 (2)
 
 
$
 16 
 
 

The loss from discontinued operations for the three months ended September 30, 2010, related to an unfavorable tax return true-up from the prior year, partially offset by the estimated transaction cost being lower than anticipated.  In addition, the income from discontinued operations for the nine months ended September 30, 2010, included additional consideration received attributable to a post-closing adjustment of the purchase price based upon a final actuarial appraisal of the value of the business as set forth in the share purchase agreement, partially offset by the items mentioned above.

4.  Variable Interest Entities (“VIEs”)

Our involvement with VIEs is primarily to invest in assets that allow us to gain exposure to a broadly diversified portfolio of asset classes.  A VIE is an entity which does not have sufficient equity to finance its own activities without additional financial support or where investors lack certain characteristics of a controlling financial interest.  We perform an ongoing qualitative assessment of our involvement with VIEs to determine whether we have a controlling financial interest and would therefore be considered the primary beneficiary of the VIE.  If we determine we are the primary beneficiary of a VIE, we consolidate the assets and liabilities of the VIE in our consolidated financial statements.

Consolidated VIEs
 
Credit-Linked Notes

We have invested in the Class 1 Notes of two credit-linked note (“CLN”) structures, which represent special purpose trusts combining asset-backed securities with credit default swaps to produce multi-class structured securities.  The CLN structures also include subordinated Class 2 Notes, which are held by third parties, and, together with the Class 1 Notes, represent 100% of the outstanding notes of the CLN structures.  The entities that issued the CLNs are financed by the note holders, and, as such, the note holders participate in the expected losses and residual returns of the entities.  Because the note holders do not have voting rights or similar rights, we determined the entities issuing the CLNs are VIEs, and as a note holder, our interest represented a variable interest.  We have the power to direct the most significant activity affecting the performance of both CLN structures, as we have the ability to actively manage the reference portfolio underlying the credit default swaps.  As a result, we have concluded we are the primary beneficiary of the VIEs associated with the CLNs and have consolidated the assets and liabilities of both CLN structures in our Consolidated Balance Sheets.

As a result of consolidating the CLNs, we also consolidate the derivative instruments in the CLN structures.  The credit default swaps create variability in the CLN structures and expose the note holders to the credit risk of the referenced portfolio.  The contingent forwards transfer a portion of the loss in the underlying fixed maturity corporate asset-backed credit card loan securities back to the counterparty after credit losses reach our attachment point.  

 
8

 
 
The following summarizes information regarding the CLN structures (dollars in millions) as of September 30, 2011:

 
Amount and Date of Issuance
 
 
 
$400
 
$200
 
 
 
 
December
 
April
 
 
 
 
2006
 
2007
 
 
Original attachment point (subordination)
 
5.50 
%
 
2.05 
%
 
 
Current attachment point (subordination)
 
4.17 
%
 
1.48 
%
 
 
Maturity
12/20/2016
 
3/20/2017
 
 
Current rating of tranche
 
B+
 
Ba2
 
 
Current rating of underlying collateral pool
 
Aa1-B3
 
Aaa-Caa1
 
 
Number of defaults in underlying collateral pool
 
 2 
 
 2 
 
 
Number of entities
 
 123 
 
 99 
 
 
Number of countries
 
 19 
 
 22 
 
 

There has been no event of default on the CLNs themselves.  Based upon our analysis, the remaining subordination as represented by the attachment point should be sufficient to absorb future credit losses, subject to changing market conditions.  Similar to other debt market instruments, our maximum principal loss is limited to our original investment.

The following summarizes the exposure of the CLN structures’ underlying collateral by industry and rating as of September 30, 2011:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industry
AAA
 
AA
 
A
 
BBB
 
BB
 
B
 
CCC
 
Total
Telecommunications
%
 
%
 
5.5 
%
 
5.1 
%
 
0.6 
%
 
%
 
%
 
11.2 
%
Financial intermediaries
0.3 
%
 
4.0 
%
 
5.7 
%
 
0.5 
%
 
%
 
%
 
%
 
10.5 
%
Oil and gas
%
 
1.0 
%
 
1.2 
%
 
4.1 
%
 
%
 
%
 
%
 
6.3 
%
Utilities
%
 
%
 
3.1 
%
 
1.4 
%
 
%
 
%
 
%
 
4.5 
%
Chemicals and plastics
%
 
%
 
2.3 
%
 
1.2 
%
 
0.4 
%
 
%
 
%
 
3.9 
%
Drugs
0.3 
%
 
2.2 
%
 
1.2 
%
 
%
 
%
 
%
 
%
 
3.7 
%
Retailers (except food
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
and drug)
%
 
%
 
1.6 
%
 
1.4 
%
 
0.5 
%
 
%
 
%
 
3.5 
%
Industrial equipment
%
 
%
 
3.0 
%
 
0.3 
%
 
%
 
%
 
%
 
3.3 
%
Sovereign
%
 
0.7 
%
 
1.6 
%
 
1.0 
%
 
%
 
%
 
%
 
3.3 
%
Food products
%
 
0.3 
%
 
1.8 
%
 
1.1 
%
 
%
 
%
 
%
 
3.2 
%
Conglomerates
%
 
2.6 
%
 
0.5 
%
 
%
 
%
 
%
 
%
 
3.1 
%
Forest products
%
 
%
 
%
 
1.6 
%
 
1.4 
%
 
%
 
%
 
3.0 
%
Other industry < 3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(27 industries)
%
 
2.5 
%
 
15.4 
%
 
17.3 
%
 
3.6 
%
 
1.4 
%
 
0.3 
%
 
40.5 
%
 
 
Total
0.6 
%
 
13.3 
%
 
42.9 
%
 
35.0 
%
 
6.5 
%
 
1.4 
%
 
0.3 
%
 
100.0 
%

Statutory Trust Note

In August 2011, we purchased a $100 million note issued by a statutory trust (“Issuer”) in a private placement offering.  The proceeds were used by the Issuer to purchase U.S. Treasury securities to be held as collateral assets supporting an excess mortality swap.  Our maximum exposure to loss is limited to our original investment in the notes.  We have concluded that the Issuer of the note is a VIE as the entity does not have sufficient equity to support its activities without additional financial support.  In our evaluation of the primary beneficiary, we concluded that our economic interest was disproportionately greater than our stated power, and as a result, we concluded that we are the primary beneficiary of the Issuer and as of August 1, 2011, have consolidated all of the assets and liabilities of the Issuer in our consolidated financial statements.

 
9

 
 
Asset and liability information (dollars in millions) for these consolidated VIEs included on our Consolidated Balance Sheets was as follows:

 
 
 
 
 
 
As of September 30, 2011
 
As of December 31, 2010
 
 
 
 
 
 
Number
 
 
 
 
 
 
 
Number
 
 
 
 
 
 
 
 
 
 
 
 
of
 
Notional
 
Carrying
 
of
 
Notional
 
Carrying
 
 
 
 
 
  Instruments
 
Amounts
 
Value
 
Instruments
 
Amounts
 
Value
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset-backed credit card loan
 
N/A
 
$
 - 
 
$
 593 
 
 
N/A
 
$
 - 
 
$
 584 
 
U.S. Government bonds
 
N/A
 
 
 - 
 
 
 107 
 
 
N/A
 
 
 - 
 
 
 - 
Excess mortality swap
 
 1 
 
 
 100 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
Total assets (1)
 
 1 
 
$
 100 
 
$
 700 
 
 
 - 
 
$
 - 
 
$
 584 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative instruments not designated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
and not qualifying as hedging
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit default swaps
 
 2 
 
$
 600 
 
$
 312 
 
 
 2 
 
$
 600 
 
$
 215 
 
 
Contingent forwards
 
 2 
 
 
 - 
 
 
 (5)
 
 
 2 
 
 
 - 
 
 
 (6)
 
 
 
Total derivative instruments not
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
designated and not qualifying
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
as hedging instruments
 
 4 
 
 
 600 
 
 
 307 
 
 
 4 
 
 
 600 
 
 
 209 
Federal income tax
 
N/A
 
 
 - 
 
 
 (104)
 
 
N/A
 
 
 - 
 
 
 (77)
 
 
 
 
 
Total liabilities (2)
 
 4 
 
$
 600 
 
$
 203 
 
 
 4 
 
$
 600 
 
$
 132 

(1)  
Reported in VIEs’ fixed maturity securities on our Consolidated Balance Sheets.
(2)  
Reported in VIEs’ liabilities on our Consolidated Balance Sheets.

For details related to the fixed maturity AFS securities for these VIEs, see Note 5.

As described more fully in Note 1 of our 2010 Form 10-K, we regularly review our investment holdings for other-than-temporary impairment (“OTTI”).  Based upon this review, we believe that the fixed maturity securities were not other-than-temporarily impaired as of September 30, 2011.

The gains (losses) for these consolidated VIEs (in millions) recorded on our Consolidated Statements of Income (Loss) were as follows:

 
 
 
For the Three
 
For the Nine
 
 
 
Months Ended
 
Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2011 
 
2010 
 
2011 
 
2010 
Derivative Instruments Not Designated and
 
 
 
 
 
 
 
 
 
 
 
 
Not Qualifying as Hedging Instruments
 
 
 
 
 
 
 
 
 
 
 
Credit default swaps
$
 (105)
 
$
 60 
 
$
 (92)
 
$
 (10)
Contingent forwards
 
 2 
 
 
 (4)
 
 
 1 
 
 
 (7)
 
Total derivative instruments not designated and
 
 
 
 
 
 
 
 
 
 
 
 
 
not qualifying as hedging instruments (1)
$
 (103)
 
$
 56 
 
$
 (91)
 
$
 (17)

(1)  
Reported in realized gain (loss) on our Consolidated Statements of Income (Loss).

 
10

 
 
Unconsolidated VIEs
 
See Note 4 in our 2010 Form 10-K for a detailed discussion of our unconsolidated VIEs.

5.  Investments

AFS Securities

Pursuant to the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards CodificationTM (“ASC”), we have categorized AFS securities into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3), as described in Note 1 in our 2010 Form 10-K, which also includes additional disclosures regarding our fair value measurements.

The amortized cost, gross unrealized gains, losses and OTTI and fair value of AFS securities (in millions) were as follows:

 
 
 
 
As of September 30, 2011
 
 
 
 
Amortized
 
Gross Unrealized
 
Fair
 
 
 
 
Cost
 
Gains
 
Losses
 
OTTI
 
Value
Fixed Maturity Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate bonds
$
 52,926 
 
$
 5,955 
 
$
 551 
 
$
 67 
 
$
 58,263 
U.S. Government bonds
 
 239 
 
 
 47 
 
 
 - 
 
 
 - 
 
 
 286 
Foreign government bonds
 
 590 
 
 
 53 
 
 
 1 
 
 
 - 
 
 
 642 
Mortgage-backed securities ("MBS"):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized mortgage obligations ("CMOs")
 
 5,001 
 
 
 404 
 
 
 73 
 
 
 124 
 
 
 5,208 
 
Mortgage pass through securities ("MPTS")
 
 3,052 
 
 
 188 
 
 
 - 
 
 
 - 
 
 
 3,240 
 
Commercial mortgage-backed securities ("CMBS")
 
 1,719 
 
 
 70 
 
 
 105 
 
 
 14 
 
 
 1,670 
ABS CDOs
 
 131 
 
 
 - 
 
 
 20 
 
 
 - 
 
 
 111 
State and municipal bonds
 
 3,407 
 
 
 571 
 
 
 9 
 
 
 - 
 
 
 3,969 
Hybrid and redeemable preferred securities
 
 1,317 
 
 
 55 
 
 
 170 
 
 
 - 
 
 
 1,202 
VIEs' fixed maturity securities
 
 672 
 
 
 28 
 
 
 - 
 
 
 - 
 
 
 700 
 
 
Total fixed maturity securities
 
 69,054 
 
 
 7,371 
 
 
 929 
 
 
 205 
 
 
 75,291 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Banking securities
 
 2 
 
 
 - 
 
 
 1 
 
 
 - 
 
 
 1 
Insurance securities
 
 29 
 
 
 1 
 
 
 3 
 
 
 - 
 
 
 27 
Other financial services securities
 
 17 
 
 
 8 
 
 
 - 
 
 
 - 
 
 
 25 
Other securities
 
 83 
 
 
 7 
 
 
 6 
 
 
 - 
 
 
 84 
 
 
Total equity securities
 
 131 
 
 
 16 
 
 
 10 
 
 
 - 
 
 
 137 
 
 
 
Total AFS securities
$
 69,185 
 
$
 7,387 
 
$
 939 
 
$
 205 
 
$
 75,428 


 
11

 
 
 
 
 
 
As of December 31, 2010
 
 
 
 
Amortized
 
Gross Unrealized
 
Fair
 
 
 
 
Cost
 
Gains
 
Losses
 
OTTI
 
Value
Fixed Maturity Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate bonds
$
 48,863 
 
$
 3,571 
 
$
 607 
 
$
 87 
 
$
 51,740 
U.S. Government bonds
 
 150 
 
 
 17 
 
 
 2 
 
 
 - 
 
 
 165 
Foreign government bonds
 
 473 
 
 
 38 
 
 
 3 
 
 
 - 
 
 
 508 
MBS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CMOs
 
 5,693 
 
 
 324 
 
 
 114 
 
 
 146 
 
 
 5,757 
 
MPTS
 
 2,980 
 
 
 106 
 
 
 5 
 
 
 - 
 
 
 3,081 
 
CMBS
 
 2,144 
 
 
 95 
 
 
 180 
 
 
 6 
 
 
 2,053 
ABS CDOs
 
 174 
 
 
 22 
 
 
 13 
 
 
 9 
 
 
 174 
State and municipal bonds
 
 3,222 
 
 
 27 
 
 
 94 
 
 
 - 
 
 
 3,155 
Hybrid and redeemable preferred securities
 
 1,476 
 
 
 56 
 
 
 135 
 
 
 - 
 
 
 1,397 
VIEs' fixed maturity securities
 
 570 
 
 
 14 
 
 
 - 
 
 
 - 
 
 
 584 
 
 
Total fixed maturity securities
 
 65,745 
 
 
 4,270 
 
 
 1,153 
 
 
 248 
 
 
 68,614 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Banking securities
 
 61 
 
 
 -