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Fair value measurements
12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair value measurements
(21)
Fair value measurements

Our financial assets and liabilities are summarized below, with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S. Treasury Bills, other receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of or otherwise approximate the fair values.

 

 

 

Carrying
Value

 

 

Fair Value

 

 

Quoted
Prices
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in fixed maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury, U.S. government corporations and
   agencies

 

$

4,459

 

 

$

4,459

 

 

$

4,425

 

 

$

34

 

 

$

 

Foreign governments

 

 

9,362

 

 

 

9,362

 

 

 

9,199

 

 

 

163

 

 

 

 

Corporate and other

 

 

1,543

 

 

 

1,543

 

 

 

 

 

 

1,041

 

 

 

502

 

Investments in equity securities

 

 

271,588

 

 

 

271,588

 

 

 

261,910

 

 

 

10

 

 

 

9,668

 

Investments in Kraft Heinz & Occidental common
    stock

 

 

30,682

 

 

 

23,047

 

 

 

23,047

 

 

 

 

 

 

 

Loans and finance receivables

 

 

27,798

 

 

 

27,579

 

 

 

 

 

 

810

 

 

 

26,769

 

Derivative contract assets (1)

 

 

201

 

 

 

201

 

 

 

33

 

 

 

158

 

 

 

10

 

Derivative contract liabilities (1)

 

 

234

 

 

 

234

 

 

 

15

 

 

 

143

 

 

 

76

 

Notes payable and other borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance and other

 

 

44,885

 

 

 

40,181

 

 

 

 

 

 

40,158

 

 

 

23

 

Railroad, utilities and energy

 

 

79,877

 

 

 

72,506

 

 

 

 

 

 

72,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in fixed maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury, U.S. government corporations and
   agencies

 

$

10,269

 

 

$

10,269

 

 

$

10,234

 

 

$

35

 

 

$

 

Foreign governments

 

 

11,805

 

 

 

11,805

 

 

 

11,559

 

 

 

246

 

 

 

 

Corporate and other

 

 

1,684

 

 

 

1,684

 

 

 

 

 

 

1,095

 

 

 

589

 

Investments in equity securities

 

 

353,842

 

 

 

353,842

 

 

 

343,358

 

 

 

10

 

 

 

10,474

 

Investments in Kraft Heinz & Occidental common
    stock

 

 

28,640

 

 

 

26,587

 

 

 

26,587

 

 

 

 

 

 

 

Loans and finance receivables

 

 

24,681

 

 

 

24,190

 

 

 

 

 

 

892

 

 

 

23,298

 

Derivative contract assets (1)

 

 

334

 

 

 

334

 

 

 

39

 

 

 

282

 

 

 

13

 

Derivative contract liabilities (1)

 

 

213

 

 

 

213

 

 

 

7

 

 

 

111

 

 

 

95

 

Notes payable and other borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance and other

 

 

48,468

 

 

 

44,981

 

 

 

 

 

 

44,950

 

 

 

31

 

Railroad, utilities and energy

 

 

79,803

 

 

 

75,239

 

 

 

 

 

 

75,239

 

 

 

 

(1)
Assets are included in other assets, and liabilities are included in accounts payable, accruals and other liabilities.

Notes to Consolidated Financial Statements

(21)
Fair value measurements

The fair values of substantially all of our financial instruments were measured using market or income approaches. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.

Reconciliations of significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for each of the three years ending December 31, 2024 follow (in millions).

 

 

 

Balance at the
beginning
of the year

 

 

Gains (losses)
included in
earnings

 

 

Acquisitions,
dispositions
and
settlements

 

 

Balance at the
end of the year

 

Investments in equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

$

10,468

 

 

$

(805

)

 

$

 

 

$

9,663

 

2023

 

 

12,169

 

 

 

(40

)

 

 

(1,661

)

 

 

10,468

 

2022

 

 

11,480

 

 

 

689

 

 

 

 

 

 

12,169

 

 

Quantitative information as of December 31, 2024 for the significant assets measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (dollars in millions).

 

 

 

Fair
Value

 

 

Principal
Valuation
Techniques

 

Unobservable
Inputs

 

Weighted
Average

Investments in equity securities:

 

 

 

 

 

 

 

 

 

Preferred stock

 

$

8,429

 

 

Discounted cash flow

 

Expected duration

 

5 years

 

 

 

 

 

 

 

Discount for illiquidity and subordination

 

372 bps

 

 

 

 

 

 

 

 

 

 

Common stock warrants

 

 

1,234

 

 

Warrant pricing model

 

Expected duration

 

6 years

 

 

 

 

 

 

 

Volatility

 

42%

 

Investments in equity securities in the preceding table include our investments in certain preferred and common stock warrants that do not have readily determinable market values as defined under GAAP. These investments are private placements and are not traded in securities markets. We applied discounted cash flow techniques in valuing the preferred stock and we made assumptions regarding the expected duration of the investment and the effects of illiquidity and subordination in liquidation. In valuing the common stock warrants, we used a warrant valuation model. While most of the inputs to the warrant model are observable, we made assumptions regarding the expected duration and volatility.