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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Note 12 – Fair Value Measurements
The Company carries certain financial instruments at fair value in the financial statements including debt securities, certain equity securities, short-term investments and derivatives. Other financial instruments are measured at fair value only under certain conditions, such as when impaired or when there are observable price changes for equity securities with no readily determinable fair value.
Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a market participant, not the amount that would be paid to settle the liability with the creditor.
The Company's financial assets and liabilities carried at fair value have been classified based upon a hierarchy defined by GAAP. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset's or a liability's classification is based on the lowest level of input that is significant to its measurement. For example, a
financial asset or liability carried at fair value would be classified in Level 3 if unobservable inputs were significant to the instrument's fair value, even though the measurement may be derived using inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).
For a description of the policies, methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments, see Note 13 in the Company's 2023 Form 10-K.
Financial Assets and Financial Liabilities Carried at Fair Value
The following table provides information about the Company's financial assets and liabilities carried at fair value. Further information regarding insurance assets and liabilities carried at fair value is provided in Note 9E to the Consolidated Financial Statements. Separate account assets are also recorded at fair value on the Company's Consolidated Balance Sheets and are reported separately in the Separate Accounts section below as gains and losses related to these assets generally accrue directly to contractholders:
(In millions)Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
September 30,
2024		December 31, 2023September 30,
2024		December 31, 2023September 30,
2024		December 31, 2023September 30,
2024		December 31, 2023
Financial assets at fair value
Debt securities
Federal government and agency$168 $130 $121 $137 $— $— $289 $267 
State and local government— — 38 38 — — 38 38 
Foreign government— — 376 352 — — 376 352 
Corporate
— — 8,448 8,432 377 401 8,825 8,833 
Mortgage and other asset-backed— — 307 319 46 46 353 365 
Total debt securities168 130 9,290 9,278 423 447 9,881 9,855 
Equity securities (1)
1 4 48 47 — — 49 51 
Short-term investments— — 182 206 — — 182 206 
Derivative assets— — 129 131 — 1 129 132 
Financial liabilities at fair value
Derivative liabilities$— $— $5 $4 $— $— $5 $4 
(1)Excludes certain equity securities that have no readily determinable fair value.
Level 3 Financial Assets and Financial Liabilities
Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. Additionally, as discussed in Note 9E to the Consolidated Financial Statements, the Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.
Quantitative Information about Unobservable Inputs
The significant unobservable input used to value our corporate and government debt securities and mortgage and other asset-backed securities is an adjustment for liquidity. This adjustment is needed to reflect current market conditions and issuer circumstances when there is limited trading activity for the security.

The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities. The range and weighted average basis point amounts for liquidity reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate these fair values.
Fair Value as ofUnobservable Adjustment Range (Weighted Average by Quantity) as of
(Fair value in millions)September 30, 2024December 31, 2023Unobservable Input September 30, 2024September 30, 2024December 31, 2023
Debt securities
Corporate$377 $401 Liquidity
60 - 1495 (380)
bps
70 - 1235 (310)
bps
Mortgage and other asset-backed securities46 46 Liquidity
100 - 635 (320)
bps
95 - 640 (310)
bps
Total Level 3 debt securities$423 $447 

An increase in liquidity spread adjustments would result in a lower fair value measurement, while a decrease would result in a higher fair value measurement.
Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value
The following table summarizes the changes in financial assets and financial liabilities classified in Level 3. Gains and losses reported in the table may include net changes in fair value that are attributable to both observable and unobservable inputs.
Three Months Ended September 30,Nine Months Ended
September 30,
(In millions)2024202320242023
Debt and Equity Securities
Beginning balance$397 $454 $447 $447 
Losses included in Shareholders' net income
(10)(1)(71)(1)
Gains (losses) included in Other comprehensive income (loss)
8 (5)3 (5)
Purchases, sales and settlements
Purchases4 6 15 10 
Sales(2)— (2)— 
Settlements(4)(5)(19)(32)
Total purchases, sales and settlements(2)1 (6)(22)
Transfers into / (out of) Level 3
Transfers into Level 332 — 63 71 
Transfers out of Level 3(2)(13)(13)(54)
Total transfers into / (out of) Level 330 (13)50 17 
Ending balance$423 $436 $423 $436 
Total losses included in Shareholders' net income attributable to instruments held at the reporting date
$(9)$(1)$(71)$(1)
Change in unrealized gain or (loss) included in Other comprehensive income (loss) for assets held at the end of the reporting period
$8 $(4)$3 $(9)

Total gains and losses included in Shareholders' net income in the tables above are reflected in the Consolidated Statements of Income as Net realized investment losses and Net investment income.
Gains and losses included in Other comprehensive income (loss), net of tax in the tables above are reflected in Net unrealized appreciation (depreciation) on securities and derivatives in the Consolidated Statements of Comprehensive Income.
Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. Market activity typically decreases during periods of economic uncertainty and this decrease in activity reduces the availability of market observable data. As a result, the level of unobservable judgment that must be applied to the pricing of certain instruments increases
and is typically observed through the widening of liquidity spreads. Transfers between Level 2 and Level 3 during 2024 and 2023 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors. See discussion under Quantitative Information about Unobservable Inputs above for more information.
Separate Accounts
The investment income and fair value gains and losses of Separate account assets generally accrue directly to the contractholders and, together with their deposits and withdrawals, are excluded from the Company's Consolidated Statements of Income and Cash Flows. The separate account activity for the nine months ended September 30, 2024 and 2023 was primarily driven by changes in the market values of the underlying separate account investments.
Fair values of Separate account assets were as follows:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
(In millions)September 30, 2024December 31, 2023September 30, 2024December 31, 2023September 30, 2024December 31, 2023September 30, 2024December 31, 2023
Guaranteed separate accounts (See Note 16)
$247 $226 $353 $352 $— $— $600 $578 
Non-guaranteed separate accounts (1)
166 158 6,007 5,797 227 217 6,400 6,172 
Subtotal$413 $384 $6,360 $6,149 $227 $217 7,000 6,750 
Non-guaranteed separate accounts priced at net asset value ("NAV") as a practical expedient (1)
651 680 
Total$7,651 $7,430 
(1)Non-guaranteed separate accounts include $4.0 billion as of both September 30, 2024 and December 31, 2023 in assets supporting the Company's pension plans, including $0.2 billion classified in Level 3 as of both September 30, 2024 and December 31, 2023.
Separate account assets classified in Level 3 primarily support the Company's pension plans and include certain newly-issued, privately-placed, complex or illiquid securities that are priced using methods discussed above, as well as commercial mortgage loans. Activity, including transfers into and out of Level 3, was not material for the three and nine months ended September 30, 2024 or 2023.
Separate account investments in securities partnerships, real estate, real estate funds and hedge funds are generally valued based on the separate account's ownership share of the equity of the investee (NAV as a practical expedient), including changes in the fair values of its underlying investments. Substantially all of these assets support the Company's pension plans. The following table provides additional information on these investments:
Fair Value as ofUnfunded Commitment as of September 30, 2024Redemption Frequency
(if currently eligible)		Redemption Notice
Period
(In millions)September 30, 2024December 31, 2023
Securities partnerships$413 $419 $224 Not applicableNot applicable
Real estate and real estate funds237 258 3 Quarterly
30 - 90 days
Hedge funds1 3 — Up to annually, varying by fund
30 - 90 days
Total$651 $680 $227 
As of September 30, 2024, the Company does not have plans to sell any of these assets at less than fair value. These investments are structured to satisfy longer-term investment objectives. Securities partnerships are contractually non-redeemable and the underlying investment assets are expected to be liquidated by the fund managers within ten years after inception.
Assets and Liabilities Measured at Fair Value under Certain Conditions
Some financial assets and liabilities are not carried at fair value, such as commercial mortgage loans that are carried at unpaid principal, investment real estate that is carried at depreciated cost and equity securities with no readily determinable fair value when there are no observable market transactions. However, these financial assets and liabilities may be measured using fair value under certain conditions, such as when investments become impaired and are written down to their fair value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.

For the nine months ended September 30, 2024, we determined our investment in VillageMD was fully impaired and recorded a $2.7 billion loss in Net realized investment losses in the Company's Consolidated Statements of Income. For the nine months ended
September 30, 2023, impairments recognized requiring the assets and liabilities described above to be measured at fair value were not material. Observable price changes for equity securities with no readily determinable fair value were not material for the nine months ended September 30, 2024 and September 30, 2023.
Fair Value Disclosures for Financial Instruments Not Carried at Fair Value
The following table includes the Company's financial instruments not recorded at fair value but for which fair value disclosure is required. In addition to universal life products and finance leases, financial instruments that are carried in the Company's Consolidated Balance Sheets at amounts that approximate fair value are excluded from the following table:
Classification in Fair Value HierarchySeptember 30, 2024December 31, 2023
(In millions)Fair ValueCarrying ValueFair ValueCarrying Value
Commercial mortgage loansLevel 3$1,394 $1,460 $1,430 $1,533 
Long-term debt, including current maturities, excluding finance leasesLevel 2$29,854 $31,073 $28,033 $29,585