FAIR VALUE

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Financial Assets

The following table summarizes our fair value measurements at December 31, 2024 and 2023, respectively, for financial assets measured at fair value on a recurring basis:

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(in millions)
December 31, 2024
Cash equivalents	$	2,048	$	2,048	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	3,227		—		3,227		—
Mortgage-backed securities	3,995		—		3,995		—
Tax-exempt municipal securities	526		—		526		—
Mortgage-backed securities:
Residential	522		—		522		—
Commercial	1,206		—		1,199		7
Asset-backed securities	1,403		—		1,330		73
Corporate debt securities	7,756		—		7,514		242
Total debt securities	18,635		—		18,313		322
Securities lending invested collateral	418		418		—		—
Total invested assets	$	21,101	$	2,466	$	18,313	$	322
December 31, 2023
Cash equivalents	$	4,582	$	4,582	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	2,667		—		2,667		—
Mortgage-backed securities	3,522		—		3,522		—
Tax-exempt municipal securities	858		—		858		—
Mortgage-backed securities:
Residential	400		—		396		4
Commercial	1,345		—		1,345		—
Asset-backed securities	1,771		—		1,733		38
Corporate debt securities	6,445		—		6,269		176
Total debt securities	17,008		—		16,790		218
Total invested assets	$	21,590	$	4,582	$	16,790	$	218

Our Level 3 assets had fair values of $322 million, or 1.5% of total invested assets, and $218 million, or 1.0% of total invested assets, at December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, the changes in the fair value of the assets measured using significant unobservable inputs (Level 3) were comprised of the following:

	For the year ended December 31, 2024		For the year ended December 31, 2023
	Private Placements
	(in millions)
Beginning balance at January 1	$	218	$	101
Total gains or losses:
Realized in earnings	(1)		—
Unrealized in other comprehensive income	(1)		3
Purchases	114		115
Sales	(3)		—
Settlements	(5)		—
Transfers Out	—		(8)
Transfers In	—		7
Balance at December 31	$	322	$	218

Interest Rate Swaps

We have entered into interest-rate swap agreements with major financial institutions to convert our interest-rate exposure on some of our senior notes payable from fixed rates to variable rates, based on Secured Overnight Financing Rate (SOFR), to align interest costs more closely with floating interest rates received on our cash equivalents and investment securities. These swap agreements were qualified and designated as a fair value hedge. Our interest rate swaps are recognized in other assets or other liabilities, as appropriate, in our consolidated balance sheets at fair value as of the reporting date. Our interest rate swaps are highly effective at reflecting the fair value of our hedged fixed rate senior notes payable. We utilize market-based financing rates, forward yield curves and discount rates in determining fair value of these swaps at each reporting date, a Level 2 measure within the fair value hierarchy. The cumulative, aggregate adjustment to the carrying value of the senior notes was a decrease of approximately $129 million at December 31, 2024. The swap liability, included within other long-term liabilities on our consolidated balance sheet, was approximately $129 million at December 31, 2024. The swap asset, included within other long-term assets on our consolidated balance sheet, was approximately $68 million at December 31, 2023. We include the gain or loss on the swap agreements in interest expense on our consolidated statement of income, the same line item as the offsetting loss or gain on the related senior notes. The gain or loss due to hedge ineffectiveness was not material for the year ended December 31, 2024.

The following table summarizes the notional amounts at December 31, 2024 and December 31, 2023, respectively, for our senior notes under the swap agreements:

	Notional amount at
Senior Notes Under Swap Agreements	December 31, 2024		December 31, 2023
	(in millions)
$750 million, 5.875% due March 1, 2033	$	650	$	650
$850 million, 5.950% due March 15, 2034	800		400
$500 million, 3.950% due August 15, 2049	450		450
$750 million, 5.500% due March 15, 2053	700		300
$400 million, 4.625% due December 1, 2042	400		—
$750 million, 4.950% due October 1, 2044	400		—
$1,250 million, 5.375% due April, 15, 2031	700		—
$400 million, 4.800% due March 15, 2047	200		—
$1,000 million, 5.750% due April 15, 2054	700		—

Financial Liabilities

Our debt is recorded at carrying value in our consolidated balance sheets. The carrying value of our senior notes debt outstanding, net of unamortized debt issuance costs, was $11.7 billion at December 31, 2024 and $10.8 billion at December 31, 2023. The fair value of our senior note debt was $11.2 billion at December 31, 2024 and $10.6 billion at December 31, 2023. The fair value of our senior note debt is determined based on Level 2 inputs, including quoted market prices for the same or similar debt, or if no quoted market prices are available, on the current prices estimated to be available to us for debt with similar terms and remaining maturities. Carrying value approximates fair value for our term loans and commercial paper borrowings. We had no outstanding commercial paper borrowings at December 31, 2024. The commercial paper borrowings were $0.9 billion at December 31, 2023.

Put and Call Options Measured at Fair Value

The put and call options fair values associated with our Primary Care Organization strategic partnership with Welsh, Carson, Anderson & Stowe, or WCAS, which are exercisable at a fixed revenue exit multiple and provide a minimum return on WCAS' investment if exercised, are measured at fair value each reporting period using a Monte Carlo simulation. The put and call options fair values, derived from the Monte Carlo simulation, were $883 million and $10 million, respectively, at December 31, 2024. The put and call options fair values, derived from the Monte Carlo simulation, were $595 million and $18 million, respectively, at December 31, 2023. The put liability and call asset are included within other long-term liabilities and other long-term assets, respectively, within our consolidated balance sheets.

The significant unobservable inputs utilized in these Level 3 fair value measurements (and selected values) include the enterprise value, annualized volatility and credit spread. Enterprise value was derived from a discounted cash flow model, which utilized significant unobservable inputs for long-term revenue, to measure underlying cash flows, weighted average cost of capital and long term growth rate. The table below presents the assumptions used for December 31, 2024 and 2023, respectively:

	December 31, 2024		December 31, 2023
Annualized volatility	17.5% - 18.9%		16.1% to 17.8%
Credit spread	0.9% - 1.5%		0.9% to 1.1%
Revenue exit multiple	1.5x - 2.5x		1.5x - 2.5x
Weighted average cost of capital	11.0% - 14.5%		11.0% to 12.5%
Long term growth rate	3.0	%	3.0	%

The assumptions used for annualized volatility, credit spread and weighted average cost of capital reflect the lowest and highest values where they differ significantly across the series of put and call options due to their expected exercise dates.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a non-recurring basis subject to fair value adjustment only in certain circumstances. As disclosed in Note 3, we completed the sale of a 60% interest in Gentiva Hospice on August 11, 2022. The carrying value of the assets and liabilities of Gentiva Hospice disposed approximates fair value. The amount of goodwill included in the carrying value is based on the relative fair value of Gentiva Hospice as compared to the total fair value of our home solutions reporting unit included within the CenterWell segment.

Additionally, as disclosed in Note 3, we completed our acquisitions of certain health and wellness related businesses during 2024, 2023, and 2022. The values of net tangible assets acquired and the resulting goodwill and other intangible assets were recorded at fair value using Level 3 inputs. The majority of the related tangible assets acquired and liabilities assumed were recorded at their carrying values as of the respective dates of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in these acquisitions were internally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates in the present value calculations. Other than assets acquired and liabilities assumed in these acquisitions, there were no material assets or liabilities measured at fair value on a nonrecurring basis during 2024, 2023, or 2022.