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Fair Value of Financial Instruments
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Financial Instruments Carried at Fair Value

The following summarizes our financial instruments carried at fair value (in millions) on a recurring basis by the fair value hierarchy levels:
As of March 31, 2025
Quoted
Prices
in Active
Markets forSignificantSignificant
IdenticalObservableUnobservableTotal
AssetsInputsInputsFair
(Level 1)(Level 2)(Level 3)Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$– $63,911 $2,974 $66,885 
U.S. government bonds518 20 – 538 
State and municipal bonds– 2,350 – 2,350 
Foreign government bonds– 239 – 239 
RMBS– 1,922 19 1,941 
CMBS– 1,800 30 1,830 
ABS– 11,610 2,631 14,241 
Hybrid and redeemable preferred securities47 145 81 273 
Trading securities– 1,697 287 1,984 
Equity securities– 310 35 345 
Mortgage loans on real estate– – 232 232 
Derivative investments (1)
– 11,238 10 11,248 
Other investments – short-term investments– 468 15 483 
MRB assets– – 4,157 4,157 
Other assets:
Ceded MRBs– – 2 2 
Indexed annuity ceded embedded derivatives– – 1,092 1,092 
Separate account assets373 162,133 – 162,506 
Total assets$938 $257,843 $11,565 $270,346 
Liabilities
Policyholder account balances – RILA, fixed annuity
and IUL contracts$– $– $(10,807)$(10,807)
Funds withheld reinsurance liabilities – reinsurance-related
embedded derivatives– 185 (323)(138)
MRB liabilities– – (1,306)(1,306)
Other liabilities:
Ceded MRBs– – (314)(314)
Derivative liabilities (1)
– (3,377)(119)(3,496)
Total liabilities$– $(3,192)$(12,869)$(16,061)
As of December 31, 2024
Quoted
Prices
in Active
Markets forSignificantSignificant
IdenticalObservableUnobservableTotal
AssetsInputsInputsFair
(Level 1)(Level 2)(Level 3)Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$– $63,585 $2,865 $66,450 
U.S. government bonds371 20 – 391 
State and municipal bonds– 2,371 – 2,371 
Foreign government bonds– 237 – 237 
RMBS– 1,851 12 1,863 
CMBS– 1,657 8 1,665 
ABS– 11,781 2,099 13,880 
Hybrid and redeemable preferred securities48 133 73 254 
Trading securities– 1,760 265 2,025 
Equity securities– 260 34 294 
Mortgage loans on real estate– – 232 232 
Derivative investments (1)
– 13,884 3 13,887 
Other investments – short-term investments– 369 23 392 
MRB assets– – 4,860 4,860 
Other assets:
Ceded MRBs– – 2 2 
Indexed annuity ceded embedded derivatives– – 1,115 1,115 
Separate account assets391 168,047 – 168,438 
Total assets$810 $265,955 $11,591 $278,356 
Liabilities
Policyholder account balances – RILA, fixed annuity
and IUL contracts $– $– $(12,449)$(12,449)
Funds withheld reinsurance liabilities – reinsurance-related
embedded derivatives– 204 (234)(30)
MRB liabilities– – (1,046)(1,046)
Other liabilities:
Ceded MRBs– – (381)(381)
Derivative liabilities (1)
– (4,256)(139)(4,395)
Total liabilities$– $(4,052)$(14,249)$(18,301)

(1) Derivative investment assets and liabilities are presented within the fair value hierarchy on a gross basis by derivative type and not on a master netting basis by counterparty.
The following summarizes changes to our financial instruments carried at fair value (in millions) and classified within Level 3 of the fair value hierarchy. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. The summary schedule excludes changes to MRB assets and MRB liabilities as these balances are rolled forward in Note 8.

For the Three Months Ended March 31, 2025
GainsIssuances,Transfers
Items(Losses)Sales,Into or
IncludedinMaturities,Out
BeginninginOCISettlements,ofEnding
FairNet andCalls,Level 3,Fair
ValueIncome
Other (1)
NetNetValue
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds$2,865 $(13)$1 $99 $22 $2,974 
RMBS12 – – 7 – 19 
CMBS8 – – 22 – 30 
ABS2,099 (21)18 478 57 2,631 
Hybrid and redeemable preferred
securities73 – – 18 (10)81 
Trading securities265 1 – 4 17 287 
Equity securities34 (6)– 7 – 35 
Mortgage loans on real estate232 (1)2 (1)– 232 
Other investments23 – – (8)– 15 
Other assets:
Ceded MRBs (3)
2 – – –– 2 
Indexed annuity ceded embedded
derivatives (4)
1,115 (24)– 1 – 1,092 
Liabilities
Policyholder account balances –
RILA, fixed annuity and
IUL contracts (4)
(12,449)1,676 – (34)– (10,807)
Funds withheld reinsurance
liabilities – reinsurance-related
embedded derivatives (4)
(234)(89)– –– (323)
Other liabilities:
Ceded MRBs (3)
(381)67 – –– (314)
Derivative liabilities(136)27 – –– (109)
Total, net$(6,472)$1,617 $21 $593 $86 $(4,155)
For the Three Months Ended March 31, 2024
GainsIssuances,Transfers
Items(Losses)Sales,Into or
IncludedinMaturities,Out
BeginninginOCISettlements,ofEnding
FairNetandCalls,Level 3,Fair
ValueIncome
Other (1)
NetNetValue
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds$2,497 $2 $(10)$22 $(22)$2,489 
State and municipal bonds5 – – – (5)– 
RMBS13 – (1)– – 12 
CMBS8 – – – – 8 
ABS1,484 – (1)201 8 1,692 
Hybrid and redeemable preferred
securities48 – 3 – – 51 
Trading securities284 – – (13)– 271 
Equity securities42 (3)– – – 39 
Mortgage loans on real estate288 – 1 – – 289 
Derivative investments36 12 – 4 (51)1 
Other assets:
Ceded MRBs (3)
2 – – – – 2 
Indexed annuity ceded embedded
derivatives (4)
940 33 – – – 973 
Liabilities
Policyholder account balances –
RILA, fixed annuity and
IUL contracts (4)
(9,077)(1,677)– (142)– (10,896)
Funds withheld reinsurance
liabilities – reinsurance-related
embedded derivatives (4)
(789)206 – – – (583)
Other liabilities – ceded MRBs (3)
(239)(121)– – – (360)
Total, net$(4,458)$(1,548)$(8)$72 $(70)$(6,012)

(1) The changes in fair value of the interest rate swaps are offset by an adjustment to derivative investments (see Note 5).
(2) Amortization and accretion of premiums and discounts are included in net investment income on the Consolidated Statements of Comprehensive Income (Loss). Gains (losses) from sales, maturities, settlements and calls and credit loss expense are included in realized gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(3) Gains (losses) from the changes in fair value are included in market risk benefit gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(4) Gains (losses) from the changes in fair value are included in realized gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
The following provides the components of the items included in issuances, sales, maturities, settlements and calls, net, (in millions) as reported above:

For the Three Months Ended March 31, 2025
IssuancesSalesMaturitiesSettlementsCallsTotal
Investments:
Fixed maturity AFS securities:
Corporate bonds$246 $(45)$– $(102)$– $99 
RMBS7 – – – – 7 
CMBS22 – – – – 22 
ABS594 – (10)(90)(16)478 
Hybrid and redeemable preferred
securities20 (2)– – – 18 
Trading securities50 (42)– (4)– 4 
Equity securities8 (1)– – – 7 
Mortgage loans on real estate– (1)– – – (1)
Other investments2 – (10)– – (8)
Other assets – indexed annuity ceded
embedded derivatives27 – – (26)– 1 
Policyholder account balances –
RILA, fixed annuity and
IUL contracts(234)– – 200 – (34)
Total, net$742 $(91)$(20)$(22)$(16)$593 

For the Three Months Ended March 31, 2024
IssuancesSalesMaturitiesSettlementsCallsTotal
Investments:
Fixed maturity AFS securities:
Corporate bonds$277 $(141)$(2)$(111)$(1)$22 
ABS264 – – (63)– 201 
Trading securities– (2)– (11)– (13)
Mortgage loans on real estate1 (1)– – – – 
Derivative investments7 – (3)– – 4 
Other assets – indexed annuity ceded
embedded derivatives26 – – (26)– – 
Policyholder account balances –
RILA, fixed annuity and
IUL contracts(249)– – 107 – (142)
Total, net$326 $(144)$(5)$(104)$(1)$72 
The following summarizes changes in unrealized gains (losses) included in net income related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

For the Three
Months Ended
March 31,
20252024
Investments:
Trading securities (1)
$(3)$– 
Equity securities (1)
(6)(3)
Mortgage loans on real estate (1)
(1)– 
Derivative investments (1)
12 16 
MRBs (2)
(1,299)1,896 
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives (1)
(89)206 
Embedded derivatives – indexed annuity
and IUL contracts (1)
169 241 
Total, net
$(1,217)$2,356 

(1) Included in realized gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(2) Included in market risk benefit gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).

The following summarizes changes in unrealized gains (losses) included in OCI, net of tax, related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

For the Three
Months Ended
March 31,
20252024
Investments:
Fixed maturity AFS securities:
Corporate bonds$(7)$(11)
ABS16 (1)
Hybrid and redeemable preferred
securities– 2 
Mortgage loans on real estate2 1 
Total, net $11 $(9)

The following provides the components of the transfers into and out of Level 3 (in millions) as reported above:

For the Three
Months Ended
March 31, 2025		For the Three
Months Ended
March 31, 2024
TransfersTransfersTransfersTransfers
IntoOut ofIntoOut of
Level 3Level 3TotalLevel 3Level 3Total
Investments:
Fixed maturity AFS securities:
Corporate bonds$22 $– $22 $22 $(44)$(22)
State and municipal bonds– – – – (5)(5)
ABS57 – 57 31 (23)8 
Hybrid and redeemable preferred
securities– (10)(10)– – – 
Trading securities17 – 17 – – – 
Derivative investments– – – – (51)(51)
Total, net $96 $(10)$86 $53 $(123)$(70)

Transfers into and out of Level 3 are generally the result of observable market information on financial instruments no longer being available or becoming available to our pricing vendors. For the three months ended March 31, 2025 and 2024, transfers in and out of Level 3 were attributable primarily to the financial instruments’ observable market information no longer being available or becoming available.
The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements as of March 31, 2025:

Weighted
Average
FairValuationSignificantAssumption orInput
ValueTechniqueUnobservable InputsInput Ranges
Range (1)
Assets
Investments:
Fixed maturity AFS
securities:
Corporate bonds$190 Discounted cash flow
Liquidity/duration adjustment (2)
0.0 %– 4.3 %1.9 %
ABS10 Discounted cash flow
Liquidity/duration adjustment (2)
1.4 %– 1.4 %1.4 %
CMBS8 Discounted cash flow
Liquidity/duration adjustment (2)
2.0 %— 2.0 %2.0 %
Hybrid and redeemable
preferred securities39 Discounted cash flow
Liquidity/duration adjustment (2)
1.2 %– 2.1 %1.8 %
Equity securities5 Discounted cash flow
Liquidity/duration adjustment (2)
4.5 %– 4.5 %4.5 %
MRB assets 4,157 Discounted cash flow
Lapse (3)
1.0 %— 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %— 100.0 %92.0 %
Claims utilization factor (5)
60.0 %— 100.0 %
(10)
Premiums utilization factor (5)
80.0 %— 115.0 %
(10)
Non-performance risk (6)
0.3 %— 2.2 %1.8 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %— 29.0 %14.3 %
Other assets:
Ceded MRBs (11)
2 
Indexed annuity
ceded embedded
derivatives1,092 Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
Liabilities
Policyholder account
balances – indexed annuity
contracts embedded
derivatives$(10,860)Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
MRB liabilities(1,306)Discounted cash flow
Lapse (3)
1.0 %— 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %— 100.0 %92.0 %
Claims utilization factor (5)
60.0 %— 100.0 %
(10)
Premiums utilization factor (5)
80.0 %— 115.0 %
(10)
Non-performance risk (6)
0.3 %— 2.2 %1.8 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %— 29.0 %14.3 %
Other liabilities – ceded
MRBs (11)
(314)
The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements as of December 31, 2024:

Weighted
Average
FairValuationSignificantAssumption orInput
ValueTechniqueUnobservable InputsInput Ranges
Range (1)
Assets
Investments:
Fixed maturity AFS
securities:
Corporate bonds$187 Discounted cash flow
Liquidity/duration adjustment (2)
0.0 %– 3.1 %1.7 %
ABS10 Discounted cash flow
Liquidity/duration adjustment (2)
1.3 %– 1.3 %1.3 %
CMBS8 Discounted cash flow
Liquidity/duration adjustment (2)
1.9 %– 1.9 %1.9 %
Hybrid and redeemable
preferred securities19 Discounted cash flow
Liquidity/duration adjustment (2)
1.4 %– 1.9 %1.8 %
Equity securities5 Discounted cash flow
Liquidity/duration adjustment (2)
4.5 %– 4.5 %4.5 %
MRB assets 4,860 Discounted cash flow
Lapse (3)
1.0 %— 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %– 100.0 %92.0 %
Claims utilization factor (5)
60.0 %– 100.0 %
(10)
Premiums utilization factor (5)
80.0 %– 115.0 %
(10)
Non-performance risk (6)
0.3 %– 2.0 %1.6 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %– 29.0 %14.5 %
Other assets:
Ceded MRBs (11)
2 
Indexed annuity
ceded embedded
derivatives1,115 Discounted cash flow
Lapse (3)
0.0 %— 9.0 %
(10)
Mortality (7)
(9)
(10)
Liabilities
Policyholder account
balances – indexed annuity
contracts embedded
derivatives$(12,402)Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
MRB liabilities(1,046)Discounted cash flow
Lapse (3)
1.0 %– 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %– 100.0 %92.0 %
Claims utilization factor (5)
60.0 %– 100.0 %
(10)
Premiums utilization factor (5)
80.0 %– 115.0 %
(10)
Non-performance risk (6)
0.3 %— 2.0 %1.6 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %– 29.0 %14.5 %
Other liabilities – ceded
MRBs (11)
(381)

(1) Unobservable inputs were weighted by the relative fair value of the instruments, unless otherwise noted.
(2) The liquidity/duration adjustment input represents an estimated market participant composite of adjustments attributable to liquidity premiums, expected durations, structures and credit quality that would be applied to the market observable information of an investment.
(3) The lapse input represents the estimated probability of a contract surrendering during a year, and thereby forgoing any future benefits. The range for indexed annuity contracts represents the lapses during the surrender charge period.
(4) The utilization of GLB withdrawals input represents the estimated percentage of policyholders that utilize the GLB withdrawal riders.
(5) The utilization factors are applied to the present value of claims or premiums, as appropriate, in the MRB calculation to estimate the impact of inefficient GLB withdrawal behavior, including taking less than or more than the maximum GLB withdrawal.
(6) The non-performance risk input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract. The non-performance risk input was weighted by the absolute value of the sensitivity of the reserve to the non-performance risk assumption.
(7) The mortality input represents the estimated probability of when an individual belonging to a particular group, categorized according to age or some other factor such as gender, will die.
(8) The volatility input represents overall volatilities assumed for the underlying variable annuity funds, which include a mixture of equity and fixed-income assets. Volatility assumptions vary by fund due to the benchmarking of different indices. The volatility input was weighted by the relative account balance assigned to each index.
(9) The mortality is based on a combination of company and industry experience, adjusted for improvement factors.
(10) A weighted average input range is not a meaningful measurement for lapse, utilization factors or mortality.
(11) The fair value inputs for ceded MRBs are consistent with those used to value MRB assets and liabilities.
From the table above, we have excluded Level 3 fair value measurements obtained from independent, third-party pricing sources. We do not develop the significant inputs used to measure the fair value of these assets and liabilities, and the information regarding the significant inputs is not readily available to us. Independent broker-quoted fair values are non-binding quotes developed by market makers or broker-dealers obtained from third-party sources recognized as market participants. The fair value of a broker-quoted asset or liability is based solely on the receipt of an updated quote from a single market maker or a broker-dealer recognized as a market participant as we do not adjust broker quotes when used as the fair value measurement for an asset or liability. Significant increases or decreases in any of the quotes received from a third-party broker-dealer may result in a significantly higher or lower fair value measurement.

The embedded derivative liability associated with Fortitude Re was excluded from the above table. As discussed in Note 7, this embedded derivative liability was created through a coinsurance with funds withheld reinsurance agreement where the investments supporting the reinsurance agreement were withheld by and continue to be reported on the Consolidated Balance Sheets. This reinsurance-related embedded derivative is valued as a total return swap with reference to the fair value of the investments held by us. Accordingly, the unobservable inputs utilized in the valuation of the reinsurance-related embedded derivative are a component of the investments supporting the reinsurance agreement that are reported on the Consolidated Balance Sheets.

Changes in any of the significant inputs presented in the table above would have resulted in a significant change in the fair value measurement of the asset or liability as follows:

•Investments – An increase in the liquidity/duration adjustment input would have resulted in a decrease in the fair value measurement.
•Indexed annuity contracts embedded derivatives – For direct embedded derivatives, an increase in the lapse or mortality inputs would have resulted in a decrease in the fair value measurement.
•MRBs – Assuming our MRBs are in a liability position: an increase in our lapse, non-performance risk or mortality inputs would have resulted in a decrease in the fair value measurement, except for policies with guaranteed death benefit (“GDB”) riders only, in which case an increase in mortality inputs would have resulted in an increase in the fair value measurement.

For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input would not have affected the other inputs.

As part of our ongoing valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary.

Fair Value Option

Mortgage loans on real estate, net of allowance for credit losses, as reported on the Consolidated Balance Sheets, includes mortgage loans on real estate for which the fair value option was elected. The fair value option allows us to elect fair value as an alternative measurement for mortgage loans not otherwise reported at fair value. We have made these elections for certain mortgage loans associated with modified coinsurance agreements to help mitigate the inconsistency in earnings that would otherwise result from the use of embedded derivatives included with these loans. Changes in fair value are reflected in realized gain (loss) on the Consolidated Statement of Comprehensive Income (Loss). Changes in fair value due to instrument-specific credit risk are estimated using changes in credit spreads and quality ratings for the period reported. Mortgage loans on real estate for which the fair value option was elected are valued using third-party pricing services. We have procedures in place to review the valuations each quarter to ensure they are reasonable, including utilizing a separate third party to reperform the valuation for a selection of mortgage loans on an annual basis. Due to lack of observable inputs, mortgage loans electing the fair value option are classified as Level 3 within the fair value hierarchy.
The fair value and aggregate contractual principal for mortgage loans on real estate where the fair value option was elected (in millions) were as follows:

As of
March 31,		As of
December 31,
20252024
Fair value$232 $232 
Aggregate contractual principal263 263 

For information on current and past due composition and accruing status for loans where we have elected the fair value option, see Note 3.

Financial Instruments Not Carried at Fair Value

The following summarizes the fair value by the fair value hierarchy levels and the carrying amount of our financial instruments not carried at fair value (in millions):

As of March 31, 2025
Quoted
Prices
in Active
Markets forSignificantSignificant
IdenticalObservableUnobservableTotal
AssetsInputsInputsFairCarrying
(Level 1)(Level 2)(Level 3)ValueAmount
Assets
Investments:
Mortgage loans on real estate$– $20,373 $– $20,373 $21,326 
Other investments– 513 5,657 6,170 6,170 
Policy loans– 2,529 – 2,529 2,529 
Cash and invested cash– 4,284 – 4,284 4,284 
Liabilities
Policyholder account balances – certain investment
contracts and other liabilities$– $– $(30,876)$(30,876)$(41,005)
Policyholder account balances – funding agreements– (508)– (508)(500)
Long-term debt– (5,356)– (5,356)(5,868)
Funds withheld reinsurance-related liabilities – excluding
embedded derivatives– – (16,700)(16,700)(16,700)
As of December 31, 2024
Quoted
Prices
in Active
Markets forSignificantSignificant
IdenticalObservableUnobservableTotal
AssetsInputsInputsFairCarrying
(Level 1)(Level 2)(Level 3)ValueAmount
Assets
Investments:
Mortgage loans on real estate$– $19,647 $– $19,647 $21,083 
Other investments– 1,119 5,469 6,588 6,588 
Policy loans– 2,476 – 2,476 2,476 
Cash and invested cash– 5,801 – 5,801 5,801 
Liabilities
Policyholder account balances – certain investment
contracts and other liabilities$– $– $(30,505)$(30,505)$(40,394)
Short-term debt– (299)– (299)(300)
Long-term debt– (5,304)– (5,304)(5,856)
Funds withheld reinsurance-related liabilities – excluding
embedded derivatives– – (16,877)(16,877)(16,877)

The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value on the Consolidated Balance Sheets. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown above are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.

Mortgage Loans on Real Estate

The fair value of mortgage loans on real estate, excluding mortgage loans accounted for using the fair value option, is established using a discounted cash flow method based on credit rating, maturity and future income. The ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt-service coverage, LTV, quality of tenancy, borrower and payment record. The fair value for impaired mortgage loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s market price or the fair value of the collateral if the loan is collateral dependent. The inputs used to measure the fair value of our mortgage loans on real estate, excluding mortgage loans accounted for using the fair value option, are classified as Level 2 within the fair value hierarchy.

Other Investments

The carrying value of our assets classified as other investments, excluding short-term investments, approximates fair value. Other investments includes primarily LPs and other privately held investments that are accounted for using the equity method of accounting and the carrying value is based on our proportional share of the net assets of the LPs. Other investments also includes FHLB stock carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. The inputs used to measure the fair value of our LPs, other privately held investments and FHLB stock are classified as Level 3 within the fair value hierarchy. The remaining assets in other investments include cash collateral receivables and securities that are not LPs or other privately held investments. The inputs used to measure the fair value of these assets are classified as Level 2 within the fair value hierarchy.

Policy Loans

The carrying value for policy loans are the unpaid principal balances. 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. The inputs used to measure the fair value of these assets are classified as Level 2 within the fair value hierarchy.
Cash and Invested Cash

Cash and invested cash is carried at cost. The inputs used to measure its fair value are classified as Level 2 within the fair value hierarchy.

Policyholder Account Balances – Certain Investment Contracts and Other Liabilities

Policyholder account balances and other liabilities include account balances of certain investment contracts that exclude significant mortality or morbidity risk. The fair value of the account balances of certain investment contracts is based on a discounted cash flow model as of the balance sheet date. The inputs used to measure the fair value of these policyholder account balances are classified as Level 3 within the fair value hierarchy.

Policyholder Account Balances – Funding Agreements

The fair value of funding agreements is based on quoted market prices and is measured using inputs that are classified as Level 2 within the fair value hierarchy. For more information on funding agreements, see Note 10.

Short-Term and Long-Term Debt

The fair value of short-term and long-term debt is based on quoted market prices. The inputs used to measure the fair value of our short-term and long-term debt are classified as Level 2 within the fair value hierarchy.

Funds Withheld Reinsurance Liabilities
Funds withheld reinsurance liabilities includes our obligation to pay reinsurers under coinsurance with funds withheld and modified coinsurance arrangements where the Company is the cedant. This liability includes embedded derivatives, which are total return swaps with contractual returns that are attributable to the Company’s reinsurance agreements. The embedded derivatives are carried at fair value and thus excluded from the preceding table. The inputs used to measure the remaining balance are classified as Level 3 within the fair value hierarchy.