Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2026

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, 2026
	Asset (Liability) Measurement in the						Total
	Fair Value Hierarchy						Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	–	$	65,002	$	3,282	$	68,284
U.S. government bonds	900		19		–		919
State and municipal bonds	–		2,124		–		2,124
Foreign government bonds	–		202		–		202
RMBS	–		2,063		–		2,063
CMBS	–		2,566		103		2,669
ABS	–		13,550		4,153		17,703
Hybrid and redeemable preferred securities	31		123		82		236
Trading securities	–		1,329		223		1,552
Equity securities (1)	38		243		33		314
Mortgage loans on real estate	–		–		198		198
Derivative investments (2)	–		13,436		69		13,505
Other investments – short-term investments	–		165		28		193
MRB assets	–		–		4,303		4,303
Other assets:
Ceded MRBs	–		–		2		2
Indexed annuity ceded embedded derivatives	–		–		1,332		1,332
Separate account assets	367		171,676		–		172,043
Total assets	$	1,336	$	272,498	$	13,808	$	287,642
Liabilities
Policyholder account balances – RILA, fixed annuity
and IUL contracts	$	–	$	–	$	(13,444)	$	(13,444)
Funds withheld reinsurance liabilities – reinsurance-related
embedded derivatives	–		160		(252)		(92)
MRB liabilities	–		–		(1,127)		(1,127)
Other liabilities:
Ceded MRBs	–		–		(329)		(329)
Derivative liabilities (2)	–		(5,145)		(134)		(5,279)
Total liabilities	$	–	$	(4,985)	$	(15,286)	$	(20,271)

	As of December 31, 2025
	Asset (Liability) Measurement in the						Total
	Fair Value Hierarchy						Fair
	(Level 1)		(Level 2)		(Level 3)		Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	–	$	65,132	$	3,913	$	69,045
U.S. government bonds	849		20		–		869
State and municipal bonds	–		2,147		–		2,147
Foreign government bonds	–		226		–		226
RMBS	–		2,122		–		2,122
CMBS	–		2,417		85		2,502
ABS	–		12,698		3,584		16,282
Hybrid and redeemable preferred securities	32		140		83		255
Trading securities	–		1,347		329		1,676
Equity securities (1)	234		234		33		501
Mortgage loans on real estate	–		–		199		199
Derivative investments (2)	–		16,001		28		16,029
Other investments – short-term investments	–		193		1		194
MRB assets	–		–		4,753		4,753
Other assets:
Ceded MRBs	–		–		2		2
Indexed annuity ceded embedded derivatives	–		–		1,369		1,369
Separate account assets	383		179,709		–		180,092
Total assets	$	1,498	$	282,386	$	14,379	$	298,263
Liabilities
Policyholder account balances – RILA, fixed annuity
and IUL contracts	$	–	$	–	$	(15,115)	$	(15,115)
Funds withheld reinsurance liabilities – reinsurance-related
embedded derivatives	–		145		(434)		(289)
MRB liabilities	–		–		(1,118)		(1,118)
Other liabilities:
Ceded MRBs	–		–		(359)		(359)
Derivative liabilities (2)	–		(6,008)		(136)		(6,144)
Total liabilities	$	–	$	(5,863)	$	(17,162)	$	(23,025)

(1) Total investments included in the fair value hierarchy exclude certain closed-end funds that are measured at estimated fair value using the NAV per share (or its equivalent) practical expedient. The estimated fair value of such investments was $161 million and $135 million as of March 31, 2026, and December 31, 2025, respectively.

(2) 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, 2026
					Gains		Issuances,		Transfers
	Beginning		Items		(Losses)		Sales,		Into or		Ending
	Asset		Included		in		Maturities,		Out		Asset
	(Liability)		in		OCI		Settlements,		of		(Liability)
	Fair		Net		and		Calls,		Level 3,		Fair
	Value		Income		Other (1)		Net		Net		Value
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds	$	3,913	$	(14)	$	(30)	$	133	$	(720)	$	3,282
CMBS	85		–		(1)		28		(9)		103
ABS	3,584		(7)		(39)		607		8		4,153
Hybrid and redeemable preferred
securities	83		–		(1)		–		–		82
Trading securities	329		(2)		–		(82)		(22)		223
Equity securities	33		(3)		–		3		–		33
Mortgage loans on real estate	199		1		(1)		(1)		–		198
Other investments – short-term
investments	1		–		–		27		–		28
Other assets:
Ceded MRBs (3)	2		–		–		–		–		2
Indexed annuity ceded embedded
derivatives (4)	1,369		(19)		–		(18)		–		1,332
Liabilities
Policyholder account balances –
RILA, fixed annuity and
IUL contracts (4)	$	(15,115)	$	1,604	$	–	$	67	$	–	$	(13,444)
Funds withheld reinsurance
liabilities – reinsurance-related
embedded derivatives (4)	(434)		182		–		–		–		(252)
Other liabilities:
Ceded MRBs (3)	(359)		30		–		–		–		(329)
Derivative liabilities, net	(108)		1		–		42		–		(65)

	For the Three Months Ended March 31, 2025
					Gains		Issuances,		Transfers
	Beginning		Items		(Losses)		Sales,		Into or		Ending
	Asset		Included		in		Maturities,		Out		Asset
	(Liability)		in		OCI		Settlements,		of		(Liability)
	Fair		Net		and		Calls,		Level 3,		Fair
	Value		Income		Other (1)		Net		Net		Value
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds	$	2,702	$	(13)	$	(2)	$	104	$	22	$	2,813
RMBS	1		–		–		7		–		8
CMBS	8		–		–		22		–		30
ABS	2,092		(21)		17		473		57		2,618
Hybrid and redeemable preferred
securities	63		–		–		18		–		81
Trading securities	259		2		–		–		20		281
Equity securities	34		(6)		–		7		–		35
Mortgage loans on real estate	232		(1)		2		(1)		–		232
Other investments – short-term
investments	23		–		–		(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, net	(136)		27		–		–		–		(109)

(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, 2026
	Issuances		Sales		Maturities		Settlements		Calls		Total
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	262	$	(14)	$	–	$	(92)	$	(23)	$	133
CMBS	28		–		–		–		–		28
ABS	793		–		–		(162)		(24)		607
Trading securities	–		(12)		–		(5)		(65)		(82)
Equity securities	3		–		–		–		–		3
Mortgage loans on real estate	–		–		–		(1)		–		(1)
Derivative investments	42		–		–		–		–		42
Other investments – short-term investments	28		–		(1)		–		–		27
Other assets – indexed annuity ceded
embedded derivatives	–		–		–		(18)		–		(18)
Liabilities
Policyholder account balances –
RILA, fixed annuity and
IUL contracts	$	(359)	$	–	$	–	$	426	$	–	$	67

	For the Three Months Ended March 31, 2025
	Issuances		Sales		Maturities		Settlements		Calls		Total
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	246	$	(45)	$	–	$	(97)	$	–	$	104
RMBS	7		–		–		–		–		7
CMBS	22		–		–		–		–		22
ABS	594		–		(10)		(95)		(16)		473
Hybrid and redeemable preferred
securities	20		(2)		–		–		–		18
Trading securities	50		(42)		–		(8)		–		–
Equity securities	8		(1)		–		–		–		7
Mortgage loans on real estate	–		(1)		–		–		–		(1)
Other investments – short-term investments	2		–		(10)		–		–		(8)
Other assets – indexed annuity ceded
embedded derivatives	27		–		–		(26)		–		1
Liabilities
Policyholder account balances –
RILA, fixed annuity and
IUL contracts	$	(234)	$	–	$	–	$	200	$	–	$	(34)

The following summarizes changes in unrealized gains (losses) included in net income (loss) 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,
	2026		2025
Investments:
Trading securities (1)	$	(2)	$	(3)
Equity securities (1)	(4)		(6)
Mortgage loans on real estate (1)	1		(1)
Derivative investments, net (1)	(34)		12
MRBs, net (2)	(994)		(1,299)
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives (1)	182		(89)
Embedded derivatives – indexed annuity
and IUL contracts, net (1)	368		169

(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,
	2026		2025
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	(38)	$	(10)
CMBS	(1)		–
ABS	(39)		16
Hybrid and redeemable preferred
securities	(1)		–
Mortgage loans on real estate	(1)		2

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, 2026						For the Three Months Ended March 31, 2025
	Transfers		Transfers				Transfers		Transfers
	Into		Out of				Into		Out of
	Level 3		Level 3		Total		Level 3		Level 3		Total
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds	$	56	$	(776)	$	(720)	$	22	$	–	$	22
CMBS	–		(9)		(9)		–		–		–
ABS	24		(16)		8		57		–		57
Trading securities	–		(22)		(22)		20		–		20

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, 2026 and 2025, 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, 2026:

								Weighted
								Average
	Fair		Valuation	Significant	Assumption or			Input
	Value		Technique	Unobservable Inputs	Input Ranges			Range (1)
Assets
Investments:
Fixed maturity AFS
securities:
Corporate bonds	$	322	Discounted cash flow	Liquidity/duration adjustment (2)	0.0%	–	6.5%	1.9%
ABS	7		Discounted cash flow	Liquidity/duration adjustment (2)	1.6%	–	1.6%	1.6%
CMBS	40		Discounted cash flow	Liquidity/duration adjustment (2)	1.9%	–	2.0%	1.9%
Hybrid and redeemable
preferred securities	40		Discounted cash flow	Liquidity/duration adjustment (2)	1.7%	–	2.0%	1.9%
Equity securities	4		Discounted cash flow	Liquidity/duration adjustment (2)	4.5%	–	4.5%	4.5%
MRB assets	4,303		Discounted cash flow	Lapse (3)	1.0%	–	30.0%	(10)
				Utilization of GLB withdrawals (4)	85.0%	–	100.0%	93.0%
				Claims utilization factor (5)	50.0%	–	100.0%	(10)
				Premiums utilization factor (5)	80.0%	–	115.0%	(10)
				Non-performance risk (6)	0.3%	–	2.3%	1.8%
				Mortality (7)			(9)	(10)
				Volatility (8)	1.0%	–	27.0%	14.9%
Other assets:
Ceded MRBs (11)	2
Indexed annuity
ceded embedded
derivatives	1,332		Discounted cash flow	Lapse (3)	0.0%	–	9.0%	(10)
				Mortality (7)			(9)	(10)
Liabilities
Policyholder account
balances – indexed annuity
contracts embedded
derivatives	$	(13,462)	Discounted cash flow	Lapse (3)	0.0%	–	9.0%	(10)
				Mortality (7)			(9)	(10)
MRB liabilities	(1,127)		Discounted cash flow	Lapse (3)	1.0%	–	30.0%	(10)
				Utilization of GLB withdrawals (4)	85.0%	–	100.0%	93.0%
				Claims utilization factor (5)	50.0%	–	100.0%	(10)
				Premiums utilization factor (5)	80.0%	–	115.0%	(10)
				Non-performance risk (6)	0.3%	–	2.3%	1.8%
				Mortality (7)			(9)	(10)
				Volatility (8)	1.0%	–	27.0%	14.9%
Other liabilities – ceded
MRBs (11)	(329)

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, 2025:

								Weighted
								Average
	Fair		Valuation	Significant	Assumption or			Input
	Value		Technique	Unobservable Inputs	Input Ranges			Range (1)
Assets
Investments:
Fixed maturity AFS
securities:
Corporate bonds	$	706	Discounted cash flow	Liquidity/duration adjustment (2)	0.0%	–	6.2%	1.4%
ABS	8		Discounted cash flow	Liquidity/duration adjustment (2)	1.1%	–	1.1%	1.1%
CMBS	41		Discounted cash flow	Liquidity/duration adjustment (2)	1.8%	–	1.9%	1.8%
Hybrid and redeemable
preferred securities	40		Discounted cash flow	Liquidity/duration adjustment (2)	1.6%	–	1.9%	1.7%
Equity securities	4		Discounted cash flow	Liquidity/duration adjustment (2)	4.5%	–	4.5%	4.5%
MRB assets	4,753		Discounted cash flow	Lapse (3)	1.0%	–	30.0%	(10)
				Utilization of GLB withdrawals (4)	85.0%	–	100.0%	93.0%
				Claims utilization factor (5)	50.0%	–	100.0%	(10)
				Premiums utilization factor (5)	80.0%	–	115.0%	(10)
				Non-performance risk (6)	0.2%	–	1.6%	1.3%
				Mortality (7)			(9)	(10)
				Volatility (8)	1.0%	–	27.0%	15.1%
Other assets:
Ceded MRBs (11)	2
Indexed annuity
ceded embedded
derivatives	1,369		Discounted cash flow	Lapse (3)	0.0%	–	9.0%	(10)
				Mortality (7)			(9)	(10)
Liabilities
Policyholder account
balances – indexed annuity
contracts embedded
derivatives	$	(15,031)	Discounted cash flow	Lapse (3)	0.0%	–	9.0%	(10)
				Mortality (7)			(9)	(10)
MRB liabilities	(1,118)		Discounted cash flow	Lapse (3)	1.0%	–	30.0%	(10)
				Utilization of GLB withdrawals (4)	85.0%	–	100.0%	93.0%
				Claims utilization factor (5)	50.0%	–	100.0%	(10)
				Premiums utilization factor (5)	80.0%	–	115.0%	(10)
				Non-performance risk (6)	0.2%	–	1.6%	1.3%
				Mortality (7)			(9)	(10)
				Volatility (8)	1.0%	–	27.0%	15.1%
Other liabilities – ceded
MRBs (11)	(359)

(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 us 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,
	2026		2025
Fair value	$	198	$	199
Aggregate contractual principal	229		231

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, 2026
	Asset (Liability) Measurement in the						Total
	Fair Value Hierarchy						Fair		Carrying
	(Level 1)		(Level 2)		(Level 3)		Value		Amount
Assets
Investments:
Mortgage loans on real estate	$	–	$	–	$	22,057	$	22,057	$	22,627
Other investments	–		1,090		6,261		7,351		7,351
Policy loans	–		2,606		–		2,606		2,606
Liabilities
Policyholder account balances – certain investment
contracts	$	–	$	–	$	(35,870)	$	(35,870)	$	(44,028)
Policyholder account balances – funding agreements	–		(4,364)		–		(4,364)		(4,399)
Short-term debt	–		(397)		–		(397)		(400)
Long-term debt	–		(5,466)		–		(5,466)		(5,969)
Funds withheld reinsurance-related liabilities – excluding
embedded derivatives	–		–		(17,472)		(17,472)		(17,472)

	As of December 31, 2025
	Asset (Liability) Measurement in the						Total
	Fair Value Hierarchy						Fair		Carrying
	(Level 1)		(Level 2)		(Level 3)		Value		Amount
Assets
Investments:
Mortgage loans on real estate	$	–	$	–	$	21,756	$	21,756	$	22,273
Other investments	–		962		5,759		6,721		6,721
Policy loans	–		2,626		–		2,626		2,626
Liabilities
Policyholder account balances – certain investment
contracts	$	–	$	–	$	(36,710)	$	(36,710)	$	(43,793)
Policyholder account balances – funding agreements	–		(3,778)		–		(3,778)		(3,749)
Short-term debt	–		(399)		–		(399)		(400)
Long-term debt	–		(5,605)		–		(5,605)		(5,866)
Funds withheld reinsurance-related liabilities – excluding
embedded derivatives	–		–		(17,633)		(17,633)		(17,633)

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 internal quality rating, maturity and future income. The ratings for mortgages in good standing are based on occupancy, debt-service coverage, LTV and forecasted tenancy. 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 3 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 include 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 include FHLB stock, which is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value, and the investments in corporate-owned universal life insurance and variable universal life insurance, which are recorded at cash surrender value and not required to be included in the table above. 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.

Policyholder Account Balances – Certain Investment Contracts

Policyholder account balances 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 issued under the FABN program is based on quoted market prices. The fair value of secured funding agreements issued under FABRs and funding agreements issued to FHLB is based on a discounted cash flow model as of the balance sheet date. The inputs used to measure the fair value of funding agreements 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.