Fair Value (Tables)

12 Months Ended

Dec. 31, 2019

Fair value of financial assets and liabilities

Financial assets measured at fair value on a recurring basis on the consolidated balance sheets at December 31, 2019 and 2018 were as follows:



In millions	Level 1		Level 2		Level 3		Total
December 31, 2019
Cash and cash equivalents	$	3,397	$	2,286	$	—	$	5,683
Debt securities:
U.S. government securities	1,785		67		—		1,852
States, municipalities and political subdivisions	—		2,309		—		2,309
U.S. corporate securities	—		7,700		37		7,737
Foreign securities	—		2,348		—		2,348
Residential mortgage-backed securities	—		533		—		533
Commercial mortgage-backed securities	—		700		—		700
Other asset-backed securities	—		1,405		—		1,405
Redeemable preferred securities	—		26		12		38
Total debt securities	1,785		15,088		49		16,922
Equity securities	34		—		39		73
Total	$	5,216	$	17,374	$	88	$	22,678

December 31, 2018
Cash and cash equivalents	$	2,619	$	1,440	$	—	$	4,059
Debt securities:
U.S. government securities	1,597		91		—		1,688
States, municipalities and political subdivisions	—		2,399		—		2,399
U.S. corporate securities	—		6,422		67		6,489
Foreign securities	—		2,380		3		2,383
Residential mortgage-backed securities	—		577		—		577
Commercial mortgage-backed securities	—		605		—		605
Other asset-backed securities	—		1,085		—		1,085
Redeemable preferred securities	—		22		7		29
Total debt securities	1,597		13,581		77		15,255
Equity securities	19		—		54		73
Total	$	4,235	$	15,021	$	131	$	19,387

Changes in level 3 financial assets

The changes in the balances of Level 3 financial assets during 2019 were as follows:



In millions	Foreign securities			U.S. corporate securities			Equity securities			Redeemable preferred securities		Total
Beginning balance	$	3		$	67		$	54		$	7	$	131
Net realized and unrealized capital gains (losses):
Included in earnings	—			(33		)	13			—		(20		)
Included in other comprehensive income	—			18			—			5		23
Purchases	2			3			13			—		18
Sales	—			(6		)	(41		)	—		(47		)
Settlements	(1		)	(12		)	—			—		(13		)
Transfers out of Level 3, net	(4		)	—			—			—		(4		)
Ending balance	$	—		$	37		$	39		$	12	$	88

The total gross transfers into (out of) Level 3 during the year ended December 31, 2019 were as follows:



In millions
Gross transfers into Level 3	$	—
Gross transfers out of Level 3	(4		)
Net transfers out of Level 3	$	(4	)

Carrying value and estimated fair value of certain financial instruments

The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the consolidated balance sheets at adjusted cost or contract value at December 31, 2019 and 2018 were as follows:



	Carrying Value		Estimated Fair Value
In millions			Level 1		Level 2		Level 3		Total
December 31, 2019
Assets:
Mortgage loans	$	1,213	$	—	$	—	$	1,239	$	1,239
Equity securities ⁽¹⁾	149		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	372		—		—		392		392
Long-term debt	68,480		74,306		—		—		74,306



	Carrying Value		Estimated Fair Value
In millions			Level 1		Level 2		Level 3		Total
December 31, 2018
Assets:
Mortgage loans	$	1,361	$	—	$	—	$	1,366	$	1,366
Equity securities ⁽¹⁾	140		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	382		—		—		357		357
Long-term debt	72,709		71,252		—		—		71,252

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(1)	It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies. See Note 1 ‘‘Significant Accounting Policies’’ for additional information regarding the valuation of cost method investments.

Separate account financial assets

Separate Accounts financial assets at December 31, 2019 and 2018 were as follows:



	December 31, 2019								December 31, 2018
In millions	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	2	$	143	$	—	$	145	$	2	$	189	$	—	$	191
Debt securities	1,224		2,589		—		3,813		782		2,500		4		3,286
Equity securities	—		2		—		2		—		3		—		3
Common/collective trusts	—		499		—		499		—		404		—		404
Total	$	1,226	$	3,233	$	—	$	4,459	$	784	$	3,096	$	4	$	3,884