Fair value measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair value measurements

Note 18. Fair value measurements

Our financial assets and liabilities are summarized below, with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S. Treasury Bills, other receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of or otherwise approximate the fair values.

	Carrying Value		Fair Value		Level 1		Level 2		Level 3
March 31, 2024
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations    and agencies	$	4,503	$	4,503	$	4,469	$	34	$	—
Foreign governments		10,997		10,997		10,748		249		—
Corporate bonds		1,429		1,429		—		851		578
Other		238		238		—		238		—
Investments in equity securities		335,864		335,864		325,182		10		10,672
Investments in Kraft Heinz & Occidental common stock		29,147		28,128		28,128		—		—
Loans and finance receivables		25,435		24,981		—		898		24,083
Derivative contract assets (1)		238		238		38		183		17
Derivative contract liabilities (1)		295		295		4		150		141
Notes payable and other borrowings:
Insurance and other		40,723		36,693		—		36,668		25
Railroad, utilities and energy		82,031		75,921		—		75,921		—
December 31, 2023
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations    and agencies	$	10,269	$	10,269	$	10,234	$	35	$	—
Foreign governments		11,805		11,805		11,559		246		—
Corporate bonds		1,449		1,449		—		860		589
Other		235		235		—		235		—
Investments in equity securities		353,842		353,842		343,358		10		10,474
Investments in Kraft Heinz & Occidental common stock		28,640		26,587		26,587		—		—
Loans and finance receivables		24,681		24,190		—		892		23,298
Derivative contract assets (1)		334		334		39		282		13
Derivative contract liabilities (1)		213		213		7		111		95
Notes payable and other borrowings:
Insurance and other		42,692		39,184		—		39,153		31
Railroad, utilities and energy		85,579		81,036		—		81,036		—

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(1)Assets are included in other assets and liabilities are included in accounts payable, accruals and other liabilities.

The fair values of substantially all of our financial instruments were measured using market or income approaches. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

Notes to Consolidated Financial Statements

Note 18. Fair value measurements

Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets or liabilities.

Reconciliations of significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the three months ended March 31, 2024 and 2023 follow (in millions).

	Balance at January 1		Gains (losses) in earnings			Acquisitions (dispositions)			Transfers out of Level 3		Balance at March 31
Investments in equity securities:
2024	$	10,468	$	199		$	—		$	—	$	10,667
2023		12,169		(54	)		(521	)		—		11,594

Quantitative information as of March 31, 2024 for the significant assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (dollars in millions).

	Fair Value		Principal Valuation Techniques	Unobservable Inputs	Weighted Average
Investments in equity securities:
Preferred stock	$	8,609	Discounted cash flow	Expected duration	6 years
				Discounts for liquidity    and subordination	372 bps
Common stock warrants		2,058	Warrant pricing model	Expected duration	6 years
				Volatility	41%

Investments in equity securities in the preceding table include our investments in certain preferred stock and common stock warrants that do not have readily determinable market values as defined under GAAP. These investments are private placements with contractual terms that restrict transfers and currently prevent us from economically hedging our investments. We applied discounted cash flow techniques in valuing the preferred stock and we made assumptions regarding the expected duration of the investment and the effects of subordination in liquidation. In valuing the common stock warrants, we used a warrant valuation model. While most of the inputs to the warrant model are observable, we made assumptions regarding the expected duration and volatility.