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Fair Value

12 Months Ended

Dec. 31, 2023

8. FAIR VALUE

Fair Value Hierarchy

Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company utilizes the U.S. GAAP fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumption about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The inputs used to measure fair value are classified into the following fair value hierarchy:


Level 1:		Quoted market prices in active markets for identical assets or liabilities.
Level 2:		Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:		Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions.

In instances where the determination of the fair value hierarchy measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment of factors specific to the asset or liability. Transfers between levels within the fair value hierarchy are recognized by the Company on the date of the change in circumstances that requires such transfer. There were no transfers between levels during the years ended December 31, 2023 or 2022.

The following table sets forth, by level within the fair value hierarchy, the financial assets recorded at fair value on a recurring basis as of December 31, 2023 and 2022 (in millions):


	December 31, 2023		Level 1		Level 2		Level 3
Investments in equity securities	$	69	$	69	$	—	$	—
Available-for-sale debt securities		182		—		182		—
Trading securities		5		—		5		—
Total assets	$	256	$	69	$	187	$	—


	December 31, 2022		Level 1		Level 2		Level 3
Investments in equity securities	$	107	$	107	$	—	$	—
Available-for-sale debt securities		179		—		179		—
Trading securities		5		—		5		—
Total assets	$	291	$	107	$	184	$	—

Investments in Equity Securities, Available-for-Sale Debt Securities and Trading Securities

Investments in equity securities classified as Level 1 are measured using quoted market prices. Level 2 available-for-sale debt securities and trading securities primarily consist of bonds and notes issued by the United States government and its agencies and domestic and foreign corporations. The estimated fair values of these securities are determined using various valuation techniques, including a multi-dimensional relational model that incorporates standard observable inputs and assumptions such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids/offers and other pertinent reference data.

Supplemental information regarding the Company’s available-for-sale debt securities (all of which had no withdrawal restrictions) is set forth in the table below (in millions):


			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Values
As of December 31, 2023:
Government	$	118	$	—	$	(10	)	$	108
Corporate		65		—		(6	)		59
Mortgage and asset-backed securities		16		—		(1	)		15
Total available-for-sale debt securities	$	199	$	—	$	(17	)	$	182


			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Values
As of December 31, 2022:
Government	$	107	$	—	$	(11	)	$	96
Corporate		69		—		(9	)		60
Mortgage and asset-backed securities		25		—		(2	)		23
Total available-for-sale debt securities	$	201	$	—	$	(22	)	$	179

As of December 31, 2023 and 2022, investments with aggregate estimated fair values of approximately $145 million (306 investments) and $169 million (348 investments), respectively, generated the gross unrealized losses disclosed in the above table. At each reporting date, the Company performs an evaluation of impaired securities to determine if the unrealized losses are other-than-temporary. This evaluation considers a number of factors including, but not limited to, the length of time and extent to which the fair value has been less than cost, and management’s ability and intent to hold the securities until fair value recovers. Based on the results of this evaluation, management concluded that as of December 31, 2023, there were no other-than-temporary losses related to available-for-sale debt securities. The recent declines in value of the securities and/or length of time they have been below cost, as well as the Company’s ability and intent to hold the securities for a reasonable period of time sufficient for a projected recovery of fair value, have caused management to conclude that the securities, that have generated gross unrealized losses, were not other-than-temporarily impaired. Management will continue to monitor and evaluate the recoverability of the Company’s available-for-sale debt securities.

The contractual maturities of debt-based securities held by the Company as of December 31, 2023 and 2022, excluding mutual fund holdings, are set forth in the table below (in millions). Expected maturities will differ from contractual maturities because the issuers of the debt securities may have the right to prepay their obligations without prepayment penalties.


	December 31, 2023				December 31, 2022
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Values		Cost		Fair Values
Within 1 year	$	19	$	19	$	13	$	13
After 1 year and through year 5		63		62		74		70
After 5 years and through year 10		63		57		56		48
After 10 years		54		44		58		48

Gross realized gains and losses on sales of available-for-sale debt securities are summarized in the table below (in millions):


	Year Ended December 31,
	2023			2022			2021
Realized gains	$	—		$	—		$	1
Realized losses		(2	)		(2	)		(1	)

Other investment income, which includes interest and dividends, related to all investment securities was $7 million, $6 million and $5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Net losses and gains recognized during the years ended December 31, 2023, 2022 and 2021 for investments in equity securities, which are broken out between investments sold during the year and investments held at the end of the year, are summarized in the table below (in millions):


	Year Ended December 31,
	2023			2022			2021
Net gains and (losses) recognized during the year on equity securities	$	11		$	(28	)	$	20
Less: Net (losses) and gains recognized during the year on equity securities sold during the year		(5	)		(2	)		13
Unrealized gains and (losses) recognized during the year on equity securities held at the end of year	$	16		$	(26	)	$	7