Fair Value

3 Months Ended

Mar. 31, 2023

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables. Corporate bonds and other includes obligations of the United States of America (“U.S.”) Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.


March 31, 2023	Level 1		Level 2		Level 3		Total
(In millions)

Fixed maturity securities:
Corporate bonds and other	$	135	$	22,590	$	912	$	23,637
States, municipalities and political subdivisions			7,957		44		8,001
Asset-backed			6,596		859		7,455
Fixed maturities available-for-sale	135		37,143		1,815		39,093
Fixed maturities trading	203		53				256
Total fixed maturities	$	338	$	37,196	$	1,815	$	39,349

Equity securities	$	607	$	421	$	29	$	1,057
Short term and other	3,854		68				3,922
Receivables			17				17

Payable to brokers	(81)						(81)

December 31, 2022


Fixed maturity securities:
Corporate bonds and other	$	120	$	21,187	$	810	$	22,117
States, municipalities and political subdivisions			8,274		43		8,317
Asset-backed			6,405		788		7,193
Fixed maturities available-for-sale	120		35,866		1,641		37,627
Fixed maturities trading	1		69				70
Total fixed maturities	$	121	$	35,935	$	1,641	$	37,697

Equity securities	$	669	$	435	$	35	$	1,139
Short term and other	4,539		167				4,706
Receivables			19				19
Payable to brokers	(82)						(82)

The following tables present reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2023 and 2022:


			Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)																Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at March 31		Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at March 31
2023	Balance, January 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Balance, March 31
(In millions)

Fixed maturity securities:
Corporate bonds and other	$	810			$	24	$	81			$	(3)					$	912			$	24
States, municipalities and political
subdivisions	43				1												44				1
Asset-backed	788		$	5	7		55				(9)		$	23	$	(10)	859				7
Fixed maturities available-for-sale	1,641		5		32		136		$	—	(12)		23		(10)		1,815		$	—	32
Fixed maturities trading	—																—
Total fixed maturities	$	1,641	$	5	$	32	$	136	$	—	$	(12)	$	23	$	(10)	$	1,815	$	—	$	32

Equity securities	$	35	$	(6)													$	29	$	(6)


			Net Realized Investment Gains (Losses) and Net Change in Unrealized Investment Gains (Losses)																Unrealized Gains (Losses) Recognized in Net Income (Loss) on Level 3 Assets and Liabilities Held at March 31		Unrealized Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Level 3 Assets and Liabilities Held at March 31
2022	Balance, January 1		Included in Net Income		Included in OCI		Purchases		Sales		Settlements		Transfers into Level 3		Transfers out of Level 3		Balance, March 31
(In millions)

Fixed maturity securities:
Corporate bonds and other	$	937	$	(1)	$	(71)	$	67	$	(5)	$	(22)	$	10			$	915			$	(72)
States, municipalities and political
subdivisions	56				(5)												51				(5)
Asset-backed	556		3		(32)		140				(17)		5		$	(51)	604				(31)
Fixed maturities available-for-sale	1,549		2		(108)		207		(5)		(39)		15		(51)		1,570		$	—	(108)
Fixed maturities trading	—																—
Total fixed maturities	$	1,549	$	2	$	(108)	$	207	$	(5)	$	(39)	$	15	$	(51)	$	1,570	$	—	$	(108)

Equity securities	$	29	$	3			$	12									$	44	$	3

Net investment gains and losses are reported in Net income as follows:


Major Category of Assets and Liabilities			Consolidated Condensed Statements of Operations Line Items

Fixed maturity securities available-for-sale			Investment gains (losses)
Fixed maturity securities trading			Net investment income
Equity securities			Investment gains (losses) and Net investment income
Other invested assets			Investment gains (losses) and Net investment income
Derivative financial instruments held in a trading portfolio			Net investment income
Derivative financial instruments, other			Investment gains (losses) and Operating revenues and other

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs utilized in the fair value measurement of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of unobservable inputs from these broker quotes is neither provided nor reasonably available. The weighted average rate is calculated based on fair value.


March 31, 2023	Estimated Fair Value		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
	(In millions)

Fixed maturity securities	$	1,340	Discounted cash flow	Credit spread	1%	—	8%	(3%)

December 31, 2022

Fixed maturity securities	$	1,177	Discounted cash flow	Credit spread	1%	—	8%	(2%)

For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement.

Financial Assets and Liabilities Not Measured at Fair Value

The carrying amount, estimated fair value and the level of the fair value hierarchy of the financial assets and liabilities which are not measured at fair value on the Consolidated Condensed Balance Sheets are presented in the following tables. The carrying amounts and estimated fair values of short term debt and long term debt exclude finance lease obligations. The carrying amounts reported on the Consolidated Condensed Balance Sheets for cash and short term investments not carried at fair value and certain other assets and liabilities approximate fair value due to the short term nature of these items.


	Carrying Amount		Estimated Fair Value
March 31, 2023			Level 1	Level 2		Level 3		Total
(In millions)

Assets:
Other invested assets, primarily mortgage loans	$	1,006				$	958	$	958

Liabilities:
Short term debt	907			$	742	166		908
Long term debt	8,146			7,167		568		7,735

December 31, 2022

Assets:
Other invested assets, primarily mortgage loans	$	1,040				$	973	$	973

Liabilities:
Short term debt	853			$	744	111		855
Long term debt	8,160			7,035		586		7,621

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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