v3.25.2
Fair Value of Assets and Liabilities
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Assets and Liabilities
Note 6Fair Value of Assets and Liabilities
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets and liabilities recorded on the Condensed Consolidated Statements of Financial Position at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:
Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.
Level 2: Assets and liabilities whose values are based on the following:
(a)Quoted prices for similar assets or liabilities in active markets;
(b)Quoted prices for identical or similar assets or liabilities in markets that are not active; or
(c)Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect the Company’s estimates of the assumptions that market participants would use in valuing the assets and liabilities.
The availability of observable inputs varies by instrument. In situations where fair value is based on internally developed pricing models or inputs that are unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised by the Company in determining fair value is typically greatest for instruments categorized in Level 3. In many instances, valuation inputs used to measure fair value fall into different levels of the fair value hierarchy. The category level in the fair value hierarchy is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company uses prices and inputs that are current as of the measurement date, including during periods of market disruption. In periods of market disruption, the ability to observe prices and inputs may be reduced for many instruments.
The Company is responsible for the determination of fair value and the supporting assumptions and methodologies. The Company gains assurance that assets and liabilities are appropriately valued through the execution of various processes and controls designed to ensure the overall reasonableness and consistent application of valuation methodologies, including inputs and assumptions, and compliance with accounting standards. For fair values received from third parties or internally estimated, the Company’s processes and controls are designed to ensure that the valuation methodologies are appropriate and consistently applied, the inputs and assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded. For example, on a continuing basis, the Company assesses the reasonableness of individual fair values that have stale security prices or that exceed certain thresholds as compared to previous fair values received from valuation service providers or brokers or derived from internal models. The Company performs procedures to understand and assess the methodologies, processes and controls of valuation service providers.
In addition, the Company may validate the reasonableness of fair values by comparing information obtained from valuation service providers or brokers to other third-party valuation sources for selected securities. The Company performs ongoing price validation procedures such as back-testing of actual sales, which corroborate the various inputs used in internal models to market observable data. When fair value determinations are expected to be more variable, the Company validates them through reviews by members of management who have relevant expertise and who are independent of those charged with executing investment transactions.
The Company has two types of situations where investments are classified as Level 3 in the fair value hierarchy:
(1)Specific inputs significant to the fair value estimation models are not market observable. This primarily occurs in the Company’s use of broker quotes to value certain securities where the inputs have not been corroborated to be market observable, and the use of valuation models that use significant non-market observable inputs.
(2)Quotes continue to be received from independent third-party valuation service providers and all significant inputs are market observable; however, there has been a significant decrease in the
volume and level of activity for the asset when compared to normal market activity such that the degree of market observability has declined to a point where categorization as a Level 3 measurement is considered appropriate. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources.
Certain assets are not carried at fair value on a recurring basis, including mortgage loans, bank loans, real estate and policy loans and are only included in the fair value hierarchy disclosure when the individual investment is reported at fair value.
In determining fair value, the Company principally uses the market approach which generally utilizes market transaction data for the same or similar instruments. To a lesser extent, the Company uses the income approach which involves determining fair values from discounted cash flow methodologies. For the majority of Level 2 and Level 3 valuations, a combination of the market and income approaches is used.
Summary of significant inputs and valuation techniques for Level 2 and Level 3 assets and liabilities measured at fair value on a recurring basis
Level 2 measurements
•Fixed income securities:
U.S. government and agencies, municipal, corporate - public and foreign government: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.
Corporate - privately placed: Privately placed securities are valued using a discounted cash flow model that is widely accepted in the financial services industry and uses market observable inputs and inputs derived principally from, or corroborated by, observable market data. The primary inputs to the discounted cash flow model include an interest rate yield curve, as well as published credit spreads for similar assets in markets that are not active that incorporate the credit quality and industry sector of the issuer.
Corporate - privately placed also includes redeemable preferred stock that are valued using quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, underlying stock prices and credit spreads.
ABS and MBS: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, collateral performance and credit spreads. Certain ABS are valued based
on non-binding broker quotes whose inputs have been corroborated to be market observable. Residential MBS include prepayment speeds as a primary input for valuation.
•Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets in markets that are not active.
•Short-term: The primary inputs to the valuation include quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields and credit spreads.
•Other investments: Free-standing exchange listed derivatives that are not actively traded are valued based on quoted prices for identical instruments in markets that are not active.
Over-the-counter (“OTC”) derivatives, including interest rate swaps, foreign currency swaps, total return swaps, foreign exchange forward contracts, certain options and certain credit default swaps, are valued using models that rely on inputs such as interest rate yield curves, implied volatilities, index price levels, currency rates, and credit spreads that are observable for substantially the full term of the contract. The valuation techniques underlying the models are widely accepted in the financial services industry and do not involve significant judgment.
•Assets held for sale: Comprise U.S. government and agencies, municipal, corporate, MBS fixed income securities and short-term. The significant inputs and valuation techniques are based on the respective asset type as described above.
Level 3 measurements
•Fixed income securities:
Municipal: Comprise municipal bonds that are not rated by third-party credit rating agencies. The primary inputs to the valuation of these municipal bonds include quoted prices for identical or similar assets that are not market observable, contractual cash flows, benchmark yields and credit spreads. Also included are municipal bonds valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and municipal bonds in default valued based on the present value of expected cash flows.
Corporate - public and privately placed: Primarily valued using a discounted cash flow model that is widely accepted in the financial services industry using inputs that have not been corroborated to be market observable. In certain situations, non-binding broker quotes where the inputs have not been corroborated to be market observable are used. Other inputs for corporate fixed income securities include expected cash flows, an interest rate yield curve, as well as published credit spreads for similar assets that incorporate the credit quality and industry sector of the issuer.
ABS and MBS: The primary inputs to the valuation include expected cash flows, benchmark yields,
collateral performance and credit spreads. Residential MBS include prepayment speeds as a primary input for valuation.
•Equity securities: The primary inputs to the valuation include quoted prices or quoted net asset values for identical or similar assets that are not market observable.
•Short-term: For certain short-term investments, amortized cost is used as the best estimate of fair value.
•Other investments: Certain options (including swaptions) are valued using models that are widely accepted in the financial services industry. These are categorized as Level 3 as a result of the significance of non-market observable inputs such as volatility. Other primary inputs include interest rate yield curves and quoted prices for identical or similar assets in markets that exhibit less liquidity relative to those markets supporting Level 2 fair value measurements. Certain OTC interest rate swaps associated with real estate investments are valued using non-market observable counterparty valuations.
•Other assets: Includes the contingent consideration provision in the sale agreement for Allstate Life Insurance Company (“ALIC”) which meets the definition of a derivative. This derivative is valued internally using a model that includes stochastically determined cash flows and inputs that include spot and forward interest rates, volatility, corporate credit spreads and a liquidity
discount. This derivative is categorized as Level 3 due to the significance of non-market observable inputs.
•Assets held for sale: Comprise corporate fixed income securities. The significant inputs and valuation techniques are based on the respective asset type as described above.
Assets measured at fair value on a non-recurring basis
Comprise long-lived assets to be disposed of by sale, including real estate, that are written down to fair value less costs to sell and bank loans written down to fair value in connection with recognizing credit losses.
Investments excluded from the fair value hierarchy
Investments reported at net asset value (“NAV”)
Limited partnerships carried at fair value, which do not have readily determinable fair values, use NAV provided by the investees and are excluded from the fair value hierarchy. These investments are generally not redeemable by the investees and generally cannot be sold without approval of the general partner. The Company receives distributions of income and proceeds from the liquidation of the underlying assets of the investees, which usually takes place in years 4-9 of the typical contractual life of 10-12 years. As of June 30, 2025, the Company has commitments to invest $138 million in limited partnership interests that are reported at net asset value.
Assets and liabilities measured at fair value
June 30, 2025
($ in millions)Quoted prices in active markets for identical assets (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)Counterparty and cash collateral nettingTotal
Assets     
Fixed income securities:     
U.S. government and agencies$15,703 $9 $—  $15,712 
Municipal— 7,284 2  7,286 
Corporate - public— 18,971 35  19,006 
Corporate - privately placed— 8,847 109 8,956 
Foreign government— 1,391 —  1,391 
ABS— 944 39 983 
MBS
— 1,013 88 1,101 
Total fixed income securities15,703 38,459 273  54,435 
Equity securities (1)
1,611 278 358  2,247 
Short-term investments3,756 5,880 4  9,640 
Other investments— 2 1 $(2)1 
Other assets1 — 137  138 
Assets held for sale195 125 — 320 
Total recurring basis assets21,266 44,744 773 (2)66,781 
Non-recurring basis
— — 2  2 
Total assets at fair value$21,266 $44,744 $775 $(2)$66,783 
Investments reported at NAV953 
Total$67,736 
Liabilities     
Other liabilities$(3)$(49)$(1)$38 $(15)
Total recurring basis liabilities(3)(49)(1)38 (15)
Total liabilities at fair value$(3)$(49)$(1)$38 $(15)
(1)Excludes $150 million of preferred stock measured at cost.
Assets and liabilities measured at fair value
December 31, 2024
($ in millions)Quoted prices in active markets for identical assets (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)Counterparty and cash collateral nettingTotal
Assets     
Fixed income securities:     
U.S. government and agencies$11,099 $9 $—  $11,108 
Municipal— 8,840 2  8,842 
Corporate - public— 21,211 22  21,233 
Corporate - privately placed— 8,849 110 8,959 
Foreign government— 1,364 —  1,364 
ABS— 1,119 26 1,145 
MBS
— 8 88 96 
Total fixed income securities11,099 41,400 248  52,747 
Equity securities (1)
3,600 306 407  4,313 
Short-term investments2,016 2,516 5  4,537 
Other investments— 21 1 $(19)3 
Other assets— — 134  134 
Assets held for sale241 1,536 7 1,784 
Total recurring basis assets16,956 45,779 802 (19)63,518 
Non-recurring basis— — 3  3 
Total assets at fair value$16,956 $45,779 $805 $(19)$63,521 
Investments reported at NAV1,096 
Total$64,617 
Liabilities     
Other liabilities$(1)$(1)$— $1 $(1)
Total recurring basis liabilities(1)(1)— 1 (1)
Total liabilities at fair value$(1)$(1)$— $1 $(1)
(1)Excludes $150 million of preferred stock measured at cost.
As of June 30, 2025 and December 31, 2024, Level 3 fair value measurements of fixed income securities totaled $273 million and $248 million, respectively, and included $85 million and $87 million, respectively, of securities valued based on third-party discounted cash flow pricing models where the inputs have not been corroborated to be market observable, $24 million and $22 million, respectively, of securities valued based on non-binding broker quotes where the inputs have not been corroborated to be market observable and $2 million for both periods, of municipal fixed income securities that are not rated by third-party credit rating agencies.
An increase (decrease) in credit spreads for fixed income securities valued based on third-party discounted cash flow pricing models or non-binding broker quotes would result in a lower (higher) fair value, and an increase (decrease) in the credit rating of municipal bonds that are not rated by third-party credit rating agencies would result in a higher (lower) fair value.
Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2025
Balance as of
 March 31, 2025		Total gains (losses)
included in:		 Transfers Balance as of
 June 30, 2025
($ in millions)Net incomeOCIInto Level 3Out of Level 3PurchasesSalesSettlements
Assets
Fixed income securities:
Municipal$2 $— $— $— $— $— $— $— $2 
Corporate - public35 — — — — — — — 35 
Corporate - privately placed109 — 1 — — — — (1)109 
ABS51 — — — (26)15 — (1)39 
MBS
88 — — — — — — — 88 
Total fixed income securities285 — 1 — (26)15 — (2)273 
Equity securities416 16 — — — 1 (75)— 358 
Short-term investments2 — — — — 2 — — 4 
Other investments1 — — — — — — — 1 
Other assets134 3 — — — — — — 137 
Assets held for sale
7 — 1 — — — (8)— — 
Total recurring Level 3 assets845 19 2 — (26)18 (83)(2)773 
Liabilities
Other liabilities
(1)— — — — — — — (1)
Total recurring Level 3 liabilities$(1)$— $— $— $— $— $— $— $(1)
Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2025
Balance as of
 December 31, 2024		Total gains (losses)
included in:		 Transfers Balance as of
 June 30, 2025
($ in millions)Net incomeOCIInto Level 3Out of Level 3PurchasesSalesSettlements
Assets
Fixed income securities:
Municipal$2 $— $— $— $— $— $— $— $2 
Corporate - public22 (1)1 — (7)20 — — 35 
Corporate - privately placed110 (1)1 — — — — (1)109 
ABS26 — — 26 (26)15 — (2)39 
MBS
88 — — — — — — — 88 
Total fixed income securities248 (2)2 26 (33)35 — (3)273 
Equity securities407 30 — — — 5 (84)— 358 
Short-term investments5 — — — — 3 (4)— 4 
Other investments1 — — — — — — — 1 
Other assets134 3 — — — — — — 137 
Assets held for sale
7 — 1 — — — (8)— — 
Total recurring Level 3 assets802 31 3 26 (33)43 (96)(3)773 
Liabilities— 
Other liabilities
— (1)— — — — — — (1)
Total recurring Level 3 liabilities$— $(1)$— $— $— $— $— $— $(1)
Rollforward of Level 3 assets and liabilities held at fair value during the three month period ended June 30, 2024
Balance as of
 March 31, 2024		Total gains (losses)
 included in:		 Transfers Balance as of
 June 30, 2024
($ in millions)Net incomeOCIInto Level 3Out of Level 3PurchasesSalesSettlements
Assets
Fixed income securities:
Municipal$8 $— $— $— $— $— $(1)$— $7 
Corporate - public23 1 (1)— — 11 (4)— 30 
Corporate - privately placed54 (2)— — — — (2)— 50 
ABS and MBS
58 — — — — 14 — (1)71 
Total fixed income securities143 (1)(1)— — 25 (7)(1)158 
Equity securities408 (3)— — — 9 (21)— 393 
Short-term investments21 — — — — 1 (20)(1)1 
Other investments2 — — — — — — — 2 
Other assets120 1 — — — — — — 121 
Total recurring Level 3 assets694 (3)(1)— — 35 (48)(2)675 
Liabilities
Total recurring Level 3 liabilities$— $— $— $— $— $— $— $— $— 
Rollforward of Level 3 assets and liabilities held at fair value during the six month period ended June 30, 2024
Balance as of
 December 31, 2023		Total gains (losses)
 included in:		 Transfers Balance as of
 June 30, 2024
($ in millions)Net incomeOCIInto Level 3Out of Level 3PurchasesSalesSettlements
Assets
Fixed income securities:
Municipal$11 $— $— $— $— $— $(2)$(2)$7 
Corporate - public26 1 1 — — 11 (9)— 30 
Corporate - privately placed58 (6)— — — — (2)— 50 
ABS and MBS
58 — — — — 14 — (1)71 
Total fixed income securities153 (5)1 — — 25 (13)(3)158 
Equity securities402 6 — — — 9 (24)— 393 
Short-term investments1 — — — — 21 (20)(1)1 
Other investments2 — — — — — — — 2 
Other assets118 3 — — — — — — 121 
Total recurring Level 3 assets676 4 1 — — 55 (57)(4)675 
Liabilities
Total recurring Level 3 liabilities$— $— $— $— $— $— $— $— $— 
Total Level 3 gains (losses) included in net income
Three months ended June 30,Six months ended June 30,
($ in millions)2025202420252024
Net investment income$— $1 $— $1 
Net gains (losses) on investments and derivatives
16 (5)27 — 
Operating costs and expenses
3 1 3 3 
There were no transfers into Level 3 during the three months ended June 30, 2025. Transfers into Level 3 during the six months ended June 30, 2025 included situations where a quote was not provided by the Company’s independent third-party valuation service provider and as a result the price was stale or had been replaced with a broker quote where the inputs had not been corroborated to be market observable resulting in the security being classified as Level 3. There were no transfers into Level 3 during the three and six months ended June 30, 2024.
Transfers out of Level 3 during the three and six months ended June 30, 2025 included situations where a broker quote was used in the prior period and a quote with market observable inputs became available from the Company’s independent third-party valuation service provider in the current period. Any gains or losses related to the change in valuation source for individual securities were not significant. There were no transfers out of Level 3 during the three and six months ended June 30, 2024.
Valuation changes included in net income and OCI for Level 3 assets and liabilities still held
Three months ended June 30,Six months ended June 30,
($ in millions)2025202420252024
Assets    
Fixed income securities:
Corporate - public$— $1 $(1)$1 
Corporate - privately placed— (2)— (6)
Total fixed income securities— (1)(1)(5)
Equity securities15 — 29 11 
Other assets3 1 3 3 
Total recurring Level 3 assets$18 $— $31 $9 
Liabilities    
Other liabilities$— $— $(1)$— 
Total recurring Level 3 liabilities— — (1)— 
Total included in net income$18 $— $30 $9 
Components of net income
Net investment income$— $1 $— $1 
Net gains (losses) on investments and derivatives15 (2)27 5 
Operating costs and expenses3 1 3 3 
Total included in net income$18 $— $30 $9 
Assets
Corporate - public$— $(1)$1 $1 
Corporate - privately placed1 — 1 — 
Changes in unrealized net capital gains and losses reported in OCI$1 $(1)$2 $1 
Financial instruments not carried at fair value
($ in millions)June 30, 2025December 31, 2024
Financial assetsFair value level
Amortized cost, net (1)
Fair
value
Amortized cost, net (1)
Fair
value
Mortgage loansLevel 3$807 $782 $784 $746 
Bank loansLevel 3335 341 201 207 
Financial liabilitiesFair value level
Carrying value (1)
Fair
value
Carrying value (1)
Fair
value
DebtLevel 2$8,087 $7,880 $8,085 $7,740 
Liability for collateralLevel 21,918 1,918 2,041 2,041 
Liabilities held for sale
Level 3— — 40 40 
(1)Represents the amounts reported on the Condensed Consolidated Statements of Financial Position.