v3.25.2
Fair value measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair value measurements

Note 17. 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

 

June 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in fixed maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury, U.S. government corporations
   and agencies

$

3,857

 

 

$

3,857

 

 

$

3,823

 

 

$

34

 

 

$

—

 

Foreign governments

 

9,736

 

 

 

9,736

 

 

 

9,601

 

 

 

135

 

 

 

—

 

Corporate and other

 

1,491

 

 

 

1,491

 

 

 

—

 

 

 

1,015

 

 

 

476

 

Investments in equity securities

 

267,923

 

 

 

267,923

 

 

 

258,484

 

 

 

10

 

 

 

9,429

 

Investments in Kraft Heinz & Occidental common stock

 

24,866

 

 

 

19,538

 

 

 

19,538

 

 

 

—

 

 

 

—

 

Loans and finance receivables

 

28,722

 

 

 

28,744

 

 

 

—

 

 

 

396

 

 

 

28,348

 

Derivative contract assets (1)

 

197

 

 

 

197

 

 

 

29

 

 

 

152

 

 

 

16

 

Derivative contract liabilities (1)

 

218

 

 

 

218

 

 

 

11

 

 

 

105

 

 

 

102

 

Notes payable and other borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance and other

 

45,040

 

 

 

40,319

 

 

 

—

 

 

 

40,284

 

 

 

35

 

Railroad, utilities and energy

 

81,980

 

 

 

75,387

 

 

 

—

 

 

 

75,387

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in fixed maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury, U.S. government corporations
   and agencies

$

4,459

 

 

$

4,459

 

 

$

4,425

 

 

$

34

 

 

$

—

 

Foreign governments

 

9,362

 

 

 

9,362

 

 

 

9,199

 

 

 

163

 

 

 

—

 

Corporate and other

 

1,543

 

 

 

1,543

 

 

 

—

 

 

 

1,041

 

 

 

502

 

Investments in equity securities

 

271,588

 

 

 

271,588

 

 

 

261,910

 

 

 

10

 

 

 

9,668

 

Investments in Kraft Heinz & Occidental common stock

 

30,682

 

 

 

23,047

 

 

 

23,047

 

 

 

—

 

 

 

—

 

Loans and finance receivables

 

27,798

 

 

 

27,579

 

 

 

—

 

 

 

810

 

 

 

26,769

 

Derivative contract assets (1)

 

201

 

 

 

201

 

 

 

33

 

 

 

158

 

 

 

10

 

Derivative contract liabilities (1)

 

234

 

 

 

234

 

 

 

15

 

 

 

143

 

 

 

76

 

Notes payable and other borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance and other

 

44,885

 

 

 

40,181

 

 

 

—

 

 

 

40,158

 

 

 

23

 

Railroad, utilities and energy

 

79,877

 

 

 

72,506

 

 

 

—

 

 

 

72,506

 

 

 

—

 

——————

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

Notes to Consolidated Financial Statements

Note 17. Fair value measurements

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.

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) follow (in millions).

 

Balance at
January 1

 

 

Gains (losses)
in earnings

 

 

Balance at
June 30

 

Investments in equity securities:

 

 

 

 

 

 

 

 

2025

$

9,663

 

 

$

(240

)

 

$

9,423

 

2024

 

10,468

 

 

 

(114

)

 

 

10,354

 

Quantitative information as of June 30, 2025 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

$

8,635

 

 

Discounted cash flow

 

Expected duration

 

4 years

 

 

 

 

 

Discounts for liquidity
   and subordination

 

325 bps

Common stock warrants

 

790

 

 

Warrant pricing model

 

Expected duration

 

5 years

 

 

 

 

 

Volatility

 

42%

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 by GAAP. These investments are private placements and are not traded in securities markets. 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 illiquidity and 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.