v3.25.4
Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Financial Instruments Carried at Fair Value

The following summarizes our financial instruments carried at fair value (in millions) on a recurring basis by the fair value hierarchy levels:

As of December 31, 2025
Asset (Liability) Measurement in theTotal
Fair Value HierarchyFair
(Level 1)(Level 2)(Level 3)Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$– $56,426 $7,297 $63,723 
U.S. government bonds848 19 – 867 
State and municipal bonds– 1,965 – 1,965 
Foreign government bonds– 223 – 223 
RMBS– 1,965 – 1,965 
CMBS– 2,338 85 2,423 
ABS– 12,594 3,584 16,178 
Hybrid and redeemable preferred securities31 128 83 242 
Trading securities– 1,331 329 1,660 
Equity securities (1)
233 234 28 495 
Mortgage loans on real estate– – 199 199 
Derivative investments (2)
– 16,001 28 16,029 
Other investments – short-term investments– 193 1 194 
MRB assets– – 4,753 4,753 
Other assets:
Ceded MRBs– – 19 19 
Indexed annuity ceded embedded derivatives– – 2,482 2,482 
LPR ceded derivative– – 202 202 
Separate account assets383 179,709 – 180,092 
Total assets$1,495 $273,126 $19,090 $293,711 
Liabilities
Policyholder account balances – RILA, fixed annuity
and IUL contracts$– $– $(15,115)$(15,115)
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives– 358 (156)202 
MRB liabilities– – (1,118)(1,118)
Other liabilities:
Ceded MRBs– – (2,884)(2,884)
Derivative liabilities (2)
– (6,008)(136)(6,144)
Total liabilities$– $(5,650)$(19,409)$(25,059)

As of December 31, 2024
Asset (Liability) Measurement in theTotal
Fair Value HierarchyFair
(Level 1)(Level 2)(Level 3)Value
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$– $54,945 $6,888 $61,833 
U.S. government bonds370 20 – 390 
State and municipal bonds– 2,148 – 2,148 
Foreign government bonds– 233 – 233 
RMBS– 1,702 1 1,703 
CMBS– 1,575 8 1,583 
ABS– 11,677 2,092 13,769 
Hybrid and redeemable preferred securities47 131 63 241 
Trading securities– 1,746 259 2,005 
Equity securities28 232 34 294 
Mortgage loans on real estate– – 232 232 
Derivative investments (2)
– 13,728 3 13,731 
Other investments – short-term investments– 369 23 392 
MRB assets– – 4,860 4,860 
Other assets:
Ceded MRBs– – 14 14 
Indexed annuity ceded embedded derivatives– – 1,970 1,970 
LPR ceded derivative– – 190 190 
Separate account assets391 168,047 – 168,438 
Total assets$836 $256,553 $16,637 $274,026 
Liabilities
Policyholder account balances – RILA,
fixed annuity and IUL contracts$– $– $(12,449)$(12,449)
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives– 787 (59)728 
MRB liabilities– – (1,046)(1,046)
Other liabilities:
Ceded MRBs– – (2,763)(2,763)
Derivative liabilities (2)
– (4,256)(139)(4,395)
Total liabilities$– $(3,469)$(16,456)$(19,925)

(1) Total investments included in the fair value hierarchy exclude certain closed-end funds that are measured at estimated fair value using the NAV per share (or its equivalent) practical expedient. The estimated fair value of such investments was $134 million as of December 31, 2025.
(2) Derivative investment assets and liabilities are presented within the fair value hierarchy on a gross basis by derivative type and not on a master netting basis by counterparty.
 
The following summarizes changes to our financial instruments carried at fair value (in millions) and classified within Level 3 of the fair value hierarchy. The gains and losses below may include changes in fair value due in part to observable inputs that are a component of the valuation methodology. The summary schedule excludes changes to MRB assets and MRB liabilities as these balances are rolled forward in Note 9.

For the Year Ended December 31, 2025
GainsIssuances,Transfers
BeginningItems(Losses)Sales,Into orEnding
AssetIncludedinMaturities,OutAsset
(Liability)inOCISettlements,of(Liability)
FairNet andCalls,Level 3,Fair
ValueIncome
Other(1)
NetNetValue
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds$6,888 $(63)$19 $(238)$691 $7,297 
RMBS1 – 1 67 (69)– 
CMBS8 – – 84 (7)85 
ABS2,092 (29)55 1,651 (185)3,584 
Hybrid and redeemable preferred
securities63 – 1 19 – 83 
Trading securities259 7 – 35 28 329 
Equity securities34 (9)– 1 2 28 
Mortgage loans on real estate232 (3)4 (34)– 199 
Other investments – short-term investments23 – – (22)– 1 
Other assets:
Ceded MRBs (3)
14 5 – – – 19 
Indexed annuity ceded embedded
derivatives (4)
1,970 222 – 290 – 2,482 
LPR ceded derivative (5)
190 12 – – – 202 
Liabilities
Policyholder account balances –
RILA, fixed annuity and IUL
contracts (4)
(12,449)(2,237)– (429)– (15,115)
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives (4)
(59)(97)– – – (156)
Other liabilities:
Ceded MRBs (3)
(2,763)(121)– – – (2,884)
Derivative liabilities, net(136)24 – 4 – (108)
For the Year Ended December 31, 2024
GainsIssuances,Transfers
BeginningItems(Losses)Sales,Into orEnding
AssetIncludedinMaturities,OutAsset
(Liability)inOCISettlements,of(Liability)
FairNetandCalls,Level 3,Fair
ValueIncome
Other(1)
NetNetValue
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds$6,350 $(3)$2 $696 $(157)$6,888 
State and municipal bonds5 – – – (5)– 
RMBS1 – – – – 1 
CMBS8 – – 19 (19)8 
ABS1,476 2 23 980 (389)2,092 
Hybrid and redeemable preferred
securities48 – 3 12 – 63 
Trading securities272 2 – (18)3 259 
Equity securities36 (3)– – 1 34 
Mortgage loans on real estate288 9 1 (66)– 232 
Other investments – short-term investments– – – 13 10 23 
Other assets:
Ceded MRBs (3)
274 (260)– – – 14 
Indexed annuity ceded embedded
derivatives (4)
940 227 – 803 – 1,970 
LPR ceded derivative (5)
206 (16)– – – 190 
Liabilities
Policyholder account balances –
RILA, fixed annuity and IUL
contracts (4)
(9,077)(3,059)– (313)– (12,449)
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives (4)
– (59)– – – (59)
Other liabilities:
Ceded MRBs (3)

(1,149)(1,614)– – – (2,763)
Derivative liabilities, net36 (124)– 3 (51)(136)
For the Year Ended December 31, 2023
GainsIssuances,Transfers
BeginningItems(Losses)Sales,Into orEnding
AssetIncludedinMaturities,OutAsset
(Liability)inOCISettlements,of(Liability)
FairNetandCalls,Level 3,Fair
ValueIncome
Other(1)
NetNetValue
Assets
Investments: (2)
Fixed maturity AFS securities:
Corporate bonds$5,017 $(2)$11 $1,345 $(21)$6,350 
State and municipal bonds35 (4)4 (30)– 5 
RMBS1 – – 5 (5)1 
CMBS– – – (4)12 8 
ABS1,117 – 9 733 (383)1,476 
Hybrid and redeemable preferred
securities34 – – (2)16 48 
Trading securities568 17 – (313)– 272 
Equity securities153 (19)– (98)– 36 
Mortgage loans on real estate487 (7)5 (197)– 288 
Derivative investments, net2 (13)– 16 31 36 
Other assets:
Ceded MRBs (3)
540 (266)– – – 274 
Indexed annuity ceded embedded
derivatives (4)
525 6 – 409 – 940 
LPR ceded derivative (5)
212 (6)– – – 206 
Liabilities
Policyholder account balances –
RILA, fixed annuity and IUL
contracts (4)
(4,783)(3,193)– (1,101)– (9,077)
Other liabilities – ceded MRBs (3)
(246)(903)– – – (1,149)
(1) The changes in fair value of the interest rate swaps are offset by an adjustment to derivative investments (see Note 5).
(2) Amortization and accretion of premiums and discounts are included in net investment income on the Consolidated Statements of Comprehensive Income (Loss). Gains (losses) from sales, maturities, settlements and calls and credit loss expense are included in realized gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(3) Gains (losses) from the changes in fair value are included in market risk benefit gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(4) Gains (losses) from the changes in fair value are included in realized gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(5) Gains (losses) from the changes in fair value are included in benefits on the Consolidated Statements of Comprehensive Income (Loss).
The following provides the components of the items included in issuances, sales, maturities, settlements and calls, net, (in millions) as reported above:

For the Year Ended December 31, 2025
IssuancesSalesMaturitiesSettlementsCallsTotal
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$1,675 $(1,404)$(6)$(473)$(30)$(238)
RMBS67 – – – – 67 
CMBS99 (15)– – – 84 
ABS2,287 (128)(10)(383)(115)1,651 
Hybrid and redeemable preferred
securities21 (2)– – – 19 
Trading securities171 (75)(5)(54)(2)35 
Equity securities14 (13)– – – 1 
Mortgage loans on real estate2 (1)(30)(5)– (34)
Other investments – short-term investments11 – (16)(17)– (22)
Other assets – indexed annuity ceded
embedded derivatives130 – – 160 – 290 
Liabilities
Policyholder account balances –
RILA, fixed annuity and IUL
contracts(1,541)– – 1,112 – (429)
Derivative liabilities, net4 – – – – 4 

For the Year Ended December 31, 2024
IssuancesSalesMaturitiesSettlementsCallsTotal
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$1,646 $(371)$(2)$(576)$(1)$696 
CMBS19 – – – – 19 
ABS1,438 (82)– (319)(57)980 
Hybrid and redeemable preferred
 securities16 – – – (4)12 
Trading securities5 1 – (24)– (18)
Equity securities1 (1)– – – – 
Mortgage loans on real estate1 (31)(29)(7)– (66)
Other investments – short-term investments16 – (3)– – 13 
Other assets – indexed annuity ceded
 embedded derivatives134 – – 669 – 803 
Liabilities
Policyholder account balances –
 RILA, fixed annuity and IUL
contracts(1,137)– – 824 – (313)
Other liabilities – derivative liabilities4 – (1)– – 3 
For the Year Ended December 31, 2023
IssuancesSalesMaturitiesSettlementsCallsTotal
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$2,030 $(269)$(34)$(371)$(11)$1,345 
State and municipal bonds– (30)– – – (30)
RMBS5 – – – – 5 
CMBS– – – (4)– (4)
ABS971 (2)– (230)(6)733 
Hybrid and redeemable preferred
securities– – – – (2)(2)
Trading securities– (231)– (82)– (313)
Equity securities1 (99)– – – (98)
Mortgage loans on real estate5 – – (202)– (197)
Derivative investments, net19 – (3)– – 16 
Other assets – indexed annuity ceded
embedded derivatives404 – – 5 – 409 
Liabilities
Policyholder account balances –
RILA, fixed annuity and IUL
contracts(1,113)– – 12 – (1,101)

The following summarizes changes in unrealized gains (losses) included in net income (loss) related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

For the Years Ended December 31,
202520242023
Investments:
Trading securities (1)
$2 $– $8 
Equity securities (1)
(5)(1)(16)
Mortgage loans on real estate (1)
(3)– (8)
Derivative investments, net (1)
(35)(121)1 
MRBs, net (2)
197 904 1,071 
Other assets – LPR ceded derivative (3)
13 (16)(6)
Funds withheld reinsurance liabilities –
reinsurance-related embedded derivatives (1)
(97)(59)– 
Embedded derivatives – indexed annuity
and IUL contracts, net (1)
915 1,061 (20)
(1) Included in realized gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(2) Included in market risk benefit gain (loss) on the Consolidated Statements of Comprehensive Income (Loss).
(3) Included in benefits on the Consolidated Statements of Comprehensive Income (Loss).
The following summarizes changes in unrealized gains (losses) included in OCI, net of tax, related to financial instruments carried at fair value classified within Level 3 that we still held (in millions):

For the Years Ended December 31,
202520242023
Investments:
Fixed maturity AFS securities:
Corporate bonds$(14)$(23)$(6)
State and municipal bonds– – 3 
ABS60 (2)9 
Hybrid and redeemable preferred
securities1 3 1 
Mortgage loans on real estate3 2 4 

The following provides the components of the transfers into and out of Level 3 (in millions) as reported above:
For the Year Ended December 31, 2025
TransfersTransfers
IntoOut of
Level 3Level 3Total
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$828 $(137)$691 
RMBS– (69)(69)
CMBS– (7)(7)
ABS81 (266)(185)
Trading securities38 (10)28 
Equity securities54 (52)2 

For the Year Ended December 31, 2024
TransfersTransfers
IntoOut of
Level 3Level 3Total
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$29 $(186)$(157)
State and municipal bonds– (5)(5)
CMBS– (19)(19)
ABS45 (434)(389)
Trading securities3 – 3 
Equity securities5 (4)1 
Other investments – short-term investments10 – 10 
Liabilities
Other liabilities – derivative liabilities– (51)(51)
For the Year Ended December 31, 2023
TransfersTransfers
IntoOut of
Level 3Level 3Total
Assets
Investments:
Fixed maturity AFS securities:
Corporate bonds$158 $(179)$(21)
RMBS– (5)(5)
CMBS12 – 12 
ABS8 (391)(383)
Hybrid and redeemable preferred securities16 – 16 
Derivative investments31 – 31 

Transfers into and out of Level 3 are generally the result of observable market information on financial instruments no longer being available or becoming available to our pricing vendors. For the years ended December 31, 2025, 2024 and 2023, transfers in and out of Level 3 were attributable primarily to the financial instruments’ observable market information no longer being available or becoming available.
The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements as of December 31, 2025:

Weighted
FairValuationSignificantAssumption orAverage Input
ValueTechniqueUnobservable InputsInput Ranges
Range (1)
Assets
Investments:
Fixed maturity AFS
securities:
Corporate bonds$673 Discounted cash flow
Liquidity/duration adjustment (2)
0.0 %– 6.2 %1.4 %
ABS8Discounted cash flow
Liquidity/duration adjustment (2)
1.1 %– 1.1 %1.1 %
CMBS41 Discounted cash flow
Liquidity/duration adjustment (2)
1.8 %– 1.9 %1.8 %
Hybrid and redeemable
preferred securities40 Discounted cash flow
Liquidity/duration adjustment (2)
1.6 %– 1.9 %1.7 %
Equity securities4 Discounted cash flow
Liquidity/duration adjustment (2)
4.5 %– 4.5 %4.5 %
MRB assets4,753 Discounted cash flow
Lapse (3)
1.0 %– 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %– 100.0 %93.0 %
Claims utilization factor (5)
50.0 %– 100.0 %
(10)
Premiums utilization factor (5)
80.0 %– 115.0 %
(10)
Non-performance risk (6)
0.2 %– 1.6 %1.3 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %– 27.0 %15.1 %
Other assets:
Ceded MRBs (11)
19 
Indexed annuity
ceded embedded
derivatives2,482 Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
LPR ceded
derivative202 Discounted cash flow
Lapse (3)
0.1 %– 2.4 %
(10)
Non-performance risk (6)
0.2 %– 1.6 %1.2 %
Mortality (7)
(9)
(10)
Liabilities
Policyholder account
balances – indexed annuity
contracts embedded
derivatives$(15,031)Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
MRB liabilities(1,118)Discounted cash flow
Lapse (3)
1.0 %– 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %– 100.0 %93.0 %
Claims utilization factor (5)
50.0 %– 100.0 %
(10)
Premiums utilization factor (5)
80.0 %– 115.0 %
(10)
Non-performance risk (6)
0.2 %– 1.6 %1.3 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %– 27.0 %15.1 %
Other liabilities – ceded
MRBs (11)
(2,884)
The following summarizes the fair value (in millions), valuation techniques and significant unobservable inputs of the Level 3 fair value measurements as of December 31, 2024:

Weighted
FairValuationSignificantAssumption orAverage Input
ValueTechniqueUnobservable InputsInput Ranges
Range (1)
Assets
Investments:
Fixed maturity AFS
securities:
Corporate bonds$185 Discounted cash flow
Liquidity/duration adjustment (2)
0.0 %– 3.1 %1.7 %
CMBS8 Discounted cash flow
Liquidity/duration adjustment (2)
1.9 %– 1.9 %1.9 %
ABS10 Discounted cash flow
Liquidity/duration adjustment (2)
1.3 %– 1.3 %1.3 %
Hybrid and redeemable
 preferred securities19 Discounted cash flow
Liquidity/duration adjustment (2)
1.4 %– 1.9 %1.8 %
Equity securities5 Discounted cash flow
Liquidity/duration adjustment (2)
4.5 %– 4.5 %4.5 %
MRB assets4,860 Discounted cash flow
Lapse (3)
1.0 %– 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %– 100.0 %92.0 %
Claims utilization factor (5)
60.0 %– 100.0 %
(10)
Premiums utilization factor (5)
80.0 %– 115.0 %
(10)
Non-performance risk (6)
0.3 %– 2.0 %1.6 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %– 29.0 %14.5 %
Other assets:
Ceded MRBs (11)
14 
Indexed annuity
ceded embedded
derivatives1,970 Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
LPR ceded
derivative190 Discounted cash flow
Lapse (3)
0.1 %– 2.0 %
(10)
Non-performance risk (6)
0.3 %– 2.0 %1.4 %
Mortality (7)
(9)
(10)
Liabilities
Policyholder account
balances – indexed annuity
contracts embedded
derivatives$(12,402)Discounted cash flow
Lapse (3)
0.0 %– 9.0 %
(10)
Mortality (7)
(9)
(10)
MRB liabilities(1,046)Discounted cash flow
Lapse (3)
1.0 %– 30.0 %
(10)
Utilization of GLB withdrawals (4)
85.0 %– 100.0 %92.0 %
Claims utilization factor (5)
60.0 %– 100.0 %
(10)
Premiums utilization factor (5)
80.0 %– 115.0 %
(10)
Non-performance risk (6)
0.3 %– 2.0 %1.6 %
Mortality (7)
(9)
(10)
Volatility (8)
1.0 %– 29.0 %14.5 %
Other liabilities – ceded
MRBs (11)
(2,763)

(1) Unobservable inputs were weighted by the relative fair value of the instruments, unless otherwise noted.
(2) The liquidity/duration adjustment input represents an estimated market participant composite of adjustments attributable to liquidity premiums, expected durations, structures and credit quality that would be applied to the market observable information of an investment.
(3) The lapse input represents the estimated probability of a contract surrendering during a year, and thereby forgoing any future benefits. The range for indexed annuity contracts represents the lapses during the surrender charge period.
(4) The utilization of GLB withdrawals input represents the estimated percentage of policyholders that utilize the GLB withdrawal riders.
(5) The utilization factors are applied to the present value of claims or premiums, as appropriate, in the MRB calculation to estimate the impact of inefficient GLB withdrawal behavior, including taking less than or more than the maximum GLB withdrawal.
(6) The non-performance risk input represents the estimated additional credit spread that market participants would apply to the market observable discount rate when pricing a contract. The non-performance risk input was weighted by the absolute value of the sensitivity of the reserve to the non-performance risk assumption. The non-performance risk input for LPR ceded derivative was weighted using a simple average.
(7) The mortality input represents the estimated probability of when an individual belonging to a particular group, categorized according to age or some other factor such as gender, will die.
(8) The volatility input represents overall volatilities assumed for the underlying variable annuity funds, which include a mixture of equity and fixed-income assets. Volatility assumptions vary by fund due to the benchmarking of different indices. The volatility input was weighted by the relative account balance assigned to each index.
(9) The mortality is based on a combination of company and industry experience, adjusted for improvement factors.
(10) A weighted average input range is not a meaningful measurement for lapse, utilization factors or mortality.
(11) The fair value inputs for ceded MRBs are consistent with those used to value MRB assets and liabilities.

From the table above, we have excluded Level 3 fair value measurements obtained from independent, third-party pricing sources. We do not develop the significant inputs used to measure the fair value of these assets and liabilities, and the information regarding the significant inputs is not readily available to us. Independent broker-quoted fair values are non-binding quotes developed by market makers or broker-dealers obtained from third-party sources recognized as market participants. The fair value of a broker-quoted asset or liability is based solely on the receipt of an updated quote from a single market maker or a broker-dealer recognized as a market participant as we do not adjust broker quotes when used as the fair value measurement for an asset or liability. Significant increases or decreases in any of the quotes received from a third-party broker-dealer may result in a significantly higher or lower fair value measurement.

The embedded derivative liability associated with Fortitude Re was excluded from the above table. As discussed in Note 7, this embedded derivative liability was created through a coinsurance with funds withheld reinsurance agreement where the investments supporting the reinsurance agreement were withheld by us and continue to be reported on the Consolidated Balance Sheets. This reinsurance-related embedded derivative is valued as a total return swap with reference to the fair value of the investments held by us. Accordingly, the unobservable inputs utilized in the valuation of the reinsurance-related embedded derivative are a component of the investments supporting the reinsurance agreement that are reported on the Consolidated Balance Sheets.

Changes in any of the significant inputs presented in the table above would have resulted in a significant change in the fair value measurement of the asset or liability as follows:

• Investments – An increase in the liquidity/duration adjustment input would have resulted in a decrease in the fair value measurement.
•Indexed annuity contracts embedded derivatives – For direct embedded derivatives, an increase in the lapse or mortality inputs would have resulted in a decrease in the fair value measurement.
•LPR ceded derivative – Assuming our LPR ceded derivative is in an asset position: an increase in our lapse, non-performance risk or mortality inputs would have resulted in an increase in the fair value measurement.
•MRBs – Assuming our MRBs are in a liability position: an increase in our lapse, non-performance risk or mortality inputs would have resulted in a decrease in the fair value measurement, except for policies with guaranteed death benefit (“GDB”) riders only, in which case an increase in mortality inputs would have resulted in an increase in the fair value measurement.

For each category discussed above, the unobservable inputs are not inter-related; therefore, a directional change in one input would not have affected the other inputs.

As part of our ongoing valuation process, we assess the reasonableness of our valuation techniques or models and make adjustments as necessary. For more information, see Note 1.

Fair Value Option

Mortgage loans on real estate, net of allowance for credit losses, as reported on the Consolidated Balance Sheets, includes mortgage loans on real estate for which the fair value option was elected. The fair value option allows us to elect fair value as an alternative measurement for mortgage loans not otherwise reported at fair value. We have made these elections for certain mortgage loans associated with modified coinsurance agreements to help mitigate the inconsistency in earnings that would otherwise result from the use of embedded derivatives included with these loans. Changes in fair value are reflected in realized gain (loss) on the Consolidated Statement of Comprehensive Income (Loss). Changes in fair value due to instrument-specific credit risk are estimated using changes in credit spreads and quality ratings for the period reported. Mortgage loans on real estate for which the fair value option was elected are valued using third-party pricing services. We have procedures in place to review the valuations each quarter to ensure they are reasonable, including utilizing a separate third party to reperform the valuation for a selection of mortgage loans on an annual basis. Due to lack of observable inputs, mortgage loans electing the fair value option are classified as Level 3 within the fair value hierarchy.
The fair value and aggregate contractual principal for mortgage loans on real estate where the fair value option was elected (in millions) were as follows:
As of December 31,
20252024
Fair value$199 $232 
Aggregate contractual principal231 263 

For information on current and past due composition and accruing status for loans where we have elected the fair value option, see Note 3.

Financial Instruments Not Carried at Fair Value

The following summarizes the fair value by the fair value hierarchy levels and the carrying amount of our financial instruments not carried at fair value (in millions):
As of December 31, 2025
Asset (Liability) Measurement in the Total
Fair Value HierarchyFairCarrying
(Level 1)(Level 2)(Level 3)ValueAmount
Assets
Investments:
Mortgage loans on real estate$– $– $21,636 $21,636 $22,139 
Other investments– 542 5,887 6,429 6,429 
Policy loans– 2,617 – 2,617 2,617 
Liabilities
Policyholder account balances – certain investment contracts$– $– $(36,693)$(36,693)$(43,774)
Policyholder account balances – funding agreements– (3,778)– (3,778)(3,749)
Long-term debt– (1,476)– (1,476)(1,426)
Funds withheld reinsurance-related liabilities –
excluding embedded derivatives– – (31,132)(31,132)(31,132)

As of December 31, 2024
Asset (Liability) Measurement in theTotal
Fair Value HierarchyFairCarrying
(Level 1)(Level 2)(Level 3)ValueAmount
Assets
Investments:
Mortgage loans on real estate$– $– $19,523 $19,523 $20,940 
Other investments– 1,061 5,211 6,272 6,272 
Policy loans– 2,465 – 2,465 2,465 
Liabilities
Policyholder account balances – certain investment contracts$– $– $(29,689)$(29,689)$(39,137)
Short-term debt– (24)– (24)(24)
Long-term debt– (2,164)– (2,164)(2,173)
Funds withheld reinsurance-related liabilities –
excluding embedded derivatives– – (27,538)(27,538)(27,538)

The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value on the Consolidated Balance Sheets. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown above are not necessarily indicative of the amounts that would be realized in a one-time, current market exchange of all of our financial instruments.
Mortgage Loans on Real Estate

The fair value of mortgage loans on real estate, excluding mortgage loans accounted for using the fair value option, is established using a discounted cash flow method based on internal quality rating, maturity and future income. The ratings for mortgages in good standing are based on occupancy, debt-service coverage, LTV, and forecasted tenancy. The fair value for impaired mortgage loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s market price or the fair value of the collateral if the loan is collateral dependent. The inputs used to measure the fair value of our mortgage loans on real estate, excluding mortgage loans accounted for using the fair value option, are classified as Level 3 within the fair value hierarchy.

Other Investments

The carrying value of our assets classified as other investments, excluding short-term investments, approximates fair value. Other investments includes primarily LPs and other privately held investments that are accounted for using the equity method of accounting and the carrying value is based on our proportional share of the net assets of the LPs. Other investments also include FHLB stock, which is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value, and the investments in COLI, which are recorded at cash surrender value and not required to be included in the table above. The inputs used to measure the fair value of our LPs, other privately held investments and FHLB stock are classified as Level 3 within the fair value hierarchy. The remaining assets in other investments include cash collateral receivables and securities that are not LPs or other privately held investments. The inputs used to measure the fair value of these assets are classified as Level 2 within the fair value hierarchy.

Policy Loans

The carrying value for policy loans are the unpaid principal balances. Policy loans are fully collateralized by the cash surrender value of underlying insurance policies. As a result, the carrying value of the policy loans approximates the fair value. The inputs used to measure the fair value of these assets are classified as Level 2 within the fair value hierarchy.

Policyholder Account Balances – Certain Investment Contracts and Other Liabilities

Policyholder account balances and other liabilities include account balances of certain investment contracts that exclude significant mortality or morbidity risk. The fair value of the account balances of certain investment contracts is based on a discounted cash flow model as of the balance sheet date. The inputs used to measure the fair value of these policyholder account balances are classified as Level 3 within the fair value hierarchy.

Policyholder Account Balances – Funding Agreements

The fair value of funding agreements issued under the FABN program is based on quoted market prices. The fair value of secured funding agreements issued under FABRs and funding agreements issued to FHLB is based on a discounted cash flow model as of the balance sheet date. The inputs used to measure the fair value of funding agreements are classified as Level 2 within the fair value hierarchy. For more information on funding agreements, see Note 11.

Short-Term and Long-Term Debt

The fair value of short-term and long-term debt is based on quoted market prices. The inputs used to measure the fair value of our short-term and long-term debt are classified as Level 2 within the fair value hierarchy.

Funds Withheld Reinsurance Liabilities

Funds withheld reinsurance liabilities includes our obligation to pay reinsurers under coinsurance with funds withheld and modified coinsurance arrangements where the Company is the cedant. This liability includes embedded derivatives, which are total return swaps with contractual returns that are attributable to the Company’s reinsurance agreements. The embedded derivatives are carried at fair value and thus excluded from the preceding table. The inputs used to measure the remaining balance are classified as Level 3 within the fair value hierarchy.