| FAIR VALUE OF FINANCIAL INSTRUMENTS |
FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability. A fair value hierarchy is used to determine fair value based on a hypothetical transaction as of the measurement date from the perspective of a market participant. The Company has evaluated the types of securities in its investment portfolio to determine an appropriate hierarchy level based upon trading activity and the observability of market inputs. The classification of assets or liabilities within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows: | | | | | | | | | | Level 1 | | Unadjusted quoted prices in active markets for identical assets or liabilities | | Level 2 | | Quoted prices in markets that are not active or inputs that are observable directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities | | 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. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and third-party evaluation, as well as instruments for which the determination of fair value requires significant management judgment or estimation |
The fair value hierarchy measurements of the assets and liabilities recorded at fair value are shown below: | | | | | | | | | | | | | | | | | | | | | | | | | | | AS OF JUN. 30, 2026
US$ MILLIONS | | Total Fair Value | | Level 1 | | Level 2 | | Level 3 | | Assets | | | | | | | | | | Available-for-sale fixed maturity securities: | | | | | | | | | | U.S. treasury and government | | $ | 327 | | | $ | 268 | | | $ | 59 | | | $ | — | | | U.S. state and municipal | | 3,070 | | | — | | | 3,070 | | | — | | | Foreign governments | | 14,154 | | | — | | | 14,103 | | | 51 | | | Corporate debt securities | | 68,235 | | | — | | | 65,309 | | | 2,926 | | | Residential mortgage-backed securities | | 1,088 | | | — | | | 1,070 | | | 18 | | | Commercial mortgage-backed securities | | 3,827 | | | — | | | 3,534 | | | 293 | | | Collateralized debt securities | | 5,956 | | | — | | | 1,958 | | | 3,998 | | | Total available-for-sale fixed maturity securities | | 96,657 | | | 268 | | | 89,103 | | | 7,286 | | | Equity securities: | | | | | | | | | | Common stock | | 6,123 | | | 6,028 | | | 2 | | | 93 | | | Preferred stock | | 541 | | | 35 | | | 43 | | | 463 | | | | | | | | | | | Total equity securities(1) | | 6,664 | | | 6,063 | | | 45 | | | 556 | | Investment real estate(2) | | 1,245 | | | — | | | — | | | 1,245 | | Real estate partnerships(2)(3) | | 2,399 | | | — | | | — | | | 2,399 | | Investment funds(2)(4) | | 150 | | | — | | | — | | | 150 | | Short-term investments(5) | | 612 | | | 96 | | | 516 | | | — | | Derivative assets(6) | | 3,065 | | | — | | | 2,872 | | | 193 | | | Other invested assets: | | | | | | | | | | Separately managed accounts | | 49 | | | — | | | — | | | 49 | | Other(3) | | 575 | | | — | | | — | | | 575 | | | Cash and cash equivalents | | 12,609 | | | 12,609 | | | — | | | — | | | Reinsurance funds withheld – embedded derivative | | 56 | | | — | | | — | | | 56 | | | Premiums due and other receivables – derivative asset | | 16 | | | — | | | 16 | | | — | | | Other assets – market risk benefit assets | | 1,167 | | | — | | | — | | | 1,167 | | | Separate account assets | | 874 | | | 857 | | | 17 | | | — | | | Total assets | | $ | 126,138 | | | $ | 19,893 | | | $ | 92,569 | | | $ | 13,676 | | | Liabilities | | | | | | | | | | Policyholders’ account balances – embedded derivative | | $ | 6,625 | | | $ | — | | | $ | — | | | $ | 6,625 | | | Market risk benefits | | 4,751 | | | — | | | — | | | 4,751 | | | Funds withheld for reinsurance liabilities – embedded derivative | | 20 | | | — | | | — | | | 20 | | Derivative liabilities(6) | | 1,847 | | | — | | | 1,847 | | | — | | | Separate account liabilities | | 874 | | | 857 | | | 17 | | | — | | | Total liabilities | | $ | 14,117 | | | $ | 857 | | | $ | 1,864 | | | $ | 11,396 | |
__________________________ (1)Balance excludes $260 million of equity securities measured at cost less any impairments, if any, as their fair values are not readily determinable and are therefore not subject to the fair value hierarchy as of June 30, 2026. No amounts of impairments were recorded for the six months ended June 30, 2026. The cost of equity securities, inclusive of those not subject to the fair value hierarchy, as of June 30, 2026 was $6.5 billion. (2)Includes assets that are fair valued as a result of consolidation of investment company VIE in accordance with ASC 946. (3)$2.4 billion of real estate partnerships and $575 million of other invested assets are financial assets that are fair valued in accordance with ASC 825. (4)Excludes those measured at estimated fair value using NAV as a practical expedient. As of June 30, 2026, the estimated fair values of investment funds measured at NAV as a practical expedient were $349 million. (5)There were no amounts loaned under reverse repurchase agreements as of June 30, 2026. (6)Excludes $2.9 billion and $1.3 billion of derivative cash collateral that are recorded as an offset to “Derivative assets” and “Derivative liabilities”, respectively, in the statements of financial position and are also not included in the fair value hierarchy as of June 30, 2026. Refer to “Derivative Exposure” section of Note 9 for details. | | | | | | | | | | | | | | | | | | | | | | | | | | | AS OF DEC. 31, 2025
US$ MILLIONS | | Total Fair Value | | Level 1 | | Level 2 | | Level 3 | | Assets | | | | | | | | | | Available-for-sale fixed maturity securities: | | | | | | | | | | U.S. treasury and government | | $ | 360 | | | $ | 299 | | | $ | 61 | | | $ | — | | | U.S. state and municipal | | 3,158 | | | — | | | 3,158 | | | — | | | Foreign governments | | 1,851 | | | — | | | 1,829 | | | 22 | | | Corporate debt securities | | 48,599 | | | — | | | 47,317 | | | 1,282 | | | Residential mortgage-backed securities | | 1,204 | | | — | | | 1,185 | | | 19 | | | Commercial mortgage-backed securities | | 3,738 | | | — | | | 3,628 | | | 110 | | | Collateralized debt securities | | 5,299 | | | — | | | 2,519 | | | 2,780 | | | Total available-for-sale fixed maturity securities | | 64,209 | | | 299 | | | 59,697 | | | 4,213 | | | Equity securities: | | | | | | | | | | Common stock | | 7,222 | | | 7,132 | | | 2 | | | 88 | | | Preferred stock | | 492 | | | 20 | | | 63 | | | 409 | | | | | | | | | | | Total equity securities(1) | | 7,714 | | | 7,152 | | | 65 | | | 497 | | Investment real estate(2) | | 1,253 | | | — | | | — | | | 1,253 | | Real estate partnerships(2)(3) | | 2,385 | | | — | | | — | | | 2,385 | | Investment funds(2)(4) | | 152 | | | — | | | — | | | 152 | | Short-term investments(5) | | 475 | | | 1 | | | 243 | | | 231 | | Derivative assets(6) | | 1,611 | | | — | | | 1,408 | | | 203 | | | Other invested assets: | | | | | | | | | | Separately managed accounts | | 54 | | | — | | | — | | | 54 | | Other(3) | | 407 | | | — | | | — | | | 407 | | | Cash and cash equivalents | | 13,014 | | | 13,014 | | | — | | | — | | | Reinsurance funds withheld – embedded derivative | | 48 | | | — | | | — | | | 48 | | | Premiums due and other receivables – derivative asset | | 19 | | | — | | | 19 | | | — | | | Other assets – market risk benefit assets | | 1,174 | | | — | | | — | | | 1,174 | | | Separate account assets | | 822 | | | 804 | | | 18 | | | — | | | Total assets | | $ | 93,337 | | | $ | 21,270 | | | $ | 61,450 | | | $ | 10,617 | | | Liabilities | | | | | | | | | | Policyholders’ account balances – embedded derivative | | $ | 6,414 | | | $ | — | | | $ | — | | | $ | 6,414 | | | Market risk benefits | | 4,536 | | | — | | | — | | | 4,536 | | | Funds withheld for reinsurance liabilities – embedded derivative | | 74 | | | — | | | — | | | 74 | | Derivative liabilities(6) | | 37 | | | — | | | 37 | | | — | | | Separate account liabilities | | 822 | | | 804 | | | 18 | | | — | | | Total liabilities | | $ | 11,883 | | | $ | 804 | | | $ | 55 | | | $ | 11,024 | |
__________________________ (1)Balance excludes $250 million of equity securities measured at cost less any impairments, if any, as their fair values are not readily determinable and are therefore not subject to the fair value hierarchy as of December 31, 2025. No amounts of impairments were recorded for the six months ended June 30, 2025. The cost of equity securities, inclusive of those not subject to the fair value hierarchy, as of December 31, 2025 was $6.7 billion. (2)Includes assets that are fair valued as a result of consolidation of investment company VIE in accordance with ASC 946. (3)$2.3 billion of real estate partnerships and $407 million of other invested assets are financial assets that are fair valued in accordance with ASC 825. (4)Excludes those measured at estimated fair value using NAV as a practical expedient. As of December 31, 2025, the estimated fair values of investment funds measured at NAV as a practical expedient were $662 million. (5)Includes $400 million of amounts loaned under reverse repurchase agreements as of December 31, 2025. The fair value of the collateral received under these agreements was $872 million as of December 31, 2025. (6)Excludes $1.5 billion of derivative cash collateral that is recorded as an offset to “Derivative assets” in the statements of financial position and is also not included in the fair value hierarchy as of December 31, 2025. There is no derivative collateral that is recorded as an offset to “Derivative liabilities” in the statements of financial position as of December 31, 2025. Refer to “Derivative Exposure” section of Note 9 for details. Fair Value Information About Financial Instruments Not Recorded at Fair Value The carrying amount and estimated fair value of financial instruments not recorded at fair value are shown below. The table below excludes accrued investment income, which is recorded at amortized cost in the statements of financial position, as their carrying amounts approximate fair values due to their short-term nature. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AS OF JUN. 30, 2026
US$ MILLIONS | | Carrying Amount | | Fair Value | | FV Hierarchy Level | | | | Level 1 | | Level 2 | | Level 3 | | Financial assets | | | | | | | | | | | | Mortgage loans on real estate, net of allowance | | $ | 14,021 | | | $ | 13,979 | | | $ | — | | | $ | — | | | $ | 13,979 | | | Private loans, net of allowance | | 9,407 | | | 9,563 | | | — | | | 41 | | | 9,522 | | | Policy loans | | 238 | | | 238 | | | — | | | — | | | 238 | | Deposit assets, included in reinsurance recoverables and deposit assets(1) | | 4,980 | | | 4,930 | | | — | | | — | | | 4,930 | | Other invested assets, excluding derivatives and separately managed accounts(2) | | 8,636 | | | 8,737 | | | — | | | 427 | | | 8,310 | | | Total financial assets | $ | 37,282 | | | $ | 37,447 | | | | | | | | | Financial liabilities | | | | | | | | | | | | Policyholders’ account balances – excluding embedded derivative | | $ | 86,295 | | | $ | 86,295 | | | — | | | — | | | 86,295 | | | Funds withheld for reinsurance liabilities – excluding embedded derivative | | 2,918 | | | 2,918 | | | — | | | — | | | 2,918 | | | Corporate and non-recourse borrowings | | 9,630 | | | 9,694 | | | — | | | — | | | 9,694 | | | Notes payable | | 206 | | | 206 | | | — | | | — | | | 206 | | Payables under repurchase agreements(3) | | 4,386 | | | 4,435 | | | — | | | 4,435 | | | — | | | Total financial liabilities | $ | 103,435 | | | $ | 103,548 | | | | | | | |
__________________________ (1)Excludes balances associated with contracts that involve significant mortality or morbidity risks, as these fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. (2)Includes lifetime mortgages, the fair value of which is estimated by discounting projected future cash flows using a swap rate plus a liquidity premium on a loan-by-loan basis. Future cash flows allow for assumptions relating to future expenses, future mortality experience, voluntary redemptions and repayment shortfalls. (3)The fair value of the collateral pledged under these agreements was $4.4 billion. Upon inception of these repurchase agreements, they had durations ranging from 2 to 24 months. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AS OF DEC. 31, 2025
US$ MILLIONS | | Carrying Amount | | Fair Value | | FV Hierarchy Level | | | | Level 1 | | Level 2 | | Level 3 | | Financial assets | | | | | | | | | | | | Mortgage loans on real estate, net of allowance | | $ | 11,231 | | | $ | 11,343 | | | $ | — | | | $ | — | | | $ | 11,343 | | | Private loans, net of allowance | | 8,415 | | | 8,489 | | | — | | | 74 | | | 8,415 | | | Policy loans | | 234 | | | 234 | | | — | | | — | | | 234 | | Deposit assets, included in reinsurance recoverables and deposit assets(1) | | 5,440 | | | 5,352 | | | — | | | — | | | 5,352 | | | Other invested assets, excluding derivatives and separately managed accounts | | 782 | | | 781 | | | — | | | 417 | | | 364 | | | Total financial assets | $ | 26,102 | | | $ | 26,199 | | | | | | | | | Financial liabilities | | | | | | | | | | | | Policyholders’ account balances – excluding embedded derivative | | $ | 83,782 | | | $ | 83,782 | | | — | | | — | | | 83,782 | | | Funds withheld for reinsurance liabilities – excluding embedded derivative | | 3,083 | | | 3,083 | | | — | | | — | | | 3,083 | | | Corporate and non-recourse borrowings | | 5,485 | | | 5,574 | | | — | | | — | | | 5,574 | | | Notes payable | | 205 | | | 205 | | | — | | | — | | | 205 | | | | | | | | | | | | | | Total financial liabilities | $ | 92,555 | | | $ | 92,644 | | | | | | | |
__________________________ (1)Excludes balances associated with contracts that involve significant mortality or morbidity risks, as these fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. For assets and liabilities measured at fair value on a recurring basis using Level 3 inputs during the periods, reconciliations of the beginning and ending balances are shown below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FOR THE PERIOD ENDED JUN. 30, 2026
US$ MILLIONS | | Assets | | Liabilities | | Invested assets(1) | | Derivative assets | | Reinsurance funds withheld – embedded derivative | | Policyholders’ account balances – embedded derivative | | Funds withheld for reinsurance liabilities – embedded derivative | | | | Balance as of January 1, 2026 | | $ | 9,192 | | | $ | 203 | | | $ | 48 | | | $ | (6,414) | | | $ | (74) | | | | | | | | | | | | | | | | | | Fair value changes in net income | | 68 | | | (35) | | | 8 | | | 311 | | | 33 | | | | | Fair value changes in other comprehensive income | | (40) | | | — | | | — | | | — | | | — | | | | | Purchases | | 162 | | | 37 | | | — | | | — | | | — | | | | | Sales | | (65) | | | — | | | — | | | — | | | — | | | | | Settlements or maturities | | (321) | | | (60) | | | — | | | — | | | — | | | | | Premiums less benefits | | — | | | — | | | — | | | 43 | | | — | | | | | Transfers into Level 3 | | 441 | | | — | | | — | | | — | | | — | | | | | Transfers out of Level 3 | | (121) | | | — | | | — | | | — | | | — | | | | | Balance as of March 31, 2026 | | $ | 9,316 | | | $ | 145 | | | $ | 56 | | | $ | (6,060) | | | $ | (41) | | | | | Acquisition from business combination | | 1,522 | | | — | | | — | | | — | | | — | | | | | Fair value changes in net income | | 68 | | | 71 | | | — | | | (167) | | | 21 | | | | | Fair value changes in other comprehensive income | | (77) | | | — | | | — | | | — | | | — | | | | | Purchases | | 1,676 | | | 43 | | | — | | | — | | | — | | | | | Sales | | (45) | | | — | | | — | | | — | | | — | | | | | Settlements or maturities | | (102) | | | (66) | | | — | | | — | | | — | | | | | Premiums less benefits | | — | | | — | | | — | | | (398) | | | — | | | | | Transfers into Level 3 | | — | | | — | | | — | | | — | | | — | | | | | Transfers out of Level 3 | | (98) | | | — | | | — | | | — | | | — | | | | | Balance as of June 30, 2026 | | $ | 12,260 | | | $ | 193 | | | $ | 56 | | | $ | (6,625) | | | $ | (20) | | | |
__________________________ (1)Includes separately managed accounts. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FOR THE PERIOD ENDED JUN. 30, 2025
US$ MILLIONS | | Assets | | Liabilities | | Invested assets(1) | | Derivative assets | | Reinsurance funds withheld – embedded derivative | | Policyholders’ account balances – embedded derivative | | Funds withheld for reinsurance liabilities – embedded derivative | | | | Balance as of January 1, 2025 | | $ | 10,093 | | | $ | 223 | | | $ | 18 | | | $ | (1,123) | | | $ | (37) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value changes in net income | | (32) | | | (38) | | | (10) | | | 268 | | | (18) | | | | | Fair value changes in other comprehensive income | | 20 | | | — | | | — | | | — | | | — | | | | | Purchases | | 172 | | | 33 | | | — | | | — | | | — | | | | | Sales | | (45) | | | — | | | — | | | — | | | — | | | | | Settlements or maturities | | (13) | | | (69) | | | — | | | — | | | — | | | | | Premiums less benefits | | — | | | — | | | — | | | (93) | | | — | | | | | Transfers into Level 3 | | 681 | | | — | | | — | | | — | | | — | | | | | Transfers out of Level 3 | | (67) | | | — | | | — | | | — | | | — | | | | | Balance as of March 31, 2025 | | $ | 10,809 | | | $ | 149 | | | $ | 8 | | | $ | (948) | | | $ | (55) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value changes in net income | | 26 | | | 66 | | | (2) | | | (242) | | | (8) | | | | | Fair value changes in other comprehensive income | | (11) | | | — | | | — | | | — | | | — | | | | | Purchases | | 1,214 | | | 34 | | | — | | | — | | | — | | | | | Sales | | (1,537) | | | — | | | — | | | — | | | — | | | | | Settlements or maturities | | (138) | | | (61) | | | — | | | — | | | — | | | | | Premiums less benefits | | — | | | — | | | — | | | (1) | | | — | | | | | Transfers into Level 3 | | 239 | | | — | | | — | | | (5,066) | | | — | | | | | Transfers out of Level 3 | | (1,024) | | | — | | | — | | | — | | | — | | | | | Balance as of June 30, 2025 | | $ | 9,578 | | | $ | 188 | | | $ | 6 | | | $ | (6,257) | | | $ | (63) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________________________ (1)Includes separately managed accounts. Transfers into and out of Level 3 for the period ended June 30, 2026 were primarily the result of changes in observable pricing. The Company’s valuation of financial instruments categorized as Level 3 in the fair value hierarchy is based on valuation techniques that use significant inputs that are unobservable or had a decline in market activity that obscured observability. The fair values of these assets and liabilities are subject to significant management judgment and estimation, and inherently, the use of different assumptions or valuation methodologies may have a material effect on such value. 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. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and discounted cash flow methodology based on spread/yield assumptions.
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