FAIR VALUE MEASUREMENTS. Our assets and liabilities measured at fair value on a recurring basis include debt securities mainly supporting obligations to annuitants and policyholders in our run-off insurance operations and derivatives.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
Level 1Level 2Level 3(a)Netting
adjustment(b)
Net balance(c)
December 312025202420252024202520242025202420252024
Investment securities$655 $14 $34,911 $33,635 $3,222 $5,074 $— $— $38,788 $38,723 
Derivatives— — 247 243 — — (60)(55)187 188 
Total assets$655 $14 $35,158 $33,878 $3,222 $5,074 $(60)$(55)$38,975 $38,911 
Derivatives$— $— $129 $131 $— $— $(58)$(54)$71 $77 
Other(d)— — 400 367 — — — — 400 367 
Total liabilities$— $— $530 $498 $— $— $(58)$(54)$472 $444 
(a)Included $292 million of U.S. corporate debt securities and $2,530 million of Mortgage and asset-backed debt securities as of December 31, 2025. Included $1,627 million of U.S. corporate debt securities, $1,935 million of Mortgage and asset-backed debt securities and the $982 million AerCap note as of December 31, 2024.
(b)The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk.
(c)Included investment securities in our run-off insurance operations of $37,842 million and $37,352 million as of December 31, 2025 and 2024, respectively, which are Level 2 and 3. See Notes 3 and 22 for further information on the composition of our investment securities and derivative portfolios.
(d)Primarily represents the liabilities associated with certain of our deferred incentive compensation plans.

LEVEL 3 INSTRUMENTS. The majority of our Level 3 balances comprised debt securities classified as available-for-sale with changes in fair value recorded in Other comprehensive income.

Balance at
January 1
Net realized/unrealized gains(losses)(a)
Purchases(b)
Sales & Settlements(c)
Transfers
into
Level 3
Transfers
out of
Level 3(d)
Balance at
December 31
2025
Investment securities$5,074 $27 $2,155 $(2,753)$13 $(1,293)$3,222 
2024
Investment securities$6,841 $20 $1,505 $(768)$12 $(2,536)$5,074 
(a)Primarily included net unrealized gains (losses) of $5 million and $(29) million in Other comprehensive income for the years ended December 31, 2025 and 2024, respectively.
(b)Included $356 million of U.S. corporate debt securities and $1,764 million of Mortgage and asset-backed debt securities for the year ended December 31, 2025. Included $491 million of U.S. corporate debt securities and $600 million of Mortgage and asset-backed debt securities for the year ended December 31, 2024.
(c)Included $(1,080) million of Mortgage and asset-backed debt securities and $(600) million of U.S. corporate debt securities for the year ended December 31, 2025. Included $(95) million of Mortgage and asset-backed debt securities and $(621) million of U.S. corporate debt securities the year ended December 31, 2024.
(d)Transfers out of Level 3 during the years ended December 31, 2025 and 2024, related to increases in the observability of external information used in determining fair value. These transfers were in our run-off insurance operations and primarily included certain investments in private placement U.S. and non-U.S. corporate debt securities.
The majority of these Level 3 securities are fair valued using non-binding broker quotes or other third-party sources that utilize a number of different unobservable inputs not subject to meaningful aggregation.

Historical Timeline

Fiscal YearFiled
2025Jan 29, 2026Showing above
2024Feb 3, 2025
2023Feb 2, 2024
2022Feb 10, 2023
2021Feb 11, 2022
2020Feb 12, 2021
2019Feb 24, 2020
2018Feb 26, 2019
2017Feb 23, 2018
2016Feb 24, 2017
2015Feb 26, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.