METLIFE INCMET

METLIFE INC Fair Value Disclosure

10-KFiled Feb 19, 202627 min read
13. Fair Value
When developing estimated fair values, the Company considers three broad valuation approaches: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation approach to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its valuation. The input levels are as follows:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities AFS.
Level 2
Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can 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 significant 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 determination of estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.
Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company’s ability to sell securities, as well as the price ultimately realized for these securities, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities.
Considerable judgment is often required in interpreting the market data used to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.
Recurring Fair Value Measurements
The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at:
December 31, 2025
Fair Value Hierarchy
Level 1Level 2Level 3Total
Estimated
Fair Value
(In millions)
Assets
Fixed maturity securities AFS:
U.S. corporate$— $74,437 $13,522 $87,959 
Foreign corporate— 43,761 16,828 60,589 
RMBS— 43,491 1,927 45,418 
Foreign government— 40,696 52 40,748 
U.S. government and agency18,732 18,790 — 37,522 
ABS & CLO— 21,747 1,150 22,897 
Municipals— 11,063 1 11,064 
CMBS— 9,318 416 9,734 
Total fixed maturity securities AFS18,732 263,303 33,896 315,931 
Equity securities464 77 317 858 
Contractholder-directed equity securities and FVO securities:
Contractholder-directed equity securities 
7,983 2,571 194 10,748 
FVO securities
623 1,323 1,265 3,211 
Total contractholder-directed equity securities and FVO securities:
8,606 3,894 1,459 13,959 
Short-term investments (1)
2,761 537 42 3,340 
Other investments46 — 1,137 1,183 
Derivative assets: (2)
Interest rate1 2,601 — 2,602 
Foreign currency exchange rate— 3,905 34 3,939 
Credit— 155 — 155 
Equity market5 344 — 349 
Total derivative assets6 7,005 34 7,045 
MRBs— — 458 458 
Reinsured MRBs (3)
— — 293 293 
Separate account assets (4)
77,488 73,554 891 151,933 
Total assets (5)
$108,103 $348,370 $38,527 $495,000 
Liabilities
Derivative liabilities: (2)
Interest rate$3 $3,763 $— $3,766 
Foreign currency exchange rate1 3,403 — 3,404 
Credit— 59 — 59 
Equity market2 316 1 319 
Total derivative liabilities6 7,541 1 7,548 
Embedded derivatives within liability host contracts (6)
— — 57 57 
Notes issued by CFEs
— — 1,206 1,206 
MRBs— — 2,406 2,406 
Total liabilities$6 $7,541 $3,670 $11,217 
December 31, 2024
Fair Value Hierarchy
Level 1Level 2Level 3Total
Estimated
Fair Value
(In millions)
Assets
Fixed maturity securities AFS:
U.S. corporate$— $67,333 $12,041 $79,374 
Foreign corporate— 39,295 14,464 53,759 
RMBS— 32,771 1,650 34,421 
Foreign government— 40,209 41 40,250 
U.S. government and agency16,675 16,753 — 33,428 
ABS & CLO— 14,755 5,836 20,591 
Municipals— 9,866 7 9,873 
CMBS— 8,194 1,153 9,347 
Total fixed maturity securities AFS16,675 229,176 35,192 281,043 
Equity securities415 61 236 712 
Contractholder-directed equity securities and FVO securities:
Contractholder-directed equity securities 
6,805 2,135 157 9,097 
FVO securities501 41 1,033 1,575 
Total contractholder-directed equity securities and FVO securities:
7,306 2,176 1,190 10,672 
Short-term investments (1)
4,127 702 5 4,834 
Other investments37 63 1,010 1,110 
Derivative assets: (2)
Interest rate1 3,004 — 3,005 
Foreign currency exchange rate1 4,694 14 4,709 
Credit— 215 — 215 
Equity market9 271 3 283 
Total derivative assets11 8,184 17 8,212 
MRBs— — 372 372 
Reinsured MRBs (3)
— — 12 12 
Separate account assets (4)
63,979 74,535 990 139,504 
Total assets (5)
$92,550 $314,897 $39,024 $446,471 
Liabilities
Derivative liabilities: (2)
Interest rate$1 $3,463 $— $3,464 
Foreign currency exchange rate— 3,440 12 3,452 
Credit— 72 — 72 
Equity market6 265 — 271 
Total derivative liabilities7 7,240 12 7,259 
Embedded derivatives within liability host contracts (6)
— — 9 9 
Notes issued by CFEs
— — — — 
MRBs— — 2,581 2,581 
Total liabilities$7 $7,240 $2,602 $9,849 
__________________
(1)Short-term investments as presented in the tables above differ from the amounts presented on the consolidated balance sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.
(2)Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other liabilities on the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.
(3)Reinsured MRBs are presented within premiums, reinsurance and other receivables on the consolidated balance sheets.
(4)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities.
(5)Total assets included in the fair value hierarchy exclude OLPI that are measured at estimated fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient. The estimated fair value of such investments was $41 million and $50 million at December 31, 2025 and 2024, respectively.
(6)Embedded derivatives within liability host contracts are presented within PABs and other liabilities on the consolidated balance sheets.
The following describes the valuation methodologies used to measure assets and liabilities at fair value.
Investments
Securities, Short-term Investments and Other Investments
When available, the estimated fair value of these financial instruments is based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not involve management’s judgment.
When quoted prices in active markets are not available, the determination of estimated fair value of securities is based on market standard valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. When observable inputs are not available, the market standard valuation methodologies rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs can be based, in large part, on management’s judgment or estimation and cannot be supported by reference to market activity. Unobservable inputs are based on management’s assumptions about the inputs market participants would use in pricing such investments.
The estimated fair value of short-term investments and other investments is determined on a basis consistent with the methodologies described herein.
The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below. The primary valuation approaches are the market approach, which considers recent prices from market transactions involving identical or similar assets or liabilities, and the income approach, which converts expected future amounts (e.g., cash flows) to a single current, discounted amount. The valuation of most instruments listed below is determined using independent pricing sources, matrix pricing, discounted cash flow methodologies or other similar techniques that use either observable market inputs or unobservable inputs.
Instrument
Level 2
Observable Inputs
Level 3
Unobservable Inputs
Fixed maturity securities AFS
U.S. corporate and Foreign corporate securities
Valuation Approaches: Principally the market and income approaches.
Valuation Approaches: Principally the market approach.
Key Inputs:
Key Inputs:
•
quoted prices in markets that are not active
•
illiquidity premium
•benchmark yields; spreads off benchmark yields; new issuances; issuer ratings•delta spread adjustments to reflect specific credit-related issues
•
trades of identical or comparable securities; duration
•credit spreads
•
privately placed securities are valued using the additional key inputs:
•
quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
•
market yield curve; call provisions
•
observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer
•
independent non-binding broker quotations
•
delta spread adjustments to reflect specific credit-related issues
Foreign government securities, U.S. government and agency securities and Municipals
Valuation Approaches: Principally the market approach.
Valuation Approaches: Principally the market approach.
Key Inputs:
Key Inputs:
•
quoted prices in markets that are not active
•
independent non-binding broker quotations
•benchmark U.S. Treasury yield or other yields•
quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
•
the spread off the U.S. Treasury yield curve for the identical security
•issuer ratings and issuer spreads; broker-dealer quotations•credit spreads
•
comparable securities that are actively traded
Structured Products
Valuation Approaches: Principally the market and income approaches.
Valuation Approaches: Principally the market and income approaches.
Key Inputs:
Key Inputs:
•quoted prices in markets that are not active•
credit spreads
•
spreads for actively traded securities; spreads off benchmark yields
•
quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
•
expected prepayment speeds and volumes
•
current and forecasted loss severity; ratings; geographic region
•
independent non-binding broker quotations
•
weighted average coupon and weighted average maturity
•credit ratings
•average delinquency rates; DSCR
•
credit ratings
•
issuance-specific information, including, but not limited to:
•collateral type; structure of the security; vintage of the loans
•payment terms of the underlying assets
•
payment priority within the tranche; deal performance
Instrument
Level 2
Observable Inputs
Level 3
Unobservable Inputs
Equity securities
Valuation Approaches: Principally the market approach.
Valuation Approaches: Principally the market and income approaches.
Key Input:
Key Inputs:
•
quoted prices in markets that are not considered active
•
credit ratings; issuance structures
•
quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
•
independent non-binding broker quotations
Contractholder-directed equity and FVO securities, Short-term investments and Other investments
Valuation Approaches: Principally the market and income approaches.
Valuation Approaches: Principally the market and income approaches.
Key Inputs:Key Inputs:
•
Contractholder-directed equity and FVO securities include mutual fund interests without readily determinable fair values given prices are not published publicly. Valuation of these mutual funds is based upon quoted prices or reported NAV provided by the fund managers, which were based on observable inputs.
•
Contractholder-directed equity and FVO securities, short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and unobservable inputs used in their valuation are also similar to those described above. Other investments also include certain REJV and use the valuation approach and key inputs as described for OLPI below.
•
Short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and observable inputs used in their valuation are also similar to those described above.
Separate account assets and Separate account liabilities (1)
Mutual funds and hedge funds without readily determinable fair values as prices are not published publicly
Key Input:•N/A
•quoted prices or reported NAV provided by the fund managers
OLPI
•
N/A
Valued giving consideration to the underlying holdings of the partnerships and adjusting, if appropriate.
Key Input:
•
NAV
__________________
(1)Estimated fair value equals carrying value, based on the value of the underlying assets, including mutual fund interests, fixed maturity securities, equity securities, derivatives, hedge funds, OLPI, short-term investments and cash and cash equivalents. The estimated fair value of fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents is determined on a basis consistent with the assets described under “— Securities, Short-term Investments and Other Investments” and “— Derivatives — Freestanding Derivatives.”
Derivatives
The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives, or through the use of pricing models for OTC-bilateral and OTC-cleared derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models.
The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. With respect to certain OTC-bilateral and OTC-cleared derivatives, management may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Unobservable inputs are based on management’s assumptions about the inputs market participants would use in pricing such derivatives.
Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.
The credit risk of both the counterparty and the Company is considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by the counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is, in part, due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.
Freestanding Derivatives
Level 2 Valuation Approaches and Key Inputs:
This level includes all types of derivatives utilized by the Company with the exception of exchange-traded derivatives included within Level 1 and those derivatives with unobservable inputs as described in Level 3.
Level 3 Valuation Approaches and Key Inputs:
These valuation methodologies generally use the same inputs as described in the corresponding sections for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data.
Freestanding derivatives are principally valued using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. Key inputs are as follows:
InstrumentInterest RateForeign Currency
Exchange Rate		CreditEquity Market
Inputs common to Level 2 and Level 3 by instrument type
•
swap yield curves
•
swap yield curves
•
swap yield curves
•
swap yield curves
•
basis curves
•
basis curves
•
credit curves
•
spot equity index levels
•
interest rate volatility (1)
•
currency spot rates
•
recovery rates
•
dividend yield curves
•
cross currency basis curves
•
equity volatility (1)
•
currency volatility (1)
Level 3
•
N/A
•
swap yield curves (2)
•
N/A
•
dividend yield curves (2)
•
basis curves (2)
•
equity volatility (1), (2)
•
cross currency basis curves (2)
•
correlation between model inputs (1)
•
currency correlation
•
currency volatility (1)
__________________
(1)Option-based only.
(2)Extrapolation beyond the observable limits of the curve(s).
Embedded Derivatives
Embedded derivatives principally include equity-indexed annuity contracts and investment risk within funds withheld related to certain reinsurance agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.
The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as described in “— Investments — Securities, Short-term Investments and Other Investments.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.
The estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity returns to the policyholder using actuarial and present value assumptions including expectations concerning policyholder behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business and uses standard capital market techniques, such as Black-Scholes, to calculate the value of the portion of the embedded derivative for which the terms are set. The portion of the embedded derivative covering the period beyond where terms are set is calculated as the present value of amounts expected to be spent to provide equity indexed returns in those periods. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.
Notes Issued by CFEs
The estimated fair value of these notes are based on the estimated fair value of the corresponding securities which collateralize the notes. Since the notes are valued based on referenced collateral, they are classified as Level 3.
MRBs
See Note 6 for information on the Company’s valuation approaches and key inputs for MRBs.
Transfers between Levels
Overall, transfers between levels occur when there are changes in the observability of inputs and market activity.
Transfers into or out of Level 3:
Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.
Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)
The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
December 31, 2025December 31, 2024Impact of
Increase in Input
on Estimated
Fair Value (2)
Valuation TechniquesSignificant
Unobservable Inputs		RangeWeighted
Average (1)		RangeWeighted
Average (1)
Fixed maturity securities AFS (3)
U.S. corporate and foreign corporate
•
Matrix pricing
•
Offered quotes (4)
32-1279447-12692Increase
•
Market pricing
•
Quoted prices (4)
—-1009113-10295Increase
•
Consensus pricing
•
Offered quotes (4)
—-1019247-10096Increase
RMBS
•
Market pricing
•
Quoted prices (4)
33-11496—-12895Increase (5)
ABS & CLO•
Market pricing
•
Quoted prices (4)
3-1421014-11397Increase (5)
Derivatives
Foreign currency exchange rate
•
Present value techniques
•
Swap yield (6)
154-203202131-230222Increase (7)
MRBs and Reinsured MRBs
Direct, assumed and ceded guaranteed minimum benefits
•
Option pricing techniques
•
Mortality rates:
Ages 0 - 40
0%-0.15%0.05%0%-0.15%0.05%
(8)
Ages 41 - 60
0.04%-0.79%0.22%0.04%-0.79%0.22%
(8)
Ages 61 - 115
0%-100%1.23%0%-100%1.14%
(8)
•
Lapse rates:
Durations 1 - 10
0.15%-20.10%13.37%0.14%-20.10%12.86%
Decrease (9)
Durations 11 - 20
0.38%-15%8.17%0.39%-15%6.05%
Decrease (9)
Durations 21 - 116
0.38%-15%7.48%0.39%-15%8.20%
Decrease (9)
•
Utilization rates
0.20%-16.25%0.54%0.20%-22%0.79%
Increase (10)
•
Withdrawal rates
0%-20%4.92%0%-20%4.77%(11)
•
Long-term equity volatilities
14.29%-22.49%18.96%14.23%-22.27%18.77%
Increase (12)
•
Nonperformance risk spread
0.10%-1.41%0.58%0.11%-1.46%0.64%
Decrease (13)
__________________
(1)The weighted average for fixed maturity securities AFS and derivatives is determined based on the estimated fair value of the securities and derivatives. The weighted average for MRBs is determined based on a combination of account values and experience data.
(2)The impact of a decrease in input would have resulted in the opposite impact on estimated fair value. For MRBs, changes to direct and assumed guaranteed minimum benefits are based on liability positions; changes to ceded guaranteed minimum benefits are based on asset positions.
(3)Significant increases (decreases) in expected default rates in isolation would have resulted in substantially lower (higher) valuations.
(4)Range and weighted average are presented in accordance with the market convention for fixed maturity securities AFS of dollars per hundred dollars of par.
(5)Changes in the assumptions used for the probability of default would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.
(6)Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.
(7)Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.
(8)Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on Company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the MRBs. For contracts that contain only a GMDB, any increase (decrease) in mortality rates result in an increase (decrease) in the estimated fair value of MRBs. Generally, for contracts that contain both a GMDB and a living benefit (e.g., GMIB, GMWB, GMAB), any increase (decrease) in mortality rates result in a decrease (increase) in the estimated fair value of MRBs.
(9)Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the MRBs.
(10)The utilization rate assumption estimates the percentage of contractholders with GMIBs or a lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the MRBs.
(11)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the MRBs. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.
(12)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the MRBs.
(13)Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the MRBs.
All other classes of securities classified within Level 3, including those within Unit-linked and FVO securities, Other investments, Separate account assets, Notes issued by CFEs, and Embedded derivatives within funds withheld related to certain ceded reinsurance, use the same valuation techniques and significant unobservable inputs as previously described for Level 3 securities. Generally, all other classes of assets and liabilities classified within Level 3 that are not included above use the same valuation techniques and significant unobservable inputs as previously described for Level 3. The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in nature to that described in the preceding table. The valuation techniques and significant unobservable inputs used in the fair value measurement for the more significant assets measured at estimated fair value on a nonrecurring basis and determined using significant unobservable inputs (Level 3) are summarized in “— Nonrecurring Fair Value Measurements.”
The following tables summarize the change of all assets (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3), excluding MRBs (see Note 6):
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fixed Maturity Securities AFS
Corporate (6)Foreign
Government		Structured
Products		Equity
Securities
Contractholder-directed and FVO Securities
(In millions)
Balance, January 1, 2024
$28,345 $51 $4,551 $249 $1,103 
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)(143)(1)34 (32)131 
Total realized/unrealized gains (losses) included in AOCI(1,177)(2)246 — — 
Purchases (3)5,587 2 3,014 53 141 
Sales (3)(2,236)(1)(2,080)(34)(166)
Issuances (3)— — — — — 
Settlements (3)— — — — — 
Transfers into Level 3 (4)232 — 3,163 — — 
Transfers out of Level 3 (4)(4,103)(8)(289)— (19)
Balance, December 31, 2024
26,505 41 8,639 236 1,190 
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)(93)1 10 20 197 
Total realized/unrealized gains (losses) included in AOCI1,528 5 62 — — 
Purchases (3)4,944 12 2,065 133 291 
Sales (3)(2,538)(6)(1,829)(67)(219)
Issuances (3)— — — — — 
Settlements (3)— — — — — 
Transfers into Level 3 (4)336 — 59 1 — 
Transfers out of Level 3 (4)(332)(1)(5,513)(6)— 
Balance, December 31, 2025
$30,350 $52 $3,493 $317 $1,459 
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2023 (5)
$(10)$2 $10 $— $136 
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2024 (5)
$(82)$(1)$40 $(48)$135 
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2025 (5)
$(62)$— $7 $2 $188 
Changes in unrealized gains (losses) included in AOCI for the
instruments still held at December 31, 2023 (5)
$1,371 $(3)$14 $— $— 
Changes in unrealized gains (losses) included in AOCI for the
instruments still held at December 31, 2024 (5)
$(1,189)$(2)$209 $— $— 
Changes in unrealized gains (losses) included in AOCI for the
instruments still held at December 31, 2025 (5)
$1,450 $6 $49 $— $— 
Gains (Losses) Data for the year ended December 31, 2023:
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)$(35)$2 $(11)$9 $138 
Total realized/unrealized gains (losses) included in AOCI$1,413 $(3)$33 $— $— 
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Short-term
Investments		Other
Investments		Net
Derivatives (7)		Net Embedded
Derivatives (8)		Separate
Accounts (9)
Notes Issued by CFEs
(In millions)
Balance, January 1, 2024
$27 $975 $(143)$(93)$1,147 $— 
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)— 14 (23)86 (51)— 
Total realized/unrealized gains (losses) included in AOCI(1)— (31)— — — 
Purchases (3)5 72 — — 134 — 
Sales (3)(26)(282)— — (226)— 
Issuances (3)— — — — — — 
Settlements (3)— — 213 (2)— — 
Transfers into Level 3 (4)— 231 — — — — 
Transfers out of Level 3 (4)— — (11)— (14)— 
Balance, December 31, 2024
5 1,010 5 (9)990 — 
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)(14)(64)27 (154)(9)— 
Total realized/unrealized gains (losses) included in AOCI5 — 2 — — — 
Purchases (3)51 307 — — 97 (1,206)
Sales (3)(5)(137)— — (185)— 
Issuances (3)— — — (51)— — 
Settlements (3)— — — 157 — — 
Transfers into Level 3 (4)— 21 — — 4 — 
Transfers out of Level 3 (4)— — (1)— (6)— 
Balance, December 31, 2025
$42 $1,137 $33 $(57)$891 $(1,206)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2023 (5)
$— $23 $(39)$(36)$— $— 
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2024 (5)
$— $13 $(15)$86 $— $— 
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2025 (5)
$(14)$(76)$26 $(153)$— $— 
Changes in unrealized gains (losses) included in AOCI for the instruments still held at December 31, 2023 (5)
$— $— $(5)$— $— $— 
Changes in unrealized gains (losses) included in AOCI for the instruments still held at December 31, 2024 (5)
$— $— $— $— $— $— 
Changes in unrealized gains (losses) included in AOCI for the instruments still held at December 31, 2025 (5)
$5 $— $— $— $— $— 
Gains (Losses) Data for the year ended December 31, 2023:
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)$— $22 $(39)$(36)$(60)$— 
Total realized/unrealized gains (losses) included in AOCI$1 $— $(5)$— $— $— 
__________________
(1)Amortization of premium/accretion of discount is included within net investment income. Impairments and changes in ACL charged to net income (loss) on certain securities are included in net investment gains (losses), while changes in estimated fair value of Unit-linked and FVO securities are included in net investment income. Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).
(2)Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.
(3)Items purchased/issued and then sold/settled in the same period are excluded from the rollforward.
(4)Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.
(5)Changes in unrealized gains (losses) included in net income (loss) and included in AOCI relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).
(6)Comprised of U.S. and foreign corporate securities.
(7)Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.
(8)Embedded derivative assets and liabilities are presented net for purposes of the rollforward.
(9)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure, these changes are presented within net income (loss). Separate account assets and liabilities are presented net for the purposes of the rollforward.
Fair Value Option
The Company has elected the FVO for certain invested assets held by, and notes issued by, CFEs. See Note 3.
At December 31, 2025, the unpaid principal balance on the invested assets held by CFEs exceeded the estimated fair value by $33 million.
At December 31, 2025, the unpaid principal balance on the notes issued by CFEs exceeded the estimated fair value by $1 million.
Nonrecurring Fair Value Measurements
The following table presents information for assets measured at estimated fair value on a nonrecurring basis during the periods and still held at the reporting dates (for example, when there is evidence of impairment), using significant unobservable inputs (Level 3).
December 31,
20252024
(In millions)
Carrying value after measurement:
Mortgage loans (1)$1,583 $1,075 
Other invested assets (2)
$— $63 
Years Ended December 31,
202520242023
(In millions)
Net investment gains (losses):
Mortgage loans (1)
$(590)$(217)$(215)
Other invested assets (2)
$— $— $(136)
__________________
(1)Estimated fair values of impaired mortgage loans are based on the underlying collateral or discounted cash flows. See Note 11.
(2)The Company recognized an impairment loss for the year ended December 31, 2023 related to AmMetLife Insurance Berhad (Malaysia) and AmMetLife Takaful Berhad (Malaysia) (collectively, “MetLife Malaysia”).
Fair Value of Financial Instruments Carried at Other Than Fair Value
The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. The following tables exclude cash and cash equivalents, which are primarily classified as Level 1, and accrued investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities (i.e., time deposits), which are primarily classified as Level 2. The Company believes that due to the short-term nature of these excluded financial instruments, the estimated fair value approximates carrying value.
The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:
December 31, 2025
Fair Value Hierarchy
Carrying
Value		Level 1Level 2Level 3Total
Estimated
Fair Value
(In millions)
Assets
Mortgage loans
$84,593 $— $— $82,933 $82,933 
Policy loans
$8,547 $— $— $9,083 $9,083 
Other invested assets
$895 $— $700 $195 $895 
Premiums, reinsurance and other receivables
$8,681 $— $1,252 $6,835 $8,087 
Other assets
$247 $— $53 $202 $255 
Liabilities
PABs
$147,826 $— $— $145,695 $145,695 
Long-term debt
$14,461 $— $14,143 $— $14,143 
Collateral financing arrangement
$352 $— $— $322 $322 
Subordinated debt securities
$4,155 $— $4,707 $— $4,707 
Other liabilities
$11,993 $— $842 $10,747 $11,589 
Separate account liabilities
$80,164 $— $80,164 $— $80,164 
December 31, 2024
Fair Value Hierarchy
Carrying
Value		Level 1Level 2Level 3Total
Estimated
Fair Value
(In millions)
Assets
Mortgage loans
$89,012 $— $— $84,217 $84,217 
Policy loans$8,545 $— $— $9,058 $9,058 
Other invested assets$1,202 $— $704 $498 $1,202 
Premiums, reinsurance and other receivables$4,831 $— $881 $3,917 $4,798 
Other assets$228 $— $69 $167 $236 
Liabilities
PABs
$139,882 $— $— $134,612 $134,612 
Long-term debt$15,080 $— $14,498 $— $14,498 
Collateral financing arrangement$476 $— $— $425 $425 
Subordinated debt securities
$3,164 $— $3,587 $— $3,587 
Other liabilities$9,635 $— $734 $8,570 $9,304 
Separate account liabilities$70,359 $— $70,359 $— $70,359 

Historical Timeline

Fiscal YearFiled
2025Feb 19, 2026Showing above
2024Feb 21, 2025
2023Feb 16, 2024
2022Feb 23, 2023
2021Feb 18, 2022
2020Feb 19, 2021
2019Feb 21, 2020
2018Feb 22, 2019
2017Mar 1, 2018
2016Mar 1, 2017
2015Feb 25, 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.

Other Available Disclosures

Income TaxesRevenueEarnings Per ShareGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsNew Standards