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Fair Values | 12 Months Ended
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Dec. 31, 2023
Fair Value Disclosures [Abstract] |
Fair Values | FAIR VALUES Fair value is defined as the price that would be required to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the principal or, in the absence of a principal, most advantageous market for the specific asset or liability. GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows: •Level 1 ― Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access. •Level 2 ― Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including: – Quoted prices for similar assets or liabilities in active markets; – Quoted prices for identical or similar assets or liabilities in markets that are not active; – Inputs other than quoted prices that are observable for the asset or liability; and – Inputs that are derived principally from or corroborated by observable market data by correlation or other means. •Level 3 ― Inputs that are unobservable and reflect our own estimates about the estimates market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). We monitor the market conditions and evaluate the fair value hierarchy levels at least quarterly. For the years ended December 31, 2023 and 2022, there were no Level 3 transfers. FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUE The following table summarizes our financial assets and financial liabilities measured at fair value on a recurring basis, categorized by GAAP’s fair value hierarchy (as described in the preceding paragraphs), as of December 31:
|  | 2023 |  | 2022
(Millions) |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment securities: (a) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | $ | 66 |  |  | $ | 66 |  |  | $ | — |  |  | $ | — |  |  | $ | 41 |  |  | $ | 40 |  |  | $ | 1 |  |  | $ | — |
Debt securities |  | 2,120 |  |  | — |  |  | 2,046 |  |  | 74 |  |  | 4,537 |  |  | — |  |  | 4,490 |  |  | 47 |
Derivatives, gross (a)(b) |  | 80 |  |  | — |  |  | 62 |  |  | 18 |  |  | 521 |  |  | — |  |  | 494 |  |  | 27 |
Total Assets |  | 2,266 |  |  | 66 |  |  | 2,108 |  |  | 92 |  |  | 5,099 |  |  | 40 |  |  | 4,985 |  |  | 74 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives, gross (a) |  | 977 |  |  | — |  |  | 977 |  |  | — |  |  | 801 |  |  | — |  |  | 801 |  |  | — |
Total Liabilities |  | $ | 977 |  |  | $ | — |  |  | $ | 977 |  |  | $ | — |  |  | $ | 801 |  |  | $ | — |  |  | $ | 801 |  |  | $ | — |
(a)Refer to Note 4 for the fair values of investment securities and to Note 13 for the fair values of derivative assets and liabilities, on a further disaggregated basis. (b)Level 3 fair value reflects an embedded derivative. Management reviews and applies judgment to the valuation of the embedded derivative that is performed by an independent third party using a Monte Carlo simulation that models a range of probable future stock prices based on implied volatility in a risk neutral framework. Refer to Note 13 for additional information about this embedded derivative. VALUATION TECHNIQUES USED IN THE FAIR VALUE MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT FAIR VALUE For the financial assets and liabilities measured at fair value on a recurring basis (categorized in the valuation hierarchy table above), we apply the following valuation techniques: Investment Securities When available, quoted prices of identical investment securities in active markets are used to estimate fair value. Such investment securities are classified within Level 1 of the fair value hierarchy. When quoted prices of identical investment securities in active markets are not available, the fair values for our investment securities are obtained primarily from pricing services engaged by us, and we receive one price for each security. The fair values provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. Such investment securities are classified within Level 2 of the fair value hierarchy. The inputs to the valuation techniques applied by the pricing services vary depending on the type of security being priced but are typically benchmark yields, benchmark security prices, credit spreads, prepayment speeds, reported trades and broker-dealer quotes, all with reasonable levels of transparency. The pricing services did not apply any adjustments to the pricing models used. In addition, we did not apply any adjustments to prices received from the pricing services. We reaffirm our understanding of the valuation techniques used by our pricing services at least annually. In addition, we corroborate the prices provided by our pricing services by comparing them to alternative pricing sources. In instances where price discrepancies are identified between different pricing sources, we evaluate such discrepancies to ensure that the prices used for our valuation represent the fair value of the underlying investment securities. Refer to Note 4 for additional information on investment securities. Within Level 3 of the fair value hierarchy are our holdings of debt securities issued by Community Development Financial Institutions. We take the carrying value for these investment securities to be a reasonable proxy for their fair value unless we determine, based on our internal credit model, that there are indicators that the contractual cash flows will not be received in full. Derivative Financial Instruments The fair value of our Level 2 derivative financial instruments is estimated by using third-party pricing models, where the inputs to those models are readily observable from active markets. The pricing models used are consistently applied and reflect the contractual terms of the derivatives as described below. We reaffirm our understanding of the valuation techniques at least annually and validate the valuation output on a quarterly basis. The fair value of our interest rate swaps is determined based on a discounted cash flow method using the following significant inputs: the contractual terms of the swap such as the notional amount, fixed coupon rate, floating coupon rate and tenor, as well as discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated. The fair value of foreign exchange forward contracts is determined based on a discounted cash flow method using the following significant inputs: the contractual terms of the forward contracts such as the notional amount, maturity dates and contract rate, as well as relevant foreign currency forward curves, and discount rates consistent with the underlying economic factors of the currency in which the cash flows are denominated. Our Level 3 derivative financial instrument represents an embedded derivative in the form of C Ordinary Shares of GBT JerseyCo Limited. The fair valuation is performed by an independent third party using a Monte Carlo Simulation technique that models a range of probable future stock prices using the following significant inputs: term of the earnout, initial stock price, annual expected volatility of the common stock over the expected term, annual risk-neutral rate of return over the contractual term and dividend yield, which is further reviewed by management. Credit valuation adjustments are necessary when the market parameters, such as a benchmark curve, used to value derivatives are not indicative of our credit quality or that of our counterparties. We consider the counterparty credit risk by applying an observable forecasted default rate to the current exposure. Refer to Note 13 for additional information on derivative financial instruments. FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE The following table summarizes the estimated fair values of our financial assets and financial liabilities that are measured at amortized cost, and not required to be carried at fair value on a recurring basis, as of December 31, 2023 and 2022. The fair values of these financial instruments are estimates based upon the market conditions and perceived risks as of December 31, 2023 and 2022, and require management’s judgment. These figures may not be indicative of future fair values, nor can the fair value of American Express be estimated by aggregating the amounts presented.
2023 (Billions) |  | Carrying Value |  | Corresponding Fair Value Amount
|  | Total |  | Level 1 |  | Level 2 |  | Level 3
Financial Assets: |  |  |  |  |  |  |  |  |  |
Financial assets for which carrying values equal or approximate fair value |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents(a) |  | $ | 47 |  |  | $ | 47 |  |  | $ | 45 |  |  | $ | 2 |  |  | $ | — |
Other financial assets(b) |  | 63 |  |  | 63 |  |  | — |  |  | 63 |  |  | — |
Financial assets carried at other than fair value |  |  |  |  |  |  |  |  |  |
Card Member and Other loans, less reserves(c) |  | 128 |  |  | 133 |  |  | — |  |  | — |  |  | 133 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |
Financial liabilities for which carrying values equal or approximate fair value |  | 143 |  |  | 143 |  |  | — |  |  | 143 |  |  | — |
Financial liabilities carried at other than fair value |  |  |  |  |  |  |  |  |  |
Certificates of deposit(d) |  | 19 |  |  | 18 |  |  | — |  |  | 18 |  |  | — |
Long-term debt(c) |  | $ | 48 |  |  | $ | 48 |  |  | $ | — |  |  | $ | 48 |  |  | $ | — |
2022 (Billions) |  | Carrying Value |  | Corresponding Fair Value Amount
|  | Total |  | Level 1 |  | Level 2 |  | Level 3
Financial Assets: |  |  |  |  |  |  |  |  |  |
Financial assets for which carrying values equal or approximate fair value |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents(a) |  | $ | 34 |  |  | $ | 34 |  |  | $ | 32 |  |  | $ | 2 |  |  | $ | — |
Other financial assets(b) |  | 60 |  |  | 60 |  |  | — |  |  | 60 |  |  | — |
Financial assets carried at other than fair value |  |  |  |  |  |  |  |  |  |
Card Member and Other loans, less reserves(c) |  | 110 |  |  | 113 |  |  | — |  |  | — |  |  | 113 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |
Financial liabilities for which carrying values equal or approximate fair value |  | 123 |  |  | 123 |  |  | — |  |  | 123 |  |  | — |
Financial liabilities carried at other than fair value |  |  |  |  |  |  |  |  |  |
Certificates of deposit(d) |  | 16 |  |  | 16 |  |  | — |  |  | 16 |  |  | — |
Long-term debt(c) |  | $ | 43 |  |  | $ | 42 |  |  | $ | — |  |  | $ | 42 |  |  | $ | — |
(a)Level 2 fair value amounts reflect time deposits and short-term investments. (b)Balances include Card Member receivables (including fair values of Card Member receivables of $4.6 billion and 5.2 billion held by a consolidated VIE as of December 31, 2023 and 2022, respectively), other receivables and other miscellaneous assets. (c)Balances include amounts held by a consolidated VIE for which the fair values of Card Member loans were $28.6 billion and $28.4 billion as of December 31, 2023 and 2022, respectively, and the fair values of Long-term debt were $13.3 billion and $12.3 billion as of December 31, 2023 and 2022, respectively. (d)Presented as a component of Customer deposits on the Consolidated Balance Sheets. VALUATION TECHNIQUES USED IN THE FAIR VALUE MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES CARRIED AT OTHER THAN FAIR VALUE For the financial assets and liabilities that are not required to be carried at fair value on a recurring basis (categorized in the valuation hierarchy table), we apply the following valuation techniques to measure fair value: Financial Assets For Which Carrying Values Equal Or Approximate Fair Value Financial assets for which carrying values equal or approximate fair value include cash and cash equivalents, Card Member receivables, accrued interest and certain other assets. For these assets, the carrying values approximate fair value because they are short term in duration, have no defined maturity or have a market-based interest rate. Financial Assets Carried At Other Than Fair Value Card Member and Other loans, less reserves Card Member and Other loans are recorded at historical cost, less reserves, on the Consolidated Balance Sheets. In estimating the fair value for our loans, we use a discounted cash flow model. Due to the lack of a comparable whole loan sales market for similar loans and the lack of observable pricing inputs thereof, we use various inputs to estimate fair value. Such inputs include projected income, discount rates and forecasted write-offs. The valuation does not include economic value attributable to future receivables generated by the accounts associated with the loans. Financial Liabilities For Which Carrying Values Equal Or Approximate Fair Value Financial liabilities for which carrying values equal or approximate fair value include accrued interest, customer deposits (excluding certificates of deposit, which are described further below), Travelers Cheques and other prepaid products outstanding, accounts payable, short-term borrowings and certain other liabilities for which the carrying values approximate fair value because they are short term in duration, have no defined maturity or have a market-based interest rate. Financial Liabilities Carried At Other Than Fair Value Certificates of Deposit Certificates of deposit (CDs) are recorded at their historical issuance cost on the Consolidated Balance Sheets. Fair value is estimated using a discounted cash flow methodology based on the future cash flows and the discount rate that reflects the current market rates for similar types of CDs within similar markets. Long-term Debt Long-term debt is recorded at historical issuance cost on the Consolidated Balance Sheets adjusted for (i) unamortized discount and unamortized fees, (ii) the impact of movements in exchange rates on foreign currency denominated debt and (iii) the impact of fair value hedge accounting on certain fixed-rate notes that have been swapped to floating rate through the use of interest rate swaps. The fair value of our long-term debt is measured using quoted offer prices when quoted market prices are available. If quoted market prices are not available, the fair value is determined by discounting the future cash flows of each instrument at rates currently observed in publicly-traded debt markets for debt of similar terms and credit risk. For long-term debt, where there are no rates currently observable in publicly traded debt markets of similar terms and comparable credit risk, we use market interest rates and adjust those rates for necessary risks, including our own credit risk. In determining an appropriate spread to reflect our credit standing, we consider credit default swap spreads, bond yields of other long-term debt offered by us, and interest rates currently offered to us for similar debt instruments of comparable maturities. NONRECURRING FAIR VALUE MEASUREMENTS We have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired or where there are observable price changes for equity investments without readily determinable fair values. We estimate the Level 3 fair value of equity investments without readily determinable fair values, which include investments in our Amex Ventures portfolio, based on price changes as of the date of new similar equity financing transactions completed by the companies in the portfolio. In addition, impairments on such investments are recorded to account for the difference between the estimated fair value and carrying value of an investment based on a qualitative assessment of impairment indicators such as business performance, general market conditions and the economic and regulatory environment. When an impairment triggering event occurs, the fair value measurement is generally derived by taking into account all available information, such as share prices of publicly traded peer companies, internal valuations performed by our investees, and other third-party fair value data. The fair value of impaired investments represents a Level 3 fair value measurement. The carrying value of equity investments without readily determinable fair values totaled $0.9 billion and $1.0 billion as of December 31, 2023 and 2022, respectively, of which approximately nil and $0.6 billion as of December 31, 2023 and 2022, respectively, represented a nonrecurring Level 3 fair value measurement for certain of our equity investments. These amounts are included within Other assets on the Consolidated Balance Sheets. We recorded unrealized gains of $18 million, $94 million and $729 million for the years ended December 31, 2023, 2022 and 2021, respectively. Unrealized losses were $142 million, $388 million and $2 million for the years ended December 31, 2023, 2022 and 2021, respectively. Unrealized gains and losses are recorded in Other, net on the Consolidated Statements of Income. Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative unrealized gains for equity investments without readily determinable fair values totaled $1.1 billion and $1.2 billion as of December 31, 2023 and 2022, respectively, and cumulative unrealized losses were $431 million and $394 million as of December 31, 2023 and 2022, respectively. In addition, we also have certain equity investments measured at fair value using the net asset value practical expedient. Such investments were immaterial as of both December 31, 2023 and 2022.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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