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Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Our measurement of fair value is based on assumptions used by market participants in pricing the asset or liability, which may include inherent risk, restrictions on the sale or use of an asset, or non-performance risk, which may include our own credit risk. We estimate an exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability (“exit price”) in the principal market, or the most advantageous market for that asset or liability in the absence of a principal market as opposed to the price that would be paid to acquire the asset or assume a liability (“entry price”). We categorize financial instruments carried at fair value into a three-level fair value hierarchy, based on the priority of inputs to the respective valuation technique, along with net asset value. The three-level hierarchy for fair value measurement is defined as follows:
Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date.
Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads, and yield curves.
Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date based on the best information available in the circumstances.
NAV - Certain equity investments are measured using NAV as a practical expedient in determining fair value. In addition, our unconsolidated affiliates (primarily limited partnerships) are primarily accounted for using the equity method of accounting with fair value determined using NAV as a practical expedient. Our carrying value reflects our pro rata ownership percentage as indicated by NAV in the unconsolidated affiliate’s financial statements, which we may adjust if we determine NAV is not calculated consistent with investment company fair value principles. The underlying investments of the unconsolidated affiliates may have significant unobservable inputs, which may include, but are not limited to, comparable multiples and weighted average cost of capital rates applied in valuation models or a discounted cash flow model. Additionally, management inquires quarterly with the general partner to determine whether any credit or other market events have occurred since prior period financial statements to ensure any material events are properly included in current period valuation and investment income.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
When a determination is made to classify an asset or liability within Level 3 of the fair value hierarchy, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. Because certain securities trade in less liquid or illiquid markets with limited or no pricing information, the determination of fair value for these securities is inherently more difficult. In addition to the unobservable inputs, Level 3 fair value investments may include observable components, which are components that are actively quoted or can be validated to market-based sources.
 
Our assets and liabilities measured and carried at fair value on a recurring basis, summarized according to the hierarchy previously described, are as follows:
December 31, 2024
Level 1Level 2Level 3NAVFair Value
Assets(In millions)
Cash and cash equivalents$3,479 $— $— $— $3,479 
Fixed maturity securities, available-for-sale:
Asset-backed securities— 7,513 8,143 — 15,656 
Commercial mortgage-backed securities— 5,182 — — 5,182 
Corporates41 18,698 2,957 — 21,696 
Hybrids35 546 — — 581 
Municipals— 1,386 — — 1,386 
Residential mortgage-backed securities— 2,793 3 — 2,796 
U.S. Government631 6 — — 637 
Foreign Governments— 280 4 — 284 
Short term investments2,995 18 37 — 3,050 
Preferred securities189 246 8 — 443 
Equity securities575 — 10 57 642 
Derivative investments— 791 3 — 794 
Investment in unconsolidated affiliates— — 272 — 272 
Loan receivable, included in Prepaid expenses and other assets— — 11 — 11 
Reinsurance related embedded derivative, included in other assets— 109 — — 109 
Market risk benefits asset— — 189 — 189 
Other assets— — 65 — 65 
Other long-term investments— — 32 — 32 
Total financial assets at fair value$7,945 $37,568 $11,734 $57 $57,304 
Liabilities
Derivatives:
Indexed annuities/indexed universal life insurance ("IUL") embedded derivatives, included in Contractholder funds$— $— $5,220 $— $5,220 
Interest rate swaps— 10 — — 10 
Equity options1 — — — 1 
Contingent consideration obligation— — 74 — 74 
Market risk benefits liability— — 549 — 549 
Total financial liabilities at fair value$1 $10 $5,843 $— $5,854 
December 31, 2023
Level 1Level 2Level 3NAVFair Value
Assets(In millions)
Cash and cash equivalents $2,767 $— $— $— $2,767 
Fixed maturity securities, available-for-sale:
Asset-backed securities— 7,220 7,122 — 14,342 
Commercial mortgage-backed securities— 4,457 18 — 4,475 
Corporates25 15,892 1,979 — 17,896 
Hybrids95 523 — — 618 
Municipals— 1,562 49 — 1,611 
Residential mortgage-backed securities— 2,426 3 — 2,429 
U.S. Government662 16 — — 678 
Foreign Governments— 308 16 — 324 
Preferred securities214 399 8 — 621 
Equity securities692 — 15 59 766 
Derivative investments— 740 57 — 797 
Investment in unconsolidated affiliates — — 285 — 285 
Short-term investments2,111 8 — — 2,119 
Reinsurance related embedded derivative, included in other assets— 152 — — 152 
Other long-term investments— — 37 — 37 
Market risk benefits asset — — 88 — 88 
Total financial assets at fair value$6,566 $33,703 $9,677 $59 $50,005 
Liabilities
Derivatives:
Indexed annuities/IUL embedded derivatives, included in Contractholder funds$— $— $4,258 $— $4,258 
Market risk benefits liability — — 403 — 403 
Equity options1 — — — 1 
Total financial liabilities at fair value$1 $— $4,661 $— $4,662 
Valuation Methodologies
Cash and Cash Equivalents
The carrying amounts reported in the Consolidated Balance Sheets for these instruments approximate fair value.
Fixed Maturity, Preferred and Equity Securities
We measure the fair value of our securities based on assumptions used by market participants in pricing the security. The most appropriate valuation methodology is selected based on the specific characteristics of the fixed maturity, preferred or equity security, and we will then consistently apply the valuation methodology to measure the security’s fair value. Our fair value measurement is based on a market approach, which utilizes prices and other relevant information generated by market transactions involving identical or comparable securities. Sources of inputs to the market approach include third-party pricing services, independent broker quotations, or pricing matrices. We use observable and unobservable inputs in our valuation methodologies. Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. In addition, market indicators and industry and economic events are monitored and further market data will be acquired when certain thresholds are met.
For certain security types, additional inputs may be used, or some of the inputs described above may not be applicable. The significant input used in the fair value measurement of equity securities for which the market approach valuation technique is employed is yield for comparable securities. Increases or decreases in the yields would result in lower or higher, respectively, fair value measurements. For broker-quoted only securities, quotes from market makers or broker-dealers are obtained from sources recognized to be market participants. We believe the broker quotes are prices at which trades could be executed based on historical trades executed at broker-quoted or slightly higher prices.
We analyze the third-party valuation methodologies and related inputs to perform assessments to determine the appropriate level within the fair value hierarchy. However, we did not adjust prices received from third parties as of December 31, 2024 or 2023.
Certain equity investments are measured using NAV as a practical expedient in determining fair value.
Derivative Financial Instruments
Our call options and put options (together referred to as “equity options”), futures contracts, and interest rate swaps can either be exchange traded or over the counter. Exchange traded derivatives typically fall within Level 1 of the fair value hierarchy if there is active trading activity. Two methods are used to value over-the-counter derivatives. When required inputs are available, certain derivatives are valued using valuation pricing models, which represent what we would expect to receive or pay at the balance sheet date if we cancelled or exercised the derivative or entered into offsetting positions. Valuation models require a variety of inputs, which include the use of market-observable inputs, including interest rate, yield curve volatilities, and other factors. These over-the-counter derivatives are typically classified within Level 2 of the fair value hierarchy as the majority trade in liquid markets, we can verify model inputs and model selection does not involve significant management judgment. When inputs aren’t available for valuation models, certain over-the-counter derivatives are valued using independent broker quotes, which are based on unobservable market data and classified within Level 3. Effective September 30, 2024, pricing for certain derivatives was obtained from internal models using substantially all market observable inputs, and those derivatives were transferred out of Level 3 to Level 2.
The fair value of the reinsurance-related embedded derivatives in the funds withheld reinsurance agreements are estimated based upon the fair value of the assets supporting the funds withheld from reinsurance liabilities. The fair value of the assets is based on a quoted market price of similar assets (Level 2), and therefore the fair value of the embedded derivative is based on market-observable inputs and classified as Level 2. See Note O F&G Reinsurance for further discussion on F&G reinsurance agreements.
The fair value measurement of the indexed annuities/IUL embedded derivatives included in contractholder funds is determined through a combination of market observable information and significant unobservable inputs using the option budget method. The market observable inputs are the market value of option and treasury rates. The significant unobservable inputs are the budgeted option cost (i.e., the expected cost to purchase equity options in future periods to fund the equity indexed linked feature), surrender rates, mortality multiplier and non-performance spread. The mortality multiplier at December 31, 2024 and 2023 was applied to the 2012 Individual Annuity mortality tables. Increases or decreases in the market value of an option in isolation would result in a higher or lower, respectively, fair value measurement. Increases or decreases in treasury rates, mortality multiplier, surrender rates, or non-performance spread in isolation would result in a lower or higher fair value measurement, respectively. Generally, a change in any one unobservable input would not directly result in a change in any other unobservable input.
Investments in Unconsolidated affiliates
We have elected the fair value option for certain investments in unconsolidated affiliates as we believe this better aligns them with other investments in unconsolidated affiliates that are measured using NAV as a practical expedient in determining fair value. Investments measured using the fair value option are included in Level 3 and the fair values of these investments are determined using a multiple of the affiliates’ EBITDA. The EBITDA is based on the affiliates’ financial information. The multiple is derived from market analysis of transactions involving comparable companies. The inputs are considered unobservable, as not all market participants have access to this data.
Short-term Investments
The carrying amounts reported in the Consolidated Balance Sheets for these instruments approximate fair value. Certain short-term investments are valued based on third-party pricing services or broker quotes and are classified as Level 2 or 3.
Loan receivable
Concurrent with the Roar purchase agreement, F&G executed a separate loan agreement with the sellers of Roar. The loan is collateralized by the sellers’ minority equity stake in Roar. The loan receivable is measured at fair value using a discounted cash flow model applied using a Monte Carlo simulation of estimated cash flows at each measurement period and for each simulated path relative to the estimated collateral value. The Monte Carlo simulation utilizes the outstanding principal balance, a risk-adjusted discount rate, and risk-free rates to discount the expected cash flows and compare to the estimated collateral value for each payment period and simulated path. The discounted cash flow approach applies a company-specific discount rate to future expected interest and payoff payments to calculate the estimated fair value based on the average outcome from the simulation. This loan receivable is included in Level 3 and the inputs are considered unobservable, as not all market participants have access to this data.
Other long-term investments
We hold a fund-linked note, which provides for an additional payment at maturity based on the value of an embedded derivative based on the actual return of a dedicated return fund. Fair value of the embedded derivative is based on an unobservable input, the NAV of the fund at the balance sheet date. The embedded derivative is similar to an equity option on the NAV of the fund with a strike price of zero since F&G will not be required to make any additional payments at maturity of the fund-linked note in order to receive the NAV of the fund on the maturity date. A Black-Scholes model determines the NAV of the fund as the fair value of the equity option regardless of the values used for the other inputs to the option pricing model. The NAV of the fund is provided by the fund manager at the end of each calendar month and represents the value an investor would receive if it withdrew its investment on the balance sheet date. Therefore, the key unobservable input used in the Black-Scholes model is the value of the fund. As the value of the fund increases or decreases, the fair value of the embedded derivative will increase or decrease. See further discussion on the available-for-sale embedded derivative in Note F Derivative Financial Instruments.
The fair value of the credit-linked note is based on a weighted average of a broker quote and a discounted cash flow analysis. The discounted cash flow approach is based on the expected portfolio cash flows and amortization schedule reflecting investment expectations, adjusted for assumptions on the portfolio's default and recovery rates, and the note's discount rate. The fair value of the note is provided by the fund manager at the end of each quarter.
Other Assets
Mortgage servicing rights are measured at fair value using a discounted cash flow model, which incorporates assumptions that market participants use in estimating future net servicing income cash flows. These assumptions include estimates of prepayment rates, discount rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income, and ancillary income.
Contingent Consideration
The contingent consideration is measured at fair value using a discounted cash flow model applied using a Monte Carlo simulation of estimated EBITDA at each measurement period and for each simulated path relative to contractual EBITDA milestones. The Monte Carlo simulation utilizes a risk-adjusted discount rate, volatility assumption, and risk-free rates to assess the probability Roar's EBITDA trajectory reaches required milestones for the earn out payments to be made. The discounted cash flow approach applies a company-specific discount rate based on F&G credit profile to future expected earn out payments to calculate the estimated fair value based on the average outcome from the simulation. See further discussion on the contingent consideration in Note H Commitments and Contingencies.
MRBs
MRBs (inclusive of reinsured MRBs) are measured at fair value using an attributed fee measurement approach where attributed fees are explicit rider charges collectible from the policyholder (or paid to the reinsurer) used to cover the excess benefits. The fair value is calculated using a risk neutral valuation method and is based on current net amounts at risk, market data, internal and industry experience, and other factors. The balances are computed using assumptions including mortality, full and partial surrender, rider benefit utilization, risk-free rates including non-performance spread and risk margin, market value of options and economic scenarios. Policyholder behavior assumptions are reviewed at least annually, typically in the third quarter, for any revisions. Reinsured MRBs are valued using a methodology consistent with direct MRBs, with the exception of the non-performance spread which reflects the credit of the reinsurer. See further discussion on MRBs in Note X Market Risk Benefits.
Quantitative information regarding significant unobservable inputs used for recurring Level 3 fair value measurements of financial instruments carried at fair value as of December 31, 2024 and 2023, excluding assets and liabilities for which significant quantitative unobservable inputs are not developed internally and not readily available to the Company (primarily those valued using broker quotes and certain third-party pricing services) are as follows:
Fair Value atValuation TechniqueUnobservable Input(s)Range (Weighted average)
December 31, 2024
(in millions)December 31, 2024
Assets
Asset-backed securities$95 Third-Party ValuationDiscount Rate
4.83% - 7.15% (6.33%)
Corporates 7 Discounted Cash FlowDiscount Rate
13.33% - 100.00% (96.45%)
Corporates750 Third-Party Valuation Discount Rate
2.00% - 22.53% (6.76%)
Residential mortgage-backed securities3 Third-Party Valuation Discount Rate
5.89%-5.89% (5.89%)
Foreign Governments4 Third-Party Valuation Discount Rate
12.14% - 12.14% (12.14%)
Investment in unconsolidated affiliates272 Market Comparable Company AnalysisEBITDA Multiple
8.7x - 23.6x (14.6x)
Preferred securities1 Discounted Cash FlowDiscount rate
100.00% - 100.00% (100.00%)
Equity securities4 Discounted Cash FlowDiscount rate
4.80% - 14.10% (9.40%)
Market Comparable Company AnalysisEBITDA multiple
5.8x - 7.5x (7.0x)
Other assets 65 Discounted Cash Flow Discount Rate
10.60% - 12.00% (11.30%)
Conditional Prepayment Rate
6.24% -11.99% (9.12%)
Other long-term investments:
Available-for-sale embedded derivative32 Black Scholes ModelMarket Value of AnchorPath Fund
100.00%
Prepaid expenses and other assets:
Loan receivable 11 Discounted Cash FlowRisk-Adjusted Discount Rate
7.22% - 7.22% (7.22%)
Collateral Volatility
35.00% - 35.00% (35.00%)
Market risk benefits asset189 Discounted Cash FlowMortality
80.00% - 115.00% (100.00%)
Surrender Rates
0.25% - 30.00% (5.05%)
Partial Withdrawal Rates
2.00% - 24.39% (2.48%)
Non-Performance Spread
0.48% - 0.95% (0.75%)
GMWB Utilization
50.00% - 75.00% (61.77%)
Total financial assets at fair value (a)$1,433 
Liabilities
Derivatives:
Indexed annuity/ IUL embedded derivatives, included in contractholder funds$5,220 Discounted Cash FlowMarket Value of Option
0.00% - 20.81% (2.92%)
Mortality Multiplier
80.00% - 115.00% (100.00%)
Surrender Rates
0.25% - 50.00% (6.94%)
Partial Withdrawals
2.00% - 35.71% (2.72%)
Non-Performance Spread
0.48% - 0.95% (0.75%)
Option Cost
0.07% - 5.70% (2.68%)
Contingent consideration74 Discounted Cash FlowRisk-Adjusted Discount Rate
13.50% - 13.50% (13.50%)
EBITDA Volatility
35% - 35% (35%)
Counterparty Discount Rate
6.50% - 6.50% (6.50%)
Market risk benefits liability549 Discounted Cash FlowMortality
80.00% - 115.00% (100.00%)
Surrender Rates
0.25% - 30.00% (5.05%)
Partial Withdrawal Rates
2.00% - 24.39% (2.48%)
Non-Performance Spread
0.48% - 0.95% (0.75%)
GMWB Utilization
50.00% - 75.00% (61.77%)
Total financial liabilities at fair value$5,843 
(a) Excludes $10,301 million for which significant quantitative unobservable inputs are not developed internally and not readily available to the Company (primarily those valued using broker quotes and certain third-party pricing services) are excluded from the respective totals in the table above.
Fair Value atValuation TechniqueUnobservable Input(s)Range (Weighted average)
December 31, 2023
(In millions)December 31, 2023
Assets
Asset-backed securities$57 Third-Party ValuationDiscount Rate
5.09% - 6.95% (6.00%)
Corporates787 Third-Party ValuationDiscount Rate
0.00% - 12.87% (6.91%)
Corporates8 Discounted Cash FlowDiscount Rate
44.00% - 100.00% (75.20%)
Municipals32 Third-Party ValuationDiscount Rate
6.25% - 6.25% (6.25%)
Residential mortgage-backed securities3 Third-Party ValuationDiscount Rate
5.46% - 5.46% (5.46%)
Foreign Governments16 Third-Party ValuationDiscount Rate
6.94% - 7.68% (7.45%)
Investment in unconsolidated affiliates285 Market Comparable Company AnalysisEBITDA Multiple
4.4x - 31.8x (23.2x)
Preferred securities1 Discounted Cash FlowDiscount rate
100.00%
Equity securities7 Discounted Cash FlowDiscount rate
11.50% - 11.50% (11.50%)
Other long-term investments:
Available-for-sale embedded derivative28 Black Scholes ModelMarket Value of Fund100%
Market risk benefits asset88 Discounted Cash FlowMortality
100.00% - 100.00% (100.00%)
Surrender Rates
0.25% - 10.00% (5.22%)
Partial Withdrawal Rates
0.00% - 23.26% (2.50%)
Non-Performance Spread
0.38% - 1.10% (0.96%)
GMWB Utilization
50.00% - 60.00% (50.81%)
Total financial assets at fair value (a)$1,312 
Liabilities
Derivatives:
Indexed annuities/ IUL embedded derivatives, included in Contractholder funds$4,258 Discounted Cash FlowMarket Value of Option
0.00% - 18.93%
(2.63%)
Swap Rates
3.84% - 5.26%
(4.55%)
Mortality Multiplier
100.00% - 100.00%
(100.00%)
Surrender Rates
0.25% - 70.00% (6.83%)
Partial Withdrawals
2.00% - 34.48%
(2.74%)
Non-Performance Spread
0.38% - 1.10%
0.96%
Option Cost
0.07% - 5.48%
(2.38%)
Market risk benefits liability403 Discounted Cash FlowMortality
100.00% - 100.00% (100.00%)
Surrender Rates
0.25% - 10.00%
(5.22%)
Partial Withdrawal Rates
0.00% - 23.26%
2.50%
Non-Performance Spread
0.38% - 1.10%
(0.96%)
GMWB Utilization
50.00% - 60.00% (50.81%)
Total financial liabilities at fair value$4,661 
(a) Assets of $8,365 million for which significant quantitative unobservable inputs are not developed internally and not readily available to the Company (primarily those valued using broker quotes and certain third-party pricing services) are excluded from the respective totals in the table above.
The following tables summarize changes to the Company’s financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the years ended December 31, 2024 and 2023, respectively. 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.
Year ended December 31, 2024
(in millions)
Balance at Beginning
of Period		Total Gains (Losses)PurchasesSalesSettlementsNet transfer In (Out) of
Level 3 (a)		Balance at End of
Period		Change in Unrealized Incl in OCI
Included in
Earnings		Included in
AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities$7,122 $19 $128 $5,104 $(2,825)$(1,210)$(195)$8,143 $130 
Commercial mortgage-backed securities18 — — 58 — — (76)— — 
Corporates1,979 (3)81 1,148 (100)(139)(9)2,957 80 
Municipals49 — 1 — (50)— — — 1 
Residential mortgage-backed securities3 — — 1 — — (1)3 — 
Foreign Governments16 — (1)— — (11)— 4 (1)
Preferred securities8 — — — — — — 8 — 
Equity securities15 (5)— — — — — 10 — 
Interest rate swaps57 (50)3 — — — (7)3 1 
Investment in unconsolidated affiliates (b)285 79 — — — — (92)272 — 
Other assets— — — 65 — — — 65 — 
Short-term investments— — — 236 (190)(9)— 37 — 
Other long-term assets:
Available-for-sale embedded derivative27 — 5 — — — — 32 5 
Credit linked note10 1 — — — (11)— — — 
Prepaid expenses and other assets:
Loan receivable (c)— — — 11 — — — 11 — 
Subtotal Level 3 assets at fair value$9,589 $41 $217 $6,623 $(3,165)$(1,380)$(380)$11,545 $216 
Market risk benefits asset (d))88 189 
Total Level 3 assets at fair value$9,677 $11,734 
Liabilities
Indexed annuity/ IUL embedded derivatives, included in contractholder funds$4,258 $45 $— $1,351 $— $(434)$— $5,220 $— 
Interest rate swaps— 28 — — — — (28)— — 
Contingent consideration (e)— 26 — 48 — — — 74 — 
Subtotal Level 3 liabilities at fair value$4,258 $99 $— $1,399 $— $(434)$(28)$5,294 $— 
Market Risk benefits liability (d)403 549 
Total Level 3 liabilities at fair value $4,661 $5,843 
(a)The net transfers out of Level 3 during the year ended December 31, 2024 were exclusively to Level 2 with the exception of (b) below.
(b)The transfer out of investments in unconsolidated affiliates reflects F&G’s majority acquisition of PALH on July 18, 2024. Refer to Note B Acquisitions for details of the PALH majority acquisition.
(c)Purchases represent advances on the loan commitment to Roar. Refer to Note H - Commitments and Contingencies for further details.
(d)Refer to Note X Market Risk Benefits for roll forward activity of the net Market Risk Benefits Asset and Liability.
(e)The initial contingent consideration recorded in the Roar transaction is included in purchases in the table above. Refer to Note B Acquisitions for more information.
Year ended December 31, 2023
Balance at Beginning
of Period		Total Gains (Losses)PurchasesSalesSettlementsNet transfer In (Out) of
Level 3 (a)		Balance at End of
Period		Change in Unrealized Incl in OCI
Included in
Earnings		Included in
AOCI
Assets
Fixed maturity securities available-for-sale:
Asset-backed securities$6,263 $(53)$186 $1,830 $(125)$(738)$(241)$7,122 $185 
Commercial mortgage-backed securities37 — 2 22 — — (43)18 2 
Corporates1,440 (2)(21)654 (1)(94)3 1,979 (20)
Municipals29 — 20 — — — — 49 20 
Residential mortgage-backed securities302 1 7 32 — (9)(330)3 7 
Foreign Governments16 — — — — — — 16 — 
Investment in unconsolidated affiliates23 13 — 249 — — — 285 — 
Short-term investments— — — 204 (19)(185)— — — 
Derivative Instruments — 57 — — — — — 57 — 
Preferred securities1 — — — — — 7 8 1 
Equity securities10 1 1 — — — 3 15 — 
Other long-term assets:
Available-for-sale embedded derivative23 — 4 — — — — 27 4 
Credit linked note15 — — — — (5)— 10 — 
Secured borrowing receivable 10 — — — — (10)— — — 
Subtotal Level 3 assets at fair value$8,169 $17 $199 $2,991 $(145)$(1,041)$(601)$9,589 $199 
Market risk benefits asset (b)117 88 
Total Level 3 assets at fair value $8,286 $9,677 
Liabilities
Indexed annuities embedded derivatives, included in contractholder funds$3,115 $257 $— $1,049 $— $(163)$— $4,258 $— 
Subtotal Total liabilities at Level 3 fair value$3,115 $257 $— $1,049 $— $(163)$— $4,258 $— 
Market risk benefits liability (b)282 403 
Total Level 3 liabilities at fair value $3,397 $4,661 
(a) The net transfers out of Level 3 during the year ended December 31, 2023, were to Level 2.
(b) Refer to Note X Market Risk Benefits for roll forward activity of the net Market risk benefits asset and liability.

Valuation Methodologies and Associated Inputs for Financial Instruments Not Carried at Fair Value
The following discussion outlines the methodologies and assumptions used to determine the fair value of our financial instruments not carried at fair value. Considerable judgment is required to develop these assumptions used to measure fair value. Accordingly, the estimates shown 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
The fair value of mortgage loans is established using a discounted cash flow method based on internal credit rating, maturity and future income. This yield-based approach is sourced from our third-party vendor. The internal ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt service coverage, loan-to-value, quality of tenancy, borrower, and payment record. The inputs used to measure the fair value of our mortgage loans are classified as Level 3 within the fair value hierarchy.
Investments in Unconsolidated affiliates
In our F&G segment, the fair value of Investments in unconsolidated affiliates is determined using NAV as a practical expedient and are included in the NAV column in the table below. In our Title segment, Investments in unconsolidated affiliates are accounted for under the equity method of accounting. In our Title segment, Investments in unconsolidated affiliates were $166 million and $263 million as of December 31, 2024 and 2023, respectively.
Policy Loans (included within Other long-term investments)
Policy loans are reported at the unpaid principal balance and are fully collateralized by the cash surrender value of underlying insurance policies. The carrying value of the policy loans approximates the fair value and are classified as Level 3 in the fair value hierarchy.
Company Owned Life Insurance (included within Other long-term investments)
Company owned life insurance ("COLI") is a life insurance program used to finance certain employee benefit expenses. The fair value of COLI is based on net realizable value, which is generally cash surrender value. COLI is classified as Level 3 within the fair value hierarchy.
Other Invested Assets (included within Other long-term investments)
The fair value of bank loans is estimated using a discounted cash flow method with the discount rate based on weighted average cost of capital ("WACC"). This yield-based approach is sourced from a third-party vendor and the WACC establishes a market participant discount rate by determining the hypothetical capital structure for the asset should it be underwritten as of each period end. Bank loans are classified as Level 3 within the fair value hierarchy. For cost method investments, our carrying value approximates fair value. Cost method investments are classified as Level 1 within the fair value hierarchy.
Investment Contracts
Investment contracts include deferred annuities (indexed annuities and fixed rate annuities), IUL policies, funding agreements and PRT, and immediate annuity contracts without life contingencies. The indexed annuities/IUL embedded derivatives, included in contractholder funds, are excluded as they are carried at fair value. The fair value of the deferred annuities (indexed annuities and fixed rate annuities) and IUL contracts is based on their cash surrender value (i.e., the cost the Company would incur to extinguish the liability) as these contracts are generally issued without an annuitization date. The fair value of funding agreements and PRT and immediate annuity contracts without life contingencies is derived by calculating a new fair value interest rate using the updated yield curve and treasury spreads as of the respective reporting date. The Company is not required to, and has not, estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value.
Other
Federal Home Loan Bank of Atlanta ("FHLB") common stock, Accounts receivable and Notes receivable are carried at cost, which approximates fair value. The carrying amount of FHLB common stock represents the value it can be sold back to the FHLB and is classified as Level 2 within the hierarchy. Accounts receivable and Notes receivable are classified as Level 3 within the fair value hierarchy.
Debt
The fair value of debt, with the exception of the F&G Credit Agreement is based on quoted market prices. The carrying value of the F&G Credit Agreement approximates fair value as the rates are comparable to those at which we could currently borrow under similar terms. The inputs used to measure the fair value of our outstanding debt are classified as Level 2 within the fair value hierarchy. As of December 31, 2024 and 2023, the outstanding balance on the F&G Credit Agreement was $0 million and $365 million, respectively.
The following tables provide the carrying value and estimated fair value of our financial instruments that are carried on the accompanying Consolidated Balance Sheets at amounts other than fair value, summarized according to the fair value hierarchy previously described.
December 31, 2024
(in millions)
Level 1Level 2Level 3NAVTotal Estimated Fair ValueCarrying Amount
Assets
FHLB common stock$— $153 $— $— $153 $153 
Commercial mortgage loans— — 2,404 — 2,404 2,705 
Residential mortgage loans— — 2,916 — 2,916 3,221 
Investments in unconsolidated affiliates— — 5 3,288 3,293 3,293 
Policy loans— — 104 — 104 104 
Other invested assets42 — — 48 90 90 
Company-owned life insurance— — 431 — 431 431 
Trade and notes receivables, net of allowance— — 471 — 471 471 
Total$42 $153 $6,331 $3,336 $9,862 $10,468 
Liabilities
Investment contracts, included in contractholder funds$— $— $46,339 $— $46,339 $51,184 
Debt— 3,781 — — 3,781 4,321 
Total$— $3,781 $46,339 $— $50,120 $55,505 
December 31, 2023
(in millions)
Level 1Level 2Level 3NAVTotal Estimated Fair ValueCarrying Amount
Assets
FHLB common stock$— $138 $— $— $138 $138 
Commercial mortgage loans— — 2,253 — 2,253 2,538 
Residential mortgage loans— — 2,545 — 2,545 2,798 
Investments in unconsolidated affiliates— — 7 2,779 2,786 2,786 
Policy loans— — 71 — 71 71 
Other invested assets17 — — 42 59 59 
Company-owned life insurance— — 397 — 397 397 
Trade and notes receivables, net of allowance— — 442 — 442 442 
Total$17 $138 $5,715 $2,821 $8,691 $9,229 
Liabilities
Investment contracts, included in contractholder funds$— $— $40,229 $— $40,229 $44,540 
Debt— 3,568 — — 3,568 3,887 
Total$— $3,568 $40,229 $— $43,797 $48,427 

For investments for which NAV is used, we do not have any significant restrictions in our ability to liquidate our positions in these investments, other than obtaining general partner approval, nor do we believe it is probable a price less than NAV would be received in the event of a liquidation.
We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3, or between other levels, at the beginning fair value for the reporting period in which the changes occur. The transfers into and out of Level 3 were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value.