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5. FAIR VALUE MEASUREMENTS
Fair Value Hierarchy
U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques
are observable or unobservable. These two types of inputs create three valuation hierarchy levels. Level 1 valuations
reflect quoted market prices for identical assets or liabilities in active markets. Level 2 valuations reflect quoted market
prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in
non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets.
Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.
The following tables present the fair value hierarchy levels of the Company's assets and liabilities that are measured
and carried at fair value on a recurring basis as of December 31.
2016
(In millions)
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair
Value
Assets:
Securities available for sale, carried at
fair value:
Fixed maturities:
Government and agencies
$ 25,387
$ 827
$ 0
$ 26,214
Municipalities
0
1,295
0
1,295
Mortgage- and asset-backed securities
0
1,139
198
1,337
Public utilities
0
7,667
16
7,683
Sovereign and supranational
0
1,469
0
1,469
Banks/financial institutions
0
6,038
25
6,063
Other corporate
0
29,699
0
29,699
Total fixed maturities
25,387
48,134
239
73,760
Perpetual securities:
Banks/financial institutions
0
1,420
0
1,420
Other corporate
0
213
0
213
Total perpetual securities
0
1,633
0
1,633
Equity securities
1,300
6
3
1,309
Other assets:
Foreign currency swaps
0
365
125
490
Foreign currency forwards
0
672
0
672
Foreign currency options
0
43
0
43
Credit default swaps
0
0
2
2
Total other assets
0
1,080
127
1,207
Other investments
276
0
0
276
Cash and cash equivalents
4,859
0
0
4,859
Total assets
$ 31,822
$ 50,853
$ 369
$ 83,044
Liabilities:
Foreign currency swaps
$
0
$ 84
$ 146
$ 230
Foreign currency forwards
0
1,717
0
1,717
Foreign currency options
0
51
0
51
Total liabilities
$
0
$ 1,852
$ 146
$ 1,998
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