NOTE 21. FINANCIAL INSTRUMENTS NOTE 20. FAIR VALUE MEASUREMENTS ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS Level 1 Level 2 Level 3(a) Netting adjustment(d) Net balance(b) December 31 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Investment securities $ 7,319 $ 9,704 $ 36,684 $ 33,606 $ 5,866 $ 5,210 $ — $ — $ 49,868 $ 48,521  Derivatives —  —  3,057  2,561  8  11  (2,582) (1,832) 483  740  Total assets $ 7,319 $ 9,704 $ 39,741 $ 36,167 $ 5,874 $ 5,221 $ (2,582) $ (1,832) $ 50,352 $ 49,261  Derivatives $ — $ — $ 1,112 $ 834 $ 7 $ 19 $ (752) $ (651) $ 367 $ 202  Other(c) —  —  780  807  —  —  —  —  780  807  Total liabilities $ — $ — $ 1,892 $ 1,641 $ 7 $ 19 $ (752) $ (651) $ 1,147 $ 1,009  (a) Included debt securities classified within Level 3 of $4,185 million of U.S. corporate and $976 million of Mortgage and asset-backed securities at December 31, 2020, and $3,977 million of U.S. corporate and $330 million of Government and agencies securities at December 31, 2019. (b) See Notes 3 and 21 for further information on the composition of our investment securities and derivative portfolios. (c) Primarily represents the liabilities associated with certain of our deferred incentive compensation plans. (d) The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk. Our assets and liabilities measured at fair value on a recurring basis include debt securities mainly supporting obligations to annuitants and policyholders in our run-off insurance operations, our remaining equity interest in Baker Hughes and derivatives. LEVEL 3 INSTRUMENTS.  The majority of our Level 3 balances comprised debt securities classified as available-for-sale with changes in fair value recorded in Other comprehensive income. (a) Primarily included net unrealized gains (losses) of $323 million and $404 million in Other comprehensive income for the years ended December 31, 2020 and 2019, respectively. (b) Included $745 million of Mortgage and asset-backed securities for the year ended December 31, 2020, and $975 million of U.S. corporate debt securities for the year ended December 31, 2019. Substantially all of these Level 3 securities are fair valued using non-binding broker quotes or other third-party sources that utilize a number of different unobservable inputs not subject to meaningful aggregation. The following table provides information about assets and liabilities not carried at fair value and excludes finance leases, equity securities without readily determinable fair value and non-financial assets and liabilities. Substantially all of these assets are considered to be Level 3 and the vast majority of our liabilities’ fair value are considered Level 2. The higher fair value in relation to carrying value for borrowings at December 31, 2020 compared to December 31, 2019 was driven primarily by a decline in market interest rates. Unlike the carrying amount, the estimated fair value of borrowings included $898 million and $1,106 million of accrued interest at December 31, 2020 and 2019, respectively. Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above disclosures; such items include cash and equivalents, investment securities and derivative financial instruments. Balance at January 1 Net realized/unrealized gains(losses)(a) Purchases(b) Sales & Settlements Transfers into Level 3 Transfers out of Level 3 Balance at December 31 2020 Investment securities $ 5,210 $ 357 $ 1,301 $ (958) $ 2 $ (45) $ 5,866  2019 Investment securities $ 4,013 $ 399 $ 2,159 $ (1,308) $ — $ (53) $ 5,210  December 31, 2020 December 31, 2019 Carrying amount (net) Estimated fair value Carrying amount (net) Estimated fair value Assets Loans and other receivables $ 3,842 $ 3,970  $ 4,113 $ 4,208  Liabilities Borrowings (Note 11) $ 75,067 $ 86,171  $ 90,882 $ 97,754  Investment contracts (Note 12) 2,049  2,547  2,191  2,588  GE 2020 FORM 10-K  94