Investments

3 Months Ended

Mar. 31, 2023

Fixed Maturity Securities

We evaluate our available-for-sale fixed maturity securities for declines based on qualitative and quantitative factors. We have established an allowance for credit loss and recorded credit loss expense as a reflection of our expected impairment losses. We continue to review our investment portfolios under our impairment review policy. Given the inherent uncertainty of changes in market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and additional material impairment losses for credit losses on investments may be recorded in future periods.

A summary of current and long-term fixed maturity securities, available-for-sale, at March 31, 2023 and December 31, 2022 is as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance For Credit Losses		Estimated Fair Value

March 31, 2023
Fixed maturity securities:
United States Government securities	$	2,053	$	8	$	(66)	$	—	$	1,995
Government sponsored securities	80		1		(3)		—		78
Foreign government securities	332		2		(43)		(1)		290
States, municipalities and political subdivisions, tax-exempt	4,339		38		(192)		—		4,185
Corporate securities	13,834		78		(956)		(5)		12,951
Residential mortgage-backed securities	3,165		15		(281)		—		2,899
Commercial mortgage-backed securities	2,243		2		(173)		(2)		2,070
Other asset-backed securities	4,142		17		(208)		—		3,951
Total fixed maturity securities	$	30,188	$	161	$	(1,922)	$	(8)	$	28,419
December 31, 2022
Fixed maturity securities:
United States Government securities	$	1,502	$	2	$	(103)	$	—	$	1,401
Government sponsored securities	82		1		(5)		—		78
Foreign government securities	321		1		(46)		(2)		274
States, municipalities and political subdivisions, tax-exempt	4,389		19		(265)		—		4,143
Corporate securities	13,721		31		(1,218)		(5)		12,529
Residential mortgage-backed securities	2,978		9		(324)		—		2,663
Commercial mortgage-backed securities	2,055		1		(176)		(2)		1,878
Other asset-backed securities	3,967		12		(241)		—		3,738
Total fixed maturity securities	$	29,015	$	76	$	(2,378)	$	(9)	$	26,704

Other asset-backed securities primarily consists of collateralized loan obligations and other debt securities.

For fixed maturity securities in an unrealized loss position at March 31, 2023 and December 31, 2022, the following table summarizes the aggregate fair values and gross unrealized losses by length of time those securities have continuously been in an unrealized loss position:


	Less than 12 Months					12 Months or Greater
(Securities are whole amounts)	Number of Securities	Estimated Fair Value		Gross Unrealized Loss		Number of Securities	Estimated Fair Value		Gross Unrealized Loss
March 31, 2023
Fixed maturity securities:
United States Government securities	39	$	490	$	(13)	47	$	393	$	(53)
Government sponsored securities	15	38		(1)		30	19		(2)
Foreign government securities	80	40		(3)		231	186		(40)
States, municipalities and political subdivisions, tax-exempt	468	945		(12)		967	1,689		(180)
Corporate securities	1,878	3,636		(114)		3,207	6,687		(842)
Residential mortgage-backed securities	532	579		(25)		1,224	1,730		(256)
Commercial mortgage-backed securities	260	679		(24)		558	1,298		(149)
Other asset-backed securities	364	1,067		(59)		775	2,149		(149)
Total fixed maturity securities	3,636	$	7,474	$	(251)	7,039	$	14,151	$	(1,671)


December 31, 2022
Fixed maturity securities:
United States Government securities	61	$	701	$	(40)	38	$	442	$	(63)
Government sponsored securities	39	73		(4)		6	5		(1)
Foreign government securities	150	100		(10)		198	142		(36)
States, municipalities and political subdivisions, tax-exempt	1,398	2,615		(147)		396	652		(118)
Corporate securities	3,551	7,826		(549)		2,204	3,521		(669)
Residential mortgage-backed securities	1,341	1,435		(121)		496	982		(203)
Commercial mortgage-backed securities	457	1,082		(76)		324	719		(100)
Other asset-backed securities	784	2,203		(124)		398	1,074		(117)
Total fixed maturity securities	7,781	$	16,035	$	(1,071)	4,060	$	7,537	$	(1,307)

Unrealized losses on our securities shown in the table above have not been recognized into income because, as of March 31, 2023, we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their maturity or anticipated recovery. The declines in fair values are largely due to increasing interest rates driven by the higher rate of inflation and other market conditions.

Allowances for credit losses have been recorded in the amounts of $8 and $9 at March 31, 2023 and December 31, 2022, respectively, for declines in fair value due to unfavorable changes in the credit quality characteristics that impact our assessment of collectability of principal and interest.

The amortized cost and fair value of fixed maturity securities at March 31, 2023, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.


	Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,242	$	1,232
Due after one year through five years	7,892		7,557
Due after five years through ten years	9,334		8,806
Due after ten years	6,312		5,855
Mortgage-backed securities	5,408		4,969
Total fixed maturity securities	$	30,188	$	28,419

During the three months ended March 31, 2023 and 2022, we received total proceeds from sales, maturities, calls or redemptions of fixed maturity securities of $5,410 and $3,646, respectively.

In the ordinary course of business, we may sell securities at a loss for a number of reasons, including, but not limited to: (i) changes in the investment environment; (ii) expectation that the fair value could deteriorate further; (iii) desire to reduce exposure to an issuer or an industry; (iv) changes in credit quality; or (v) changes in expected cash flow.

All securities sold resulting in investment gains and losses are recorded on the trade date. Realized gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.

Equity Securities

A summary of marketable equity securities at March 31, 2023 and December 31, 2022 is as follows:


	March 31, 2023		December 31, 2022
Equity securities:
Exchange traded funds	$	288	$	822

Common equity securities	26		43
Private equity securities	78		88
Total	$	392	$	953

Other Invested Assets

Other invested assets include primarily our investments in limited partnerships, joint ventures and other non-controlled corporations, mortgage loans and the cash surrender value of corporate-owned life insurance policies. Investments in limited partnerships, joint ventures and other non-controlled corporations are carried at our share in the entities’ undistributed earnings, which approximates fair value. Financial information for certain of these investments is reported on a one or three month lag due to the timing of when we receive financial information from the companies.

Investment Gains and Losses

Net investment (losses) gains for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31
	2023		2022
Net (losses) gains:
Fixed maturity securities:
Gross realized gains from sales	$	10	$	20
Gross realized losses from sales	(115)		(78)
Impairment losses recognized in income	(7)		(20)
Net realized losses from sales of fixed maturity securities	(112)		(78)
Equity securities:
Unrealized losses recognized on equity securities still held at the end of the period	(1)		(71)
Net realized losses recognized on equity securities sold during the period	(1)		(14)
Net losses on equity securities	(2)		(85)
Other investments:
Gross gains	27		23
Gross losses	(1)		(30)
Impairment losses recognized in income	(3)		(4)
Net gains (losses) on other investments	23		(11)
Net losses on investments	$	(91)	$	(174)

Accrued Investment Income

At March 31, 2023 and December 31, 2022, accrued investment income totaled $256 and $245, respectively. We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

Securities Lending Programs

We participate in securities lending programs whereby marketable securities in our investment portfolio are transferred to independent brokers or dealers in exchange for cash and securities collateral. The fair value of the collateral received at the time of the transactions amounted to $2,252 and $2,457 at March 31, 2023 and December 31, 2022, respectively. The value of the collateral represented 102% of the market value of the securities on loan at each of March 31, 2023 and December 31, 2022. We recognize the collateral as an asset under the caption “Other current assets” in our consolidated balance sheets, and we recognize a corresponding liability for the obligation to return the collateral to the borrower under the caption “Other current liabilities.” The securities on loan are reported in the applicable investment category on our consolidated balance sheets.

At March 31, 2023 and December 31, 2022, the remaining contractual maturity of our securities lending agreements included overnight and continuous transactions of cash for $2,127 and $2,221, respectively, of United States Government securities for $104 and $224, respectively, and of Residential Mortgage-Backed securities for $21 and $12, respectively.