10-K Investments

12 Months Ended

Dec. 31, 2023

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


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

December 31, 2023
Fixed maturity securities:
United States Government securities	$	1,873	$	25	$	(54)	$	—	$	1,844
Government sponsored securities	112		1		(3)		—		110
Foreign government securities	5		1		(2)		—		4
States, municipalities and political subdivisions, tax-exempt	3,985		69		(152)		—		3,902
Corporate securities	14,838		322		(580)		(2)		14,578
Residential mortgage-backed securities	4,071		40		(279)		—		3,832
Commercial mortgage-backed securities	2,174		13		(138)		(2)		2,047
Other asset-backed securities	4,278		25		(130)		—		4,173
Total fixed maturity securities	$	31,336	$	496	$	(1,338)	$	(4)	$	30,490


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 consist of collateralized loan obligations and other debt securities.

For fixed maturity securities in an unrealized loss position at December 31, 2023 and 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
	Number of Securities	Estimated Fair Value		Gross Unrealized Loss		Number of Securities	Estimated Fair Value		Gross Unrealized Loss
(Securities are whole amounts)
December 31, 2023
Fixed maturity securities:
United States Government securities	35	$	552	$	(9)	44	$	370	$	(45)
Government sponsored securities	0	—		—		40	52		(3)
Foreign government securities	0	—		—		2	4		(2)
States, municipalities and political subdivisions, tax-exempt	203	354		(2)		1,034	1,811		(150)
Corporate securities	389	608		(15)		2,624	6,871		(565)
Residential mortgage-backed securities	183	438		(5)		1,620	2,075		(274)
Commercial mortgage-backed securities	112	353		(6)		534	1,317		(132)
Other asset-backed securities	110	394		(18)		761	2,342		(112)
Total fixed maturity securities	1,032	$	2,699	$	(55)	6,659	$	14,842	$	(1,283)


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 December 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 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 $4 and $9 at December 31, 2023 and 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 December 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	$	473	$	470
Due after one year through five years	7,350		7,193
Due after five years through ten years	10,495		10,325
Due after ten years	6,773		6,624
Mortgage-backed securities	6,245		5,878
Total fixed maturity securities	$	31,336	$	30,490

Equity Securities

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


	December 31, 2023		December 31, 2022
Equity Securities:
Exchange traded funds	$	106	$	822

Common equity securities	45		43
Private equity securities	78		88
Total	$	229	$	953

Investment Income

The major categories of net investment income for the years ended December 31, 2023, 2022 and 2021 are as follows:


	2023		2022		2021
Fixed maturity securities	$	1,387	$	971	$	755
Equity securities	18		48		43
Cash equivalents	305		77		5
Other invested assets	157		432		616
Investment income	1,867		1,528		1,419
Investment expenses	(42)		(43)		(41)
Net investment income	$	1,825	$	1,485	$	1,378

Investment (Losses) Gains

Net investment (losses) gains for the years ended December 31, 2023, 2022 and 2021 are as follows:


	2023		2022		2021
Net gains (losses):
Fixed maturity securities:
Gross realized gains from sales	$	47	$	52	$	170
Gross realized losses from sales	(488)		(469)		(44)
Impairment (losses) recoveries recognized in income	(15)		(31)		1
Net realized gains on fixed maturity securities	(456)		(448)		127
Equity securities:
Unrealized (losses) gains recognized on equity securities still held	(1)		(78)		2
Net realized (losses) gains recognized on equity securities sold	6		(102)		(73)
Net (losses) gains on equity securities	5		(180)		(71)
Other investments:
Gross gains	103		96		293
Gross losses	(63)		(64)		(22)
Impairment losses recognized in income	(291)		(34)		(16)
Net (losses) gains on other investments	(251)		(2)		255
Net (losses) gains on investments	$	(702)	$	(630)	$	311

A primary objective in the management of our fixed maturity and equity portfolios is to maximize total return relative to underlying liabilities and respective liquidity needs. In achieving this goal, assets may be sold to take advantage of market conditions or other investment opportunities as well as tax considerations. Sales will generally produce realized gains and losses. 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) expectations 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.

Total proceeds from sales, maturities, calls or redemptions of fixed maturity securities was $12,289, $22,048 and $10,565 for the years ended December 31, 2023, 2022 and 2021, respectively.

A significant judgment in the valuation of investments is the determination of when a credit loss has occurred. We follow a consistent and systematic process for recognizing impairments on securities that sustain credit declines in value. We have established a committee responsible for the impairment review process. The decision to impair a security incorporates both quantitative criteria and qualitative information. The impairment review process considers a number of factors including, but not limited to: (i) the extent to which the fair value is less than book value, (ii) the financial condition and near term prospects of the issuer, (iii) our intent and ability to retain impaired investments for a period of time sufficient to allow for any anticipated recovery in fair value, (iv) our intent to sell or the likelihood that we will need to sell a fixed maturity security before recovery of its amortized cost basis, (v) whether the debtor is current on interest and principal payments, (vi) the reasons for the decline in value (i.e., credit event compared to liquidity, general credit spread widening, currency exchange rate or interest rate factors) and (vii) general market conditions and industry or sector specific factors. When a decision has been made to sell an impaired security or it is more likely than not that the impaired security will be required to be disposed of prior to recovery of its cost basis, the security is written down to fair value at the reporting date. For all other impaired securities, if the impairment is deemed to be credit related, an allowance is created.

Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is possible that changes in these risk factors in the near term could have a material adverse impact on our results of operations or shareholders’ equity.

At December 31, 2023 and 2022, there were no individual investments that exceeded 10% of shareholders’ equity.

At December 31, 2023 and 2022, there were eleven and eight respectively, fixed maturity investments that did not produce income during the years then ended.

As of December 31, 2023 and 2022, we had committed approximately $1,321 and $1,504, respectively, to future capital calls from various third-party investments in exchange for an ownership interest in the related entities.

As of December 31, 2023 and 2022, we had committed approximately $497 and $185, respectively, to future investments in rated notes.

At December 31, 2023 and 2022, securities with carrying values of approximately $876 and $752, respectively, were deposited by our insurance subsidiaries under requirements of regulatory authorities.

Accrued Investment Income

Accrued investment income totaled $301 and $245 at December 31, 2023 and 2022, respectively. We recognize accrued investment income under the caption “Other receivables” on our consolidated balance sheets.

Securities Lending Programs

The fair value of the cash and securities received as collateral for securities loaned at December 31, 2023 and 2022 was $2,380 and $2,457, respectively. The collateral received was 102% of the market value of the loaned securities at each of December 31, 2023 and 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 December 31, 2023 and 2022, the remaining contractual maturities of our securities lending transactions included overnight and continuous transactions of cash for $2,255 and $2,221, respectively, United States Government securities for $99 and $224, respectively, and residential mortgage-backed securities for $26 and $12, respectively.