The majority of the investment portfolio comprises investment grade fixed-maturity securities managed by three outside managers. The Company has established investment guidelines for these investment managers regarding credit quality, exposure to a particular sector and exposure to a particular obligor within a sector.

The remainder of the investment portfolio primarily consists of (i) Loss Mitigation Securities; (ii) CVIs received in connection with the 2022 Puerto Rico Resolutions; (iii) equity method investments; and (iv) short-term investments. Equity method investments primarily consist of the investment in Sound Point and fund investments across a variety of strategies.


	As of
	March 31, 2024		December 31, 2023
	(in millions)
Fixed-maturity securities, available-for-sale (1):
Externally managed	$	5,383	$	5,372
Loss Mitigation Securities	464		459
Other	244		476
Fixed-maturity securities, trading - Puerto Rico, CVIs (2)	272		318
Short-term investments	1,649		1,661
Other invested assets:
Equity method investments:
Sound Point	417		429
Alternative investments (3)	451		394
Other	7		6
Total (4)	$	8,887	$	9,115

(1) 9.5% and 9.2% of fixed-maturity securities, available for sale, were rated BIG or not rated as of March 31, 2024 and December 31, 2023, respectively. BIG rated securities consisted primarily of Loss Mitigation Securities.

(3) Excludes certain investments in funds that are consolidated and accounted for as CIVs. See Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

(4) The aggregate carrying value of the Company’s investments in Sound Point, and Sound Point managed funds was $636 million and $631 million as of March 31, 2024 and December 31, 2023, respectively.

The Company has agreed to invest $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments, subject to regulatory approval. The fair value of alternative investments as of March 31, 2024 was $803 million. The Company had $743 million in unfunded commitments to alternative investments (of which $324 million is committed to specific funds). See Note 1, Business and Basis of Presentation for a description of the Sound Point Transaction.

Of the $1.5 billion mentioned above, the U.S. Insurance Subsidiaries through their jointly owned investment subsidiary, AGAS, are authorized to invest up to $750 million plus previously distributed gains of $162 million for a total of $912 million as of March 31, 2024. As of March 31, 2024, AGAS commitments to Sound Point and AHP funds were $772 million (of which $574 million was funded with a net asset value (NAV) of $632 million). This capital was committed to several funds, each dedicated to a single strategy, including CLOs, asset-based/special finance and healthcare structured capital. As of March 31, 2024, three of the eight funds in which AGAS invests are accounted for as CIVs. See Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.


Security Type	Percent of Total (1)		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(dollars in millions)
Obligations of state and political subdivisions	37	%	$	2,418	$	(14)	$	27	$	(100)	$	2,331
U.S. government and agencies	1		60		—		1		(6)		55
Corporate securities (2)	35		2,307		(6)		10		(210)		2,101
Mortgage-backed securities (3):
RMBS	7		490		(22)		3		(69)		402
Commercial mortgage-backed securities (CMBS)	3		202		—		—		(6)		196
Asset-backed securities:
CLOs	7		442		—		1		(4)		439
Other	8		535		(25)		1		(28)		483
Non-U.S. government securities	2		99		—		—		(15)		84
Total available-for-sale fixed-maturity securities	100	%	$	6,553	$	(67)	$	43	$	(438)	$	6,091


Security Type	Percent of Total (1)		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(dollars in millions)
Obligations of state and political subdivisions	41	%	$	2,733	$	(13)	$	33	$	(92)	$	2,661
U.S. government and agencies	1		65		—		1		(6)		60
Corporate securities (2)	34		2,327		(6)		17		(197)		2,141
Mortgage-backed securities (3):
RMBS	6		428		(21)		3		(68)		342
CMBS	2		157		—		—		(6)		151
Asset-backed securities:
CLOs	7		456		—		1		(7)		450
Other	7		465		(37)		—		(26)		402
Non-U.S. government securities	2		115		—		—		(15)		100
Total available-for-sale fixed-maturity securities	100	%	$	6,746	$	(77)	$	55	$	(417)	$	6,307

(3)U.S. government-agency obligations were approximately 56% and 42% of mortgage-backed securities as of March 31, 2024 and December 31, 2023, respectively, based on fair value.


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(dollars in millions)
Obligations of state and political subdivisions	$	603	$	(3)	$	1,250	$	(96)	$	1,853	$	(99)
U.S. government and agencies	7		—		33		(6)		40		(6)
Corporate securities	164		(2)		1,384		(168)		1,548		(170)
Mortgage-backed securities:
RMBS	34		—		138		(11)		172		(11)
CMBS	4		—		127		(6)		131		(6)
Asset-backed securities:
CLOs	9		—		222		(2)		231		(2)
Other	9		—		26		(1)		35		(1)
Non-U.S. government securities	—		—		79		(15)		79		(15)
Total	$	830	$	(5)	$	3,259	$	(305)	$	4,089	$	(310)
Number of securities (1)			319				1,311				1,609


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(dollars in millions)
Obligations of state and political subdivisions	$	641	$	(4)	$	931	$	(87)	$	1,572	$	(91)
U.S. government and agencies	—		—		33		(6)		33		(6)
Corporate securities	72		(1)		1,426		(152)		1,498		(153)
Mortgage-backed securities:
RMBS	27		(1)		124		(8)		151		(9)
CMBS	3		—		148		(6)		151		(6)
Asset-backed securities:
CLOs	22		(1)		379		(6)		401		(7)
Other	1		—		26		(1)		27		(1)
Non-U.S. government securities	—		—		95		(15)		95		(15)
Total	$	766	$	(7)	$	3,162	$	(281)	$	3,928	$	(288)
Number of securities (1)			274				1,266				1,525

(1) The number of securities does not add across because lots consisting of the same securities have been purchased at different times and appear in both categories above (i.e., less than 12 months and 12 months or more). If a security appears in both categories, it is counted only once in the total column.

The Company considered the credit quality, cash flows, interest rate movements, ability to hold a security to recovery and intent to sell a security in determining whether a security had a credit loss. The Company has determined that the unrealized losses recorded as of March 31, 2024 and December 31, 2023 were primarily related to higher interest rates rather than credit quality. As of March 31, 2024, the Company did not intend to and was not required to sell investments in an unrealized loss position prior to expected recovery in value. As of March 31, 2024, of the securities in an unrealized loss position for which an allowance for credit loss was not recorded, 458 securities had unrealized losses in excess of 10% of their carrying value,

whereas as of December 31, 2023, 409 securities had unrealized losses in excess of 10% of their carrying value. The total unrealized loss for these securities was $224 million as of March 31, 2024 and $200 million as of December 31, 2023.

The amortized cost and estimated fair value of available-for-sale fixed-maturity securities by contractual maturity as of March 31, 2024 are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Estimated Fair Value
	(in millions)
Due within one year	$	289	$	283
Due after one year through five years	1,373		1,305
Due after five years through 10 years	1,605		1,527
Due after 10 years	2,594		2,378
Mortgage-backed securities:
RMBS	490		402
CMBS	202		196
Total	$	6,553	$	6,091

Based on fair value, fixed-maturity securities, short-term investments and cash that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $143 million as of March 31, 2024 and $234 million as of December 31, 2023. The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or are otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements with a fair value of $1,144 million and $1,154 million as of March 31, 2024 and December 31, 2023, respectively.


	First Quarter
	2024		2023
	(in millions)
Investment income:
Fixed-maturity securities, available-for-sale:
Externally managed	$	51	$	52
Loss Mitigation Securities	7		9
Puerto Rico, New Recovery Bonds	—		3
Other	4		5
Short-term investments	23		13

Investment income	85		82
Investment expenses	(1)		(1)
Net investment income	$	84	$	81

Fair value gains (losses) on trading securities (1)	$	26	$	(2)

Equity in earnings (losses) of investees:
Sound Point (2)	$	4	$	—
Funds (3)	14		—
Other	6		2
Equity in earnings (losses) of investees	$	24	$	2

(1) Fair value gains on trading securities pertaining to securities still held as of March 31, 2024 were $22 million for first quarter 2024. Fair value losses on trading securities pertaining to securities still held as of March 31, 2023 were $2 million for first quarter 2023.

(2) Beginning in the fourth quarter of 2023, equity in earnings (losses) includes the Company’s share of the earnings of Sound Point, which is reported on a one-quarter lag.

The table below presents the components of net realized investment gains (losses). Realized gains and losses on sales of investments are determined using the specific identification method.


	First Quarter
	2024		2023
	(in millions)
Gross realized gains on sales of available-for-sale securities	$	1	$	12
Gross realized losses on sales of available-for-sale securities	(3)		(9)

Change in the allowance for credit losses and intent to sell (1)	10		(5)

Net realized investment gains (losses)	$	8	$	(2)


	First Quarter
	2024		2023
	(in millions)
Balance, beginning of period	$	77	$	65
Additions (reductions) for securities for which credit losses were previously recognized	(10)		4
Balance, end of period	$	67	$	69

The Company did not purchase any securities with credit deterioration during first quarter 2024 and first quarter 2023. Most of the Company’s allowance for credit losses relates to Loss Mitigation Securities.