Investments

12 Months Ended

Dec. 31, 2020

The following table provides amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity securities:


(Dollars in millions)	Amortized cost		Gross unrealized				Fair value
At December 31, 2020			gains		losses
Fixed-maturity securities:
Corporate	$	6,281	$	621	$	7	$	6,895
States, municipalities and political subdivisions	4,604		395		2		4,997
Commercial mortgage-backed	271		15		1		285
United States government	115		5		—		120
Foreign government	29		—		—		29
Government-sponsored enterprises	12		—		—		12

Total	$	11,312	$	1,036	$	10	$	12,338






At December 31, 2019
Fixed-maturity securities:
Corporate	$	6,074	$	332	$	5	$	6,401
States, municipalities and political subdivisions	4,477		252		1		4,728
Commercial mortgage-backed	290		11		—		301
United States government	102		2		—		104
Foreign government	28		—		—		28
Government-sponsored enterprises	137		—		1		136

Total	$	11,108	$	597	$	7	$	11,698

The net unrealized investment gains in our fixed-maturity portfolio at December 31, 2020, are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa1/AA at December 31, 2020 and 2019.

The table below provides fair values and unrealized losses by investment category and by the duration of the securities’ continuous unrealized loss positions:


(Dollars in millions)	Less than 12 months				12 months or more				Total
At December 31, 2020	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	330	$	5	$	46	$	2	$	376	$	7
States, municipalities and political subdivisions	31		2		2		—		33		2
Commercial mortgage-backed	23		1		6		—		29		1
United States government	12		—		—		—		12		—
Foreign government	10		—		—		—		10		—

Total	$	406	$	8	$	54	$	2	$	460	$	10





At December 31, 2019
Fixed-maturity securities:
Corporate	$	199	$	2	$	118	$	3	$	317	$	5
States, municipalities and political subdivisions	98		1		10		—		108		1
Commercial mortgage-backed	6		—		—		—		6		—
United States government	—		—		4		—		4		—
Foreign government	11		—		—		—		11		—
Government-sponsored enterprises	26		1		51		—		77		1
Total	$	340	$	4	$	183	$	3	$	523	$	7

Contractual maturity dates for fixed-maturity investments were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At December 31, 2020
Maturity dates:
Due in one year or less	$	581	$	589	4.8	%
Due after one year through five years	3,450		3,697		30.0
Due after five years through ten years	3,789		4,178		33.9
Due after ten years	3,492		3,874		31.3
Total	$	11,312	$	12,338	100.0	%

Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.

At December 31, 2020 and 2019, the company had fixed-maturity investments with a fair value of $121 million and $117 million, respectively, on deposit with various states in compliance with regulatory requirements. In addition, cash and fixed-maturity investments deposited with third parties used as collateral to secure liabilities on behalf of insureds, cedants and other creditors had a fair value of $98 million and $95 million at December 31, 2020 and 2019, respectively.

In the normal course of investing activities, the company enters into investments in limited partnerships, including private equity, real estate investments and asset-backed securities issued by third-parties. The company’s maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the company’s consolidated balance sheets and any unfunded commitments.

The following table provides investment income and investment gains and losses:


(Dollars in millions)	Years ended December 31,
	2020		2019		2018
Investment income:
Interest	$	455	$	446	$	445
Dividends	220		201		181
Other	8		12		5
Total	683		659		631
Less investment expenses	13		13		12
Total	$	670	$	646	$	619

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	79	$	26	$	9
Unrealized gains and losses on securities still held, net	841		1,626		(404)



Subtotal	920		1,652		(395)
Fixed-maturity securities:
Gross realized gains	16		13		12
Gross realized losses	(3)		(3)		(2)
Write-down of impaired securities	(78)		(9)		(5)
Subtotal	(65)		1		5

Other	10		(3)		(12)
Total	$	865	$	1,650	$	(402)

The fair value of our equity portfolio was $8.856 billion and $7.752 billion at December 31, 2020 and 2019, respectively. At December 31, 2020 and 2019, Apple, Inc. (Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $644 million and $414 million, which was 7.5% and 5.5% of our publicly traded common equities portfolio and 3.0% and 2.1% of the total investment portfolio, respectively.

During 2020, there were no fixed-maturity securities with an allowance for credit losses. There were 14 fixed-maturity securities that were written down to fair value, due to an intention to be sold, for holdings in the energy, real estate, consumer goods, municipal and technology & electronics sectors. At December 31, 2020, 128 fixed-maturity investments with a total unrealized loss of $10 million were in an unrealized loss position. Of that total, no fixed-maturity investments had fair values below 70% of amortized cost.

During 2019, we other-than-temporarily impaired three securities. At December 31, 2019, 38 fixed-maturity investments with a total unrealized loss of $3 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity investments had fair values below 70% of amortized cost.

During 2018, we other-than-temporarily impaired one security. At December 31, 2018, 400 fixed-maturity investments with a total unrealized loss of $58 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity investments had fair values below 70% of amortized cost.