Investments

9 Months Ended

Sep. 30, 2022

Investments

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 September 30, 2022			gains		losses
Fixed maturity securities:
Corporate	$	7,307	$	33	$	661	$	6,679
States, municipalities and political subdivisions	4,911		4		433		4,482
Commercial mortgage-backed	253		—		13		240
United States government	193		—		5		188
Government-sponsored enterprises	122		—		3		119
Foreign government	26		—		—		26

Total	$	12,812	$	37	$	1,115	$	11,734






At December 31, 2021
Fixed maturity securities:
Corporate	$	7,043	$	467	$	13	$	7,497
States, municipalities and political subdivisions	4,768		330		3		5,095
Commercial mortgage-backed	264		9		—		273
United States government	121		2		—		123
Government-sponsored enterprises	8		—		—		8
Foreign government	26		—		—		26






Total	$	12,230	$	808	$	16	$	13,022

The net unrealized investment losses in our fixed-maturity portfolio at September 30, 2022, are primarily due to an increase in U.S. Treasury yields and a widening of corporate credit spreads. Our commercial mortgage-backed securities had an average rating of Aa2/AA- and Aa2/AA at September 30, 2022, and December 31, 2021, respectively.

The table below provides fair values and gross 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 September 30, 2022	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
Corporate	$	5,835	$	535	$	376	$	126	$	6,211	$	661
States, municipalities and political subdivisions	3,831		414		48		19		3,879		433
Commercial mortgage-backed	225		11		14		2		239		13
United States government	173		5		12		—		185		5
Government-sponsored enterprises	101		3		3		—		104		3
Foreign government	21		—		—		—		21		—
Total	$	10,186	$	968	$	453	$	147	$	10,639	$	1,115





At December 31, 2021
Fixed maturity securities:
Corporate	$	861	$	13	$	15	$	—	$	876	$	13
States, municipalities and political subdivisions	105		2		2		1		107		3
Commercial mortgage-backed	10		—		11		—		21		—
United States government	48		—		—		—		48		—
Government-sponsored enterprises	7		—		—		—		7		—
Foreign government	16		—		—		—		16		—





Total	$	1,047	$	15	$	28	$	1	$	1,075	$	16

Contractual maturity dates for fixed-maturities securities were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At September 30, 2022
Maturity dates:
Due in one year or less	$	690	$	687	5.9	%
Due after one year through five years	3,861		3,717		31.7
Due after five years through ten years	3,573		3,334		28.4
Due after ten years	4,688		3,996		34.0
Total	$	12,812	$	11,734	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.

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


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Investment income:
Interest	$	129	$	121	$	376	$	356
Dividends	66		61		203		179
Other	3		1		6		4
Total	198		183		585		539
Less investment expenses	5		4		12		11
Total	$	193	$	179	$	573	$	528

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	16	$	(1)	$	34	$	6
Unrealized gains and losses on securities still held, net	(705)		(104)		(2,568)		869

Subtotal	(689)		(105)		(2,534)		875
Fixed maturities:
Gross realized gains	—		10		6		24
Gross realized losses	—		(1)		(3)		(3)
Write-down of impaired securities	—		(1)		—		(1)
Subtotal	—		8		3		20

Other	15		27		37		59

Total	$	(674)	$	(70)	$	(2,494)	$	954

The fair value of our equity portfolio was $8.840 billion and $11.315 billion at September 30, 2022, and December 31, 2021, respectively. At September 30, 2022, and December 31, 2021, Apple Inc. (Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $638 million and $862 million, which was 7.6% and 7.9% of our publicly traded common equities portfolio and 3.1% and 3.5% of the total investment portfolio, respectively.

At September 30, 2022, and December 31, 2021, the allowance for credit losses was $1 million and less than

$1 million, respectively. Changes in the amount during each period were less than $1 million. During the three months ended September 30, 2022, there were no fixed-maturity securities that were written down to fair value due to an intention to be sold. During the nine months ended September 30, 2022, there were two fixed-maturity securities that were written down to fair value due to an intention to be sold resulting in impairment charges of less than $1 million. During the three and nine months ended September 30, 2021, there were five fixed-maturity securities that were written down to fair value due to an intention to be sold.

At September 30, 2022, 4,049 fixed-maturity securities with a total unrealized loss of $1.115 billion were in an unrealized loss position. Of that total, 118 fixed-maturity securities had fair values below 70% of amortized cost. At December 31, 2021, 278 fixed-maturity securities with a total unrealized loss of $16 million were in an unrealized loss position. Of that total, no fixed-maturity securities had fair values below 70% of amortized cost.