Investments

12 Months Ended

Dec. 31, 2022

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, 2022			gains		losses
Fixed-maturity securities:
Corporate	$	7,412	$	37	$	580	$	6,869
States, municipalities and political subdivisions	4,901		24		303		4,622
Commercial mortgage-backed	250		—		16		234
United States government	196		—		5		191
Government-sponsored enterprises	186		—		3		183
Foreign government	34		—		1		33

Total	$	12,979	$	61	$	908	$	12,132






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 December 31, 2022, are primarily due to an increase in U.S. Treasury yields and widening of corporate credit spreads. Our commercial mortgage-backed securities had an average rating of Aa2/AA- and Aa2/AA at December 31, 2022 and 2021, respectively.

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, 2022	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	5,651	$	412	$	661	$	168	$	6,312	$	580
States, municipalities and political subdivisions	2,600		274		77		29		2,677		303
Commercial mortgage-backed	215		13		14		3		229		16
United States government	146		3		41		2		187		5
Government-sponsored enterprises	123		3		3		—		126		3
Foreign government	25		1		4		—		29		1
Total	$	8,760	$	706	$	800	$	202	$	9,560	$	908





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-maturity securities were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At December 31, 2022
Maturity dates:
Due in one year or less	$	713	$	709	5.8	%
Due after one year through five years	3,966		3,834		31.6
Due after five years through ten years	3,533		3,357		27.7
Due after ten years	4,767		4,232		34.9
Total	$	12,979	$	12,132	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, 2022 and 2021, the company had fixed-maturity securities with a fair value of $107 million and $119 million, respectively, on deposit with various states in compliance with regulatory requirements. In addition, cash and fixed-maturity securities deposited with third parties used as collateral to secure liabilities on behalf of insureds, cedants and other creditors had a fair value of $135 million and $116 million at December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, the company had common equities with a fair value of $101 million and $84 million, respectively, held in Lloyd's trust accounts to provide a portion of the capital needed to support Cincinnati Global's operations.

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,
	2022		2021		2020
Investment income:
Interest	$	510	$	477	$	455
Dividends	275		246		220
Other	11		5		8
Total	796		728		683
Less investment expenses	15		14		13
Total	$	781	$	714	$	670

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	16	$	4	$	79
Unrealized gains and losses on securities still held, net	(1,526)		2,278		841



Subtotal	(1,510)		2,282		920
Fixed-maturity securities:
Gross realized gains	6		36		16
Gross realized losses	(4)		(5)		(3)
Write-down of impaired securities	(5)		(1)		(78)
Subtotal	(3)		30		(65)

Other	46		97		10
Total	$	(1,467)	$	2,409	$	865

The fair value of our equity portfolio was $9.841 billion and $11.315 billion at December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, Apple, Inc. (Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $597 million and $862 million, which was 6.3% and 7.9% of our publicly traded common equities portfolio and 2.7% and 3.5% of the total investment portfolio, respectively.

At December 31, 2022, the allowance for credit losses on fixed-maturity securities was $1 million. Changes in the amount during the period were also $1 million. There were three fixed-maturity securities that were written down to fair value, due to an intention to be sold, primarily in the real estate sector. At December 31, 2022, 3,272 fixed-maturity securities with a total unrealized loss of $908 million were in an unrealized loss position. Of that total, 49 fixed-maturity securities had fair values below 70% of amortized cost.

At December 31, 2021, the allowance for credit losses on fixed-maturity securities, including changes in the amount during the period, was immaterial. There were five fixed-maturity securities that were written down to fair value, due to an intention to be sold, in the municipal sector. 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.

At December 31, 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, in the energy, real estate, consumer goods, municipal and technology & electronics sectors. At December 31, 2020, 128 fixed-maturity securities with a total unrealized loss of $10 million had been in an unrealized loss position. Of that total, no fixed-maturity securities had fair values below 70% of amortized cost.