Investments

3 Months Ended

Mar. 31, 2023

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 March 31, 2023			gains		losses
Fixed-maturity securities:
Corporate	$	7,568	$	49	$	526	$	7,091
States, municipalities and political subdivisions	4,933		42		226		4,749
Government-sponsored enterprises	390		1		4		387
Commercial mortgage-backed	241		—		16		225
United States government	199		—		4		195
Foreign government	31		—		—		31

Total	$	13,362	$	92	$	776	$	12,678






At December 31, 2022
Fixed-maturity securities:
Corporate	$	7,412	$	37	$	580	$	6,869
States, municipalities and political subdivisions	4,901		24		303		4,622
Government-sponsored enterprises	186		—		3		183
Commercial mortgage-backed	250		—		16		234
United States government	196		—		5		191
Foreign government	34		—		1		33






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

The net unrealized investment losses in our fixed-maturity portfolio at March 31, 2023, 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- at March 31, 2023, and December 31, 2022.

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 March 31, 2023	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	3,910	$	158	$	2,273	$	368	$	6,183	$	526
States, municipalities and political subdivisions	1,287		48		890		178		2,177		226
Government-sponsored enterprises	263		3		7		1		270		4
Commercial mortgage-backed	107		5		116		11		223		16
United States government	121		1		52		3		173		4
Foreign government	10		—		2		—		12		—
Total	$	5,698	$	215	$	3,340	$	561	$	9,038	$	776





At December 31, 2022
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
Government-sponsored enterprises	123		3		3		—		126		3
Commercial mortgage-backed	215		13		14		3		229		16
United States government	146		3		41		2		187		5
Foreign government	25		1		4		—		29		1





Total	$	8,760	$	706	$	800	$	202	$	9,560	$	908

Contractual maturity dates for fixed-maturities securities were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At March 31, 2023
Maturity dates:
Due in one year or less	$	728	$	725	5.7	%
Due after one year through five years	4,139		4,003		31.6
Due after five years through ten years	3,583		3,447		27.2
Due after ten years	4,912		4,503		35.5
Total	$	13,362	$	12,678	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 March 31,
		2023		2022
Investment income:
Interest		$	140	$	123
Dividends		66		65
Other		7		1
Total		213		189
Less investment expenses		3		4
Total		$	210	$	185

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net		$	(1)	$	8
Unrealized gains and losses on securities still held, net		106		(683)

Subtotal		105		(675)
Fixed-maturity securities:
Gross realized gains		1		4
Gross realized losses		(1)		(1)

Subtotal		—		3

Other		1		6

Total		$	106	$	(666)

The fair value of our equity portfolio was $9.967 billion and $9.841 billion at March 31, 2023, and December 31, 2022, respectively. Apple Inc. (Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $758 million and $597 million, which was 7.9% and 6.3% of our publicly traded common equities portfolio and 3.3% and 2.7% of the total investment portfolio at March 31, 2023, and December 31, 2022, respectively.

The allowance for credit losses was $1 million at both March 31, 2023, and December 31, 2022. Changes in the allowance for credit losses were less than $1 million for both the three months ended March 31, 2023 and 2022. There were no fixed-maturity securities that were written down to fair value due to an intention to be sold during the three months ended March 31, 2023. There was one fixed-maturity security that was written down to fair value due to an intention to be sold during the three months ended March 31, 2022, resulting in an impairment charge of less than $1 million.

There were 2,900 fixed-maturity securities with a total unrealized loss of $776 million, which were in an unrealized loss position at March 31, 2023. Of that total, 26 fixed-maturity securities had fair values below 70% of amortized cost. There were 3,272 fixed-maturity securities with a total unrealized loss of $908 million, which were in an unrealized loss position at December 31, 2022. Of that total, 49 fixed-maturity securities had fair values below 70% of amortized cost.