Investments

9 Months Ended

Sep. 30, 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 September 30, 2023			gains		losses
Fixed-maturity securities:
Corporate	$	7,786	$	27	$	700	$	7,113
States, municipalities and political subdivisions	4,911		2		489		4,424
Government-sponsored enterprises	897		—		23		874
United States government	223		—		6		217
Commercial mortgage-backed	214		—		18		196
Foreign government	19		—		—		19

Total	$	14,050	$	29	$	1,236	$	12,843






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
United States government	196		—		5		191
Commercial mortgage-backed	250		—		16		234
Foreign government	34		—		1		33






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

The net unrealized investment losses in our fixed-maturity portfolio at September 30, 2023, are primarily due to an increase in U.S. Treasury yields, partially offset by a tightening of corporate credit spreads. Our commercial mortgage-backed securities had an average rating of Aa3/AA- and Aa2/AA- at September 30, 2023, and December 31, 2022, 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, 2023	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	1,283	$	58	$	5,431	$	642	$	6,714	$	700
States, municipalities and political subdivisions	2,331		89		1,902		400		4,233		489
Government-sponsored enterprises	742		17		95		6		837		23
United States government	80		1		130		5		210		6
Commercial mortgage-backed	1		—		194		18		195		18
Foreign government	9		—		5		—		14		—
Total	$	4,446	$	165	$	7,757	$	1,071	$	12,203	$	1,236





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
United States government	146		3		41		2		187		5
Commercial mortgage-backed	215		13		14		3		229		16
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 September 30, 2023
Maturity dates:
Due in one year or less	$	825	$	814	6.3	%
Due after one year through five years	4,507		4,314		33.6
Due after five years through ten years	3,522		3,246		25.3
Due after ten years	5,196		4,469		34.8
Total	$	14,050	$	12,843	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,
	2023		2022		2023		2022
Investment income:
Interest	$	154	$	129	$	441	$	376
Dividends	69		66		205		203
Other	5		3		18		6
Total	228		198		664		585
Less investment expenses	3		5		9		12
Total	$	225	$	193	$	655	$	573

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	(5)	$	16	$	2	$	34
Unrealized gains and losses on securities still held, net	(458)		(705)		99		(2,568)
Subtotal	(463)		(689)		101		(2,534)
Fixed-maturity securities:
Gross realized gains	1		—		2		6
Gross realized losses	(1)		—		(2)		(3)
Write-down of impaired securities with intent to sell	—		—		(4)		—

Subtotal	—		—		(4)		3

Other	7		15		(13)		37

Total	$	(456)	$	(674)	$	84	$	(2,494)

The fair value of our equity portfolio was $10.031 billion and $9.841 billion at September 30, 2023, and December 31, 2022, respectively. Apple Inc. (Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $764 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 September 30, 2023, and December 31, 2022, respectively.

The allowance for credit losses was $3 million and $1 million at September 30, 2023, and December 31, 2022, respectively. Changes decreased the allowance $1 million for the three months ended September 30, 2023, and increased the allowance $2 million for the nine months ended September 30, 2023. Changes were less than $1 million for both the three and nine months ended September 30, 2022.

There were 4,490 fixed-maturity securities with a total unrealized loss of $1.236 billion, which were in an unrealized loss position at September 30, 2023. Of that total, 202 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.