Investments

6 Months Ended

Jun. 30, 2023

Total investments at June 30, 2023 and December 31, 2022 were as follows:


	June 30, 2023						December 31, 2022
In millions	Current		Long-term		Total		Current		Long-term		Total
Debt securities available for sale	$	2,988	$	17,915	$	20,903	$	2,718	$	17,562	$	20,280
Mortgage loans	90		1,143		1,233		55		989		1,044
Other investments	2		3,056		3,058		5		2,562		2,567
Total investments (1)	$	3,080	$	22,114	$	25,194	$	2,778	$	21,113	$	23,891

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(1)Includes long-term investments of $17 million which have been accounted for as assets held for sale and are included in assets held for sale on the unaudited condensed consolidated balance sheet at December 31, 2022. See Note 2 ‘‘Acquisitions and Assets Held for Sale’’ for additional information.

Debt Securities

Debt securities available for sale at June 30, 2023 and December 31, 2022 were as follows:


In millions	Gross Amortized Cost		Allowance for Credit Losses		Net Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2023
Debt securities:
U.S. government securities	$	2,066	$	—	$	2,066	$	1	$	(159)	$	1,908
States, municipalities and political subdivisions	2,391		—		2,391		10		(91)		2,310
U.S. corporate securities	10,061		—		10,061		32		(703)		9,390
Foreign securities	2,761		(1)		2,760		17		(192)		2,585
Residential mortgage-backed securities	863		—		863		1		(79)		785
Commercial mortgage-backed securities	1,137		—		1,137		1		(140)		998
Other asset-backed securities	2,969		—		2,969		7		(68)		2,908
Redeemable preferred securities	20		—		20		—		(1)		19
Total debt securities (1)	$	22,268	$	(1)	$	22,267	$	69	$	(1,433)	$	20,903

December 31, 2022
Debt securities:
U.S. government securities	$	2,074	$	—	$	2,074	$	—	$	(182)	$	1,892
States, municipalities and political subdivisions	2,393		—		2,393		8		(129)		2,272
U.S. corporate securities	9,838		(3)		9,835		26		(903)		8,958
Foreign securities	2,780		(1)		2,779		15		(244)		2,550
Residential mortgage-backed securities	845		—		845		1		(89)		757
Commercial mortgage-backed securities	1,172		—		1,172		1		(155)		1,018
Other asset-backed securities	2,940		—		2,940		6		(136)		2,810
Redeemable preferred securities	25		—		25		—		(2)		23
Total debt securities (1)	$	22,067	$	(4)	$	22,063	$	57	$	(1,840)	$	20,280

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(1)Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At June 30, 2023, debt securities with a fair value of $600 million, gross unrealized capital gains of $4 million and gross unrealized capital losses of $44 million and at December 31, 2022, debt securities with a fair value of $609 million, gross unrealized capital gains of $3 million and gross unrealized capital losses of $59 million were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive loss.

The net amortized cost and fair value of debt securities at June 30, 2023 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.


In millions	Net Amortized Cost		Fair Value
Due to mature:
Less than one year	$	1,304	$	1,288
One year through five years	7,318		6,942
After five years through ten years	4,408		4,078
Greater than ten years	4,268		3,904
Residential mortgage-backed securities	863		785
Commercial mortgage-backed securities	1,137		998
Other asset-backed securities	2,969		2,908
Total	$	22,267	$	20,903

Summarized below are the debt securities the Company held at June 30, 2023 and December 31, 2022 that were in an unrealized capital loss position, aggregated by the length of time the investments have been in that position:


	Less than 12 months					Greater than 12 months					Total
In millions, except number of securities	Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
June 30, 2023
Debt securities:
U.S. government securities	174	$	476	$	19	346	$	1,144	$	140	520	$	1,620	$	159
States, municipalities and political subdivisions	440	816		12		610	913		79		1,050	1,729		91
U.S. corporate securities	2,697	3,438		125		3,647	4,633		578		6,344	8,071		703
Foreign securities	566	854		24		954	1,356		168		1,520	2,210		192
Residential mortgage-backed securities	321	403		18		218	336		61		539	739		79
Commercial mortgage-backed securities	126	311		15		328	619		125		454	930		140
Other asset-backed securities	466	1,174		16		669	1,168		52		1,135	2,342		68
Redeemable preferred securities	2	3		—		6	14		1		8	17		1
Total debt securities	4,792	$	7,475	$	229	6,778	$	10,183	$	1,204	11,570	$	17,658	$	1,433

December 31, 2022
Debt securities:
U.S. government securities	519	$	1,620	$	164	35	$	191	$	18	554	$	1,811	$	182
States, municipalities and political subdivisions	859	1,370		95		196	322		34		1,055	1,692		129
U.S. corporate securities	5,193	6,537		622		1,479	1,822		281		6,672	8,359		903
Foreign securities	1,168	1,715		147		403	592		97		1,571	2,307		244
Residential mortgage-backed securities	452	464		39		91	257		50		543	721		89
Commercial mortgage-backed securities	288	611		69		187	381		86		475	992		155
Other asset-backed securities	1,008	1,893		88		391	694		48		1,399	2,587		136
Redeemable preferred securities	13	18		2		2	5		—		15	23		2
Total debt securities	9,500	$	14,228	$	1,226	2,784	$	4,264	$	614	12,284	$	18,492	$	1,840

The Company reviewed the securities in the table above and concluded that they are performing assets generating investment income to support the needs of the Company’s business. In performing this review, the Company considered factors such as the quality of the investment security based on research performed by the Company’s internal credit analysts and external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. Unrealized capital losses at June 30, 2023 were generally caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities. As of June 30, 2023, the Company did not intend to sell these securities, and did not believe it was more likely than not that it would be required to sell these securities prior to the anticipated recovery of their amortized cost basis.

The maturity dates for debt securities in an unrealized capital loss position at June 30, 2023 were as follows:


	Supporting experience-rated products				Supporting remaining products				Total
In millions	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Due to mature:
Less than one year	$	17	$	—	$	1,074	$	16	$	1,091	$	16
One year through five years	146		5		5,982		381		6,128		386
After five years through ten years	121		13		3,194		335		3,315		348
Greater than ten years	186		22		2,927		374		3,113		396
Residential mortgage-backed securities	11		1		728		78		739		79
Commercial mortgage-backed securities	19		2		911		138		930		140
Other asset-backed securities	19		1		2,323		67		2,342		68
Total	$	519	$	44	$	17,139	$	1,389	$	17,658	$	1,433

Mortgage Loans

The Company’s mortgage loans are collateralized by commercial real estate. During the three and six months ended June 30, 2023 and 2022, the Company had the following activity in its mortgage loan portfolio:


	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
New mortgage loans	$	168	$	121	$	223	$	180
Mortgage loans fully repaid	3		39		17		74
Mortgage loans foreclosed	—		—		—		—

The Company assesses mortgage loans on a regular basis for credit impairments, and assigns a credit quality indicator to each loan. The Company’s credit quality indicator is internally developed and categorizes each loan in its portfolio on a scale from 1 to 7. These indicators are based upon several factors, including current loan-to-value ratios, current and future property cash flow, property condition, market trends, creditworthiness of the borrower and deal structure.

•Category 1 - Represents loans of superior quality.

•Categories 2 to 4 - Represent loans where credit risk is minimal to acceptable; however, these loans may display some susceptibility to economic changes.

•Categories 5 and 6 - Represent loans where credit risk is not substantial, but these loans warrant management’s close attention.

•Category 7 - Represents loans where collections are potentially at risk; if necessary, an impairment is recorded.

Based on the Company’s assessments at June 30, 2023 and December 31, 2022, the amortized cost basis of the Company's mortgage loans within each credit quality indicator by year of origination was as follows:


	Amortized Cost Basis by Year of Origination
In millions, except credit quality indicator	2023		2022		2021		2020		2019		Prior		Total
June 30, 2023
1	$	—	$	—	$	—	$	—	$	—	$	13	$	13
2 to 4	194		339		258		36		11		376		1,214
5 and 6	—		—		—		—		—		6		6
7	—		—		—		—		—		—		—
Total	$	194	$	339	$	258	$	36	$	11	$	395	$	1,233

December 31, 2022
1			$	—	$	—	$	—	$	—	$	15	$	15
2 to 4			326		247		36		11		402		1,022
5 and 6			—		—		—		—		7		7
7			—		—		—		—		—		—
Total			$	326	$	247	$	36	$	11	$	424	$	1,044

Net Investment Income

Sources of net investment income for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Debt securities	$	204	$	172	$	395	$	336
Mortgage loans	14		13		27		24
Other investments	165		68		410		145
Gross investment income	383		253		832		505
Investment expenses	(11)		(9)		(21)		(18)
Net investment income (excluding net realized capital losses)	372		244		811		487
Net realized capital losses (1)	(98)		(98)		(203)		(173)
Net investment income (2)	$	274	$	146	$	608	$	314

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(1)Net realized capital losses include yield-related impairment losses on debt securities of $37 million and are net of the reversal of previously recorded credit-related impairment losses on debt securities of $2 million in the three months ended June 30, 2023. Net realized capital losses include yield-related impairment losses on debt securities of $61 million and are net of the reversal of previously recorded credit-related impairment losses on debt securities of $3 million in the six months ended June 30, 2023. Net realized capital losses include yield-related impairment losses on debt securities of $30 million and are net of the reversal of previously recorded credit-related impairment losses on debt securities of $22 million in the three months ended June 30, 2022. Net realized capital losses include yield-related and credit-related impairment losses on debt securities of $48 million and $16 million, respectively, in the six months ended June 30, 2022.

(2)Net investment income includes $9 million and $17 million for the three and six months ended June 30, 2023, respectively, and $9 million and $18 million for the three and six months ended June 30, 2022, respectively, related to investments supporting experience-rated products.

Excluding amounts related to experience-rated products, proceeds from the sale of available-for-sale debt securities and the related gross realized capital gains and losses for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Proceeds from sales	$	991	$	1,052	$	2,332	$	2,963
Gross realized capital gains	2		3		5		17
Gross realized capital losses	73		72		184		107