The amortized cost and fair value of investments in fixed maturities classified as available for sale were as follows:


	Amortized		Allowance for Expected Credit Losses		Gross Unrealized				Fair
(at December 31, 2022, in millions)	Cost				Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	5,798	$	—	$	3	$	363	$	5,438
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	19,615		—		33		1,825		17,823
Revenue	11,076		—		29		907		10,198
State general obligation	1,104		—		3		88		1,019
Pre-refunded	2,323		—		17		1		2,339
Total obligations of U.S. states, municipalities and political subdivisions	34,118		—		82		2,821		31,379
Debt securities issued by foreign governments	1,049		—		—		55		994
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,178		—		13		200		1,991
Corporate and all other bonds	34,237		3		37		2,913		31,358
Total	$	77,380	$	3	$	135	$	6,352	$	71,160


	Amortized		Allowance for Expected Credit Losses		Gross Unrealized				Fair
(at December 31, 2021, in millions)	Cost				Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	3,574	$	—	$	20	$	32	$	3,562
Obligations of U.S. states, municipalities and political subdivisions:
Local general obligation	18,668		—		1,045		46		19,667
Revenue	11,274		—		693		27		11,940
State general obligation	1,158		—		67		2		1,223
Pre-refunded	3,825		—		207		—		4,032
Total obligations of U.S. states, municipalities and political subdivisions	34,925		—		2,012		75		36,862
Debt securities issued by foreign governments	1,041		—		7		7		1,041
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,754		—		68		5		1,817
Corporate and all other bonds	33,457		3		1,249		175		34,528
Total	$	74,751	$	3	$	3,356	$	294	$	77,810

The amortized cost and fair value of fixed maturities by contractual maturity follow. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


(at December 31, 2022, in millions)	Amortized Cost		Fair Value
Due in one year or less	$	4,973	$	4,941
Due after 1 year through 5 years	20,438		19,641
Due after 5 years through 10 years	24,982		22,224
Due after 10 years	24,809		22,363
	75,202		69,169
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	2,178		1,991
Total	$	77,380	$	71,160

Pre-refunded bonds of $2.34 billion and $4.03 billion at December 31, 2022 and 2021, respectively, were bonds for which U.S. states or municipalities have established irrevocable trusts that are almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds.

The Company’s fixed maturity investment portfolio at December 31, 2022 and 2021 included $1.99 billion and $1.82 billion, respectively, of residential mortgage-backed securities, which include pass-through securities and collateralized mortgage obligations (CMOs). Included in the totals at December 31, 2022 and 2021 were $922 million and $846 million, respectively, of GNMA, FNMA, FHLMC (excluding FHA project loans) and Canadian government guaranteed residential mortgage-backed pass-through securities classified as available for sale. Also included in those totals were residential CMOs classified as available for sale with a fair value of $1.07 billion and $971 million at December 31, 2022 and 2021, respectively. Approximately 40% and 47% of the Company’s CMO holdings at December 31, 2022 and 2021, respectively, were guaranteed by or fully collateralized by securities issued by GNMA, FNMA or FHLMC. The weighted average credit rating of the $647 million and $511 million of non-guaranteed CMO holdings at December 31, 2022 and 2021, respectively, was “Aaa/Aa1” at both December 31, 2022 and 2021. The weighted average credit rating of all of the above securities was "Aaa/Aa1” at both December 31, 2022 and 2021.

At December 31, 2022 and 2021, the Company held commercial mortgage-backed securities (CMBS, including FHA project loans) of $1.14 billion and $1.30 billion, respectively, which are included in “Corporate and all other bonds” in the tables above. At December 31, 2022 and 2021, approximately $131 million and $207 million of these securities, respectively, or the loans backing such securities, contained guarantees by the U.S. government or a government-sponsored enterprise. The weighted average credit rating of the $1.01 billion and $1.09 billion of non-guaranteed securities at December 31, 2022 and 2021, respectively, was “Aaa” at both dates. The CMBS portfolio is supported by loans that are diversified across economic sectors and geographical areas. The weighted average credit rating of the CMBS portfolio was “Aaa” at both December 31, 2022 and 2021.

Proceeds from the sales of fixed maturities classified as available for sale were $5.66 billion, $3.17 billion and $3.06 billion in 2022, 2021 and 2020, respectively. Gross gains of $27 million, $74 million and $70 million and gross losses of $99 million, $5 million and $3 million were realized on those sales in 2022, 2021 and 2020, respectively.

At December 31, 2022 and 2021, the Company’s insurance subsidiaries had $3.94 billion and $4.32 billion, respectively, of securities on deposit at financial institutions in certain states pursuant to the respective states’ insurance regulatory requirements. Funds deposited with third parties to be used as collateral to secure various liabilities on behalf of insureds, cedants and other creditors had a fair value of $53 million and $58 million at December 31, 2022 and 2021, respectively. In addition, the Company utilizes Lloyd’s trust deposits, whereby owned securities with a fair value of approximately $28 million and $33 million held by a wholly-owned subsidiary at December 31, 2022 and 2021, respectively, and $58 million and $34

The cost and fair value of investments in equity securities were as follows:


(at December 31, 2022, in millions)	Cost		Gross Gains		Gross Losses		Fair Value
Common stock	$	706	$	89	$	32	$	763
Non-redeemable preferred stock	41		3		—		44
Total	$	747	$	92	$	32	$	807

The Company’s real estate investments include warehouses, office buildings and other commercial land and properties that are directly owned. The Company negotiates commercial leases with individual tenants through unrelated, licensed real estate brokers. Negotiated terms and conditions include, among others, rental rates, length of lease period and improvements to the premises to be provided by the landlord.

Proceeds from the sales of real estate investments were $10 million in 2022, $31 million in 2021 and $0 million in 2020. Gains of $4 million and $8 million were realized on those sales in 2022 and 2021, respectively. Net realized investment gains (losses) in 2022 also included $12 million of impairment charges related to real estate. Accumulated depreciation on real estate held for investment purposes was $519 million and $497 million at December 31, 2022 and 2021, respectively.

Future minimum rental income on operating leases relating to the Company’s real estate properties is expected to be $116 million, $103 million, $78 million, $59 million and $45 million for 2023, 2024, 2025, 2026 and 2027, respectively, and $63 million for 2028 and thereafter.

The Company’s short-term securities consist of Aaa-rated registered money market funds, U.S. Treasury securities, high-quality commercial paper (primarily A1/P1) and high-quality corporate securities purchased within a year to their maturity with a combined average of 41 days to maturity at December 31, 2022. The amortized cost of these securities, which totaled $3.47 billion and $3.84 billion at December 31, 2022 and 2021, respectively, approximated their fair value.

Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company's financial statements on a quarter lag basis.

Entities which do not have sufficient equity at risk to allow the entity to finance its activities without additional financial support or in which the equity investors, as a group, do not have the characteristic of a controlling financial interest are referred to as variable interest entities (VIE). A VIE is consolidated by the variable interest holder that is determined to have the controlling financial interest (primary beneficiary) as a result of having both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and the Company’s relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE. The Company reassesses its VIE determination with respect to an entity on an ongoing basis.

The Company is a passive investor in limited partner equity interests issued by third party VIEs. These include certain of the Company’s investments in private equity limited partnerships, hedge funds and real estate partnerships where the Company is not related to the general partner. These investments are generally accounted for under the equity method and reported in the Company’s consolidated balance sheet as other investments unless the Company is deemed the primary beneficiary. These equity interests generally cannot be redeemed. Distributions from these investments are received by the Company as a result of liquidation of the underlying investments of the funds and/or as income distribution. The Company’s maximum exposure to loss with respect to these investments is limited to the investment carrying amounts reported in the Company’s consolidated balance sheet and any unfunded commitment. The Company considers an investment in a VIE in which it has a 20% or greater equity interest as a significant VIE. Neither the Company’s carrying amounts nor the unfunded commitments related to these significant VIE’s are material individually or in the aggregate.

The following tables summarize, for all fixed maturities classified as available for sale in an unrealized loss position at December 31, 2022 and 2021, the aggregate fair value and gross unrealized loss by the length of time those securities have been continuously in an unrealized loss position. The fair value amounts reported in the tables are estimates that are prepared using the process described in note 4. The Company also relies upon estimates of several factors in its review and evaluation of individual investments, using the process described in note 1, in determining whether a credit loss impairment exists.


	Less than 12 months				12 months or longer				Total
(at December 31, 2022, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,835	$	100	$	1,679	$	263	$	4,514	$	363
Obligations of U.S. states, municipalities and political subdivisions	19,251		1,975		3,134		846		22,385		2,821
Debt securities issued by foreign governments	604		22		367		33		971		55
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	1,414		128		316		72		1,730		200
Corporate and all other bonds	24,080		1,635		6,096		1,278		30,176		2,913
Total	$	48,184	$	3,860	$	11,592	$	2,492	$	59,776	$	6,352


	Less than 12 months				12 months or longer				Total
(at December 31, 2021, in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	2,438	$	32	$	5	$	—	$	2,443	$	32
Obligations of U.S. states, municipalities and political subdivisions	3,873		69		153		6		4,026		75
Debt securities issued by foreign governments	452		7		7		—		459		7
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	426		5		1		—		427		5
Corporate and all other bonds	7,306		153		436		22		7,742		175
Total	$	14,495	$	266	$	602	$	28	$	15,097	$	294

The following table summarizes, for all fixed maturities reported at fair value for which fair value was less than 80% of amortized cost at December 31, 2022, the gross unrealized investment loss by length of time those securities have continuously been in an unrealized loss position of greater than 20% of amortized cost:


	Period For Which Fair Value is Less Than 80% of Amortized Cost
(at December 31, 2022, in millions)	3 months or less		Greater than 3 months, 6 months or less		Greater than 6 months, 12 months or less		Greater than 12 months		Total
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	—	$	—	$	—	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	81		776		643		—		1,500
Debt securities issued by foreign governments	1		—		—		—		1
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	4		48		—		—		52
Corporate and all other bonds	89		526		8		—		623
Total	$	175	$	1,350	$	651	$	—	$	2,176

At December 31, 2021, the Company had no fixed maturity investments reported at fair value for which fair value was less than 80% of amortized cost. Recent increases in interest rates resulted in the gross unrealized investment losses above; however, since the Company generally holds its high-quality fixed maturity investments to maturity, the net unrealized loss is considered temporary in nature and is not expected to result in significant realized losses.

Credit impairment charges included in net realized investment gains (losses) in the consolidated statement of income were as follows:


(for the year ended December 31, in millions)	2022		2021		2020
Fixed maturities
U.S. Treasury securities and obligations of U.S. government and government agencies and authorities	$	12	$	—	$	—
Obligations of U.S. states, municipalities and political subdivisions	14		—		—
Debt securities issued by foreign governments	—		—		—
Mortgage-backed securities, collateralized mortgage obligations and pass-through securities	—		—		—
Corporate and all other bonds	—		2		15
Total fixed maturities	$	26	$	2	$	15

The following table presents changes in the allowance for expected credit losses on fixed maturities classified as available for sale for the category of Corporate and All Other Bonds (no other categories of fixed maturities currently have an allowance for expected credit losses):


	Fixed Maturities
	Corporate and All Other Bonds
(in millions)	At and For the Twelve Months Ended December 31, 2022		At and For the Twelve Months Ended December 31, 2021

Balance, beginning of period	$	3	$	2
Additions for expected credit losses on securities where no credit losses were previously recognized	—		1
Additions for expected credit losses on securities where credit losses were previously recognized	1		1
Reductions due to sales/defaults of credit-impaired securities	(1)		(1)
Reductions for impairments of securities which the Company intends to sell or more likely than not will be required to sell	—		—
Balance, end of period	$	3	$	3

Total net impairment charges, including credit impairments, reported in net realized investment gains (losses) in the consolidated statement of income, were $38 million, $2 million and $55 million for the years ended December 31, 2022, 2021 and 2020, respectively. Net realized investment gains (losses) in 2022 included $12 million of realized losses related to real estate. Net realized investment gains (losses) in 2020 included $40 million of realized losses related to the other-than-temporary impairment of the carrying value of an equity method investment included in other investments. Credit losses related to the fixed maturity portfolio for 2022 and 2021 represented less than 1% of the fixed maturity portfolio on a pre-tax basis and less than 1% of shareholders' equity on an after-tax basis at both December 31, 2022 and 2021.

Concentrations of credit risk arise from exposure to counterparties that are engaged in similar activities and have similar economic characteristics that could cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Company seeks to mitigate credit risk by actively monitoring the creditworthiness of counterparties, obtaining collateral as deemed appropriate and applying controls that include credit approvals, limits of credit exposure and other monitoring procedures.

At December 31, 2022 and 2021, other than U.S. Treasury securities and obligations of U.S. government and government agencies and authorities, the Company was not exposed to any concentration of credit risk of a single issuer greater than 5% of the Company’s shareholders’ equity.

Included in fixed maturities are below investment grade securities totaling $930 million and $1.11 billion at December 31, 2022 and 2021, respectively. The Company defines its below investment grade securities as those securities rated below investment grade by external rating agencies, or the equivalent by the Company when a public rating does not exist. Such securities include below investment grade bonds that are publicly traded and certain other privately issued bonds that are classified as below investment grade loans.

Net Investment Income


(for the year ended December 31, in millions)	2022		2021		2020
Gross investment income
Fixed maturities	$	2,113	$	1,989	$	2,011
Equity securities	17		19		15
Short-term securities	73		7		44
Real estate investments	66		59		48
Other investments	336		999		146
Gross investment income	2,605		3,073		2,264
Investment expenses	43		40		37
Net investment income	$	2,562	$	3,033	$	2,227


(at and for the year ended December 31, in millions)	2022		2021		2020
Changes in net unrealized investment gains (losses)
Fixed maturities	$	(9,279)	$	(2,113)	$	2,322

Other investments	(1)		(2)		—
Change in net pre-tax unrealized gains (losses) on investment securities	(9,280)		(2,115)		2,322
Related tax expense (benefit)	(1,967)		(456)		494
Change in net unrealized gains (losses) on investment securities	(7,313)		(1,659)		1,828


Balance, beginning of year	2,415		4,074		2,246
Balance, end of year	$	(4,898)	$	2,415	$	4,074

The Company has a put/call option that was entered into in connection with a business acquisition that allows the Company to acquire the remaining shares of the acquired company at a future date. Net realized investment gains and losses related to this put/call option in 2022, 2021 and 2020 were not significant.