The majority of the investment portfolio comprises investment grade fixed-maturity securities managed by three outside managers. The Company has established investment guidelines for these investment managers regarding credit quality, exposure to a particular sector and exposure to a particular obligor within a sector.

The remainder of the investment portfolio primarily consists of (i) Loss Mitigation Securities; (ii) New Recovery Bonds and CVIs received in connection with the consummation of the 2022 Puerto Rico Resolutions; (iii) other investments including certain fixed-maturity and short-term securities, and (iv) equity method investments. Equity method investments primarily consist of generally less liquid alternative investments including an investment in renewable and clean energy and private equity funds.


	As of
	June 30, 2023		December 31, 2022
	(in millions)
Fixed-maturity securities, available-for-sale (1):
Externally managed (2)	$	5,551	$	5,824
Loss Mitigation Securities	509		548
Puerto Rico, New Recovery Bonds (3)	36		358
Other (4)	392		389
Fixed-maturity securities, trading - Puerto Rico, CVIs (3)	340		303
Short-term investments (5)	1,650		810
Other invested assets:
Equity method investments (6)	130		123
Other	16		10
Total	$	8,624	$	8,365

(1) 7.5% and 7.4% of fixed-maturity securities were rated BIG as of June 30, 2023 and December 31, 2022, respectively, consisting primarily of Loss Mitigation Securities. 1.7% and 5.9% were not rated, as of June 30, 2023 and December 31, 2022, respectively.

(2) As of June 30, 2023 and December 31, 2022 amounts include $292 million and $305 million, respectively, of CLOs that had been managed by AssuredIM under an investment management agreement until June 20, 2023.

(4) As of June 30, 2023 and December 31, 2022 amounts include $221 million and $232 million, respectively, of municipal bonds that had been managed by AssuredIM under an investment management agreement until June 20, 2023.

(5) Weighted average credit rating of AAA as of both June 30, 2023 and December 31, 2022, based on the lower of the Moody’s Investors Service, Inc. (Moody’s) and S&P Global Ratings, a division of Standard & Poor's Financial Services LLC (S&P) classifications.

Upon closing of the Sound Point Transaction and the AHP Transaction in July, the Company has increased the aggregate amount it has agreed to invest in alternative investments to $1.5 billion, including the $1 billion with Sound Point, subject to regulatory approval, which includes $510 million of investment capital (at fair value), and $991 million in unfunded commitments. See Note 1, Business and Basis of Presentation for a description of the Sound Point Transaction.

Of the $1.5 billion to be invested, the U.S. Insurance Subsidiaries through their jointly owned investment subsidiary, AGAS, are authorized to invest up to $750 million plus previously distributed gains of $114 million for a total of $864 million as of June 30, 2023. As of July 1, 2023, AGAS commitments to funds previously managed by AssuredIM were $553 million (of which $333 million was funded with a net asset value (NAV) of $350 million). This capital was committed to several funds, each dedicated to a single strategy, including CLOs, asset-based finance and healthcare structured capital and are managed by Sound Point or by AHP. As of June 30, 2023, all of the funds in which AGAS invests are accounted for as CIVs. See Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

Accrued investment income, which is reported in “other assets,” was $73 million as of June 30, 2023 and $71 million as of December 31, 2022. In six months 2023 and six months 2022, the Company did not write off any accrued investment income.


Security Type	Percent of Total (1)		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Weighted Average Credit Rating (2)
	(dollars in millions)
Obligations of state and political subdivisions	42	%	$	2,973	$	(14)	$	27	$	(110)	$	2,876	AA-
U.S. government and agencies	1		69		—		1		(6)		64		AA+
Corporate securities (3)	33		2,330		(6)		3		(261)		2,066		A
Mortgage-backed securities (4):
RMBS	6		440		(20)		3		(71)		352		BBB+
Commercial mortgage-backed securities (CMBS)	3		214		—		—		(10)		204		AAA
Asset-backed securities:
CLOs	7		468		—		—		(14)		454		A+
Other	6		432		(39)		17		(36)		374		CCC+
Non-U.S. government securities	2		118		—		—		(20)		98		AA-
Total available-for-sale fixed-maturity securities	100	%	$	7,044	$	(79)	$	51	$	(528)	$	6,488	A


Security Type	Percent of Total (1)		Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Weighted Average Credit Rating (2)
	(dollars in millions)
Obligations of state and political subdivisions	45	%	$	3,509	$	(14)	$	37	$	(138)	$	3,394	A
U.S. government and agencies	2		118		—		1		(8)		111		AA+
Corporate securities (3)	31		2,387		(6)		2		(299)		2,084		A
Mortgage-backed securities (4):
RMBS	5		418		(19)		3		(62)		340		BBB
CMBS	4		282		—		—		(11)		271		AAA
Asset-backed securities:
CLOs	6		449		—		—		(21)		428		A+
Other	5		423		(26)		22		(26)		393		CCC+
Non-U.S. government securities	2		121		—		—		(23)		98		AA-
Total available-for-sale fixed-maturity securities	100	%	$	7,707	$	(65)	$	65	$	(588)	$	7,119	A

(2)Ratings represent the lower of the Moody’s and S&P classifications, except for Loss Mitigation Securities and certain other securities, which use internal ratings classifications. The Company’s portfolio primarily consists of high-quality, liquid instruments. New Recovery Bonds received in connection with the consummation of the 2022 Puerto Rico Resolutions are not rated.


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(dollars in millions)
Obligations of state and political subdivisions	$	1,357	$	(18)	$	622	$	(89)	$	1,979	$	(107)
U.S. government and agencies	9		—		32		(6)		41		(6)
Corporate securities	473		(13)		1,253		(202)		1,726		(215)
Mortgage-backed securities:
RMBS	127		(6)		56		(5)		183		(11)
CMBS	21		(1)		183		(9)		204		(10)
Asset-backed securities:
CLOs	1		—		415		(14)		416		(14)
Other	10		—		18		(2)		28		(2)
Non-U.S. government securities	—		—		94		(20)		94		(20)
Total	$	1,998	$	(38)	$	2,673	$	(347)	$	4,671	$	(385)
Number of securities (1)			778				1,079				1,830


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(dollars in millions)
Obligations of state and political subdivisions	$	1,763	$	(79)	$	163	$	(56)	$	1,926	$	(135)
U.S. government and agencies	32		—		52		(8)		84		(8)
Corporate securities	1,276		(95)		519		(147)		1,795		(242)
Mortgage-backed securities:
RMBS	147		(9)		3		(1)		150		(10)
CMBS	270		(11)		—		—		270		(11)
Asset-backed securities:
CLOs	171		(7)		250		(14)		421		(21)
Other	27		(2)		—		—		27		(2)
Non-U.S. government securities	65		(10)		30		(13)		95		(23)
Total	$	3,751	$	(213)	$	1,017	$	(239)	$	4,768	$	(452)
Number of securities (1)			1,340				466				1,776

(1) The number of securities does not add across because lots consisting of the same securities have been purchased at different times and appear in both categories above (i.e., less than 12 months and 12 months or more). If a security appears in both categories, it is counted only once in the total column.

The Company considered the credit quality, cash flows, interest rate movements, ability to hold a security to recovery and intent to sell a security in determining whether a security had a credit loss. The Company has determined that the unrealized losses recorded as of June 30, 2023 and December 31, 2022 were related to higher interest rates rather than credit quality. As of June 30, 2023, the Company did not intend to and was not required to sell investments in an unrealized loss position prior to expected recovery in value. As of June 30, 2023, of the securities in an unrealized loss position for which an allowance for credit loss was not recorded, 508 securities had unrealized losses in excess of 10% of their carrying value, whereas as of December 31, 2022, 567 securities had unrealized losses in excess of 10% of their carrying value. The total unrealized loss for these securities was $269 million as of June 30, 2023 and $329 million as of December 31, 2022.

The amortized cost and estimated fair value of available-for-sale fixed-maturity securities by contractual maturity as of June 30, 2023 are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Estimated Fair Value
	(in millions)
Due within one year	$	286	$	280
Due after one year through five years	1,537		1,430
Due after five years through 10 years	1,696		1,597
Due after 10 years	2,871		2,625
Mortgage-backed securities:
RMBS	440		352
CMBS	214		204
Total	$	7,044	$	6,488

Based on fair value, investments and other assets that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $230 million as of June 30, 2023 and $222 million as of December 31, 2022. The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or are otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements in the amounts of $1,149 million and $1,169 million based on fair value as of June 30, 2023 and December 31, 2022, respectively.

Net investment income is a function of the yield that the Company earns on available-for-sale fixed-maturity securities and short-term investments, and the size of such portfolio. The investment yield is a function of market interest rates at the time of investment as well as the type, credit quality and maturity of the securities in this portfolio.

Puerto Rico CVIs in the investment portfolio are classified as trading securities. Equity in earnings (losses) of investees represents the Company’s interest in the earnings of its equity method investments.


	Second Quarter				Six Months
	2023		2022		2023		2022
	(in millions)
Investment income:
Fixed-maturity securities, available-for-sale:
Externally managed (1)	$	53	$	50	$	105	$	100
Loss Mitigation Securities	12		6		22		15
Puerto Rico, New Recovery Bonds	1		3		4		4
Other (2)	4		4		7		7
Short-term investments	18		1		32		1
Other invested assets	2		—		2		—
Investment income	90		64		172		127
Investment expenses	(1)		(2)		(2)		(3)
Net investment income	$	89	$	62	$	170	$	124

Fair value gains (losses) on trading securities (3)	$	40	$	(18)	$	38	$	(22)
Equity in earnings (losses) of investees (4)	$	5	$	—	$	7	$	(11)

(3) Fair value gains on trading securities pertaining to securities still held as of June 30, 2023 were $40 million for second quarter 2023 and $38 million for six months 2023, respectively. Fair value losses on trading securities pertaining to securities still held as of June 30, 2022 were $12 million for second quarter 2022 and $16 million for six months 2022, respectively.

(4) Fair value gains (losses) on investments where the fair value option (FVO) was elected utilizing the NAV as a practical expedient were $1 million in second quarter 2023, $2 million in six months 2023, and $3 million in six months 2022.


	Second Quarter				Six Months
	2023		2022		2023		2022
	(in millions)
Gross realized gains on sales of available-for-sale securities (1)	$	7	$	—	$	19	$	—
Gross realized losses on sales of available-for-sale securities (1)	(6)		(21)		(15)		(23)
Net foreign currency gains (losses)	—		(3)		—		(3)
Change in allowance for credit losses and intent to sell	(10)		(4)		(15)		(9)
Other net realized gains (losses)	—		—		—		10
Net realized investment gains (losses)	$	(9)	$	(28)	$	(11)	$	(25)

The proceeds from sales of fixed-maturity securities classified as available-for-sale were $239 million in second quarter 2023, $296 million in second quarter 2022, $694 million in six months 2023 and $353 million in six months 2022.


	Second Quarter				Six Months
	2023		2022		2023		2022
	(in millions)
Balance, beginning of period	$	69	$	47	$	65	$	42
Additions for securities for which credit losses were not previously recognized	—		—		—		4

Additions (reductions) for securities for which credit losses were previously recognized	10		4		14		5

Balance, end of period	$	79	$	51	$	79	$	51