Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We manage exposure to market interest rates by diversifying investments across different fixed-income market sectors and debt across maturities, as well as by matching a portion of our floating-rate assets and liabilities, either directly or through the use of interest rate swap contracts. Unrealized gains and losses on investments in available-for-sale debt securities are reported in comprehensive income.
The following table summarizes the impact of hypothetical changes in market interest rates across the entire yield curve by 1% point or 2% points as of September 30, 2023 on our investment income and interest expense per annum, and the fair value of our investments and debt (in millions, except percentages):
September 30, 2023
Increase (Decrease) in Market Interest Rate Investment
Income Per
Annum Interest
Expense Per
Annum Fair Value of
Financial Assets Fair Value of
Financial Liabilities
2 % $ 971 $ 419 $ (3,408) $ (7,067)
1 486 209 (1,758) (3,846)
(1) (486) (193) 1,858 4,635
(2) (971) (386) 3,800 10,274
Note: The impact of hypothetical changes in interest rates may not reflect the full 100 or 200 basis point change on interest income and interest expense or on the fair value of financial assets and liabilities as the rates are assumed to not fall below zero.
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