Allowance for credit losses

12 Months Ended

Dec. 31, 2022

Movements in the allowance for credit losses during the years ended December 31, 2022 and 2021 were as follows:


	Year Ended December 31, 2022

	Investment in finance leases		Notes receivable		Loans receivable		Total
Allowance for credit losses at beginning of period	$	71,292	$	40,964	$	5,291	$	117,547
Current period provision for expected credit losses	(11,483)		122,568		(1,393)		109,692
Write-offs charged against the allowance	(36,784)		(52,594)		—		(89,378)
Allowance for credit losses at end of period	$	23,025	$	110,938	$	3,898	$	137,861


	Year Ended December 31, 2021

	Investment in finance leases		Notes receivable		Loans receivable		Total
Allowance for credit losses at beginning of period	$	59,663	$	7,490	$	—	$	67,153
Initial credit provision related to GECAS purchased financial assets with credit deterioration	9,944		—		1,423		11,367
Current period provision for expected credit losses	1,685		78,144		3,868		83,697
Write-offs charged against the allowance	—		(44,670)		—		(44,670)
Allowance for credit losses at end of period	$	71,292	$	40,964	$	5,291	$	117,547

During the year ended December 31, 2022, we recognized credit provision and write-offs charged against the allowance of $109.7 million and $89.4 million respectively, primarily reflecting provisions and write-offs with respect to two of our lessees and losses due to the Ukraine Conflict. During the year ended December 31, 2021, we increased our credit provision, classified in leasing expenses by $83.7 million primarily due to a customer settlement, the increase in finance leases, notes receivable and loan balances due to the GECAS Transaction and to reflect the ongoing credit risk due to the Covid-19 pandemic.

Substantially all our Financing Receivables portfolio is secured lending and we assess the overall quality of the portfolio based on Financing Receivables by airline customer risk rating as defined below. Our internal risk ratings process is an important source of information in determining our allowance for credit losses and represents a comprehensive approach to evaluating risk in our Financing Receivables portfolio. We stratify our Financing Receivables portfolio into three categories: A, B and C. An internal risk rating is developed for our airline customers, which is based upon our proprietary model using data derived from the airline customer financial statements and other relevant data points that may impact our airline customer’s ability to honor its financial commitments. The frequency of rating updates is established by our credit risk policy, which requires periodic monitoring and at least an annual review. The latest credit rating review was performed as of December 31, 2022.

26. Allowance for credit losses (Continued)

The tables below present Financing Receivables carried at amortized cost basis, gross of allowance for credit losses, grouped into the three credit risk categories for the years ended December 31, 2022 and 2021. Category A is considered an excellent or high-credit-quality airline customer; Category B is considered a good-credit-quality airline customer; and those airline customers in Category C are considered marginal.


	As of December 31, 2022
	Category A		Category B		Category C		Total
	(U.S. Dollars in millions)
Investment in finance leases	$	292	$	486	$	601	$	1,379
Notes receivable	—		18		579		597
Loans receivable	16		329		10		355
Total	$	308	$	833	$	1,190	$	2,331


	As of December 31, 2021
	Category A		Category B		Category C		Total
	(U.S. Dollars in millions)
Investment in finance leases	$	534	$	1,247	$	219	$	2,000
Notes receivable	—		26		632		658
Loans receivable	12		161		236		409
Total	$	546	$	1,434	$	1,087	$	3,067