Available-For-Sale Securities

We have investments in certain debt and equity securities, primarily at Insurance Services, that have been classified as available-for-sale and recorded at fair value based upon quoted market prices. These investments are primarily included in Other assets in the Consolidated Statement of Financial Position. Unrealized gains and losses arising from the revaluation of available-for-sale securities are included, net of applicable deferred income taxes, in equity (Accumulated other comprehensive income (loss) in the Consolidated Statement of Financial Position). Realized gains and losses on sales of investments are generally determined using the FIFO (first-in, first-out) method for debt instruments and the specific identification method for equity securities. Realized gains and losses are included in Other income (expense) in the Consolidated Statement of Results of Operations.



	March 31, 2014						December 31, 2013
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)			Fair Value
Government debt
U.S. treasury bonds	$	10	$	—	$	10	$	10	$	—		$	10
Other U.S. and non-U.S. government bonds	117		1		118		119		1			120

Corporate bonds
Corporate bonds	629		22		651		612		21			633
Asset-backed securities	76		1		77		72		—			72

Mortgage-backed debt securities
U.S. governmental agency	326		—		326		322		(1		)	321
Residential	17		1		18		18		—			18
Commercial	70		6		76		87		6			93

Equity securities
Large capitalization value	164		74		238		173		81			254
Smaller company growth	24		24		48		25		24			49
Total	$	1,433	$	129	$	1,562	$	1,438	$	132		$	1,570

During the three months ended March 31, 2014 and 2013, there were no charges for other-than-temporary declines in the market values of securities.



Investments in an unrealized loss position that are not other-than-temporarily impaired:

	March 31, 2014
	Less than 12 months¹				12 months or more ¹				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	159	$	1	$	1	$	—	$	160	$	1
Asset-backed securities	5		—		17		1		22		1
Mortgage-backed debt securities
U.S. governmental agency	98		2		105		4		203		6
Equity securities
Large capitalization value	20		1		1		—		21		1
Total	$	282	$	4	$	124	$	5	$	406	$	9



	December 31, 2013
	Less than 12 months ¹				12 months or more ¹				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	159	$	2	$	1	$	—	$	160	$	2
Asset-backed securities	6		—		20		1		26		1
Mortgage-backed debt securities
U.S. governmental agency	140		4		65		2		205		6
Total	$	305	$	6	$	86	$	3	$	391	$	9

¹ Indicates length of time that individual securities have been in a continuous unrealized loss position.

Corporate Bonds. The unrealized losses on our investments in corporate bonds and asset-backed securities relate to changes in interest rates and credit-related yield spreads since time of purchase. We do not intend to sell the investments and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis. We do not consider these investments to be other-than-temporarily impaired as of March 31, 2014.

Mortgage-Backed Debt Securities. The unrealized losses on our investments in mortgage-backed securities relate to changes in interest rates and credit-related yield spreads since time of purchase. We do not intend to sell the investments and it is not likely that we will be required to sell these investments before recovery of their amortized cost basis. We do not consider these investments to be other-than-temporarily impaired as of March 31, 2014.

Equity Securities. Insurance Services maintains a well-diversified equity portfolio consisting of two specific mandates: large capitalization value stocks and smaller company growth stocks. U.S. equity valuations were generally higher during the first quarter of 2014 on generally favorable economic data. The unrealized losses on our investments in equity securities relate to inherent risks of individual holdings and/or their respective sectors. We do not consider these investments to be other-than-temporarily impaired as of March 31, 2014.

The cost basis and fair value of the available-for-sale debt securities at March 31, 2014, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.



	March 31, 2014
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	155	$	156
Due after one year through five years	614		635
Due after five years through ten years	33		35
Due after ten years	30		30
U.S. governmental agency mortgage-backed securities	326		326
Residential mortgage-backed securities	17		18
Commercial mortgage-backed securities	70		76
Total debt securities – available-for-sale	$	1,245	$	1,276



Sales of Securities:
	Three Months Ended March 31,
(Millions of dollars)	2014		2013
Proceeds from the sale of available-for-sale securities	$	115	$	98
Gross gains from the sale of available-for-sale securities	$	14	$	1
Gross losses from the sale of available-for-sale securities	$	—	$	—