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Investments in Debt and Equity Securities
 9 Months Ended
Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Equity Securities
    Investments in debt and equity 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. In addition, Insurance Services has an equity security investment in a real estate investment trust (REIT) which is recorded at fair value based on the net asset value (NAV) of the investment. These investments are primarily included in Other assets in the Consolidated Statement of Financial Position. Unrealized gains and losses arising from the revaluation of debt and equity 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 specific identification method for debt and equity securities and are included in Other income (expense) in the Consolidated Statement of Results of Operations.

The cost basis and fair value of debt and equity securities were as follows:
 
September 30, 2016
 
December 31, 2015
(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

 
$
9

 
$
—

 
$
9

Other U.S. and non-U.S. government bonds
67

 
1

 
68

 
71

 
1

 
72

 
 
 
 
 
 
 
 
 
 
 
 
Corporate bonds
 

 
 

 
 
 
 

 
 

 
 

Corporate bonds
697

 
13

 
710

 
701

 
7

 
708

Asset-backed securities
134

 
1

 
135

 
129

 
—

 
129

 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed debt securities
 
 
 
 
 
 
 

 
 

 
 

U.S. governmental agency
282

 
4

 
286

 
291

 
1

 
292

Residential
10

 
—

 
10

 
12

 
—

 
12

Commercial
62

 
1

 
63

 
59

 
2

 
61

 
 
 
 
 
 
 
 
 
 
 
 
Equity securities
 
 
 
 
 
 
 

 
 

 
 

Large capitalization value
279

 
20

 
299

 
243

 
30

 
273

Real estate investment trust (REIT)
70

 
2

 
72

 
25

 
—

 
25

Smaller company growth
47

 
10

 
57

 
37

 
17

 
54

Total
$
1,658

 
$
52

 
$
1,710

 
$
1,577

 
$
58

 
$
1,635

 
 
 
 
 
 
 
 
 
 
 
 

Available-for-sale investments in an unrealized loss position that are not other-than-temporarily impaired:
 
 
 
September 30, 2016
 
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
 
 
 
 
 
 
 
 
 
 
 
Asset-backed securities
$
—

 
$
—

 
$
16

 
$
1

 
$
16

 
$
1

Equity securities
 
 
 
 
 
 
 
 
 
 
 
Large capitalization value
85

 
6

 
9

 
1

 
94

 
7

Small company growth
13

 
3

 
—

 
—

 
13

 
3

Total
$
98

 
$
9

 
$
25

 
$
2

 
$
123

 
$
11

 
December 31, 2015
 
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
$
242

 
$
3

 
$
27

 
$
1

 
$
269

 
$
4

Asset-backed securities
84

 
1

 
10

 
1

 
94

 
2

Mortgage-backed debt securities
 

 
 

 
 

 
 

 
 

 
 

U.S. governmental agency
135

 
1

 
57

 
1

 
192

 
2

Equity securities
 

 
 

 
 

 
 

 
 

 
 

Large capitalization value
97

 
8

 
2

 
—

 
99

 
8

Smaller company growth
14

 
1

 
—

 
—

 
14

 
1

Total
$
572

 
$
14

 
$
96

 
$
3

 
$
668

 
$
17

 

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 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 September 30, 2016.
 
Equity Securities.  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 September 30, 2016.
 
The cost basis and fair value of the available-for-sale debt securities at September 30, 2016, 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.

 
September 30, 2016
(Millions of dollars)
Cost Basis
 
Fair Value
Due in one year or less
$
209

 
$
210

Due after one year through five years
622

 
634

Due after five years through ten years
50

 
52

Due after ten years
27

 
27

U.S. governmental agency mortgage-backed securities
282

 
286

Residential mortgage-backed securities
10

 
10

Commercial mortgage-backed securities
62

 
63

Total debt securities – available-for-sale
$
1,262

 
$
1,282

 
 
 
 

 
Sales of Securities:
 
 
 
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
(Millions of dollars)
2016
 
2015
 
2016
 
2015
Proceeds from the sale of available-for-sale securities
$
109

 
$
110

 
$
304

 
$
238

Gross gains from the sale of available-for-sale securities
$
10

 
$
32

 
$
43

 
$
38

Gross losses from the sale of available-for-sale securities
$
1

 
$
1

 
$
3

 
$
2