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:



	March 31, 2017							December 31, 2016
(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	$	9	$	—		$	9	$	9	$	—		$	9
Other U.S. and non-U.S. government bonds	58		—			58		60		—			60

Corporate bonds
Corporate bonds	479		3			482		489		3			492
Asset-backed securities	88		—			88		90		—			90

Mortgage-backed debt securities
U.S. governmental agency	214		(2		)	212		225		(2		)	223
Residential	9		—			9		10		—			10
Commercial	31		—			31		36		—			36

Equity securities
Large capitalization value	281		44			325		280		32			312
Real estate investment trust (REIT)	84		4			88		77		2			79
Smaller company growth	41		19			60		41		15			56
Total	$	1,294	$	68		$	1,362	$	1,317	$	50		$	1,367



Available-for-sale investments in an unrealized loss position that are not other-than-temporarily impaired:

	March 31, 2017
	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	$	121	$	1	$	12	$	—	$	133	$	1
Mortgage-backed debt securities
U.S. governmental agency	140		2		12		—		152		2
Equity securities
Large capitalization value	42		5		8		1		50		6
Small company growth	6		1		2		—		8		1
Total	$	309	$	9	$	34	$	1	$	343	$	10



	December 31, 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
Corporate bonds	$	131	$	1	$	13	$	—	$	144	$	1
Mortgage-backed debt securities
U.S. governmental agency	167		2		11		—		178		2
Equity securities
Large capitalization value	68		6		11		2		79		8
Smaller company growth	10		1		3		1		13		2
Total	$	376	$	10	$	38	$	3	$	414	$	13

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 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, 2017.

Mortgage-Backed Debt Securities. The unrealized losses on our investments in U.S. government agency 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 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, 2017.

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 March 31, 2017.

The cost basis and fair value of the available-for-sale debt securities at March 31, 2017, 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, 2017
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	198	$	200
Due after one year through five years	386		387
Due after five years through ten years	24		24
Due after ten years	26		26
U.S. governmental agency mortgage-backed securities	214		212
Residential mortgage-backed securities	9		9
Commercial mortgage-backed securities	31		31
Total debt securities – available-for-sale	$	888	$	889



Sales of Securities:
	Three Months Ended March 31
(Millions of dollars)	2017		2016
Proceeds from the sale of available-for-sale securities	$	89	$	49
Gross gains from the sale of available-for-sale securities	$	1	$	1
Gross losses from the sale of available-for-sale securities	$	1	$	1