Investments in Debt and Equity Securities

9 Months Ended

Sep. 30, 2020

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, which we record at fair value and primarily include in Other assets in the Consolidated Statement of Financial Position.

We classify debt securities as available-for-sale, and we include the unrealized gains and losses arising from the revaluation of these debt securities, net of applicable deferred income taxes, in equity (Accumulated other comprehensive income (loss) in the Consolidated Statement of Financial Position). We include the unrealized gains and losses arising from the revaluation of the equity securities in Other income (expense) in the Consolidated Statement of Results of Operations. We generally determine realized gains and losses on sales of investments using the specific identification method for debt and equity securities and include them in Other income (expense) in the Consolidated Statement of Results of Operations.

The cost basis and fair value of debt securities with unrealized gains and losses included in equity (Accumulated other comprehensive income (loss) in the Consolidated Statement of Financial Position) were as follows:

	September 30, 2020						December 31, 2019
(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	$	16	$	—	$	16	$	9	$	—	$	9
Other U.S. and non-U.S. government bonds	50		1		51		54		—		54
Corporate bonds
Corporate bonds	958		43		1,001		836		20		856
Asset-backed securities	156		2		158		62		—		62
Mortgage-backed debt securities
U.S. governmental agency	351		13		364		327		4		331
Residential	5		—		5		6		—		6
Commercial	61		4		65		46		1		47
Total debt securities	$	1,597	$	63	$	1,660	$	1,340	$	25	$	1,365

Available-for-sale investments in an unrealized loss position:
	September 30, 2020
	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	$	65	$	2	$	6	$	—	$	71	$	2
Total	$	65	$	2	$	6	$	—	$	71	$	2

	December 31, 2019
	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	$	58	$	1	$	50	$	—	$	108	$	1
Total	$	58	$	1	$	50	$	—	$	108	$	1
1 Indicates the 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. In addition, we did not expect credit-related losses on these investments as of September 30, 2020.

The cost basis and fair value of the available-for-sale debt securities at September 30, 2020, by contractual maturity, are 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, 2020
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	134	$	135
Due after one year through five years	715		748
Due after five years through ten years	246		257
Due after ten years	85		86
U.S. governmental agency mortgage-backed securities	351		364
Residential mortgage-backed securities	5		5
Commercial mortgage-backed securities	61		65
Total debt securities – available-for-sale	$	1,597	$	1,660

Sales of available-for-sale securities:
	Three Months Ended September 30				Nine Months Ended September 30
(Millions of dollars)	2020		2019		2020		2019
Proceeds from the sale of available-for-sale securities	$	74	$	92	$	197	$	237
Gross gains from the sale of available-for-sale securities	—		—		1		1
Gross losses from the sale of available-for-sale securities	—		—		1		1

For the three months ended September 30, 2020 and 2019, the net unrealized gains (losses) for equity securities held at September 30, 2020 and 2019 were $9 million and $2 million, respectively. For the nine months ended September 30, 2020 and 2019, the net unrealized gains (losses) for equity securities held at September 30, 2020 and 2019 were $(1) million and $54 million, respectively.