Investment Securities (Tables)

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of the cost/amortized cost, unrealized gains and losses, and fair value of available-for-sale securities by type

Cost/amortized cost, allowance for credit losses, unrealized gains and losses, and fair value of fixed maturity available-for-sale securities by type were as follows:

(dollars in millions)	Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2020*
Fixed maturity available-for-sale securities:
U.S. government and government sponsored entities	$	12	$	—	$	—	$	12
Obligations of states, municipalities, and political subdivisions	81		5		—		86
Commercial paper	24		—		—		24
Non-U.S. government and government sponsored entities	132		9		—		141
Corporate debt	1,106		83		(5)		1,184
Mortgage-backed, asset-backed, and collateralized:
RMBS	211		7		—		218
CMBS	61		2		—		63
CDO/ABS	78		1		(1)		78
Total	$	1,705	$	107	$	(6)	$	1,806

* There was no allowance for credit losses related to our investment securities as of September 30, 2020.

(dollars in millions)	Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2019*
Fixed maturity available-for-sale securities:
U.S. government and government sponsored entities	$	11	$	—	$	—	$	11
Obligations of states, municipalities, and political subdivisions	91		2		(1)		92
Commercial paper	91		—		—		91
Non-U.S. government and government sponsored entities	144		3		—		147
Corporate debt	1,054		45		(1)		1,098
Mortgage-backed, asset-backed, and collateralized:
RMBS	214		3		—		217
CMBS	56		1		—		57
CDO/ABS	84		1		—		85
Total	$	1,745	$	55	$	(2)	$	1,798

* The balances reported as of December 31, 2019 are not subject to the adoption of ASU 2016-13 on January 1, 2020 and continue to be reported under ASC 320, Investments – Debt and Equity Securities.

Schedule of fair value and unrealized losses on investment securities by type and length of time in a continuous unrealized loss position

Fair value and unrealized losses on available-for-sale securities by type and length of time in a continuous unrealized loss position without an allowance for credit losses were as follows:

	Less Than 12 Months				12 Months or Longer				Total
(dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2020
Obligations of states, municipalities, and political subdivisions	$	3	$	—	$	—	$	—	$	3	$	—
Commercial paper	19		—		—		—		19		—
Non-U.S. government and government sponsored entities	3		—		—		—		3		—
Corporate debt	95		(4)		5		(1)		100		(5)
Mortgage-backed, asset-backed, and collateralized:
RMBS	10		—		—		—		10		—
CMBS	21		—		—		—		21		—
CDO/ABS	21		(1)		—		—		21		(1)
Total	$	172	$	(5)	$	5	$	(1)	$	177	$	(6)
December 31, 2019*
U.S. government and government sponsored entities	$	—	$	—	$	3	$	—	$	3	$	—
Obligations of states, municipalities, and political subdivisions	29		(1)		4		—		33		(1)
Commercial paper	76		—		—		—		76		—
Non-U.S. government and government sponsored entities	19		—		14		—		33		—
Corporate debt	63		(1)		13		—		76		(1)
Mortgage-backed, asset-backed, and collateralized:
RMBS	45		—		—		—		45		—
CMBS	15		—		7		—		22		—
CDO/ABS	14		—		—		—		14		—
Total	$	261	$	(2)	$	41	$	—	$	302	$	(2)

* The balances reported as of December 31, 2019 are not subject to the adoption of ASU 2016-13 on January 1, 2020 and continue to be reported under ASC 320, Investments – Debt and Equity Securities.

Schedule of contractual maturities of fixed-maturity available-for-sale securities

Contractual maturities of fixed-maturity available-for-sale securities at September 30, 2020 were as follows:

(dollars in millions)	Fair Value		Amortized Cost
Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities:
Due in 1 year or less	$	128	$	127
Due after 1 year through 5 years	605		573
Due after 5 years through 10 years	526		485
Due after 10 years	188		170
Mortgage-backed, asset-backed, and collateralized securities	359		350
Total	$	1,806	$	1,705

Schedule of fair value of other securities by type

The fair value of other securities by type was as follows:

(dollars in millions)	September 30, 2020		December 31, 2019
Fixed maturity other securities:
Bonds
Non-U.S. government and government sponsored entities	$	1	$	1
Corporate debt	20		24
Mortgage-backed, asset-backed, and collateralized bonds	17		15
Total bonds	38		40
Preferred stock *	14		19
Common stock *	24		26
Other long-term investments	—		1
Total	$	76	$	86

* We employ an income equity strategy targeting investments in stocks with strong current dividend yields. Stocks included have a history of stable or increasing dividend payments.