Investment Securities

Our portfolio of securities includes bonds, equity securities, asset- and mortgage-backed securities, notes, interests in securitization trusts, and other investments. The cost, fair value, and gross unrealized gains and losses on available-for-sale securities were as follows:



	September 30, 2013									December 31, 2012
	Amortized cost		Gross unrealized					Fair value		Amortized cost		Gross unrealized					Fair value
($ in millions)	Amortized cost		gains		losses			Fair value		Amortized cost		gains		losses			Fair value
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	2,075	$	1	$	(54	)	$	2,022	$	2,212	$	3	$	(1	)	$	2,214
U.S. States and political subdivisions	178		1		—			179		—		—		—			—
Foreign government	299		4		(3		)	300		295		8		—			303
Mortgage-backed residential (a)	11,444		78		(316		)	11,206		6,779		130		(3		)	6,906
Mortgage-backed commercial	20		—		—			20		—		—		—			—
Asset-backed	2,251		17		(3		)	2,265		2,309		32		(1		)	2,340
Corporate debt	1,047		20		(9		)	1,058		1,209		57		(3		)	1,263
Total debt securities	17,314		121		(385		)	17,050		12,804		230		(8		)	13,026
Equity securities	929		32		(44		)	917		1,193		32		(73		)	1,152
Total available-for-sale securities (b)	$	18,243	$	153	$	(429	)	$	17,967	$	13,997	$	262	$	(81	)	$	14,178


(a)	Residential mortgage-backed securities include agency-backed bonds totaling $8,702 million and $4,983 million at September 30, 2013, and December 31, 2012, respectively.


(b)	Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $15 million and $15 million at September 30, 2013, and December 31, 2012, respectively.

The maturity distribution of available-for-sale debt securities outstanding is summarized in the following tables. Prepayments may cause actual maturities to differ from scheduled maturities.



	Total				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years (a)
($ in millions)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
September 30, 2013
Fair value of available-for-sale debt securities (b)
U.S. Treasury and federal agencies	$	2,022	0.9	%	$	588	0.1	%	$	505	1.2	%	$	929	1.3	%	$	—	—	%
U.S. States and political subdivisions	179		3.4		—		—		—		—		86		2.6		93		4.2
Foreign government	300		3.5		5		6.1		111		3.8		179		3.3		5		4.1
Mortgage-backed residential	11,206		2.7		—		—		—		—		101		2.1		11,105		2.7
Mortgage-backed commercial	20		1.3		—		—		—		—		—		—		20		1.3
Asset-backed	2,265		1.9		—		—		1,580		1.9		540		1.9		145		2.5
Corporate debt	1,058		4.3		16		5.1		511		3.3		449		5.1		82		5.7
Total available-for-sale debt securities	$	17,050	2.5		$	609	0.2		$	2,707	2.1		$	2,284	2.4		$	11,450	2.7
Amortized cost of available-for-sale debt securities	$	17,314			$	609			$	2,694			$	2,323			$	11,688
December 31, 2012
Fair value of available-for-sale debt securities (b)
U.S. Treasury and federal agencies	$	2,214	0.9	%	$	422	—	%	$	682	0.7	%	$	1,110	1.4	%	$	—	—	%
Foreign government	303		2.5		1		2.2		136		1.8		166		3.0		—		—
Mortgage-backed residential	6,906		2.7		—		—		—		—		35		4.3		6,871		2.7
Asset-backed	2,340		2.1		—		—		1,543		2.0		510		1.7		287		3.3
Corporate debt	1,263		5.1		9		3.2		560		4.0		596		6.0		98		5.8
Total available-for-sale debt securities	$	13,026	2.4		$	432	0.1		$	2,921	2.0		$	2,417	2.6		$	7,256	2.6
Amortized cost of available-for-sale debt securities	$	12,804			$	431			$	2,880			$	2,369			$	7,124


(a)	Investments with no stated maturities are included as contractual maturities of greater than 10 years. Actual maturities may differ due to call or prepayment options.


(b)	Yields on tax-exempt obligations are computed on a tax-equivalent basis.

The balances of cash equivalents were $3.2 billion and $3.4 billion at September 30, 2013, and December 31, 2012, respectively, and were composed primarily of money market accounts and short-term securities, including U.S. Treasury bills.

The following table presents gross gains and losses realized upon the sales of available-for-sale securities and other-than-temporary impairment.



	Three months ended September 30,						Nine months ended September 30,
($ in millions)	2013			2012			2013			2012
Gross realized gains	$	59		$	52		$	196		$	217
Gross realized losses	(7		)	(19		)	(21		)	(31		)
Other-than-temporary impairment	(11		)	(56		)	(19		)	(56		)
Other gain (loss) on investments, net	$	41		$	(23	)	$	156		$	130

The following table presents interest and dividends on available-for-sale securities.



	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2013		2012		2013		2012
Taxable interest	$	79	$	58	$	210	$	197
Taxable dividends	6		6		19		18
Interest and dividends on available-for-sale securities	$	85	$	64	$	229	$	215

Certain available-for-sale securities were sold at a loss in 2013 and 2012 as a result of market conditions. The table below summarizes available-for-sale securities in an unrealized loss position in accumulated other comprehensive income. Based on the methodology described below that was applied to these securities, we believe that the unrealized losses relate to factors other than credit losses in the current market environment. As of September 30, 2013, we did not have the intent to sell the debt securities with an unrealized loss position in accumulated other comprehensive income, and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. As of September 30, 2013, we had the ability and intent to hold equity securities with an unrealized loss position in accumulated other comprehensive income. As a result, we believe that the securities with an unrealized loss position in accumulated other comprehensive income are not considered to be other-than-temporarily impaired at September 30, 2013. Refer to Note 1 to the Consolidated Financial Statements in our 2012 Annual Report for additional information related to investment securities and our methodology for evaluating potential other-than-temporary impairments.



	September 30, 2013										December 31, 2012
	Less than 12 months					12 months or longer					Less than 12 months					12 months or longer
($ in millions)	Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	1,419	$	(54	)	$	—	$	—		$	244	$	(1	)	$	—	$	—
U.S. States and political subdivisions	32		—			—		—			—		—			—		—
Foreign government	113		(3		)	—		—			11		—			—		—
Mortgage-backed	6,688		(316		)	3		—			493		(2		)	23		(1		)
Asset-backed	438		(3		)	1		—			143		(1		)	1		—
Corporate debt	316		(9		)	—		—			120		(2		)	15		(1		)
Total temporarily impaired debt securities	9,006		(385		)	4		—			1,011		(6		)	39		(2		)
Temporarily impaired equity securities	380		(29		)	90		(15		)	380		(39		)	218		(34		)
Total temporarily impaired available-for-sale securities	$	9,386	$	(414	)	$	94	$	(15	)	$	1,391	$	(45	)	$	257	$	(36	)