Investments

A summary of short-term and long-term investments is as follows:



(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2012
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,690	$	55	$	—		$	2,745
State and municipal obligations	6,300		435		—			6,735
Corporate obligations	6,422		292		(3		)	6,711
U.S. agency mortgage-backed securities	2,340		95		—			2,435
Non-U.S. agency mortgage-backed securities	465		39		—			504
Total debt securities - available-for-sale	18,217		916		(3		)	19,130
Equity securities - available-for-sale	633		12		(2		)	643
Debt securities - held-to-maturity:
U.S. government and agency obligations	169		7		—			176
State and municipal obligations	31		—		—			31
Corporate obligations	292		—		—			292
Total debt securities - held-to-maturity	492		7		—			499
Total investments	$	19,342	$	935	$	(5	)	$	20,272
December 31, 2011
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,319	$	54	$	—		$	2,373
State and municipal obligations	6,363		403		(1		)	6,765
Corporate obligations	5,825		205		(23		)	6,007
U.S. agency mortgage-backed securities	2,279		74		—			2,353
Non-U.S. agency mortgage-backed securities	476		28		—			504
Total debt securities - available-for-sale	17,262		764		(24		)	18,002
Equity securities - available-for-sale	529		23		(8		)	544
Debt securities - held-to-maturity:
U.S. government and agency obligations	166		7		—			173
State and municipal obligations	13		—		—			13
Corporate obligations	18		—		—			18
Total debt securities - held-to-maturity	197		7		—			204
Total investments	$	17,988	$	794	$	(32	)	$	18,750

Included in the Company’s investment portfolio were securities collateralized by sub-prime home equity lines of credit with fair values of $2 million at September 30, 2012 and December 31, 2011. Also included were Alt-A securities with fair values of $7 million and $9 million at September 30, 2012 and December 31, 2011. The fair values of the Company’s mortgage-backed securities by credit rating (when multiple credit ratings are available for an individual security, the average of the available ratings is used) and origination as of September 30, 2012 were as follows:



(in millions)	AAA		AA		Non-Investment Grade		Total Fair Value
2012	$	56	$	—	$	—	$	56
2011	27		—		—		27
2010	—		3		—		3
2007	76		—		3		79
2006	153		—		8		161
Pre - 2006	172		—		6		178
U.S. agency mortgage-backed securities	2,435		—		—		2,435
Total	$	2,919	$	3	$	17	$	2,939

The amortized cost and fair value of available-for-sale debt securities as of September 30, 2012, by contractual maturity, were as follows:



(in millions)	Amortized Cost		Fair Value
Due in one year or less	$	3,102	$	3,116
Due after one year through five years	6,110		6,353
Due after five years through ten years	4,534		4,911
Due after ten years	1,666		1,811
U.S. agency mortgage-backed securities	2,340		2,435
Non-U.S. agency mortgage-backed securities	465		504
Total debt securities - available-for-sale	$	18,217	$	19,130

The amortized cost and fair value of held-to-maturity debt securities as of September 30, 2012, by contractual maturity, were as follows:



(in millions)	Amortized Cost		Fair Value
Due in one year or less	$	71	$	72
Due after one year through five years	131		133
Due after five years through ten years	180		181
Due after ten years	110		113
Total debt securities - held-to-maturity	$	492	$	499

The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows:



	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
September 30, 2012
Debt securities - available-for-sale:
Corporate obligations	$	452	$	(2	)	$	33	$	(1	)	$	485	$	(3	)
Total debt securities - available-for-sale	$	452	$	(2	)	$	33	$	(1	)	$	485	$	(3	)
Equity securities - available-for-sale	$	27	$	(1	)	$	5	$	(1	)	$	32	$	(2	)
December 31, 2011
Debt securities - available-for-sale:
State and municipal obligations	$	85	$	(1	)	$	21	$	—		$	106	$	(1	)
Corporate obligations	1,496		(22		)	28		(1		)	1,524		(23		)
Total debt securities - available-for-sale	$	1,581	$	(23	)	$	49	$	(1	)	$	1,630	$	(24	)
Equity securities - available-for-sale	$	24	$	(7	)	$	3	$	(1	)	$	27	$	(8	)

The unrealized losses from all securities as of September 30, 2012 were generated from 700 positions out of a total of 18,000 positions. The Company believes that it will collect the principal and interest due on its investments that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit ratings associated with these securities. At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a significant deterioration since purchase nor other factors leading to an other-than-temporary impairment (OTTI). As of September 30, 2012, the Company did not have the intent to sell any of the securities in an unrealized loss position.

As of September 30, 2012, the Company’s holdings of non-U.S. agency mortgage-backed securities included $6 million of commercial mortgage loans in default. These loans represented less than 1% of the Company’s total mortgage-backed security holdings as of September 30, 2012.

A portion of the Company’s investments in equity securities and venture capital funds consists of investments held in various public and nonpublic companies concentrated in the areas of health care services and related information technologies. Market conditions that affect the value of health care and related technology stocks will likewise impact the value of the Company’s equity portfolio. The equity securities and venture capital funds were evaluated for severity and duration of unrealized loss, overall market volatility and other market factors.

Net realized gains included in Investment and Other Income on the Condensed Consolidated Statements of Operations were from the following sources:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2012			2011			2012			2011
Total OTTI	$	—		$	(4	)	$	(4	)	$	(10	)
Portion of loss recognized in other comprehensive income	—			—			—			—
Net OTTI recognized in earnings	—			(4		)	(4		)	(10		)
Gross realized losses from sales	(2		)	(5		)	(5		)	(9		)
Gross realized gains from sales	22			46			118			125
Net realized gains	$	20		$	37		$	109		$	106