Fair Value and Investment Securities (Tables)

6 Months Ended

Jun. 30, 2016

Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis

The distribution of the Company’s financial instruments which are measured at fair value on a recurring basis within the Valuation Hierarchy was as follows:



	June 30, 2016
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities	$	—	$	70		$	—	$	70
Government and agency securities¹	34		118			—		152
Corporate securities	—		869			—		869
Asset-backed securities	—		68			—		68
Other	2		(31		)	—		(29		)
Total	$	36	$	1,094		$	—	$	1,130

	December 31, 2015
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities	$	—	$	62		$	—	$	62
Government and agency securities ¹	31		64			—		95
Corporate securities	—		645			—		645
Asset-backed securities	—		57			—		57
Other	2		14			—		16
Total	$	33	$	842		$	—	$	875

¹Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $542 million and $541 million at June 30, 2016 and December 31, 2015, respectively, which would be included in Level 1 of the Valuation Hierarchy. See Note 5 (Accrued Expenses and Accrued Litigation) and Note 10 (Legal and Regulatory Proceedings) for further details.

Available-for-Sale Investment Securities, Unrealized Gains and Losses

The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of June 30, 2016 and December 31, 2015 were as follows:



	June 30, 2016
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in millions)
Municipal securities	$	70	$	—	$	—		$	70
Government and agency securities	151		1		—			152
Corporate securities	865		4		—			869
Asset-backed securities	68		—		—			68
Other	2		—		—			2
Total	$	1,156	$	5	$	—		$	1,161

	December 31, 2015
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in millions)
Municipal securities	$	62	$	—	$	—		$	62
Government and agency securities	94		1		—			95
Corporate securities	646		—		(1		)	645
Asset-backed securities	57		—		—			57
Other	2		—		—			2
Total	$	861	$	1	$	(1	)	$	861

Maturity Distribution Based on Contractual Terms of Investment Securities

The maturity distribution based on the contractual terms of the Company’s investment securities at June 30, 2016 was as follows:



	Available-For-Sale
	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	441	$	441
Due after 1 year through 5 years	707		711
Due after 5 years through 10 years	1		1
Due after 10 years	6		6
No contractual maturity ¹	1		2
Total	$	1,156	$	1,161

¹Equity securities have been included in the No contractual maturity category, as these securities do not have stated maturity dates.