Settlement Assets and Obligations and Non-Settlement Related Investments

Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment.

Settlement assets and obligations consisted of the following (in millions):



	September 30, 2014		December 31, 2013
Settlement assets:
Cash and cash equivalents	$	892.1	$	538.6
Receivables from selling agents and Business Solutions customers	1,177.6		981.3
Investment securities	1,396.1		1,750.5
	$	3,465.8	$	3,270.4
Settlement obligations:
Money transfer, money order and payment service payables	$	2,485.3	$	2,376.6
Payables to agents	980.5		893.8
	$	3,465.8	$	3,270.4

Investment securities included in "Settlement assets" in the Company's Condensed Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including variable rate demand notes. Variable rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week, but have varying maturities through 2050. Generally, these securities are used by the Company for short-term liquidity needs and are held for short periods of time, typically less than 30 days. The Company is required to hold specific highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state and foreign country requirements.

In 2013, the Company invested in a short-term bond mutual fund which held a diversified portfolio of fixed income securities. During the first quarter of 2014, the Company sold this investment for $100.2 million, which was also the fair value of this investment as of December 31, 2013. The investment was included in "Other assets" in the Company's Condensed Consolidated Balance Sheets as of December 31, 2013.

The substantial majority of the Company's investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification. As of September 30, 2014, the majority of the Company's investment securities had credit ratings of "AA-" or better from a major credit rating agency.

Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive income or loss, net of related deferred taxes. Gains and losses on investments are calculated using the specific-identification method and are recognized during the period in which the investment is sold or when an investment experiences an other-than-temporary decline in value. Proceeds from the sale and maturity of available-for-sale securities during the nine months ended September 30, 2014 and 2013 were $13.3 billion and $14.3 billion, respectively.

The components of investment securities are as follows (in millions):



September 30, 2014	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains
Settlement assets:
State and municipal debt securities (a)	$	959.6	$	974.3	$	15.5	$	(0.8	)	$	14.7
State and municipal variable rate demand notes	412.4		412.4		—		—			—
Other debt securities	9.4		9.4		—		—			—
	$	1,381.4	$	1,396.1	$	15.5	$	(0.8	)	$	14.7



December 31, 2013	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses			Net Unrealized Gains
Settlement assets:
State and municipal debt securities (a)	$	868.1	$	874.2	$	7.8	$	(1.7	)	$	6.1
State and municipal variable rate demand notes	865.0		865.0		—		—			—
Other debt securities	11.2		11.3		0.1		—			0.1
	$	1,744.3	$	1,750.5	$	7.9	$	(1.7	)	$	6.2
Other assets:
Short-term bond mutual fund	100.0		100.2		0.2		—			0.2
	$	1,844.3	$	1,850.7	$	8.1	$	(1.7	)	$	6.4

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(a)	The majority of these securities are fixed-rate instruments.

The following summarizes the contractual maturities of settlement-related debt securities as of September 30, 2014 (in millions):



	Fair Value
Due within 1 year	$	131.3
Due after 1 year through 5 years	487.0
Due after 5 years through 10 years	384.3
Due after 10 years	393.5
	$	1,396.1

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with variable rate demand notes. Variable rate demand notes, having a fair value of $20.1 million and $392.3 million, are included in the "Due after 5 years through 10 years" and "Due after 10 years" categories, respectively, in the table above.