Investments in Debt and Equity Securities

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Equity Securities

Investments in debt and equity securities

We have investments in certain debt and equity securities, primarily at Insurance Services, which are recorded at fair value and are primarily included in Other assets in the Consolidated Statement of Financial Position.

Debt securities have been classified as available-for-sale, and the unrealized gains and losses arising from the revaluation of these debt securities are included, net of applicable deferred income taxes, in equity (Accumulated other comprehensive income (loss) in the Consolidated Statement of Financial Position). The unrealized gains and losses arising from the revaluation of the equity securities are included in Other income (expense) in the Consolidated Statement of Results of Operations. Realized gains and losses on sales of investments are generally determined using the specific identification method for debt and equity securities and are included in Other income (expense) in the Consolidated Statement of Results of Operations.

The cost basis and fair value of debt securities with unrealized gains and losses included in equity (Accumulated other comprehensive income (loss) in the Consolidated Statement of Financial Position) were as follows:



	September 30, 2019						December 31, 2018
(Millions of dollars)	Cost Basis		Unrealized Pretax Net Gains (Losses)		Fair Value		Cost Basis		Unrealized Pretax Net Gains (Losses)			Fair Value
Government debt
U.S. treasury bonds	$	9	$	—	$	9	$	9	$	—		$	9
Other U.S. and non-U.S. government bonds	47		1		48		42		—			42

Corporate bonds
Corporate bonds	823		17		840		735		(15		)	720
Asset-backed securities	53		—		53		63		—			63

Mortgage-backed debt securities
U.S. governmental agency	326		5		331		301		(4		)	297
Residential	6		—		6		7		—			7
Commercial	40		1		41		14		(1		)	13
Total debt securities	$	1,304	$	24	$	1,328	$	1,171	$	(20	)	$	1,151



Available-for-sale investments in an unrealized loss position that are not other-than-temporarily impaired:

	September 30, 2019
	Less than 12 months¹				12 months or more ¹				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	33	$	1	$	29	$	1	$	62	$	2
Total	$	33	$	1	$	29	$	1	$	62	$	2



	December 31, 2018
	Less than 12 months ¹				12 months or more ¹				Total
(Millions of dollars)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate bonds
Corporate bonds	$	280	$	3	$	391	$	11	$	671	$	14
Asset-backed securities	6		—		38		1		44		1
Mortgage-backed debt securities
U.S. governmental agency	52		—		223		5		275		5
Commercial	—		—		14		1		14		1
Total	$	338	$	3	$	666	$	18	$	1,004	$	21

¹ Indicates the length of time that individual securities have been in a continuous unrealized loss position.

Corporate Bonds. The unrealized losses on our investments in corporate bonds relate to changes in interest rates and credit-related yield spreads since time of purchase. We do not intend to sell the investments, and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis. We do not consider these investments to be other-than-temporarily impaired as of September 30, 2019.

The cost basis and fair value of the available-for-sale debt securities at September 30, 2019, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay and creditors may have the right to call obligations.



	September 30, 2019
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	74	$	73
Due after one year through five years	703		716
Due after five years through ten years	137		142
Due after ten years	18		19
U.S. governmental agency mortgage-backed securities	326		331
Residential mortgage-backed securities	6		6
Commercial mortgage-backed securities	40		41
Total debt securities – available-for-sale	$	1,304	$	1,328



Sales of available-for-sale securities:
	Three Months Ended September 30				Nine Months Ended September 30
(Millions of dollars)	2019		2018		2019		2018
Proceeds from the sale of available-for-sale securities	$	92	$	41	$	237	$	181
Gross gains from the sale of available-for-sale securities	$	—	$	—	$	1	$	—
Gross losses from the sale of available-for-sale securities	$	—	$	—	$	1	$	—

For the three and nine months ended September 30, 2019, the net unrealized gains (losses) for equity securities held at September 30, 2019 were $2 million and $54 million, respectively. For the three and nine months ended September 30, 2018, the net unrealized gains (losses) for equity securities held at September 30, 2018 were $18 million and $20 million, respectively.