Investments in Debt and Equity Securities

3 Months Ended

Mar. 31, 2020

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:



	March 31, 2020							December 31, 2019
(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	46		1			47		54		—		54

Corporate bonds
Corporate bonds	880		(9		)	871		836		20		856
Asset-backed securities	87		(1		)	86		62		—		62

Mortgage-backed debt securities
U.S. governmental agency	365		13			378		327		4		331
Residential	6		(1		)	5		6		—		6
Commercial	53		—			53		46		1		47
Total debt securities	$	1,446	$	3		$	1,449	$	1,340	$	25	$	1,365



Available-for-sale investments in an unrealized loss position:

	March 31, 2020
	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	$	375	$	20	$	42	$	1	$	417	$	21
Asset-backed securities	$	46	$	2	$	2	$	—	$	48	$	2
Total	$	421	$	22	$	44	$	1	$	465	$	23



	December 31, 2019
	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	$	58	$	1	$	50	$	—	$	108	$	1
Total	$	58	$	1	$	50	$	—	$	108	$	1

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.

The cost basis and fair value of the available-for-sale debt securities at March 31, 2020, 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.



	March 31, 2020
(Millions of dollars)	Cost Basis		Fair Value
Due in one year or less	$	97	$	97
Due after one year through five years	683		680
Due after five years through ten years	189		184
Due after ten years	53		52
U.S. governmental agency mortgage-backed securities	365		378
Residential mortgage-backed securities	6		5
Commercial mortgage-backed securities	53		53
Total debt securities – available-for-sale	$	1,446	$	1,449



Sales of available-for-sale securities:
	Three Months Ended March 31
(Millions of dollars)	2020		2019
Proceeds from the sale of available-for-sale securities	$	58	$	47
Gross losses from the sale of available-for-sale securities	$	—	$	1

For the three months ended March 31, 2020 and 2019, the net unrealized gains (losses) for equity securities held at March 31, 2020 and 2019 were $(54) million and $38 million, respectively.