Investments

The following table provides cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value for our investment portfolio:



(Dollars in millions)	Cost or amortized cost
			Gross unrealized				Fair value
At September 30, 2015			gains		losses		Fair value
Fixed maturity securities:
Corporate	$	5,333	$	325	$	49	$	5,609
States, municipalities and political subdivisions	3,401		159		3		3,557
Commercial mortgage-backed	284		9		1		292
Government-sponsored enterprises	280		—		4		276
Foreign government	10		—		—		10
Convertibles and bonds with warrants attached	8		—		—		8
United States government	4		—		—		4
Subtotal	9,320		493		57		9,756
Equity securities:
Common equities	2,784		1,585		56		4,313
Nonredeemable preferred equities	186		28		1		213
Subtotal	2,970		1,613		57		4,526
Short-term investments	75		—		—		75
Total	$	12,365	$	2,106	$	114	$	14,357
At December 31, 2014
Fixed maturity securities:
Corporate	$	5,117	$	420	$	11	$	5,526
States, municipalities and political subdivisions	3,267		178		2		3,443
Commercial mortgage-backed	250		9		—		259
Government-sponsored enterprises	213		—		5		208
Foreign government	10		—		—		10
Convertibles and bonds with warrants attached	7		—		—		7
United States government	7		—		—		7
Subtotal	8,871		607		18		9,460
Equity securities:
Common equities	2,583		2,099		3		4,679
Nonredeemable preferred equities	145		35		1		179
Subtotal	2,728		2,134		4		4,858
Total	$	11,599	$	2,741	$	22	$	14,318

The net unrealized investment gains in our fixed-maturity portfolio are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa1/AA at September 30, 2015, and December 31, 2014. At December 31, 2014, we held no short-term investments. The seven largest unrealized investment gains in our common stock portfolio are from Exxon Mobil Corporation (NYSE:XOM), Honeywell International Incorporated (NYSE:HON), The Procter & Gamble Company (NYSE:PG), Apple Inc. (Nasdaq:AAPL), Hasbro Incorporated (Nasdaq:HAS), BlackRock Inc. (NYSE:BLK), and JPMorgan Chase & Co. (NYSE:JPM), which had a combined gross unrealized gain of $494 million. At September 30, 2015, Apple was our largest single common stock holding with a fair value of 3.6 percent of our publicly traded common stock portfolio and 1.1 percent of the total investment portfolio.

The table below provides fair values and gross unrealized losses by investment category and by the duration of the securities’ continuous unrealized loss positions:



(Dollars in millions)	Less than 12 months				12 months or more				Total
	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
At September 30, 2015	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
Corporate	$	729	$	42	$	85	$	7	$	814	$	49
States, municipalities and political subdivisions	227		3		51		—		278		3
Commercial mortgage-backed	57		1		2		—		59		1
Government-sponsored enterprises	74		1		139		3		213		4
Foreign government	10		—		—		—		10		—
Subtotal	1,097		47		277		10		1,374		57
Equity securities:
Common equities	511		56		—		—		511		56
Nonredeemable preferred equities	43		1		—		—		43		1
Subtotal	554		57		—		—		554		57
Total	$	1,651	$	104	$	277	$	10	$	1,928	$	114
At December 31, 2014
Fixed maturity securities:
Corporate	$	261	$	8	$	90	$	3	$	351	$	11
States, municipalities and political subdivisions	17		—		135		2		152		2
Commercial mortgage-backed	3		—		23		—		26		—
Government-sponsored enterprises	11		—		181		5		192		5
Subtotal	292		8		429		10		721		18
Equity securities:
Common equities	85		3		—		—		85		3
Nonredeemable preferred equities	16		—		17		1		33		1
Subtotal	101		3		17		1		118		4
Total	$	393	$	11	$	446	$	11	$	839	$	22

The following table provides investment income, realized investment gains and losses, the change in unrealized investment gains and losses, and other items:



(Dollars in millions)	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Investment income:
Interest	$	108		$	105		$	319		$	312
Dividends	37			35			108			101
Other	1			—			2			2
Total	146			140			429			415
Less investment expenses	3			2			7			6
Total	$	143		$	138		$	422		$	409

Realized investment gains and losses summary:
Fixed maturities:
Gross realized gains	$	4		$	6		$	14		$	12
Gross realized losses	—			—			—			(4		)
Other-than-temporary impairments	(8		)	—			(11		)	—
Equity securities:
Gross realized gains	6			59			106			93
Gross realized losses	—			—			(1		)	—
Other-than-temporary impairments	—			—			(1		)	(1		)
Other	1			—			3			1
Total	$	3		$	65		$	110		$	101

Change in unrealized investment gains and losses:
Fixed maturities	$	(15	)	$	(66	)	$	(153	)	$	115
Equity securities	(350		)	(54		)	(574		)	117
Less income taxes	127			42			254			(81		)
Total	$	(238	)	$	(78	)	$	(473	)	$	151

During the three months ended September 30, 2015, one new equity security was other-than-temporarily impaired along with two other-than-temporarily impaired fixed-maturity securities. During the nine months ended September 30, 2015, there were three equity securities and three fixed-maturity securities other-than-temporarily impaired. There were no credit losses on fixed-maturity securities for which a portion of other-than-temporary impairment (OTTI) has been recognized in other comprehensive income for the three and nine months ended September 30, 2015 and 2014. At September 30, 2015, 73 fixed-maturity investments with a total unrealized loss of $10 million had been in an unrealized loss position for 12 months or more. Of that total, one fixed-maturity investment had a fair value below 70 percent of amortized cost. There were no equity investments in an unrealized loss position for 12 months or more as of September 30, 2015.

During 2014, we other-than-temporarily impaired six fixed-maturity securities. At December 31, 2014, 144 fixed-maturity investments with a total unrealized loss of $10 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity investments had fair values below 70 percent of amortized cost. There were three equity security investments in an unrealized loss position for 12 months or more with a total unrealized loss of $1 million as of December 31, 2014. Of that total, no equity security investments had fair values below 70 percent of cost.