Investments

The following table provides cost or amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity and equity securities:



(Dollars in millions)	Cost or amortized cost		Gross unrealized				Fair value
At December 31, 2017	Cost or amortized cost		gains		losses		Fair value
Fixed-maturity securities:
Corporate	$	5,420	$	246	$	13	$	5,653
States, municipalities and political subdivisions	4,316		155		6		4,465
Commercial mortgage-backed	280		7		1		286
Government-sponsored enterprises	257		1		4		254
United States government	31		—		—		31
Foreign government	10		—		—		10
Subtotal	10,314		409		24		10,699
Equity securities:
Common equities	2,918		3,135		14		6,039
Nonredeemable preferred equities	176		34		—		210
Subtotal	3,094		3,169		14		6,249
Total	$	13,408	$	3,578	$	38	$	16,948

At December 31, 2016
Fixed-maturity securities:
Corporate	$	5,555	$	252	$	26	$	5,781
States, municipalities and political subdivisions	3,770		100		42		3,828
Commercial mortgage-backed	282		7		2		287
Government-sponsored enterprises	167		—		3		164
United States government	10		—		—		10
Foreign government	10		—		—		10
Convertibles and bonds with warrants attached	5		—		—		5
Subtotal	9,799		359		73		10,085
Equity securities:
Common equities	2,812		2,320		9		5,123
Nonredeemable preferred equities	183		28		—		211
Subtotal	2,995		2,348		9		5,334
Total	$	12,794	$	2,707	$	82	$	15,419

The net unrealized investment gains in our fixed-maturity portfolio at December 31, 2017, 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 December 31, 2017 and 2016. The seven largest net unrealized investment gains in our common stock portfolio are from JP Morgan Chase & Co. (NYSE:JPM), Honeywell International Incorporated (NYSE:HON), BlackRock Inc. (NYSE:BLK), Microsoft Corporation (Nasdaq:MFST), Apple Inc. (Nasdaq:AAPL), 3M Company (NYSE:MMM) and Johnson and Johnson (NYSE:JNJ), which had a combined gross unrealized gain of $1.013 billion. At December 31, 2017, JP Morgan Chase & Co. was our largest single equity holding with a fair value of 4.0 percent of our publicly traded common equities portfolio and 1.4 percent of the total investment portfolio.

The table below provides fair values and 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
At December 31, 2017	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	330	$	4	$	252	$	9	$	582	$	13
States, municipalities and political subdivisions	88		1		264		5		352		6
Commercial mortgage-backed	33		—		36		1		69		1
Government-sponsored enterprises	96		1		124		3		220		4
Foreign government	10		—		—		—		10		—
United States government	23		—		6		—		29		—
Subtotal	580		6		682		18		1,262		24
Equity securities:
Common equities	229		14		—		—		229		14
Subtotal	229		14		—		—		229		14
Total	$	809	$	20	$	682	$	18	$	1,491	$	38
At December 31, 2016
Fixed-maturity securities:
Corporate	$	733	$	15	$	189	$	11	$	922	$	26
States, municipalities and political subdivisions	989		42		—		—		989		42
Commercial mortgage-backed	89		2		2		—		91		2
Government-sponsored enterprises	155		3		—		—		155		3
United States government	6		—		—		—		6		—
Subtotal	1,972		62		191		11		2,163		73
Equity securities:
Common equities	103		9		—		—		103		9
Nonredeemable preferred equities	4		—		—		—		4		—
Subtotal	107		9		—		—		107		9
Total	$	2,079	$	71	$	191	$	11	$	2,270	$	82

Contractual maturity dates for fixed-maturity investments were:



(Dollars in millions)	Amortized cost		Fair value		% of fair value
At December 31, 2017	Amortized cost		Fair value		% of fair value
Maturity dates:
Due in one year or less	$	511	$	519	4.9	%
Due after one year through five years	2,736		2,839		26.5
Due after five years through ten years	3,921		4,058		37.9
Due after ten years	3,146		3,283		30.7
Total	$	10,314	$	10,699	100.0	%

Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.

At December 31, 2017 and 2016, the company had fixed-maturity investments with a fair value of $101 million and $72 million, respectively, on deposit with various states in compliance with regulatory requirements. In addition, cash and fixed-maturity investments deposited with third parties used as collateral to secure liabilities on behalf of insureds, cedants and other creditors had a fair value of $57 million and $22 million at December 31, 2017 and 2016, respectively.

In the normal course of investing activities, the company enters into investments in limited partnerships, including private equity and real estate investments, and asset-backed securities issued by third-parties. The company’s maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the company’s consolidated balance sheets and any unfunded commitments.

The following table provides investment income and realized investment gains and losses:



(Dollars in millions)	Years ended December 31,
	2017			2016			2015
Investment income:
Interest	$	445		$	440		$	428
Dividends	170			161			150
Other	4			3			3
Total	619			604			581
Less investment expenses	10			9			9
Total	$	609		$	595		$	572

Realized investment gains and losses:
Fixed maturities:
Gross realized gains	$	25		$	26		$	18
Gross realized losses	—			(1		)	—
Other-than-temporary impairments	(6		)	(2		)	(18		)
Equity securities:
Gross realized gains	195			152			129
Gross realized losses	(72		)	(53		)	(26		)
Other-than-temporary impairments	(3		)	—			(34		)
Other	9			2			1
Total	$	148		$	124		$	70

For the years ended December 31, 2017, 2016 and 2015, there were no credit losses on fixed-maturity securities for which a portion of OTTI has been recognized in other comprehensive income.

During 2017, we other-than-temporarily impaired six securities. At December 31, 2017, 249 fixed-maturity investments with a total unrealized loss of $18 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 no equity security investments in an unrealized loss position for 12 months or more as of December 31, 2017.

During 2016, we other-than-temporarily impaired four securities. At December 31, 2016, 32 fixed-maturity investments with a total unrealized loss of $11 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 no equity security investments in an unrealized loss position for 12 months or more as of December 31, 2016.

During 2015, we other-than-temporarily impaired 20 securities. At December 31, 2015, 69 fixed-maturity investments with a total unrealized loss of $37 million had been in an unrealized loss position for 12 months or more. Of that total, five fixed-maturity investments had fair values below 70 percent of amortized cost. There were no equity security investments in an unrealized loss position for 12 months or more as of December 31, 2015.