Investments

On January 1, 2018, we adopted ASU 2016-01, which resulted in changes in the fair value of equity securities still held, being reported in net income instead of being reported in other comprehensive income. See Note 1, Accounting Policies, for additional discussion.

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 September 30, 2018	Cost or amortized cost		gains		losses		Fair value
Fixed maturity securities:
Corporate	$	5,709	$	94	$	60	$	5,743
States, municipalities and political subdivisions	4,306		54		65		4,295
Commercial mortgage-backed	287		2		4		285
Government-sponsored enterprises	293		—		13		280
United States government	48		—		1		47
Foreign government	10		—		—		10
Total	$	10,653	$	150	$	143	$	10,660
At December 31, 2017
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

The net unrealized investment gains in our fixed-maturity portfolio at September 30, 2018, are reduced compared to year end December 31, 2017, as a result of the increase in interest rate environment. Our commercial mortgage-backed securities had an average rating of Aa1/AA at September 30, 2018, and December 31, 2017. At September 30, 2018, Apple Inc. (Nasdaq:AAPL) was our largest single equity holding with a fair value of

$316 million, which was 4.9 percent of our publicly traded common equities portfolio and 1.8 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
At September 30, 2018	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed maturity securities:
Corporate	$	2,111	$	39	$	336	$	21	$	2,447	$	60
States, municipalities and political subdivisions	1,545		47		264		18		1,809		65
Commercial mortgage-backed securities	138		2		43		2		181		4
Government-sponsored enterprises	115		5		165		8		280		13
Foreign government	10		—		—		—		10		—
United States government	35		1		12		—		47		1
Total	$	3,954	$	94	$	820	$	49	$	4,774	$	143
At December 31, 2017
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

Contractual maturity dates for fixed-maturity investments were:



(Dollars in millions)	Amortized cost		Fair value		% of fair value
At September 30, 2018	Amortized cost		Fair value		% of fair value
Maturity dates:
Due in one year or less	$	668	$	678	6.4	%
Due after one year through five years	2,797		2,823		26.5
Due after five years through ten years	3,660		3,655		34.2
Due after ten years	3,528		3,504		32.9
Total	$	10,653	$	10,660	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.

The following table provides investment income and investment gains and losses, net:



(Dollars in millions)	Three months ended September 30,					Nine months ended September 30,
	2018			2017		2018			2017
Investment income:
Interest	$	111		$	112	$	333		$	334
Dividends	45			43		131			124
Other	1			1		3			3
Total	157			156		467			461
Less investment expenses	3			3		9			8
Total	$	154		$	153	$	458		$	453

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	8		$	—	$	17		$	—
Unrealized gains and losses on securities still held, net	450			—		351			—
Gross realized gains	—			1		—			160
Gross realized losses	—			—		—			(14		)
Other-than-temporary impairments	—			—		—			(3		)
Subtotal	458			1		368			143
Fixed maturities:
Gross realized gains	2			3		9			16
Gross realized losses	(1		)	—		(2		)	—
Other-than-temporary impairments	—			—		—			(6		)
Subtotal	1			3		7			10

Other	(1		)	3		(3		)	3
Total	$	458		$	7	$	372		$	156

During the three and nine months ended September 30, 2018, there were no fixed-maturity securities other-than-temporarily impaired. During the three months ended September 30, 2017, there were no equity securities and no fixed-maturity security other-than-temporarily impaired. During the nine months ended September 30, 2017, there were five equity securities and one fixed-maturity security 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, 2018 and 2017.

At September 30, 2018, 288 fixed-maturity securities with a total unrealized loss of $49 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity security had a fair value below 70 percent of amortized cost. At December 31, 2017, 249 fixed-maturity securities 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 securities had fair values below 70 percent of amortized cost. There were no equity securities in an unrealized loss position for 12 months or more as of December 31, 2017.