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INVESTMENT SECURITIES
 6 Months Ended
Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT SECURITIES
INVESTMENT SECURITIES
Investment securities classified as current and long-term were as follows at June 30, 2015 and December 31, 2014, respectively:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(in millions)
June 30, 2015
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government
corporations and agencies:
 
 
 
 
 
 
 
U.S. Treasury and agency obligations
$
336

 
$
1

 
$
—

 
$
337

Mortgage-backed securities
1,345

 
34

 
(17
)
 
1,362

Tax-exempt municipal securities
2,563

 
92

 
(14
)
 
2,641

Mortgage-backed securities:
 
 
 
 
 
 
 
Residential
14

 
—

 
—

 
14

Commercial
965

 
9

 
(30
)
 
944

Asset-backed securities
162

 
1

 
—

 
163

Corporate debt securities
3,239

 
211

 
(31
)
 
3,419

Total debt securities
$
8,624

 
$
348

 
$
(92
)
 
$
8,880

December 31, 2014
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government
corporations and agencies:
 
 
 
 
 
 
 
U.S. Treasury and agency obligations
$
365

 
$
10

 
$
(1
)
 
$
374

Mortgage-backed securities
1,453

 
50

 
(5
)
 
1,498

Tax-exempt municipal securities
2,931

 
140

 
(3
)
 
3,068

Mortgage-backed securities:
 
 
 
 
 
 
 
Residential
17

 
—

 
—

 
17

Commercial
846

 
16

 
(19
)
 
843

Asset-backed securities
28

 
1

 
—

 
29

Corporate debt securities
3,432

 
299

 
(13
)
 
3,718

Total debt securities
$
9,072

 
$
516

 
$
(41
)
 
$
9,547


Gross unrealized losses and fair values aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows at June 30, 2015 and December 31, 2014, respectively:
 
Less than 12 months
 
12 months or more
 
Total
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
(in millions)
June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and other U.S.
government corporations
and agencies:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
obligations
$
86

 
$
—

 
$
19

 
$
—

 
$
105

 
$
—

Mortgage-backed
securities
710

 
(14
)
 
91

 
(3
)
 
801

 
(17
)
Tax-exempt municipal
securities
685

 
(12
)
 
38

 
(2
)
 
723

 
(14
)
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Residential
—

 
—

 
5

 
—

 
5

 
—

Commercial
383

 
(8
)
 
271

 
(22
)
 
654

 
(30
)
Asset-backed securities
149

 
—

 
—

 
—

 
149

 
—

Corporate debt securities
708

 
(28
)
 
38

 
(3
)
 
746

 
(31
)
Total debt securities
$
2,721

 
$
(62
)
 
$
462

 
$
(30
)
 
$
3,183

 
$
(92
)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and other U.S.
government corporations
and agencies:
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
obligations
$
79

 
$
—

 
$
80

 
$
(1
)
 
$
159

 
$
(1
)
Mortgage-backed
securities
22

 
—

 
320

 
(5
)
 
342

 
(5
)
Tax-exempt municipal
securities
131

 
(1
)
 
118

 
(2
)
 
249

 
(3
)
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Residential
1

 
—

 
4

 
—

 
5

 
—

Commercial
31

 
(1
)
 
267

 
(18
)
 
298

 
(19
)
Asset-backed securities
13

 
—

 
—

 
—

 
13

 
—

Corporate debt securities
219

 
(6
)
 
128

 
(7
)
 
347

 
(13
)
Total debt securities
$
496

 
$
(8
)
 
$
917

 
$
(33
)
 
$
1,413

 
$
(41
)

Approximately 97% of our debt securities were investment-grade quality, with a weighted average credit rating of AA- by S&P at June 30, 2015. Most of the debt securities that were below investment-grade were rated BB, the higher end of the below investment-grade rating scale. At June 30, 2015, 7% of our tax-exempt municipal securities were pre-refunded, generally with U.S. government and agency securities. Tax-exempt municipal securities that were not pre-refunded were diversified among general obligation bonds of U.S. states and local municipalities as well as special revenue bonds. General obligation bonds, which are backed by the taxing power and full faith of the issuer, accounted for 35% of the tax-exempt municipals that were not pre-refunded in the portfolio. Special revenue bonds, issued by a municipality to finance a specific public works project such as utilities, water and sewer, transportation, or education, and supported by the revenues of that project, accounted for the remaining 65% of these municipals. Our general obligation bonds are diversified across the United States with no individual state exceeding 11%. In addition, 17% of our tax-exempt securities were insured by bond insurers and had an equivalent weighted average S&P credit rating of AA exclusive of the bond insurers’ guarantee. Our investment policy limits investments in a single issuer and requires diversification among various asset types.
The recoverability of our non-agency commercial mortgage-backed securities is supported by factors such as seniority, underlying collateral characteristics and credit enhancements. At June 30, 2015, these commercial mortgage-backed securities primarily were composed of senior tranches having high credit support. The weighted average credit rating of all commercial mortgage-backed securities was AA+ at June 30, 2015.
The percentage of corporate securities associated with the financial services industry was 23% at June 30, 2015 and 21% at December 31, 2014.
All issuers of securities we own that were trading at an unrealized loss at June 30, 2015 remain current on all contractual payments. After taking into account these and other factors previously described, we believe these unrealized losses primarily were caused by an increase in market interest rates in the current markets since the time the securities were purchased. At June 30, 2015, we did not intend to sell the securities with an unrealized loss position in accumulated other comprehensive income, and it is not likely that we will be required to sell these securities before recovery of their amortized cost basis. As a result, we believe that the securities with an unrealized loss were not other-than-temporarily impaired at June 30, 2015.
The detail of realized gains (losses) related to investment securities and included within investment income was as follows for the three and six months ended June 30, 2015 and 2014:
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Gross realized gains
$
30

 
$
6

 
$
47

 
$
7

Gross realized losses
(2
)
 
(4
)
 
(10
)
 
(4
)
Net realized capital gains
$
28

 
$
2


$
37


$
3


There were no material other-than-temporary impairments for the three months ended June 30, 2015 or 2014.
The contractual maturities of debt securities available for sale at June 30, 2015, regardless of their balance sheet classification, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
Amortized
Cost
 
Fair
Value
 
(in millions)
Due within one year
$
454

 
$
456

Due after one year through five years
1,859

 
1,953

Due after five years through ten years
1,805

 
1,861

Due after ten years
2,020

 
2,127

Mortgage and asset-backed securities
2,486

 
2,483

Total debt securities
$
8,624

 
$
8,880