XML 31 R11.htm IDEA: XBRL DOCUMENT v3.3.1.900
INVESTMENT SECURITIES
 12 Months Ended
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
INVESTMENT SECURITIES
Investment securities classified as current and long-term were as follows at December 31, 2015 and 2014, respectively:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(in millions)
December 31, 2015
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government
corporations and agencies:
 
 
 
 
 
 
 
U.S. Treasury and agency obligations
$
331

 
$
2

 
$
(1
)
 
$
332

Mortgage-backed securities
1,902

 
12

 
(23
)
 
1,891

Tax-exempt municipal securities
2,611

 
61

 
(4
)
 
2,668

Mortgage-backed securities:
 
 
 
 
 
 
 
Residential
13

 
—

 
—

 
13

Commercial
1,024

 
2

 
(41
)
 
985

Asset-backed securities
264

 
1

 
(2
)
 
263

Corporate debt securities
2,873

 
140

 
(55
)
 
2,958

Total debt securities
$
9,018

 
$
218

 
$
(126
)
 
$
9,110

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 December 31, 2015 and 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)
 
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and other U.S. government
corporations and agencies:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency obligations
$
195

 
$
(1
)
 
$
14

 
$
—

 
$
209

 
$
(1
)
 
Mortgage-backed securities
1,484

 
(20
)
 
86

 
(3
)
 
1,570

 
(23
)
 
Tax-exempt municipal securities
843

 
(3
)
 
52

 
(1
)
 
895

 
(4
)
 
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
Residential
2

 
—

 
4

 
—

 
6

 
—

 
Commercial
626

 
(13
)
 
265

 
(28
)
 
891

 
(41
)
 
Asset-backed securities
258

 
(2
)
 
—

 
—

 
258

 
(2
)
 
Corporate debt securities
918

 
(45
)
 
63

 
(10
)
 
981

 
(55
)
 
Total debt securities
$
4,326

 
$
(84
)
 
$
484

 
$
(42
)
 
$
4,810

 
$
(126
)
 
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 98% of our debt securities were investment-grade quality, with a weighted average credit rating of AA by S&P at December 31, 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 December 31, 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 42% 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 58% of these municipals. Our general obligation bonds are diversified across the United States with no individual state exceeding 11%. In addition, 6% 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.
Residential mortgage back securities comprised approximately 98% of our agency mortgage-backed securities at December 31, 2015 and 99% at December 31, 2014.
The recoverability of our non-agency residential and commercial mortgage-backed securities is supported by factors such as seniority, underlying collateral characteristics and credit enhancements. These residential and commercial mortgage-backed securities at December 31, 2015 primarily were composed of senior tranches having high credit support, with over 99% of the collateral consisting of prime loans. The weighted average credit rating of all commercial mortgage-backed securities was AA+ at December 31, 2015.
The percentage of corporate securities associated with the financial services industry was 25% at December 31, 2015 and 21% at December 31, 2014.
Our unrealized loss from all securities was generated from approximately 690 positions out of a total of approximately 2,000 positions at December 31, 2015. All issuers of securities we own that were trading at an unrealized loss at December 31, 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 than when the securities were purchased. At December 31, 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 December 31, 2015.
The detail of realized gains (losses) related to investment securities and included within investment income was as follows for the years ended December 31, 2015, 2014, and 2013:
 
2015
 
2014
 
2013
 
(in millions)
Gross realized gains
$
179

 
$
29

 
$
33

Gross realized losses
(33
)
 
(9
)
 
(11
)
Net realized capital gains
$
146

 
$
20

 
$
22


There were no material other-than-temporary impairments in 2015, 2014, or 2013.
The contractual maturities of debt securities available for sale at December 31, 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
$
438

 
$
439

Due after one year through five years
1,829

 
1,871

Due after five years through ten years
1,244

 
1,264

Due after ten years
2,304

 
2,384

Mortgage and asset-backed securities
3,203

 
3,152

Total debt securities
$
9,018

 
$
9,110