INVESTMENT SECURITIES

Investment securities classified as current and long-term were as follows at December 31, 2016 and 2015, respectively:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
December 31, 2016
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	$	800	$	1	$	(15	)	$	786
Mortgage-backed securities	1,662		6		(31		)	1,637
Tax-exempt municipal securities	3,358		15		(68		)	3,305
Mortgage-backed securities:
Residential	9		—		—			9
Commercial	307		1		(4		)	304
Asset-backed securities	160		—		—			160
Corporate debt securities	3,530		145		(78		)	3,597
Total debt securities	$	9,826	$	168	$	(196	)	$	9,798
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

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, 2016 and 2015, 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
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(in millions)
December 31, 2016
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	$	697	$	(15	)	$	3	$	—		$	700	$	(15	)
Mortgage-backed securities	1,528		(31		)	3		—			1,531		(31		)
Tax-exempt municipal securities	2,756		(67		)	43		(1		)	2,799		(68		)
Mortgage-backed securities:
Residential	—		—			4		—			4		—
Commercial	182		(3		)	24		(1		)	206		(4		)
Asset-backed securities	51		—			63		—			114		—
Corporate debt securities	1,544		(71		)	69		(7		)	1,613		(78		)
Total debt securities	$	6,758	$	(187	)	$	209	$	(9	)	$	6,967	$	(196	)
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	)

Approximately 98% of our debt securities were investment-grade quality, with a weighted average credit rating of AA by S&P at December 31, 2016. 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, 2016, 8% 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 46% 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 54% of these municipals. Our general obligation bonds are diversified across the United States with no individual state exceeding 11%. In addition, 4% 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 99% of our agency mortgage-backed securities at December 31, 2016 and 98% at December 31, 2015.

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, 2016 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, 2016.

The percentage of corporate securities associated with the financial services industry was 23% at December 31, 2016 and 25% at December 31, 2015.

Our unrealized loss from all securities was generated from approximately 990 positions out of a total of approximately 2,140 positions at December 31, 2016. All issuers of securities we own that were trading at an unrealized loss at December 31, 2016 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, 2016, 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, 2016.

The detail of realized gains (losses) related to investment securities and included within investment income was as follows for the years ended December 31, 2016, 2015, and 2014:



	2016			2015			2014
	(in millions)
Gross realized gains	$	120		$	179		$	29
Gross realized losses	(24		)	(33		)	(9		)
Net realized capital gains	$	96		$	146		$	20

There were no material other-than-temporary impairments in 2016, 2015, or 2014.

The contractual maturities of debt securities available for sale at December 31, 2016, 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	$	635	$	635
Due after one year through five years	2,424		2,426
Due after five years through ten years	1,938		1,893
Due after ten years	2,691		2,734
Mortgage and asset-backed securities	2,138		2,110
Total debt securities	$	9,826	$	9,798