Investments

A summary of short-term and long-term investments by major security type is as follows:



(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2013
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,442	$	30	$	(1	)	$	2,471
State and municipal obligations	6,340		352		(5		)	6,687
Corporate obligations	7,325		254		(6		)	7,573
U.S. agency mortgage-backed securities	2,022		56		(4		)	2,074
Non-U.S. agency mortgage-backed securities	630		30		(1		)	659
Total debt securities - available-for-sale	18,759		722		(17		)	19,464
Equity securities - available-for-sale	720		8		(2		)	726
Debt securities - held-to-maturity:
U.S. government and agency obligations	177		6		—			183
State and municipal obligations	28		—		—			28
Corporate obligations	622		—		—			622
Total debt securities - held-to-maturity	827		6		—			833
Total investments	$	20,306	$	736	$	(19	)	$	21,023
December 31, 2012
Debt securities - available-for-sale:
U.S. government and agency obligations	$	2,501	$	38	$	(1	)	$	2,538
State and municipal obligations	6,282		388		(3		)	6,667
Corporate obligations	6,930		283		(4		)	7,209
U.S. agency mortgage-backed securities	2,168		70		—			2,238
Non-U.S. agency mortgage-backed securities	538		36		—			574
Total debt securities - available-for-sale	18,419		815		(8		)	19,226
Equity securities - available-for-sale	668		10		(1		)	677
Debt securities - held-to-maturity:
U.S. government and agency obligations	168		6		—			174
State and municipal obligations	30		—		—			30
Corporate obligations	641		2		—			643
Total debt securities - held-to-maturity	839		8		—			847
Total investments	$	19,926	$	833	$	(9	)	$	20,750

The fair values of the Company’s mortgage-backed securities by credit rating (when multiple credit ratings are available for an individual security, the average of the available ratings is used) and origination as of March 31, 2013 were as follows:



(in millions)	AAA		AA		A		Non-Investment Grade		Total Fair Value
2013	$	59	$	—	$	—	$	—	$	59
2012	116		—		—		—		116
2011	26		—		—		—		26
2010	19		3		—		—		22
2009	1		—		—		—		1
2007	72		—		—		3		75
Pre - 2007	335		4		11		10		360
U.S. agency mortgage-backed securities	2,074		—		—		—		2,074
Total	$	2,702	$	7	$	11	$	13	$	2,733

The Company includes any securities backed by Alt-A or sub-prime mortgages and any commercial mortgage loans in default in the non-investment grade column in the table above.

The amortized cost and fair value of available-for-sale debt securities as of March 31, 2013, by contractual maturity, were as follows:



(in millions)	Amortized Cost		Fair Value
Due in one year or less	$	3,105	$	3,120
Due after one year through five years	6,626		6,849
Due after five years through ten years	4,717		5,010
Due after ten years	1,659		1,752
U.S. agency mortgage-backed securities	2,022		2,074
Non-U.S. agency mortgage-backed securities	630		659
Total debt securities - available-for-sale	$	18,759	$	19,464

The amortized cost and fair value of held-to-maturity debt securities as of March 31, 2013, by contractual maturity, were as follows:



(in millions)	Amortized Cost		Fair Value
Due in one year or less	$	424	$	425
Due after one year through five years	148		150
Due after five years through ten years	145		148
Due after ten years	110		110
Total debt securities - held-to-maturity	$	827	$	833

The fair value of available-for-sale investments with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position were as follows:



	Less Than 12 Months					12 Months or Greater					Total
(in millions)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
March 31, 2013
Debt securities - available-for-sale:
U.S. government and agency obligations	$	142	$	(1	)	$	—	$	—		$	142	$	(1	)
State and municipal obligations	417		(5		)	—		—			417		(5		)
Corporate obligations	1,120		(6		)	—		—			1,120		(6		)
U.S. agency mortgage-backed securities	420		(4		)	—		—			420		(4		)
Non-U.S. agency mortgage-backed securities	157		(1		)	—		—			157		(1		)
Total debt securities - available-for-sale	$	2,256	$	(17	)	$	—	$	—		$	2,256	$	(17	)
Equity securities - available-for-sale	$	40	$	(1	)	$	2	$	(1	)	$	42	$	(2	)
December 31, 2012
Debt securities - available-for-sale:
U.S. government and agency obligations	$	183	$	(1	)	$	—	$	—		$	183	$	(1	)
State and municipal obligations	362		(3		)	—		—			362		(3		)
Corporate obligations	695		(4		)	—		—			695		(4		)
Total debt securities - available-for-sale	$	1,240	$	(8	)	$	—	$	—		$	1,240	$	(8	)
Equity securities - available-for-sale	$	13	$	(1	)	$	—	$	—		$	13	$	(1	)

The unrealized losses from all securities as of March 31, 2013 were generated from approximately 2,000 positions out of a total of 18,000 positions. The Company believes that it will collect the principal and interest due on its investments that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit ratings associated with these securities. At each reporting period, the Company evaluates securities for impairment when the fair value of the investment is less than its amortized cost. The Company evaluated the underlying credit quality and credit ratings of the issuers, noting neither a significant deterioration since purchase nor other factors leading to an other-than-temporary impairment (OTTI). The unrealized losses on mortgage-backed securities as of March 31, 2013 were primarily caused by higher interest rates in the marketplace. These unrealized losses represented less than 1% of the total amortized cost of the Company's mortgage-backed security holdings as of March 31, 2013. The Company believes these losses to be temporary. All of the Company's mortgage-backed securities in an unrealized loss position as of March 31, 2013 were rated “AAA” with no known deterioration or other factors leading to an OTTI. As of March 31, 2013, the Company did not have the intent to sell any of the securities in an unrealized loss position.

A portion of the Company’s investments in equity securities and venture capital funds consists of investments held in various public and nonpublic companies concentrated in the areas of health care services and related information technologies. Market conditions that affect the value of health care and related technology stocks will likewise impact the value of the Company’s equity portfolio. The equity securities and venture capital funds were evaluated for severity and duration of unrealized loss, overall market volatility and other market factors.

Net realized gains reclassified out of accumulated other comprehensive income were from the following sources:



	Three Months Ended March 31,
(in millions)	2013			2012
Total OTTI	$	(3	)	$	(3	)
Portion of loss recognized in other comprehensive income	—			—
Net OTTI recognized in earnings	(3		)	(3		)
Gross realized losses from sales	(1		)	(1		)
Gross realized gains from sales	61			43
Net realized gains (included in Investment and Other Income on the Condensed Consolidated Statements of Operations)	57			39
Income tax effect (included in Provision for Income Taxes on the Condensed Consolidated Statements of Operations)	(21		)	(14		)
Realized gains, net of taxes	$	36		$	25