Investments in Marketable Securities

3 Months Ended

Dec. 31, 2013

Investments in Marketable Securities [Abstract]

Note 3 – Investments in Marketable Securities

We classify all of our investments in marketable securities as available-for-sale. The amortized cost and estimated fair value of investments in marketable securities and related unrealized gains and losses were as follows:

				December 31, 2013
				Amortized		Unrealized		Unrealized		Fair
(Dollars in millions)				cost		gains		losses		value
Available-for-sale securities:
	Debt instruments:
		U.S. government and agency obligations		$	87	$	1	$	(1)	$	87
		Municipal debt securities			14		-		-		14
		Certificates of deposit			1,533		-		-		1,533
		Commercial paper			125		-		-		125
		Foreign government debt securities			3		-		-		3
		Corporate debt securities			151		4		(2)		153
		Mortgage-backed securities:
			U.S. government agency		64		1		(1)		64
			Non-agency residential		4		1		-		5
			Non-agency commercial		51		-		(1)		50
		Asset-backed securities			23		-		-		23
	Equity instruments:
		Fixed income mutual funds:
			Short-term sector fund		41		3		-		44
			U.S. government sector fund		343		-		(6)		337
			Municipal sector fund		21		-		-		21
			Investment grade corporate sector fund		284		28		(2)		310
			High-yield sector fund		36		7		-		43
			Real return sector fund		275		-		(7)		268
			Mortgage sector fund		567		-		(9)		558
			Asset-backed securities sector fund		40		9		-		49
			Emerging market sector fund		64		1		(1)		64
			International sector fund		170		1		(1)		170
		Equity mutual fund			241		288		-		529
Total investments in marketable securities				$	4,137	$	344	$	(31)	$	4,450

Note 3 – Investments in Marketable Securities (Continued)

					March 31, 2013
				Amortized		Unrealized		Unrealized		Fair
(Dollars in millions)				cost		gains		losses		value
Available-for-sale securities:
	Debt instruments:
		U.S. government and agency obligations		$	101	$	3	$	-	$	104
		Municipal debt securities			14		2		-		16
		Certificates of deposit			2,040		1		-		2,041
		Commercial paper			495		-		-		495
		Foreign government debt securities			3		-		-		3
		Corporate debt securities			122		6		-		128
		Mortgage-backed securities:
			U.S. government agency		83		4		-		87
			Non-agency residential		4		1		-		5
			Non-agency commercial		50		1		-		51
		Asset-backed securities			13		-		-		13
	Equity instruments:
		Fixed income mutual funds:
			Short-term sector fund		40		3		-		43
			U.S. government sector fund		296		16		-		312
			Municipal sector fund		19		3		-		22
			Investment grade corporate sector fund		273		54		-		327
			High-yield sector fund		34		8		-		42
			Real return sector fund		284		9		-		293
			Mortgage sector fund		663		-		(15)		648
			Asset-backed securities sector fund		38		9		-		47
			Emerging market sector fund		63		3		-		66
			International sector fund		163		7		-		170
		Equity mutual fund			259		225		-		484
Total investments in marketable securities				$	5,057	$	355	$	(15)	$	5,397

The fixed income mutual funds include investments in funds that are privately placed and which are managed by an open-end investment management company (the “Trust”). The total fair value of private placement fixed income mutual funds was $1.9 billion and $2.0 billion at December 31, 2013 and March 31, 2013, respectively. We may redeem shares during any 90 day period solely in cash up to the lesser of $250 thousand or 1 percent of the Trust's asset value at the beginning of such period. Although the Trust will normally redeem all shares for cash, it may, in unusual circumstances, redeem amounts exceeding the lesser of the two amounts described above, in whole or in part, by payment in kind of securities held by the respective fund. Note 3 – Investments in Marketable Securities (Continued)

Unrealized Losses on Securities

The following table presents the fair value and gross unrealized losses of investments in marketable securities that had been in a continuous unrealized loss position for less than twelve consecutive months. These unrealized losses are recorded in Accumulated other comprehensive income, net of applicable taxes in our Consolidated Statement of Shareholder's Equity:


				Less than 12 months as of
				December 31, 2013				March 31, 2013
				Fair		Unrealized		Fair		Unrealized
(Dollars in millions)				value		losses		value		losses
Available-for-sale securities:
	Debt instruments:
		U.S. government and agency
			obligations	$	43	$	(1)	$	-	$	-
		Corporate debt securities			81		(2)		-		-
		Mortgage backed securities:
			U.S. government agency		30		(1)		-		-
			Non-agency commercial		17		(1)		-		-
	Equity instruments:
		Fixed income mutual funds:
			U.S. government sector fund		337		(6)		-		-
			Investment grade corporate sector fund		310		(2)		-		-
			Real return sector fund		268		(7)		-		-
			Mortgage sector fund		558		(9)		532		(12)
			Emerging market sector fund		64		(1)		-		-
			International sector fund		170		(1)		-		-
	Total investments in marketable
		securities		$	1,878	$	(31)	$	532	$	(12)

At December 31, 2013, the unrealized losses of investments that had been in a loss position for 12 consecutive months or more were not significant. At March 31, 2013, total gross unrealized losses and the fair value of investments that had been in a continuous unrealized loss position for 12 consecutive months or more were $3 million and $116 million, respectively.

Realized Gains and Losses on Securities

The following table represents realized gains and losses by transaction type for the three and nine months ended December 31, 2013 and 2012:

		Three Months Ended				Nine Months Ended
		December 31,				December 31,
(Dollars in millions)		2013		2012		2013		2012
Available-for-sale securities:
	Realized gains on sales	$	12	$	-	$	28	$	9
	Realized losses on sales	$	-	$	-	$	(3)	$	(2)
	Impairment write-downs	$	(1)	$	-	$	(54)	$	0

Substantially all of the other-than-temporary impairment write-downs of $1 million and $54 million during the three and nine months ended December 31, 2013, respectively, were related to fixed income mutual funds.

Note 3 – Investments in Marketable Securities (Continued)

Contractual Maturities and Yields

The fair value and contractual maturities of investments in marketable securities at December 31, 2013 are summarized in the following table. Prepayments may cause actual maturities to differ from scheduled maturities.

		Due in 1 Year or				Due after 1 Year				Due after 5 Years				Due after
			less			through 5 years				through 10 years				10 years					Total
(Dollars in millions)		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Available-for-Sale Securities:
Debt instruments:
	U.S. government and
	agency obligations	$	-	-	%	$	65	1.50	%	$	21	1.61	%	$	1	3.57	%	$	87	1.55	%
	Municipal debt securities		2	2.39			-	-			1	5.57			11	5.69			14	5.18
	Certificates of deposit		1,533	0.29			-	-			-	-			-	-			1,533	0.29
	Commercial paper		125	0.23			-	-			-	-			-	-			125	0.23
	Foreign government debt
	securities		3	2.93			-	-			-	-			-	-			3	2.93
	Corporate debt
	securities		7	4.14			49	4.31			71	3.55			26	4.39			153	3.97
	Mortgage-backed securities:
	U.S. government agency		-	-			-	-			4	3.91			60	3.24			64	3.28
	Non-agency residential		-	-			-	-			-	-			5	10.17			5	10.17
	Non-agency commercial		-	-			3	1.87			1	3.64			46	3.35			50	3.29
	Asset-backed securities		-	-			5	0.75			4	1.87			14	2.54			23	1.97
Debt instruments total			1,670	0.31			122	2.62			102	3.15			163	3.75			2,057	0.86

Equity instruments:
	Fixed income mutual funds																		1,864	5.56
	Equity mutual fund																		529	4.29
Equity instruments total			-				-				-				-				2,393	5.28
Total fair value		$	1,670	0.31	%	$	122	2.62	%	$	102	3.15	%	$	163	3.75	%	$	4,450	3.24	%
Total amortized cost		$	1,670			$	119			$	104			$	162			$	4,137

Yields are based on the amortized cost balances of securities held at December 31, 2013. Yields are derived by aggregating the monthly result of interest and dividend income (including the effect of related amortization of premiums and accretion of discounts) divided by amortized cost. Equity instruments do not have a stated maturity date.

Securities on Deposit

In accordance with statutory requirements, we had on deposit with state insurance authorities U.S. debt securities with amortized cost and fair value of $6 million at both December 31, 2013 and March 31, 2013.