Investments of Insurance Subsidiary

6 Months Ended

Jun. 30, 2011

Investments of Insurance Subsidiary [Abstract]

INVESTMENTS OF INSURANCE SUBSIDIARY

NOTE 4 — INVESTMENTS OF INSURANCE SUBSIDIARY

A summary of our insurance subsidiary’s investments at June 30, 2011 and December 31, 2010 follows (dollars in millions):

	June 30, 2011
			Unrealized
	Amortized		Amounts					Fair
	Cost		Gains		Losses			Value
Debt securities:
States and municipalities	$	305	$	12	$	(1	)	$	316
Auction rate securities		152		—		(3	)		149
Asset-backed securities		23		—		—			23
Money market funds		229		—		—			229
		709		12		(4	)		717
Equity securities		8		1		(1	)		8
	$	717	$	13	$	(5	)		725
Amounts classified as current assets									(210	)
Investment carrying value								$	515

	December 31, 2010
			Unrealized
	Amortized		Amounts					Fair
	Cost		Gains		Losses			Value
Debt securities:
States and municipalities	$	312	$	12	$	(1	)	$	323
Auction rate securities		251		—		(1	)		250
Asset-backed securities		26		1		(1	)		26
Money market funds		135		—		—			135
		724		13		(3	)		734
Equity securities		8		1		(1	)		8
	$	732	$	14	$	(4	)		742
Amounts classified as current assets									(100	)
Investment carrying value								$	642

At June 30, 2011 and December 31, 2010, the investments of our insurance subsidiary were classified as “available-for-sale.” Changes in temporary unrealized gains and losses are recorded as adjustments to other comprehensive income. At June 30, 2011 and December 31, 2010, $19 million and $92 million, respectively, of our investments were subject to restrictions included in insurance bond collateralization and assumed reinsurance contracts.

Scheduled maturities of investments in debt securities at June 30, 2011 were as follows (dollars in millions):

	Amortized		Fair
	Cost		Value
Due in one year or less	$	249	$	250
Due after one year through five years		139		147
Due after five years through ten years		122		124
Due after ten years		24		24
		534		545
Auction rate securities		152		149
Asset-backed securities		23		23
	$	709	$	717

The average expected maturity of the investments in debt securities at June 30, 2011 was 2.6 years, compared to the average scheduled maturity of 8.6 years. Expected and scheduled maturities may differ because the issuers of certain securities have the right to call, prepay or otherwise redeem such obligations prior to the scheduled maturity date. The average expected maturities for our auction rate and asset-backed securities were derived from valuation models of expected cash flows and involved management’s judgment. At June 30, 2011, the average expected maturities for our auction rate and asset-backed securities were 4.4 years and 5.1 years, respectively, compared to average scheduled maturities of 25.2 years and 25.1 years, respectively.