Investments of Insurance Subsidiary

9 Months Ended

Sep. 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 September 30, 2011 and December 31, 2010 follows (dollars in millions):

	September 30, 2011
	Amortized Cost		Unrealized Amounts					Fair   Value
			Gains		Losses
Debt securities:
States and municipalities	$	354	$	15	$	(1	)	$	368
Auction rate securities		149		—		(4	)		145
Asset-backed securities		21		—		—			21
Money market funds		88		—		—			88
		612		15		(5	)		622
Equity securities		8		1		(1	)		8
	$	620	$	16	$	(6	)		630
Amounts classified as current assets									(85	)
Investment carrying value								$	545

	December 31, 2010
	Amortized Cost		Unrealized Amounts					Fair   Value
			Gains		Losses
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 September 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 September 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 September 30, 2011 were as follows (dollars in millions):

	Amortized Cost		Fair     Value
Due in one year or less	$	136	$	137
Due after one year through five years		113		120
Due after five years through ten years		130		135
Due after ten years		63		64
		442		456
Auction rate securities		149		145
Asset-backed securities		21		21
	$	612	$	622

The average expected maturity of the investments in debt securities at September 30, 2011 was 3.8 years, compared to the average scheduled maturity of 10.7 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 September 30, 2011, the average expected maturities for our auction rate and asset-backed securities were 4.5 years and 4.9 years, respectively, compared to average scheduled maturities of 25.2 years and 25.0 years, respectively.