Investments of Insurance Subsidiaries

9 Months Ended

Sep. 30, 2013

Investments Debt And Equity Securities [Abstract]

Investments of Insurance Subsidiaries

NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES

A summary of our insurance subsidiaries’ investments at September 30, 2013 and December 31, 2012 follows (dollars in millions):

	September 30, 2013
	Amortized Cost		Unrealized Amounts					Fair Value
			Gains		Losses
Debt securities:
States and municipalities	$	383	$	12	$	(2	)	$	393
Auction rate securities		32		—		—			32
Asset-backed securities		13		—		—			13
Money market funds		24		—		—			24
		452		12		(2	)		462
Equity securities		2		1		—			3
	$	454	$	13	$	(2	)		465
Amounts classified as current assets									(63	)
Investment carrying value								$	402

	December 31, 2012
	Amortized Cost		Unrealized Amounts					Fair Value
			Gains		Losses
Debt securities:
States and municipalities	$	395	$	23	$	—		$	418
Auction rate securities		74		—		(6	)		68
Asset-backed securities		14		—		—			14
Money market funds		67		—		—			67
		550		23		(6	)		567
Equity securities		2		1		—			3
	$	552	$	24	$	(6	)		570
Amounts classified as current assets									(55	)
Investment carrying value								$	515

At September 30, 2013 and December 31, 2012, the investments of our insurance subsidiaries were classified as “available-for-sale.” Changes in temporary unrealized gains and losses are recorded as adjustments to other comprehensive income. At September 30, 2013 and December 31, 2012, $1 million and $9 million, respectively, of our money market fund investments were subject to restrictions included in insurance bond collateralization and assumed reinsurance contracts.

Scheduled maturities of investments in debt securities at September 30, 2013 were as follows (dollars in millions):

	Amortized Cost		Fair Value
Due in one year or less	$	41	$	41
Due after one year through five years		176		182
Due after five years through ten years		108		111
Due after ten years		82		83
		407		417
Auction rate securities		32		32
Asset-backed securities		13		13
	$	452	$	462

The average expected maturity of the investments in debt securities at September 30, 2013 was 4.0 years, compared to the average scheduled maturity of 7.1 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, 2013, the average expected maturities for our auction rate and asset-backed securities were 1.4 years and 3.9 years, respectively, compared to average scheduled maturities of 22.1 years and 22.7 years, respectively.