v3.8.0.1
Short-term and Long-term Investments, Restricted Deposits
 12 Months Ended
Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]  
Short-term and Long-term Investments, Restricted Deposits
Short-term and Long-term Investments, Restricted Deposits

Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions):
 
December 31, 2017
 
December 31, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized Losses
 
Fair
Value
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized Losses
 
Fair
Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies
$
311

 
$
—

 
$
(2
)
 
$
309

 
$
364

 
$
—

 
$
(1
)
 
$
363

Corporate securities
2,208

 
12

 
(10
)
 
2,210

 
1,933

 
12

 
(13
)
 
1,932

Restricted certificates of deposit
4

 
—

 
—

 
4

 
5

 
—

 
—

 
5

Restricted cash equivalents
17

 
—

 
—

 
17

 
6

 
—

 
—

 
6

Municipal securities
2,085

 
12

 
(10
)
 
2,087

 
1,767

 
1

 
(35
)
 
1,733

Asset-backed securities
437

 
1

 
(1
)
 
437

 
317

 
1

 
(1
)
 
317

Residential mortgage-backed securities
337

 
1

 
(6
)
 
332

 
219

 
1

 
(5
)
 
215

Commercial mortgage- backed securities
272

 
1

 
(2
)
 
271

 
343

 
—

 
(5
)
 
338

Equity method investments
176

 
—

 
—

 
176

 
163

 
—

 
—

 
163

Life insurance contracts
135

 
—

 
—

 
135

 
116

 
—

 
—

 
116

Total
$
5,982

 
$
27

 
$
(31
)
 
$
5,978

 
$
5,233

 
$
15

 
$
(60
)
 
$
5,188



The Company’s investments are classified as available-for-sale with the exception of life insurance contracts and certain equity method investments. The Company’s investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with the focus on high credit quality securities. The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of December 31, 2017, 96% of the Company’s investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At December 31, 2017, the Company held certificates of deposit, life insurance contracts and equity method investments which did not carry a credit rating.

The Company's residential mortgage-backed securities are primarily issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA+ and a weighted average duration of 4.0 years at December 31, 2017.
In January 2016, the Company completed a 19% investment in a data analytics business, and as a result, issued the selling stockholders 1.1 million shares of Centene common stock, valued at $68 million. The investment is being accounted for using the equity method of accounting due to the Company's significant influence of the business.
The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):
 
December 31, 2017
 
December 31, 2016
 
Less Than 12 Months
 
12 Months or More
 
Less Than 12 Months
 
12 Months or More
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies
$
(1
)
 
$
222

 
$
(1
)
 
$
79

 
$
(1
)
 
$
215

 
$
—

 
$
2

Corporate securities
(6
)
 
1,044

 
(4
)
 
185

 
(12
)
 
1,020

 
(1
)
 
39

Municipal securities
(7
)
 
943

 
(3
)
 
175

 
(35
)
 
1,423

 
—

 
30

Asset-backed securities
(1
)
 
228

 
—

 
28

 
(1
)
 
101

 
—

 
18

Residential mortgage- backed securities
(1
)
 
109

 
(5
)
 
171

 
(5
)
 
188

 
—

 
—

Commercial mortgage- backed securities
(1
)
 
112

 
(1
)
 
51

 
(5
)
 
271

 
—

 
—

Total
$
(17
)
 
$
2,658

 
$
(14
)
 
$
689

 
$
(59
)
 
$
3,218

 
$
(1
)
 
$
89



As of December 31, 2017, the gross unrealized losses were generated from 1,979 positions out of a total of 3,475 positions. The change in fair value of fixed income securities is primarily a result of movement in interest rates subsequent to the purchase of the security.

For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If the security meets this criterion, the decline in fair value is other-than-temporary and is recorded in earnings. The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, there is no indication of other-than-temporary impairment for these securities.

During the years ended December 31, 2017, 2016 and 2015, the Company recognized $3 million, $5 million and $8 million, respectively, of income from equity method investments.

The contractual maturities of short-term and long-term investments and restricted deposits are as follows ($ in millions):
 
December 31, 2017
 
December 31, 2016
 
Investments
 
Restricted Deposits
 
Investments
 
Restricted Deposits
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
One year or less
$
474

 
$
474

 
$
48

 
$
47

 
$
500

 
$
500

 
$
91

 
$
91

One year through five years
2,424

 
2,420

 
88

 
88

 
1,982

 
1,974

 
47

 
47

Five years through ten years
1,773

 
1,779

 
—

 
—

 
1,101

 
1,089

 
—

 
—

Greater than ten years
129

 
130

 
—

 
—

 
633

 
617

 
—

 
—

Asset-backed securities
1,046

 
1,040

 
—

 
—

 
879

 
870

 
—

 
—

Total
$
5,846

 
$
5,843

 
$
136

 
$
135

 
$
5,095

 
$
5,050

 
$
138

 
$
138


 
Actual maturities may differ from contractual maturities due to call or prepayment options. Equity method investments and life insurance contracts are included in the five years through ten years category. The Company has an option to redeem at amortized cost substantially all of the securities included in the greater than ten years category listed above.

The Company continuously monitors investments for other-than-temporary impairment. Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions. The Company recognizes an impairment loss for equity method investments when evidence demonstrates that it is other-than-temporarily impaired. Evidence of a loss in value that is other-than-temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment.