Humana 2013 Annual Report Download - page 116

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Gross unrealized losses and fair values aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position were as follows at December 31, 2013 and 2012,
respectively:
Less than 12 months 12 months or more Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
(in millions)
December 31, 2013
U.S. Treasury and other U.S. government
corporations and agencies:
U.S. Treasury and agency obligations . . $ 231 $ (6) $ 5 $ 0 $ 236 $ (6)
Mortgage-backed securities .......... 1,076 (47) 21 (1) 1,097 (48)
Tax-exempt municipal securities .......... 693 (28) 57 (5) 750 (33)
Mortgage-backed securities:
Residential ........................ 6 0 1 0 7 0
Commercial ....................... 270 (8) 40 (1) 310 (9)
Asset-backed securities .................. 35 (1) 0 0 35 (1)
Corporate debt securities ................. 594 (28) 17 (2) 611 (30)
Total debt securities ............ $2,905 $(118) $141 $(9) $3,046 $(127)
December 31, 2012
U.S. Treasury and other U.S. government
corporations and agencies:
U.S. Treasury and agency obligations . . $ 56 $ 0 $ 2 $ 0 $ 58 $ 0
Mortgage-backed securities .......... 38 0 25 (1) 63 (1)
Tax-exempt municipal securities .......... 233 (3) 27 (1) 260 (4)
Mortgage-backed securities:
Residential ........................ 0 0 4 (1) 4 (1)
Commercial ....................... 94 0 0 0 94 0
Asset-backed securities .................. 2 0 4 0 6 0
Corporate debt securities ................. 104 (2) 4 0 108 (2)
Total debt securities ............ $ 527 $ (5) $ 66 $(3) $ 593 $ (8)
Approximately 95% of our debt securities were investment-grade quality, with a weighted average credit
rating of AA- by S&P at December 31, 2013. Most of the debt securities that were below investment-grade were
rated BB, the higher end of the below investment-grade rating scale. At December 31, 2013, 7% of our tax-
exempt municipal securities were pre-refunded, generally with U.S. government and agency securities. Tax-
exempt municipal securities that were not pre-refunded were diversified among general obligation bonds of U.S.
states and local municipalities as well as special revenue bonds. General obligation bonds, which are backed by
the taxing power and full faith of the issuer, accounted for 40% of the tax-exempt municipals that were not pre-
refunded in the portfolio. Special revenue bonds, issued by a municipality to finance a specific public works
project such as utilities, water and sewer, transportation, or education, and supported by the revenues of that
project, accounted for the remaining 60% of these municipals. Our general obligation bonds are diversified
across the United States with no individual state exceeding 12%. In addition, 18% of our tax-exempt securities
were insured by bond insurers and had an equivalent weighted average S&P credit rating of AA- exclusive of the
bond insurers’ guarantee. Our investment policy limits investments in a single issuer and requires diversification
among various asset types.
106