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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
104
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, 2015 and 2014,
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, 2015
U.S. Treasury and other U.S. government
corporations and agencies:
U.S. Treasury and agency obligations $ 195 $ (1) $ 14 $ — $ 209 $ (1)
Mortgage-backed securities 1,484 (20)86 (3) 1,570 (23)
Tax-exempt municipal securities 843 (3)52 (1) 895 (4)
Mortgage-backed securities:
Residential 2 — 4 — 6 —
Commercial 626 (13) 265 (28) 891 (41)
Asset-backed securities 258 (2) — — 258 (2)
Corporate debt securities 918 (45)63(10) 981 (55)
Total debt securities $ 4,326 $ (84) $ 484 $ (42) $ 4,810 $ (126)
December 31, 2014
U.S. Treasury and other U.S. government
corporations and agencies:
U.S. Treasury and agency obligations $ 79 $ — $ 80 $ (1) $ 159 $ (1)
Mortgage-backed securities 22 — 320 (5) 342 (5)
Tax-exempt municipal securities 131 (1) 118 (2) 249 (3)
Mortgage-backed securities:
Residential 1 — 4 — 5 —
Commercial 31 (1) 267 (18) 298 (19)
Asset-backed securities 13———13—
Corporate debt securities 219 (6) 128 (7) 347 (13)
Total debt securities $ 496 $ (8) $ 917 $ (33) $ 1,413 $ (41)
Approximately 98% of our debt securities were investment-grade quality, with a weighted average credit rating
of AA by S&P at December 31, 2015. 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, 2015, 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 42% 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 58% of these municipals. Our
general obligation bonds are diversified across the United States with no individual state exceeding 11%. In addition,
6% 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.