Fair value measurements (Tables)

6 Months Ended

Jun. 30, 2012

Financial assets and liabilities measured at fair value on a recurring basis

Our financial assets and liabilities are summarized below according to the fair value hierarchy. The carrying values of cash and cash equivalents, accounts receivable and accounts payable, accruals and other liabilities are considered to be reasonable estimates of their fair values. As of June 30, 2012 and December 31, 2011, the carrying values and fair values of financial assets and liabilities were as follows (in millions).

	Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2012 - Assets and liabilities carried at fair value:
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	2,630	$	2,630	$	1,140	$	1,488	$	2
States, municipalities and political subdivisions		2,910		2,910		—		2,909		1
Foreign governments		11,136		11,136		4,719		6,417		—
Corporate bonds		12,054		12,054		—		11,404		650
Mortgage-backed securities		2,705		2,705		—		2,705		—
Investments in equity securities		86,216		86,216		86,114		64		38
Other investments		13,439		13,439		—		—		13,439
Derivative contract assets (1)		258		258		1		142		115
Derivative contract liabilities:
Railroad, utilities and energy (2)		312		312		22		279		11
Finance and financial  products:
Equity index put options		8,983		8,983		—		—		8,983
Credit default obligations		987		987		—		—		987
Other		167		167		—		167		—
June 30, 2012 - Assets and liabilities not carried at fair value:
Other investments		5,246		6,175		—		—		6,175
Loans and finance receivables		13,664		13,300		—		1,393		11,907
Notes payable and other borrowings:
Insurance and other		13,531		14,240		—		14,240		—
Railroad, utilities and energy		34,148		39,375		—		39,375		—
Finance and financial products		13,453		14,407		—		13,522		885
December 31, 2011 - Assets and liabilities carried at fair value:
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		2,935		2,935		843		2,090		2
States, municipalities and political subdivisions		3,070		3,070		—		3,069		1
Foreign governments		10,843		10,843		4,444		6,265		134
Corporate bonds		12,448		12,448		—		11,801		647
Mortgage-backed securities		2,892		2,892		—		2,892		—
Investments in equity securities		76,991		76,991		76,906		63		22
Other investments		11,669		11,669		—		—		11,669
Derivative contract assets (1)		327		327		—		205		122
Derivative contract liabilities:
Railroad, utilities and energy (2)		336		336		12		320		4
Finance and financial products:
Equity index put options		8,499		8,499		—		—		8,499
Credit default obligations		1,527		1,527		—		—		1,527
Other		113		113		—		113		—

(1) Included in other assets.

(2) Included in accounts payable, accruals and other liabilities.

As of December 31, 2011, the carrying values and fair values of financial assets and liabilities that are not carried at fair value were as follows (in millions).

	Carrying Value		Fair Value
Other investments	$	5,252	$	6,258
Loans and finance receivables		13,934		13,126
Notes payable and other borrowings:
Insurance and other		13,768		14,334
Railroad, utilities and energy		32,580		38,257
Finance and financial products		14,036		14,959

Reconciliations of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3)

A reconciliation of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the first six months of 2011 follows (in millions).

	Investments in fixed maturity securities			Investments in equity securities		Other investments			Net derivative contract (liabilities)
Balance at December 31, 2010	$	801		$	35	$	17,589		$	(8,222	)
Gains (losses) included in:
Earnings		—			—		—			194
Other comprehensive income		3			5		(1,385	)		—
Regulatory assets and liabilities		—			—		—			83
Acquisitions		6			—		—			—
Dispositions		(33	)		—		—			—
Settlements		—			—		—			(23	)
Transfers out of Level 3		—			—		(5,500	)		—
Balance at June 30, 2011	$	777		$	40	$	10,704		$	(7,968	)

A reconciliation of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the first six months of 2012 follows (in millions).

	Investments in fixed maturity securities			Investments in equity securities		Other investments		Net derivative contract (liabilities)
Balance at December 31, 2011	$	784		$	22	$	11,669	$	(9,908	)
Gains (losses) included in:
Earnings		—			—		—		23
Other comprehensive income		5			16		1,770		3
Regulatory assets and liabilities		—			—		—		3
Dispositions		(7	)		—		—		—
Settlements		—			—		—		13
Transfers out of Level 3		(129	)		—		—		—
Balance at June 30, 2012	$	653		$	38	$	13,439	$	(9,866	)

Fair value assets and liabilities measured on recurring basis, unobservable inputs, additional information

Quantitative information as of June 30, 2012, with respect to assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (in millions).

	Fair value		Principal valuation techniques	Unobservable Input	Weighted Average
Other investments:
Preferred stocks	$	11,475	Discounted cash flow	Expected duration	10 years
				Discount for transferability restrictions and subordination	97 bps
Common stock warrants		1,964	Warrant pricing model	Discount for transferability and hedging restrictions	19%
Net derivative liabilities:
Equity index put options		8,983	Option pricing model	Volatility	22%
Credit default-states/municipalities		953	Discounted cash flow	Credit default spreads	113 bps