Fair value measurements (Tables)

12 Months Ended

Dec. 31, 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 December 31, 2012 and 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)
December 31, 2012—Assets and liabilities carried at fair value:
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	2,775	$	2,775	$	1,225	$	1,549	$	1
States, municipalities and political subdivisions		2,913		2,913		—		2,912		1
Foreign governments		11,355		11,355		4,571		6,784		—
Corporate bonds		12,661		12,661		—		12,011		650
Mortgage-backed securities		2,587		2,587		—		2,587		—
Investments in equity securities		87,662		87,662		87,563		64		35
Other investments		15,750		15,750		—		—		15,750
Derivative contract assets ⁽¹⁾		220		220		1		128		91

Derivative contract liabilities:
Railroad, utilities and energy ⁽²⁾		234		234		10		217		7
Finance and financial products:
Equity index put options		7,502		7,502		—		—		7,502
Credit default		429		429		—		—		429
Other		2		2		—		2		—
December 31, 2012—Assets and liabilities not carried at fair value:
Other investments	$	5,259	$	6,134	$	—	$	—	$	6,134
Loans and finance receivables		12,809		11,991		—		304		11,687

Notes payable and other borrowings:
Insurance and other		13,535		14,284		—		14,284		—
Railroad, utilities and energy		36,156		42,074		—		42,074		—
Finance and financial products		13,045		14,005		—		13,194		811
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		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)

Reconciliations of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for each of the three years ending December 31, 2012 follow (in millions).


	Investments in fixed maturity securities			Investments in equity securities			Other investments			Net derivative contract liabilities
Balance at December 31, 2009	$	918		$	304		$	20,614		$	(9,196	)
Gains (losses) included in:
Earnings		—			—			1,305			471
Other comprehensive income		16			(8	)		(358	)		—
Regulatory assets and liabilities		—			—			—			(33	)
Acquisitions, dispositions and settlements		9			(1	)		(3,972	)		533
Transfers into (out of) Level 3		(142	)		(260	)		—			3

Balance at December 31, 2010		801			35			17,589			(8,222	)
Gains (losses) included in:
Earnings		—			—			—			(2,035	)
Other comprehensive income		5			(13	)		(2,120	)		(3	)
Regulatory assets and liabilities		—			—			—			144
Acquisitions		17			—			5,000			(68	)
Dispositions		(39	)		—			—			—
Settlements, net		—			—			—			275
Transfers into (out of) Level 3		—			—			(8,800	)		1

Balance at December 31, 2011		784			22			11,669			(9,908	)
Gains (losses) included in:
Earnings		—			—			—			1,873
Other comprehensive income		5			13			4,081			—
Regulatory assets and liabilities		—			—			—			(2	)
Dispositions		(8	)		—			—			—
Settlements, net		—			—			—			190
Transfers out of Level 3		(129	)		—			—			—

Balance at December 31, 2012	$	652		$	35		$	15,750		$	(7,847	)

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

Quantitative information as of December 31, 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	$	11,860	Discounted cash flow	Expected duration	10 years
				Discount for transferability restrictions and subordination	97 basis points
Common stock warrants		3,890	Warrant pricing model	Discount for transferability and hedging restrictions	19%
Net derivative liabilities:
Equity index put options		7,502	Option pricing model	Volatility	21%
Credit default-states/municipalities		421	Discounted cash flow	Credit spreads	85 basis points