Fair value measurements (Tables)

6 Months Ended

Jun. 30, 2013

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

Our financial assets and liabilities are summarized below as of June 30, 2013 and December 31, 2012 with fair values shown according to the fair value hierarchy (in millions). 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.


	Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2013
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	2,811	$	2,811	$	1,128	$	1,682	$	1
States, municipalities and political subdivisions		2,748		2,748		—		2,748		—
Foreign governments		10,238		10,238		4,079		6,159		—
Corporate bonds		11,464		11,464		—		10,833		631
Mortgage-backed securities		2,244		2,244		—		2,244		—

Investments in equity securities		103,274		103,274		103,205		62		7
Other investments carried at fair value		17,200		17,200		—		1,703		15,497
Other investments carried at cost		17,519		18,259		—		—		18,259
Loans and finance receivables		12,855		12,032		—		481		11,551
Derivative contract assets ⁽¹⁾		67		67		1		15		51

Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾		178		178		5		164		9
Finance and financial products:
Equity index put options		5,874		5,874		—		—		5,874
Credit default		348		348		—		—		348
Other		19		19		—		19		—

Notes payable and other borrowings:
Insurance and other		13,261		13,612		—		13,612		—
Railroad, utilities and energy		37,861		41,194		—		41,194		—
Finance and financial products		12,831		13,234		—		12,509		725

December 31, 2012
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 carried at fair value		15,750		15,750		—		—		15,750
Other investments carried at cost		5,259		6,134		—		—		6,134
Loans and finance receivables		12,809		11,991		—		304		11,687
Derivative contract assets ⁽¹⁾		220		220		1		128		91

Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾		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		—

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

(1)

Assets are included in other assets and liabilities are included in accounts payable, accruals and other liabilities.

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 the first six months of 2013 and 2012 follow (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
Acquisitions, dispositions and settlements		(7	)		—			—			13
Transfers into (out of) Level 3		(129	)		—			—			—

Balance at June 30, 2012	$	653		$	38		$	13,439		$	(9,866	)


Balance at December 31, 2012	$	652		$	35		$	15,750		$	(7,847	)
Gains (losses) included in:
Earnings		—			3			520			1,715
Other comprehensive income		(12	)		—			722			(5	)
Regulatory assets and liabilities		—			—			—			2
Dispositions		(8	)		—			—			—
Settlements, net		—			(31	)		—			(45	)
Transfers into (out of) Level 3		—			—			(1,495	)		—

Balance at June 30, 2013	$	632		$	7		$	15,497		$	(6,180	)

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

Quantitative information as of June 30, 2013, 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	$	11,696	Discounted cash flow	Expected duration	7 years
				Discount for transferability restrictions and subordination	97 basis points

Common stock warrants		3,801	Warrant pricing model	Discount for transferability and hedging restrictions	22%

Net derivative liabilities:
Equity index put options		5,874	Option pricing model	Volatility	21%

Credit default-states/municipalities		337	Discounted cash flow	Credit spreads	76 basis points