Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2013

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

Our financial assets and liabilities are summarized below as of September 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)
September 30, 2013
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$	2,552	$	2,552	$	2,113	$	438	$	1
States, municipalities and political subdivisions		2,533		2,533		—		2,533		—
Foreign governments		10,370		10,370		6,524		3,846		—
Corporate bonds		11,932		11,932		—		11,311		621
Mortgage-backed securities		2,148		2,148		—		2,148		—
Investments in equity securities		106,765		106,765		106,695		63		7
Other investments carried at fair value		16,085		16,085		—		—		16,085
Other investments carried at cost		12,922		13,143		—		—		13,143
Loans and finance receivables		12,838		12,016		—		493		11,523
Derivative contract assets ⁽¹⁾		73		73		1		19		53

Derivative contract liabilities:
Railroad, utilities and energy ⁽¹⁾		176		176		4		164		8
Finance and financial products:
Equity index put options		5,355		5,355		—		—		5,355
Credit default		478		478		—		—		478
Other		14		14		—		14		—
Notes payable and other borrowings:
Insurance and other		13,023		13,357		—		13,357		—
Railroad, utilities and energy		40,016		43,098		—		43,098		—
Finance and financial products		12,710		13,139		—		12,420		719

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 nine 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		—			—			—			(199	)
Other comprehensive income		6			13			2,776			3
Regulatory assets and liabilities		—			—			—			—
Acquisitions, dispositions and settlements		(8	)		—			—			186
Transfers into (out of) Level 3		(129	)		—			—			—

Balance at September 30, 2012	$	653		$	35		$	14,445		$	(9,918	)

Balance at December 31, 2012	$	652		$	35		$	15,750		$	(7,847	)
Gains (losses) included in:
Earnings		—			3			520			2,119
Other comprehensive income		(12	)		—			1,310			(5	)
Regulatory assets and liabilities		—			—			—			1
Dispositions		(18	)		—			—			—
Settlements, net		—			(31	)		—			(56	)
Transfers into (out of) Level 3		—			—			(1,495	)		—

Balance at September 30, 2013	$	622		$	7		$	16,085		$	(5,788	)

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

Quantitative information as of September 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

11,857

Discounted cash flow

Expected duration

6 years

Discount for transferability restrictions and subordination

97 basis

points

Common stock warrants

4,228

Warrant pricing model

Discount for transferability and hedging restrictions

Net derivative liabilities:

Equity index put options

5,355

Option pricing model

Volatility

Credit default-states/municipalities

478

Discounted cash flow

Credit spreads

98 basis

points